Source Of Foreign Direct Investment Research Articles

International Law and the Extraordinary Interaction Between the People's Republic of China and the Republic of China on Taiwan

International Law and the Extraordinary Interaction Between the People's Republic of China and the Republic of China on Taiwan

Historic and Emergent Trends in Chinese Outward Direct Investment

A substantial body of literature has grown on the prominence of China as a recipient of foreign direct investment (FDI) and its consequences for national economic development and management practice (Branstetter and Lardy, 2006). By contrast, much less attention has been paid to China’s position as an FDI source. Given that China attracted an annual average FDI inflow of around US$29bn (or more than 7% of the world’s total) in the 1990s, but contributed less than US$2.5bn (around 0.6%) to global outflows, this is perhaps not surprising (UNCTAD, 2006). However, the sharp growth in Chinese outward direct investment (ODI) evident since 2002 (illustrated in Figure 7.1) combined with a number of recent high profile attempts by Chinese enterprises to acquire North American and European firms have brought into relief China’s rising status and potential as an investor nation. This potential is recognised in a recent UNCTAD survey of investment promotion agencies which predicts that China will become a ‘top three’source country for FDI before the end of 2008 (UNCTAD, 2005). It is also highlighted by the Director-General of UNIDO, Kandeh Yumkella, who suggests that annual flows of Chinese outbound investment are likely to reach US$60bn by 2010 (MOFCOM, 2006). If growth rates in Chinese ODI continue and these predictions are realised, China’s contribution to global FDI flows is likely to approximate current outflows of the leading industrialised countries.

Managerial Implications of Cultural Factors That Influence the Success of TQM Programs in Mexican Maquiladoras

Maquiladoras, border factories and assembly operations in Mexico, are an important source of foreign direct investment and jobs. In the past decade, there has been rapid growth in the number of maquiladoras. It is estimated that in 1999 there were 3,219 maquiladoras employing over 1 million workers. Along with this growth, there has been a structural transformation of the industry. As a result of major investments in the automobile and electronics sectors, there has been a shift from low-wage manufacturing towards total quality manufacturing [TQM], including flexible manufacturing and just-in-time inventory systems. Since their inception maquiladoras have suffered from high turnover and absenteeism. These two problems serve as major obstacles to the successful implementation of TQM programs and increase the cost of recruitment and training. This paper surveys the literature and presents a theory that relates the success of TQM programs to cross-cultural management. Our hypothesis is that strategic quality initiatives like TQM work best when they incorporate top leadership involvement and worker-focused human resources policies integrated to provide both salary and non-salary benefits that increase worker satisfaction. We hold that effective cross-cultural management based upon top leadership involvement responds to deep-seated cultural needs by constructing approximations of traditional elements of Mexican culture. Therefore, incorporating and respecting traditional culture and the worker's need for community will positively influence worker acceptance of TQM programs and reduce turnover.

Trends and Drivers of Bilateral FDI Flows in Developing Asia

Developing countries are rapidly emerging as new and important sources of foreign direct investment (FDI) to other developing countries. While Asian companies have become significant foreign direct investors abroad, a large share of outward investments from Asia appears to have been recycled intraregionally. However, unlike trade flows, there has been little to no detailed examination of FDI flows between Asian economies at a bilateral level. This paper uses bilateral FDI flows data to investigate trends and patterns of intra-Asian FDI flows over the period 1990 to 2005. It also employs an augmented gravity model framework to examine the main determinants of intra-Asian FDI flows. A range of drivers of FDI flows, including transactional and informational distance (proxied by distance), real sector variables, financial variables and institutional quality are examined.

Foreign direct investment and exports The experiences of Vietnam1

AbstractWe examined the implementation statuses of a total of 5,919 foreign direct investment (FDI) projects approved by the Vietnamese Ministry of Planning and Investment since 1988, and compiled a database of actually disbursed FDI in Vietnam. The database covers FDI flows into Vietnam from 23 countries from 1990 to 2004. Using the data, we analyzed the impact of FDI on the exports of Vietnam with gravity equations. The empirical results demonstrate that FDI is one of the major factors driving the rapid export growth of Vietnam. It has significantly facilitated the expansion of Vietnam's exports to FDI source countries. In particular, the empirical analysis shows that a 1 percent increase in FDI inflows will be expected to give rise to a 0.13 percent increase in Vietnam's exports to these countries.

Divergent Hybrid Capitalisms in China: Hong Kong and Taiwanese Electronics Clusters in Dongguan

This article explores and compares the changing dynamics and organization of cross-border production by Hong Kong and Taiwanese electronics firms in China, on the basis of more than 40 semistructured interviews with firms from April 2005 to January 2007 in various towns of Dongguan, an emergent “global factory” in south China. Despite initial resemblances, Hong Kong and Taiwanese electronics clusters have adopted different approaches to organize their cross-border production since the late 1990s. Little systemic comparative analysis has been conducted on the causes. The divergent practices can be interpreted as differences in corporate strategies of parent and branch firms, industrial policies in Hong Kong and Taiwan, linkages with global leaders, and home-host interactions in response to the challenges of globalization. To tap into the domestic market of mainland China, Hong Kong companies have tended to become “domestic firms,” while Taiwanese companies have become wholly foreign owned and pursued a “pseudo-location” of suppliers of raw materials and components. The article concludes that more comparative studies are needed on divergent hybrid capitalisms that are driven by different sources of foreign direct investment in various host regions, so as to develop empirical insights into appropriate conceptual frameworks.

The economic impacts of China and India on sub-Saharan Africa: Trends and prospects

The paper examines the impact of the emergence of China and India as important players in the global economy on 21 sub-Saharan African countries. Trade between the “Asian Drivers” and Africa has grown significantly since 1990 and in the last few years they have also become sources of foreign direct investment (FDI) in the region. Four types of impacts are considered—exports from Africa to the Asian Drivers, African imports from China and India, competition in third markets, and impacts on FDI. It is shown that for some African countries these impacts are by no means negligible and are likely to become more important in the foreseeable future. The ways in which Africa has been affected differs from country to country, with some such as Angola, Nigeria and Sudan being important exporters, others such as Ghana, Ethiopia, Kenya, Tanzania and Uganda mainly importers from Asia, and Lesotho facing competition from China in export markets.

INWARD AND OUTWARD FDI IN LITHUANIA AND ESTONIA: REVIEW OF PATTERNS IN NEIGHBORING COUNTRIES

The paper aims to trace how important state policies, cultural differences and neighborhood of developed countries are as driving forces attracting foreign capital inflows. Authors overview the inward and outward foreign direct investment (FDI) tendencies in Lithuania and Estonia, reveal similarities and differences of the neighbor countries. Authors distinguish and discuss a role of privatization policy in attracting foreign direct investments. The assumption about different inward FDI sources caused by different privatization strategies adopted by considered countries is to be elaborated. Another focus of presented paper is outward FDI structure in terms of capital origin, and differences of its in scale in two Baltic countries ‐ Lithuania and Estonia. Phenomenon of Scandinavian FDI channeling through Estonia is to be traced and interpreted.

Attracting Foreign Investment Through Privatization

ABSTRACT Privatization serves as a potential source of foreign direct investment in Africa. During the Chiluba era (1991–2001), Zambia conducted one of Africa's most sweeping privatization programs. Accordingly, direct investment swelled with the sale of state enterprises. This paper explores foreign and domestic ownership patterns following investor purchases of Zambian state-owned assets. Previous foreign owners of mining and manufacturing companies represent the principal sources of foreign capital received through privatization-the only real exceptions being expansions by South African firms. A difference of means test conducted on all known privatization cases reveals that foreign investors (outside South Africa) are more export-oriented than domestic investors and also buy higher-priced assets. South African investors, heavily concentrated in retail activities, are more likelyto have been involved in competitive acquisitions. Despite increased foreign investment during the 1990s, however, the economy has stagnated. Having sold most of its state assets Zambia, like other sub-Saharan Africa countries, must endeavor to attract investment through other channels.

TECHNOLOGY TRANSFER TO CHINA BY HONG KONG'S CROSS‐BORDER GARMENT FIRMS

Hong Kong manufacturers have historically been one of the main sources of foreign direct investment to China, but their contribution to the transfer of technology to the mainland has been questioned due to the generally labor‐ rather than capital‐intensive, low‐value‐adding activities they perform there. Using data from eighty‐four Hong Kong‐based garment manufacturers that have invested directly in mainland China, this paper examines the role of Hong Kong FDI in the transfer of technology to China. Analyses show that Hong Kong garment firms are in fact human‐capital‐intensive and are endowed with valuable managerial technology and, moreover, act as effective channels for the transfer of such technology to mainland China.

Investing Profitably in China: is it Getting Harder?

Using information from the Toyo Keizai, this article studies the performance of 2,962 foreign subsidiaries across the period 1985–1999 to show a picture of declining profitability from foreign direct investment by MNE’s in China. Despite the influence of macro-level factors, such as the historically fluctuating performance of the Chinese economy, we observed that of the many factors that may affect profitability, subsidiary-specific factors had the greater influence. The findings suggest that there are significant benefits for early entrants into the market, but caution against the use of high majority ownership control. Other evidence showed that larger subsidiaries tended to perform better. Managerial implications for MNEs and the future prospects of foreign direct investment in China are discussed.Since China opened up to the outside world in 1979, it has been attracting increasing amounts of foreign direct investment (FDI), and after 1993 became the second largest recipient of FDI flows in the world. Meanwhile, a major participant in the upsurge in global foreign direct investment in the 1990s was Japan. By the mid-1990s, Japan became the second largest FDI source country in the world behind the United States. China, in particular, has become a major destination for Japan’s direct investments, absorbing one-ninth of all Japanese foreign investments at the end of 1996.1Studying Japan’s worldwide direct foreign investment, we found that the proportion of profitable Japanese subsidiaries in China has been declining. In fact, this was the only part of the world where this was the case. While over 71 percent of Japanese subsidiaries in China claimed profits in 1992, the percentage steadily slipped to around 50 percent by 1999 (see Table 1Table 1Performance of Japanese subsidiaries in China (% profitable)1992 (%)1994 (%)1997 (%)1999 (%)Loss11 (13.3%)27 (16.1%)99 (21.7%)201 (24.3%)Break-even13 (15.7%)35 (20.8%)114 (25%)205 (24.8%)Gain59 (71.1%)106 (63.1%)243 (53.3%)421 (50.9%)Total # Reporting83168456827Source: Toyo Keizai, 1999.). This poses two interesting questions. Is it really getting harder to invest profitably in China? And what could have influenced the profit performance of foreign subsidiaries in China?

Research Issues in Japanese Foreign Direct Investment

Since the mid-1980s Japan has been one of the world's leading sources of foreign direct investment (FDI) reflecting the continuing internationalisation of Japanese corporations. This paper provides a broad survey of trends in Japanese FDI in the postwar period and considers its motivations and determinants in the economic literature. One problem that emerges is that the underlying statistical database often limits an explanation of the industrial and geographical distribution of Japanese FDI. While the Ministry of Finance statistical series on Japanese FDI is the most commonly used data source, detailed information on investment by industry and country has not been easily available for long time periods or even particular years. The author has assembled a broad ranging collection of MOF statistics on FDI and examines the potential for using this resource to better understand the reasons for Japanese investment. A case study of Japanese real estate FDI is used to illustrate the research possibilities opened up by this approach.

Why is U.S. direct investment in China so small?

While the United States is the largest source of foreign direct investment (FDI) in the world, and China is the largest FDI recipient among developing countries, U.S. direct investment (USDI) in China has been surprisingly small. This article investigates the determinants of USDI through a relative‐demand model with time‐series data. Evidence presented in this article indicates that the small USDI cannot be fully appreciated without understanding differences between USDI and Hong Kong direct investment (HKDI), the latter being the dominant source of FDI in China. Empirical results suggest that the USDI in China was primarily motivated by market access and that the HKDI was export oriented. The small USDI thus is a result of U.S. investors' preference for market access and China's export‐promotion FDI regime, along with the troubled Sino‐U.S. relations and political instabilities in China.

The Political Economy of Taiwan´s Relations with Vietnam

Taiwan and Vietnam did not have any links from the mid-1970s to the late 1980s, but since the early 1990s both sides have improved their political and economic relations. Economists contend that Taiwan's expanding investments in Vietnam play a key role behind this change. This article argues that the Taiwan authorities are using the island's economic resources in exchange for political gains from Vietnam. Taiwan's economic diplomacy has been quite successful in developing the island's relations with Vietnam over the past decade, but Taiwan is also facing a serious challenge from Mainland China, because the latter is also strengthening its links with Vietnam. To solve Taiwan's political isolation in the world, both Taiwan and the Mainland will have to go back to the negotiating table. Introduction When the Viet Cong conquered Saigon (Ho Chi Minh City) in April 1975, Vietnam was completely under the control of the communists. Over the next eleven years (1975-86), few scholars and observers had any opportunity to know real conditions in Vietnam because of its closed society. As a result of its expensive military venture in Cambodia and little domestic economic development, Vietnam's economy was on a declining trajectory. Vietnam suffered negative economic growth in the early 1980s, with gross national product (GNP) per capita falling to less than US$200. When China opened its doors to the world in 1980 and subsequently experienced rapid economic growth, Vietnam, the biggest communist country in Southeast Asia, also decided it was time to make a change. Since Vietnam implemented doi moi (renovation policy) in late 1986, it has enacted a number of laws [1] to encourage foreign investment in the country. [2] During the past decade Vietnam has absorbed relatively large amounts of foreign direct investment (FDI). Major sources of FDI have included Hong Kong, Taiwan, Japan, South Korea, Singapore, France and some other Western European countries. According to official Vietnamese statistics, Taiwan, with accumulated capital of more than US$4.7 billion by the end of 1998 (from 1990 to 1998), has become the largest foreign investor in Vietnam, followed by Singapore and Hong Kong. Because of Vietnam's great potential for business opportunities (for example, relatively cheap labour), [3] most foreign enterprises entered Vietnam purely for economic reasons. Accordingly, Vietnam's economic relations with the capitalist world, especially countries along the Pacific rim, have strengthened considerably since the early 1990s. Most economists contend that Taiwan's increasing investments in Vietnam is no different from that of other foreign investors. According to one field study, about 86.4 per cent of Taiwanese small firms (with less than 300 employees) and larger firms have invested in Vietnam to take advantage of its low-cost labour. [4] The background to this is that Taiwan's native enterprises, because of the island's worsening investment environment, [5] have gradually moved out since the mid-1980s to seek opportunities elsewhere; this occurred almost at the same time as the initiating of Vietnam's open-door policy. However, this represents only a partial explanation of Taiwan's increasing investments in Vietnam. Several questions immediately come to mind. Why did Taiwan expand its economic links with Vietnam so quickly in such a short period of time? Why have Taiwan and Vietnam recently upgraded their bilateral relations? While knowing of Taiwan's improving relations with Vietnam, how has Mainland China been dealing with this development? How is Vietnam handling China's political intervention in the growth of the Vietnam-Taiwan relationship? This writer argues that Taiwan's increasing economic links with Vietnam contains both economic and political rationales, because the ruling elite in Taiwan is using the island's economic resources in exchange for political gains from Vietnam (for example, establishing semi-official offices in both countries). …

Canadian Direct Investment in the United States: An Ohio Perspective

AbstractThis analysis focuses on the direct investment behaviour of small Canadian manufacturing firms in the heavily industrialized state of Ohio. Hypotheses were developed regarding the push and pull factors in foreign direct investment in Ohio. Two types of analyses were conducted: a survey of Canadian firms and a logit regression on financial and locational characteristics of a set of Canadian manufacturing firms. The results suggest that the leading factors affecting the probability that a Canadian firm will invest in Ohio are the nature of the industry, the proximity of the parent firm, and the size of the firm. The implications of NAFTA are also discussed.RésuméLa présente analyse met en relief la stratégie d'in‐vestissement direct des petites entreprises canadiennes dans l'Etat fortement industrialisé de l'Ohio. Des hypothéses ont été développées relativement aux fac‐teurs poussée‐aspiration (push‐pull) qui favorisent I'in‐vestissement direct étranger. Deux genres d'analyse ont été menés: un sondage auprès des entreprises canadiennes par le Centre des études canadiennes de la Bowling Green State University; et une régression logit sur les caractéristiques du financement et du lieu d'implantation d'un groupe de firmes canadiennes. Les résultats suggèrent que les facteurs principaux qui influent sur la probabilité d'un investissement canadien dans l'Ohio dépendent du type et de la taille de l'entreprise, et de la proximité de la maison mère. Cette étude se penche également sur les répercussions possible de l'Alena.

Toward Korean unification: A policy proposal for investment in North Korea*

South Korea became a net‐provider of foreign direct investment in the late 1980s, and is now emerging as a major source of foreign direct investment in ASEAN and China. In general, the economic gains that the host country realizes from foreign direct investment are not a factor that the home country should take into account in deciding its policy on outward investment. The case of South Korea is, however, an exception to this general principle because of the possibility of the eventual unification of the two Koreas. Given that the unification cost borne by South Korea will decrease as the North Korean economy improves, the South Korean government should actively encourage South Korean investment in North Korea by offering appropriate incentives. The rationale for this policy is that the beneficial effect of investment on the North Korean economy is not a factor taken into account by private investors. Policy measures in this direction include the provision of a corrective subsidy for North Korea‐bound investment.

The Global Context

This paper aims to set processes of regional and urban restructuring in Europe in their global con text. We begin with an account of Europe's situation within the international population system, demon strating that wider issues have been and will con tinue to be significant. Then we consider Europe's position within the international division of labour, particularly its role in a global trading system and as a source of foreign direct investment. Finally we focus on the changing external policy environment, placing emphasis upon trade policy.

Foreign Direct Investment in China: An Examination of the Literature

Since 1978, when China announced its ‘open-door’ policy to pursue the country's long-term national goal, the Four Modernisations, more than 220,000 foreign funded ventures have been approved. By the end of 1994 some US$300 billion of contracted investment had been agreed and US$95 billion of utilized investment, making the country the most important recipient of foreign direct investment (FDI) in the developing world. This paper analyses the phenomenon of FDI in China. It examines the different forms and composition of FDI, reviewing its development since the early days of the ‘open-door’ policy and analysing its importance for Chinese domestic and export industries, as well as Western investor companies. Furthermore, the paper focuses on the world-wide sources of FDI in China and its distribution by both region and industry. Additionally, it reviews the existing research on FDI in China, emphasizing the investment mode of equity joint venture.

Foreign Direct Investment in South Asia

Foreign Direct Investment in South Asia

Transfer pricing in multinational firms: A review of the literature

Transfer pricing and intra-firm trade have been somewhat neglected in the agricultural economics literature. As multinational agribusiness firms (MNFs) gain importance as sources of foreign direct investment in developing countries and as players in international agricultural markets, the need for understanding the motives for and consequences of MNF practices also grows. The first part of this reviewidentifies the practices and issues associated with MNF transfer pricing. The second section reviews survey results on the objectives and influences affecting MNF transfer pricing decisions. The final section then summarizes the theoretical development of transfer pricing analysis in the economics literature.