Source Of Foreign Direct Investment Research Articles

FDI technology spillovers in Chinese supplier-customer networks

This paper examines foreign direct investment (FDI) technology spillovers between firms in a supply chain and analyzes the mechanism behind their occurrence. Results using firm-level transaction data from China between 2009 and 2020 show that, unlike inter-industry linkage effects, in the Chinese market, FDI technology spillovers can directly occur through connections between suppliers and customers, demonstrating the existence of inter-firm technology spillover effects of FDI. Further analysis reveals that FDI technology spillovers between firms are generated through channels of knowledge transfer and optimized supply chain configurations, predominantly observed in state-owned firms, small and medium-sized firms, the manufacturing sector, and high-tech industries. Upon analyzing the detailed breakdown of FDI sources, it was found that FDI from developed countries exhibits inter-firm technology spillover effects. In contrast, FDI from Hong Kong, Macao, and Taiwan regions, developing countries, and tax havens such as the British Virgin Islands and the Cayman Islands show insignificant effects on inter-firm technology spillovers. These conclusions offer policy insights for China and other developing countries to better utilize FDI to promote the development of local firms in the context of the sustained global supply chain restructuring.

The Foreign-Trade Zone and its Impacts on Neighboring Communities in Mobile, Alabama

abstract: The foreign-trade zone (FTZ) has become an essential part of national trade policy in the United States and an important aspect of promoting local development. Officially opened in its current form in 1983 under the official title of FTZ No. 82, the foreign-trade zone in Mobile, Alabama has become an integral part of the local economy and an important tool used by local councils for attracting overseas firms. Located primarily along the west banks of the Mobile Bay and Mobile River, with several sites dispersed throughout Mobile and Baldwin counties, the zone has been used as a catalyst for regional economic growth policy. The purpose of this study is to analyze the external costs and benefits to the local community using observational data and interviews with local authorities familiar with the zone. Qualitative findings indicate the zone has been a major source of foreign direct investment for Mobile and contributes to local economic development by attracting major transnational firms to the city. However, observations and interviews suggest the zone has primarily benefited large firms at the expense of smaller firms, provided little spillover into neighboring boroughs, and adversely affected the local environment and public health.

Impact of Nigeria-China relations on development in Nigeria, 2010-2020

Nigeria-China relations had a considerable influence on Nigeria's development, and the Peoples Republic of China emerged as one of Nigeria's primary commercial partners and a major source of foreign direct investment (FDI) in recent decades. To this, the relationship between the two nations has influenced Nigeria's growth in various ways, especially in the area of infrastructure development obtained through loans, investments, skills and technology transfer. China has contributed to the development of Nigeria’s infrastructure, thus, fostering economic growth in addition to influencing regional integration. Furthermore, in the energy and power sectors, Chinese firms have been involved in the construction of power plants, transmission lines, and renewable energy projects in Nigeria aimed at addressing power deficits and improving access to electricity, which is essential for industrial development and improving Nigerians' quality of life. China is one of Nigeria's top commercial partners and a substantial source of foreign direct investment (FDI). Chinese enterprises working in Nigeria have provided technology, skills, and knowledge transfer that has benefited Nigerian industries. Chinese investments in industries like telecommunications, manufacturing and agriculture have eased the transfer of technical skills while also increasing efficiency in production methods. This paper aims to illustrate the importance of bilateral trade relations as a means of change and development especially when the nations involved are in need of each other. The paper adopts qualitative approach to the study of international relations. The paper adopts dependency theory to analyze bilateral trade relation between Nigeria and China. The theory believes that trade should only be done to enhance prosperity and also argued that the principle of comparative advantage ensures everyone would profit from the interaction. The paper reveals and concludes that Nigeria-China relations have made a substantial impact on Nigeria's economic development notwithstanding some notable deficiencies that have arisen in areas of unfair labour practices amongst others

Country-of-origin effects on technology transfer in foreign direct investment

This study investigates the role of foreign direct investment (FDI) and its country-of-origin in technology transfer. Using data of 95 countries from 2008 to 2019, results indicate that net inflows of the FDI are positively related to technological transfer especially in developing countries. This is consistent with the findings that show fewer resources endowed countries benefited from advanced technologies and management know-how. Furthermore, results suggest different country-of-origin affects the technology transfer of the host economy differently. These results are consistent with studies that suggest the FDI origins are crucial to expose firms with variety of technologies and management practices. Results from quantile analysis prove that there is an existence of a threshold for the developed and developing countries to gain from the country-of-origin of the FDI. Therefore, we need to relook at the investment policies of the host countries to maximize the benefits from different sources of FDI.

Technological prospects of Belt and Road Initiative in Bangladesh

This study provides an alternative agenda to better explain the Belt and Road Initiative's (BRI's) technological connotations in Bangladesh using the Game Theory and Demand Curve approaches. BRI can proceed as a means to technology development for Bangladesh based on foreign direct investment (FDI) spillover effects that ranked China as the top FDI source, with 1159.42 million USD invested in 2018–2019. The findings suggest that motivated by mutual interests of economic transformation (China) and technological requirements (Bangladesh), BRI offers a bargaining game of cooperation. Thus, while economic transformation may force China to relocate its garment factories, Bangladesh's low wages and geopolitical location give it a superior position regarding relocation. The technological effects of such relocation will be two-fold: exchanges of tacit knowledge (conventional) and techno-based infrastructural support (component) that align with the proposed technology development framework on a macro level. More conventional technological projects and additional sector-based technology transfer are required to amplify BRI's technological forecasts. Moreover, to encourage more abundant FDI, bank loan interest must be decreased, and political stability has to be ensured. Both survey-based fieldwork and projects-based qualitative research need to be conducted to discover BRI's tangible technological implications.

A mixed methods approach in analyzing the perspective of Croatia’s economic relations with the U.S., Russia, and China

This study explores the relationship between Croatia and the U.S., Russia, and China, providing a comparative qualitative analysis of trade and investment flows between these countries. Using a Mixed Methods approach combined with a literature review, evaluation of a range of data sources, analysis of bilateral trade data and foreign direct investment flows, and other economic indicators, the study analyzes the drivers of and implications for economic ties between Croatia and these countries. The study also examines the impact of economic sanctions on Croatia's relationship with Russia. The research finds that the U.S. is Croatia's largest trading partner, while Russia and China are important sources of foreign direct investment. Finally, the study provides recommendations for future research, highlighting the need for a greater focus on trade in services, investment flows, and comparative analysis with other countries in the Balkans region. Overall, the study contributes to understanding the complex economic relationship between Croatia and the U.S., Russia, and China and offers recommendations for greater diversification of Croatia's trade and investment partners and the importance of monitoring the political and economic risks in economic cooperation.

HARMONISING COMPLIANCE IN CHINA AND MALAYSIA CROSS BORDER COMMERCIAL RELATIONSHIP: AN ALTERNATIVE DISPUTE RESOLUTION PERSPECTIVE

The cross-border commercial relationship between China and Malaysia has continued to grow over the years, with China being Malaysia’s largest trading and business partner and a major source of foreign direct investment. However, the relationship has not been without issues and challenges within the realm of cross-border business, trade and commercial formation of contracts and agreements and its implementation between both contracting parties. Holistic dispute resolution mechanisms are therefore crucial towards harmonising compliance in cross-border commercial relations between China and Malaysia. Alternative dispute resolution (ADR) mechanisms such as negotiation, mediation, arbitration, online dispute resolution, and expert determination can be used to overcome contractual issues and legal comprehension challenges such as the language barrier, cultural differences, in view of differing legal systems within historical and contemporary legal norms and developments. These mechanisms can provide parties with a cost-effective, efficient, and flexible means of resolving conflicts while preserving long-term cross-border business inter-relationships between two unique jurisdictions comprising China and Malaysia. Alternative dispute resolution mechanisms can strengthen business, trade, and commercial engagements at many levels-both public and private ventures- and thus considerably enhance cross-border compliance, and foster a more stable ease of doing business environment. Alternative dispute resolution mechanisms can facilitate harmonious compliance in cross-border commercial relations between China and Malaysia. The use of these mechanisms could overcome commercial and business disputes and uphold bilateral business integrity and build long -term commercial interests in the long run. By adopting ADR mechanisms, China and Malaysia can strengthen their trade and business ties and foster a more stable and holistic business environment at both ASEAN and global environment.

Samsung in Vietnam: FDI, Business–Government Relations, Industrial Parks, and Skills Shortages

AbstractSamsung has largely shifted its electronics manufacturing out of China, and mostly to Vietnam. In that process, it has, to date, avoided local labour market (LLM) difficulties faced by its subsidiaries in industrial parks in China: in particular, pervasive skill shortages among the electronics assembly workers on whom Samsung’s manufacturing depends. Labour retention problems in China had significantly challenged its commitment to invest in necessary employee training. By contrast, Samsung’s domination of foreign direct investment (FDI) within particular Vietnamese industrial parks has removed the inter-employer competition it experienced in China. A deeper explanation involves Samsung’s development – as Vietnam’s largest single source of FDI, and major producer of that country’s exports – of synergistic and symbiotic relationships with Vietnam’s national and subnational governments. These relationships have allowed Samsung to influence development strategies for industrial parks and their LLMs. Samsung has invests expansively in forms of education and training whose benefits extend beyond the areas in which its manufacturing facilities operate, to populations that the company does not employ. Providing benefits beyond typical success criteria for FDI in developing economies, Samsung has helped Vietnam’s party-state meet its own legitimacy needs with its internal constituencies, contributing to a broader practical consensus in favour of the party-state’s development policies. This article therefore widens the perspective of FDI to embed it in national and subnational business–government relations.

Impact of the divestment of Spanish FDI on economic growth of Morocco: an econometric analysis of 13 country-of-origin

PurposeThis study aims to identify the impact of foreign direct investment (FDI) on economic growth in Morocco depending on each origin country, including Spain. This study uses a linear model to measure the marginal impact of FDI on the growth of Morocco. This marginal effect allows to compare the different effects of FDI among countries of origin. Also, the marginal effect helps to measure the rate of substitution between FDI in an easier way than the other specifications of the model. The second step determines the substitute for Spain in case he decides to divest its FDI from Morocco to maintain the economic growth.Design/methodology/approachUsing data of FDI from 13 countries of origin from 1995 to 2020 and two estimation methods (Dynamic Ordinary Least Squares and Autoregressive model), this study aims to measure the marginal impact of the divestment of FDI from Spain on growth. Then this study estimates how much Morocco should attract FDI from other countries when Spain divests. This study uses the differential calculus, assuming a perfect substitution between FDI from different countries. This calculus implies an indifference curve between FDI from Spain and FDI from another country where we deduct the substitution rates between FDI.FindingsThe results indicate that the FDI from Spain and France are the only ones to impact positively Moroccan economic growth. The FDI coming from Germany, Holland, China and Turkey have a negative impact, whereas those from the USA, Italy, UK, Switzerland and Gulf countries: Saudi Arabia, Kuwait and UAE have an insignificant effect. Second, using the differential calculus, the result indicates that when Spain divests 1m dirhams of its investments from Morocco, France would have to increase its own by 0.1509m dirhams so that Morocco could maintain its economic growth.Research limitations/implicationsThe research focuses only on economic growth, neglecting the impact on other aggregates, such as total factor productivity, technology transfer and employment. Also, this research marginalized the sectorial analysis of FDI by the source to better understand the divergent effects.Originality/valueThis paper fills a research gap when analyzing the effect of FDI on the host economy depending on country-of-origin. In addition, it contributes to the body of literature by constructing the rate of substitution between the different sources of FDI to adapt to divestment policy.

The effects of urbanization, ICT, fertilizer usage, and foreign direct investment on carbon dioxide emissions in Ghana.

Rising levels of carbon dioxide emissions in emerging countries has become a concern to all and there are calls for urgent action to curtail this. Ghana's government has in recent times sought to achieve higher economic growth at a lower carbon emission rate. With the current development of the country, this study analyzed the effect of urbanization, fertilizer usage, foreign direct investment (FDI), and ICT development on carbon dioxide emissions in Ghana. Time series data for 1971-2018 period was analyzed using autoregressive distributed lag regression approach within the environmental Kuznets curve (EKC) framework. From regression analysis, while the EKC hypothesis was not validated for aggregate carbon emissions, it was found that urbanization has a negative and significant impact on aggregate carbon emissions, whereas FDI and ICT infrastructure have positive impacts on the same in the both long run and short run. Fertilizer usage is seen to interact with urbanization to reduce carbon emissions at the aggregate and sectoral levels. It was found that although ICT helps reduce emissions at some sectoral levels, it was not enough to lower emissions at the aggregate level. Among other things, it is important for Ghana to take a critical assessment of its FDI sources and engagements to ensure that it does not become a sink for high toxic-emitting industries. Intensive education on efficient usage of fertilizer is also needed. It is important for policymakers to critically assess ways and means by which ICT development can be deployed to reduce overall carbon dioxide emissions in the country.

China-Sri Lanka Economic Relations: Opportunities and Challenges for Sri Lanka

This study intends to analyse the growing economic relations between China and Sri Lanka focusing on opportunities and challenges for Sri Lanka. The study used qualitative and quantitative research methods for the subsequent analysis. Descriptive statistical techniques were used to analyse the quantitative data, and critical discourse analysis was used to analyse the qualitative data. The data was presented using texts, tables and figures. The study found that Sri Lanka has gained many opportunities due to close economic relations with China. Sri Lanka is an important location in China’s Maritime Silk Road initiative and China’s string of pearls concept provided lots of economic benefits for Sri Lanka. China become a significant export market, source of foreign direct investment, source of low-cost imports for Sri Lanka, vast infrastructure development of the country and source of the tourism industry in Sri Lanka. China also became a key source of military and diplomatic support for Sri Lanka when needed. Sri Lanka’s economic relations with China present both opportunities as well as challenges. China’s involvement in Sri Lanka has become a possible challenge for Sri Lanka to tackle with big brother India. As well, negative trade balance, huge debts and low investment returns also can be considered as the major challenging areas in which Sri Lanka faced economic relations with China.

How Important Are Russia's External Economic Links?

Abstract In this note, we review recent data concerning Russia's economic integration with other countries. We first analyze the general picture of Russia's economic integration with the rest of the world and the importance of foreign economic relations for the country. We then turn to China, an increasingly significant economic partner for Russia. The European Union remains Russia's most important trading partner and is by far the most important source of foreign direct investment to Russia as well as source of other financing. China's importance to Russia has also increased, especially with respect to merchandise trade.

Research on the Effect of International Experience and Market Distance on the Market Entry Order of Enterprises

With the continuous advancement of China's "going out" strategy and remarkable achievements in foreign direct investment, China has become one of the world's most active and influential sources of foreign direct investment. Chinese enterprises have accumulated rich and valuable experience in the past decades. In this process, there are a lot of continuous FDI behaviors, and the previous investment behaviors will have an important impact on the subsequent investment decisions. How do continuous investments prioritize market entry? Existing studies do not pay attention to the correlation between successive expansion behaviors, and there are some gaps in the research on the order of international market entry of enterprises. From a dynamic perspective, this paper adopts the data from the List of Overseas Investment Enterprises (Institutions) issued by the Ministry of Commerce of China from 1983 to 2015, and based on the ordered Probit model, takes the continuous investment behavior of Chinese enterprises as the research object, and conducts the following research: The empirical study on the impact of market distance, which is composed of geographical distance, cultural distance and institutional distance, on the entry order of Chinese enterprises in international market. The empirical results show that: Geographical distance, cultural distance and institutional distance have a significant effect on the order of market entry. Chinese firms have the priority to enter the markets with small geographical distance and cultural distance, but the markets with large institutional distance.

Policy insight from renewable energy, foreign direct investment (FDI), and urbanization towards climate goal: insight from Indonesia.

This study is premised on Indonesia’s climate goal amidst good economic performance. To test the environmental implication of this macroeconomic performance of Indonesia, we adopt Indonesian quarterly data of 1990Q1–2018Q4 for empirical analysis. Relevant instruments in the economic performance of Indonesia such as urbanization, foreign direct investment (FDI), and renewable energy source are all adopted for accurate estimations and analysis of this topic. Different approaches (structural break test, autoregressive distributed lag (ARDL)-bounds testing and Granger causality) are all adopted in this study. Our analysis and policy recommendations are based on the short-run and long-run ARDL dynamics and Granger causality. Findings from ARDL confirmed negative relationship between carbon emission and renewable energy source, FDI, and urbanization. Also, a U-shape instead of inverted U-shaped EKC is found confirming the impeding implication of Indonesian economic growth to its environmental performance if not checkmate. From Granger causality analysis, all the variables are seen transmitting to urbanization in a one-way causal relationship. Also, FDI and renewable energy prove to be essential determinants of the country’s environment development; hence, FDI is seen transmitting to both energy sources (fossil fuels and renewables) in a one-way causal relationship. Renewable energy is as well seen having two ways causal relationship with both carbon emission and fossil fuels. This result has equally exposed the significant position of the three instruments (urbanization, FDI, and renewable energy source) in Indonesian environment development.

Developing Tendencies of Foreign Direct Investments

The formation process of foreign direct investment theories began in the second half of the twentieth century, it was period that the importance of foreign direct investment (FDI) in international capital movement increased, and this period was characterized by the rapid growth of multinational enterprises, which, in turn, is a major source of FDI. Scientific and technological progress has become the basis for decisions of transnational companies to invest capital in to different parts of the world and to coordinate and control its many branches from one country. During this period scientists actively began to develop theories and mathematical models of foreign direct investments, which meant studying the genesis of FDI, as well as analyzing their impact on the economy of both the host and the issuer countries. The analysis of foreign direct investment theories is closely related to the study of the activities of multinational corporations. Among them are some paradigms containing interesting discoveries that view the foreign direct investment as a contributing factor for the economic growth of the host country and its industrial development. In this article, the author consider the key theories and models of foreign direct investment: 1. The Product Life Cycle Theory, which is developed by Vernon; 2. Transnational companies and monopolistic computation theory, which is developed by Hymer; 3. Generalized theory of economic development, which is developed by Akamatsu; 4.The competitive advantage of nation’s theory, which is developed by Porter; 5.The eclectic paradigm and country's investment development theory, which is developed by Dunning; 6.Differential model of capital distribution between countries by Leontiev. The theories and models provide a basic range of motives of investors' behavior in the world market. It also makes it possible to analyze what impact foreign direct investment has on the economy of the recipient country and what forecast the recipient country's economy will have. Keywords: Globalization, Foreign Direct Investment, Economic Growth, Multinational Corporations, Analysis of Basic Theories and models;

Китайский феномен экономического роста

Modern China should be considered as an unique experiment and great world project of human civilization, effectively a co-product of the Communist Party of China (CPC) and the West. The centuries-old concept of a free-market economy fell on fertile ground of the hardworking Chinese people and in a short historical period since the beginning of the reform has finally bore fruit. Globalization and digitalization have greatly helped the Chinese economy to expand around the world and have become powerful catalysts for Chinese economic development, providing it with new approaches to doing business. The article attempts to analyze this phenomenon and systematize the factors of China’s growth. Key aspects of the Chinese economy transformation are studied, such as GDP (in current and constant prices) and GNI per capita, manufacturing and trade, finance and capital. Special attention is paid to the global leadership role of China or/and the USA: Economy, Manufacturing, and International Trade. An in-depth comparative analysis of the economic growth indicators for China and the USA is based on extensive international statistical data. The author focuses on estimates of key indicators published by international bodies, such as the United Nations, UNCTAD, UNIDO, OECD, WTO and others. Various think tanks, independent agencies and other institutions such as McKinsey Global Institute, Primakov Institute of World Economy and International Relations RAS, Congressional Research Service (CRS), United States–China Economic and Security Review Commission, Committee on Foreign Investment in the United States (CFIUS) have been analyzing Chinese phenomenon of economic growth. Quantitative assessments of China’s economic growth are discussed. As shown, China plays a major role in the world economy and manufacturing. It is now the world’s first country by many economic indicators. In 2007, China became the world’s largest merchandise exporter. In 2009, it took the 1st place in manufacturing value-added output. Measured by purchasing power parity (PPP), in 2017 China stood as the world-largest economy in terms of GDP in current US dollars. Over the past decade, China has provided at least 30 percent of global GDP growth, while the United States was half as much. China is in the world’s top two for receiving and being the source of foreign direct investment (FDI). In 2020, China had 124 Global Fortune 500 companies compared to 121 American. At the same time, the US remains the world leader in many other quantitative indicators, for example in GDP at official exchange rates, innovation, research and development, finance, and services. It also ranks first in the world in terms of quality indicators of economic development. The author gives his vision of the China’s economic growth fundamental factors. Four of them are identified: a) low labor costs, b) well-designed legal environment for attracting foreign capital, c) massive FDI influx, d) imports of capital goods as well as modern Western technologies, including transfer of critical technologies, intellectual property and know-how (mainly through acquisition of Western firms). The general conclusion is that the reforms completely transformed the lives of Chinese people. China of the 1970s 80s and today’s China are two different economic, industrial, scientific, technical, socio-humanitarian entities.

EU STRATEGIC INTERESTS IN KAZAKHSTAN IN THE CONTEXT OF GEOPOLITICAL AND GEO-ECONOMIC CHANGES IN THE REGION WITH FOCUS ON CHINA

Kazakhstan has an important position as the EU´s main trading partner in Central Asia and the EU has been its largest trade partner as well as the largest source of foreign direct investment. The importance of China as trade and investment partner is rising, on the contrary, the EU’s share is declining. Even though there remains plenty of scope for further growth, mutual relations and cooperation are influenced by increased geopolitical tensions and geo-economic changes in the wider region. The paper evaluates the position of the EU and its strategic interests in Kazakhstan in the context of geopolitical and geo-economic changes in the region based on the assessment of the trade and investment position of the EU in comparison with the position of China.

Global and local corporate social responsibility: a study of foreign entry mode choice in Spanish quoted firms

PropósitoSe examina las relaciones entre el modo de entrada en el exterior (MEE) de una empresa, su responsabilidad social corporativa (RSC) global y el entorno de RSC local del país de destino en empresas cotizadas en España. Además, analiza el papel moderador de la RSC del país de destino en la relación entre la RSC global de la empresa y el MEE.Diseño/metodología/enfoqueSe utiliza la regresión logística binaria con una muestra de 418 operaciones de inversión directa exterior (IED) entre 2002–2008. Este período se elige para conocer qué sucedió durante el auge de las inversiones españolas en el exterior a principios de 2000.HallazgosLos resultados revelan patrones de comportamiento en relación al MEE de las empresas y los dos tipos de RSC según las hipótesis propuestas. Además, se encuentra que la RSC local del país de destino puede también moderar la relación entre la RSC global de la empresa y el MEE.Originalidad/valorEste es uno de los primeros estudios en proponer como variables explicativas del MEE, dos tipos de RSC (RSC global de la empresa y RSC local del país de destino), gracias a la creación de una base de datos ad-hoc con datos de diferentes fuentes de información de IED (ICEX) y RSC (Eikon ™ y AccountAbility NCRI).

‘Many Chinas?’ Provincial internationalization and Chinese foreign direct investment in Africa

ABSTRACT Chinese provincial firms are a major and growing source of foreign direct investment (FDI) in Africa, yet there has thus far been little systematic analysis of their motives and behaviour. Based on statistical analysis of a panel of mainland China’s 31 provinces from 2000 to 2015 and a study of three diverse provincial cases, and modifying the classic Organization-Location-Internalization theory of FDI, this article uncovers a three-stage ‘inverted-U’ shaped pathway linking home province internationalization and investment in Africa. Firms from provinces with very low levels of integration in the global economy lack the experience needed to invest in Africa, while those in highly globalized provinces face fewer push factors driving them to (comparatively risky) countries of the developing world. These findings suggest that Chinese provincial FDI in Africa may be driven by a ‘logic of escapism’ alongside conventional FDI motives.

China’s FDI inflow into Ethiopia; Does it have relation with bilateral trade?

PurposeThe purpose of this study is to empirically analyze if a bilateral trade between two countries leads to a foreign direct investment (FDI) using a time series data spanning over the period 2000–2017.Design/methodology/approachThe Engle-Granger method of co-integration analysis is applied to the data to estimate if China’s export to Ethiopia led to an inflow of FDI from China to Ethiopia over the long run.FindingsThe results indicated that bilateral trade (import from China) is a major determinant of Chinese FDI inflow to Ethiopia over the study period.Originality/valueA number of studies have been conducted on the determinants of FDI in Ethiopia using time series data at different points of time. However, none of them tried to analyze what attracts FDI from an individual country. Accordingly, this study has concentrated on FDI from China and its relation with bilateral trade between China and Ethiopia as China is the number one FDI source and trade partner of Ethiopia.