Size Of Foreign Direct Investment Research Articles

Modeling and Estimating the size of Foreign Direct Investment in Saudi Arabia ARIMA Model Approach

The Kingdom has put foreign investment in its priorities, and investment has become a major hub not only to enhance its vision, but also be an effective tool in the economic transformation process that is mainly based on attracting more foreign investment.

Effect of the Internet on Services Export Diversification

This study empirically examines the effect of Internet access on services export diversification. A panel dataset containing 131 countries is analyzed over 1995-2014 and shows that greater access to the Internet is positively associated with services export diversification.T his outcome applies to both high-income and developing countries, and particularly to least developed countries (LDCs) among developing countries. Additionally, the effect of Internet access on services export product diversification translates to countries’ level of innovation, merchandise exports, including export product concentration and size of foreign direct investment (FDI) inflows.T hese findings highlight the need for developing digital infrastructure and regulations that would facilitate access to the Internet, particularly in developing countries.T he international community must focus on developing countries, particularly LDCs, by helping them to develop the requisite digital infrastructure and regulations to better participate in international trade, especially through greater series export diversification.

Aid for Trade Flows and Recipient-Countries’ Integration into the World Market for Services Exports: Do Merchandises Exports and Foreign Direct Investment Inflows Matter?

An important literature on the recipient-countries’ export performance effect of Aid for Trade (AfT) flows has focused on the goods side. The few existing studies on the services exports effects of AfT interventions have reached mixed results, reflecting a positive or weak effect. This study aims to complement these few studies by examining the effect of AfT flows on recipient-countries’ share of services exports in the world services exports (‘services export integration’), including through two main channels: their share of merchandises exports in the world merchandises exports (‘merchandises export integration’) and the size of Foreign Direct Investment (FDI) inflows. The empirical analysis, based on a sample of 105 countries over the period 2002–2016, has shown that these two channels definitely matter for the effect of AfT flows on countries’ services export integration. Specifically, by fostering countries’ merchandises export integration, AfT flows can promote their services export integration. Furthermore, promoting FDI inflows enhances the positive effect of AfT flows on countries’ services export integration.

Size of foreign direct investment and firm characteristics

This paper focuses on the role of classifying types of foreign direct investment (FDI) for analysing the determinants of cross-border investment relationships. We base our investigation on a newly established firm-level data set of German multinational firms and their affiliates in the Czech Republic that allows various categorisations into vertical foreign direct investment (VFDI) and horizontal foreign direct investment (HFDI). Apart from data for conventional approaches to classifying FDI types, the surveyed information contained herein also includes a detailed self-assessment of the firms with respect to investment motives, and specifications on intra-firm trade and the flow of intermediate inputs. In order to correct for sample selection, we apply a two-step Heckman procedure by comparing multinational firms that have an affiliate in the Czech Republic to companies without investment abroad. The results for the direct measures of FDI types confirm theoretical expectations and previous empirical literature and stand in marked contrast to the outcome for indirect measurement concepts. Our finding leads us to the conclusion that one should be more cautious in interpreting differences between vertical and horizontal FDI when using approximative classification concepts.

Size of foreign direct investment and firm characteristics

This paper focuses on the role of classifying types of foreign direct investment (FDI) for analysing the determinants of cross-border investment relationships. We base our investigation on a newly established firm-level data set of German multinational firms and their affiliates in the Czech Republic that allows various categorisations into vertical foreign direct investment (VFDI) and horizontal foreign direct investment (HFDI). Apart from data for conventional approaches to classifying FDI types, the surveyed information contained herein also includes a detailed self-assessment of the firms with respect to investment motives, and specifications on intra-firm trade and the flow of intermediate inputs. In order to correct for sample selection, we apply a two-step Heckman procedure by comparing multinational firms that have an affiliate in the Czech Republic to companies without investment abroad. The results for the direct measures of FDI types confirm theoretical expectations and previous empirical literature and stand in marked contrast to the outcome for indirect measurement concepts. Our finding leads us to the conclusion that one should be more cautious in interpreting differences between vertical and horizontal FDI when using approximative classification concepts.

Pengaruh Pertumbuhan Ekonomi, Suku Bunga, dan Nilai Tukar terhadap Investasi Asing Langsung di Indonesia

Foreign direct investment is one of the alternative sources for funding to assist development in Indonesia. Economic growth, interest rate, and exchange rate are considered to have an effect on the size of foreign direct investment in a country. This study aimed to determine the effect of economic growth, interest rate, and exchange rate to foreign direct investment in Indonesia. The research data source is secondary data from then the foreign direct investment, economic growth, interest rate, and exchange rate during the quarter of 2004 until second quarter of 2017. This study uses multiple linear regression analysis technique. This study found that economic growth has a positive but insignificant effect on foreign direct investment, interest rate has a significant negative effect and exchange rates has a positive significant on foreign direct investment in Indonesia.

Do International Investment Agreements Attract Foreign Direct Investment into Developing Countries?

The study is concerned with answering a question: what is the role of international investment agreements (IIAs) in attracting foreign direct investment (FDI) into developing countries? It reviews the literature on the impact of IIAs on the size of FDI into developing countries to the extent, to which such literature exists. This is the case for bilateral investment treaties (BITs) and regional integration agreements, but less so for bilateral free trade agreements (FTAs), nowadays including also investment provisions. In the absence of the literature the study relies on the conceptual discussion of possible impacts. Needless to say the literature, especially that on the impact of BITs on FDI, is not only far from reaching definite conclusions but also has come to conflicting findings. The study offers an own assessment of these findings and of the likely impact of IIAs on FDI. As regards the impact of BITs, the study concludes that there is evidence that BITs have played a role in a number of individual FDI projects, thus increasing FDI, but apparently these increases have not been large enough to be captured in aggregated flows of FDI used in most econometric studies. But in their rather narrow responsibilities, BITs constitute one of the most solid, although quite small, components of a coherent, transparent, predictable and stable investment framework of developing countries. Other agreements, and notably regional integration agreements, including investment and trade provisions, lead to new FDI. The impact is more evident in the case of FDI from outside of the economic grouping. EIIAs can also stimulate some intra-regional FDI. The latter impact can be strong when EIIA membership includes both developed and developing or transition countries.

Size, Location and Agglomeration of Inward Foreign Direct Investment (FDI) in the United States

Halvorsen T. Size, location and agglomeration of inward foreign direct investment (FDI) in the United States, Regional Studies. Since the late 1970s a range of economic development policies to attract foreign direct investments (FDIs) have been tried out. Despite a policy reorientation from a large-size bias to policies also favouring smaller investments, little empirical work has been performed on the determinants of investment size. This paper presents empirical evidence on how the size of FDIs is determined by agglomeration and other state-level factors. The results indicate that FDI agglomeration and urbanization affect investment size and that taxes, markets, labour, land and the concentration of scientific knowledge are important determinants in the size composition of FDI. Halvorsen T. Le montant, la localisation et l'agglomération de l'investissement direct étranger (IDE) aux Etats-Unis, Regional Studies. Depuis la fin des années 1970, on met en vigueur toute une série de politiques de développement économique afin de séduire l'investissement direct étranger. En dépit d'une réorientation de la politique d'une tendance à la taille vers des politiques plutôt en faveur des investissements plus modestes, rares sont les recherches empiriques sur les déterminants du montant de l'investissement. Cet article cherche à présenter des preuves empiriques sur la détermination du montant de l'IDE en fonction de l'agglomération et d'autres facteurs au niveau de l'Etat. Les résultats laissent voir que l'agglomération et l'urbanisation de l'IDE influencent le montant de l'investissement, et que les impôts, les marchés, la main-d'oeuvre, le terrain, et la concentration de la connaissance scientifique sont d'importants déterminants de la structure du montant de l'IDE. Investissement direct étranger (IDE) Economies d'agglomération Montant de l'investissement Etats-Unis Halvorsen T. Umfang, Standort und Agglomeration von ausländischen Direktinvestitionen in den USA, Regional Studies. Seit dem Ende der siebziger Jahre des 20. Jahrhunderts wurden verschiedene Wirtschaftsentwicklungspolitiken zur Anziehung von ausländischen Direktinvestitionen ausprobiert. Trotz einer politischen Umorientierung von einer Bevorzugung umfangreicher Investitionen hin zu einer Begünstigung auch von kleineren Investitionen wurden über die Determinanten für den Umfang der Investition bisher nur wenige empirische Studien durchgeführt. In diesem Beitrag werden empirische Belege zur Frage vorgestellt, wie die Höhe von ausländischen Direktinvestitionen von der Agglomeration und von anderen Faktoren auf Staatsebene bestimmt wird. Aus den Ergebnissen geht hervor, dass sich die Agglomeration und Urbanisierung von ausländischen Direktinvestitionen auf die Investitionshöhe auswirken und dass Steuern, Märkte, das Angebot an Arbeitskräften und Grundstücken sowie die Konzentration von wissenschaftlichem Wissen wichtige Determinanten für die Höhe und Zusammensetzung ausländischer Direktinvestitionen darstellen. Ausländische Direktinvestitionen Agglomerationswirtschaften Investitionshöhe USA Halvorsen T. Tamaño, ubicación y aglomeración de la inversión extranjera directa interna (IDE) en los Estados Unidos, Regional Studies. Desde finales de los setenta se han puesto en marcha una serie de políticas de desarrollo económico para atraer la inversión directa extranjera (IDE). Pese a una reorientación política desde una predisposición de inversiones importantes hacia políticas que también favorecen inversiones más pequeñas, se ha realizado poco trabajo empírico sobre los determinantes del tamaño de las inversiones. En este artículo presentamos evidencia empírica que demuestra que el tamaño de la IDE está determinado por la aglomeración y otros factores a nivel estatal. Los resultados indican que la aglomeración y la urbanización de la IDE afectan al tamaño de la inversión y que los impuestos, los mercados, la mano de obra, el suelo y la concentración de conocimiento científico son determinantes importantes en la composición del tamaño de la IDE. Inversión directa extranjera (IDE) Economías de aglomeración Tamaño de la inversion Estados Unidos

Nation Brands and Foreign Direct Investment*

This article studies the explanatory power of intangible factors - such as country stereotypes and consumer perceptions - for the size of foreign direct investment (FDI) flows, controlling for fundamental variables. To operationalize the concept of these intangibles we use the idea of the 'nation brand'. Nation brands are strongly related to the idea of 'country-of-origin' biases for both industrial and consumer products. It is known that the 'country-of-origin' serves often as a product characteristic, an informational cue, but also as a means of applying a heuristic for simplified decision-making. Given its role for purchase decisions, the size and direction of the country-of-origin bias should be important for multinational investors when choosing the location of production, and everything else given, investors should choose as their location of production countries to which consumers show a positive country bias. In a similar spirit, the strength of nation brands may be used as a heuristic or a source of information about the quality of a country as an investment decision. Using the EUROSTAT data on FDI flows from 30 source countries to 34 host countries for the years 2005 and 2006 and the Anholt Nation Brands Index as our measure of these intangibles, we find that this index has a significant and strong impact on FDI flows in a multivariate analysis that is based on the knowledge-capital (KC) model of FDI. The volume of FDI into a host country is shown to rise by 27 percent as its nation index, the measure for the quality of these intangibles, improves by one point. Among the six components of the index, the perceptions about a country's products, about its social and economic conditions and about cultural aspects are most relevant. Our results suggest that the nation brands index accounts for important aspects of FDI decisions that are not captured in fundamental data which explain FDI in the standard foreign trade approach to FDI. © 2010 Blackwell Publishing Ltd.

Nation Brands and Foreign Direct Investment

We study the explanatory role of fundamentals versus the effects of nation brands for the size of foreign direct investment (FDI) flows. Using the EUROSTAT data on FDI flows we find that the Anholt Nation Brands Index has a significant and strong impact on FDI flows in a multi-variate analysis that is based on the knowledge-capital (KC) model of FDI. Our results suggest that the nation brands index accounts for important aspects of FDI decisions that are not captured in fundamental data which explain FDI in the standard foreign trade approach to FDI.

Japanese Foreign Direct Investment in the UK Electronic Industry: The Eclectic Approach

This article analyses the combined effects of Japanese firms' ownership and location advantages on the size of foreign direct investment (FDI). The size of FDI is measured by two proxies, the firm's employment level and its total assets. Econometric models are estimated. The estimated regression models show that the parent company's firm-specific resources and the external economies in the located region determine the flow of FDI at the time of entry of Japanese electronic firms in the UK. This result shows that empirical analysis on FDI flows should combine both the ownership and location advantages, as suggested by Dunning's eclectic paradigm.

TRANSACTION AND TRANSFER EFFICIENCIES AND THE SIZE OF FDI

This paper develops a general equilibrium model with endogenous international economic structure and international division of labor to identify the forces that determine the size of foreign direct investment (FDI). It shows that the volume of FDI is affected positively by host country's transaction efficiency for final goods and ordinary labor, source country's transaction efficiency for managerial and technical professionals, as well as international transfer efficiency for cross-border movement of managerial and technical professionals; and negatively by difficulty in the production of intermediate goods and international transaction efficiency for traded goods. While consistent with some established hypotheses, the findings have cleared up some misunderstandings in the literature on FDI. It has methodological and theoretical contributions and its findings have rich policy implications in the era of globalization.

Strategic motivations of Finnish FDIs in Asian countries

PurposeTo empirically investigate how the location‐specific variables and strategic motives influence the ownership strategies of Finnish manufacturing firms in ten South and Southeast Asian countries from 1980 to 2000.Design/methodology/approachBecause of the nature of the dependent and independent variables, the binomial logit model is used in the analysis. The regression coefficient estimates the impact of independent variables on the probability that the wholly owned subsidiary (WOS) is market, efficiency and/or a risk‐reduction seeking type of foreign direct investment (FDI). A positive sign for the coefficient means that the variable increases the probability of choosing WOS and undertaking a certain type of investment.FindingsThe research results indicate that the low cultural distance, large market size, and high levels of economic welfare in the target country increases the probability of choosing WOS in order to undertake market‐seeking and efficiency‐seeking FDIs. Similarly the low level of risks in the target country increases the probability to choose WOS in order to undertake risk‐reduction seeking FDIs.Research limitations/implicationsDue to the lack of information about the absolute and relative size of FDIs and competition related data could not be included in this study. Adding those variables would also be interesting for future research.Practical implicationsThis study may also help the different governments to understand the strategic motives of different multinational firms and fine‐tune existing investment policies or criteria to better satisfy some of their motives.Originality/valueTo the best of our knowledge, this is the first study trying to analyze how the location‐specific variables and strategic motives have influenced the ownership strategies of Finnish manufacturing FDIs in Asian countries.

Japanese Foreign Direct Investment in Electrical Machinery and Appliances in the United States: A Combined Industrial Organization and Location Theory Approach

We analyse the effects of both ownership and location advantages on the size of foreign direct investment, by combining industrial organization and location theory approaches. The estimated results employing a truncated distribution model show that the parent company's managerial resources and the external economies in a located region between them determine the FDI size of Japanese electrical machinery and appliances firms. This result suggests that empirical studies, applying only the industrial organization theory approach, need to be complemented by the location theory approach.

Anti-tax-avoidance provisions and the size of foreign direct investment

The paper sets up a model of a multinational firm in which the home country uses a credit with deferral or an exemption system and the host country is a low-tax jurisdiction. In this model the impact of anti-tax-avoidance provisions on the size and the growth of the foreign subsidiary is analyzed. Two main results emerge. First, anti-tax-avoidance provisions may lower the cost of capital of foreign firms quite significantly. Second, in contrast to previous models with limited financial possibilities the paper shows that a tax induced growth dynamics is absent if there are some important tax constellations.

Small and medium-sized transnational corporations: Trends and patterns of foreign direct investment

This paper provides an analysis of small and medium-sized transnational corporations (TNCs). Statistical evidence is provided on trends and patterns of foreign direct investment (FDI) by small and medium-sized enterprises (SMEs). There are virtually no countries for which consistent and systematic FDI data are available by firm size, but data complied by or made available to the author for the UNCTAD Programme on Transnational Corporations allow an analysis of broad characteristics, trends and patterns. FDI by SMEs is more concentrated in developed countries than that by large TNCs. However, small and medium-sized TNCs, especially those from Japan, are increasingly investing in developing countries. Although absolute size of FDI is still small, SMEs account for a large share in terms of the number of investment cases and the number of parent firms. South and East Asia became the primary host region of small and medium-sized TNCs during the 1980s and early 1990s. The industrial distribution of FDI by SMEs in developing countries is quite wide, but concentrated in electrical goods, chemicals, textiles and some services industries. SMEs also engage in non-equity investments.