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This study aims to examine the effect of foreign direct investment (FDI) inflows on tax revenue in 34 developed and developing countries from 2006 to 2020.
Abstract
Purpose
This study aims to examine the effect of foreign direct investment (FDI) inflows on tax revenue in 34 developed and developing countries from 2006 to 2020.
Design/methodology/approach
Feasible generalised least squares (FGLS), a dynamic panel of a two-step system generalised method of moments (GMM) system and a pool mean group (PMG) panel autoregressive distributed lag (ARDL) approach were used to compare the developed and developing countries. Basic estimators were used as pre-estimators and diagnostic tests were used to increase robustness.
Findings
The FGLS, a two-step system of GMM, PMG–ARDL estimator’s results showed that there was a significant negative long and positive short-term in most countries relationship between FDI inflows and tax revenue in developed countries. This study concluded that attracting investments can improve the quality of institutions despite high tax rates, leading to low tax revenue. Meanwhile, there was a significant positive long and negative short-term relationship between FDI inflows and tax revenue in the developing countries. The developing countries sought to attract FDI that could be used to create job opportunities and transfer technology to simultaneously develop infrastructure and impose a tax policy that would achieve high tax revenue.
Originality/value
The present study sheds light on the effect of FDI on tax revenue and compares developed and developing countries through the design and implementation of policies to create jobs, transfer technology and attain economic growth in order to assure foreign investors that they would gain continuous high profits from their investments.
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Faris ALshubiri and Mawih Kareem Al Ani
This study aims to analyse the intellectual property rights (INPR), foreign direct investment (FDI) inflows and technological exports of 32 developing and developed countries for…
Abstract
Purpose
This study aims to analyse the intellectual property rights (INPR), foreign direct investment (FDI) inflows and technological exports of 32 developing and developed countries for the period of 2006–2020.
Design/methodology/approach
Diagnostic tests were used to confirm the panel least squares, fixed effect, random effect, feasible general least squares, dynamic ordinary least squares and fully modified ordinary least squares estimator results as well as to increase the robustness.
Findings
According to the findings for the developing countries, trademark, patent and industrial design applications, each had a significant positive long-run effect on FDI inflows. In addition, there was a significant positive long-run relationship between patent applications and medium- and high-technology exports. Meanwhile, trademark and industrial design applications had a significant negative long-term effect on medium- and high-technology exports. In developed countries, patent and industrial design applications each have a significant negative long-term on medium- and high-technology exports. Furthermore, patent and trademark applications each had a significant negative long-run effect on FDI inflows.
Originality/value
This study contributes significantly to the focus that host countries evaluate the technology gaps between domestic and foreign investors at different industry levels to select the best INPR rules and innovation process by increasing international cooperation. Furthermore, the host countries should follow the structure–conduct–performance paradigm based on analysis of the market structure, strategic firms and industrial dynamics systems.
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Oğuz Kara, Levent Altinay, Mehmet Bağış, Mehmet Nurullah Kurutkan and Sanaz Vatankhah
Entrepreneurial activity is a phenomenon that increases the economic growth of countries and improves their social welfare. The economic development levels of countries have…
Abstract
Purpose
Entrepreneurial activity is a phenomenon that increases the economic growth of countries and improves their social welfare. The economic development levels of countries have significant effects on these entrepreneurial activities. This research examines which institutional and macroeconomic variables explain early-stage entrepreneurship activities in developed and developing economies.
Design/methodology/approach
The authors conducted panel data analysis on the data from the Global Entrepreneurship Monitor (GEM) and International Monetary Fund (IMF) surveys covering the years 2009–2018.
Findings
First, the authors' results reveal that cognitive, normative and regulatory institutions and macroeconomic factors affect early-stage entrepreneurial activity in developed and developing countries differently. Second, the authors' findings indicate that cognitive, normative and regulatory institutions affect early-stage entrepreneurship more positively in developed than developing countries. Finally, the authors' results report that macroeconomic factors are more effective in early-stage entrepreneurial activity in developing countries than in developed countries.
Originality/value
This study provides a better understanding of the components that help explain the differences in entrepreneurship between developed and developing countries regarding institutions and macroeconomic factors. In this way, it contributes to developing entrepreneurship literature with the theoretical achievements of combining institutional theory and macroeconomic indicators with entrepreneurship literature.
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Applying the internationalization process model (IPM) and the strategic fit perspective, this research aims to test the effects of firm age on Chinese firms’ outward foreign…
Abstract
Purpose
Applying the internationalization process model (IPM) and the strategic fit perspective, this research aims to test the effects of firm age on Chinese firms’ outward foreign direct investment (OFDI) in developing and developed countries.
Design/methodology/approach
Using data on some Chinese firms, this study applied the zero-inflated negative binomial model and Heckman two-stage model to do the analyses.
Findings
This research found that firm age has different effects on Chinese firms’ OFDI in developed and developing countries. State ownership and industry munificence independently and jointly can moderate these effects.
Originality/value
This study contributes to the IPM and solves the theoretical conflict about the firm age–OFDI relationship.
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Rupjyoti Saha and Santi Gopal Maji
The rapid global economic development in the last century, led by industrialization, brings environmental issues to the forefront as a serious concern. While some country-specific…
Abstract
Purpose
The rapid global economic development in the last century, led by industrialization, brings environmental issues to the forefront as a serious concern. While some country-specific studies are undertaken to find the effectiveness of different mechanisms for funding environment-friendly projects, to the authors' knowledge, no study has been conducted to examine the impact of green bonds (GBs) on CO2 emissions for a global sample. Against this backdrop, this study examines the general impact of GBs on CO2 emissions and its differential impact for developed and developing countries and country categorizations based on sustainable development.
Design/methodology/approach
The study selects a sample of 44 countries from 2016–2020. The authors use trend analysis and box plots to analyze the present GBs and CO2 emissions scenarios. Further, the panel data regression model is used to examine the overall impact of GBs on CO2 emissions and uncover the variation in such relationships regarding country-level economic and sustainable development. Generalized methods of moments (GMM) and instrumental variables (IV) models are used for robustness.
Findings
The yearly trend of GBs is upward at the global level, while CO2 emissions exhibit a marginal decline during the study period. However, significant variations are observed in such trends between developed and developing countries and country-level sustainable development. The authors' regression results show that GBs significantly negatively impact CO2 emissions globally. In addition, the effect of GBs on CO2 emissions is strongly negative for developing countries, while the same influence becomes weak for developed nations. Similar variations exist between countries based on sustainable development.
Originality/value
This is the first study in extant literature to examine such a relationship for a global sample of 44 countries. Further, this study makes a novel contribution by analyzing the variations in the GBs-CO2 emissions nexus for developed and developing countries and country-level sustainable development.
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Faris Alshubiri, Samia Fekir and Billal Chikhi
The present study aimed to examine the effect of received remittance inflows on the price level ratio of the purchasing power parity conversion factor to the market exchange rate…
Abstract
Purpose
The present study aimed to examine the effect of received remittance inflows on the price level ratio of the purchasing power parity conversion factor to the market exchange rate in 36 developed and developing countries from 2004 to 2020.
Design/methodology/approach
The panel data conducted a comparative analysis and used panel least squares, regression with Driscoll-Kraay standard errors of fixed effect, random effect, feasible generalised least squares and maximum likelihood robust least squares to overcome the heterogeneity issue. Furthermore, the two-step difference generalised method of moments to overcome the endogeneity issue. Diagnostic tests were used to increase robustness.
Findings
In the studied countries, there was a statistically significant negative relationship between received remittance inflows and the price-level ratio of the purchasing power parity conversion factor to the market exchange rate. This relationship explains why remittance flows depreciate the real exchange rate. The study’s results also indicated that attracting investments can improve the quality of institutions despite high tax rates, leading to low tax revenue.
Originality/value
The current study findings enrich the understanding of policies of how governments should minimise tariff rates on capital imports and introduce export-oriented incentive programmes. The study also revealed that Dutch disease can occur due to differences in the demand structure and manufacturing development policy.
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Oli Ahad Thakur, Matemilola Bolaji Tunde, Bany-Ariffin Amin Noordin, Md. Kausar Alam and Muhammad Agung Prabowo
This study empirically investigates the relationship between goodwill assets and capital structure (i.e. debt ratio) of firms and the moderating effect of financial market…
Abstract
Purpose
This study empirically investigates the relationship between goodwill assets and capital structure (i.e. debt ratio) of firms and the moderating effect of financial market development on the relationship between goodwill assets and capital structure.
Design/methodology/approach
This research applied a quantitative method. The article collects large samples of listed firms from 23 developing and nine developed countries and applied the panel data techniques. This research used firm-level data from the DataStream database for both developed and developing countries. The study uses 4,912 firm-level data from 23 developing countries and 4,303 firm-level data from nine developed countries.
Findings
The findings reveal a significant positive relationship between goodwill assets and capital structure in developing countries, but goodwill assets have a significant negative relationship with capital structure in developed countries. Moreover, financial market development positively moderates the relationship between goodwill assets and the capital structure of firms in developing countries. The results inform firm managers that goodwill assets serve as additional collateral to secure debt financing. Moreover, policymakers should formulate a debt market policy that recognizes goodwill assets as additional collateral for the purpose of obtaining debt capital.
Research limitations/implications
The study has several implications. First, goodwill assets are identified as a factor of capital structure in this study. Fixed assets have been identified as one of the drivers of capital structure in previous research, although goodwill assets are seldom included. Second, this article shows that along with demand-side determinants, supply-side determinants also play an important role in terms of the firms' choice about the capital structure. Therefore, firms should take both the demand-side and supply-side factors into consideration when sourcing for external financing (i.e. debt capital).
Originality/value
The study considered goodwill as a component of capital structure. The study analysis includes a large sample of enterprises, including 4,912 big firms from 23 developing countries and 4,303 large firms from nine industrialized or developed countries, which adds to the current capital structure information. Furthermore, a large sample size increases the results' robustness and generalizability.
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Despite the importance of tax policy in reducing energy consumption and carbon emissions, there is a dearth of research on the environmental impact of indirect taxes. This paper…
Abstract
Purpose
Despite the importance of tax policy in reducing energy consumption and carbon emissions, there is a dearth of research on the environmental impact of indirect taxes. This paper examines the impact of indirect taxes on carbon dioxide (CO2) emissions, with an emphasis on institutional quality.
Design/methodology/approach
The study uses the Government Revenue Dataset (2021), comprising 143 countries, dividing into 114 developing and 29 developed countries, during the period between 1996 and 2019. The author adopts panel data techniques, with Driscoll–Kraay standard errors to account for the issue of cross-sectional dependence (CSD).
Findings
The results indicate that indirect tax revenues have a negative and significant impact on CO2 emissions for the total sample. The subsample analysis revealed that while indirect taxes reduce carbon emissions in developing countries, opposed results are reported for developed countries. This finding implies that most of the advanced countries have already reached a high level of taxes, at which carbon emissions increase as indirect tax increases further. Interestingly, the results revealed that institutional quality enhances the role of indirect taxes in mitigating carbon emissions for both developing and developed countries.
Originality/value
To the best of the authors' knowledge, this is the sole study using the newly developed tax data by the United Nations University, World Institute for Development Research (UNU-WIDER) to investigate the impact of indirect taxes on carbon emissions, with an emphasis on institutional quality. The existing literature focuses on specific taxes, like carbon taxes, with no comprehensive research on the link between indirect taxes and carbon emissions.
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Su-Lan Pan, Lingqiong Wu and Alastair M. Morrison
The purpose of this study is to review empirical studies on the relationship between climate change and tourism for a period of 15 years, from 2007 to 2021. The main variables…
Abstract
Purpose
The purpose of this study is to review empirical studies on the relationship between climate change and tourism for a period of 15 years, from 2007 to 2021. The main variables analyzed were research subjects, topics and economic development levels.
Design/methodology/approach
Literature review was used to analyze articles published on climate change and tourism from 2007 to 2021. A staged article selection process was followed using the Scopus database. Statistical comparison tests found differences among sub-groupings of articles.
Findings
The research articles on climate change and tourism continued their upward trajectory until 2021. The 893 articles analyzed were published in 254 different journals, with over 60% from non-tourism or cross-disciplinary journals. Significant differences were found by time period and between developed and developing countries.
Research limitations/implications
Gaps in the literature were detected with respect to policy analysis and it was concluded that the research for developing nations remains insufficient. More research should be encouraged to focus on the situation and solutions to climate change and tourism in developing countries. Additional research is also needed on biodiversity declines in destinations because of climate change.
Originality/value
This research dealt exclusively with empirical research studies in academic articles. It compared results across three different time periods and between developing and developed countries. Statistical tests supported the comparisons.
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Rama Krishna Reddy, Frances Fabian and Sung-Jin Park
According to the 2019 World Investment Report, recent events in deglobalization have made many countries, especially developed markets, resist inward foreign direct investment…
Abstract
Purpose
According to the 2019 World Investment Report, recent events in deglobalization have made many countries, especially developed markets, resist inward foreign direct investment (FDI) as ceding control to foreign countries. At the same time, many emerging market firms (EMFs) have been increasing their acquisitions in developed markets. The authors elaborate three unconventional motives that justify such acquisitions, and test whether conditions in home countries related to these motives predict the pursuit of greater or lesser equity control. Understanding how home country conditions may spur seeking greater equity control can help policymakers and business firm decision-makers improve these dynamics.
Design/methodology/approach
Examining data covering the period 2006–2018, the authors test hypotheses using a sample of 4,130 acquisitions by EMFs into developed markets, and test hypotheses to investigate “How does the institutional and resource environment of an EMF's home country relate to the respective EMF acquisition behavior of seeking equity control?”
Findings
The authors found that higher institutional quality, poorer factor market development, and higher capital market quality in the home country are related to higher equity positions sought.
Practical implications
Acquiring and target firm managers, along with other stakeholders, can gain insights on how to respond to acquisition opportunities by recognizing how home country conditions influence emerging market internationalizing behaviors into developed markets.
Originality/value
The compilation of this data uniquely covers 48 different emerging markets and further concentrates on the relatively less understood pre-deal phase for EMNEs entering developed markets.
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