Sectoral FDI,absorptive capacity and economic growth – empirical evidence from Egyptian governorates

Using a novel panel dataset of Egyptian governorates for the period 1992–2007, we investigate the effects of aggregate and sectoral foreign direct investment (FDI) on Egypt’s economic growth. We distinguish between FDI in the manufacturing, agriculture and service sector. The similarity of governorates in terms of institutional characteristics like culture, language and legal framework and the consistency of the data collection process enables an effective estimation of the effect of FDI on Egypt’s economic growth. Employing General Methods of Moments (GMM) panel estimations, we find that neither aggregate nor sectoral FDI has an unconditional effect on economic growth. We also reject human capital as a channel of absorptive capacity, but reveal an interesting effect of FDI in the service sector on economic growth in interaction with domestic private investment (DPI). Service FDI promotes economic growth only if the host governorate has a minimum threshold of DPI to absorb foreign knowledge and technology.     

Infrastructure Development and FDI Inflow to Developing Economies: Evidence from India

Nowadays, developing economies are becoming the preferred destination of foreign direct investment (FDI) inflow. We draw insights from Dunning's eclectic paradigm to explore how FDI inflow is influenced by the quality of the physical infrastructure and human resources of the host country. We investigate various India‐specific infrastructural factors affecting FDI inflow between 1991 and 2010. Our empirical findings indicate that factors like railway transportation and road network as well as the quality of human resources played a crucial role in attracting FDI. However, air transportation or communication infrastructure is yet to play a significant role. Our study makes a modest attempt to identify areas of concern and scope for the further improvement of India's infrastructure facilities to attract foreign investment in the future. © 2016 Wiley Periodicals, Inc.     

Does foreign direct investment really enhance China's regional productivity?

While foreign direct investment (FDI) is widely recognized as one of major driving forces on promoting the regional economic growth in China, its impact on regional productivity is unclear and less systematically investigated. This article investigates the effect of FDI on regional productivity in China. Specifically, we adopt a newly developed measure of total factor productivity (TFP) to deal with the endogenous inputs choice accompanied with various measures of FDI, enabling to provide robust estimates on the TFP effect of FDI. Moreover, we examine the role of absorptive ability on the FDI-TFP nexus and explore the existence of FDI spillover effect on productivity across regions. The potential difference in productivity effect of FDI between coastal and non-coastal regions is also examined. Based on the province-level panel dataset over the period 1997–2006, the various estimates show that the overall productivity effect of FDI is significantly positive, while this effect depends heavily on the host region's absorptive ability. Technological gap is found to associate with a significantly negative coefficient along with the finding that FDI tends to exhibit a higher impact on productivity in coastal regions than their non-coastal counterparts, highlighting a widening income inequality between coastal and non-coastal regions in China.     

基于金融发展视角下的FDI与经济增长研究综述

众多的决策者与学者相信外商直接投资（FDI）有利于促进东道国的经济增长。但是实证研究结果却表明,FDI的经济增长效应在许多发展中国家却并不明确,主要原因在于FDI效应受到东道国自身环境和条件（即吸收能力）的制约。东道国的金融发展主要通过人力资本效应、技术创新效应、产业关联效应以及市场环境优化效应等机制对FDI与经济增长的关系产生影响。金融发展已经成为东道国FDI效应有效发挥的核心要素。也是未来FDI研究的一个重要的新方向。     

人力资本流动对FDI技术溢出效应的影响——基于吸收能力的实证研究

人力资本流动对增强东道国自身技术吸收能力具有重要意义。本文选取来华留学生数与留学回国人数以及外资就业率作为人力资本流动的代理指标,使用数据包络分析方法（DEA）来测算技术进步,就人力资本流动对FDI技术吸收能力的影响进行了实证分析,并得出结论：FDI和人力资本流动相结合与技术进步存在正相关关系．但正效应并不显著。因此,我国应当提高人力资本流动质量,提升其总体水平,为FDI技术溢出创造优越的人才环境。     

How does FDI inflow affect productivity of domestic firms? The role of horizontal and vertical spillovers,absorptive capacity and competition

This paper examines the existence of externalities associated with foreign direct investment (FDI) in a host country by exploiting firm-level panel data covering the Polish corporate sector. We distinguish between horizontal spillovers (from foreign to domestic firms operating in the same industry) and two types of vertical spillovers: backward (from FDI in downstream industries) and forward spillovers (from FDI in upstream industries). The main findings are as follows. Local firms benefit from foreign presence in the same industry and in downstream industries. The absorptive capacity of domestic firms is highly relevant to the size of spillovers: vertical spillovers are larger for R&D-intensive firms, while firms investing in other (external) types of intangibles benefit more from horizontal spillovers. Competitive pressure facilitates backward spillovers, while market power increases the extent of forward spillovers. Horizontal spillovers are particularly strong in services, while the remaining results, including backward spillovers and the role of absorptive capacity and competition, are mainly driven by manufacturing. Host country equity participation in foreign firms is consistent with higher unconditional productivity spillovers to domestic firms. A number of robustness checks yield results qualitatively similar to those obtained in the baseline specification.     

Revisiting FDI-led growth hypothesis: the role of sector characteristics

Does foreign direct investment (FDI) lead to higher growth? What type of FDI really works? In this paper, we disaggregate FDIs based on their technological characteristics and investigate which kind of FDI leads to output growth. The results for the sample of OECD countries during the period 1985–2012 indicate that FDI inflows to Information and Communication Technologies (ICTs) using and producing manufacturing and service sectors (ICT-based), non-ICT using and producing manufacturing and service sectors (non-ICT-based) and other sectors (non-ICT-other) play no role in contributing to economic growth. However, we provide evidence that absorptive capacities of host countries work through ICT-based FDI inflows. Only if the host countries have sufficient level of human capital, financial resources and technological infrastructure, ICT-based FDI will foster economic growth. The results are robust to controlling missing values, studying the subsample of emerging market economies and consideration of endogeneity.     

FDI与中国技术创新能力的协整分析——基于中国1990-2005年数据

外国直接投资(FDI)对东道国提高生产率、增强国内产业的竞争力具有重要贡献。FDI在对中国经济增长做出贡献的同时,是否也促进了中国技术创新能力的提高?文章运用协整与格兰杰因果检验方法考察了1990-2005年流入中国的FDI和专利授权量之间的关系。研究结果表明,FDI流量与专利授权量存在长期稳定的均衡关系,但FDI流量对专利授权量的贡献在短期内是不明显的。FDI流入类型、中国企业的吸收能力以及FDI与中国企业的互动关系是造成这一现象的主要原因。     

Is FDI Integrating the World Economy?

FDI's spectacular growth, in diverse forms, during the past two decades represented an important force generating greater economic integration. FDI increased substantially in relation to global productive capacity, cross border mergers and acquisitions component of FDI put domestic corporate laggards on notice, and the spread of FDI to non‐tradable service sectors generated the possibility that these traditionally low productivity sectors would be brought closer to the standards of international efficiency. Yet, FDI did not perform an integrating role in a more fundamental sense. There is little evidence that FDI served to speed up income convergence across countries. This was the case for two reasons. First, FDI flows remained highly concentrated. Second, the benefits from FDI appear to have accrued principally where conditions were already conducive to investment and growth. Hence, though cross‐country disciplines through bilateral, regional and multilateral efforts are important in reducing the distortions that lead to misallocation of capital, domestic efforts to raise absorptive capacity will ultimately be critical. Efforts to increase labour mobility, as foreseen, for example, under GATS, could have a significant effect in raising the benefits from FDI as the more mobile labour serves to bridge the cultural, institutional and contractual differences across nations.     

外商直接投资与发展中国家的人力资本发展

人力资本不仅仅影响一国内部经济增长,同时也和外部经济交往比如外商直接投资(FDI)存在互为补充的关系。FDI能够对东道国的人力资本发展起到重要作用,主要通过影响东道国的正规教育和在职培训提升东道国的人力资本水平;发展中国家要加大本国的教育投资;鼓励跨国公司的培训活动和实施吸引人才的制度;实现FDI、人力资本和技术外溢的良性循环。     

When does FDI matter? The roles of local institutions and ethnic origins of FDI

How foreign direct investment (FDI) affects a host environment is a much discussed yet less understood topic of salience for international business managers, policy makers and researchers. Using panel data from 287 Chinese cities over the period 1999–2005, our study assesses (1) the multiple impacts of FDI in both positive and negative domains, (2) the role of local institutional development in moderating these impacts, and (3) whether the moderating effects of institutions differ depending upon the origins of the incoming investment (ethnic- versus non-ethnic-linked). Our analysis shows that indeed, FDI is a double-edged sword: it enhances the host city's economic growth, labor productivity and innovation but it also causes employment reduction and pollution in host cities. Moreover, the host city's institutional development is found to enhance the positive impacts of FDI and reduce its negative ones. Interestingly, the moderating effect is smaller for ethnic-linked FDI than for non-ethnic-linked FDI. As the first comprehensive attempt to unravel the role of institutional development in moderating the ambiguous impacts of FDI in multiple domains, this study confirms that a host's ability to absorb the benefits of FDI while curtailing its associated costs is both plausible and pivotal. As our world becomes flatter and FDI more entrenched in a host's economic and social development, this study provides important implications.     

The impact of horizontal and vertical FDI on host's country economic growth

In this paper, we contribute to the literature investigating the impact of FDI on host country economic growth by distinguishing between the growth effects of horizontal (market seeking) FDI and vertical (efficiency seeking) FDI. Using a new database, we estimate the growth effects of vertical and horizontal US MNE activity into 44 host countries over the period 1983–2003, also using traditional total FDI figures as a benchmark. Controlling for endogeneity and absorptive capacity effects, we find that horizontal and vertical FDI have positive and significant growth effects in developed countries. Moreover, our results indicate a superior growth effect of horizontal FDI over vertical FDI. In line with existing literature, we find no significant effects of horizontal or vertical FDI in developing countries.     

Absorptive capacity from foreign direct investment in Spanish manufacturing firms

This paper deals with the determinants of absorptive capacity from foreign direct investment (FDI) spillovers. We study how firm behavior, capabilities, and structure drive absorptive capacity such as research and development (R&D) activities and expenditures, R&D results, internal organization of innovation, external relationships of innovation, human-capital quality, family management, business complexity, and market concentration. Our results enhance and complement previous evidence of the determinants of absorptive capacity, particularly with different approaches to innovative activities as mediators of the capability.     

South Korea’s outward direct investment and its dyadic determinants: Foreign aid,bilateral treaty and economic diplomacy

This study investigates the factors that affect South Korean outward foreign direct investment (FDI) in developing countries. Most previous studies focus on monadic factors and do not consider how and to what extent bilateral relationships between South Korea and the host countries affect the investment decisions of Korean firms. The current study finds that interstate factors such as South Korea's international investment treaties with and official development assistance to host countries have positive effects on FDI to these countries, while presidential visits have strong and statistically significant effects on FDI only in countries located in non-Asian regions, especially the African continent. The findings suggest that the effects of bilateral relations on South Korea's FDI vary depending on the geographic location of the host country.     

关于人力资本和FDI技术外溢关系的文献综述

FDI的技术外溢效应一直是国内外经济学理论关注的一个焦点,越来越多的研究表明FDI的外溢效应和东道国自身的环境和条件相关。而人力资本在技术外溢效应中的作用近年来得到广泛的关注。本文对国内外经济学者在该领域的研究进行概述和评价,以期为国内后续的相关研究提供一些有益的启示。     

The effect of outward foreign direct investment on home country's export: A case study on Taiwan, 1989–2006

The purpose of this study is to examine the effect of outward foreign direct investment (FDI) on home country's export in Taiwan since the late 1980s. By pooling the time series and cross-section data in a modified gravity model, the study analyzes the effect of outward FDI, both country by country and host groups as a whole, on Taiwan's exports. It is concluded that outward FDI has a complementary effect on home country's export in Taiwan, most significantly evidenced in China-bound investment, which accounted for most FDIs after the 1990s.     

Outward FDI from the USA and host country financial transparency

Extant research has focused on the role of host country corruption as either an attractant or deterrent to foreign investment. These studies generally contend that corruption acts more like a ‘grabbing hand’ than as a ‘helping hand’. However, it is plausible that a significant component of foreign investment may be attracted to locales that offer opaque financial environments. Specifically, we hypothesize that money laundering opportunities may encourage illicit capital flows into certain jurisdictions. Using the USA as the ‘source’ country, we investigate the effect of corruption and money laundering opportunities on Foreign Direct Investment (FDI) flows. The empirical findings indicate that corruption deters foreign investment, while money laundering opportunities attract it. We also show that the effect of money laundering and corruption vary based on the host country's level of development. Our findings bolster the contention that FDI into certain host countries is motivated by a facilitation of illicit capital flows.     

外商直接投资技术外溢吸收能力影响因素研究——基于中国29个地区面板数据分析

东道国的吸收能力是外商直接投资技术外溢实现的关键;文章论述了技术外溢的产生途径;对中国29个地区面板数据的平稳性进行检验,从东道国吸收能力的角度分析影响外商直接投资技术外溢的因素:人力资本、经济开放度、基础设施等。实证研究结果表明,高等教育和高中教育的人力资本、基础设施建设和外商直接投资相结合对技术外溢的吸收能力有正向作用,而对外贸易和初中、小学的人力资本尚未构成对外商直接投资技术外溢的促进作用。     

Spillovers from foreign direct investment and firm growth: technological,financial and market structure effects

This article examines spillover effects from inward investment on domestic firm growth in the case of a developed host country. The emphasis is placed on the role of the technological gap between domestic and foreign firms in identifying the importance of technology diffusion from the presence of multinationals. An augmented production function is employed to account for technological, financial and market structure effects. Based on a sample of 2589 manufacturing firms operating in Greece between 1992 and 1997, the analysis provides evidence that the significance of spillovers varies with the relative technological position of domestic firms and is higher in the middle and upper quantiles of the growth distribution. It was estimated that a unit increase in the foreign presence in Greek industry raises output growth by 7% on average, in a five‐year period, after controlling for technological differences among firms. This result is consistent with the ‘absorptive capacity’ hypothesis that the technological capability of the host country relates positively to FDI spillover benefits.     

Foreign direct investment,technological advancement,and absorptive capacity: A network analysis

Technological advancement is an important instrument for economic and technological development, but most countries receive the benefits of innovation and new technologies through technology transfer. Previous studies typically consider direct linkages in order to understand technological advancement without paying much attention to indirect linkages, such as the inter-connectivity of the recipients of Foreign Direct Investment (FDI). To understand the relationship between FDI and technological advancement and whether recipients’ absorptive capacity matters, we model global FDI networks for the period 2009–2016. We find empirical evidence that the global FDI network has a core-periphery structure, and that core countries are more technologically developed than peripheral countries. We also find empirical evidence that a country’s centrality of position in the global FDI network is positively associated with the technological advancement of a country, and that the absorptive capacity of a country can moderate this relationship. Regression analyses using instrumental variable estimators confirm the robustness of our findings. The most striking finding of our research is the strong moderation effect of knowledge intensity, a constituent of absorptive capacity. This finding provides a nuanced understanding of absorptive capacity, demonstrating the ways a country can benefit from FDI by reshaping the factors related to absorptive capacity.