Narrow Results

A key component for economic growth is the foreign direct investment (FDI), which drew the attention of researchers worldwide. This study aims to examine the relationship between foreign direct investment (FDI), state-owned investment (SOI), private investment (PI), import (M), export (X) and Vietnam’s economic growth (GDP) since the Renovation (1986) to now (2019). The Vector Autoregression Model (VAR) and Vector Error Correction Model (VECM) were utilized to realize the above-mentioned goals. The Johansen co-integration test confirmed that there exists a long-run relationship among the above variables. The Granger causal relationship test found one-way causal relationship from GDP to FDI and PI in the short-run. Besides, the similar causal relationship between export and GDP is confirmed. Also, the two-way causal relationship between PI and export in the short-run is also found in this study. In addition, the impact of a shock of SOI on GDP is more significant than that of an FDI or PI shocks on GDP. By contrast, the response of GDP to shocks of import and export seems are small. Finally, it is certain that FDI plays an essential role in Vietnam’s economy.

This paper uses systematic panel data methods to scrutinize the impact of China’s foreign direct investment (FDI) on economic growth in eight Association of Southeast Asian Nations (ASEAN) countries from 2004 to 2018. The findings indicate a statistically significant causal association between these countries’ economic growth and Chinese investment, which shows that China’s FDI is not a cause but rather a result of the economic expansion. Specifically, the results show that there was a causal chain running from fixed capital to Chinese FDI, through trade openness, in the relatively wealthier ASEAN countries; also, there was a causal chain running from economic growth to Chinese FDI, through trade openness, in relatively poorer ASEAN countries.

The purpose of this study is to examine the role of air pollution in foreign direct investment (FDI) outflows. Using PM${}_{2.5}$ concentration as an index of air pollution and a panel data of 102 economies from 2011 to 2020, several specifications of a dynamic panel spatial autoregressive model justified by several diagnostic tests and that considers the potential endogeneity problem have been estimated. The primary finding is that air pollution has a positive impact on a country’s FDI outflows. It is also found that air pollution is a more important and robust factor affecting outward investment than the effective corporate tax rate, political risk and the level of economic development. Moreover, outward FDI exhibits a positive spatial dependence among countries and regions and has a positive dynamic process. All these conclusions are consistent with our expectations and are robust for different model specifications.

The resurgence of anti-globalization has made multinational companies concerned about the impact of host countries’ economic policy change on outward foreign direct investment (OFDI). However, existing studies mainly focus on improving a host country’s institutional environment but ignore the impact of anti-globalization policies. This paper aims to complement this line of research by considering the effect of one-time economic policy shock on OFDI. In particular, using a unique dataset, this paper empirically investigates the effect of Canada’s review policy on investments by Chinese state-owned enterprises (SOEs). The results suggest that an intensified review policy effectively discouraged Chinese SOEs from investing in Canada. However, as a coping strategy to the review policy, Chinese SOEs continued to invest in Canada by adding more funding to the existing projects, establishing new businesses or investing in small-scale deals.

This paper explores the applicability of the well-known “Pollution Haven” hypothesis and “Pollution Halo” hypothesis at the city-level in contemporary China. The fixed effect model and the threshold effect model are employed to investigate the relationship between foreign direct investment (FDI) and carbon emission in 265 Chinese prefecture-level cites. Based on the entire sample, the results of fixed effect model support the applicability of “Pollution Haven” hypothesis, while the hypothesis is substantiated primarily in eastern and western China. In contrast, the central part of China does not conform to either hypothesis, suggesting that the emergence of a distinct “Pollution Haven Basin” within the country. Unlike the inverted “U-shaped” curve commonly posited in the existing literature, the threshold effect model unveils a “U-shaped” connection between FDI and carbon emission. Specifically, we find that the turning point is at around $52.93 million, which implies that FDI needs to surpass a certain threshold to actively drive carbon emission in the presence of a “Pollution Haven Engine”. Accordingly, in the context of more in-depth international trade and China’s carbon neutralization commitment, it would be wise for the Chinese local governments to control the FDI scale, and encourage FDI to tilt toward the clean sectors.

Prior studies focused on the relationship between foreign direct investment (FDI), carbon emissions, and trade openness; however, previous investigations have yet to explicitly look at carbon emissions using data at the sector level. Using the threshold regression technique and the concentration of carbon emissions as the main indicator, this research adds to the body of knowledge by examining the sector-level impacts of FDI and trade openness on carbon emissions. Our results show that the effect depends on the selected thresholds, highlighting the effects of FDI and trade openness on carbon emissions in the industrial area. The influence coefficient of FDI on carbon emissions in industries particular to a specific sector varies over time. Conversely, carbon emissions are affected by trade openness both favorably and unfavorably. More specifically, in less carbon-intensive industries the, lack of carbon emissions results from greater international trade openness. Within industrial sectors, carbon emissions are heavily influenced by variables including GDP per capita, employment levels, autonomous technical invention, and the intensity of economic movement.

A dynamic between foreign direct investment (FDI) and international trade, and the level of urbanization, has been observed in many developing countries. This study seeks to fill a literature gap on the extent that FDI and international trade impact developing Asian economies through urbanization. The study explores the relationship between FDI, international trade, and urbanization in 31 developing Asian economies from 1991 to 2019, utilizing the dynamic panel model. Empirical results imply the significant effect of FDI inflows and trade openness on urbanization in developing Asia. The impact is clearly observed following the global financial crisis despite increased deglobalization. This finding supports the existence of structural changes and the transformation of economies in the region, which, among other factors, are driven by stronger global supply chains and improved logistics infrastructure in developing Asia.

The main objective of this paper is to examine the role of Foreign Direct Investment (FDI) in promoting the growth of the economy via export promotion by using the annual data from 1979–80 to 2000–01. This study uses the Johansen co-integration test and the results demonstrate that there is a long run relationship between Gross Domestic Product (GDP), FDI and Export (EX). The same relationship is also established when the Index of Industrial Production (IIP) replaces GDP. However, the positive elasticity coefficients between FDI, GDP and FDI, IIP are less than the positive elasticity coefficient between EX, GDP and EX, IIP. It implies that EX plays a comparatively better role in the growth of the Indian economy than FDI. Thus, on the eve of India's plan for further opening up of the economy, it is advisable to open up the export-oriented sectors so that a higher growth of the economy can be achieved through the growth of these sectors.

This study aims to incorporate the role of domestic financial system in transferring the technological diffusion embodied in FDI inflows on the Malaysian economy from 1970–2001. Applying bound test, or unrestricted error correction model (UECM) proposed by Pesaran et al. (2001), the presence of FDI inflows creates a positive technological diffusion in both short- and long-run if the evolution of domestic financial system has achieved a certain minimum level. This implies that the improvement of technology level in Malaysia in the long run is due to the spillover efficiency effects from FDI. Hence, the study suggests that FDI tends to be more likely to enhance economic growth more efficiently when a recipient country has a well-developed and well-functioning financial sector.

The paper attempts to analyze the spillover effect of Foreign Direct Investment (FDI) across Indian manufacturing industries. Foreign presence by way of FDI brings new channels of technology spillover to the domestic industrial firms in the form of enhanced efficiency and diffusion of knowledge in the long-run. By carrying out Pedroni cointegration tests, the analysis tries to provide a long-run relationship between endogenous variables and explanatory variables, pertaining to technology spillovers across Indian manufacturing industries. We find that technology spillovers are relatively higher in industries like food products, textiles, chemicals, drugs and pharmaceuticals and non-metallic mineral products.

This paper examines the effects of market demand, labor productivity, socio-economic development and provision of industrial estates on foreign direct investment (FDI) across 13 states and 1 federal territory in Malaysia. The analysis uses FDI data of the manufacturing sector and data on independent variables for the years 1990, 1995, 2000 and 2005. Results indicate positive relationships between these factors and FDI inflows in the manufacturing sector. FDI inflows are found to be most sensitive to labor productivity and GDP. The significance of socio-economic development for FDI is viewed in a long-term perspective.

This paper investigates the interactions between foreign direct investment (FDI) and country-level individual governance indicators for a sample of 173 countries from 1996 to 2007, and also the effect of legal origin, international financial reporting standards (IFRS) and ownership diffusion on them. We find evidence of positively significant two-way relationships between each of the six individual governance indicators and lagged FDI inflows scaled by lagged GDP to confirm that governance is a function of FDI inflows and vice-versa. The overall interpretation of the results is that FDI inflows, IFRS, ownership diffusion and legal framework of a country 'matter' for macro-level governance in a competitive global business environment while FDI inflows are dependent on individual governance indicators and other macro-economic variables to a large extent. Both IFRS and legal origin have no direct link to FDI inflow. These findings have policy implications for individual governments and international donor organizations to undertake tenable actions for the improvement of country-level individual governance indicators to attract more FDI inflow.

Foreign direct investment (FDI) influences host country's economic growth through several channels. Empirically, a variety of studies considers that FDI generate economic growth but others conclude that FDI is a source of negative effects. By reviewing existing theoretical and empirical literature, we intend to shed light on the main explanations for the mixed results. The main conclusion is that the effects of FDI on economic growth depend on the domestic conditions of the host country (e.g., human capital, economic and technological conditions, degree of openness of its economy). Thus, the host countries governments have a key role in creating the conditions that allow for the leverage of the positive effects or for the reduction of the negative effects of FDI on the host country's economic growth.

Japanese firms undertake multiple foreign direct investments (FDIs) in the United States. When Japanese firms undertake merger and acquisition (M&A) FDI, they acquire indivisible assets in the United States. To utilize their acquired assets fully, these firms may undertake additional non-M&A FDI. This implies a positive association between the number of M&As and the number of non-M&A FDIs because they may be complements. In contrast, the literature on the choice of modes of FDI examines the tradeoff between M&A and non-M&A FDI. This may suggest a negative association between the number of M&As and non-M&A FDIs because they may be substitutes. The authors examine whether the number of M&As and non-M&A FDIs are positively associated or not by proposing an econometric model that tests the contemporaneous association and the lagged complementary effect between M&A and non-M&A FDI. Using firm-level data, the authors find evidence that M&A and non-M&A FDI of Japanese firms in the United States are positively associated. Particularly, the findings indicate that given all other things equal, a one unit increase in the number of the firm's M&A FDI (non-M&A) projects in a given year will increase the firm's average non-M&A (M&A) FDI by 28.1% (15.8%) the following year.

Recent studies in the innovation literature show that Foreign Direct Investment (FDI) enhances innovations in recipient countries through spill-over effects. In this paper we extend the existing literature by incorporating the corruption index in the estimation procedure. Using a cross-country analysis from the Europe and Central Asia (ECA) region, covering 57 countries over the period of 1995–2010, we find no evidence of FDI spill-over effects on innovations, when corruption is endogenously modelled in the regression. Interestingly, we find that corruption and expenditure on education sector are positively related to the number of patents applications, suggesting anti-corruption programs encourage innovations that promote economic growth. Our study shed light on the national innovations and anti-corruption programs.

We discuss the important determinants requires to develop green patents, which eventually reinforce green growth. The theoretical framework examined four elements, the enforcement of intellectual property rights (IPRs), research and development (R&D) expenditures, market size and environmental taxations. We empirically test the green patent data to test the interrelationship of green patents representing the green innovations and IPR, R&D expenditures, market size and environmental taxations. Keeping in view the availability of the data we studied 11 developed countries, which are Austria, Australia, Canada, France, Japan, Finland, Germany, Sweden, U.K and U.S. The panel data can better handled the technological change rather than the pure cross section or pure time series data. Therefore, this study used the Pooled Least Square estimation techniques like Fixed Effect Model (FEM) and random effect model (REM) for both balance period of 1995–2010 and unbalanced period from 1995–2010. We only interpreted the balance period results depicting the enforcement of IPRs has negative and significant impact on green patents while the R&D expenditures, market size and environmental taxations has positive and significant impact on the green patents e.g. development of green innovations. We believe that the enforcement of explanatory variables will eventually acquire green growth.

This paper estimates an adjusted gravity model by directly measuring downward wage rigidities based on our modified regime-switching specification in order to investigate the effect of labor market flexibility on the flows of foreign direct investment (FDI) between Korea and 18 counterpart countries. To measure wage–cost rigidities, we employ firm-specific sales data for 410,012 firms in 19 countries obtained from Compustat as a relevant driver of wage costs extracted from earnings data by International Labor Organization (ILO). Our results suggest that greater wage rigidities in a counterpart country are associated with less net-outflows of FDI in Korea.

Foreign direct investment (FDI) flows into Vietnam have increased significantly in recent years and are distributed unequally between provinces. This paper aims to investigate the locational determinants of FDI in 62 Vietnamese provinces and whether spatial dependence is a significant factor that both researchers and policy-makers should take into account. We report that province-specific per-capita income, secondary education enrolment, labor costs, openness to trade, and domestic investment affect FDI directly within the province itself and have indirect effects on FDI in neighboring provinces. The direct and indirect effects coexist with spill-over effects and spatial dependence between provinces. Our findings indicate that FDI in Vietnam reflects a combination of complex vertical and export platform motivations on the part of foreign investors; and an agglomeration dynamics that may perpetuate the existing regional disparities in the distribution of FDI capital between provinces.

This paper is an empirical investigation on economic growth for Malaysia, with focus on income inequality, foreign direct investment (FDI), financial development and trade. Co-integrating regression procedures namely, fully modified ordinary least squares (FMOLS), canonical co-integrating regression (CCR) and dynamic ordinary least squares (DOLS) were employed. Positive relationship between growth with financial development and trade are found to be consistent across all estimations. Income inequality on the other hand though negative, does not seem to exhibit robust significant statistical relationship with growth. The orders of integration for variables used have been demonstrated to be governed such that a long-run relationship prevails.

This study aims to explore the influence of fiscal transparency on foreign direct investment (FDI, hereafter) in China under the consideration of the spatial dependence of FDI. The study adopts panel data for 30 provinces from 2010 to 2014 to estimate a one-way fixed-effect spatial Durbin model. The primary finding of this study is that a higher level of fiscal transparency will attract more FDI, while keeping other factors constant and considering the spatial dependence of FDI. Other explanatory variables, such as gross regional product and the density of railways, also have statistically significant influences on FDI. Consequently, this study suggests that the Chinese local governments should improve their fiscal transparency in order to attract more foreign capital and further stimulate their economic development as well as China’s economic growth as a whole.