Research

13 pages, 687 KiB

Open AccessArticle

Monetary Policy and Foreign Direct Investment—Empirical Evidence

by Van Chien Nguyen

Economies 2023, 11(9), 234; https://doi.org/10.3390/economies11090234 - 13 Sep 2023

Cited by 1 | Viewed by 2758

The purpose of this study is to evaluate the impact of monetary policy on attracting foreign direct investment. We used data for typical countries in Southeast Asia for the period 1997 to 2020, using regression of least squares (OLS), fixed effects (FEM) and [...] Read more.

The purpose of this study is to evaluate the impact of monetary policy on attracting foreign direct investment. We used data for typical countries in Southeast Asia for the period 1997 to 2020, using regression of least squares (OLS), fixed effects (FEM) and random effects (REM), as well as cross-sectional dependence test based on panel-corrected standard errors (PCSE) and Driscoll-Kraay standard errors to evaluate differences in monetary policies of Southeast Asian countries over time. The results confirm that expansionary monetary policy has a negative influence on attracting foreign direct investment, while contractionary monetary policy has the effect of promoting the flow of international capital into Southeast Asian countries. The study also confirmed the positive impact of trade liberalization and the quality of human resources on the ability to attract foreign direct investment. However, no effect on foreign direct investment was found for urbanization rate, population size, or number of tourists. Full article

(This article belongs to the Special Issue Foreign Direct Investment and Investment Policy)

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21 pages, 1589 KiB

Open AccessArticle

The Association between Foreign Investment and Gross Domestic Product in Ten ASEAN Countries

by Rosdiana Sijabat

Economies 2023, 11(7), 188; https://doi.org/10.3390/economies11070188 - 12 Jul 2023

Cited by 1 | Viewed by 6194

Abstract

Although empirical studies of the link between foreign direct investment, foreign portfolio investment, and economic development have long influenced economic studies, the results have been inconclusive. Focusing on ten countries, this study contributes to our understanding of foreign investment as a determinant of [...] Read more.

Although empirical studies of the link between foreign direct investment, foreign portfolio investment, and economic development have long influenced economic studies, the results have been inconclusive. Focusing on ten countries, this study contributes to our understanding of foreign investment as a determinant of regional economic performance. More specifically, this study seeks to analyze the short- and long-term relationship between foreign direct investment, foreign portfolio investment, and Gross Domestic Product (GDP) in ten ASEAN member states using data from the 2009–2020 period. For this examination, this study employs a cross-sectional dependency test, followed by panel unit root and panel cointegration testing. From the results of this test, Dumitrescu–Hurlin Panel Causality (DHPC) analysis is conducted. These results show that FDI and GDP have a positive bilateral association, i.e., FDI positively affects GDP and GDP positively affects FDI, as presumed by the theory. Testing also finds bilateral causality between FPI and GDP in the ten analyzed nations. This study contributes to the literature by testing the association between FDI/FPI and GDP using fully modified least squares (FMOLS) and dynamic least squares (DMOLS) panel testing. These results show that FPI and FDI have significantly influenced GDP in ten ASEAN member states. Foreign investment has thus been shown to be the most potent means of accelerating economic development in the studied nations, and thus the governments of these ASEAN member states should formulate policies that attract foreign investors and better direct their investments. Full article

(This article belongs to the Special Issue Foreign Direct Investment and Investment Policy)

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15 pages, 422 KiB

Open AccessArticle

Factors Affecting the Performance of Small and Medium Enterprises Regarding the Sustainable Development Goals—The Case of Foreign Direct Investment Firms in Vietnam

by Nguyen Thi Phuong Thu and Vu Ngoc Xuan

Economies 2023, 11(3), 72; https://doi.org/10.3390/economies11030072 - 21 Feb 2023

Cited by 1 | Viewed by 8452

Abstract

The owners of SMEs in Vietnam mainly focus on business performance in the short term. In recent years, FDI firms have demonstrated interest in both business efficiency and sustainable development. These issues have attracted the attention of scientists and policy makers in Vietnam. [...] Read more.

The owners of SMEs in Vietnam mainly focus on business performance in the short term. In recent years, FDI firms have demonstrated interest in both business efficiency and sustainable development. These issues have attracted the attention of scientists and policy makers in Vietnam. Therefore, this study aimed to determine the factors affecting the performance of small and medium enterprises in Vietnam regarding the Sustainable Development Goals (SDGs). Using the latest published survey data up to March 2022 for food and beverage, wood and steel foreign direct investment enterprises, combined with a data envelope analysis model in step one and Tobit regression in step two, the results from this quantitative study are as follows: (1) the production efficiency index of Vietnamese FDI enterprises ranges from 82.5% to 89% depending on the industry (assuming variable output to scale); (2) the factors financial leverage, renewable consumption, scale and operating time are related to the performance of FDI enterprises, and have a positive effect on performance; and (3) financial leverage and renewable consumption can generally boost a firm’s performance in the case of FDI SMEs in the food and beverage, wood and steel industries. This research also suggests some solutions to achieve the Sustainable Development Goads (SDGs) in the FDI SMEs of Vietnam. Full article

(This article belongs to the Special Issue Foreign Direct Investment and Investment Policy)

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15 pages, 427 KiB

Open AccessArticle

Tourism, Remittances, and Foreign Investment as Determinants of Economic Growth: Empirical Evidence from Selected Asian Economies

by Mosab I. Tabash, Suhaib Anagreh, Bilal Haider Subhani, Mamdouh Abdulaziz Saleh Al-Faryan and Krzysztof Drachal

Economies 2023, 11(2), 54; https://doi.org/10.3390/economies11020054 - 06 Feb 2023

Cited by 5 | Viewed by 2431

Abstract

This research discovers how international tourism affects the economic growth of selected Asian states, e.g., Bangladesh, China, India, Pakistan, and Sri Lanka, throughout 2001–2019. To attain this objective, we have employed various regression estimation approaches, e.g., Fixed Effect Model (FEM) and Fully Modified [...] Read more.

This research discovers how international tourism affects the economic growth of selected Asian states, e.g., Bangladesh, China, India, Pakistan, and Sri Lanka, throughout 2001–2019. To attain this objective, we have employed various regression estimation approaches, e.g., Fixed Effect Model (FEM) and Fully Modified Ordinary Least Square (FMOLS) technique. The statistical results of the applied techniques reveal that international tourism activities have a positive and significant effect on the GDP growth rate because such kinds of activities considerably contribute to creating opportunities that lead to hoist economic activities and economic growth. Moreover, an influx of tourism increases tourism activities and operations, which opens further doors to opportunities and generates revenue for the government. Similarly, the GDP per capita has been positively and significantly influenced by international tourism activities. The government and host country should emphasize the activities and operations regarding tourism and should also concentrate on the dynamic role, importance, and sensitivity of tourism operations in under-analyzed economies. This research brings a new arrangement of the variable, which has never been considered in prior literature. Full article

(This article belongs to the Special Issue Foreign Direct Investment and Investment Policy)

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21 pages, 780 KiB

Open AccessArticle

Foreign Direct Investment Elasticities of Output, Labor, and Wages in Chile: A Simultaneous Equations Approach

by Félix Modrego, Jorge Ortega, Lenia Planas and Álvaro Astudillo

Economies 2022, 10(12), 295; https://doi.org/10.3390/economies10120295 - 25 Nov 2022

Cited by 1 | Viewed by 1942

Abstract

We estimate foreign direct investment elasticities of output, of unskilled and skilled labor, and of unskilled and skilled wages for Chile, both at an aggregate level and for eight economic sectors. We use regional data from official Chilean sources ranging from 2012 to [...] Read more.

We estimate foreign direct investment elasticities of output, of unskilled and skilled labor, and of unskilled and skilled wages for Chile, both at an aggregate level and for eight economic sectors. We use regional data from official Chilean sources ranging from 2012 to 2019 and data from economic sectors in each region for the period 1996–2011. Estimates are based on a simultaneous equation approach, which considers the two-way relationships between FDI and output as well as the relationships between output, labor, and wages stressed by the duality theory of production in economics. The estimations confirm that FDI triggers growth and that FDI follows growth. Due to the positive effects on output, FDI boosts employment creation, particularly of skilled labor. The estimated effects on wages are not significant, either statistically or practically. The output and labor effects of FDI are positive and significant in all economic sectors, but point estimates suggest that they could be larger for the agriculture-forestry-fishing sector. The results indicate that realistic increases in FDI can have substantial output and employment effects in Chile. Full article

(This article belongs to the Special Issue Foreign Direct Investment and Investment Policy)

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16 pages, 593 KiB

Open AccessArticle

Foreign Direct Investment and Exports Stimulate Economic Growth? Evidence of Equilibrium Relationship in Peru

by Ciro Eduardo Bazán Navarro and Víctor Josué Álvarez-Quiroz

Economies 2022, 10(10), 234; https://doi.org/10.3390/economies10100234 - 22 Sep 2022

Cited by 1 | Viewed by 6397

Abstract

The purpose of this research is to estimate the dynamic impacts of foreign direct investments (FDI) and exports on economic growth in Peru (1970–2020) using annual series. Starting with the theoretical Mundell–Fleming static model with assumptions, we find that the change in exports [...] Read more.

The purpose of this research is to estimate the dynamic impacts of foreign direct investments (FDI) and exports on economic growth in Peru (1970–2020) using annual series. Starting with the theoretical Mundell–Fleming static model with assumptions, we find that the change in exports does not affect GDP, and the effect of FDI on GDP can be positive or negative depending on the comparison between the slopes of the IS and LM curves. The variables are foreign direct investment net flow (% of GDP), exports of goods and services (% of GDP), and GDP growth rate (%). FDI and exports constitute first-order integrated processes; meanwhile, the GDP growth rate is a stationary process. The Granger causality evidences feedback between GDP and exports and the FDI-led growth hypothesis. Considering the dependent variable GDP growth rate, the autoregressive distributed lag cointegration bound test shows the findings regarding the cointegration consist of positive long-term equilibrium impacts from exports and FDI on GDP. Estimating an error correction model, in the short-term, the FDI explains to GDP and the exports have an insignificant impact on economic growth in Peru. Finally, we conclude that Peru’s economic policy path should continue to attract foreign capital to increase FDI. Full article

(This article belongs to the Special Issue Foreign Direct Investment and Investment Policy)

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14 pages, 691 KiB

Open AccessArticle

How Can Foreign Direct Investment Trigger Green Growth? The Mediating and Moderating Role of the Energy Transition

by Rafaela Vital Caetano, António Cardoso Marques and Tiago Lopes Afonso

Economies 2022, 10(8), 199; https://doi.org/10.3390/economies10080199 - 18 Aug 2022

Cited by 8 | Viewed by 3277

Abstract

Developed countries have the resources/technologies to combat pollution even at the expense of economic growth. Developing countries are in a less fortunate position. Foreign Direct Investment (FDI) can be a tool for developed countries to transfer polluting industries, which increases pollution in host [...] Read more.

Developed countries have the resources/technologies to combat pollution even at the expense of economic growth. Developing countries are in a less fortunate position. Foreign Direct Investment (FDI) can be a tool for developed countries to transfer polluting industries, which increases pollution in host countries. However, as FDI might reduce pollution by reducing energy consumption, the pollutant effect might also be influenced. Therefore, this study examines the mediating effect of energy consumption on the impact of FDI on pollution, and the role of FDI to attain Green Growth via energy transition. The main findings indicate that FDI impacts pollution through energy consumption and that energy transition plays a vital role in reducing this mediating effect. Developing countries appear to use non-renewable energy to fill energy demand. In both groups of countries, FDI is a driver of Green Growth. However, developing countries require larger efforts to achieve Green Growth through the energy transition. Full article

(This article belongs to the Special Issue Foreign Direct Investment and Investment Policy)

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31 pages, 1082 KiB

Open AccessFeature PaperArticle

Development Aid and Export Resilience in Developing Countries: A Reference to Aid for Trade

by Sèna Kimm Gnangnon

Economies 2022, 10(7), 161; https://doi.org/10.3390/economies10070161 - 04 Jul 2022

Cited by 4 | Viewed by 3216

Abstract

The COVID-19 pandemic, as with previous major crises, such as the 2008 financial crisis, has had a severe negative impact on international trade flows. The present paper aims to contribute to the debate concerning how to foster resilience against future crises, in terms [...] Read more.

The COVID-19 pandemic, as with previous major crises, such as the 2008 financial crisis, has had a severe negative impact on international trade flows. The present paper aims to contribute to the debate concerning how to foster resilience against future crises, in terms of countries’ aggregate exports, by examining the effect of development aid (i.e., so-called official development assistance), particularly the impact of the Aid for Trade (AfT) component, upon export resilience. The resilience of exports refers to the ability of countries’ aggregate exports to resist shocks, regardless of whether they are environmental or external shocks. The core argument of the analysis is that development aid would affect export resilience through its impact upon productive capacities. The analysis covers 93 developing countries over the period 2002–2018. The findings indicate that the total development aid flows, including both AfT flows and NonAfT flows, exert a positive effect upon export resilience. Among AfT components, AfT for productive capacities appears to exert a greater positive effect upon export resilience than AfT for economic infrastructure and AfT for trade policy and regulation. In addition, development aid (regardless of which aid variable is considered) exerts the greatest positive effect upon export resilience in countries (such as the least developed countries—LDCs) that have the lowest productive capacities. These findings highlight the need for donor countries to supply higher development aid flows, in particular, AfT flows, to countries such as LDCs that have low productive capacities. Full article

(This article belongs to the Special Issue Foreign Direct Investment and Investment Policy)

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21 pages, 556 KiB

Open AccessArticle

Trade Liberalization and Comparative Advantage: Evidence from Indonesia and Asian Trade Partners

by Rudi Purwono, Lilik Sugiharti, Rossanto Dwi Handoyo and Miguel Angel Esquivias

Economies 2022, 10(4), 80; https://doi.org/10.3390/economies10040080 - 25 Mar 2022

Cited by 9 | Viewed by 5487

Abstract

This study analyzes whether ongoing liberalization has resulted in more profound trade expansion for Indonesia versus regional partner countries. A gravity model is first employed to find whether regional trade agreements resulted in more significant intra-regional exports or diverted trade. This study applies [...] Read more.

This study analyzes whether ongoing liberalization has resulted in more profound trade expansion for Indonesia versus regional partner countries. A gravity model is first employed to find whether regional trade agreements resulted in more significant intra-regional exports or diverted trade. This study applies the generalized method of moment (GMM-sys) and the Poisson pseudo-maximum likelihood (PPML) estimator. Four groups of manufactured products are aggregated according to technology intensity, and two nature-based groups of products are estimated in the dynamic panel model. Additionally, revealed comparative advantage (RCA) and a trade balance index (TBI) for 5120 products are used to map goods based on specialization–advantage patterns. The gravity model indicates that regional trade agreements supported trade in manufactured and naturally sourced goods but not in high-tech and primary goods. Additionally, export expansion took place in goods that revealed comparative advantage and export specialization. Competition has increased between Indonesia and four regional trade partners: China, India, Thailand, and Vietnam. Indonesia gained from trading primary materials while losing in some low-cost manufacturing sectors. The potential for trade expansion remains large, as trade patterns differ among regional partners. Full article

(This article belongs to the Special Issue Foreign Direct Investment and Investment Policy)

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23 pages, 766 KiB

Open AccessArticle

FDI and Institutions in BRIC and CIVETS Countries: An Empirical Investigation

by Polyxeni Kechagia and Theodore Metaxas

Economies 2022, 10(4), 77; https://doi.org/10.3390/economies10040077 - 24 Mar 2022

Cited by 10 | Viewed by 4903

Abstract

In recent years, a number of countries with emerging economies have proceeded to use market-oriented strategies, deregulation and reforms in order to attract more foreign investors and attract foreign direct investment (FDI) inflows. The present paper aims to empirically investigate the role of [...] Read more.

In recent years, a number of countries with emerging economies have proceeded to use market-oriented strategies, deregulation and reforms in order to attract more foreign investors and attract foreign direct investment (FDI) inflows. The present paper aims to empirically investigate the role of governance in attracting FDI using panel data and comparing two groups of fast-growing emerging countries, namely BRIC (Brazil, Russia, India, China) and CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa). The study includes a panel data analysis using the latest available secondary data ranging from 2002 to 2019. Empirical models are extended and presented. The findings suggest that FDI inflows in BRICS are attracted by rule of law, regulatory quality, political stability and absence of violence, while CIVETS absorb FDI inflows due to control of corruption, political stability, absence of violence, regulatory quality and government effectiveness. The paper contributes to the existing literature since it is the first attempt to investigate the role of governance in attracting FDI in BRIC and CIVETS economies, taking into consideration other FDI determinants. To our knowledge, it is the first paper to study and compare FDI and institutional determinants in the specific groups of emerging countries. Full article

(This article belongs to the Special Issue Foreign Direct Investment and Investment Policy)

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21 pages, 2749 KiB

Open AccessArticle

Institutional Change and Macroeconomic Variables in the ASEAN—Indonesia, Vietnam, and Cambodia: The Effects of a Trade War between China and USA

by Fransiskus Xaverius Lara Aba

Economies 2021, 9(4), 195; https://doi.org/10.3390/economies9040195 - 09 Dec 2021

Cited by 2 | Viewed by 4687

Abstract

A trade war between the United States and China resulted in an increase in trade tariffs on imported goods entering each of these countries. Southeast Asian countries that have trade relations with the two countries, especially in terms of non-oil and gas exports [...] Read more.

A trade war between the United States and China resulted in an increase in trade tariffs on imported goods entering each of these countries. Southeast Asian countries that have trade relations with the two countries, especially in terms of non-oil and gas exports of 25% to 35%, will be affected by export demand. Furthermore, the effects of the trade war will reduce gross domestic product (GDP) in Southeast Asian countries or the ASEAN and increase the current account deficit. On the other hand, the effects of the trade war that led to the decision of foreign investors to move their manufacturing base out of China will produce a flow of foreign investment that is ready to be captured by every ASEAN country. Full article

(This article belongs to the Special Issue Foreign Direct Investment and Investment Policy)

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