Foreign direct investment and civil violence in Sub-Saharan Africa

Despite the steady growth in foreign direct investment (FDI) flow into Sub-Saharan Africa (SSA), which is facilitated by the United Nations "2030 Agenda for Sustainable Development", economic development in SSA countries remains relatively weak, due in part to frequent incidents of civil violence. The critics of FDI inflow into SSA posit that the cross-border capital flow fuels civil conflict and unrest, whilst the proponents maintain that FDI inflow helps developing countries raise their economies. To reconcile these two views, this paper considers the impact of FDI on civil violence in SSA by distinguishing recipient industries of FDI. The results from a new general equilibrium theory suggest that an increase in resource-directed FDI inflow to countries where the resource sector is skilled labour (unskilled labour) intensive reduces (increases, respectively) the risk of violence. Using a panel data consisting of 34 SSA countries for 1972–2013, the dynamic panel estimates provide support for our theoretical findings. In particular, an increase in FDI inflow reduces the risk of civil violence for skilled labour intensive fuel-resource-rich SSA countries. However, the likelihood of violence can increase in FDI inflow for countries that are rich in unskilled labour intensive non-fuel, ore and other mineral resources.     

Foreign direct investment and growth under economic integration

This paper studies foreign direct investment (FDI) and economic growth in a two-country endogenous growth model. Starting with a core-periphery steady state in the world, the model shows that economic integration gives rise to FDI, leads to an expansion of R&D activity in the industrial core, and increases the world growth rate. In that process, the peripheral country enjoys a rise in the level of living standards. The model suggests that the often-observed positive correlation between inward FDI and economic growth does not necessarily imply any causal relationship—both of them respond endogenously to economic integration.     

Foreign direct investment,institutional quality,economic freedom and entrepreneurship in emerging markets

This study investigates the relationship between foreign direct investment, institutional quality, economic freedom, and entrepreneurship in emerging markets. The research compares the capacity and appetite for business creation among high-income, low-income and emerging countries. The results are based on a panel study of data, from 2004 to 2009 for 87 countries, using as its source “The World Bank Entrepreneurship Snapshots” to look at the connection between business creation, institutional quality, market freedom and foreign direct investment (FDI). The findings reveal a strong positive relationship between institutional quality and business generation in all three of the above categories. The freedom to create businesses and invest has an impact on business generation in emerging countries, while the influence of international trade appears more important as a spur to the genesis of business in low-income countries. Finally, there is a direct and significant relationship between FDI and business development in emerging countries. This result is consistent with “the spillover theory of entrepreneurship” (,  and ).     

International linkages and productivity at the plant level: Foreign direct investment, exports, imports and licensing

Productivity growth may be affected particularly for developing countries by international linkages or technology transfer. We evaluate relationships between productivity and FDI, exports, imports and licensing for Turkish manufacturing plants in the apparel, textiles, and motor vehicles industries. We assess performance premia associated with these international technology transfer channels that control for plant size and location. We then use a structural model to allow for plant-specific input composition and interactions, estimated alternatively by quantile regression and semi-parametric techniques to recognize plant heterogeneity and to accommodate simultaneity and selection issues. Overall, we find that productivity is most closely related to foreign ownership, especially for larger plants and in combination with other forms of technology transfer, followed by exporting and then licensing.     

Foreign direct investment and labor productivity: New evidence from China as the host

We use a pooled city‐level data set, consisting of 2032 observations from 11 consecutive years, to examine the causal relationship between the intensity of FDI inflow and the increase of technical efficiency in various cities in China. The results confirm the exis‐tence of feedback effects between per capita FDI intensity and labor productivity. However, FDI intensity in terms of the geographical size of the city does not Granger‐cause the increase in labor productivity. Spillover efficiency to various cities in China is investigated in detail. We split the sample into coastal and inland cities, taking into consideration time lags. The feedback effects of labor productivity on inward FDI also are estimated statistically. Finally, we discuss the policy implications of our research. © 2000 John Wiley & Sons, Inc.     

The labour situation in South Africa

The following article examines the situation of the black workers in South Africa from the legal and institutional points of view and describes what their situation is like in practice.     

Foreign direct investment in Central Europe

Central European governments see foreign direct investment (FDI) as one of the main macroeconomic mechanisms for stabilizing the volatile process of economic and political transition. What are the favorite destinations of FDI in Central Europe? What are the motives of Western investors? Why does the amount of FDI vary so much between countries?     

Foreign direct investment and entrepreneurship: gender differences across international economic freedom and taxation

Using recent cross-national data, this paper examines the impact of foreign direct investment (FDI) on entrepreneurship activity. The impact of FDI on entrepreneurship is not clear a priori, with possibilities of both a negative effect (crowding out) and a positive effect (synergy or complementarity via spillovers). Results find support for the crowding out effect; however, this effect varies across nations with different prevalence of entrepreneurship. Another focus of this work is on gender differences. The crowding out effect is stronger for the full sample rather than the subsample of female entrepreneurship. This finding stands up to a battery of robustness checks. Policy implications are discussed.     

Foreign direct investment and wage differentials in Taiwan

Abstract

The ease of restrictions on foreign direct investment in China since 1990 has attracted a continuous and dramatic flow of outward investment from Taiwan to the mainland. At the same time, the relative wages for skilled workers in Taiwan have risen mildly despite a rapid increase in the share of educated workers in its labor market. The aim of this paper is to explore the linkage between capital outflows to China and the wage share of skilled workers in Taiwan over the period 1991 – 2001. We find that the pattern of changes in relative wages is consistent with shifts in the relative demand for skilled labor. For the most part, the increases in the relative demand for skilled workers could be attributable to within-industry factors. Findings also indicate that outward direct investment to China has a significantly positive impact on the skilled labor wage share.     

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.     

Factors influencing foreign direct investment of South African financial services firms in Sub-Saharan Africa

This research investigates the key elements that South African financial services firms consider before making foreign direct investments in Sub-Saharan African (SSA) markets. The results show that South African financial services firms are most strongly influenced by the political and economic stability of the country in question as well as the profitability and long-term sustainability of its specific markets. The degree of available infrastructure in terms of Information and Communication Technology as well as the existence of credible financial systems was also viewed as highly important considerations before investing in SSA. Given the uncertainty and ambiguity of most SSA markets many South African financial services firms prefer to enter existing markets via a majority stakeholder joint venture with a local partner or via a new investment if the market does not currently exist. The nature of the financial services firm also seems to influence the entry method and once in a new country most firms seem to prefer a full service presence. Additionally, the key motives cited for expansion northward were to broaden revenue bases and improve profit margins as well as to stay close to local customers.     

Foreign direct investment and productivity spillovers in Irish manufacturing industry: evidence from plant level panel data

It is often argued that foreign firms may enhance the productivity of indigenous firms in an economy, through forward or backward linkages. Such externality effects typically are called “productivity spillovers”. In terms of foreign direct investment (FDI), Ireland is one of the most globalized economies in the world, having pursued a strategy of promoting investment by foreign companies for over 40 years. This article examines possible productivity spillovers from foreign‐owned firms to indigenous firms in the Irish manufacturing sector, using plant‐level data on all manufacturing firms for the period 1991–1998. Despite Irish policy commitment to building linkages between foreign and domestic firms, we find only weak evidence of spillovers and this evidence is sensitive to the definition and measurement of foreign presence.     

Foreign direct investment in Central Eastern Europe

Foreign direct investment (FDI) has a significant role to play not only in the process of accelerating privatization, but in the development and strengthening of the emerging market economies of Central Eastern Europe (CEE). The inflow of FDI into Poland up to 1994 was marginal as compared to Hungary and the Czech Republic. The following paper examines the situation in Poland and outlines what lessons can be learnt from the Hungarian experience.     

Foreign direct investment,technology transfer and domestic employment effects

The paper investigates the relationship between foreign direct investment and domestic employment opportunities within the context of a multinational firm which is involved in transferring technology from its domestic to its foreign operations. The transfer of technology takes the form of a managerial input, which reflects the benefits of learning-by-doing acquired through cumulative gross domestic investment, in the foreign production function. The model predicts a positive domestic employment effect over the longer run because of a favorable interaction which is generated between the firm's domestic and foreign operations as a result of the transfer of managerial expertise.     

Foreign direct investments,institutional quality,and economic growth

Institutional quality is considered to be an important factor in boosting economic growth of a country. This paper explores the role of institutional quality in economic growth and more specifically the role it plays via the channel of foreign direct investments. This paper uses a larger dataset of 104 countries and applies GMM estimation method to a dynamic panel data to evaluate the direct impact of institutional quality on economic growth and the indirect impact of institutional quality on economic growth through enhancing the FDI-induced economic growth. This paper provides evidence that both FDI inflows and institutional quality cause stronger economic growth. The FDI-led growth, however, was only experienced in the low and middle-income countries. In these countries, better institutional quality was also found to be enhancing the FDI-led economic growth. An important finding of this paper is that in the high-income countries, FDI was found to slow down the economic growth. The results are robust and consistent for individual institutional quality indicators and controlling for endogeneity.     

Foreign direct investment: A strategic move toward sustainable free enterprise and economic development in Saudi Arabia

Foreign direct investment (FDI) has been viewed in many circles as one of the key drivers for economic development. Irrespective of their ideological differences, most countries around the world have been competing to attract FDI. China, for example, is a country formally characterized by communist ideology. It has been highly proactive in formulating policies amenable to FDI so much so that in 2003, China overtook the United States as the biggest recipient of FDI, having attracted U.S. $53 billion from Organisation for Economic Co‐operation and Development (OECD) countries and elsewhere. In this article, an attempt is made to critically examine aspects of FDI, especially with reference to economic development in Saudi Arabia. The research study in this article reports new research findings based on a survey of Saudi managers/enterprises that highlight the current status of FDI in the Kingdom of Saudi Arabia. In particular, the study finds that while Saudi managers generally welcome FDI into the country, at the same time, they do retain ambivalent attitudes toward its perceived benefits.     

North‐South foreign direct investment and bilateral investment treaties

Bilateral investment treaties (BIT s) have become increasingly popular as a means of encouraging foreign direct investment (FDI ) from developed to developing countries. We adopt a difference‐in‐difference analysis to deal with the problem of self‐selection when estimating the effects of BIT s on FDI flows from a sample of OECD countries to a broader sample of lesser developed countries. Our results indicate that forming a BIT with a developed country significantly increases FDI inflows to developing countries. We further find that the development of new FDI flows and the reinvigoration of deteriorating FDI relationships accounts for the majority of the increase in FDI flows due to BIT formation.     

Foreign direct investment in Spain: Regional distribution and determinants

The purpose of this paper is to analyse the regional distribution of foreign direct investment (FDI) in Spain and its main determinants between 1995 and 2005/2008. By means of using different indicators, the paper reveals the major traits of this distribution, among which its highly geographical concentration stands out. Afterwards, the paper performs an explanatory factor analysis to reduce to a manageable number of factors the vast array of FDI determinants considered in the literature. The econometric analysis carried out reveals that factors such as economic potential, labour conditions and competitiveness are important for attracting FDI both at aggregate and sectoral levels; on the contrary, market size is not relevant at all as booster of FDI. Finally, the analysis is extended to take account of the presence of spatial effects, the results showing the existence of negative geographical spillovers associated to the economic potential and competitiveness factors.     

Foreign direct investment and wages: a cross-country analysis

While globalization has led to overall economic growth in a number of countries, questions abound on its distributional effects, especially on rising wage inequality across nations. The main objective of this study is to investigate empirically the effects of foreign direct investment (FDI) on wages in a cross-country setting. We investigate the general equilibrium propositions that capital inflows (outflows) increase (lower) wages in host (home) countries due to the change in relative factor endowments. We also explore whether capital inflows have differential impacts on skilled and unskilled wages in developing economies. Time-series data on 26 countries, 15 developed and 11 developing, are used to fit the labour share equation derived from a translog GNP function with net FDI stock as one of its arguments. Results confirm that capital movement brings about a cross-country convergence of wages. However, there is some evidence that inward FDI flows increase the wage gap between skilled and unskilled workers in developing countries.