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2. Electric Vehicles and the Changing Automotive GVC: A Window of Opportunity for African Countries?
- Author:
- Tobias Wuttke
- Publication Date:
- 03-2023
- Content Type:
- Policy Brief
- Institution:
- Centre for Business and Development Studies (CBDS), Copenhagen Business School
- Abstract:
- Only two African countries have successfully integrated with the automotive GVC to date: South Africa and Morocco. Their experiences, compared to other even more successful developing and emerging economies with automotive industries, highlight both the opportunities as well as the limitations of automotive GVC participation as an economic development engine. Scale in vehicle production, facilitated by government industrial policy, is the key prerequisite for successful participation with localisation benefits. These fundamentals do not change with the shift to electric vehicles. Governments in Africa and elsewhere need to attract FDI in electric vehicle production and from there can support the development of a local component and materials value chain. Once these basics are covered, governments and local firms can aim for making use of the technological window of opportunity by investing in EV-related technology, mainly battery technology, to potentially capture more value from automotive GVC participation than has traditionally been possible in the ICE vehicle value chain.
- Topic:
- Development, Industrial Policy, Foreign Direct Investment, Global Value Chains, Automotive Industry, and Electric Vehicles
- Political Geography:
- Africa
3. Xi Jinping’s Vision for the Middle East
- Author:
- Yair Albeck
- Publication Date:
- 07-2023
- Content Type:
- Policy Brief
- Institution:
- Hudson Institute
- Abstract:
- Chinese leader Xi Jinping clearly aspires to establish a new global economic order centered around Beijing, not Washington. However, a new global economic order cannot be built in a day. The immensity of this challenge has forced Xi to set his sights on a set of interim goals. These include cementing the Communist Party’s control of the Chinese economy and shielding supply chains, capital flows, and strategic bilateral and multilateral relationships from hostile American policies. These goals equate to the creation of a Sinocentric global economic subsystem. This would be partially integrated into the current Western-led system but would be sufficiently decoupled from the West to protect the pillars of the Chinese Communist Party’s political economy. In Beijing’s grand design, the Middle East plays an indispensable role. But Western analysts have often misjudged China’s interests in the region as purely commercial. While Xi values the region for its economic potential, he sees it as one of the most important arenas of competition with the United States. Yet when United States National Security Advisor Jake Sullivan recently discussed American leadership of the global economy, he focused on Europe and the Indo-Pacific and mentioned Africa and Latin America. He did not mention the Middle East once.1 Washington’s persistent blind spot in the Middle East has obscured its view of Beijing’s global ambitions. If the US does not rectify this mistake, it risks losing more influence in the region and aiding China’s effort to supplant the US atop the global economic order.
- Topic:
- Foreign Policy, National Security, Political Economy, Foreign Direct Investment, and Xi Jinping
- Political Geography:
- China and Middle East
4. Sunny side up: Maximising the European Green Deal’s potential for North Africa and Europe
- Author:
- Laura El-Katiri
- Publication Date:
- 01-2023
- Content Type:
- Policy Brief
- Institution:
- European Council on Foreign Relations (ECFR)
- Abstract:
- North African states hold great potential to become important partners in Europe’s energy transition in the medium and long term. The EU and its member states can make stronger use of the European Green Deal to direct investment in North Africa in support of clean energy. Governments in the region are worried about the impact of some EU decarbonisation tools, such as the carbon border adjustment mechanism. Europeans can allay some of these fears by providing political commitment, financial investment, and advice on the energy transition. New partnerships between the EU and North African states also offer the opportunity to make progress on wider environmental considerations, including biodiversity, and to embed a human rights-based approach.
- Topic:
- Climate Change, Foreign Direct Investment, Partnerships, Solar Power, Green Deal, Energy, and Energy Transition
- Political Geography:
- Europe and North Africa
5. The Impact of Populist Executive on the Inflow of Foreign Direct Investment in Latin America
- Author:
- Seungho Lee
- Publication Date:
- 04-2023
- Content Type:
- Policy Brief
- Institution:
- Korea Institute for International Economic Policy (KIEP)
- Abstract:
- Populist forces have been resilient in Latin America and continue to cause instability and uncertainty across the region. Populist figures in the region first rose to prominence during the period of import substitution industrialization in the 1930s, capitalizing on the growing demands for mass politics and better social benefits from the rapidly expanding urban working class. Populism, which had been rampant in Latin America for more than 30 years since then, seemed to fade into obscurity with military regimes which have dominated regional politics in the 1960s and 1970s. However, after a series of democratic transitions, Latin American democracies witnessed yet another wave of populism. A notable number of candidates with a populist discourse have achieved victories in presidential elections in the 1980s and 1990s. With the wave of democratization and the accumulation of public dissatisfaction due to a series of economic crises, some so-called neopopulists took power in a number of Latin American countries. They attracted voters by combining neoliberal economic policies with the typical “us-versus-them” discourse, demonstrating that any economic ideology can be linked to populist ideas. The new millennium witnessed another tide of populist presidents across the region. While a rapid transition to neoliberal policies led to various socioeconomic problems, traditional parties and politicians could not respond effectively to the emerging problems. This time around, left-wing populist figures dominated the region’s political landscapes, combining populist ideas with so-called 21st-century socialism. While the era of radical left-wing populists came to an end, new breeds of populists appeared one after another and were elected to office in the 2010s. Not many expect that populist executives will cease to exist across the region in the near future. Social and economic inequality is worsening in the aftermath of COVID-19, and the public distrust of established party politics and existing democratic institutions is growing more than ever. All in all, there is fertile ground for populist forces to spread even more, who claim that they are the only ones who can eliminate the "incompetent and corrupt" establishment and truly represent the "virtuous" people. Against this backdrop, there is a growing need to improve our understanding of the characteristics of populist governments that have repeatedly emerged in the region. Among many channels through which populist rule influences Latin American countries, Lee et al. (2022) dedicate one of their chapters to analyzing the impact of populist rule on the inflow of foreign direct investment, a variable of much importance in Latin American economies.
- Topic:
- Foreign Direct Investment, Populism, and Instability
- Political Geography:
- Latin America
6. Does Institutional Quality Matter to Korean Outward FDI? A Gravity Model Analysis
- Author:
- Muhammad Akhtaruzzaman
- Publication Date:
- 01-2023
- Content Type:
- Policy Brief
- Institution:
- Korea Institute for International Economic Policy (KIEP)
- Abstract:
- According to Korea’s Ministry of Knowledge Economy (currently the Ministry of Trade, Industry and Energy), foreign investment has now become one of the major economic pillars driving the Korean economy over the past 15 years (Tang 2022). The Korean economy started to open up to rest of the world following the Asian financial crisis in 1997 and was the biggest FDI policy reformer among 40 developed and emerging economies over the period from 1997 to 2010 (Nicolas et al. 2013). Over the last decade, Korea’s outward FDI grew much faster than inward FDI (See Figure 1) and Korea is now a net capital exporter to the world. In 2021, Korea’s outward FDI flows totaled $76.64 billion and a total of 2323 Korean enterprises invested in overseas countries (Korea EXIM Bank 2022). Due to this increased amount of outward FDI, a large number of studies (Kim and Rhee 2009; Park and Jung 2020) investigated what determines Korea’s outward FDI (OFDI). Institutional quality is found to be a major determinant in FDI literature in general. It suggests that political risk (lack of/poor institutional quality) not only deters FDI inflows to host countries but also can lead FDI to countries with higher risks and to ‘pollution heaven’ which might have an adverse impact on long term growth and development in both host and home countries. There are strong empirical evidences in literature that lack of institutional quality or good governance is associated with lower FDI inflows. An extensive literature (Alfaro et al. 2008; Ali et al. 2010; Akhtaruzzaman et al. 2017; Bénassy‐Quéré et al. 2007) investigated FDI response to various types of institutional quality in FDI host countries. Over the last 20 years data evidenced that Korea’s OFDI flowed to developing countries with a sustained large gap existing in institutional quality between host countries and Korea (See, Fig 2 top panel); however; those countries had been offering a higher degree of capital account openness. A sharp increase in capital account openness since the early 2000s coincides with sharp increase in Korea’s OFDI to those host countries. For example, Peru was the least open economy and started to initiate measures to open capital account since the mid-90s and early 2000s. The degree of openness in Peru is now similar to that of developed countries. On the other hand, Peru is one of the least progressed countries in terms of institutional quality over the same period of time. This slow or no progress in institutional quality is a common pattern of institutional improvement for a large sample of host countries of Korea’s OFDI (see, Figure 2). However, those developing countries including Peru are regular destinations of a substantial amount of Korea’s OFDI. Does this suggest that institutional quality of host country does not matter to Korean investors, or is there a 3rd factor mitigating the impact of institutional quality on Korea’s OFDI? Few studies on Korea’s OFDI considered institutional quality of host country as a control variable instead of main determinant of FDI (Park and Jung 2020). However, existing studies do not explain why Korea’s OFDI flowed to countries with a large gap in institutional quality between Korea and host countries. This research fills the gap in the literature of Korea’s OFDI. The findings of this research suggest that high degree of capital account openness (a factor that ensures profit repatriation of investors) weakened the negative impact of poor institutional quality in host countries on Korea’s OFDI. The remaining of this paper is organised as follows. Section II reviews relevant literature of FDI and identifies major determinants for Korea’s OFDI from existing studies; Section III discusses research method and empirical issues; Section IV presents the research findings; Section V concludes the research, points to the research limitations, and provides policy recommendations.
- Topic:
- Economics, Foreign Direct Investment, Institutions, and Knowledge Economy
- Political Geography:
- Asia and South Korea
7. Primer on International Investment Treaties and Investor-State Dispute Settlement
- Author:
- Columbia Centre on Sustainable Investment
- Publication Date:
- 01-2022
- Content Type:
- Policy Brief
- Institution:
- Columbia Center on Sustainable Investment
- Abstract:
- What is Foreign Direct Investment (FDI)? FDI occurs when an individual or corporation in one country (“home state”) sets up or buys all or a significant part of a company that is incorporated in a different country (“host state”). Companies invest abroad to access land-based resources including mining, more affordable labour for instance in manufacturing, and new markets, among other reasons. Many countries seek to attract FDI in order to realize benefits in the form of tax revenues, technology transfer, jobs, and other economic linkages. The images below illustrate the concept of FDI, as well as some of the sectors and industries into which it flows.
- Topic:
- International Cooperation, Foreign Direct Investment, Investment, and Public-Private Partnership
- Political Geography:
- Global Focus
8. Foreign Firms Investment in Inter-Korean Economic Cooperation
- Author:
- Jang Ho Choi, Jung Kyun Rhee, Yoojeong Choi, and Dae-Eun Lee
- Publication Date:
- 04-2022
- Content Type:
- Policy Brief
- Institution:
- Korea Institute for International Economic Policy (KIEP)
- Abstract:
- This paper examines various channels and issues for foreign firms to invest in inter-Korean economic cooperation with the as-sumption that inter-Korean economic cooper-ation can be resumed after sanctions against North Korea have been lifted, and the same treatment is applied to foreign firms. Foreign firms' investment in inter-Korean economic cooperation will provide a new op-portunity for foreign firms to earn stable profits, while also playing a role in further solidifying the establishment of peace on the Korean Peninsula. Now, inter-Korean rela-tions have fallen into difficulties due to sanc-tions against North Korea and the coronavirus pandemic, making it difficult to resume inter-Korean economic cooperation or to expect foreign firms to invest in inter-Korean eco-nomic cooperation. However, if inter-Korean economic cooperation is resumed, foreign firms' investment in inter-Korean economic cooperation will be prioritized.
- Topic:
- Foreign Direct Investment, Sanctions, Economy, and Economic Cooperation
- Political Geography:
- Asia, South Korea, and North Korea
9. Impacts of New International Tax System on Multinational Firms’ FDI
- Author:
- Sangjun Yea
- Publication Date:
- 04-2022
- Content Type:
- Policy Brief
- Institution:
- Korea Institute for International Economic Policy (KIEP)
- Abstract:
- In this study, I present a theoretical model to quantitatively assess the economics impact of Pillar 1 and Pillar 2, especially focusing on the changes in the FDI patterns of multinational enterprises (MNEs). Pillar 1 offsets the incentives of MNEs' profits-shifting for tax-planning purposes, thereby reducing the inbound FDI into the countries with low corporate income tax rates. Pillar 2 burdens MNEs with 'top-up' taxes attributed from the subsidiaries in low tax countries. As the profits after tax (PAT) of MNEs shrink at the global level, innovation and R&D investment for new products will decrease, and as a result, global FDI flows will hamper.
- Topic:
- Economics, Foreign Direct Investment, Multinational Corporations, and Tax Systems
- Political Geography:
- Global Focus
10. Is Foreign Direct Investment Losing Clout in Development?
- Author:
- Axel Berger and Alexandros Ragoussis
- Publication Date:
- 01-2022
- Content Type:
- Policy Brief
- Institution:
- German Institute of Development and Sustainability (IDOS)
- Abstract:
- Over the last decade, only a single projection of foreign direct investment (FDI) flows by the United Nations influential “World Investment Report” has proposed a negative outlook in the medium term. Based partly on surveys of business executives, these forecasts reflect ex¬pecta¬tions of investment growth which, however, have repeated¬ly failed to materialise. In fact, FDI flows to develop¬ing countries have remained stagnant over the past decade. Such wishful thinking is nurtured by a long series of positive narratives and facts about foreign investment. FDI has been one of the pillars of international development efforts for over 70 years. Its promise has not been limited to critical finance, but extends to longer term competitiveness through access to better technology, managerial know-how and, above all, prosperity through more and better paid jobs in the formal sector. From the old prescriptions of the so-called Washington Consensus to the hopeful Addis Ababa Action Agenda, the dominant development narrative has therefore favoured a rather indiscriminate pursuit of investment volume. This brief calls for rethinking of narratives and policies that help to improve the impact of FDI, based on secular trends that challenge our expectations. Four such trends stand out: First, while other sources of finance for development have grown considerably over the last decades, foreign invest¬ment has not followed the trend. Second, the kind of investment that is associated with stronger gains and longer term commitment in host economies – greenfield FDI – has also been in consistent decline as a share of total invest¬ment, while mergers and acquisitions and project finance have gained in importance. Third, the top 100 multinational enterprises (MNEs), accounting for nearly a quarter of global FDI stock, rely less on employment today than they used to in order to grow their foreign presence. Job creation, knowledge transfer and spillovers are therefore less likely to materialise through the presence of mega-firms and their corresponding investment at scale. Fourth, the growth of Chinese outward FDI within a strategic expan¬sionary political agenda stands to change rules and attitudes towards foreign investment moving forwards. We argue that, collectively, these trends invite a renewed conversation around the kind of foreign investment we want and expectations of this source of finance for develop¬ment. These facts obscure neither the broad benefits of FDI to developing countries, nor the value proposition of FDI attraction. Rather, they raise questions about expectations, priorities and the alignment of investment policy with the realities experienced across develop¬ing countries. To that end, we propose four priorities that stand to make a difference in the current context. We call for policy-makers to: 1) Place additional emphasis on retention of investment and linkages with the domestic economy. 2) Try new approaches for FDI attraction that focus on improving domestic investment facilitation frameworks. 3) Be selective as to investment sources and activities in order to mitigate political risks and align inward investment better with sustainable development. 4) Add evidence to improve our understanding of invest¬ment and inform decision-making. Overall, it is critical to engage in a serious multi-stakeholder conversation around expectations, actors and solutions that respond to the investment reality of today.
- Topic:
- Development, United Nations, Foreign Direct Investment, and Economy
- Political Geography:
- Global Focus
11. Vietnam’s Global Value Chains Participation and Policy Implications for South Korea-Vietnam Economic Cooperation
- Author:
- Quang Hoan Truong
- Publication Date:
- 09-2022
- Content Type:
- Policy Brief
- Institution:
- Korea Institute for International Economic Policy (KIEP)
- Abstract:
- The term “value chain” refers to the whole production process of a good or service from the design and raw material processing to manufacturing and market services for the final customers. A global value chain (GVC) indicates production across multiple countries (Simola 2021). Wang et al. (2017) distinguish between simple and complex GVC activities and classify GVC participation in the following four activities: (i) export its domestic value added in intermediate exports used by a direct importing country to produce products for the importing country’s final consumption (simple GVC); (ii) export its domestic value added in intermediate exports used by a direct importing country to produce products for importing countries’ exports to third countries (complex GVC forward participation); (iii) importing foreign value added in intermediate imports to produce products for domestic use (simple GVC); (iv) importing foreign value-added in intermediate imports to produce products for its gross exports (complex GVC backward participation). Trade and foreign direct investment (FDI) are considered to be the main driving factors of Vietnam’s economic growth. However, Vietnam’s growth rates became substantially lower in the first decade of the 21st century and even lower after 2008, putting the country in high danger of falling into a middle-income trap (Nguyen and Truong 2022). Overcoming this huge challenge will require Vietnam to make greater progress in GVC participation, which can only be obtained by implementing the appropriate policy reforms and adjustments, particularly in FDI, trade, and industrial and institutional areas. In this regard, assistance and cooperation from Korea – an advanced economy, especially a top trade and FDI partner of Vietnam – would play a significant role in improving Vietnam’s GVCs participation. Against this backdrop, this study aims to examine Vietnam’s GVC participation. It then assesses the major challenges faced by Vietnam’s GVC participation. Based on this, the research draws relevant policy implications for Vietnam–South Korea (hereafter Korea) economic cooperation to improve Vietnam’s GVC participation in the following years.
- Topic:
- Foreign Direct Investment, Trade, Economic Cooperation, and Global Value Chains
- Political Geography:
- Vietnam and Southeast Asia
12. China’s FDI in Europe and Europe’s Policy Response
- Author:
- Pyoung Seob Yang, Cheol-Won Lee, Suyeob Na, Taehyn Oh, Young Sun Kim, Hyung Jun Yoon, and Yoo-Duk Ga
- Publication Date:
- 04-2021
- Content Type:
- Policy Brief
- Institution:
- Korea Institute for International Economic Policy (KIEP)
- Abstract:
- China’s investment in the European Union (EU) increased significantly during the European financial crisis, but has been on the decline in recent years. The surge of Chinese investment has raised concerns and demands for analysis on the negative effects it could have on the EU companies and industries. In this context, the present study aims to analyze the main characteristics of Chinese investment and M&A in Europe, major policy issues between the two sides, the EU’s policy responses, and prospects of Chinese future investment in Eu-rope, going on to draw important lessons for Korea. To summarize the main characteristics of China's investment in Europe, the study found that the EU's share of China's overseas direct investment has continued to increase until recently. Second, investment in the Central and Eastern European Countries (CEECs) is gradually increasing, although it is still insignificant compared to the top five destinations in the EU: Netherlands, Sweden, Germany, Luxembourg and France. Third, China's investment in the EU is being made in pursuit of innovation in manufacturing and to acquire high-tech technologies. When it comes to China's M&A in Europe, the study found that the proportion of indirect China's M&As (via third countries (e.g. Hong Kong) or Chinese subsidiaries already established in Europe) was relatively higher than direct ones. Empirical factor analysis of investment also shows that China's investment in the EU is strongly motivated by the pursuit of strategic assets. Other factors such as institutional-level and regulatory variables are found to have no significant impact, or have an effect contrary to expectations. This suggests that China's investment in the EU is based on the Chinese government's growth strategy, and accompanies an element of national capitalism Today, It is highly expected that the COVID-19 pandemic will have a reorganizing effect on the global value chain (GVC) and Foreign investment regulation in the high-tech sector motivated by national security is emerging as a global issue as the US and the EU are tightening their control. As Korean companies are not free from the risk of falling under such regulations, a thorough and careful response is required. And for the Korean government, it is necessary to prepare legal and institutional measures regulating foreign investment in reference to the US and the EU.
- Topic:
- Foreign Direct Investment, Financial Crisis, European Union, Economy, Economic Growth, Global Value Chains, and COVID-19
- Political Geography:
- China, Europe, Asia, Korea, and United States of America
13. FDI another day: Russian reliance on European investment
- Author:
- Marta Dominguez-Jimenez and Niclas Poitiers
- Publication Date:
- 02-2020
- Content Type:
- Policy Brief
- Institution:
- Bruegel
- Abstract:
- Most foreign direct investment into Russia originates in the European Union: European investors own between 55 percent and 75 percent of Russian FDI stock. This points to a Russian dependence on European investment, making the EU paramount for Russian medium-term growth. Even if we consider ‘phantom’ FDI that transits through Europe, the EU remains the primary investor in Russia. Most phantom FDI into Russia is believed to originate from Russia itself and thus is by construction not foreign.
- Topic:
- Economics, Energy Policy, Foreign Direct Investment, Governance, Sanctions, European Union, and Global Political Economy
- Political Geography:
- Russia and Europe
14. A return to Africa: Why North African states are looking south
- Author:
- Anthony Dworkin
- Publication Date:
- 07-2020
- Content Type:
- Policy Brief
- Institution:
- European Council on Foreign Relations (ECFR)
- Abstract:
- North African countries, each for their own reasons, are increasingly turning their attention towards sub-Saharan Africa. Morocco is pursuing a comprehensive campaign to increase its influence and win support with regard to Western Sahara. Algeria may be showing new flexibility in its response to security threats to its south. Tunisia is beginning to look for new economic opportunities in Africa. Egypt is responding to a series of strategic concerns, particularly over the waters of the Nile. Morocco, Algeria, and Tunisia are also all dealing with increased migration flows, with migrants seeking to work on their territories or pass through it to reach Europe. This North African turn to sub-Saharan Africa offers opportunities for European cooperation. But the EU should be aware of the distinctive agendas of North African countries and the reservations that their initiatives engender in some countries.
- Topic:
- International Relations, Migration, Regional Cooperation, and Foreign Direct Investment
- Political Geography:
- Africa, Algeria, North Africa, Egypt, Morocco, and Tunisia
15. China and geopolitical considerations for investment screening in the Netherlands
- Author:
- Brigitte Dekker, Frans-Paul van der Putten, and Xiaoxue Martin
- Publication Date:
- 12-2020
- Content Type:
- Policy Brief
- Institution:
- Clingendael Netherlands Institute of International Relations
- Abstract:
- This policy brief analyses whether there are grounds for the Dutch government to conduct critical assessments of direct investments, particularly from China, from a geopolitical perspective. The economic consequences of the COVID-19 pandemic warrant continued critical oversight of Chinese foreign investments and screening of such investments. Particularly during the current difficult times for the Dutch economy, there are new opportunities for Chinese investors as a result of increased needs for capital and/or new markets on the part of Dutch companies. This policy brief argues that from a geopolitical perspective there are two grounds for the Dutch government to screen investments: the Netherlands’ need to keep pace with changes in the geopolitical stance of the US and other Western countries towards China; and the risk that the Netherlands and the EU could lose a large part of their capacity for autonomous action in a geopolitical context. Hence there are two criteria that investment screening must fulfill. The first is that it must take account of the security and geopolitical implications of investments in high-tech companies. The second is that it must be aimed at preventing a high degree of strategic dependence on a single operator.
- Topic:
- Foreign Direct Investment, Geopolitics, Economy, Investment, and COVID-19
- Political Geography:
- China and Asia
16. How Chinese Local Governments are Expanding Foreign Economic Cooperation
- Author:
- Sanghun Lee, Hongwon Kim, Joohye Kim, Jiwon Choi, and Jaehee Choi
- Publication Date:
- 10-2020
- Content Type:
- Policy Brief
- Institution:
- Korea Institute for International Economic Policy (KIEP)
- Abstract:
- As the Chinese economy becomes more advanced and the internal and external economic environment surrounding China changes, so too does China’s strategy for external openness and economic cooperation. Accordingly, specific policies are diversifying from the past focus on manufacturing and foreign direct investment to services, overseas investment, bilateral and multilateral FTAs, and bilateral investment treaties (BITs). As the central government’s policy stance changes, China’s local governments are also promoting external openness and cooperation based on regional development stages, industrial structure, and regional development policies, reflecting the central government’s strategy. In particular, after the 19th Party Congress, the central government showed a strategic stance expanding external openness. In response, local governments have moved away from the traditional method of cooperation in the manufacturing sector centered on industrial complexes, and in recent years various cooperative methods have been promoted, including regional economic integration, service and investment, the use of FTAs, and innovations in institutions to expand external openness. Along with the shift in China’s foreign economic strategy, the economic cooperation environment surrounding Korea and China is changing as well, including the strengthening of protectionism, structural changes in the Chinese economy, the Korea-China FTA coming into effect, and the launch of follow-up negotiations. Therefore Korea needs to find new strategies and measures for economic cooperation with China, making it time to find new ways to expand cooperation with China’s central and local governments. Against this backdrop, this study aims to analyze the strategies, detailed policies and major cases of China’s central and local governments’ external openness and economic cooperation, and to draw policy implications for strengthening economic cooperation between Korea and China in the future.
- Topic:
- Government, Foreign Direct Investment, Economy, and Economic Cooperation
- Political Geography:
- China and Asia
17. Determinants of FDI in Transition Economies and Implications for North Korea
- Author:
- Cheol-won Lee, Hyung-gon Jeong, and Min-suk Park
- Publication Date:
- 11-2020
- Content Type:
- Policy Brief
- Institution:
- Korea Institute for International Economic Policy (KIEP)
- Abstract:
- North Korean authorities have been seeking changes in North Korea’s economic policy since the Kim Jong Un regime took power. Along with decentralization, the government is trying to increase efficiency and productivity within the socialist economic system, and as part of this policy it has designated 27 economic development zones to attract foreign investment. Foreign direct investment plays a crucial role in economic growth for low-income countries such as North Korea, which lacks capital and technology. This study discusses North Korea's foreign investment policy and tasks ahead of its government to revitalize the economy, based on the premise that nuclear negotiations between North Korea and the US proceed smoothly. First of all, in order to derive policy tasks, we compared and analyzed the achievements and policies of transition countries in Asia and Eastern Europe in terms of attracting FDI, also analyzing the determinants of FDI inflows, after which we present policy tasks for North Korean authorities. As South Korea may very well become the largest investor in North Korea, our study also discusses tasks for the Korean government to pursue in order for Korean companies to successfully invest in North Korea.
- Topic:
- Foreign Direct Investment, Economy, and Transition
- Political Geography:
- Asia and North Korea
18. Chinese investment in Uganda: new impetus for sustainable development?
- Publication Date:
- 01-2019
- Content Type:
- Policy Brief
- Institution:
- Advocates Coalition for Development and Environment (ACODE)
- Abstract:
- Chinese investment is flowing fast into Uganda, and spreading into the agriculture and forestry sectors. The government needs to keep pace with these developments so the benefits can be shared by Ugandans. A new analysis shows that, while the jobs and new businesses created are well received, the working conditions and environmental practices of Chinese companies are often poor. Many people evicted from their land to make way for new projects have not been compensated. To hold Chinese companies to account, government agencies, with support from NGOs, must share information about these investments and introduce stronger regulation — in particular to uphold community rights. In turn, Chinese companies must be more transparent, responsible and legally compliant. With a proactive and accountable strategy for Chinese investment management, Uganda could make major gains for sustainable development.
- Topic:
- Development, Economics, International Trade and Finance, Foreign Direct Investment, Business, Accountability, Investment, and NGOs
- Political Geography:
- Uganda, Africa, and China
19. The Linkage between Foreign Direct Investment and Intra-Regional Trade within ECOWAS
- Author:
- Eme Dada
- Publication Date:
- 08-2019
- Content Type:
- Policy Brief
- Institution:
- African Economic Research Consortium (AERC)
- Abstract:
- The objective of this policy brief is to inform the Ministers of Trade and Investment of Economic Community of West African State (ECOWAS) countries about the importance of the linkage between Foreign Direct Investment (FDI) and trade for developing countries. FDI is considered an important means of promoting export of the host countries. This is true of inward FDI, which comes for efficiency reasons. Conversely, there is concern that large flows of outward FDI results in a decline in the host country’s exports and loss of jobs. This in turn assumes that the exports of the source country will fall as FDI substitutes for trade.
- Topic:
- Development, Economics, International Trade and Finance, Foreign Direct Investment, and Economic Growth
- Political Geography:
- Africa, Liberia, Sierra Leone, Senegal, Mali, Guinea, Guinea-Bissau, Cape Verde, and Gambia
20. Chinese Investments in the US and EU Are Declining—for Similar Reasons
- Author:
- Jacob Funk Kirkegaard
- Publication Date:
- 09-2019
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- For years China has been one of the world’s most rapidly growing sources of outward foreign direct investment. Since peaking in 2016, however, Chinese outward investments, primarily to the United States but also the European Union, have declined dramatically, especially in response to changes in China’s domestic rules on capital outflows and in the face of rising nationalism in the United States. Concerns about growing Chinese influence in other economies, the ascendant role of an authoritarian government in Beijing, and the possible security implications of Chinese dominance in the high-technology sector have put Chinese outward investments under intense international scrutiny. This Policy Brief analyzes the most recent trends in Chinese investments in the United States and the European Union and reviews recent political and regulatory changes both have adopted toward Chinese inward investments. It also explores the emerging transatlantic difference in the regulatory response to the Chinese information technology firm Huawei. Concerned about national security and as part of the ongoing broader trade friction with China, the United States has cracked down far harder on the company than the European Union.
- Topic:
- Economics, International Trade and Finance, National Security, Foreign Direct Investment, and Investment
- Political Geography:
- China, Europe, Asia, North America, and United States of America
21. The three stages of China’s ODI development
- Author:
- Bijang Wang and Kailin Gao
- Publication Date:
- 11-2018
- Content Type:
- Policy Brief
- Abstract:
- In 2016, China became the world’s second-largest outward investor after the United States, with US$196.2 billion of outward direct investment (ODI) flows. China’s foray into ODI developed in three stages, moving from a ‘restricted’ to a ‘relaxed’ and most recently to a ‘regulated’ approach. Today’s strengthened ODI regulations correct imbalanced ODI practices of earlier eras, but some challenges remain. Before 2000, capital shortages prompted China to invite capital inflows and restrict capital outflows. Chinese enterprises had to apply for approval to invest overseas on a case-by-case basis, which minimised overseas investment. By the end of 1999, China ranked 23rd in the world for outward investment with an ODI stock of US$27 billion, representing 0.4 per cent of the global total.
- Topic:
- Foreign Direct Investment, Investment, and Economic Development
- Political Geography:
- China and Asia
22. Commitment to Development Index 2014
- Author:
- Owen Barder and Petra Krylová
- Publication Date:
- 01-2015
- Content Type:
- Policy Brief
- Institution:
- Center for Global Development
- Abstract:
- The Commitment to Development Index ranks 27 of the world's richest countries on their policies that affect more than five billion people living in poorer nations. Moving beyond comparing how much foreign aid each country gives, the CDI quantifies a range of rich country policies that affect poor people.
- Topic:
- Development, Poverty, Foreign Aid, and Foreign Direct Investment
23. Unconventional Monetary Policy, Spillovers, and Liftoff: Implications for Northeast Asia
- Author:
- Marcus Noland
- Publication Date:
- 11-2015
- Content Type:
- Policy Brief
- Institution:
- East-West Center
- Abstract:
- Unconventional monetary policy (UMP) has had predictable effects. How exit plays out is scenario-dependent. Quantitative easing has had the predictable effect of encouraging currency depreciation and some partner countries may have attempted to offset these exchange rate effects. Korea presents a particularly interesting case: it is relatively small and relatively open and integrated, in both trade and financial terms, with the United States and Japan, two practitioners of UMP. Authorities have acted to limit the won's appreciation primarily against the currency of China, not the US or Japan. Nevertheless, Korea's policy is a source of tension with the US. Under legislation currently being considered, the currency manipulation issue could potentially interfere with Korean efforts to attract direct investment from the US and create an obstacle to Korea joining the Trans-Pacific Partnership.
- Topic:
- Economics, International Trade and Finance, Political Economy, Monetary Policy, and Foreign Direct Investment
- Political Geography:
- Asia
24. Japanese Investment in the United States: Superior Performance, Increasing Integration
- Author:
- Theodore H. Moran and Lindsay Oldenski
- Publication Date:
- 02-2015
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- Japan is reemerging as the most important source of foreign direct investment (FDI) in the United States. In 2013 Japanese firms were the largest source of new inflows of FDI into the United States for the first time since 1992, injecting almost $45 billion of fresh investment into the US economy in that year alone. Moran and Oldenski show how Japanese investment in the United States differs from that of other countries along several dimensions. These differences not only make FDI by Japanese firms especially valuable but point to some important policy goals for attracting it. Although the automotive sector is the single largest industry for Japanese investment in the United States, the focus should not be on competing to attract the auto industry in particular nor should any active industrial policy of "picking winners" be pursued. Japanese investment is unique because of its research and development intensity, manifested across a number of industries in which Japanese multinationals invest other than automobiles. US policy should focus on reinforcing and expanding the factors that attract high-performing firms and high-value production stages to the United States, regardless of industry.
- Topic:
- Development, Economics, Foreign Direct Investment, and United States
- Political Geography:
- Japan
25. Chinese Investment and CFIUS: Time for an Updated (and Revised) Perspective
- Author:
- Theodore Moran
- Publication Date:
- 09-2015
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- For more than a decade, China has complained about what it maintains has been a pattern of erratic and politicized treatment of Chinese investors when they attempt to acquire US companies. The Chinese want the Committee on Foreign Investment in the United States (CFIUS) to be more open and transparent in its rulings and to not discriminate against Chinese firms. The United States is not likely to accede to these demands in any formal or legal manner. Moran proposes practical steps to address the concerns of Chinese investors without diluting CFIUS procedures. He provides a national security threat assessment filter, which allows Chinese investors—like investors of all nationalities—to determine when their proposed acquisitions might pose a genuine threat and when any such threat is simply not plausible. He also suggests that first-time Chinese investors seek expert counsel to overcome the secrecy surrounding CFIUS objections to figure out how to proceed with problematic acquisitions.
- Topic:
- Economics, Markets, and Foreign Direct Investment
- Political Geography:
- United States
26. Moral Hazard? 'Mega' public-private partnerships in African agriculture
- Author:
- Robin Willoughby
- Publication Date:
- 09-2014
- Content Type:
- Policy Brief
- Institution:
- Oxfam Publishing
- Abstract:
- After decades of underinvestment in agriculture, African governments are rightly looking at how best to mobilize funding for the sector. Donors in turn are keen to reverse a trend of neglect and to support initiatives that are simultaneously likely to enhance productivity, improve livelihoods and increase private sector investment. Private investors, concurrently, are looking for new consumer markets and production opportunities in Africa.
- Topic:
- Agriculture, Food, Famine, and Foreign Direct Investment
- Political Geography:
- Africa
27. Investing for the Few: The IFC's Health in Africa initiative
- Author:
- Anna Marriott and Jessica Hamer
- Publication Date:
- 09-2014
- Content Type:
- Policy Brief
- Institution:
- Oxfam Publishing
- Abstract:
- World Bank Group President Jim Yong Kim has publicly stated that achieving universal health coverage (UHC) and equity in health are central to reaching the two new overarching World Bank Group goals to end extreme poverty by 2030 and boost shared prosperity. Jim Kim has also rightly emphasized the need to close the gap in access to quality health services for the poorest 40 percent of the population and to eliminate point-of-service payments that impoverish people in every country.
- Topic:
- Government, Health, Foreign Direct Investment, World Bank, and Health Care Policy
- Political Geography:
- Africa
28. The rise of FDI income, and what it means for the balance of payments of developing countries
- Author:
- Miguel Pérez Ludeña
- Publication Date:
- 05-2014
- Content Type:
- Policy Brief
- Institution:
- Columbia Center on Sustainable Investment
- Abstract:
- Multinational enterprises (MNEs) multiplied their profits made in developing countries by four between 2002 and 2011 (at current prices). In Latin America and the Caribbean, they rose from US$20 billion in 2002 to US$113 billion in 2011. The growth rate has been even higher in Africa and China, but much lower in developed countries. This rise is explained by an increase in FDI stock in developing economies and the higher average profitability of MNEs.
- Topic:
- Economics, International Trade and Finance, and Foreign Direct Investment
- Political Geography:
- Africa, China, and Latin America
29. Government-held equity in foreign investment projects: Good for host countries?
- Author:
- Louis T. Wells
- Publication Date:
- 02-2014
- Content Type:
- Policy Brief
- Institution:
- Columbia Center on Sustainable Investment
- Abstract:
- A recent Perspective concluded that, in countries given to sudden shifts in policy, "a host country government equity stake in a project may decrease project risk by giving the state a reason not to demand a renegotiation." An investor may benefit, but does the host country? In my experience, rarely.
- Topic:
- Development, Economics, International Trade and Finance, and Foreign Direct Investment
30. The Transatlantic Trade and Investment Partnership: A critical perspective
- Author:
- Rainer Geiger
- Publication Date:
- 04-2014
- Content Type:
- Policy Brief
- Institution:
- Columbia Center on Sustainable Investment
- Abstract:
- Launched in July 2013 by the European Union and the United States, the Transatlantic Trade and Investment Partnership (TTIP) represents an important effort to reach a comprehensive economic agreement between two major trading partners. As has been pointed out, the project offers great opportunities for liberalizing trade and investment and regulatory convergence. Its level of ambition implies high risks, but despite negotiators' initial optimism, its success is far from certain.
- Topic:
- Economics, International Trade and Finance, Treaties and Agreements, and Foreign Direct Investment
- Political Geography:
- United States and Europe
31. Perspectives on topical foreign direct investment issues
- Author:
- John Gaffney and James Nicholson
- Publication Date:
- 06-2014
- Content Type:
- Policy Brief
- Institution:
- Columbia Center on Sustainable Investment
- Abstract:
- In their contribution to the FDI Perspectives series, Baiju Vasani and Anastasiya Ugale drew attention to an emerging trend in favor of the so-called "costs follow the event" (CFtE) (or loser pays) approach, which is in contrast to the more "traditional" approach under which parties share the costs of arbitration equally, with each party covering its own legal fees.
- Topic:
- Economics, International Trade and Finance, and Foreign Direct Investment
32. The Quality of Official Development Assistance 2014
- Author:
- Nancy Birdsall, Homi Kharas, and Nabil Hashmi
- Publication Date:
- 07-2014
- Content Type:
- Policy Brief
- Institution:
- Center for Global Development
- Abstract:
- The Quality of Official Development Assistance (QuODA) measures donors' performance on 31 indicators of aid quality to which donors have made commitments. The indicators are grouped into four dimensions associated with effective aid: maximizing efficiency, fostering institutions, reducing the burden on partner countries, and transparency and learning. The 2014 edition finds that donors are overall becoming more transparent and better at fostering partner country institutions but that there has been little progress at maximizing efficiency or reducing the burden on partner countries. The World Bank's concessional lending arm, the International Development Association (IDA), performs very well in QuODA, ranking in the top 10 of 31 donors on all four dimensions. The United States ranks in the bottom half of all donors on three of the four dimensions of aid quality and last on reducing the burden on partner countries. The United Kingdom ranks in the top third on three of four dimensions of aid quality and scores particularly well on transparency and learning. The Global Fund ranks in the bottom third on fostering institutions but ranks in the top third on the other three dimensions of aid quality, including the top spot in maximizing efficiency.
- Topic:
- Foreign Policy, Development, Economics, Foreign Aid, and Foreign Direct Investment
- Political Geography:
- United States and United Kingdom
33. Morocco's Emergence as a Gateway to Business in Africa
- Author:
- J. Peter Pham and Ricardo Rene Laremont
- Publication Date:
- 08-2014
- Content Type:
- Policy Brief
- Institution:
- Atlantic Council
- Abstract:
- Africa is home to seven of the world's ten fastest-growing economies. By 2050, the continent's population is expected to overtake India's and China's, doubling to two billion people. Moreover, those two billion Africans will be younger than their counterparts in every other region of the world and will account for one in four workers globally by mid-century. Africa's rich endowment of natural resources, including about 30 percent of the world's known reserves of minerals and 60 percent of the planet's uncultivated arable land, is already well-known to investors.
- Topic:
- Security, Economics, International Trade and Finance, and Foreign Direct Investment
- Political Geography:
- Africa, China, and Morocco
34. Regional concentration of FDI involves trade-offs in post-reform India
- Author:
- Peter Nunnenkamp, Wan-Hsin Liu, and Frank Bickenbach
- Publication Date:
- 03-2014
- Content Type:
- Policy Brief
- Institution:
- Columbia Center on Sustainable Investment
- Abstract:
- P. Chidambaram, India's Minister of Finance, claimed that "FDI worked wonders in China and can do so in India." However, China's example may also point to the limitations of foreign direct investment (FDI) liberalization in promoting the host country's economic development. FDI in China is heavily concentrated in the coastal areas, and previous studies have suggested that this has contributed to the increasing disparity in regional income and growth since the late 1970s.
- Topic:
- Development, Economics, International Trade and Finance, and Foreign Direct Investment
- Political Geography:
- China, South Asia, and India
35. Multilateral investment disciplines: Don't forget the GATS
- Author:
- Rudolf Adlung
- Publication Date:
- 03-2014
- Content Type:
- Policy Brief
- Institution:
- Columbia Center on Sustainable Investment
- Abstract:
- A number of recent studies have discussed the implications of most-favored-nation (MFN) clauses in bilateral investment treaties (BIT s) and the possible need for, and role of, a multilateral framework for investment. Surprisingly, the relevance of existing multilateral disciplines, in particular under the General Agreement on Trade in Services (GATS), is seldom acknowledged in this context.
- Topic:
- Economics, International Trade and Finance, Treaties and Agreements, and Foreign Direct Investment
36. The case for a framework agreement on investment
- Author:
- Gary Hufbauer and Sherry Stephenson
- Publication Date:
- 03-2014
- Content Type:
- Policy Brief
- Institution:
- Columbia Center on Sustainable Investment
- Abstract:
- In Columbia FDI Perspectives, No. 102, Axel Berger claimed that the debate over a multilateral framework for investment is futile. We disagree. Following its achievements at the 9th Ministerial Conference in Bali, Indonesia, the World Trade Organization (WTO) should launch negotiations to draft a 21st century Investment Framework Agreement (IFA).
- Topic:
- Economics, International Trade and Finance, Markets, Treaties and Agreements, and Foreign Direct Investment
- Political Geography:
- Colombia
37. The "spaghetti bowl" of IIAs: The end of history?
- Author:
- Joachim Karl
- Publication Date:
- 02-2014
- Content Type:
- Policy Brief
- Institution:
- Columbia Center on Sustainable Investment
- Abstract:
- In his famous book, "The End of History and the Last Man", published in 1992, Francis Fukuyama argued that Western democracy represents the end point of the socio-cultural evolution of humanity and the final form of government.
- Topic:
- Economics, International Trade and Finance, Markets, Treaties and Agreements, and Foreign Direct Investment
- Political Geography:
- France
38. Recalibrating interpretive authority
- Author:
- Anthea Roberts
- Publication Date:
- 01-2014
- Content Type:
- Policy Brief
- Institution:
- Columbia Center on Sustainable Investment
- Abstract:
- There have been many calls for a rebalancing of investor protection and state sovereignty in the investment treaty system. However, another equally important shift is underway: the recalibration of interpretive authority between treaty parties and arbitral tribunals. In newer-style investment treaties, states are increasingly protecting and enhancing their role in interpreting and applying their treaties.
- Topic:
- Economics, Government, International Trade and Finance, Markets, Treaties and Agreements, and Foreign Direct Investment
39. The China-United States BIT negotiations: A Chinese perspective
- Author:
- Sheng Zhang
- Publication Date:
- 01-2014
- Content Type:
- Policy Brief
- Institution:
- Columbia Center on Sustainable Investment
- Abstract:
- The China-US bilateral investment treaty (BIT) negotiations have attracted attention due to the relative size and weight of both economies. Despite broad consensus about the importance of such a treaty, there is considerable debate about its shape and content. The debate is reflected in two recent Columbia FDI Perspectives. Donnelly argued that a China-US BIT should be modeled on the US Model BIT without "splitting the difference between Chinese and US positions", and that the possibility of meaningful BIT negotiations are "really up to China at this point".
- Topic:
- Economics, Globalization, International Trade and Finance, Bilateral Relations, Foreign Direct Investment, and Governance
- Political Geography:
- United States, China, Europe, and Colombia
40. Which host country government actors are most involved in disputes with foreign investors?
- Author:
- Nathan M. Jensen and Jeremy Caddel
- Publication Date:
- 03-2014
- Content Type:
- Policy Brief
- Institution:
- Columbia Center on Sustainable Investment
- Abstract:
- Foreign direct investors increasingly use investment dispute-settlement mechanisms to resolve investment disputes and reduce political risk. Using data from the International Centre for Settlement of Investment Disputes (ICSID), the major forum of international investment arbitration, we cataloged the government actors involved in disputes and the actions that led to arbitration. Existing case-based studies of investment arbitration have provided general inferences about the actors involved, but we contribute to the literature in political science and economics by systematically documenting these patterns of behavior.
- Topic:
- Economics, International Trade and Finance, Foreign Direct Investment, and Governance
41. China needs to complement its "going-out" policy with a "going-in" strategy
- Author:
- Karl P. Sauvant and Victor Z. Chen
- Publication Date:
- 05-2014
- Content Type:
- Policy Brief
- Institution:
- Columbia Center on Sustainable Investment
- Abstract:
- China's rising outward foreign direct investment (OFDI) faces rising skepticism abroad. This is partly the result of the leading role of state-owned enterprises in her OFDI (and the fear that it serves non-commercial purposes), the speed with which this investment has grown, the negative image of the home country in some quarters, and the challenges it poses to established competitors. Moreover, Chinese multinational enterprises (MNEs) may not always keep in mind that host countries see FDI as a tool to advance their own development and hence seek maximum benefits from it.
- Topic:
- Economics, International Trade and Finance, and Foreign Direct Investment
- Political Geography:
- China and Asia
42. Social Accountability and Public Service Delivery in Rural Africa
- Author:
- Esbern Friis-Hansen
- Publication Date:
- 01-2014
- Content Type:
- Policy Brief
- Institution:
- Danish Institute for International Studies (DIIS)
- Abstract:
- Social accountability as a tool for development planning is gaining foothold in international donor circles. It is concerned with the responsibility and responsiveness of state authorities, as well as the ability of citizens to make claims and hold those who exercise power to account for their actions.
- Topic:
- Development, Economics, Foreign Aid, and Foreign Direct Investment
- Political Geography:
- Africa