Does Real Exchange Rate Volatility Affect Foreign Direct Investment? Evidence from Four Developed Economies

This study examines the impact of shocks to exchange rate uncertainty (volatility) on foreign direct investment (FDI) in Canada, Japan, the United Kingdom, and the United States. The analysis is conducted using vector autoregressive models that contain the price level, real output, the real exchange rate, the volatility of the real exchange rate, the interest rate, and FDI. The results from variance decompositions yield public policy implications. In Canada, Japan, and the United States, innovations to exchange rate uncertainty explain significant portions of the forecast error variance in FDI at longer time horizons. The impulse response functions indicate that, to the extent that shocks to exchange rate volatility have an impact on FDI, the impact is positive and takes place with a lag.     

Does Foreign Direct Investment Affect Wage Inequality? An Empirical Investigation

We use a panel of more than 100 countries for the period 1980–2002 to analyse the relationship between inward foreign direct investment (FDI) and wage inequality. We particularly check whether this relationship is nonlinear, in line with a theoretical discussion. We find that the effect of FDI differs according to the level of development: we depict two different patterns, one for OECD (developed) and one for non‐OECD (developing) countries. Results suggest the presence of a nonlinear effect in developing countries: wage inequality increases with FDI inward stock, with such effect diminishing with further increases in FDI. For developed countries, wage inequality decreases with FDI inward stock, and there is no robust evidence to show that this effect is nonlinear.     

Trade Protection During the Crisis: Does it Deter Foreign Direct Investment?

This paper looks empirically at the implications that protectionist measures implemented during the current crisis may have had for a country’s ability to attract foreign direct investment. The research utilises data on such measures that are available from Global Trade Alert, combined with bilateral FDI data between OECD countries and a large number of partner countries for 2006 to 2009. This allows us to examine the short‐run effect that protectionist measures may have had on bilateral FDI flows. The verdict from this analysis is clear: a country that implements new protectionist measures may expect that this may result in lower foreign direct investment inflows into the economy. The point estimates from our preferred specifications suggest that, depending on the empirical model, the implementation of a trade protection measure is associated with about 40 to 80 per cent lower FDI inflows. Trade protection does not appear to have any implications for the country’s FDI outflows, however. The negative effect on FDI inflows does not appear to be due to direct investment measures but rather to actions related to intellectual property rights protection and other more trade‐related measures.     

Does the Quality of Investment Protection Affect FDI Flows to Developing Countries? Evidence from Latin America

Studies on the impact of international investment agreements (IIAs), including bilateral investment treaties (BITs), on foreign direct investment (FDI) inflows have been inconclusive. This paper contributes to the debate about the effectiveness of IIAs using an original database that differentiates between investment agreements according to the quality of investor protection, and which covers a wide variety of trade and investment agreements signed and ratified in the Americas. We find evidence that in the least likely case of south–south FDI flows, high‐quality international investment treaties have a demonstrable effect on foreign direct investment inflows. Moreover, international investment agreements appear to be most effective in a context of deeper economic integration. That is, they work better when they provide higher quality protection to investors and when they are combined with other preferential economic integration agreements, such as trade agreements.     

The Effect of Foreign Direct Investment on International Migration: Does Education Matter?

Using migration data in 1990 and 2000, we find that inward foreign direct investment (FDI) in non‐OECD countries affects the out‐migration of individuals with tertiary and secondary education to OECD countries originating the investments, but has no significant effect on the out‐migration of individuals with primary education. Distinguishing between linkage and home effects, our results show a dominant home effect of FDI for individuals with tertiary education, but a stronger linkage effect for those with secondary education. The existing stock of former migrants in foreign countries influences the out‐migration of individuals with primary education.     

Agglomeration, Relative Wage Costs and Foreign Direct Investment—Evidence from Swedish MNCs 1974–1998

This paper examines the relationship between agglomeration economies and relative wage costs in influencing location of multinational corporations. An inflow of firms to certain regions and industries is likely to increase demand for labor. If mobility of labor is low increased costs can be expected to deter additional inflows of firms, albeit agglomeration economies may compensate for higher wages. Despite its important policy implications this relationship has to our knowledge not been exposed to empirical testing. The empirical analysis finds that foreign direct investment has become increasingly sensitive to differences in wage cost across industrialized countries, but also that agglomeration economies related to knowledge externalities positively influences higher costs. The relative strength of these two forces impacts the spatial distribution of production.

Do Host Countries＇ Labor Standards Affect China＇s Outward Foreign Direct Investment？

本文根据劳动力产权理论并在总结国内外研究的基础上,选取了2003～2009年中国和152个东道国的面板数据,实证考察了东道国劳工标准对中国对外直接投资的影响,采用静态OLS和SYS—GMM方法对全样本、发达国家和发展中国家的样本进行验证。结果表明：中国的对外直接投资总体上更倾向于流入低劳工标准的国家,而发达国家和发展中国家劳工标准对中国对外直接投资的影响存在着截然不同的效应,发达国家的高劳工标准和发展中国家的低劳工标准分别吸引了中国的对外直接投资,此外通过分位数回归和广义最小二乘法及两阶段最小二乘估计法进行的稳健性检验不仅表明本文的结论是可靠的,而且发现中国的对外直接投资有向低劳工标准国家集聚的趋势。最后从规避劳工风险的角度提出了相应的政策建议。     

Do Retail Foreign Direct Investment Restrictions Affect Retail Channel Structure?

The purpose of this study is to contribute to the existing retail channel structure research by investigating the impact of retail foreign direct investment (FDI) restrictions on retail channel structure as well as the moderating impact of a country's level of economic development on this relationship. Using a panel data set of 79 countries over the period 1999–2012, we show that retail FDI restrictions can influence retail channel structure development and that the relationship between retail FDI restrictions and retail channel structure is moderated by a country's level of economic development.     

Does a Tougher Competition Policy Reduce or Promote Investment?

The question of how interventions from the Competition Authority (CA) affect investment is not a straightforward one: a tougher competition policy might, by reducing the ability to exert market power, either stimulate firms to invest more to counter the restrictions on their actions, or make firms invest less because of the reduced ability to have a return on investment. This tension is illustrated using two models. In one model investment is own-cost-reducing whereas in the other investment is anti-competitive. Anti-competitive investments are defined as investments that increase competitors’ costs. In both models the optimal level of investment is reduced with a tougher competition policy. Furthermore, while in the case of an anti-competitive investment a tougher authority necessarily leads to lower prices, in the case of a cost-reducing investment the opposite may happen when the impact of the investment on cost is sufficiently high. Results for total welfare are ambiguous in the cost-reducing investment model, whereas in the anti-competitive investment model welfare unambiguously increases due to a tougher competition policy.     

Do Strategic Motives Affect Ownership Mode of Foreign Direct Investments (FDIs) in Emerging African Markets? Evidence from Ghana

The objective of this study is to examine the influence of ownership, location, and internalization‐specific factors, as well as strategic motives on ownership choice of foreign subsidiaries in Ghana. The authors use a quantitative methodology in order to statistically explore the relationships between dependent and independent variables by using the logistic regression model. The analysis was based on 115 manufacturing investments made by multinational corporations (MNCs) from different countries in 1994–2013. The results indicate that contractual risk leads to the choice of whollymowned subsidiary while cultural distance and country risk lead to the choice of the joint venture. In the case of the motives, efficiency‐seeking and resource‐seeking FDIs lead to the choice of the joint venture. © 2016 Wiley Periodicals, Inc.     

Does Sustainability Investment Provide Adaptive Resilience to Ethical Investors? Evidence from Spain

Although sustainable and responsible investment (SRI) has quite recently become a hot research topic, scarcely any systematic research has been paid to the performance of this non-conventional approach to investment during the financial crisis that emerged in mid-2008 when the resilience of the financial markets was sorely tested. Such real-world resilience in practice is the subject of the current research which tests whether environmental, social and governance screens provides ethical investors with adaptive resilience in bull and bear market conditions by focussing on the SRI equity index of one of the most active markets in Europe in terms of ethical investment, the FTSE4Good-Ibex in Spain. Multivariate Generalized Autoregressive Conditional Heteroskedasticity (M-GARCH) analysis indicates that ethical investors in the equity market examined with evidence that greater resilience in severe business cycle shocks could be attributable to SRI by companies. Although limited to a single country study, the results have implications for investors seeking resilience in crisis: when individual values and beliefs towards sustainability tie with personal investment strategy, the end result is adaptive financial resilience, social well-being and environmental defence.     

Does Trade Liberalisation Trigger Tax Competition? Theory and Evidence from OECD Countries

This paper aims at assessing the empirical relevance of new economic geography models of tax competition. We rely on a simple model to specify tax reactions functions, which we estimate with a panel covering (up to) 26 OECD countries over the period 1982 to 2006. We provide striking support for the two main predictions regarding the slope and the constant of the reaction function: national governments seem to adjust their corporate tax rate towards the level chosen in countries that are more populated, and they tend to set higher corporate tax rates when their country enjoys a high real market potential. Through the latter effect, trade integration exerts a positive influence on the level of corporate taxation. However, using a theoretically grounded index of bilateral trade integration, we also show that trade liberalisation gives rise to significant tax interactions in the setting of effective average tax rates in the case of European countries, thus exerting a downward pressure on corporate tax rates.     

Chinese Private Firms’ Outward Foreign Direct Investment: Does Firm Ownership and Size Matter?

This article investigates and explains the behaviors, motives, and characteristics of Chinese privately owned enterprises’ (POEs’) outward foreign direct investment (OFDI), and compares this with the behaviors, motives, and characteristics of Chinese state‐owned enterprises (SOEs), using the institutional perspective and resources‐based view. Through in‐depth interviews with senior managers and an extensive secondary data analysis of Chinese POEs’ OFDI, we found that Chinese POEs are increasingly active in committing both market‐ and strategic asset–seeking OFDI due to the unfavorable institutional environment they face in China and the different types of resources possessed. POEs cluster with their business partners or domestic peers for international market expansion and adopt several approaches to acquire strategic assets. © 2014 Wiley Periodicals, Inc.     

To What Extent Can Foreign Direct Investment Help Achieve International Development Goals?

For FDI to help alleviate absolute poverty and stimulate economic growth in developing countries, two conditions have to be met. First, developing countries need to be attractive to foreign investors. Second, the host‐country environment in which foreign investors operate must be conducive to favourable FDI effects with regard to overall investment, economic spillovers and income growth. This paper argues that it is more difficult to benefit from FDI than to attract FDI. The widely perceived concentration of FDI in few developing countries tends to obscure that, in relative terms, various small and poor countries are fairly attractive to FDI. Yet, the mobilisation of domestic resources remains by far, more important than attracting FDI for financing investment and stimulating economic growth. Furthermore, high inward FDI is no guarantee for poverty alleviation and positive growth effects. In particular, the empirical evidence suggests that host‐country conditions typically prevailing in poor countries, including weak institutions and an insufficient endowment of complementary factors of production, constrain the growth‐enhancing and poverty‐alleviating effects of FDI. The crux is that creating an environment in which FDI may deliver social returns will take considerable time exactly where development needs are most pressing.     

Foreign Direct Investment in British Retailing, 1850–1962

This article describes a newly compiled dataset on foreign multinationals in British retailing and compares the patterns of inward investment in retailing with those in manufacturing. Foreign retailers were present in Britain well before foreign manufacturers, but their numbers did not grow as dramatically after 1890. Strikingly, very few pre-World War Two foreign entrants into UK retailing were actually retailers. The great majority were instead foreign manufacturers pursuing international markets through investing in dedicated distribution channels. These hybrid multinationals retained their home manufacturing base and mostly restricted their internationalisation to retailing.     

Foreign Direct Investment Will Reach US$63.81 Bin in 2007

Recently, Center for Fore casting Science Chinese .Academy of Sciencespredicted that China will absorb foreign direct investment （FDI） about US$63.81 billion increasing by 4% compared with the number in 2006. The increasing trend is basically the same as 2006.     

Are US Exports Different from China’s Exports? Evidence from Japan’s Imports

Are US exports different from China’s exports? If so, how? This article attempts to answer this question, using product‐level manufacturing import data from Japan. To make the comparison clear, this article also examines exports from the EU. The results indicate that more than 85 per cent and 83 per cent of products exported by the US and the EU, respectively, to Japan are also commonly exported from China. Both the US and the EU export products are priced higher than China’s export products, regardless of industries. This result suggests that quality differences matter in explaining the high overlap of China’s export products with US and EU export products. In some industries, however, the price differences of US and EU exports relative to China’s exports are relatively small. This result implies that either Chinese firms are upgrading the quality of their products, or US and EU firms are improving their efficiencies such that they can compete with Chinese firms.     

Foreign Direct Investment Will Reach US$63.81 Bln In 2007

Recently,Center for Fore casting Science Chinese Academy of Sciences predicted that China will absorb foreign direct investment (FDI) about US$63.81 billion increas- ing by 4% compared with the number in 2006.The increasing trend is basically the same as 2006. This conclusion is calculated through econometric model based     

No Risk,No Fun? Foreign Direct Investment in Central and Eastern Europe

In the course of transition from planned economies to market economies, foreign direct investment played an important role and contributed to international economic integration in Central and Eastern Europe. This paper investigates the determinants of FDI in Central and Eastern Europe, a region which in large part still lacks strong institutions. The empirical analysis presented in this article fi nds evidence that country default risk is not necessarily a hindrance to FDI. In contrast, factors like market size, labour cost and trade liberalisation do matter for FDI engagement in the region.