Surge Of Foreign Direct Investment Research Articles

Exploring FDI Policies and Trends: Insights from the Indian Landscape

"In the present-day global economic landscape, FDI emerges as a pivotal driver for economic progress, especially in developing nations. Over recent years, propelled by the wave of globalization, numerous Asian developing economies have experienced a substantial surge in FDI. Notably, India has emerged as a prominent FDI destination, witnessing a notable upswing in FDI inflows. Given the paramount significance of FDI in the modern economic landscape and its noteworthy strides in India, a comprehensive analysis encompassing shifts in FDI policy, determinants of FDI attraction, and its ramifications on the domestic economy becomes imperative. This paper endeavors to scrutinize the evolution of FDI policies in India, delve into the diverse factors shaping FDI influx and ultimately assess the profound impact that FDI has exerted on the Indian economic landscape. FDI Surge in India: India has experienced a substantial surge in Foreign Direct Investment (FDI) in recent years, making it a prominent destination for global investors."

FDI in India: Analyzing Financial Flows and Economic Impacts

Foreign Direct Investment (FDI) plays a crucial role in shaping the economic landscape of India, attracting significant attention from investors, policymakers, and economists alike. As one of the fastest-growing economies in the world, India has been successful in improving its attractiveness to foreign investors through various policy reforms and liberalization measures. The study finds important patterns and connections in the dynamics of FDI inflow by applying quantitative analytical techniques such a regression analysis and correlation analysis. The results of regression analysis highlight the impact of the GDP on FDI inflow, showing a robust positive connection between GDP and FDI inflow. In recent years, there has been a substantial increase in FDI inflows into India across different sectors, such as telecommunications, manufacturing, and services. This surge in FDI can be attributed to the country's large and growing market, skilled workforce, improving infrastructure, and stable political environment. Analyzing the financial flows of FDI into India reveals that a significant portion of inflows comes from countries such as the United States, Singapore, and Mauritius. This diversification of funding sources indicates the global interest in investing in India and leveraging its potential as a key market in the region. The economic impacts of FDI in India are multifaceted and go beyond simply bringing capital into the country. FDI inflows contribute to job creation, technology transfer, skill development, and overall economic growth. Foreign investors bring in expertise, best practices, and access to new markets, which can benefit local industries and enhance competitiveness. Moreover, FDI inflows can also lead to improvements in productivity, efficiency, and innovation within domestic firms through spillover effects. However, it is essential to recognize the challenges associated with FDI in India, such as regulatory complexity, infrastructure bottlenecks, bureaucratic inefficiencies, and socio-political factors. Addressing these challenges requires continuous efforts from the government to further streamline regulations, improve infrastructure, enhance the ease of doing business, and foster a more investor-friendly environment. Keywords: Foreign Direct Investment (FDI), Regression, Correlation, GDP, Telecommunications.

The Subject of the Underground

Romania’s 2007 accession into the European Union initiated a surge in foreign direct investment into its capital, Bucharest. New middle classes quickly took shape that pressed against the limits of the city’s socialist-era infrastructure. To accommodate the new middle classes, city planners and private developers have invested billions of euros to redesign and expand subterranean transportation, commercial, and residential spaces. This essay takes these subterranean developments as an opportunity to consider what I call the “subject of the underground.” This is the person imagined and acted on by the call to move underground. While the subject pressed underground has long been characterized by extreme marginalization, the ethnographic argument here is that projects of middle-class formation drive the assembling of underground urbanism in Bucharest. The imperative for rethinking the subject of the underground is to bring analytical attention to the sagging “place” of the new middle classes, where “place” refers both to a location in space and to a rank in a social order.

Inward foreign direct investment in emerging economies: a review and future research avenues

PurposeGiven the surge in foreign direct investment (FDI) in emerging economies (EEs) during the past four decades, inward FDI (IFDI) has spawned a rich, scholarly conversation on the topic. This paper aims to review the literature regarding EE IFDI determinants and the impact of IFDI on those economies. It also aims to provide some future research directions.Design/methodology/approachA systematic review with thematic analysis of 372 articles on the topic, published between 1991 and 2021, is undertaken. In addition to using the relevant keywords, the snowballing approach was used to manually track the literature.FindingsThis review highlights EE IFDI determinants such as institutional quality, corruption and intellectual property rights, regional trade agreements and distances, formal and informal institutions and their interactions, national and subnational diversity and policy expectations. Further, IFDI impacts EEs both at macro- and micro-levels. This review also indicates a substantial increase in research during the period 2000 to 2010 and a decline thereafter; it also indicates Africa and Latin America being under-researched, with a focus on Africa recently increasing.Research limitations/implicationsRich research opportunities exist in examining the mechanisms (mediators) and conditions (moderators) that influence relationships between the antecedents of IFDI and their outcomes. Further opportunities exist in examining the role of the context and in undertaking a multilevel analysis.Originality/valueThis review provides an understanding of what influences multinational enterprises’ FDI to EEs and how it impacts those economies. It also raises potential future research questions. It provides a holistic understanding of the chosen scope and domain.

Do Trade and Investment Agreements Promote Foreign Direct Investment within Latin America? Evidence from a Structural Gravity Model

Latin America has experienced a surge in foreign direct investment (FDI) in the last two decades, in parallel with the ratification of major regional trade agreements (RTAs) and bilateral investment treaties (BITs). This paper uses the latest developments in the structural gravity model theory to study if the co-existence of BITs and two major regional agreements, Mercosur and the Latin American Integration Association (ALADI), exerts enhancing or overlapping effects on FDI for eleven countries in Latin America over the period 1995–2018. The study is novel as it accounts for variations in the degree of investment protection across BITs within Latin America by computing a quality index of BITs. It also explores the nature of interactions (enhancing/overlapping effects) between RTAs and BITs. The findings reveal that belonging to a well-established regional trade agreement, such as Mercosur, is significantly more effective than BITs in fostering intra-regional FDI. Phasing-in effects are large and significant and there is evidence of enhancing effects. Results within the bloc are heterogeneous: BITs exert a positive, but small effect, for middle income countries. However, BITs are not effective in attracting FDI in the case of middle to low income countries, unless these countries ratify BITs with a high degree of investment protection.

ФАКТОРЫ, ВЛИЯЮЩИЕ НА ВЗАИМНЫЕ ПРЯМЫЕ ИНВЕСТИЦИИ МЕЖДУ РОССИЕЙ И КИТАЕМ

The article is devoted to the study of the factors influencing mutual direct investments between Russia and China. The subject of the analysis is direct investment as a type of international investment made by a direct investor in order to implement its long-term strategy, which implies ownership of at least 10% of the voting shares of the enterprise-recipient of direct investment. The role of foreign direct investment in the economy accepting the capital is considered. The work establishes the factors influencing mutual direct investments, taking into account foreign experience. The research is based on general scientific methods of cognition (analysis, synthesis, and comparison), presentation of tabular and graphical interpretation of statistical information, time series, econometric modeling using the EViews software product. Basing on the study, the author concluded that the sanctions crisis in Russia in 2014 caused a positive surge in foreign direct investment in relations between Russia and China. However, the shares of mutual direct investments in the total volume are insignificant and average 0.11% for Russia and 0.15% for China. A significant positive correlation was found between Russia-China and China-Russia FDI with a lag of 1 quarter. Investment decisions are not routinely made at the beginning (end) of a quarter or year, but are determined by market conditions, as evidenced by autocorrelation functions for Russia-China and China-Russia FDI, which do not show a significant seasonal component in FDI statistics for both countries. The novelty of the article lies in the determination, using quantitative methods, of the factors influencing mutual direct investments between Russia and China.

Do surges in foreign direct investment inflows lead to surges in economic growth? Evidence from developing countries

PurposeThe purpose of this paper is to examine whether surge in foreign direct investment (FDI) inflows leads to surge in economic growth in 52 developing countries for the period 1990-2014.Design/methodology/approachThe author used a threshold approach to identify surge incidences in gross domestic product (GDP) per capita growth rates and FDI inflows (measured as percentage of GDP) for each country included in the sample. Three different criteria are used to identify surge instances. As a preliminary analysis the author used the probit and complementary log–log regression methods to estimate the likelihood of growth surge occurrence. To correct the potential endogeneity problem the author jointly estimated the growth surge and FDI surge equations using the recursive bivariate probit (RBP) regression.FindingsThe author found that East Asia and the Pacific region has highest rate of growth surge incidences followed by South Asia. The results suggest that surge in FDI inflows significantly increases the likelihood of growth surge. The finding is robust to alternative surge definitions and methods of estimation.Practical implicationsThe analysis reveals that inbound FDI flow is a critical driver of economic growth in developing countries. Large FDI inflows matters for achieving rapid economic growth. Therefore developing countries should adopt favourable policies to attract more FDI. Policymakers should focus on improving the investment climate of the country to boost domestic investment and to attract larger amount of FDI into the economy.Originality/valueTo the best of the author’s knowledge this is the first study to examine whether surge in FDI inflows stimulates surge in economic growth in developing countries. The analysis reveals that FDI surge is a robust predictor of rapid economic growth in developing countries.

Brazil, BITs and FDI: A Synthetic Control Approach

Abstract The explosion in bilateral investment treaties (BITs) signed between countries in the 1990s and the concurrent surge in foreign direct investment (FDI) flows draw substantial attention in the literature. This article tackles the controversial relationship between BITs and FDI inflows using an innovative technique: the synthetic control method. Brazil is a peculiar case because it is one of the few cases where FDI inflows had a significant surge even in the complete absence of BITs. Did foreign investors really not need BITs in order to invest in Brazil? I find evidence that, although Brazil received substantial amounts of FDI even in the absence of BITs, had they enacted any BIT, the inflow in the period would have been greater. The method builds a synthetic Brazil from a pool of other countries providing this way a better comparative analysis. The findings are robust to both in-space and in-time placebo experiments.

Economic and Institutional Determinants of FDI in the Chilean Case: An Empirical Analysis, 1960-2014

This paper examines some of the major economic and institutional factors underlying the surge in foreign direct investment (FDI) flows to Chile during the more recent 1990-2014 period. It reports econometric results which suggest that standard economic variables and major changes in the institutional-legal status of foreign capital are, in large measure, responsible for the rapid increase in net FDI inflows to leading sectors of the Chilean economy. Cointegration analysis and error-correction modeling suggest that market size, the real exchange rate, the debt-service ratio, education, physical infrastructure, and the Fraser Institute’s economic freedom index are economically significant in explaining the variation in net FDI inflows to the country. Dummy variables, designed to capture qualitative factors such as the impact of economic crises and institutional reforms, are also included and they have their anticipated signs and are statistically significant. The paper also addresses the long-term negative effects of rapidly growing profit and dividend remittances on the financing of capital formation and the Chilean balance of payments in recent years.

Impact of Foreign Direct Investment on Employment Evidence: Zanzibar Tourism Industry

With the advent of globalization, there has been a massive surge of Foreign Direct Investment (FDI) inflows into developing countries during the past two decades. Tourism as one of the currently fast growing industries across the world is one of the few service sectors showing concrete and quantitative trading opportunities for all countries, regardless of their level of development. The objective of the study was to assess the impacts that FDI has, is having, and will have on the well-being and performance of the Zanzibar labour market. The data were collected by the use of questionnaire and interview and analysis were drawn from the tourist investors in particular those in northern and eastern coasts, and Zanzibar Stone Town. The study revealed that there are positive impacts of the foreign direct investment on employment in Zanzibar, as well as positive relationship between direct foreign investment and tourism. We recommend promoting tourism abroad, balancing of tourism and other economic sectors attracting FDI in other sectors of the economy.

The effects of NAFTA on US trade, jobs, and investment, 1993–2013

Between 1993 and 2013, the US trade deficit with Mexico and Canada increased from $17.0 to $177.2 billion, displacing 851 700 US jobs. All of the net jobs displaced were due to growing trade deficits with Mexico. The number of US jobs displaced by trade deficits with Canada declined slightly between 1993 and 2013. Prominent economists and US government officials predicted that the North American Free Trade Agreement (NAFTA) would lead to growing trade surpluses with Mexico and that hundreds of thousands of jobs would be gained. The evidence shows that the predicted surpluses in the wake of NAFTA's enactment in 1994 did not materialize. Growing trade deficits and job displacement, especially between the United States and Mexico, were the result of a surge in outsourcing of production by US and other foreign investors. The rise in outsourcing was fueled, in turn, by a surge in foreign direct investment into Mexico, which increased by more than 150 percent in the post-NAFTA period.

The spatial redistribution of Japanese direct investment in the United Kingdom between 1991 and 2010

Japanese firms have a firmly established reputation as influential foreign investors, originating from the surge of foreign direct investment into North America and Europe during the 1980s. This paper examines trends in Japanese corporate behaviour in the United Kingdom, a key investment destination for Japanese firms, over the period 1991 to 2010. Our ‘demographic’ analysis of Japanese firms' investments includes both investment and exit strategies. It is found that Japanese firms have reconfigured their UK presence in response to a rapidly changing market environment, with an enduring proclivity to cluster, notwithstanding government incentives intended to channel investment towards specific regions of the country.

Political Risk, Macroeconomic Uncertainty, and the Patterns of Foreign Direct Investment

While recent times have witnessed a surge of foreign direct investment (FDI) inflows into the developing world, these inflows remain below optimal levels. In this article, we use data on African, Asian, and Latin American economies to investigate the role of political risk and macroeconomic uncertainty—stemming from the foreign exchange market—as determinants of the patterns of FDI. Moreover, given the low share of FDI going into African economies, we place special attention on the differential impact of these variables on FDI flows into Africa. The results of this study point to the fact that, in general, political risk and exchange rate uncertainty reduce FDI. However, it is shown that the impact of political risk is more severe for FDI flowing into African economies.

What is Driving the Manufacturing FDI Wave in Asia?

This paper analyzes the dynamic pattern of Japanese manufacturing foreign direct investment (FDI) in Asia. Japanese electronics firms shifted manufacturing operations abroad in the 1990s. We focus on the timing of the surge in FDI: why in this period did Japanese electronics firms increase manufacturing FDI in Asia? The empirical findings indicate that, in addition to productivity improvements, learning experiences from FDI were the primary determinants of the FDI wave. Firms' own past FDI experiences, the experiences of other firms (spillovers), and the presence of own distribution services encourage manufacturing FDI.

Differences in returns to FDI between China's coast and interior: One country, two economies?

In principle, returns to factors of production within single economic systems should exhibit relatively uniform returns. Notwithstanding the fact that over the past 30 years China's economy has increasingly liberalized both internally and externally, it is widely understood that wages received by industrial workers in the coast and interior have widely diverged. However, less is known about how, between China's coast and interior, relative returns to domestic capital and foreign investment have fared, although we do know that the surge of foreign direct investment in China in recent decades has been overwhelmingly concentrated in the coastal region. This paper investigates comparative factor returns within China's industrial sector as measured by the marginal productivities of labor, domestic capital, and foreign capital. Using balanced and unbalanced samples of enterprise data during 1998–2004, we find significant differences between the returns to each of these factors. This paper explores the differences in estimates of factor returns that arise from the use of balanced versus unbalanced samples and least squares versus fixed effects estimators. We conclude that while returns to labor and domestic capital are higher in China's coastal economy, returns to foreign-owned capital are higher in the interior region. Indeed, the differences are indicative of those found in the literature that estimates cross-country comparisons between OECD and developing economies, suggesting that China's economy exhibits some of the differences found between the world's more and less developed economies.

Chinese foreign direct investment in Australia: policy issues for the resource sector1

The past 18 months have seen Chinese foreign direct investment (FDI) in the Australian resource sector become an issue of policy interest. There are two big questions that the prospects of a significant rise in FDI from China into the Australian resources sector have raised. Is the surge of FDI into Australian mining and energy consistent with achieving the traditional gains from foreign investment? And are there any particular problems associated with investment from foreign state-owned enterprises or state-managed sovereign wealth funds? These are among the questions addressed in this paper. The paper argues that there are no issues that cannot be dealt with under the umbrella of the established test of ‘national interest’ in managing the growth of Chinese FDI into the Australian minerals sector. It argues that a confusion has been introduced into policy over the questions of state ownership and supplier–buyer relations in respect of Chinese investments and that clarifying these issues is likely to be important to Australia's capturing the full benefits from the growth of Chinese resources demand and longer term economic and strategic interests in China.

Sudden Surge in FDI and Infrastructure Bottlenecks: The Case in Vietnam

Through examining trends and patterns of foreign direct investment (FDI) in Vietnam over the twenty years of reform (1986–2008), this paper found a big increase in registered FDI recently. This is not in accordance with the increase in actual capital disbursement because of low absorptive capacity of the economy in terms of poor infrastructure, restricted and unstable policy, and weak competitive capacity of domestic firms. Moreover, newly massive flows of FDI brought an explosion to infrastructure development in the form of office buildings, hotels, industrial zones, resident parks and ports. This could help to improve the situation of infrastructure because it has not kept pace with the rapid economic growth over the past decade and are considered as major constraints in attracting more FDI.

Impact of ownership and location factors on service multinationals' internalisation

Foreign direct investment in the service sector has been gaining importance in the past decade as more countries transform themselves into post-industrialised economies. The transition from a centrally planned economy to market-based economy has generated a surge of foreign direct investment from industrialised countries to Central and Eastern European Countries. This paper examines the impact of ownership and location factors on the extent of internalisation for service multinationals seeking to enter into the Czech Republic, Hungary, and Poland, as these countries launch their economies towards increased privatisation, deregulation, and liberalisation. Using foreign direct investment data of 76 firms during 1990–2000, we find significant support for our main hypotheses.

The effects of culture and politics on Foreign Direct Investment and sustainable development in China: some research hypotheses

China's GDP reached US$ 1.159 trillion in 2001, making it the sixth largest economy in the world. In addition the Chinese government has reformed its economy, liberated market forces and opened up many industries to foreign investors. However, the surge of Foreign Direct Investment in China will have consequences for the natural environment, with a consequent effect on economic sustainability of the economy. It is therefore important to consider the factors which might affect the degree of consideration given to sustainability in investment decisions. This paper suggests some hypotheses, concerning the impact of cultural, political and financial factors on sustainability.

The border effect in the Japanese market: A Gravity Model analysis

This paper uses a Gravity Model to analyze the border effect in the Japanese market, which indicates how biased interregional trade is compared with international trade. The results suggest that the border effect in Japan is much lower than in the United States and Canada, and has declined year by year between 1960 and 1990. Possible reasons for the decline include the reduction of tariff rates and non-tariff barriers, the surge of foreign direct investment, and the appreciation of the yen. J. Japanese Int. Economies 18 (1) (2004) 1–11.