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1 – 10 of over 8000Jianhong Qi and Hong Li
The purpose of this paper is to examine if the knowledge spillover effect from foreign direct investment (FDI) inflow exists as well as its possible channels in China, and makes…
Abstract
Purpose
The purpose of this paper is to examine if the knowledge spillover effect from foreign direct investment (FDI) inflow exists as well as its possible channels in China, and makes some policy suggestions.
Design/methodology/approach
Based on the literature review, the paper sets a panel data model to empirically examine if the knowledge spillover effect of FDI inflow exists in China, using data from 28 manufacturing industries during 2001‐2005.
Findings
The empirical results show that FDI played a positive role in China's knowledge creation and management in the sample period. At the same time, the demonstration effect and labor mobility effect served as the channels to yield beneficial results while the competition effect produced undesirable impact. However, the effect of these three channels on China's knowledge creation was very weak. Instead, the knowledge creation in China was still dependent on the input of R&D by domestic firms.
Research limitations/implications
Owing to the data limitation, this paper only adopted data from large and medium enterprises to examine the spillover effect of FDI on the knowledge creation, and thus the conclusions may not be applicable to small enterprises.
Originality/value
Most of the present studies only examined the existence of knowledge spillover effect, without investigating econometrically its channels. Using the latest industry‐level panel data, this paper examines both the existence of knowledge spillover and its main spillover channels empirically.
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To investigate the trends of world foreign direct investment (FDI) flows during the last decades and to explore the reasons behind these trends and to examine the role of…
Abstract
Purpose
To investigate the trends of world foreign direct investment (FDI) flows during the last decades and to explore the reasons behind these trends and to examine the role of multinationals and their investment activities.
Design/methodology/approach
This paper is based on the statistical data of FDI flows throughout the world and on an action field research which was also based on multinationals' investment behaviour. The FDI trends and the role of multinationals are evaluated.
Findings
FDI can play a key role in improving the capacity of the host country to respond to the opportunities offered by global economic integration, a goal increasingly recognized as one of the key aims of any development strategy and an increased growth rate. World FDI inflows grew rapidly and faster than world GDP and world exports during the last two decades. There was a dramatic increase in FDI over the last decade (until 2000) which was based on globalisation and economic integration, technological improvements in communications, information processing and transportation, the changing framework of international competition and the deregulation of several key sectors. There was a dramatic decrease in FDI flows after the year 2000 due to the slowdown in the world economy. M&A deals are the most important driving factors behind overall FDI flows when at least one third (up to two third) of the total FDI flows are due to the M&A cross‐border deals.
Research limitations/implications
The research should be also be expanded in continents (for example, Asia, America) in order to examine the multinationals' investment activities and behaviour in order to conclude about the FDI trends more thoroughly.
Practical implications
More investment interest must be given to the developing or transition countries in which (where) the flows in absolute terms are too low. Moreover, the absence of large cross‐border merger and acquisitions in these countries, can obviously be explained by the lack of the existence of significant and well‐known large companies which could have the potential to become significant world players in the sector that they belong to.
Originality/value
It is a valuable paper for scholars, entrepreneurs and multinationals who prefer to understand the reasons behind the FDI trends and/or for the governments/politicians who prefer to create a framework in order to attract FDI flows to their countries by examining the experience of other countries.
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The paper refers to “a theoretical model” created by the author, named Universal Model, in which have been included most of the theories determining foreign direct investment (FDI…
Abstract
The paper refers to “a theoretical model” created by the author, named Universal Model, in which have been included most of the theories determining foreign direct investment (FDI). What derives from the literature review is that no theory dominates the decision‐making process of FDI. The opportunities a country has to offer change through time, and the different ways in which multinational enterprises (MNEs) evaluate the opportunities led the author to conclude that the concept of globalization is not valid for the theory of FDI. Special attention to the case of Bulgaria has been given. The main reason why the case of Bulgaria is of great interest is the fact that the conditions in the country at the beginning of its transition were some of the worst among the Central and Eastern European countries (CEEs). The conclusion is of extreme interest since economists, MNEs and entrepreneurs have a strong interest in countries that open their economies and target their efforts towards stabilizing and liberalizing their macro‐economic environment.
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The purpose of this paper is to investigate the relationship between factors that influence conducting business and the inflow of foreign direct investment (FDI) to Sub‐Saharan…
Abstract
Purpose
The purpose of this paper is to investigate the relationship between factors that influence conducting business and the inflow of foreign direct investment (FDI) to Sub‐Saharan African (SSA) and Asian countries.
Design/methodology/approach
The factors of business climate defined by the World Bank in 2006 as ease of doing business were correlated with FDI flows to SSA and Asian countries.
Findings
Two factors, “registering property” and “trading across borders”, were found to be related to FDI over all six years of the study (2000‐2005) for the combined sample. Also, several factors were found to be related to FDI received by SSA and Asian countries during various years.
Research limitations/implications
A limitation of the study is that the sample included only SSA and Asian countries.
Practical implications
The findings may help SSA and other countries to improve the business climate in terms of the factors of ease of doing business, in order to attract more FDI.
Originality/value
The paper provides empirical support to the hypothesis that FDI is related to some of the factors of the business climate. It advances understanding of the determinants of the inflow of FDI to African and Asian countries and may be particularly useful to international organizations seeking to do business in SSA and Asian countries.
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Ishmael P. Akaah and Attila Yaprak
This paper illustrates how conjoint methodology can be used by recipient countries to segment the donor market for foreign direct investment (FDI), thereby enhancing the…
Abstract
This paper illustrates how conjoint methodology can be used by recipient countries to segment the donor market for foreign direct investment (FDI), thereby enhancing the effectiveness of their FDI attraction efforts. The study results indicate that FDI donors can be clustered into segments based on the FDI benefits they seek. The article concludes with normative and practical implications of the methodology for investment policy makers in recipient countries.
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Bangladesh achieved its independence in 1971. Since that time, the country has gone through several major policy changes regarding the ownership and control of industries with a…
Abstract
Bangladesh achieved its independence in 1971. Since that time, the country has gone through several major policy changes regarding the ownership and control of industries with a view to promoting economic growth. One of the strategies the Government of Bangladesh (GOB) followed to accelerate economic growth was to attract foreign direct investment (FDI) into the country. Immediately after the independence, the Government obtained control of a large number of industries abandoned by non‐Bangladeshi owners. Through the Nationalization Order of 1972, all key industries including jute, cotton textiles and sugar were vested upon the public sector. The wholesale nationalization of industries resulted in a low growth of the economy. The Gross National Product (GNP) per capita of the country grew at an average annual rate of 0.4 per cent until 1985 compared to 3.8 per cent for the group of “low income countries” (The World Development Report, 1989). The low growth performance of the economy put pressures on GOB to privatise major industries and to undertake economic reforms. As Karim (1996) mentions, external pressure from donors had a significant impact on the Government's investment policy. As a result, the GOB has taken a number of measures to attract FDI including the establishment of the Board of Investment (BOI) and wide publicity in foreign countries. Many believe that GOB has maintained an over‐valued exchange rate in order to attract FDI. These policy changes, along with other traditional factors (such as financial, political, regulatory and tax risks) have significant impact on foreign direct investment (FDI) in Bangladesh.
The paper aims to provide an updated broad assessment of the environment for foreign direct investment (FDI) in light of the referendum vote in the UK to exit the European Union…
Abstract
Purpose
The paper aims to provide an updated broad assessment of the environment for foreign direct investment (FDI) in light of the referendum vote in the UK to exit the European Union (Brexit), the election of Donald Trump as President of the USA and growing nationalist movements in Europe.
Design/methodology/approach
The paper uses an essay format to set out the main issues linking recent political developments to FDI. It reviews some relevant empirical literature to assess the identified linkages.
Findings
It seems reasonable to argue that there will be a reduction in FDI intensity on a global basis over the foreseeable future. It is also likely that the nature of FDI will move more toward being a substitute rather than a complement to trade.
Originality/value
The essay is original and valuable in the sense of offering a contemporary assessment of how important the recent political events may affect the FDI process.
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Ashis Kashyap and Farah Hussain
The study aims to explore the moderation effect of renewable energy consumption (REC) on the relationship between foreign direct investment (FDI) inflows and carbon emission (CO2…
Abstract
Purpose
The study aims to explore the moderation effect of renewable energy consumption (REC) on the relationship between foreign direct investment (FDI) inflows and carbon emission (CO2). Furthermore, the study investigates the prevalence of rebound effect in energy efficiency for the top five FDI inbound destinations in the Asia-Pacific region.
Design/methodology/approach
The study uses a balanced panel data set spanning from 1995 to 2020 obtained from the World Bank Database. This paper used feasible generalized least squares (FGLS) as the primary method, and to ensure the robustness of the findings, this paper used the panels corrected standard errors (PCSE) model.
Findings
The findings reveal a negative relationship between FDI and CO2 emissions and REC and CO2 emissions. However, the moderation effect of REC on the relationship between FDI inflows and CO2 emissions is positive, suggesting that when both FDI and REC increase simultaneously, carbon emissions also increase. This study attributes the observed positive moderation effect to the phenomenon known as the rebound effect.
Research limitations/implications
FDI fosters environmental sustainability. Regions’ FDI policies can be guidelines for other nations aiming for similar outcomes. REC reduces CO2 emissions, underlining renewable energy’s efficacy. However, positive moderation effect of REC on the relationship between FDI and CO2 emissions highlights the necessity for balanced policies to prevent unintended consequences like the rebound effect.
Originality/value
The originality of this study lies in examining the prevalence of rebound effect in energy efficiency. Prior empirical studies have explored the relationship between REC and carbon emission and established that increased efficiency in renewable energy creates positive environmental and climate externalities. However, it is constrained by rebound effects and this has been ignored by previous studies.
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Novica Supic, Kosta Josifidis and Sladjana Bodor
The aim of this paper is to shed more light on the foreign direct investment (FDI) - income inequality nexus in the post-communist EU countries. Special attention is paid to the…
Abstract
Purpose
The aim of this paper is to shed more light on the foreign direct investment (FDI) - income inequality nexus in the post-communist EU countries. Special attention is paid to the emergence of a new meritocratic elite related to foreign capital that tends to replace the old elite inherited from the transition period at the top end of the income distribution.
Design/methodology/approach
The macroeconomic model of the relationship between income inequality and FDI is estimated by using the generalized method of moments (GMM) technique. The sample includes 10 post-communist EU member states during the period 1993 to 2020.
Findings
The results suggest that the concentration of the highest level of human capital in foreign-owned enterprises, in the institutional environment under which foreign-owned enterprises are less numerous and pay a higher wage than domestic ones, contributes to the change of the effect of FDI and human capital on income distribution from an initial decrease to a later increase in income inequality.
Originality/value
This paper adds to the existing literature by exploring the distributive impacts of sectoral reallocation of FDI inflows from manufacturing to service sectors from the perspective of heterodox economics. It specifically examines how this shift has facilitated the emergence of a new meritocratic elite associated with foreign capital, which in turn diminishes the overall anti-inequality effect of FDI in the post-communist new EU countries.
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Vandana Arya, Ravinder Verma and Vijender Pal Saini
The study examines the association between trade (exports and imports), foreign direct investment (FDI) and economic growth in the Bay of Bengal Initiative for Multi-Sectoral…
Abstract
Purpose
The study examines the association between trade (exports and imports), foreign direct investment (FDI) and economic growth in the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) countries using data from 1991 to 2019.
Design/methodology/approach
Augmented Dickey–Fuller (ADF) and Phillips–Perron (PP) unit root tests were applied to check the stationary of the data while the Johansen cointegration test and Vector Error Correction Model (VECM) was used to analyze long-run and short-run relationships.
Findings
The results indicate a long-run relationship between trade, FDI and economic growth in all selected countries except Bhutan. Additionally, a bidirectional causality exists between gross domestic product (GDP) and FDI in India, Bangladesh, Myanmar, Nepal, Bhutan and Sri Lanka, while unidirectional causality from GDP to FDI is observed in Thailand. Moreover, a one-way causality from exports to GDP exists in Bangladesh, Nepal, Bhutan, Sri Lanka and Myanmar, whereas a bidirectional relationship exists in India and Thailand.
Practical implications
This paper will be highly beneficial for regulators and policymakers in the designated economies, aiding in the formulation of FDI and trade policies that promote economic progress and development.
Originality/value
Most previous studies examining the relationship between macroeconomic variables have focused on developed nations. This study is the first to explore the relationship between trade (exports and imports), FDI and economic growth in the BIMSTEC countries.
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