The Impact of Foreign Direct Investment on International Trade: An Empirical Study of China

This paper investigates the impact of inward FDI (Foreign Direct Investment) on international trade of China empirically on the country level by using panel data from 1984 to 2007. Two separate transformed models which are based on the gravity equation and refer to the econometric models of some previous studies, are used in this paper to estimate the effect of FDI inflows on exports and imports respectively. The estimation results confirmed the complementary relationship between FDI inflows and trade of China both on exports and imports, which has also been supported by previous empirical studies.

Foreign direct investment spillovers in Portugal: additional lessons from a country study

This paper investigates the impact of FDI on the productivity of Portuguese manufacturing sectors. Model specification is improved by considering the choice of the most appropriate interval of the technological gap for spillovers diffusion. We also allow for sectoral variation in the coefficients of the spillover effect; idiosyncratic sectoral factors are identified by means of a fixed effects model. Inter-sectoral positive spillover effects are examined. Significant spillovers require a proper technological differential between foreign and domestic producers and favourable sectoral characteristics. They may occur in modern industries in which the foreign firms have a clear, but not too sharp, edge on the domestic ones. Agglomeration effects are also one pertinent specific influence.

The determinantss of foreign direct investment distribution among the Brazilian states

O Investimento Estrangeiro Direto (IED) tem desempenhado um papel importante no esforço do Brasil para tornar-se uma economia orientada para o mercado. De 1995 a 2012 o Brasil recebeu $ 511.5 bilhões de dólares em IED. Em 2012, o Brasil foi o segundo país em desenvolvimento que mais recebeu IED e o quarto no mundo (UNCTAD).Devido à concentração geográfica, os estados brasileiros que são consideravelmente menos desenvolvidos e mais pobres, são aqueles que mais precisam de investimentos e que no entanto, não têm sido receptores relevantes de IED. Em 2010, os estados com os maiores estoques de IED foram São Paulo, com 42,3 por cento do total ($ 99,9 bilhões de dólares), Rio de Janeiro com 13,3 por cento ($ 31,4 bilhões de dólares) e Minas Gerais com 10,6 por cento do total ($ 25,1 bilhões de dólares). Como pode ser observado, apenas três dos vinte e sete estados brasileiros receberam cerca de 66 por cento do total de IED destinado ao Brasil.Dada tal diferenciação na distribuição de IED entre os estados brasileiros, o presente estudo busca explicar se o benefício tributário também é determinante para o fluxo de IED, além das demais variáveis já consideradas como determinantes em outros estudos. Dada a limitação de dados, realizamos duas análises econométricas com dados em painel: 1. Usando seis variáveis chaves: tamanho do mercado consumidor, a qualidade da mão de obra, infraestrutura, custo da mão de obra, carga tributária e benefício tributário (por macro regiões), nos anos de 1995, 2000, 2005 and 2010; 2. Usando cinco variáveis: as mesmas do primeiro modelo, excluindo o custo da mão de obra (por falta de dados) e utilizando os dados de benefício tributário por estado, nos anos de 2010, 2011 e 2012.

Export performance, technological upgrading and foreign direct investment strategies in the Asian newly industrializing economies: with special reference to Singapur

Includes bibliography

Policy competition for foreign direct investment in the Caribbean Basin: Costa Rica, the Dominican Republic and Jamaica

Includes bibliography

Chinese foreign direct investment in Latin America and the Caribbean

Includes bibliography.

Foreign Direct Investment in Latin America and the Caribbean 2015

In previous editions of Foreign Direct Investment in Latin America and the Caribbean, the year given on the cover and in the title was the year for which data were presented. Starting with this edition, however, the title carries the year in which the report is published, consistently with the practice for the other flagship reports published by ECLAC. As a result, there is no 2014 edition of Foreign Direct Investment.

The Impact of Foreign Direct Investment on Economic Growth

Over the past four decades, the number of democracies in the world has increased exponentially. This project considers how democracy and FDI affect economic growth as well as whether the impact of FDI depends on the level of democracy in a country. Thus, I explore two major research questions: 1) Whether increased FDI speeds up economic growth, controlling for political regime type, urbanization and other developmental indicators; and 2) Whether an increase in political freedom helps or hinders economic growth, and specifically whether the impact of FDI varies depending on the political regime in the recipient country. To examine these questions, this paper used data from 150 countries over a period between 1980 and 2010 and utilized several models, testing variables such as institutions, agglomerations, urbanization, FDI and type of political regime, among others, for their impact on economic growth. I found that FDI does have a positive impact on economic growth, and that this impact is often magnified when it interacts with other relevant factors. I also found that, after controlling for other variables, FDI inflows do not have a different impact on economic growth in autocracies than they do in democracies. This may be partially explained by autocratic outliers such as China and the OPEC states, which have recently experienced rapid export-led growth. This suggests that factors such as education could have a greater impact on a country¿s economic growth than does its political system.

Food Security and Agri-Foreign Direct Investment in Weak States: Finding the Governance Gap to Avoid ‘Land Grab’

Food security is important. A rising world population coupled with climate change creates growing pressure on global world food supplies. States alleviate this pressure domestically by attracting agri-foreign direct investment (agri-FDI). This is a high-risk strategy for weak states: the state may gain valuable foreign currency, technology and debt-free growth; but equally, investors may fail to deliver on their commitments and exploit weak domestic legal infrastructure to ‘grab’ large areas of prime agricultural land, leaving only marginal land for domestic production. A net loss to local food security and to the national economy results. This is problematic because the state must continue to guarantee its citizens’ right to food and property. Agri-FDI needs close regulation to maximise its benefit. This article maps the multilevel system of governance covering agri-FDI. We show how this system creates asymmetric rights in favour of the investor to the detriment of the host state’s food security and how these problems might be alleviated.

How does country risk matter for foreign direct investment?

In this paper, we aim to identify the political and financial risk components that matter most for the activities of multinational corporations. Our paper is the first paper to comprehensively examine the impact of various components of not only political risk but also financial risk on inward FDI, from both long-run and short-run perspectives. Using a sample of 93 countries (including 60 developing countries) for the period 1985-2007, we find that among the political risk components, government stability, socioeconomic conditions, investment profile, internal conflict, external conflict, corruption, religious tensions, democratic accountability, and ethnic tensions have a close association with FDI flows. In particular, socioeconomic conditions, investment profile, and external conflict appear to be the most influential components of political risk in attracting foreign investment. Among the financial risk components, only exchange rate stability yields statistically significant positive coefficients when estimated only for developing countries. In contrast, current account as a percentage of exports of goods and services, foreign debt as a percentage of GDP, net international liquidity as the number of months of import cover, and current account as a percentage of GDP yield negative coefficients in some specifications. Thus, multinationals do not seem to consider seriously the financial risk of the host country.

Export platform foreign direct investment : theory and evidence

This paper proposes a model that accounts for “export platform” FDI – a form of FDI that is common in the data but rarely discussed in the theoretical literature. Unlike the previous literature, this paper’s theory nests all the typical modes of supply, including exports, horizontal and vertical FDI, horizontal and vertical export platform FDI. The theory yields the testable hypothesis that a decrease in either inter-regional or intra-regional trade costs induces firms to choose export platform FDI. The empirical analysis provides descriptive statistics which point to large proportions of third country exports of US FDI, and an econometric analysis, whose results are in line with the model’s predictions. The last section suggests policy implications for nations seeking to attract FDI.

U.S.-Israel Foreign Direct Investment and Terrorism. ACES Working Paper No. 9, 2007

The Israeli economy has been subjected to a continuous flow of terror since its creation. The focus of our study is how terrorism's impacts the level of production of the high-tech sector. The two main objectives and novelties of the paper are: First our paper can be a major contribution to as yet a new subfield in applied microeconomics attempting to measure the impact of terror on economic issues like FDI and Industry output in general and that focused on the High-Tech industries. Second our research is designed to help us understand the impact of terror news, especially on U.S citizens' reactions to terror in Israel. Our terror variable isn't how many bodies or but how many negative articles regarding terror there are in leading American news paper. We focus on the volatility clustering of terror information arrivals in major US financial papers and its impact on high-tech production and FDI to Israel.

Law and Foreign Direct Investment. IES WORKING PAPER 4/2011

In this paper we examine the effect of law on foreign direct investment outflows with a specific interest in the relationship between international investment law and domestic private property laws. Our results indicate that FDI investor is indifferent to host country property rights, hence shareholder protection by law is not a significant determinant of FDI outflows. We argue that FDI, in contrast with other types of capital flows, can effectively mitigate the agency problem through majority ownership and control, hence reduce exposure to ex-post expropriation by the affiliate. On the other hand, FDI investor remains exposed to risk of expropriation by the host government and is strongly sensitive to the enforcement of law in the host country. In contrast with recent literature we conclude that there are no causal relationship between bilateral investment treaties and FDI.

Does German foreign direct investment lead to job losses at home?

This paper provides firm-level evidence on the labour demand effects of outward investments using a panel of multinationals (MNEs) based in Germany. Distinguishing the type of investments and the location of subsidiaries around the world between 1997 and 2008, our evidence shows that for both the manufacturing and services sector the expansion of employment abroad does not occur at the detriment of employment at home. The analysis is extended to see whether outward FDI causes average wage cuts for workers employed in the German parent firm. Our findings indicate no clear average wage effects due to outward FDI. Given that domestic MNEs are seen to play an important role in the growth potential for an economy, these findings are somewhat re-assuring from a policy point of view.

ICT diffusion and foreign direct investment:a comparative study between Asia-Pacific and the Middle Eastern economies

This chapter investigates the impact of inward and outward FDI on ICT diffusion in the Asia-Pacific and Middle East regions for the period 1996-2008. The results indicate that while inward FDI has generally had a positive and significant impact on ICT diffusion in Asia-Pacific economies, its impact on the Middle Eastern countries has been detrimental. In contrast, the results of this study also show that outward FDI has had, in general, the inverse effect, it has been in general positive and significant for the Middle East countries but insignificant for Asia-Pacific economies.