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Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination of some legal aspects concerning MNEs, cyberspace and e‐commerce as the means of expression of the digital economy. The whole effort of the author is focused on the examination of various aspects of MNEs and their impact upon globalisation and vice versa and how and if we are moving towards a global digital economy.

This paper shows that consumer preference heterogeneity affects whether multinational firms serve local markets via imports or local production. Firms are least likely to choose local production over imports for product varieties that have relatively inelastic demand because transport costs have a smaller impact on the firm’s local profits for these products. The results suggest that there is complementarity between centralized production, with local market access via imports, and strategies that maintain low price elasticities at the brand level, such as advertising and within-brand product proliferation. A partial equilibrium study of the laundry detergent industry in Western Europe illustrates how firms and consumers interact at different levels of transport costs and reveals the product varieties that are most and least likely to be manufactured locally when transport costs are high.

The purpose of this paper is to investigate the macroeconomic determinants of foreign direct investment (FDI) for the top five South Asian economies, namely, Bangladesh, India, Pakistan, Sri Lanka, and Nepal, and to examine whether these factors are the same for each.

This study employs fully modified ordinary least squares and two-stage least squares estimation methods.

This study shows that South Asian economies have a number of FDI determinants in common. For example, market size and human capital are the two most common factors attracting FDI in each country (except for Nepal, which revealed a negative correlation between FDI and market size). Other factors, such as infrastructure, domestic investment, lending rates, exchange rates, inflation, financial stability/crisis, and stock turnover entered into regression with both positive and negative signs, thereby indicating that the underlying theories on FDI do not provide a clear prediction of the direction of the effect of a particular variable on FDI.

This paper studied the effects of demand-side factors on FDI. A comparative study of the supply-side factors may add further knowledge.

This paper provides evidence to show that the determinants of FDI are indeed country-specific. Thus, to design a suitable FDI policy, it would not be wise to solely rely on other economies’ FDI experiences.

This paper provides updated evidence on factors that are essential to promoting or deterring FDI in South Asian economies.

The relationship of outward foreign direct investment (OFDI) with home country's exports has significant implications for policymakers as well as business managers of MNEs. Since BRICS nations have emerged as important sources as well as destinations of FDI, this paper aims to study the impact of OFDI from these countries on home country exports by using panel data for BRICS for time period 1993–2015.

The author use panel unit root tests, panel cointegration, VECM and causality tests in the study.

The results reveal that OFDI has a negative and significant impact on home country exports indicating that outward FDI is a substitute for exports in these countries. It also indicates long-run causality from exports towards OFDI. There is no long-run causality running from OFDI to exports, suggesting that MNEs do not “connect” with home economies' firms through forward and backward linkages in value chain.

From the point of view of policymakers, it implies a net outflow of capital as the outflow of foreign investment would not be matched by any incremental export earnings since exports are getting substituted by production abroad. For business managers, it is indicative of a growing foreign market that warrants large scale production and justifies the high cost and risk involved in FDI as a mode of entry compared to exports.

To the best of authors' knowledge, this is the first attempt to deal with the relationship between home country exports and OFDI, for an important group of emerging market economies, i.e. BRICS. The understanding of this relationship allow us to identify whether factors contributing to OFDI from emerging economies are “tied” to their home economies thereby making exports necessary or are rather based on firm specific competencies which are leveraged in different locations to cater to expanding markets.

Among the prominent economic trends in recent decades is the exponential increase in flows of goods and capital driven by technological progress and falling of restrictions. A key driver of this phenomenon has been the cross-border production, foreign investment, and trade both final and intermediate goods by multinational corporations. Research has sought to understand how foreign direct investment (FDI) affects host economies. This paper reviews the main theories and empirical evidence of two streams of literature: the mechanisms by which multinational activity might create positive effects and externalities to countries and the role of complementary local conditions, also known as “absorptive capacities,” that allow a country to reap the benefits of FDI paying particular attention to the role of factor markets, reallocation effects, and the linkages generated between foreign and domestic firms. The survey focuses mainly on work related to developing countries.

The purpose of this paper is to examine the determinants of foreign direct investment (FDI) flows from some leading developed countries (the USA, Japan, Germany, the Netherlands, the UK and France) into major four Asian economies (China, Korea, India and Singapore).

Using one basic and four augmented versions of gravity model technique, the authors tried to examine the determinants of bilateral FDI flows in four major Asian economies. The study used World Development Indicators, CEPII, KOF and Heritage Foundation data for period 2001–2012.

The results revealed that besides the market size for host and source country, other criteria such as distance, common language and common border also influence foreign investors. Other macroeconomic factors such as inflation rate and real interest rate are among the key factors that attract more FDI. In addition to economic factors, institutional and infrastructural factors such as telecommunication, degree of openness, index of globalisation and index of economic freedom also stimulate the international investors from the developed world to the major Asian countries.

It is altogether possible that only a set of home country specific characteristics or host country specific characteristics does not matter when determining FDI. Most empirical studies using indices such as the index of globalisation and economic freedom are subject to certain methodological limitations such as model selection, parameter heterogeneity, outliers and moral hazard.

More distance between the host and source country would result in less FDI flows due to more managerial and raw material supply chain cost. Similarly, more gross domestic product (GDP) and per capita income (PCI) are leading to more FDI flows into Asian economics. Therefore, major Asian economies should frame their economic policies in such a manner where these counties can strengthen their GDP as well as PCI. Furthermore, above countries should open its economy more and more for better FDI flows as it seems that economic globalisation and economic freedom are major determinants of bilateral FDI flows. The negative impact of inflation and interest rate should be controlled.

From policy perspective, higher scores of economic, social and political globalisation also attract high FDI to the host country. On the same line higher scores in economic freedom mean that less restrictions in terms of economic policies and the policy environment are conducive for free trade and resource transfers. Higher scores in trade freedom, investment freedom and freedom from corruptions also show more developed and conducive policy environment. In the same reasoning higher scores in the composite index of economic freedom which takes information from trade freedom, investment freedom and freedom from corruption and others also encourage flow of FDI in to the host country.

This is the first paper which combines the globalisation index, economic freedom index and distance along with some major macroeconomic variables.

The purpose of this paper is to examine the motivations behind Indian firms’ outward investment, i.e. whether these firms are investing abroad in search of market, resource, technology, strategic-assets, efficiency, etc. Outward FDI by Indian firms has increased considerably in recent years. Such investments have gone to more than hundred host countries and into various sectors. The higher volume of outward FDI following policy reforms requires examination of factors that have motivated Indian firms to invest in different host countries.

The empirical analysis is done for the period from 2008-2009 to 2011-2012 using firm-destination panel data with appropriate adjustment for clustering.

The analysis provides evidence of the existence of multiple motives behind such investments. Indian firms are found to have invested abroad in search of resource, technology (strategic-assets) and efficiency, whereas the evidence on market-seeking motive is found to be at best weak in the empirical analysis. The results are robust to the use of alternative sample of outward investing firms.

This analysis of firm-level motivation of outward FDI by Indian multinationals has pertinent policy implications as well. The presence of multiple motives implies that Indian firms could bring multiple benefits to the Indian economy through outward FDI.

The link between outward FDI and host country factors is examined at the firm level as against at the aggregative level using a comprehensive and unique official database on actual outward FDI made by Indian firms, originating from both manufacturing and non-manufacturing sectors, in the form of equity and loan.

It has been demonstrated by Rugman and his colleagues that a majority of the activities undertaken by the world's largest 500 MNEs, such as sales, assets, and employment, are regional in nature. This evidence has also been extended to trade and FDI patterns of OECD countries. Given the costs associated with doing business in foreign and distant markets, one may expect there to be a regional concentration in such activities. That is, the concentration of MNE activities in regional markets may be consistent with a transactions cost model. The objective of the analysis undertaken in this paper is to measure the extent to which the concentrations of OECD MNE activities can be explained by a formal transactions costs model (the gravity model in this case). These results are important for two main reasons. To the extent the concentrations are consistent with a formal model, then, first, this would provide further theoretical arguments in support of Rugman's hypotheses, and second, this would indicate that MNE managers have it right – that is, the activities of the corporations they manage are as global as they should be. On the other hand, if the activities are not fully explainable by atransactions cost model, the implications would be quite different. Theresults indicate that although some activities can be explained by a gravity model, many dimensions of OECD MNE activities, especially within the EU, are not explainable using a gravity model. That is, many of the activities of EU MNEs are more regionally concentrated than would be predicted by transactions costs.

The purpose of this paper is to analyze the effect of the duration of free trade agreement (FTA) and bilateral investment treaty (BIT) on the foreign direct investment (FDI) flows between OECDs and different level of income countries such as upper- and lower-middle-income countries.

The authors applied the gravity model by adding more variables of interest such as trade openness, export volume, dummy and cumulative variables of FTA and BIT to find out the proper determinants of FDI attraction. Through Hasuman test, the authors find the fixed model is appropriate methodology. Hence, the authors basically use the fixed models to find the effect of the duration of FTA and BIT on FDI flows between different groups of countries.

The main results of the study are briefly summarized briefly as follows. First, the effects of FTA dummy variables and its cumulative variables are greater than those of BIT dummy variables and cumulative variables. If an FTA signifies attracting FDI as well as bilateral trade, and contains an investment agreement provision in it is included in the FTA, it can be seen that the FTA is more effective way of attracting FDI than BIT because FTA is more comprehensive agreement dealing with not only investment issues but also non-investment ones. Second, the BIT effect on FDI is only meaningful when developed countries invest in developing countries. In other words, when a country decides to invest in a developing country with a relatively poor investment environment, whether to enter into a BIT will provide investors with investment stability to gage the investment climate of the host country. Third, the BIT cumulative year effect showed a positive and significant results on FDI inflow and outflow of all cases, unlike the BIT effect. While the fact that BIT cumulative effect has a relatively less positive effect than the BIT dummy effect, implying that BIT effect was evident as time elapsed after fermentation.

The main contribution of this study is that we consider the duration of FTA and BIT explicitly in the model. Previous related studies tried to find out the effects of FTA and BIT on FDI by simply applying dummy variables of them. In this paper, by applying both dummy variables and cumulative variables of FTA and BIT that capture the duration effect, we can deeply understand the effects of national agreements dealing with investment clauses on FDI more dynamically.

The purpose of this paper is to seek a clearer understanding of how firms involved in power intensive industries participate in foreign direct investment. The paper asks the following questions: how skilled are the employees available for hire? What kind of pollution restrictions will be applied to the plant? Is the infrastructure in place to enable free transport of the necessary materials? All of these are factors that can be analyzed on a national level, and are major factors in government policy.

The research is designated to explain how macro policy can be directed towards firms in the power intensive industry, to impact the competitiveness within the industry. Skilled labor differences is reflecting governmental policy in its willingness to contribute to education. Infrastructure can be viewed as an indicator for long‐term policy planning by the government. The pollution variable reflects on macro policy emphasis by governments, by presenting their emission targets. Investment cost variable gives indication of government policy concerning the ease with which foreign investors can enter into and invest in a particular country. The case country is Iceland, an isolated island that is unable to export its abundance directly and therefore must do so through foreign direct investment.

The findings indicate that source countries are attracted by the level of skill in Iceland at the beginning stage of operations when faced with fixed threshold cost. Once the plants have overcome fixed costs, there are positive impacts on marginal investment, the more skilled the source country is compared to the host. Other factors that proved to be important in this case study are distance, infrastructure, government stability, pollution quotas, and the fishing resource.

The relative friendliness a country's policies display towards an industry can make a huge difference when it comes to how successful a business can be, so studying these national‐level policies can help an individual determine what kind of direction to take on the day‐to‐day operational decisions.