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21 – 30 of over 1000
Book part
Publication date: 12 November 2016

Seong-Bong Lee, Masaaki Kotabe, Doohoi Heo, Byung Jin Kang and Albert H. Yoon

This paper examines the statistical relationship between outbound Foreign Direct Investment (FDI) and firm performance. We focus on how the link is influenced by sector-specific…

Abstract

Purpose

This paper examines the statistical relationship between outbound Foreign Direct Investment (FDI) and firm performance. We focus on how the link is influenced by sector-specific differences and geographical factors.

Methodology

We compile a time-series cross-sectional dataset that includes financial variables and FDI activities of South Korean firms between 2005 and 2008 from the DART, a financial statement database. Then, we fit our data against the linear regression models that we designed to identify FDI-performance relationship in different subsamples. Our measurement of firm performance is specifically constructed to reflect excess returns in the stock market.

Findings

We found compelling differences in the degree of FDI-performance relationships across different industries. In manufacturing sectors, the flow of direct investment is more heavily associated with firm performances than accumulated stock of direct investment, and vice versa in the service sector. The impact of China factors toward performance aspects of Korea’s outbound FDI which also differs across sectors as well.

Value

Although there have been extensive research efforts on this subject in general, our paper addresses an increasingly significant class of FDIs that have received relatively less attention, that is, direct investment originating from developing economies. Also, our analysis adds a sectoral dimension that contributes to more comprehensive understanding of a multinational-performance relationship.

Article
Publication date: 14 April 2014

Jian Zhang, Ilan Alon and Yanan Chen

– The purpose of this paper is to examine the impact of foreign direct investment (FDI) on GDP growth in Sub-Saharan Africa (SSA) with particular emphasis on Chinese FDI.

1606

Abstract

Purpose

The purpose of this paper is to examine the impact of foreign direct investment (FDI) on GDP growth in Sub-Saharan Africa (SSA) with particular emphasis on Chinese FDI.

Design/methodology/approach

Based on the growth accounting model, a dynamic GMM estimation is used. To compare the results with previous findings, the paper also uses OLS and fixed effect estimates.

Findings

The paper finds that neither FDI net inflows in SSA nor Chinese FDI has a significant effect on economic growth in SSA. By testing other economic growth determinants in SSA countries based on growth accounting theory, the paper finds the change in capital stock per labor has a persistent and significant positive impact on growth in SSA.

Originality/value

This study provides new evidence on the influence of Chinese FDI on the growth of the SSA economies. There are very few empirical studies that analyze the growth of the SSA economies from a macroeconomic perspective using a partial equilibrium model. This paper tests the determinants of GDP growth using key macroeconomic variables and provides new insights into the determinants of GDP growth in the SSA countries.

Details

International Journal of Emerging Markets, vol. 9 no. 2
Type: Research Article
ISSN: 1746-8809

Keywords

Book part
Publication date: 25 October 2014

Filip De Beule, Danny Van Den Bulcke and Haiyan Zhang

To analyze the industrial development of South, East, and Southeast Asian nations in terms of investment and trade and how the institutional environment – in particular, the…

Abstract

Purpose

To analyze the industrial development of South, East, and Southeast Asian nations in terms of investment and trade and how the institutional environment – in particular, the government policy with regard to outward foreign direct investment (OFDI) – has played a role in this respect.

Methodology/approach

The chapter puts OFDI policy and industrial upgrading in newly industrialized, emerging, and developing Asian economies (NIEDAEs) in historical perspective to attempt to draw inference from their past behavior.

Findings

The chapter provides information about each NIEDAE’s experience with OFDI policy through a comparative analysis of OFDI promotional policy.

Practical implications

A useful source of information about each NIEDAE’s OFDI policy approach, the chapter attempts to draw recommendations for OFDI policy.

Originality/value

This chapter fulfills an information need and offers practical help to government policy makers.

Details

Multinational Enterprises, Markets and Institutional Diversity
Type: Book
ISBN: 978-1-78441-421-4

Keywords

Article
Publication date: 3 August 2021

Kolawole Ebire, Saif Ullah, Bosede Ngozi Adeleye and Muhammad Ibrahim Shah

This study aims to examine the effect of various forms of capital flows on financial stability in middle-income countries from 2010 to 2017 using the World Bank economy…

Abstract

Purpose

This study aims to examine the effect of various forms of capital flows on financial stability in middle-income countries from 2010 to 2017 using the World Bank economy classifications of 121 economies.

Design/methodology/approach

Panel spatial correlation consistent approach was used in this study.

Findings

The findings provide convincing evidence that in middle-income countries, capital flows are positive and significant predictors of financial stability and that financial systems in advanced economies are more stable than those of emerging and developing countries. However, outward foreign direct investments are shown to have the largest potential for ensuring financial stability.

Originality/value

Globalization has fostered financial integration of nations, which is manifested in capital flows from lower-income countries to middle-income and upper-income countries and vice versa. These flows can lead to financial instability if not properly controlled. The authors show how the various forms of capital flows affect the financial stability in middle-income countries.

Details

Journal of Financial Regulation and Compliance, vol. 29 no. 5
Type: Research Article
ISSN: 1358-1988

Keywords

Article
Publication date: 26 November 2021

Glauco De Vita, Constantinos Alexiou, Emmanouil Trachanas and Yun Luo

Despite decades of research, the relationship between intellectual property rights (IPRs) and foreign direct investment (FDI) remains ambiguous. Using a recently developed patent…

Abstract

Purpose

Despite decades of research, the relationship between intellectual property rights (IPRs) and foreign direct investment (FDI) remains ambiguous. Using a recently developed patent enforcement index (along with a broader IPR index) and a large sectoral country-to-country FDI dataset, the authors revisit the FDI-IPR relationship by testing the impact of IPRs on UK and US outward FDI (OFDI) flows as well as earnings from outward FDI (EOFDI).

Design/methodology/approach

The authors use disaggregated data for up to 9 distinct sectors of economic activity from both the US and UK for OFDI flows and EOFDI, for a panel of up to 42 developed and developing countries over sample periods from 1998 to 2015. The authors employ a panel fixed effects (FE) approach that allows exploiting the longitudinal properties of the data using Driscoll and Kraay's (1998) nonparametric covariance matrix estimator.

Findings

The authors do not find any consistent evidence in support of the hypothesis that countries' strength of IPR protection or enforcement affects inward FDI, or that sector of investment matters. The results prove robust to sensitivity checks that include an alternative broader measure of IPR strength, analyses across sub-samples disaggregated according to the strength of countries' IPRs as well as developing vs developed economies and an extended specification accounting for dynamic effects of the response of FDI to both previous investment levels and IPR (patent) protection.

Originality/value

The authors make use of the largest most granular sectoral country-to-country FDI dataset employed to date in the analysis of the FDI-IPR nexus with disaggregated data for OFDI and EOFDI across up to 9 distinct sectors of economic activity from both the US and UK The authors employ a more sophisticated measure of IPR strength, the patent index proposed by Papageorgiadis et al. (2014), which places emphasis on the effectiveness of enforcement practices as perceived by managers, together with the overall administrative effectiveness and efficiency of the national patent system.

Details

Journal of Economic Studies, vol. 49 no. 8
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 31 August 2010

Chung‐Ming Lau, Hang‐Yue Ngo and Daphne W. Yiu

The internationalization of Chinese firms has been gaining importance in recent years. Informed by Dunning's eclectic paradigm, this paper examines the factors leading to the…

2069

Abstract

Purpose

The internationalization of Chinese firms has been gaining importance in recent years. Informed by Dunning's eclectic paradigm, this paper examines the factors leading to the “going international” decisions of Chinese firms in the very early days of the “go global” call, before the central government offered substantial support.

Design/methodology/approach

It is suggested that two types of organizational factors are relevant to these decisions: the firm's management capability and core competencies. A survey of data of chief executives from over 3,000 firms in the year 2000 was analyzed.

Findings

Empirical results indicate that different resources endowments have different relationships with internationalization decisions. The intention of going international is affected by organizational competencies of R&D and manufacturing. Two capabilities (production and sales, and operation and finance) have significant impacts on outward direct investment, while manufacturing and marketing competencies have positive effects on exports, together with production capability. In addition, manufacturing competencies also have a negative effect on the acquisition and use of international capital.

Originality/value

By using firm‐level data collected in China, a better understanding of the nature of internationalization and the foreign direct investment characteristics of firms has been obtained. The empirical results show that the impacts of the organizational resources are different for different internationalization decisions, and the effects of core competencies of a firm vary across different paths of internationalization.

Details

Chinese Management Studies, vol. 4 no. 3
Type: Research Article
ISSN: 1750-614X

Keywords

Article
Publication date: 19 September 2016

Bala Ramasamy and Matthew Yeung

The purpose of this paper is to identify location factors that Chinese managers look for when making internationalization decisions and how the factors stack up in perceived…

Abstract

Purpose

The purpose of this paper is to identify location factors that Chinese managers look for when making internationalization decisions and how the factors stack up in perceived importance. Over the past ten years, Chinese enterprises have become more multi-national in nature. China’s outward foreign direct investment (FDI) has been growing at a phenomenal rate. In 2012, China became the third largest investor, after the USA and Japan; and the largest investor among developing countries. How can host governments attract more of this Chinese capital? What are some short- to medium-term policies that host governments can initiate to make their respective nations attractive to Chinese companies?

Design/methodology/approach

The authors consider these questions by using a best-worst choice exercise among 114 senior corporate decision makers of Chinese companies who have or are planning to globalize. We rank 16 most common determinants that influence FDI location choice and evaluate their degree of importance.

Findings

The authors propose five “low hanging fruits” that policy makers should consider that could ensure their countries come within the radar of Chinese multi-nationals. These include promoting a clean and efficient business environment and strengthening/establishing political and economic relationships with China.

Originality/value

The originality of this study lies in the methodology of the study that forces respondents to make a trade-off in their decisions, which in a way is closer to reality. The respondents are also actual decision makers in their companies with regards to international investment decisions.

Details

Journal of Business Strategy, vol. 37 no. 5
Type: Research Article
ISSN: 0275-6668

Keywords

Book part
Publication date: 3 May 2011

Karl P. Sauvant

Governments throughout the world have sought, and are seeking, to attract foreign direct investment (FDI) and, for that purposed, have liberalized their national regulatory…

Abstract

Governments throughout the world have sought, and are seeking, to attract foreign direct investment (FDI) and, for that purposed, have liberalized their national regulatory frameworks for FDI and established a strong international investment law regime. However, there are signs that, as a result of a number of important developments (which are being discussed in some detail in this chapter), governments are re-evaluating their stance toward FDI, or at least certain types of it. This re-evaluation has found its expression in a number of regulatory changes that may eventually lead to a regime that balances the rights of investors and host countries in a manner that places more emphasis on maintaining policy space for host-country governments while still protecting foreign investors.

Details

The Future of Foreign Direct Investment and the Multinational Enterprise
Type: Book
ISBN: 978-0-85724-555-7

Keywords

Article
Publication date: 1 March 2019

Valeria Gattai, Rajssa Mechelli and Piergiovanna Natale

The purpose of this paper is to estimate foreign direct investment (FDI) premia in the former Soviet states.

Abstract

Purpose

The purpose of this paper is to estimate foreign direct investment (FDI) premia in the former Soviet states.

Design/methodology/approach

The authors follow an empirical approach. Using Orbis data for a sample of more than 3,000 companies, the authors characterize FDI involvement and FDI premia of firms from three distinctive groups of former Soviet states, designated “upper-middle”-income, “lower-middle”-income and “high”-income countries. This yields interesting within-group and between-group results on the effects of outward FDI (OFDI) and inward FDI (IFDI) on firm-level innovation.

Findings

The authors unveil new facts about innovation and FDI in the former Soviet states. FDI firms innovate more than non-FDI firms and OFDI firms innovate more than IFDI firms. The innovation effect of OFDI is the largest for firms from the “lower-middle” countries, followed by the “high” and “upper-middle” countries. The innovation effect of IFDI is the largest for firms from the “lower-middle” countries, followed by the “upper-middle” and “high” countries. FDI to and from Europe has the largest impact on innovation; this holds across country groups.

Research limitations/implications

The estimates of this paper document robust FDI premia, i.e., a positive and significant correlation between firm-level innovation and FDI. However, the cross-sectional nature of the data does not permit a proper causality analysis.

Originality/value

The paper contributes to the literature on FDI premia by: considering IFDI and OFDI in a unified empirical framework; dissecting IFDI and OFDI by location; measuring firm-level productivity in terms of innovation; and providing cross-country comparable evidence on both emerging and advanced economies. At the same time, the paper contributes to the literature on FDI from emerging economies by: taking a firm-level quantitative approach; focusing on a relatively unexplored set of countries; and providing comparable cross-country evidence on both emerging and advanced economies.

Details

International Journal of Emerging Markets, vol. 14 no. 3
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 1 April 2006

Federico Bonaglia and Andrea Goldstein

Aims to analyze the process of internationalization of multinational corporations from emerging economies, and more broadly test the investment development path (IDP) hypothesis…

3131

Abstract

Purpose

Aims to analyze the process of internationalization of multinational corporations from emerging economies, and more broadly test the investment development path (IDP) hypothesis for Egypt.

Design/methodology/approach

A combination of data analysis and company case studies to assess to what extent and how Egyptian companies are internationalizing. The theoretical background is the IDP hypothesis, according to which the net outward investment position of a country depends on its level of development.

Findings

The paper highlights how poor investment climate and broader geopolitical motives receive limited foreign direct investment (FDI) inflows, while outward FDI limited in size and scope. Despite this climate, the two multinational corporations have successfully expanded abroad, following different strategies.

Research limitations/implications

Data limitations and the limited size of outward FDI prevent a statistical testing of the IDP hypothesis, for example, by regressing the net FDI position on GDP, utilizing a quadratic specification to allow for the non‐linearity in the relationship.

Practical implications

The paper concludes by pointing to the importance of promoting corporate internationalization throughout an active policy to make the business environment more conducive to risk‐taking, instead of rent‐seeking, behaviours.

Originality/value

This paper covers Egypt, an under‐researched country in an under‐researched area (North Africa).

Details

International Journal of Emerging Markets, vol. 1 no. 2
Type: Research Article
ISSN: 1746-8809

Keywords

21 – 30 of over 1000