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Begin New Search Topic Foreign Direct Investment Political Geography China Content Type Working Paper Publication Year within 10 Years

1. The Future of the Belt and Road in Europe: How China’s Connectivity Project is Being Reconfigured across the Old Continent – and What It Means for the Euro-Atlantic Alliance

Author:
Nicola Casarini
Publication Date:
02-2024
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
China’s Belt and Road Initiative (BRI) has entered the twilight zone in the old continent, following a deterioration of bilateral relations between the EU member states and China over the last years. Italy’s official exit from the BRI at the end of 2023 was a further blow to Chinese President Xi Jinping’s signature foreign policy. Yet, the BRI in Europe is being reconfigured rather than being terminated. In Western Europe, the BRI is moving away from physical infrastructure projects and investment in industrial assets – the latter being increasingly protected from Chinese takeovers by both national and EU legislation – to financial and monetary connectivity. This shift is welcomed by various European actors, including some policymakers at the national level, eurozone institutions and major banks. Concurrently, most of Eastern European countries continue to promote BRI projects and seek to attract Chinese investments, suggesting that there is a two-speed Europe when it comes to China, both in terms of geography and sectors.
Topic:
Infrastructure, Foreign Direct Investment, European Union, Belt and Road Initiative (BRI), and Currency
Political Geography:
China, Europe, Asia, and Italy

2. Reshuffling Value Chains - South Korea as a Case Study

Author:
Françoise Nicolas
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
Institut français des relations internationales (IFRI)
Abstract:
Despite all the talks about the reshuffling of value-chains and the trend to a form of industrial “Desinicization” (or decoupling/disengagement from China), the example of South Korea does not vindicate such assertions. The expansion of Korean direct investment in neighboring countries such as China and the Association of Southeast Asian Nations (ASEAN) remains a reality and it has not changed in any fundamental way over the past two decades. South Korean companies’ decisions to locate in one country rather than another are still very much based on cost factors, even if security considerations are increasingly factored in. Similarly, reshoring, which has been high on the South Korean government’s agenda for a long time, remains a marginal phenomenon for South Korean companies, despite the incentives provided. Rather than the relocation of production (in the form of reshoring or nearshoring) South Korean companies have turned to more unexpected options, such as the development of complementarity-based partnerships or vertically-integrated production networks with commodity suppliers, as in the case of the production of rare earth-based magnets. Such a strategy is likely to become more popular in the future, as it nicely combines economic and security considerations. Without a doubt, due to the highly politicized nature of the technology involved, the semiconductor industry is the one undergoing the most significant changes. In a context of rising Sino-US rivalry, the US has ramped up pressures on China with far-reaching consequences, leading South Korean semiconductor companies (with the support of the government) to engage in a strategy combining relocation to the US and onshoring in South Korea. While the economic logic is likely to prevail in most sectors thus limiting the scope for supply chain reshuffling, the examples of the semiconductor and rare earth-based magnets suggest that important changes can still be expected in the future in industries that are deemed strategic.
Topic:
Foreign Direct Investment, Supply Chains, Value Chains, and Semiconductors
Political Geography:
China, South Korea, North America, and United States of America

3. Time to say goodbye? The impact of environmental regulation on foreign divestment

Author:
Haiou Mao, Holger Görg, and Guopei Fang
Publication Date:
09-2023
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
We look at divestments by foreign firms – a topic that has received comparatively little attention in the literature – and investigate how changes in the regulatory environment in the host country may impact on such divestment decisions. We use the implementation of China’s Two Control Zone (TCZ) policy as a “quasi-natural experiment”, using detailed firm level combined with city level data for the empirical analysis. Our results show that the implementation of TCZ policy has led to higher probabilities of divestments by foreign firms in targeted TCZ cities and industries. The mechanism behind this seems to be a TCZ-induced increase in discharge fees and efforts to reduce SO2 emissions. Allowing for heterogeneity of effects, we find that the effect is particularly strong for firms from source countries with less stringent environmental regulation, and those using less advanced technology. We furthermore show that firms using intermediates from polluting industries also experience a higher probability of divestment.
Topic:
Climate Change, Environment, Foreign Direct Investment, Regulation, Business, and Divestment
Political Geography:
China and Asia

4. The US–Italy Economic Relations in a Divided World

Author:
Adriana Castagnoli
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
In 2021, bilateral trade returned to the sustained pace it had prior to the Covid pandemic. Direct investment also grew – crucially, not just Italian investment in the United States but the other way round too. While Italy’s economic ties with Russia and China remain potential hotspots, Rome has never questioned its Atlantic orientation. Nevertheless, possible austerity policies following sanctions against Russia could spread social discontent that populist parties can exploit for consensus purposes in the 2023 general election, rekindling anti-Americanism rooted in different segments of Italian society.
Topic:
Foreign Policy, Foreign Direct Investment, Economic Policy, Trade, and Energy
Political Geography:
Russia, China, Italy, and United States of America

5. China in Italy: Risk Assessment and Preventive Solutions

Author:
Beatrice Gallelli and Lorenzo Mariani
Publication Date:
12-2021
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
Italy’s 2019 decision to sign a Memorandum of Understanding with China in support of the Belt and Road Initiative sparked a heated debate at home and abroad. The possibility of Italy upgrading its trade and investment relations with China through the shortcut of a political endorsement of President Xi Jinping’s flagship foreign-policy initiative was framed as either a heaven-sent opportunity or a serious strategic threat. Two years on, most of the concerns pointed out in the debate, especially regarding infrastructures, have proven unsubstantiated (although the economic opportunities for which the Italian Government wished have also failed to materialise). However, cooperation initiatives between Italian and Chinese entities in sectors often overlooked in the mainstream debate, such as media and academic partnerships, do present risks. The creation of an interagency China Information and Coordination Unit would help to prevent – or, at least, to minimise – such risks. Paper prepared in the framework of the IAI project “When Italy Embraces the BRI”.
Topic:
Foreign Policy, Education, Science and Technology, Mass Media, Foreign Direct Investment, and Trade
Political Geography:
China, Europe, Asia, and Italy

6. Cooperation Between the United States and Pakistan: What is the Future?

Author:
Riaz A. Khokhar
Publication Date:
01-2020
Content Type:
Working Paper
Institution:
East-West Center
Abstract:
Within the Indo-Pacific region, the United States and Pakistan have sharply divergent strategic objectives. While American objectives have changed over time, focusing in recent years on rivalry with China, Pakistan’s strategic objective has remained constant—to maintain a balance of power with India. Yet Pakistan retains close strategic and economic ties with China, and the United States considers India an important strategic partner. Nevertheless, the two countries have worked together for nearly two decades toward two tactical goals—achieving a political settlement in Afghanistan and eliminating terrorism in South Asia. There is potential for them to cooperate more broadly, for example, increasing direct foreign investment to Pakistan and helping Islamabad balance its relations with the United States and China. Washington’s willingness to expand such cooperation will depend on Pakistan’s cooperation in fighting terrorism in the region.
Topic:
International Cooperation, Terrorism, Power Politics, Foreign Direct Investment, and Geopolitics
Political Geography:
Pakistan, Afghanistan, China, South Asia, India, North America, United States of America, and Indo-Pacific

7. Could a Bridge between the EU and Latin America Boost Innovation “Sovereignty” in a Multipolar World?

Author:
Nicola Bilotta and Alissa Siara
Publication Date:
07-2020
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
The economic ramifications of COVID-19 will accentuate the technological innovation gap between Latin America and the rest of the world. In a region already suffering from chronic underinvestment in research and development, the strain placed on government budgets by the pandemic-induced economic crisis will push innovation further back down the agenda. The region has compensated for a lack of domestic resources with foreign capital and technology imports from China and the United States. As the US–China relationship becomes more adversarial in the face of COVID, however, Latin America will emerge as a geopolitical battleground whose countries may be forced to choose sides and potentially lose out on capital inflows or technology imports. Navigating this potential storm will involve the region in a search for other options. Public–private partnerships with European Union firms represent one valuable possibility, but Europe and Latin America should first align their innovation agendas.
Topic:
International Relations, Science and Technology, Sovereignty, Foreign Direct Investment, European Union, Institutions, Coronavirus, and Digital Policy
Political Geography:
China, South America, Latin America, North America, and United States of America

8. Determinants of Korean Outward Foreign Direct Investment: How Do Korean Firms Respond to the Labor Costs of Host Countries?

Author:
Hanbyul Ryu and Young Sik Jeong
Publication Date:
09-2020
Content Type:
Working Paper
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
Low cost of labor has been one of the major incentives that foreign firms invest in many developing countries. Yet, many developing countries including China and ASEAN have recently experienced a rapid increase in labor costs. Using the wage information provided by JETRO, this study examines how Korean FDI outflow is affected by the increase in labor costs of the manufacturing industry in host countries. The results indicate that the worker’s and engineer’s wages in Asian developing countries, who accumulated at least 3 and 5 years of work experience, have generally a negative impact on Korean FDI outflow. However, there exist positive relationships between the wages and FDI when the wages stay at very low levels. We do not find evidence that labor costs make a significant impact on Korean FDI outflow to European or Developed countries.
Topic:
Development, Foreign Direct Investment, and Labor Market
Political Geography:
China, Asia, and Korea

9. Assessing the Impacts of Chinese Investments in Cambodia: The Case of Preah Sihanoukville Province

Author:
Sovinda Po and Kimkong Heng
Publication Date:
05-2019
Content Type:
Working Paper
Institution:
Pacific Forum
Abstract:
The past several years have seen an unprecedented inflow of Chinese investments to Cambodia, resulting in a huge increase in the number of Chinese people in this Asian country. Chinese investment projects have previously been concentrated in the Cambodian capital city, Phnom Penh, but the focus has recently been shifted to Sihanoukville, a coastal province of Cambodia. The growing presence of the Chinese, many of whom are business people and migrant workers in Sihanoukville, has brought concerns about potential impacts resulting from Chinese investment projects. Although positive impacts in terms of infrastructure development and job opportunities are apparent, Chinese investments have created numerous issues that have made headlines across various media outlets, both national and international. This analysis aims to assess the impacts of Chinese investment in Cambodia by drawing on data in the form of new reports, commentaries, analyses, and articles published on different media platforms and in academic journals. Taking Sihanoukville as a case study, the analysis shows that, despite economic benefits, Chinese investments have significant negative impacts on Cambodia as a host country of foreign direct investment. Four dimensions of the impact, including political, socio-cultural, environmental, and socio-economic are discussed. The analysis concludes with ways forward for Cambodia and China to ensure that positive rather than negative outcomes are the consequences of Chinese investments in Cambodia.
Topic:
Foreign Direct Investment, Investment, and Economic Cooperation
Political Geography:
China, Asia, and Cambodia

10. China’s Recent Engagement in Latin America and the Caribbean: Current Conditions and Challenges

Author:
Enrique Dussel Peters
Publication Date:
06-2019
Content Type:
Working Paper
Institution:
The Carter Center
Abstract:
Since the beginning of the 21st century, China’s presence in Latin America and the Caribbean (LAC) has been substantial in practically all socio-economic fields: cultural, bilateral and multilateral political issues, as well as trade, foreign direct investments, academic exchanges, and other areas. The main objective of this document is to analyze the effects of China’s presence in the region in terms of sustainable and long-term development, as well as its incidence in its relationship with the United States. Thus, the document will include a diagnostic to understand some of the specificities of the LAC-China socio-economic relationship, followed by the conclusion with a series of proposals. The first section of the paper will examine five issues that are relevant to understand general and specific topics about the China-LAC relationship: 1) general geostrategic and diplomatic topics to understand current tensions between the United States and China; 2) China’s proposal of a globalization process; 3) the concept of “new triangular relationships” and LAC’s challenges given increasing tensions between the United States and China; 4) particular developments and structures in trade, foreign direct investment, financing and infrastructure; and 5) the institutional framework between LAC and China. The second part of the paper focuses on a series of recommendations attempting to deepen and extend the China-LAC relationship and integrating the United States in it.
Topic:
International Cooperation, Bilateral Relations, Foreign Direct Investment, Culture, and Multilateral Relations
Political Geography:
China, Asia, Latin America, North America, and United States of America