Study Of Foreign Direct Investment Research Articles

Determinants of Foreign Direct Investments in Agriculture of Danube Region

The research investigates the determinants of foreign direct investments in agriculture in the countries of Danube region. Pooled model of agricultural foreign direct investment inflows based on the theoretical framework of Ownership Location Internalization paradigm was formulated and estimated by using ordinary least squares method and panel data for the period from 2009 to 2016. The results suggest that the foreign direct investments in agriculture of the region are primarily resource-seeking, although market-seeking investments are also present. There is also evidence of sector-specific impact of certain frequently examined determinants which contradict theoretic expectations and highlight the importance of the sector-level studies of foreign direct investment. The research adds to the limited literature concerning foreign direct investment determinants in the context of agriculture and has significant implications for the agricultural and foreign investment policymakers.

Study of Foreign Direct Investment in India

Foreign direct investment plays a momentous role in the economic development of the country. It helps in transferring of monetary resources, know-how, novel and better management techniques along with raising yield. The paper tries to call for of FDI in India, to exhibit new reforms for make in India mission, the sector-wise & year-wise analysis of FDI’s in India, to rank the sectors based upon highest FDI inflows. The latest move of the government, the abolishment of FIPB , it is expected that foreign investment proposals will be considered by the concerned ministry in consultation with the DIPP (Department of Industrial Policy & Promotion). The results show that Singapore is the country that has invested highly in India followed by Mauritius, USA, Netherland and so on. It also shows that there has been a remarkable increase in FDI inflow in India during the year 2011-12 to 2015-16.

Sustainability Issues Turning into Subnational Political Risk: Lessons from Gold Mining in Argentina

Industrial development has been accompanied by a multitude of social and environmental externalities. Often it is social movements who highlight such concerns and put pressure on companies to change their practices. One strategy social movements can utilize here is to increase a company’s political risk. While the extant literature on political risk has largely focussed on national government, we draw attention to the importance of subnational levels of government. We discuss specifically how political risk can arise from the processes through which a sustainability discourse generated by social movements infuses a local community’s sustainability orientation, the generalized manner in which the community deals with trade-offs around sustainability issues. Presenting data from two case studies of foreign direct investment into the Argentinian mining sector, we show how a strong and coherent sustainability orientation can generate substantial political risk at subnational level, irrespective of whether sim...

Effects of Foreign Direct Investment on Firm-level Technical Efficiency: Stochastic Frontier Model Evidence from Chinese Manufacturing Firms

It has been recognized that multinational corporations can spill over to non-affiliated firms in host economies. Existing studies of foreign direct investment (FDI) and productivity growth often assume firms are perfectly efficient. Our paper relaxes this assumption and explores how FDI affects a firm’s technical efficiency improvement as well as its technical progress in a stochastic frontier model. The stochastic frontier model estimates a firm’s production frontier given a set of production inputs. The deviation of a firm’s actual output level from its maximum level of output is defined as technical inefficiency. Using data from more than 12,000 Chinese manufacturing firms, we find that FDI in a firm's own industry (horizontal FDI) does not necessarily improve the firm’s technical efficiency. However, firms with a larger absorptive capacity tend to benefit more from horizontal FDI than others. We also find that foreign presence in a firm’s downstream industries helps improve the firm’s technical efficiency, while foreign presence in upstream industries does not. In addition, a generalized Malmquist index decomposition shows that foreign affiliates achieve a higher productivity growth than domestic firms mainly through a faster improvement in technical efficiency rather than through technical progress.

THE CONDITIONS OF DETERMINANTS OF THE FOREIGN DIRECT INVESTMENT DEVELOPMENT IN THE CONTEXT OF GLOBALIZATION OF ECONOMY / TIESIOGINIŲ UŽSIENIO INVESTICIJŲ PLĖTROS SĄLYGOS GLOBALIZACIJOS PROCESŲ KONTEKSTE

The article analyzes the complex issue of foreign direct investment and unequal distribution of its flows into different countries (the analysis of foreign direct investment determinants in the con-text of globalization). In the thesis there are the comprehensive theoretical study of foreign direct investment and the attraction of its flows consdering the nowadays context of globalization presented, the results of other empirical studies that analyzes foreign direct investment determinants were systematized. The model for the analysis of foreign direct investment determinants in the circumstances of globalization developed and presented. Based on this model studies to assess the determinants of foreign direct investment in Central and Eastern European countries carried out taking into account the differences of determinants among these countries and the countries of investment sources, also considering the possible lagging effects of these factors and the different volume of attracted foreign direct investment by different countries. Straipsnyje kompleksiškai vertinamos tiesioginės užsienio investicijos ir netolygaus tiesioginių užsienio investicijų srautų pritraukimo šalių atžvilgiu problema (tiesioginių užsienio investicijų pritraukimą globalizacijos sąlygomis lemiantys veiksniai). Atlikta teorinė studija, skirta tiesioginėms užsienio investicijoms, jų pritraukimo šiuolaikinėje globalizacijos aplinkoje reiškiniui, susisteminti empirinių tyrimų, vertinančių tiesioginių užsienio investicijų pritraukimą lemiančius veiksnius, rezultatai. Parengtas tiesioginių užsienio investicijų pritraukimą globalizacijos sąlygomis lemiančių veiksnių vertinimo modelis, kurio pagrindu atliktas tyrimas, leidžiantis įvertinti tiesioginių užsienio investicijų pritraukimą Centrinės ir Rytų Europos šalyse lemiančių veiksnių reikšmingumą ir poveikio kryptį, atsižvelgiant į šių veiksnių skirtumus tarp šių šalių ir šalių, investicijų šaltinių, taip pat atsižvelgiant į galimą laiko atžvilgiu atsiliekantį šių veiksnių poveikį ir į šalių pritraukiamų tiesioginių užsienio investicijų mastą.

Social and Political Risks: Factors Affecting FDI in China's Mining Sector

Political risk can be defined as the potential for uncertainty and harm to business/economic operations that arise from political (governmental and other) behavior and events. These risks typically stem from factors such as economic structures, government institutions, policies, and societal characteristics, and are becoming more of a concern to prospective investors in a changing global political economy. This article seeks to expand upon the framework of political risk analysis by looking at “softer,” nonquantifiable risk factors. Through the analysis of foreign business experiences in China, we aim to demonstrate, via a qualitative case study of foreign direct investment (FDI) in the Chinese mining sector, that in addition to typical financial, operational, and geological factors, firms should be better aware of the particular sociopolitical and cultural risks that can harm their investments in a given industry. This study draws on primary fieldwork, focuses on micropolitical risks to the industry, and stresses that multinational corporations (MNCs) could be more cognizant of the many societal factors that can influence an investment success. © 2016 Wiley Periodicals, Inc.

Party system structure and its consequences for foreign direct investment

Studies of foreign direct investment’s (FDI’s) determinants focus on irreversibility as the main source of governments’ credibility problems. Here, we highlight an underexplored source of time-inconsistency dilemmas: geographic agglomeration within a country. FDI’s tendency to agglomerate creates visible inequalities in the country and generates demands for geographic income redistribution. Unchecked, such redistributive pressures can dissuade investors from entering the country altogether. Not all political systems are equally vulnerable, however. Countries with regionalized party systems are relatively unattractive to investors because regionalism increases the probability that investment returns from one region will be appropriated by the national government and used for geographic-based income redistribution. Countries with national parties, however, are less likely to engage in such behavior. Thus, we predict higher FDI inflows in countries with nationalized party systems and lower inflows in countries characterized by regional parties. Evidence from democracies between 1975 and 2007 supports our argument and its posited causal mechanisms.

The Spillover Effects of Outward Foreign Direct Investment on Home Countries: Evidence from the United States

Most studies of foreign direct investment (FDI) spillovers focus on externalities of inward FDI to host country firms. However, spillovers may also be generated from outward FDI and flow to home country firms. We test for the presence of spillovers from U.S. multinational corporations to domestic U.S. firms in the same industry, downstream industries and upstream industries using firm level information from Standard and Poor’s Compustat data and industry level data on U.S. outward FDI from the U.S. Bureau of Economic Analysis. We find evidence of positive and significant spillovers flowing from multinational customers to their domestic suppliers. This is consistent with most previous studies of spillovers from inward FDI and may suggest a role for domestic policies that subsidize outward FDI. We also find that the presence of beneficial spillovers depends on several firm characteristics including exporting status, size and absorptive capacity.

Moving beyond FDI and Clusters: Platform Perspective towards Mutual Value Creation

This paper integrates two independent studies of foreign direct investment and cluster through platform perspective. In order to sustain and maximize rent creation for both the investing firm and the host country, this paper suggests a shift in our perspective from exploiting advantages unilaterally to creating values mutually. Four factors, compatibility, complementarity, connectivity and commerciality, are presented to have positive impacts on sustaining value co-creation and maximizing spillover effects. The four factors, carefully chosen through rigorous studies from the platform perspective as well as other relevant studies, give meaningful implications for carrying out effective and sustainable ODA and CSR activities as well.

Analysis of China’s Import from & Direct Investment in ASEAN—Based on Gravity Models

China and Southeast Asian nations free trade area was formally established on January 1, 2010. By the end of year 2011, China’s foreign exchange reserves exceeded 3200 billion US dollars. Trade gravity model originates from the law of universal gravitation. Domestic researchers have made empirical studies using trade gravity model of trade between China and Southeast Asian nations. There are also studies of foreign direct investment or Chinese tourist arrivals in Vietnam, using gravity model. However, neither tariff and foreign exchange reserves are taken into consideration in studying China and Southeast Asian nations free trade area, nor gravity model is used in analyzing China’s direct investment and tourist arrivals in Southeast Asian nations. Using econometrics software “Eviews 5.0” and based on a panel data from year 2000 up to 2008, this paper constructs a gravity model, the independent variables of which are gross domestic product per capita of CAFTA countries, foreign exchange reserves of CAFTA countries, squares of southeast Asian nations, and distance between China and southeast Asian nations. And quantitative relationship is made between independent variables and China’s direct investment in Southeast Asian nations, import from Southeast Asian nations, as well as arrivals of Chinese visitors in Southeast Asian nations.

An alternative approach to the monitoring of technological diffusion via foreign direct investment: evidence from the Greek manufacturing sector

The existing studies of foreign direct investment and the corresponding technological diffusion process that they generate, focus either on specific parameters of the production process in isolation, or they combine certain parameters to construct indices that are not consistent across studies. The present analysis proposes an alternative approach that captures the entire production process and multinational firms are viewed as the platform that transfers more advanced technologies to the host countries. As multinational firms are able to utilise more efficiently the available production process, an efficiency gap ensues between the domestically owned firms of a country and the multinational firms that operate in it. We capture and provide a measure and a monitoring mechanism of the technological diffusion process via foreign direct investment through the evolution of the efficiency gap between the two groups of firms whilst controlling for other variables that might contribute to such a gap. We apply our approach to the manufacturing sector of the Greek economy that experiences a consistent presence of foreign direct investment inflows over the time period 2001–2007.

Internationalization of multinational banks: a study of foreign direct investment in seven Latin American countries

The article attempts to explore and contrast the different factors that influence the foreign direct investment (FDI) decisions of multinational banks. Employing eclectic theory, an estimation model with panel data from seven Latin American countries is set to test the proposed hypotheses. The results highlight an increase in foreign assets, removal of banking restriction, banking concentration, and capital cost differential in the local banking system as determinants of specific location advantages for attracting banking FDI. Other factors such as cultural proximity and crisis also have a significant impact on banking FDI. Discussions and implications are debated before conclusions are drawn for a future research agenda.

Economic trade between Australia and India: A case study of foreign direct investment

Australia and India have had few reasons in the past to develop systematic and significant levels of economic engagement. This was due to very different positions they have held in the world-system since the Second World War. De-colonization, the fall of the British Empire, the weak status of the British Commonwealth, and the realpolitik of the Cold War saw India and Australia located on different parts of the geo-political and economic world map with small demographic and cultural flows, and insignificant economic trade. Both countries developed similar economic policy regimes that were essentially state-led nationalist projects of economic development with concomitant policies of import-substitution, local industry-subsidization, highly-regulated financial systems, and high tariffs. The last quarter of the 20th century saw a radical revision of both nations’ economic strategies, with Australia moving first to drop many of its trade barriers in the 1970s and ’80s. It is now one of the most open economies in the world. India’s liberalization programme commenced much later in 1991 but nonetheless has had a dramatic impact on its economic fortunes and growing status in the world economy. With these changes there are increasing opportunities for bilateral trade and a greater economic enmeshment in regional engagements and alignments in the Indian Ocean and in wider Asian fora. One significant indicator of change in growing Australia-India economic engagement is to look at Foreign Direct Investment (hereafter FDI). Currently, the movement of FDI between these two countries is still not very large but has a strong potential to grow over the short to medium term. This paper looks at the future prospect of this growth and asserts that, by engaging in areas of comparative advantage, it will benefit both national economies. Moreover, economic flows are also indicators of great social and cultural traffic. The movement of FDI between the two countries will not only encourage greater flow of peoples, especially outward migration from India to Australia, but also trigger more Australian expatriates living in India (from a very low base). Greater economic trade promises more cultural exchange.

Chinalco – Rio Tinto Deal: A Case Study of Foreign Direct Investment from China to Australia

This essay aims to examine the flow of foreign direct investment (FDI) from China to Australia by analysing the proposed acquisition of Australian-based mining company Rio Tinto by the Chinese state-owned aluminium producer Chinalco. The proposed deal is illustrative of China’s interest in engaging in outward FDI, as well as the benefit to Australia in welcoming inward FDI, and highlights key features of Chinese and Australian FDI policies. The paper is organised in four sections. The first section outlines the key features of Chinalco’s proposed acquisition of Rio Tinto. The second section examines FDI flow from China to Australia, looking particularly at the FDI policies of the two countries in the context of the Chinalco – Rio Tinto deal. The third section applies the theoretical policy approaches to the facts of the Chinalco – Rio Tinto deal, discussing the potential benefits and risks of the proposal. The fourth and final section provides a summary and discussion.

FIRM AND GOVERNMENT AS ACTORS IN PENROSE'S PROCESS THEORY OF INTERNATIONAL GROWTH: IMPLICATIONS FOR THE RESOURCE‐BASED VIEW AND OWNERSHIP–LOCATION– INTERNATIONALISATION PARADIGM

Edith Penrose's The Theory of the Growth of the Firm proposed a process theory of growth based on the pursuit of knowledge by the firm and unconstrained by government. In her subsequent studies of foreign direct investment by large firms in developing countries, Penrose considers the firm and government as actors in the same growth process. This paper explores the development of Penrose's expanded process theory of growth from 1955 to 1973 in which she assumes that neither dual actors nor foreign expansion requires a new or special theory. This finding has implications for the resource‐based view and the eclectic ownership–location–internationalisation paradigm interpretations of international business.

Emotions and foreign direct investment: A theoretical and empirical exploration

Abstract * Emotions are largely absent in economic models. Possibly for this reason, many theories fail to explain the actual decisions made by managers. * Therefore, we integrate emotions with regular microeconomic theory. We focus on FDI decisions, and include both economic and emotional variables in our analysis of the firm's decision-making process. * In our theoretical analysis, emotions are included in a utility maximization model that considers not only the utility of the firm but also the utility of the individual decision-maker. * In our empirical analysis, the presence of emotions in FDI decision-making is tested using a sample of Dutch enterprises that considered an investment in Central or Eastern Europe between 1990 and 2000. Key Results * The empirical results show that emotions are important in economic decisionmaking. The presence of positive emotions increases the chance of Dutch firms to engage in an FDI in Central and Eastern Europe. Introduction Unlike Dr Spock cruising the Galaxy in his Voyager, most humans are not stripped of their emotions when making decisions. But equally most humans do not possess Dr. Spock's information processing capacities when making choices (Earl 2001). This is nevertheless how economic analysis models human decisions. Standard rational choice models and the bulk of empirical studies on microeconomic choice behavior use a rational choice model wherein little room is left for emotions to play a role, let alone a decisive one. The skills required to select and to handle the information that is needed to guarantee the rationality of the choice, are assumed to be abundantly available among human decision-makers. This assumption is not different in the study of foreign direct investment (FDI-) decisions. The complicated processes leading to a decision either to invest or not and where to invest (geographically) are notoriously difficult to model and the last thing that we need is more complication in terms of emotions playing a role. Direct investment-decisions are assumed to be based on estimates of the Net Present Values of all investment options and the final decision on whether or not to proceed with the investment in a particular country is assumed to be based on the ranking of all options (including the negative ones of not to invest) in terms of their estimated Net Present Value. When preparing a survey on investment-decisions of Dutch firms in Central and Eastern Europe and Central Asia. In open interviews with investors we explored the many reasons that might have played a role during open interviews with investors. During these discussions, approximately half of the respondents implied that "emotional" elements played a role in making final choices both regarding the decision to invest and the final choice of the country. Considerations such as the fact that the manager had participated in an exchange program during his/her study in that specific country, the fact that the partner of (one of) the owner(s) holds citizenship of the host country or that a personal acquaintance asked the Dutch firm to take over the foreign business, were among the important factors quoted to have been decisive elements in the decision process. These considerations seem far away from the algorithms of pure rational choice, but the question is whether they are. In this paper we explore theoretically how emotions can be seen as complements to rational choice processes and illustrate empirically that emotional factors do play a role in foreign direct investment-decisions. The second section includes a description of the economic decision-making literature including emotions and a frame that can be used to include emotions in investment-decisions. In section three a simple utility maximizing decision-making model will be described, with the specifications on how to include emotions. Section four provides empirical evidence that emotions are an influencing factor in the FDI-decision-making process, using the data from a survey among Dutch enterprises considering a foreign direct investment in Central and Eastern Europe. …

A case study of foreign direct investment in Kyrgyzstan

IntroductionFor developing or poor countries that do not have substantial natural resourcesthat can be used in their economic development, foreign direct investment(FDI) may play an important role considering the inability of such countriesto modernize their industries and produce industrialized products. One thebenefits of FDI is the opportunity for local firms to learn from experiencesand capabilities of foreign firms. Kyrgyzstan is a poor and newly independentcountry of the former Soviet Union (FSU). This region is one of the last areasto which foreign investments have been flowing. Garibaldi et al. state that‘foreign investment flows toward the region are in the form [of] FDI mostlyand portfolio investments are scarce’.

Empirical Studies of Foreign Direct Investment

Empirical Studies of Foreign Direct Investment

Regime on foreign direct investment within the Southern African Development Community (SADC): a comparative study of foreign direct investment (FDI) laws of select Southern African countries

'n Stelsel vir buitelandse direkte beleggings (FDI) in die Suider Afrikaanse Ontwikkelingsgemeenskap: 'n vergelykende studie aangaande FDI reg in geselekteerde Suider Afrika lande Die artikel se klem word geplaas op die noodsaaklikheid van effektiewe implementering van 'n algemene maar eenvormige juridiese raamwerk of omgewing vir die behandeling van FDI deur gasheer-Afrika state. Die doel hiervan is die beweging na die ontwikkeling van 'n geharmoniseerde regsraamwerk vir FDI binne die SAOG streek. Dit noodsaak 'n vergelykende studie van FDI reg in geselekteerde Afrika state, die ondersoek en analisering van die basiese beginsels van die regstelsels van hierdie state met die doel om eenvormighede en verskille aan te toon. Die artikel poog ook om die lewensvatbaarheid van die ontwikkeling en aanvaarding van reeds bestaande model wetgewing oor FDI deur lidlande van die SAOG te bepaal. Die artikel word nie beperk tot SAOG lidlande nie, maar poog om ook te steun op die ervaring en ondervinding van ander Afrikalande in ag te neem. This paper has as its emphasis the cogent need for the effective implementation of a general but uniform legal framework or environment for the treatment of foreign direct investment by the recipient African States. Hence its purpose, namely, the need to move towards the development of a harmonised legal regime on foreign direct investment within the Southern African Development Community. This necessitates a comparative study of the FDI laws of select South African countries, examining and analysing the principal features of the legal regimes of some of these countries with the aim of illustrating the areas of commonality and highlighting the differences. It also assesses the feasibility of developing or adopting an already existing model legislation on direct foreign investment by contracting parties to the SADC treaty. It thus proves instructive not to confine this paper to Southern African countries, but rather to draw from the experiences of various other countries on the African continent. Journal for Juridicial Science Vol.28(3) 2004: 71-85

Foreign direct investment in the UK: evidence from a disaggregated panel of the UK food sector

Most empirical studies of foreign direct investment (FDI) typically use either a cross-sectional (capturing ownership-specific and industry determinants) or time-series (capturing the determinants of FDI over time) approach. Panel data techniques, however, have the advantage of combining both aspects of the data. Using disaggregated panel data for the UK food sector – a leading recipient of FDI in the UK – the results in this paper highlight the predominance of ownership-specific and industry characteristics in determining the presence of foreign-owned firms in this sector while macro-economic factors have a more marginal effect.