Environmental determinants of U.S. foreign direct investment in developed and developing countries: A structural analysis

This study attempts to explain theoretically and empirically the influence of developed and developing countries’ environments on foreign direct investment from the United States. It is postulated that foreign direct investment into these economies can be explained by examining interactions among three environmental constructs: technological development, quality of life, and political instability. A structural equation model is developed to test the concurrent and longitudinal influence of the three environmental constructs on foreign direct investment into these economies from the United States.     

World market integration through the lens of foreign direct investors

This paper is motivated by the unparalleled increase in foreign direct investment to emerging market economies of the last 25 years. Using a large cross-country time-series data set, we evaluate the dependence of foreign direct investment on global factors, or worldwide sources of risk (i.e., factors that drive foreign direct investment across several countries). We construct a globalization measure that equals the share of explained variation in direct investment attributable to global factors. We show that our globalization measure has increased steadily for developing and developed countries. For the full sample of countries, the globalization measure rose by over 10-fold from 1985 to 1999. Furthermore, in recent years, developing countries' exposure to global factors has approached that of developed countries. Finally, our globalization measure correlates strongly with measures of capital market liberalization, supporting our hypothesis that increased market integration leads to a greater role for worldwide sources of risk. We discuss the implications of our results for public policies regarding capital market liberalization and policies directed at attracting foreign investment.     

Word Power: The Impact of Negative Media Coverage on Disciplining Corporate Pollution

Globalization is multifaceted and involves the interaction among businesses, services, governments, and societies beyond national borders. As a result, the flow of foreign direct investment (FDI), international trade in goods and services, and the economic interdependence of the nations of the world have been increasing. At the same time, much attention has been paid to the effect of corruption prevalent within many cultures and societies, and its impact on the economies, especially developing economies. This paper examines the relationship between human capital investment, the level of national corruption, and the global economic integration (GEI) of a nation in developing countries. Based on the data collected from over 60 countries, and building on the FDI and human capital theories, it was found that human capital investment and corruption are related to GEI. It was also found that the level of corruption moderates the relationship between human capital investment and GEI of developing economies. The findings of the study can help to deepen our understanding of GEI and have practical implications for developing countries in terms developing human capital, which plays a critical role in today’s knowledge-based economy.     

Injecting demand through spillovers: Foreign direct investment,domestic socio-political conditions,and host-country entrepreneurial activity

This study examines how foreign direct investment (FDI) spurs entrepreneurial activity in host countries. We also investigate why this relationship varies across countries because of domestic socio-political conditions. The findings from our panel analyses of 104 countries from 2000 to 2009 are consistent with our predictions that foreign direct investment positively relates to business creation and this positive effect is strongest in countries with poor institutional support, weak political stability, and low general human capital. Our work provides new insights into how cross-border investments and domestic socio-political conditions jointly influence entrepreneurial activity, especially in emerging and developing economies.     

The investment development path of newly developed countries

According to foreign direct investment (FDI) path theory, developed countries are grouped into two phases, known as the fourth and fifth phases. Fourth‐phase countries (newly developed economies) show a technological and institutional “gap” in comparison with fifth‐phase economies, which explains their lesser capacity to generate direct investment. We found that these countries, which were less developed economies in the 1980s, had undergone a deep structural transformation. This transformation encouraged the multinationalization of firms, which is a differentiating element and one outcome of their development process. These results have clear policy implications: the governments of newly developed countries should take steps to increase the endowment of knowledge‐intensive assets. The main contribution of this paper is the theoretical reformulation of the fourth phase of the investment development path theory.     

Multinational enterprise strategy,foreign direct investment and economic development: the case of the Hungarian banking industry

This paper examines foreign direct investment (FDI) in the Hungarian economy in the period of post-Communist transition since 1989. Hungary took a quite aggressive approach in welcoming foreign investment during this period and as a result had the highest per capita FDI in the region as of 2001. We discuss the impact of FDI in terms of strategic intent, i.e., market serving and resource seeking FDI. The effect of these two kinds of FDI is contrasted by examining the impact of resource seeking FDI in manufacturing sectors and market serving FDI in service industries. In the case of transition economies, we argue that due to the strategic intent, resource seeking FDI can imply a short-term impact on economic development whereas market serving FDI strategically implies a long-term presence with increased benefits for the economic development of a transition economy. Our focus is that of market serving FDI in the Hungarian banking sector, which has brought improved service and products to multinational and Hungarian firms. This has been accompanied by the introduction of innovative financial products to the Hungarian consumer, in particular consumer credit including mortgage financing. However, the latter remains an underserved segment with much growth potential. For public policy in Hungary and other transition economies, we conclude that policymakers should consider the strategic intent of FDI in order to maximize its benefits in their economies.     

中国FDI激增对东南亚FDI的影响:基于1986-2001年板面数据的分析

近几年来,针对中国对外直接投资流入量激增这一现象,有些学者认为其挤占了东南亚经济体的投资。本文采用固定因素估计量,运用FDI区位决定因素模型来测算中国FDI与东南亚经济体FDI之间的关系。结果表明,1986-2001年间中国是提高而不是分流了其邻国的FDI。     

加入WTO后我国引进外商直接投资的风险防范

改革开放20多年来,外商直接投资已经成为促进我国经济持续增长的重要因素。但同时直接投资也给东道国带来一定的风险。加入WTO后,随着我国市场进一步的对外开放,外商直接投资将呈现新的趋势,在引进外商直接投资的过程中也将会面临新的风险。在此基础上,本文提出了规避风险的一些针对性的防范措施和建议,以使外资更好地为国民经济服务。     

The impact of FDI on the performance and entrepreneurship of domestic firms

This paper examines how foreign direct investments influence the performance and entrepreneurship of domestic firms, a crucial question for economies driven by incursion of exogenous factors and especially transition economies. The intent is to investigate the way foreign direct investments shape the capabilities of domestic firms; hence, for this purpose, we take Macedonia, a Southeast European economy, as a case study. We find that (i) foreign ownership has helped restructure and enhance the productivity of domestic firms, (ii) FDI has positive influence in reinforcing the creation of new firms, and (iii) in line with the established literature, a foreign investment is likely to influence the job seeker to get employed rather to start their own business. Overall, the results confirm the influence of foreign firms in assisting entrepreneurial activity. The impact of foreign investment is, in general, positive and tends to influence the restructuring process of domestic enterprises.     

Inward investment and industrial competitiveness

Inward investment—foreign direct investment in subsidiaries and joint ventures—has played an important part in Europe's post-war development as multinational firms, particularly American multinationals, became a major feature of many European economies. Latterly, we have seen an increasing presence also from Japan and other South-East Asian countries, as well as a resurgence of intra-European investment. What has been the effect of this on the competitiveness of European industry?     

中国吸引外资对东南亚国家吸引外资影响的实证研究

中国吸引外资的浪潮引起了人们普遍的忧虑,中国吸引外资是否会导致流入东南亚国家的外资逐渐减少。本文在假定外资的供应是有弹性的前提下,利用对外投资区位决定因素的模型和固定效应分析方法来检验中国吸引外资与东南亚经济体吸引外资间的关系。结果显示在1986年至2001年间,中国吸引外资的增长实际上提高了邻国经济吸引外资的能力,而不是排挤了邻国外资的流入。     

Doing business in Malaysia

The importance of international trade to the Malaysian economy can hardly be exaggerated. Trade represents a lifeline for the Malaysian economy. Export‐oriented industrialization in the 1990s converted the labor‐surplus economy into a labor‐deficit one and then back to a labor‐surplus one in 2000 and beyond. The incidence of poverty has fallen by half since the early 1980s. Trade has also contributed much to the structural transformation and modernization of the economy. Had Malaysia been a closed economy, Malaysia would have shared the same fate as some other less developed countries that remain economically backward. Its external trade policy has paved the way for greater inflows of foreign direct investment, as foreign direct investors are not so much interested in serving the small domestic market as serving the vast external market. The large inflows of foreign direct investment have conferred positive effects on the domestic economy. This has meant significant improvements in the overall living standards for the Malaysians. Internationalization has provided employment opportunities, thereby raising their living standards through higher and more stable earnings. © 2009 Wiley Periodicals, Inc.     

Foreign direct investment in Central and Eastern Europe

Foreign direct investment is an important catalyst for the economic changes in transition economies offering host countries external resources, technology, management, and access to foreign markets. It is therefore high on the public policy agenda in the transition economies of Central and Eastern Europe and the newly independent states of the former Soviet Union and figures prominently among assistance activities at the bilateral and multilateral level. This article analyses the legal and institutional framework and the economic performance of foreign direct investment in fourteen European economies in transition at the beginning of 1993.     

俄罗斯吸引外国直接投资的政策研究

近年来,俄罗斯政治形势比较稳定,经济持续增长,吸引外国直接投资额迅速增长,同时是世界上吸引外国直接投资额增幅最大的国家之一。尽管还存在外国直接投资在外资总额和国内生产总值中比例不大、行业和地区分布不尽合理、投资环境也有待于进一步改善等问题,但是俄罗斯将成为外国直接投资热点之一已是不争的事实。     

外商直接投资对经济增长的影响分析

近年来,外商直接投资作为国际化经济的显著特征之一日益发展。它作为外资企业谋求经济利益的主要经济活动之一,与贸易并行的国际经济活动的一部分。以中国、巴基斯坦及日本为例,利用宏观经济数据,用计量经济模型,定量比较分析外商直接投资对经济增长的影响。结果表明:外商直接投资与贸易、人力资本等因素促进中国和巴基斯坦的经济增长,但是促进效果不同。     

Foreign Direct Investment Inflows,Economic Growth,and Trade Balances: The Experience of the New Members of the European Union

The study examines the role of foreign direct investment (FDI) on economic growth and trade balances of 10 emerging economies in Europe before they joined the European Union. This article uses the Granger causality test to investigate the link between FDI inflows and economic growth for the countries under study. The findings show that gross domestic product growth has a unilateral Granger-cause on FDI inflows for 9 of 10 emerging European economies. However, the results did not show FDI inflows Granger-causing the changes in economic growth of any of the 10 countries. Furthermore, FDI inflows had no or negative effects on trade balances of the majority of the emerging European nations. The policy implications of this study are that host governments in emerging economies must carefully evaluate spillover effects of FDI inflows on their economies before offering significant incentive packages to lure multinational enterprises into their countries.     

Foreign direct investments in developing countries: The openness hypothesis and policy implications

A cross-sectional time series model was estimated to explain the influence of the openness of an economy and political instability on gross inflow of foreign direct investments into developing countries. Results indicate positive relation between the openness of developing economies and the inflow of foreign direct investments and negative relation between political instability and the inflow of foreign direct investments. Research findings and policy implications are presented.     

Doing business in Brazil: A strategic approach

Brazil has the largest economy in South America, and the second largest in Latin America, offering one of the most promising markets in the world. Along with China and India, Brazil is ranked among the nations with the highest predicted development rates in the next 25 years. In the early 2000s, Brazil accounted for 56% of all foreign direct investment flows to South America and 52.5% of the foreign direct investment stock in South America. Brazil is also a key player in the design and development of the Free Trade Agreement of the Americas (FTAA), which is scheduled to be effective by 2005. The FTAA is expected to be the world's largest regional trading block. In 2002, Brazil was ranked twelfth amongst the largest economies in the world. Brazil is one of the world's “Big Five” emerging markets, along with China, India, Mexico, and Indonesia. In the past decade, Brazil was second to China among emerging economies for received foreign direct investment. This article elaborates on the main aspects of doing business in Brazil and discusses some of the challenges and opportunities facing the Brazilian economy. © 2004 Wiley Periodicals, Inc.     

Should I stay or should I go now? Understanding terrorism as a driver of institutional escapism

Prior empirical research has examined the effects of terrorism on foreign direct investment. These studies reveal the negative impact of terrorism on national economies, but neglect to theorize and examine how terrorism drives institutional escapism by promoting outward foreign direct investment (OFDI) to countries with lower risk levels. This study proposes and tests a rationalist explanation that builds on the concept of institutional escapism for how terrorism encourages increased levels of OFDI, particularly to countries with reduced risk. Drawing on the resilience, political violence, and international business literatures, we demonstrate through a unique global dataset of 22,873 observations, 5584 home-host country pairs, and 153 countries over 16 years (1995–2010) that terrorism induces institutional escapism in terms of OFDI.