Publication Year: within 10 Years and within 25 Years / Topic: Foreign Direct Investment

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. 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

3. 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

4. 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

5. 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

6. A More Strategic Approach to Foreign Direct Investment Policy

Author:: Markus Jaeger
Publication Date:: 02-2023
Content Type:: Policy Brief
Institution:: German Council on Foreign Relations (DGAP)
Abstract:: Cross-border investment and trade give rise to both economic gains and economic vulnerabilities. As geopolitical competition is intensifying, governments increasingly resort to restricting cross-border investment and trade. Policies are informed by a desire to limit security risks and secure technological advantages rather than pursue efficiency gains.
Topic:: Science and Technology, Foreign Direct Investment, Strategic Competition, and Geoeconomics
Political Geography:: Europe, Asia, and Americas

7. Who Learns More from Afar? Spatial Empirical Evidence on Manufacturing and Services

Author:: Nina Vujanović
Publication Date:: 02-2023
Content Type:: Working Paper
Institution:: The Vienna Institute for International Economic Studies (WIIW)
Abstract:: This paper investigates spatial dependence of FDI knowledge spillovers in manufacturing and services using spatial panel techniques applied to the 2006-2014 Bureau Van Dijk’s Amadeus firm-level dataset for Croatia and Slovenia. The paper finds diverse results across the two sectors. The distance between regions does not hinder the absorption of foreign knowledge in manufacturing despite the strong market-stealing effects operating within regions as well as spatially. On the other hand, FDI knowledge spillovers decrease service productivity within regions, because of market-stealing effects operating strongly across a smaller geographical scale. However, its impact is lost as knowledge spillovers from more distant neighbours are accounted for, because the poaching of local labour is impeded by distance due to rising costs of labour mobility. The research indicates that for knowledge absorption, geographic distance plays differing roles in manufacturing and services, due to the different nature of the production process.
Topic:: Development, International Trade and Finance, Foreign Direct Investment, Manufacturing, Econometrics, and Competition
Political Geography:: Europe, Croatia, and Slovenia

8. Assessing Digital Leadership: Is the EU Losing out to the US?

Author:: Dario Guarascio and Roman Stöllinger
Publication Date:: 03-2023
Content Type:: Working Paper
Institution:: The Vienna Institute for International Economic Studies (WIIW)
Abstract:: Since Leontief’s (1953) seminal work on the factor content of trade, the validity of the Heckscher-Ohlin-model has been judged not only on the basis of formal tests of the theory but also tested against prior expectation. In this vein, this paper uses the Heckscher-Ohlin-Vanek (HOV) approach to investigate whether supposed US leadership in the digital domain can be traced back to digital task endowments embodied in labour services. In a comparison between EU member states and the US, we find that the latter is more intensive in digital tasks than the EU and that this difference is explained by both an intensity-effect (US occupations being more digital-task intensive) and a structural component (relatively more digital-task intensive occupations). Viewed through the lens of the HOV theorem we find that the US is abundant in digital tasks relative to non-digital tasks, while the opposite is true for the EU. The standard tests for the predictive power of the HOV theorem are high and in line with the results for labour in previous literature.
Topic:: International Trade and Finance, Foreign Direct Investment, European Union, Digitalization, and Competition
Political Geography:: Europe and United States of America

9. Employment Effects of Offshoring, Technological Change and Migration in a Group of Western European Economies: Impact on Different Occupations

Author:: Michael Landesmann and Sandra Leitner
Publication Date:: 03-2023
Content Type:: Working Paper
Institution:: The Vienna Institute for International Economic Studies (WIIW)
Abstract:: This paper estimates conditional demand models to examine the impact of offshoring, technological change, and migration on the labour demand of native workers differentiated by four different types of occupational groups: managers/professionals, clerical workers, craft (skilled) workers and manual workers. The analysis is conducted for an unbalanced panel of five economies Austria, Belgium, France, Spain, and Switzerland covering the period 2005-2018. Our results point to important and occupation-specific effects: offshoring seems to have beneficial employment effects for native craft workers in this set of economies, while negative effects for native manual workers across a wide set of industries (including manufacturing and services industries) and managers/professionals in manufacturing. Furthermore, there are important distinctions whether offshoring occurs in other advanced economies, in the EU13 or in developing countries. The analysis of the impact of technological change shows the strong positive impact which the additional IT equipment has on most occupational groups of native workers (with the exception of manual workers), while robotisation in manufacturing showed strongly negative impacts on the employment of all groups of workers and especially of craft workers. Increasing immigrant shares in the work forces showed strongly negative impacts on native workers – however, considering only the partial substitution effects and not including the potential for productivity and demand effects – and this is mostly accounted for by immigration from low- to medium-income source countries.
Topic:: International Trade and Finance, Migration, Labor Issues, Immigration, Foreign Direct Investment, Employment, Competition, Income Distribution, and Offshoring
Political Geography:: Europe, France, Belgium, Spain, Switzerland, and Austria

10. Functional Specialisation and Working Conditions in Europe

Author:: Sandra Leitner, Roman Stöllinger, and Zuzana Zavarská
Publication Date:: 05-2023
Content Type:: Working Paper
Institution:: The Vienna Institute for International Economic Studies (WIIW)
Abstract:: Specialisation in value-chain functions is one of the new phenomena introduced by global value chains (GVCs). This report investigates the effects of functional specialisation on labour markets in fabrication and R&D activities as the two polar cases of value-chain functions, whereby the former is associated with factory economies, while the latter is characteristic of headquarter economies. More precisely, a metric similar to revealed comparative advantage is used to study the effect of relative functional specialisation on wages and non-wage working conditions. In line with the GVC literature emphasising power relations and organisational aspects of production networks, we are able to identify differentiated effects for functional specialisation patterns on wages in EU member states at the industry level across time. While relative functional specialisation in fabrication tends to hold back wages, functional specialisation in R&D has a positive effect on wage progression, controlling for labour productivity, GVC participation and numerous labour supply- and labour demand-side factors. The use of a constructed ‘sharp’ instrument allows giving these results a causal interpretation. Conversely, both functional specialisation measures are found to improve some non-wage working conditions, namely workers’ physical environment and their work intensity, which is evidence against a potential ‘race to the bottom’ effect of functional specialisation along GVCs. The effect is stronger for relative specialisation in fabrication than for relative specialisation in R&D.
Topic:: International Trade and Finance, Labor Issues, Foreign Direct Investment, European Union, Labor Market, Value Chains, and Wages
Political Geography:: Europe

11. Determinants of Functional Specialisation in EU Countries

Author:: Aleksandra Kordalska and Magdalena Olczyk
Publication Date:: 05-2023
Content Type:: Working Paper
Institution:: The Vienna Institute for International Economic Studies (WIIW)
Abstract:: This paper aims to identify factors that determine functional specialisation (FS) in global value chains (GVCs) in European Union countries. We focus on fabrication and R&D as two opposite business functions in terms of their character and their potential of creating value-added. To make our results robust two different approaches to measuring functional specialisation are used – an FDI-based approach and a trade-based approach. To assemble a relative functional specialisation index, for each approach we use the same metric – a revealed comparative advantages index. Our results suggest a positive effect of wages on specialisation in an R&D function, and a negative impact on FS in fabrication. Increasing labour productivity boosts both specialisation in fabrication and in R&D. The results are robust to different model specifications and different time intervals. The instrumental variables method allows us to interpret the results as causal relationships. Additionally, human capital and labour skills foster FS in R&D (only in FDI data), and growing employment makes FS in fabrication increase. The growth of GDP per capita positively affects functional specialisation in R&D activities. Among GVC participation measures, we confirm the importance of increasing backward linkages to explain the boost in fabrication activities. Dividing a full sample into a group of EU15 countries and a group of Central Eastern European countries we observe that patterns for the EU15 are similar to those for the full sample, while for CEE countries wages are insignificant and labour productivity affects FS in fabrication only.
Topic:: International Trade and Finance, Foreign Direct Investment, European Union, Economy, Value Chains, and Competition
Political Geography:: Europe

12. Regulatory Convergence within Technical Barriers to Trade

Author:: Mahdi Ghodsi
Publication Date:: 09-2023
Content Type:: Working Paper
Institution:: The Vienna Institute for International Economic Studies (WIIW)
Abstract:: This paper analyses how regulatory convergence in different categories of technical barriers to trade (TBTs) imposed on imports of goods in information and communications technology (ICT) globally affected the values, volumes, and unit values of imported goods during the period 1996-2019. Keywords cited in TBTs that are notified to the World Trade Organization (WTO) give an indication of the regulatory objectives behind the imposition of TBTs. MAST also classifies TBTs based on their applicability, procedural and administrative uses, factors which will also be taken into consideration in the analysis. However, objectives of TBTs may provide better insights to policymakers. TBTs are non-discriminatory measures that are imposed unilaterally on all trading partners and on domestic producers. It is not feasible to analyse unilateral TBTs in a gravity setting, as they are excluded by the introduction of country-product-time fixed effects that control for multilateral resistances. However, regulatory convergence in TBT categories is a bilateral time-varying variable that is analysed in a gravity model in this paper. The empirical results suggest that regulatory convergence between trading partners in some TBT categories stimulates import values and volumes. However, the impact is very heterogeneous across TBT objectives and classes and across ICT product categories.
Topic:: International Trade and Finance, Communications, World Trade Organization, Foreign Direct Investment, Regulation, Information Technology, and Competition
Political Geography:: Global Focus

13. EFFECT OF CORRUPTION ON FOREIGN DIRECT INVESTMENT INFLOWS IN COUNTRIES OF THE WESTERN BALKANS

Author:: Artan Hajdini, Lum Collaku, and Safet Merovci
Publication Date:: 03-2023
Content Type:: Journal Article
Journal:: Journal of Liberty and International Affairs
Institution:: Institute for Research and European Studies (IRES)
Abstract:: The purpose of this study was to investigate the effect of corruption on Foreign Direct Investment (FDI) in the Western Balkans countries, including Bosnia and Herzegovina, Croatia, Kosovo, Montenegro, North Macedonia, Serbia, and Albania. Secondary data from The World Bank, Transparency International, and International Monetary Fund databases were utilized to complete this study for 2012-2020. The built model of multiple linear regression included four independent variables, namely: Corruption Perception Index (CPI), Western Balkan Corruption Ranking (WBCR), Exchange Rate (EXG), and Inflation Rate (INFL), as well as FDI as a dependent variable, and data effects were analyzed through the SPPS scientific research software program. The results found that if CPI and WBCR were to increase by one unit, FDI would decrease by 0.088, namely 0.624, while if EXG and INFL were to increase by one unit, FDI would increase by 0.165, namely 0.236. In order to fight corruption and potentially attract more foreign direct investment, the governments of these countries should work to harmonize their anti-corruption laws with those of the European Union. In order to prevent the negative consequences of FDI inflows, they should also maintain a balanced rate of inflation, which entails stabilizing exchange rate fluctuations.
Topic:: Corruption, Foreign Direct Investment, Exchange Rate Policy, and Inflation
Political Geography:: Eastern Europe and Balkans

14. 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

15. The Great Supply Chain Shift from China to South Asia?

Author:: Ganeshan Wignaraja
Publication Date:: 07-2023
Content Type:: Research Paper
Institution:: Gateway House: Indian Council on Global Relations
Abstract:: Global supply chains connect world industry and international trade in manufactures. East Asia’s dominance with China as the preferred assembly hub in global supply chains has brought unprecedented regional prosperity, but South Asia remains a latecomer. However, pandemic-related and post-pandemic continuing disruptions to supply chains and slowing growth are being keenly felt, dampening China’s attractiveness. In an uncertain global economy, increasingly footloose foreign investors are looking for alternative production locations. Is it South Asia’s turn to prosper through supply chains in this uncertain world? This is the topical public policy question facing India and the others in South Asia. This paper discusses the concept of global supply chains, the industrial rise of East Asia, drivers of supply chain relocation from China, South Asia’s prospects, India as a complementary hub and policy lessons from East Asia’s industrial success. For the purposes of this paper, South Asia is broadly defined as the India and its contiguous countries: Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka.
Topic:: Industrial Policy, Monetary Policy, Foreign Direct Investment, Industrialization, COVID-19, Supply Chains, and Geoeconomics
Political Geography:: China, South Asia, Asia, Southeast Asia, and United States of America

16. 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

17. 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

18. Impacts of FDI Presence and Product Sophistication on the Demand for Skilled and Unskilled Labour: Evidence from SMEs in Viet Nam

Author:: Quang Hoan Truong and Van Chung Dong
Publication Date:: 02-2023
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This study employs data from the Viet Nam Enterprise Survey (VES) for 2007 and 2011) to examine the effect of foreign direct investment (FDI) and product sophistication as well as the interaction between these two factors on the skilled and unskilled labour demand on Viet Nam’s small and medium-sized enterprises (SMEs). It finds that the FDI presence in the same industry but different regions – and FDI in the same region but different industries – has a positive effect on the skilled labour demand and a negative impact on the unskilled labour demand. FDI in the same industry has a negative effect on the skilled labour demand and an advantageous impact on the unskilled labour demand. The product sophistication index is found to positively affect the skilled labour demand but decreases the demand for unskilled labour. When interacting with product sophistication, FDI presence in the same industry and region positively affects the skilled labour demand. The study also finds the opposite impacts of different types of FDI presence as well as the interaction between FDI presence and product sophistication on the demand for highly, medium-, and basic-skilled labour. Thus, it is important to consider the opposite effects of different types of FDI and the interaction between FDI presence and product sophistication on SME labour demand by skills level.
Topic:: Foreign Direct Investment, Skilled Labor, Small Industries, and Unskilled Labor
Political Geography:: Vietnam and Southeast Asia

19. Foreign Direct Investment, Agglomeration, and Production Networks in Indonesian Manufacturing

Author:: Dionisius Narjoko
Publication Date:: 05-2023
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This study examines the importance of globalisation – defined by international production networks – in determining foreign direct investment (FDI) flows into Indonesian manufacturing since 2000. It is motivated by the fact that the extent of connection between the Indonesian and the global economy had increased after the 1997–98 Asian financial crisis. Models of FDI are estimated by utilising plant-level data and various trade and tariff data. Production networks or agglomeration are found to play an important role in driving FDI in Indonesia’s manufacturing sector, at least for the period 2000–2015. This study provides the insight that agglomeration could be utilised to increase FDI in Indonesia. This not only improves the productivity of the sector targeted by the investment but also promotes productivity growth. Creating more agglomeration areas could therefore be a policy direction taken by Indonesia to help increase FDI.
Topic:: Foreign Direct Investment, Investment, Manufacturing, and Production
Political Geography:: Indonesia and Southeast Asia

20. Structural Changes and the Impact of FDI on Singapore’s Manufacturing Activities

Author:: Shandre Mugan Thangavelu
Publication Date:: 06-2023
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This chapter examines the investment and foreign direct investment (FDI) policy of Singapore’s economy in terms of the structural transformation of the economy from 1998 to 2018. The study also examines the impact of FDI on the productivity of the Singapore manufacturing industries in a panel framework from 2017 to 2019. The results indicate that FDI activities have a positive impact on labour productivity. The export activities of multinational businesses have a positive impact on labour productivity. We also observe agglomeration effects from FDI activities (average FDI activities over 3 years) in Singapore’s manufacturing industries. However, we observe a negative impact of outsourcing labour productivity. The study also derives policy implications for forward-looking policies in terms of the position of Singapore in the global production value chain.
Topic:: Foreign Direct Investment, Manufacturing, and Industry
Political Geography:: Singapore and Southeast Asia

21. Timing Is Everything: Italy Withdraws from the Belt and Road Initiative

Author:: Aurelio Insisa
Publication Date:: 12-2023
Content Type:: Commentary and Analysis
Institution:: Istituto Affari Internazionali
Abstract:: After months of rumours and speculations, on 6 December 2023, the Italian newspaper of record, the Corriere della Sera, broke the news that Rome had finally withdrawn from China’s Belt and Road Initiative (BRI), via a note sent to Beijing three days earlier.[1] In the absence of an explicit request to withdraw before the end of December, the memorandum of understanding (MoU) instrumental to Italy’s participation in the BRI would have automatically been renewed for another five years starting from March 2024. Italy’s subdued withdrawal from the BRI marked the epilogue of a long, laborious, yet ultimately successful diplomatic process that reflected a reassessment of its bilateral relations with China. The origins of this reassessment can be traced back to the government led by Mario Draghi between 2021 and 2022. In June 2021, during the first post-pandemic, post-Trump G7 Leaders’ Summit in Carbis Bay, Draghi stated that his government would “examine […] carefully” the MoU.[2] Draghi’s words reflected a deeper awareness of the broader implications of Beijing’s assertiveness in international politics and a close alignment with the Biden administration in Rome. This shift also reflected the absence of tangible economic benefits from BRI membership for Italy, although this was also due to the devastating effect of the Covid-19 pandemic on the designed trajectory of Sino-Italian economic relations.[3] Furthermore, the security-driven decision of the Draghi government to repeatedly exercise its “golden power” to veto Beijing’s investments in Italy’s strategic sectors contributed to shaping the MoU’s outcome.[4] This course correction in Rome’s China policy survived the fall of the Draghi government in July 2022 and the victory of the centre-right coalition led by Giorgia Meloni and her Fratelli d’Italia (Brothers of Italy, FdI) party in the legislative elections of September that year. After all, Meloni and her party had consistently opposed the MoU with China from the very beginning, a decision arguably also linked to the perceived need to bolster the party’s credentials as a reliable partner in the eyes of Washington – as in the case of the clear support for Ukraine well before the September electoral victory.
Topic:: Foreign Policy, Foreign Direct Investment, Belt and Road Initiative (BRI), and International Politics
Political Geography:: China, Europe, Asia, and Italy

22. 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

23. 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

24. FDI Spillover Effects: Evidence from the Philippines

Author:: Rafaelita Aldaba and Angel Derrickvhel Quejada
Publication Date:: 08-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: Using firm-level data in manufacturing, this chapter examines the impact of foreign direct investment (FDI) spillover effects on domestic firm performance. Through knowledge spillovers, FDI inflows affect the performance of domestic firms. Overall, there is some evidence to show that horizontal and forward spillovers from FDI have a significant positive impact on the performance of domestic firms. However, in terms of backward spillovers, the impact of FDI on the performance of domestic firms is negative and significant. The diffusion of backward spillover effects to domestic firms has remained limited due to the weak competitiveness of domestic firms and their inability to absorb the technology or knowledge being transferred. To strengthen the absorptive capacity and productivity of domestic firms, the chapter suggests a more comprehensive approach that would combine industrial policy to improve and develop domestic parts and supplier firms with measures to create an environment conducive to the creation and expansion of FDI backward spillovers. These include upgrading industry participation towards higher segments of global value chains, innovation, human resource development, upskilling and reskilling the workforce, and liberalising ecozone regulations affecting the transactions between multinational corporations and companies outside the economic zones.
Topic:: Economics, International Trade and Finance, Foreign Direct Investment, and Investment
Political Geography:: Philippines and Oceania

25. Entry Mode Choice and Performance of Foreign Direct Investment Firms in Emerging Economies: Micro-evidence from Viet Nam

Author:: Linh Bui, Huyen Hoang, and Hang Bui
Publication Date:: 03-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: Does the right entry mode choice help foreign direct investment (FDI) firms to perform efficiently in emerging economies? This study attempts to answer this question by examining the impact of the entry mode choice made by FDI firms on their post-entry performance in emerging markets. Using a dataset derived from specific firms for the period 2002–2016, this study accounts for the selection biases and inherent differences of FDI firms that affect their selection of entry strategies. The study found that, with regard to the manufacturing sector, the ownership type with a wholly owned subsidiary (WOS) had negative impacts on either the technical efficiency or the total factor productivity (TFP) of firms. Conversely, regarding all sectors in the economy, the WOS is likely to have a positive role on technical efficiency and TFP. It is also interesting to see that for firms with an equity joint venture (EJV) type, the higher proportion of capital contribution from domestic firms might lead to lower technical efficiency and TFP. It implies that the higher degree of management and control by the domestic firms compared with foreign firms would have negative impacts on the EJV firms’ performance.
Topic:: Economics, Foreign Aid, Foreign Direct Investment, and Emerging Powers
Political Geography:: Asia and Vietnam

26. What Will It Take for Jordan to Grow?

Author:: Tim O'Brien, Thảo-Nguyên Bùi, Ermal Frasheri, Fernando Garcia, Eric Protzer, Ricardo Villasmil, and Ricardo Hausmann
Publication Date:: 03-2022
Content Type:: Working Paper
Institution:: The John F. Kennedy School of Government at Harvard University
Abstract:: This report aims to answer the critical but difficult question: "What will it take for Jordan to grow?" Though Jordan has numerous active growth and reform strategies in place, they do not clearly answer this fundamental question. The Jordanian economy has experienced more than a decade of slow growth. Per capita income today is lower than it was prior to the Global Financial Crisis as Jordan has experienced a refugee-driven population increase. Jordan’s comparative advantages have narrowed over time as external shocks and responses to these shocks have changed the productive structure of Jordan’s economy. This was a problem well before the country faced the COVID-19 pandemic. The Jordanian economy has lost productivity, market access, and, critically, the ability to afford high levels of imports as a share of GDP. Significant efforts toward fiscal consolidation have further constrained aggregate demand, which has slowed non-tradable activity and the ability of the economy to create jobs. Labor market outcomes have worsened over time and are especially bad for women and youth. Looking ahead, this report identifies clear and significant opportunities for Jordan to strengthen new engines of export growth that would enable better overall job creation and resilience, even amidst the continued unpredictability of the pandemic. This report argues that there is need for a paradigm shift in Jordan’s growth strategy to focus more direct attention and resources on activating “agents of change” to accelerate the emergence of key growth opportunities, and that there are novel roles that donor countries can play in support of this.
Topic:: Foreign Direct Investment, Economy, Economic Growth, Trade, COVID-19, Labor Market, Inclusion, and Green Jobs
Political Geography:: Middle East and Jordan

27. Corruption, FDI, and Trade Freedom Relationship Between Turkey and Latin American Countries

Author:: Alexander Camacho Murcia and E. Murat Özgür
Publication Date:: 05-2022
Content Type:: Journal Article
Journal:: Bilgi
Institution:: Sakarya University (SAU)
Abstract:: Foreign Direct Investment (FDI) has been always associated with a high level of trade openness and freedom environment, and with a lower incidence of institutional corruption. Because it is assumed that a high level of international capital mobility makes foreign investors more cautious when there is a fluctuation in political stability and institutional transparency. Most American countries (except Canada and the USA) have been always related to a lack of transparency in their institutional and bureaucratic procedures, which conduct to important levels of corruption and in consequence, to other serious issues such as prominent level of violence, or even the inequality phenomena. This study investigates whether the variables of corruption indices, trade openness and inflation rates have positive or negative effects on FDI between Turkey and American countries. For analyzing this econometric model, it was gathered information from OECD, COMTRADE, TUIK, Heritage Foundation, UNCTAD, and the World Bank Database. The observed data correspond to a decade (2005-2014) and were only taken a sample of 14 American countries. The empirical results of the present study revealed that there is a positive correlation between the trade openness index and FDI; and, it was found a positive correlation between corruption index, inflation, and FDI. The increase in the corruption index causes a 41% increase in FDI inflow.
Topic:: International Relations, Corruption, Foreign Direct Investment, Economy, Free Trade, and Transparency
Political Geography:: Turkey and Latin America

28. A Narrative of Debt Trap Vs Connectivity under CPEC: A Case of Gwadar Port

Author:: Rizwan Naseer, Qiubin Wang, and Ahmad Ali
Publication Date:: 01-2022
Content Type:: Journal Article
Journal:: South Asian Studies
Institution:: Department of Political Science, University of the Punjab
Abstract:: Gwadar has been an underdeveloped city in Baluchistan but CPEC has addressed problems of education, health and electricity for local populace. The vision to convert Gwadar into a hub of trade is reaping benefits for Pakistan. China‟s investment and loans in Gwadar under the CPEC are termed as Debt Trap by the India and U.S. media outlets. Majority of the Western media, academia and policy making circles deliberately established the narrative of Debt Trap Diplomacy (DTD). Gwadar port is likely to unlock potential of connectivity with regional trade partners in West Asia-Central Asia and South Asia. This project is a win-win situation for China and Pakistan. China‟s investment in Gwadar port will improve Pakistan‟s economy, uplift Baluchistan‟s living standards by offering attractive opportunity to potential investors in Gwadar‟s free zone. China‟s investment in Gwadar is promising to bring real change in Gwadar and Pakistan in particular. Due to massive propaganda against Gwadar, desired results have not been achieved yet. This paper is based on primary as well as secondary data. Primary data has been collected from Planning Commission of Pakistan on the condition of anonymity. The main argument of the paper is that the narrative of debt trap diplomacy is false. Connectivity of Gwadar with regional countries will be a game changer in the region.
Topic:: Debt, Foreign Direct Investment, and Prosperity
Political Geography:: Pakistan and South Asia

29. 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

30. FDI Spillover Effects on Innovation Activities of Knowledge-using and Knowledge-creating Firms: Evidence from an Emerging Economy

Author:: Iraj Hashi, Mehtap Hisarciklilar, Slavo Radošević, Nebojša Stojčić, and Nina Vujanović
Publication Date:: 03-2022
Content Type:: Working Paper
Institution:: The Vienna Institute for International Economic Studies (WIIW)
Abstract:: The beneficial effects of innovation for firms’ performance and competitiveness are well documented, but it has been suggested in recent years that innovation regimes differ between advanced and emerging economies. While advanced economies rely on knowledge generation, their emerging counterparts follow mainly a knowledge-use regime through the application of existing knowledge and technology. Climbing up the technological ladder can be helped through spillovers from foreign investors to local firms. We investigate whether FDI spillovers influence different phases of the innovation process (from decision to innovate to productivity) among knowledge-using and knowledge-creating firms in an emerging European economy. The results show that the innovation process in emerging economies is closer to the imitation than the creation of novel products. Local firms benefit from foreign counterparts in the early phase of the innovation process. Stronger FDI effects are found among firms that undertake innovation through knowledge use rather than through knowledge generation.
Topic:: Emerging Markets, International Trade and Finance, Foreign Direct Investment, Economy, Investment, and Knowledge Systems
Political Geography:: Europe

31. FDI in Azerbaijan in 2021: Developments and Challenges

Author:: CESD Research Team
Publication Date:: 04-2022
Content Type:: Working Paper
Institution:: Center for Economic and Social Development (CESD)
Abstract:: Attracting foreign direct investment is now more important for Azerbaijan than ever before. Against the background of global uncertainty, the development of the non-oil sector and the diversification of the economy have become even more priority. On the other hand, there has been a decline in oil production in recent years, and even though high oil prices, the country's revenue from energy sales is lower than compared to the period before 2014.
Topic:: Oil, Foreign Direct Investment, Economy, and Diversification
Political Geography:: Azerbaijan

32. 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

33. 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

34. 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

35. Determinants and Effects of Foreign Direct Investment in Austria: Spillovers to Novel Innovative Environmental Technologies

Author:: Mahdi Ghodsi and Branimir Jovanovic
Publication Date:: 10-2022
Content Type:: Working Paper
Institution:: The Vienna Institute for International Economic Studies (WIIW)
Abstract:: This study investigates the determinants of FDI in Austria, as well as their spillovers to innovating technologies, productivity, and employment, using firm-level data, for the period 2008-2018. The findings point out that a decrease in the costs of trade increases investment in foreign-owned subsidiaries in Austria, and that FDI is pre-dominantly carried out in industries characterised by greater capital-intensity, higher wages, more agglomeration and regional concentration. Furthermore, FDI is higher in regions with a larger GDP and with a larger share of the population with upper secondary and post-secondary non-tertiary education. The study also finds that there are positive spillovers of FDI to the domestic economy, which are strongest and most positive for innovative activities in environmental technologies. In other words, FDI helps Austrian firms to become more innovative in major environmental technologies. Such innovative efforts are best supported at the firm-level by supporting the total assets and investment of domestic firms, and at the regional level by increasing the share of the population with higher levels of education and employing more R&D personnel. The active presence of innovative foreign MNEs that enjoy extensive technological capacities, high-skilled labour, experienced management, and large-scale resources are also conducive to innovative activities.
Topic:: Environment, Science and Technology, Foreign Direct Investment, Innovation, and Trade
Political Geography:: Europe and Austria

36. Economic and Social Impacts of FDI in Central, East and Southeast Europe

Author:: Doris Hanzl-Weiss and Branimir Jovanovic
Publication Date:: 11-2022
Content Type:: Special Report
Institution:: The Vienna Institute for International Economic Studies (WIIW)
Abstract:: This study assesses the economic and social impacts of foreign direct investment (FDI) in 17 economies in Central, East and Southeast Europe (CESEE). More precisely, we investigate how different FDI inflows have affected various economic and social indicators, such as GDP growth, labour market outcomes, and poverty and inequality, for the period since the fall of communism until 2020. We pay particular attention to FDI that originates from the EU, as well as FDI from Germany and Austria, in order to evaluate whether their effects are different from the effects of FDI from other places of origin. We also examine whether there are differences in the impacts of different types of FDI – equity capital, reinvested earnings and intra-company debt, as well as of FDI that goes to different sectors of the economy – the primary, secondary and tertiary sectors. We find that FDI inflows have had, in general, a positive effect on economic growth in CESEE, and that this effect has been particularly strong for German and Austrian FDI. For total FDI, higher inflows of 1 percentage point (pp) of GDP are associated with 0.19 pp higher GDP growth. For FDI from Germany and Austria, this effect is five times higher – FDI inflows of 1 pp of GDP have led to 0.9 pp higher GDP growth. The positive GDP effects have come from the higher consumption and exports that the FDI has induced. FDI inflows have also reduced unemployment and increased wages, but have had no effects on labour productivity. Total FDI has had only limited effects on inequality and poverty, but FDI from Germany and Austria has been found to reduce both inequality and poverty, likely because they have benefitted mainly lower-income persons. There are differences in the effects of the different types of FDI, with reinvested earnings and equity capital having in general more beneficial effects than intra-company loans. Also, FDI in different sectors of the economy has had different effects, with inflows to the secondary and tertiary sectors having greater effects than inflows to the primary sector. The policy implications of these results are that CESEE economies should not give up on their efforts to attract more FDI, but also that their endeavours should be more targeted, focusing on investments that have greater economic and social impacts. Moreover, foreign investment should not be criticised for the perhaps unsatisfactory economic and social performances of the economies from this region. Instead, the reasons for this should be sought in domestic factors and in the modest growth of the European Union during the past two decades.
Topic:: Development, International Trade and Finance, Poverty, Foreign Direct Investment, Inequality, Economic Growth, and Unemployment
Political Geography:: Europe, Eastern Europe, Germany, and Austria

37. Snakes, rats and drug addicts used to dwell here – analysis of the narrative utilised to capture the state

Author:: Luka Steric
Publication Date:: 03-2021
Content Type:: Commentary and Analysis
Institution:: Belgrade Centre for Security Policy
Abstract:: Foreign direct investments are the cornerstone of the current government’s economic policy. In their statements, the officials call them drivers of development, saying that they have enabled the revival of the economy and turned Serbia into the “economic tiger of Southeast Europe.”1 The fact that the value of the investments Serbia has managed to attract is greater “than what was achieved by all the countries of the Western Balkans put together” 2 is often mentioned as the key measure of success. However, the story of brilliant success quickly loses its lustre when one considers the long-term effects and all-encompassing consequences of this policy. Due to the way they are contracted and implemented, foreign direct investments represent one of the key mechanisms for capturing the state. Hiding behind the stories of a better future and new jobs, the government is breaking down the system of legal regulations and statutory procedures, promoting private interest to the detriment of the public one, and using foreign investments as propaganda ammunition to legitimise unlimited power. The results of such policy are a number of negative consequences for the state and the citizens, such as the increase of public debt, dramatic violation of workers’ rights and alarming problems with environmental pollution. In order to mask the negative consequences and legitimise the policy of attracting foreign investors based on the above described pattern, a complex narrative has been developed presenting foreign investments as a successful, and the only possible, model for state development. This meta-narrative about progress, which media are building up every day, is based on four basic component narratives: on the economic revival, on the efficiency of personal rule, on transparent contracts and on the opponents of Serbia’s development who ‘unfoundedly’ criticise the government’s economic success. In the analysis of the narrative we will focus on the statements of officials made since 2012, which is when the regime led by the Serbian Progressive Party came to power. Many of the described mechanisms, such as non-transparent, harmful contracts and unjustifiably high subsidies, also existed during the previous government.3 However, the capture of the state, carried out - among other things - with the help of foreign direct investments, has reached completely new dimensions under the current regime, while the narratives that accompany it have been significantly ‘improved’.
Topic:: Development, Economics, Foreign Direct Investment, and Drugs
Political Geography:: Europe and Serbia

38. Economic Sentiment Indicators and Foreign Direct Investment: Empirical Evidence from European Union Countries

Author:: Andrzej Cieślik and Mahdi Ghodsi
Publication Date:: 07-2021
Content Type:: Working Paper
Institution:: The Vienna Institute for International Economic Studies (WIIW)
Abstract:: This paper studies the role of business sentiment in the decisions of multinational enterprises (MNEs) to undertake foreign direct investment (FDI) across European Union (EU) member states. Based on the knowledge-capital model, the study employs the Pseudo Poisson Maximum Likelihood (PPML) estimator and panel data to examine empirically the determinants of FDI across EU member states during the period 2003-2017. The empirical evidence suggests that better economic sentiment in an EU Member State induces MNEs to undertake FDI in that country, while worse economic sentiment in an EU member state motivates an MNE in that country to invest abroad.
Topic:: Economics, Markets, Foreign Direct Investment, European Union, Business, and Multinational Corporations
Political Geography:: Europe

39. Interactions Between Global Value Chains and Foreign Direct Investment: A Network Approach

Author:: Amat Adarov
Publication Date:: 07-2021
Content Type:: Working Paper
Institution:: The Vienna Institute for International Economic Studies (WIIW)
Abstract:: The world economy is increasingly shaped by cross-border production and investment activity. The paper uses complex network analysis along with panel data econometric techniques to study the structure and interactions between the networks of global value chains (GVC) and foreign direct investment (FDI). The analysis reveals that both FDI and GVC networks have a distinct core-periphery structure dominated by a relatively small number of countries with the USA constituting the global hub interlinked with regional European and Asian clusters, which, in turn, are centered around regional hub countries like China and Germany. Simultaneous equation model regressions using three-stage least squares suggest that FDI centrality facilitates GVC centrality of countries. However, FDI centrality is driven to a large extent by the FDI statutory restrictions and tax oﬀshore regulations, rather than GVC connectivity.
Topic:: International Trade and Finance, Foreign Direct Investment, Borders, Networks, Macroeconomics, and Global Value Chains
Political Geography:: Global Focus

40. Heterogeneous Effects of Non-tariff Measures on Cross-border Investments: Bilateral Firm-level Analysis

Author:: Amat Adarov and Mahdi Ghodsi
Publication Date:: 09-2021
Content Type:: Working Paper
Institution:: The Vienna Institute for International Economic Studies (WIIW)
Abstract:: We analyse the heterogeneous effects of technical regulations and safety standards embodied in non-tariff measures on foreign direct investment using global firm-level panel data of bilateral cross-border ownership relationships over the period 2008-2018. To this end, we develop a novel measure of time-varying bilateral ad valorem equivalents of sectoral non-tariff measures, which reveals that technical barriers to trade (TBTs) played a much greater role as a trade-inhibiting factor in comparison with import tariffs and sanitary and phytosanitary (SPS) measures over the period 1996-2018, with their relative importance increasing in the post-Great Recession period. Estimations using the Poisson pseudo-maximum likelihood framework reveal the importance of non-tariff measures as a driver of foreign direct investment, with heterogeneous effects observed for the measures imposed by the host and the home country, as well as across sectors and types of non-tariff measures. Among other results, we find that an increase in the stringency of technical barriers to trade imposed by the host country is associated with higher investment in the foreign subsidiaries operating in this country, pointing to the regulatory barrier-jumping motive of foreign direct investment. The effect is much stronger for the multinational corporations operating in the information and communications technology sector.
Topic:: International Trade and Finance, Foreign Direct Investment, Economy, and Business
Political Geography:: Global Focus

41. How do Corporate Taxes affect International Trade?

Author:: Mario Holzner, Branimir Jovanovic, and Goran Vukšić
Publication Date:: 11-2021
Content Type:: Working Paper
Institution:: The Vienna Institute for International Economic Studies (WIIW)
Abstract:: This paper investigates how corporate income taxes affect international trade, and identifies the underlying channel. Using data on 33 NACE sectors, for 34 EU and OECD economies, over the period 2005-2014, we find that corporate income taxes reduce exports and imports only when the stock of foreign direct investment (FDI) is high. The effect is present primarily in the service sector and in countries with low corporate taxes. We interpret these findings as evidence that multinational enterprises reduce their operations in countries that raise their corporate taxes. The effect has been found to be small on aggregate, implying that the expected increase in corporate taxes in the future, arising from the global minimum tax, is unlikely to hurt international trade.
Topic:: International Trade and Finance, Foreign Direct Investment, Tax Systems, Exports, Profit, Imports, and Corporations
Political Geography:: Global Focus

42. Global Environmental, Social and Governance (ESG) Capital Allocation Strategies Between Impact Ambitions and Measurement Challenges

Author:: Sara Lovisolo
Publication Date:: 08-2021
Content Type:: Working Paper
Institution:: Istituto Affari Internazionali
Abstract:: Responsible investment as a capital allocation strategy has evolved from its ethical and political origins to embrace science-based considerations and outcome-based approaches in the context of the urgent action required in response to climate change and the Sustainable Development Goals. This shift can pose both threats and opportunities to companies seeking to get access to a diversified investor base. The investment environment companies are faced with varies depending on the geographical context and the investment style of investors. In particular, the rise of passive investment – that is the replication of financial indices in the construction of fund portfolios – is an important tool for the integration of sophisticated environmental, social and governance (ESG) factors in investment strategies. The US, Europe, Asia-Pacific and Africa present different levels of maturity and strengths in the space of responsible investment, calling for ad-hoc responses from investee companies. Across all jurisdictions the challenge of effectively measuring the impact of responsible investment is one investors and policymakers alike are still grappling with. Paper prepared in the framework of the IAI-Eni Strategic Partnership, July 2021.
Topic:: Climate Change, International Political Economy, Foreign Direct Investment, and Sustainable Development Goals
Political Geography:: Global Focus

43. 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

44. Foreign Direct Investment, Gross Domestic Product, and Export Nexus in Turkey: Autoregressive Distributed Lag Bounds Model and Granger Causality Approach

Author:: Bayram Gungor
Publication Date:: 01-2021
Content Type:: Journal Article
Journal:: The Rest: Journal of Politics and Development
Institution:: Centre for Strategic Research and Analysis (CESRAN)
Abstract:: The relationship among the FDI, GDP and Export has gained vast attention among the researchers and policy-makers. There are many studies on the interaction of these variables using various econometric approaches in the literature. However, it has seen that the findings have been different from country by country. Therefore, this study's main problematic is to estimate the coefficients that show the interaction among the FDI, GDP and Export covering 1980-2019 in Turkey. The ARDL Bounds Model and Granger Causality approach were selected to measure the coefficients statistically. Three models were executed to calculate the short-run and long-run coefficients. While the Model 1 and Model 3 were found statistically significant to explain the dependent variables, the Model 2 was found statistically insignificant. Because of this, the Model 2 was excluded from the study. The short- run coefficients were also found statistically significant to explain the dependent variables of the Model 1 and Model 3. While GDP affects the FDI positively in Model 1, GDP affects the Export negatively in Model 2. The ECT was found statistically significant at 0.01. The speeds of adjustment of the Model 1 and Model 3 were calculated as approximately 93% and 16% levels, respectively. Unlike the ARDL Bounds Model, the Granger Causality test was implemented to measure the variables' causal relationship. It was seen that there is only a unidirectional Granger causal relationship running from GDP to FDI in the Model 1 and from GDP to Export in the Model 2.
Topic:: Economics, Foreign Direct Investment, GDP, and Exports
Political Geography:: Europe, Turkey, and Asia

45. The challenge to US hegemony and the “Gilpin Dilemma”

Author:: Giorgio Romano Schutte
Publication Date:: 04-2021
Content Type:: Journal Article
Journal:: Revista Brasileira de Política Internacional (RBPI)
Institution:: Instituto Brasileiro de Relações Internacionais (IBRI)
Abstract:: This article makes a comparison between the challenges faced by the US to maintain its hegemonic position at the end of the 1970s and in the 2010s. To do so we review Robert Gilpin’s writing during the first period. He suggested the US had three options: 1) a defensive protectionist reaction 2) fragmentation of the international system 3) a new wave of innovation, (“rejuvenation”). It is argued that the Reagan administration was able to establish support for the third option. We argue the US is now faced with the same dilemma again, but with a different kind of challenger: China.
Topic:: Foreign Direct Investment, Hegemony, Conflict, and Innovation
Political Geography:: China, Asia, North America, and United States of America

46. Jagged Sphere: China’s quest for infrastructure and influence in mainland Southeast Asia

Author:: Greg Raymond
Publication Date:: 06-2021
Content Type:: Commentary and Analysis
Institution:: Lowy Institute for International Policy
Abstract:: China has land borders with mainland Southeast Asia and strong strategic imperatives to develop land routes to the sea. It has both potential and motivation to pursue an infrastructural sphere of influence in the Mekong subregion through Belt and Road Initiative (BRI) projects joining southern China and mainland Southeast Asia. The poorer states, especially Laos and Cambodia, have been receptive to the BRI and infrastructure investment, but Thailand and Vietnam, strong states and protective of sovereignty, have been more cautious. This means China’s impact is significantly varied across the subregion. China’s Special Economic Zones (SEZs) in Cambodia, Laos, and Myanmar are in some cases dissolving borders and in others carving out Chinese-controlled enclaves, all increasing the People’s Republic of China (PRC) presence and influence.
Topic:: Infrastructure, Foreign Direct Investment, Regional Integration, Borders, and Belt and Road Initiative (BRI)
Political Geography:: China, Asia, Vietnam, Cambodia, Thailand, Southeast Asia, Laos, and Myanmar

47. 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

48. Exporting out of China or out of Africa? Automation versus Relocation in the Global Clothing Industry

Author:: Tilman Altenburg, Xiao Chen, Wilfried Lütkenhorst, Cornelia Staritz, and Lindsay Whitfield
Publication Date:: 01-2020
Content Type:: Special Report
Institution:: German Institute of Development and Sustainability (IDOS)
Abstract:: The Discussion Paper examines the opportunities that the rising industrial wages in China will bring for Africa. China has been the industrial workbench of the global economy for decades. However, its competitive advantages are waning, particularly for labour-intensive assembly activities in the clothing, shoe, electronics and toy industries. The Chinese government estimates that up to 81 million low-cost industrial jobs are at risk of relocation to other countries - unless China can keep the companies in the country through automation. Against this background, three complementary studies were carried out. The first examines where the automation technology for clothing and footwear production stands today; the second, how clothing companies in China deal with the cost pressure: to what extent they automate, relocate within China or abroad and how great is the interest in Africa as a production location. The third part is devoted to Africa’s competitiveness in clothing assemly, with empirical findings from Ethiopia and Madagascar. The Discussion Paper shows that the manufacture of clothing can already be robotized today, but that for sewing, robotization will probably remain more expensive than manual labor in the next 15-20 years. China’s companies are investing heavily in the automation of all other production processes and at the same time shifting production to neighbouring Asian countries. In Africa, only Ethiopia is currently competitive in the manufacture of clothing, and here too there are significant institutional difficulties in absorbing large amounts of direct investment.
Topic:: Industrial Policy, Labor Issues, Foreign Direct Investment, Exports, and Automation
Political Geography:: Africa, Europe, Germany, Ethiopia, and Madagascar

49. Foreign Direct Investment and Labour Market Dynamics in a Developing Country: Evidence from Indonesian Plant-Level Data

Author:: Toshiyuki Matsuura and Hisamitsu Saito
Publication Date:: 02-2020
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This study examines the impact of inward foreign direct investment on the wages and employment of skilled and unskilled workers in Indonesian manufacturing plants. Entry of multinational enterprises affects local labour markets through spillovers as well as labour and product market competition. Our results show that spillovers increase the labour demand of local plants for unskilled workers, but increased wages due to severe labour market competition reduce the demand for skilled workers. We also find that product market competition causes resource reallocation from low- to high-productivity plants. Thus, attracting inward foreign direct investment effectively enhances aggregate productivity growth, but may retard the transition to skill-intensive production in Indonesian manufacturing.
Topic:: Development, Foreign Direct Investment, Manufacturing, and Labor Market
Political Geography:: Indonesia and Asia

50. Assessment of Industrial Cluster Policies in Viet Nam: The Role of Special Economic Zones in Attracting Foreign Direct Investment

Author:: Nguyen Quynh Huong
Publication Date:: 06-2020
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: Special economic zones (SEZs) are considered as one of important regional industrial policies to attract foreign investment in developing countries such as Viet Nam. The review of SEZs development in Viet Nam including the comprehensive review of infrastructure and business environment in SEZs are presented in this paper for the first time. Moreover, the paper gives novel non-parametric evidence to indicate the positive causal linkage between the zoning policies and the attraction of foreign investment at district-level in the country during the period 2011–2015.
Topic:: Industrial Policy, Regional Cooperation, Foreign Direct Investment, and Industry
Political Geography:: Asia and Vietnam

51. Political Instability, FDI and Economic Growth in Sub-Saharan African Countries: Evidence from Modelling Dynamic Simultaneous Equations

Author:: Lewis Landry Gakpa
Publication Date:: 01-2020
Content Type:: Research Paper
Institution:: African Economic Research Consortium (AERC)
Abstract:: The aim of this study is to examine the consequences of interaction between political instability and foreign direct investment (FDI) on economic growth of 31 countries in Sub-Saharan Africa in order to analyse one of the channels through which political instability affects economic growth. To achieve this objective, the study relies on a dynamic panel procedure and the Three Stage Least Squares Method to estimate a model of simultaneous equations over the period 1984-2015. The empirical results indicate that political instability affects economic growth directly and indirectly through its impact on foreign direct investment. We also highlight the simultaneous character of the relationship between political instability and the level of economic development in Sub-Saharan African countries. The results of the study then corroborate the idea that political instability hinders growth and thus calls for measures to improve the quality of political climate, which is one of the conditions necessary for a country’s economy to benefit from foreign direct investment.
Topic:: Economics, Foreign Direct Investment, Political stability, Economic Policy, and Macroeconomics
Political Geography:: Africa, South Africa, Angola, Namibia, and Botswana

52. New Productivity Drivers: Revisiting the Role of Digital Capital, FDI and Integration at Aggregate and Sectoral Levels

Author:: Amat Adarov and Robert Stehrer
Publication Date:: 04-2020
Content Type:: Working Paper
Institution:: The Vienna Institute for International Economic Studies (WIIW)
Abstract:: The paper studies the drivers of productivity at country and sectoral levels over the period 2000-2017 with the focus on the impact of capital accumulation and structure. The analysis confirms an especially important role of ICT and intangible digital capital for productivity growth, particularly in the manufacturing sectors. While backward global value chain participation and EU integration are also found to be instrumental for accelerating productivity growth, the impact of inward foreign direct investment is not robustly detected when the data is purged from the effects of special purpose entities and outlier countries.
Topic:: Economics, Foreign Direct Investment, European Union, Digital Economy, Capital Flows, and Trade
Political Geography:: Europe and Global Focus

53. 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

54. The FDI-led Growth Regimes of the East-Central and South-Eastern European Periphery

Author:: Dragos Adascalitei and Cornel Ban
Publication Date:: 06-2020
Content Type:: Working Paper
Institution:: Centre for Business and Development Studies (CBDS), Copenhagen Business School
Abstract:: The East-Central European countries that joined the EU in the 2000s are the unsung success of economic development. This paper discusses the consolidation of an export-led growth model in this region by drawing on an alternative school of thought to Varieties of Capitalism: growth regimes. By focusing on three distinct time periods (2000-2008, 2008-2012 and 2012-2019), it shows that despite marginal shifts towards consumption-led growth through personal debt or wage increases, the core of the region’s economic model continues to be heavily dependent on exports. Combining IPE and CPE analytical frameworks, we show that the consolidation of the CEE export-led model has both systemic and national roots. Specifically, we argue that growing international competition from Asia in the beginning of 2000s has forced firms in Western economies to seek alternative sources of competitiveness that involved a mix of wage moderation at home and expansion towards the East. The internationalization of Western firms met capital hungry Eastern governments, which were all too happy to use FDI to restore the competitiveness of their outdated SOEs. Backed by a social bloc that involved domestic and foreign capital as well as workers in the tradeable sectors, the export-led growth model took off and generated growth rates well above those in core countries. The 2000s also saw an increase in debt fueled consumption, that partially compensated for the lack of wage growth in the region. The crisis provided an opportunity to put an end to hybridization and to reinforce the export-led component of growth through short-term austerity measures and deeper labor market reforms. These changes consolidated the export-led model that remained in place even amidst political reconfigurations that, at least rhetorically, aimed to fight the economic dependency of the region on FDI. After the crisis ended, however, the closing of the debt-finance consumption channel combined with the German export boom to the rest of the world and local demographic decline to put upwards pressure on wage-financed consumption increases without inflationary or external balance problems. Yet despite historically low spreads in the region’s bond markets, this did not count as a full Kaleckian turn, however, with the region’s contribution of consumption to GDP growth remaining far below both consumption-led growth regimes and balanced ones.
Topic:: Economics, International Political Economy, Foreign Direct Investment, Economic Growth, Exports, State-Owned Enterprises, and Consumerism
Political Geography:: Eastern Europe and Central Europe

55. The Interaction Between Foreign Direct Investment, Foreign Portfolio Investment and Economic Growth: The Case of Sub- Saharan African Countries

Author:: Zeynep Gülru Göker and Brooke Güven
Publication Date:: 04-2020
Content Type:: Journal Article
Journal:: Journal of Academic Inquiries
Institution:: Sakarya University (SAU)
Abstract:: There are contradicting arguments in the literature examining the influence of foreign investment on economic growth in Sub Saharan Africa. Some researchers claim that high level of volatility, rising current account deficit, lack of developed financial markets and low quality of regulatory framework would generate economic losses for developing countries in Sub Saharan Africa when they liberalized their capital flows. However, some studies focus on growth enhancing effect of foreign investment to be a remedy for low capacity of accumulated savings in Sub Saharan Africa. The current study brings new evidence about the role of foreign portfolio investment and foreign direct investment on economic growth for countries in Sub Saharan Africa. Due to the endogenenity issue, we have used panel VAR methodology to estimate three simultaneous equations system. By analyzing 25 Sub Saharan African countries over the 1990-2016 period, we found that foreign direct investment and foreign portfolio investment are complements and they have positive significant impacts on economic growth.
Topic:: Development, Foreign Direct Investment, and Economic Growth
Political Geography:: Africa, Turkey, and Sub-Saharan Africa

56. ECONOMIC REBALANCING AND GEOECONOMIC CHALLENGES FOR CHINA: THE CASE OF INTRA-BRICS TRADE AND FOREIGN DIRECT INVESTMENTS

Author:: Marcelo Milan and Leandro Teixeira Santos
Publication Date:: 01-2020
Content Type:: Journal Article
Journal:: Conjuntura Austral: Journal of the Global South
Institution:: Conjuntura Austral: Journal of the Global South
Abstract:: This article examines the geoeconomic challenges brought to China by the effects of trade and foreign direct investment (FDI) flows, and consequently by the nature and composition of international economic alliances, mainlycooperation among underdeveloped nations(Glosny, 2010), of rebalancing3of its drivers of growth4. It evaluates likely impacts on other BRICS countries, given the economic linkages developed during the past couple of decades, as an example of what may happen to broader geoeconomic arrangements as the process of rebalancing deepens
Topic:: International Political Economy, Foreign Direct Investment, Geopolitics, and Economic Cooperation
Political Geography:: Russia, China, India, South Africa, and Brazil

57. Quarterly Review of the Georgian Economy (III Quarter, 2019)

Author:: Merab Kakulia, Nodar Kapanadze, and Lela Bakhtadze
Publication Date:: 01-2020
Content Type:: Special Report
Institution:: Georgian Foundation for Strategic International Studies -GFSIS
Abstract:: The Quarterly Review of the Georgian Economy is an electronic publication of the Georgian Foundation for Strategic and International Studies (Rondeli Foundation), which aims at informing readers about the ongoing processes within the country’s economy. The review is based on data of official statistics and on expert estimates.
Topic:: Debt, International Trade and Finance, Foreign Direct Investment, Budget, Employment, Economy, Economic Growth, Banks, and Inflation
Political Geography:: Eurasia, Caucasus, and Georgia

58. China and the EU in the Western Balkans: A zero-sum game?

Author:: Wouter Zweers, Vladimir Shopov, Frans-Paul van der Putten, Mirela Petkova, and Maarten Lemstra
Publication Date:: 08-2020
Content Type:: Special Report
Institution:: Clingendael Netherlands Institute of International Relations
Abstract:: This Clingendael Report explores whether and how China’s approach to the six non-European Union (EU) countries of the Western Balkans (the WB6) relates to EU interests. It focuses in particular on the question of whether China’s influence affects the behaviour of the WB6 governments in ways that run counter to the EU’s objectives in the region. China engages with the Western Balkans primarily as a financier of infrastructure and a source of direct investment. This is in line with China’s main strategic objective for the Western Balkans – that is, to develop the Land–Sea Express Corridor, a component of its Belt and Road Initiative, aimed at improving China–EU connectivity. This report proposes a number of actions based on recognising the developmental needs of countries in the Western Balkans, and accepting that China’s economic involvement is inevitable and potentially beneficial for such developmental needs. In particular, the EU should maximise accession conditionality as a tool to influence the conditions under which China is involved in the region.
Topic:: International Relations, Foreign Direct Investment, and European Union
Political Geography:: China, Europe, Eastern Europe, and Balkans

59. Cross-border Investments and Uncertainty Firm-level Evidence

Author:: Rafael Cezar, Timothée Gigout, and Fabien Tripier
Publication Date:: 03-2020
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: This paper studies the impact of uncertainty on cross-border investments. We build a data-set of firm-level outward Foreign Direct Investments between 2000 and 2015. We create a time and country varying measure of uncertainty based on the dispersion of idiosyncratic investment returns. An increase in uncertainty delays cross-border flows to the affected country. Yet, this average effect hides strong heterogeneity. Firms with low ex-ante performance durably reduce their foreign investments. Meanwhile high-performing firms increase their investments after the initial shock. We interpret these results as the evidence of a cleansing effect of uncertainty shocks among multinational firms in the presence of financial frictions.
Topic:: Economics, International Political Economy, Foreign Direct Investment, Borders, and Investment
Political Geography:: Global Focus

60. The Investment Screening Regulation and its screening ground "security or public order": how the WTO law understanding undermines the Regulation's objectives

Author:: Jens Velten
Publication Date:: 01-2020
Content Type:: Working Paper
Institution:: Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
Abstract:: The EU adopted Regulation 2019/452 (Regulation) as part of a more robust Common commercial policy to strengthen and defend its interests in a shifting global order. More concretely, the Regulation has two objectives: protecting domestic assets from harmful foreign investor interests, and equipping the EU with leverage to achieve more favourable treatment of EU investors abroad. Therefore, the Regulation provides Member States with an option to adopt foreign direct investment (FDI) screening mechanisms on the grounds of “security or public order”. However, the Regulation misses its objectives. The Regulation’s vague screening ground “security or public order” must be interpreted in accordance with WTO law. A detailed analysis finds that the relevant WTO notions of essential security interests and public order are rather narrow. The Regulation’s screening ground “security or public order” therefore only allows the screening of a few, high-profile cases of FDI. Such a narrow scope undermines the Regulation’s objectives.
Topic:: International Political Economy, International Trade and Finance, Foreign Direct Investment, and WTO
Political Geography:: Europe and European Union

61. 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

62. 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

63. Sustainable Energy through Green bonds in India

Author:: Olaf Weber and Vasundhara Saravade
Publication Date:: 07-2020
Content Type:: Working Paper
Institution:: Gateway House: Indian Council on Global Relations
Abstract:: India’s energy future needs to be low-carbon, climate-resilient and protected against price fluctuation. It can meet these needs by investing in Canadian oil companies, given the country’s political stability and rule of law. India can also attract greater foreign direct investment at home through the issuance of green bonds, a climate finance debt instrument that addresses environmental and climate-related challenges. This paper explores the regulatory perspective of the green bond market.
Topic:: Climate Change, Energy Policy, Foreign Direct Investment, Rule of Law, and Renewable Energy
Political Geography:: South Asia, Canada, India, and North America

64. 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

65. A Search for Independence in President Duterte’s Foreign Policy

Author:: Denise Layla P. Miram
Publication Date:: 12-2020
Content Type:: Special Report
Institution:: East-West Center
Abstract:: The Duterte administraƟon’s move toward favoring non‐tradiƟonal partners above other equally valuable— and perhaps more beneficial—trade and development partners, such as the United States and the European Union, has significantly changed the direcƟon of the country’s foreign policy and impacted its naƟonal security. While the government maintains that it is pursuing an “independent foreign policy”, many experts have criƟcized the administraƟon’s supposed strategy for its lack of clarity and posiƟon. In the absence of clear guidelines and a well‐defined vision, the administraƟon has merely pivoted away from one superpower, its treaty ally in the US, to global superpowers China and Russia.
Topic:: Foreign Policy, Foreign Direct Investment, European Union, Trade, and Rodrigo Duterte
Political Geography:: Russia, China, Philippines, Asia-Pacific, and United States of America

66. Corporate Tax Revenue and Foreign Direct Investment: Potential Trade-Offs and How to Address Them

Author:: Sabine Laudage
Publication Date:: 01-2020
Content Type:: Working Paper
Institution:: German Institute of Development and Sustainability (IDOS)
Abstract:: Corporate tax revenue and Foreign Direct Investment (FDI) are two key development finance sources. This paper discusses potential trade-offs faced by developing countries, when mobilizing corporate tax revenue and FDI jointly, and provides policy recommendations how to address these trade-offs.
Topic:: Development, Foreign Direct Investment, Finance, and Corporate Tax
Political Geography:: Global Focus

67. 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

68. 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

69. 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

70. 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

71. Key Drivers of Industrial Growth A Case Study of Botswana’s Manufacturing Sector

Author:: Goitseone Khanie
Publication Date:: 03-2020
Content Type:: Working Paper
Institution:: Botswana Institute for Development Policy Analysis
Abstract:: The paper examines the key determinants of industrial growth in Botswana, using manufacturing sector value added as the proxy for industrial growth. It employs the Autoregressive Distributed Lag (ARDL) cointegration approach using annual time series data for the period 1983 to 2015. Empirical results show that industrial growth is driven by financial sector development, human capital development, trade openness and foreign direct investment. Specifically, domestic credit to the private sector as a percentage of GDP and secondary school enrolment ratio are found to be significantly related to manufacturing value added as a percentage of GDP both in the long run and short run. While the relationship is limited to long run for total trade to GDP, it only exits in the short run for FDI net inflows. The study therefore recommends that policy makers should design and ensure proper implementation of financial sector development strategies that can help ease access to credit for manufacturing enterprises in the country. There is also a need for a holistic approach in the design and implementation of innovation and human resource development policies in order to provide a conducive environment for skills acquisition, innovation and technological advancements in the manufacturing sector. Trade policies and export promotion strategies should heighten productivity and value addition in the manufacturing sector, so as to make local firms internationally competitive. Finally, with regards to FDI, the Government of Botswana should create an environment that could entice multinationals to invest in the local manufacturing industry. This, however, should be coupled with protectionist policies to avoid crowding out local manufacturers and exposing them to foreign competition.
Topic:: Industrial Policy, Foreign Direct Investment, Economic Growth, Manufacturing, and Trade
Political Geography:: Africa and Botswana

72. 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

73. 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

74. Does Participation in Global Value Chains Increase Productivity? An Analysis of Trade in Value Added Data

Author:: Shujiro Urata and Youngmin Baek
Publication Date:: 11-2019
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper examines the impact of global value chain (GVC) participation on productivity by considering both backward and forward participation. Conducting a panel estimation covering 47 countries and 13 manufacturing sectors for 1995–2011, we found that both backward and forward GVC participation contributes to an increase in the productivity of the countries involved in GVCs. In particular, benefits in the form of improved productivity are larger in cases where developing countries procure intermediate goods from developed countries, or backward participation. Our analysis indicates the importance of GVC participation for improving productivity. We argue that, in order for a country to increase GVC participation, an open, free, and transparent trade and foreign direct investment environment (which is provided by regional trade agreements); well-developed soft infrastructure (e.g. educational and legal systems); hard infrastructure (e.g. transportation and communication systems); and the availability of capable human resources are important.
Topic:: International Trade and Finance, Foreign Direct Investment, and Global Value Chains
Political Geography:: Global Focus

75. 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

76. 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

77. Trade And Foreign Direct Investment Nexus In West Africa: Does Export Category Matter?

Author:: Chukwuka Onyekwena, Idris Adermuyiwa, and Eberechukwu Uneze
Publication Date:: 08-2019
Content Type:: Working Paper
Institution:: Centre for the Study of the Economies of Africa (CSEA)
Abstract:: This paper examines the effect of inward FDI in West Africa on exports to EU countries. It investigates from a host country perspective, the impact of FDI on different export categories: primary, intermediate, and final goods.
Topic:: Economics, Foreign Direct Investment, European Union, Exports, and Trade
Political Geography:: Africa and West Africa

78. Using SDGs to Leverage National Intellectual Property Strategies

Author:: Marsha Cadogan
Publication Date:: 09-2019
Content Type:: Working Paper
Institution:: Centre for International Governance Innovation
Abstract:: IP rights are often presented as a contentious issue in the development discourse. Some view strong IP rights as an obstacle to domestic development by creating barriers to the use of intangible resources on favourable terms. Others view IP rights as a means to foster growth in domestic industries, encourage innovation and protect foreign firms in high-infringement jurisdictions. These differing global perspectives on whether and, if so, how, IP rights promote development in domestic and global economies often result in policies that are either conducive to development or are challenging as development aids. The SDGs make no explicit reference to IP. However, IP is implicit in either the achievement of the SDGs as a whole, or as an aspect of specific goals, such as innovation. This policy brief deals with the relevance of the SDGs to the creation, use, protection and management of IP in developed economies.
Topic:: Development, Foreign Direct Investment, Sustainable Development Goals, Innovation, and Industry
Political Geography:: Global Focus

79. 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

80. Implications of Foreign Direct Investment, Capital Formation and its Structure for Global Value Chains

Author:: Amat Adarov and Robert Stehrer
Publication Date:: 11-2019
Content Type:: Working Paper
Institution:: The Vienna Institute for International Economic Studies (WIIW)
Abstract:: In the age of globalisation, international trade and foreign direct investment (FDI) have become integral elements of cross-country production sharing. In this paper we empirically assess the impact of FDI, as well as capital dynamics and structure, on the formation of global value chains (GVC) and trade in value added at country and sectoral levels based on a database constructed for a sample of European countries over the period 2000-2014. The analysis reveals that inward FDI is especially conducive to the formation of backward linkages while outward FDI facilitates forward GVC participation, especially in high-tech manufacturing sectors. A particularly robust influence of FDI and capital accumulation on GVC integration is identified in the textile and clothing industry. While capital accumulation in general intensifies GVC linkages for most sectors, ICT capital appears to be especially instrumental for backward integration of electrical and transportation equipment sectors.
Topic:: Globalization, International Trade and Finance, Foreign Direct Investment, Trade, and Global Value Chains
Political Geography:: United States, Japan, and Europe

81. China: Economy, Energy and the Middle East

Author:: Paul Rivlin
Publication Date:: 03-2019
Content Type:: Commentary and Analysis
Institution:: Moshe Dayan Center for Middle Eastern and African Studies
Abstract:: Paul Rivlin analyzes the economic background of China's involvement in the Middle East. Several key questions arise with respect to China’s economic involvement in the Middle East: What are China’s interests in the Middle East? How far are they dominated by its energy needs? How are they affected by its relations with the United States?
Topic:: Foreign Policy, Energy Policy, Foreign Direct Investment, Geopolitics, and Economy
Political Geography:: China and Middle East

82. Competing with Whom? European Tax Competition, the “Great Fragmentation of the Firm,” and Varieties of FDI Attraction Profiles

Author:: Javier Garcia-Bernardo and Arjan Reurink
Publication Date:: 10-2019
Content Type:: Working Paper
Institution:: Max Planck Institute for the Study of Societies
Abstract:: International tax competition is generally framed as states competing for foreign direct invest- ment (FDI), and analyses of the phenomenon draw heavily on FDI statistics. In and of themselves, however, FDI statistics are merely a quantification of the value of investment projects and tell us little about the heterogeneity of these projects and the distinct patterns of competitive dynamics between countries they generate. In this paper, we create a more sophisticated understanding of international tax competition by pointing out its variegated nature. To do so, we introduce the notion of the “great fragmentation of the firm” to distinguish between five categories of FDI: manufacturing affiliates, shared service centers, research and development facilities, intermedi- ate holding companies, and top holding companies. Using a novel combination of firm-level and country-level data, we identify for each category of FDI which European Union member states are most successful in attracting it, what macro-institutional and tax arrangements they rely on for doing so, and what benefits they receive from it in terms of tax revenues and employment creation. In this way we were able to identify five distinct FDI attraction profiles and show that, rather than being a game of all against all, tax competition in the European Union increasingly takes place amongst subsets of countries that compete for similar categories of FDI.
Topic:: Foreign Direct Investment, European Union, and Tax Systems
Political Geography:: Europe

83. Quarterly Review of the Georgian Economy ( III Quarter, 2018)

Author:: Merab Kakulia, Nodar Kapanadze, and Lela Bakhtadze
Publication Date:: 01-2019
Content Type:: Special Report
Institution:: Georgian Foundation for Strategic International Studies -GFSIS
Abstract:: The Quarterly Review of the Georgian Economy is an electronic publication of the Georgian Foundation for Strategic and International Studies (Rondeli Foundation), which aims at informing readers about the ongoing processes within the country’s economy. The review is based on data of official statistics and on expert estimates.
Topic:: Debt, International Trade and Finance, Foreign Direct Investment, Budget, Employment, Economic Growth, Banks, and Inflation
Political Geography:: Eurasia, Caucasus, and Georgia

84. Quarterly Review of the Georgian Economy (IV Quarter, 2018)

Author:: Merab Kakulia, Nodar Kapanadze, and Lela Bakhtadze
Publication Date:: 04-2019
Content Type:: Special Report
Institution:: Georgian Foundation for Strategic International Studies -GFSIS
Abstract:: The Quarterly Review of the Georgian Economy is an electronic publication of the Georgian Foundation for Strategic and International Studies (Rondeli Foundation), which aims at informing readers about the ongoing processes within the country’s economy. The review is based on data of official statistics and on expert estimates.
Topic:: Debt, International Trade and Finance, Foreign Direct Investment, Budget, Employment, Economic Growth, Banks, and Inflation
Political Geography:: Eurasia, Caucasus, and Georgia

85. Quarterly Review of the Georgian Economy (I Quarter, 2019)

Author:: Merab Kakulia, Nodar Kapanadze, and Lela Bakhtadze
Publication Date:: 07-2019
Content Type:: Special Report
Institution:: Georgian Foundation for Strategic International Studies -GFSIS
Abstract:: The Quarterly Review of the Georgian Economy is an electronic publication of the Georgian Foundation for Strategic and International Studies (Rondeli Foundation), which aims at informing readers about the ongoing processes within the country’s economy. The review is based on data of official statistics and on expert estimates.
Topic:: Debt, International Trade and Finance, Foreign Direct Investment, Budget, Employment, Economic Growth, Banks, and Inflation
Political Geography:: Eurasia, Caucasus, and Georgia

86. Quarterly Review of the Georgian Economy (II Quarter, 2019)

Author:: Merab Kakulia, Nodar Kapanadze, and Lela Bakhtadze
Publication Date:: 10-2019
Content Type:: Special Report
Institution:: Georgian Foundation for Strategic International Studies -GFSIS
Abstract:: The Quarterly Review of the Georgian Economy is an electronic publication of the Georgian Foundation for Strategic and International Studies (Rondeli Foundation), which aims at informing readers about the ongoing processes within the country’s economy. The review is based on data of official statistics and on expert estimates.
Topic:: Debt, International Trade and Finance, Foreign Direct Investment, Budget, Employment, Economic Growth, Banks, and Inflation
Political Geography:: Eurasia, Caucasus, and Georgia

87. Can China’s Diplomatic Partnership Strategy Benefit Outward Foreign Direct Investment?

Author:: Churen Sun and Yaying Liu
Publication Date:: 12-2019
Content Type:: Working Paper
Abstract:: In the context of global integration, whether a diplomatic partnership strategy can promote outward foreign direct investment (OFDI) and how it works are very important issues for China. Based on a dataset featuring China’s partnerships collected from the Ministry of Foreign Affairs website, we establish an empirical framework to assess the role of China’s diplomatic strategy in its OFDI arising from partnerships since 1993. The results show that the establishment or upgrade of partnerships has had a positive effect on Chinese firms’ decisions on OFDI for at least the short term, especially for firms with higher demand for policy guarantees from the government, such as noncentral firms and non-Beijing firms. The results also show that the increase in OFDI is concentrated in host countries with higher political risks, such as developing countries, neighboring countries, and Belt and Road countries, which is consistent with China’s diplomatic focus. Our research proves that China’s diplomatic strategy can assist firms to invest abroad.
Topic:: Diplomacy, Foreign Direct Investment, Partnerships, Belt and Road Initiative (BRI), Risk, and Economic Diplomacy
Political Geography:: China and Asia

88. Forty Years Development of China’s Outward Foreign Direct Investment: Retrospect and the Challenges Ahead

Author:: Tao Wang and Kailin Gao
Publication Date:: 05-2019
Content Type:: Working Paper
Abstract:: Outward foreign direct investment (OFDI) has increasingly become an importantmethod for China to integrate into the world economy. This paper comprehensivelyreviews and analyses policy development and the changing pattern of China’s OFDIover the past 40 years. We divide the development into “restricted” (1978–1999), “relaxed” (2000–2016) and “regulated” (2017 onwards) stages. This paper alsoreviews literature on the impact of Chinese OFDI on China and host countries. Despite its generally positive ef ects, large-scale and unbalanced OFDI activitieshave alarmed Chinese policy-makers. Both developing and developed host countrieshave expressed their concern over national security and the misbehavior of someChinese overseas enterprises. Therefore, greater supervision and adjustment fromquantity to quality growth is necessary for the future development of China’s OFDI.
Topic:: Development, History, and Foreign Direct Investment
Political Geography:: China and Asia

89. How Does Protectionist Trade Policy Interact with FDI?

Author:: Jongduk Kim and Moonhee Cho
Publication Date:: 12-2019
Content Type:: Working Paper
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: In this study, we investigate the question whether importing countries’ implementation of protective trade measures, such as antidumping duties, leads to changes in foreign direct investment from trading partners. That is, we examine the prevalence of “ADP-jumping FDI” across countries. We use more recent and organized non-tariff measure data provided by the WTO I-TIP and Ghodsi et al. (2017), which can be matched with other trade-related variables. Using econometrically sensible identification strategies, the Tobit and the Heckman two-stage selection models, we find out that ADP-jumping FDI to importing countries prevails rather consistently around the world. These results are also consistent with those using Poisson and linear fixed effects models.
Topic:: Foreign Direct Investment, Trade, and Protectionism
Political Geography:: Asia, Korea, and Global Focus

90. How Do Technical Barriers to Trade Affect Foreign Direct Investment?

Author:: Mahdi Ghodsi
Publication Date:: 01-2019
Content Type:: Working Paper
Institution:: The Vienna Institute for International Economic Studies (WIIW)
Abstract:: Trade liberalisation and the EU enlargement in the past two decades allowed European multinational enterprises (MNEs) to benefit from production fragmentation in Central, East and Southeast Europe (CESEE). Recent studies show that market regulations and standards that are embedded within Technical Barriers to Trade (TBTs) might not necessarily hamper trade but improve the quality of products, production procedures, and market efficiencies. However, complying with the regulations embedded in the TBTs imposed by a host country might be costly enough to discourage MNEs from investing there. Furthermore, MNEs from countries that impose more regulations and standards might be more capable of investing abroad. This article analyses how TBTs imposed by both home and host countries affect inward FDI stocks in the CESEE countries during the period 1996-2016. The results suggest that Specific Trade Concerns (STCs) raised on trade-restrictive TBTs imposed by CESEE countries induce ‘tariff jumping’ motives of investment to these countries, while regular TBTs as indications of positive externalities and efficiency gains at home discourage outward FDI. Besides, FDI stocks by non-EU28 countries are found to be stimulated by regular quality TBTs imposed by the host economies.
Topic:: International Trade and Finance, Foreign Direct Investment, European Union, Regulation, and Tariffs
Political Geography:: Europe

91. Competing with Whom? European Tax Competition, the “Great Fragmentation of the Firm,” and Varieties of FDI Attraction Profiles

Author:: Javier Garcia-Bernardo and Arjan Reurink
Publication Date:: 10-2019
Content Type:: Working Paper
Institution:: Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:: International tax competition is generally framed as states competing for foreign direct investment (FDI), and analyses of the phenomenon draw heavily on FDI statistics. In and of themselves, however, FDI statistics are merely a quantification of the value of investment projects and tell us little about the heterogeneity of these projects and the distinct patterns of competitive dynamics between countries they generate. In this paper, we create a more sophisticated understanding of international tax competition by pointing out its variegated nature. To do so, we introduce the notion of the “great fragmentation of the firm” to distinguish between five categories of FDI: manufacturing affiliates, shared service centers, research and development facilities, intermediate holding companies, and top holding companies. Using a novel combination of firm-level and country-level data, we identify for each category of FDI which European Union member states are most successful in attracting it, what macro-institutional and tax arrangements they rely on for doing so, and what benefits they receive from it in terms of tax revenues and employment creation. In this way we were able to identify five distinct FDI attraction profiles and show that, rather than being a game of all against all, tax competition in the European Union increasingly takes place amongst subsets of countries that compete for similar categories of FDI.
Topic:: Foreign Direct Investment, European Union, Global Value Chains, Wealth, Tax Competition, and Transnational Corporations
Political Geography:: Europe

92. Financing Energy Access in Sub-Saharan Africa

Author:: Nicola Bilotta and Lorenzo Colantoni
Publication Date:: 12-2018
Content Type:: Working Paper
Institution:: Istituto Affari Internazionali
Abstract:: The electrification of Sub-Saharan Africa has traditionally suffered from a lack of adequate investments, given the scarcity of domestic funds and the higher regional risk perceived by foreign investors. And yet, electrification of the continent has accelerated lately, driven by innovative financing instruments that fit the African framework. Such tools as aggregation, securitization and guarantee instruments reduce risk premiums, thus increasing the attractiveness of the sector and making it easier for international institutions to provide back-up funding for private, local and decentralized projects. Critical in this regard has been Africa’s FinTech system, which enables forms of mobile payment and micro-credit access, resulting in innovative business models. Such sets of tools will be then fundamental to maintaining the current trends and, eventually, reach the long-awaited universal access to energy for those in Sub-Saharan Africa. Paper prepared in the framework of the IAI-Eni Strategic Partnership, December 2018.
Topic:: Climate Change, Energy Policy, Natural Resources, Foreign Direct Investment, and Sustainable Development Goals
Political Geography:: Africa and Europe

93. Russia’s National Oil Champion Goes Global

Author:: Edward C. Chow and Andrew J. Stanley
Publication Date:: 02-2018
Content Type:: Working Paper
Institution:: Center for Strategic and International Studies
Abstract:: After the Soviet Union collapsed and Russia was roiled by political and economic chaos, many state-owned assets were privatized based on political connections and corrupt practices. The oil sector was a particularly attractive, but by no means the only, target for these privatizations. By the end of the 1990s, almost all of Russia’s oil production was privately owned. In spite of continued nontransparency, the oil sector began to resemble a competitive market with private investors introducing Western technology, financial accounting, and operating and management practices. It also started to attract major foreign investments. The remaining state oil assets were managed by a sleepy state enterprise named Rosneft that, in spite of its name (Russian Oil), produced less than 5 percent of Russia’s oil. Today, majority state-owned Rosneft produces almost half of Russia’s oil. Its daily oil production of 4.6 million barrels, according to its last reported quarterly results, is double that of the world’s largest oil company by market capitalization, ExxonMobil, which last reported daily liquids production of 2.3 million barrels. Rosneft’s rapid rise coincided with the rule of Vladimir Putin, who first became president of Russia in 2000. Its production increases were built largely on the backs of controversial acquisitions of assets previously held by private companies such as Yukos, TNK-BP, and Bashneft. Rosneft’s acquisition spree accelerated after Putin’s close associate and Russia’s then-deputy prime minister Igor Sechin became chairman of its board of directors in 2004. Sechin left government in 2012 to take over as Rosneft’s chief executive officer. Rosneft’s board of directors is now chaired by former German chancellor Gerhard Schroeder. Rosneft’s transformation as Russia’s national oil champion is consistent with Putin’s policy of regaining state control over the commanding heights of the Russian economy, which is more reliant on oil income today than the Soviet Union ever was. Rosneft is Russia’s largest taxpayer and contributed a quarter of government revenue in 2014. Until recently, Rosneft concentrated mainly on consolidating its dominance over the domestic oil patch. It is also Russia’s leading refiner and is increasing natural gas production for direct sales to domestic gas users, producing 67 billion cubic meters in 2016. In 2014, Russia was hit by the twin shocks of a global oil price collapse and Western economic sanctions enacted after its aggression against Ukraine in the Donbas region and annexation of Crimea. These developments affected Rosneft severely since it involved the value of the commodity it produces and sells and restricted Rosneft’s access to international financing when it was heavily indebted from the aforementioned acquisitions. A normal company might hunker down, repair its balance sheet, and wait for external conditions to improve. Instead Rosneft has done the exact opposite and expanded its international business aggressively. As part of the 2014 U.S.-led sanction efforts, Igor Sechin, as the leading figure of Russia’s largest petroleum company and his having “shown utter loyalty to Vladimir Putin,” was directly sanctioned. Further Russian sanctions enacted by Congress in 2017 called on the U.S. Department of the Treasury to submit a detailed report on senior political figures, oligarchs, and parastatal entities as determined by their “closeness to the Russian regime and their net worth.” While the unclassified version of the report released to Congress on January 29 included Igor Sechin, the report was poorly received and largely regarded as nothing more than a “rich list” by Russian experts. However, the report also contains classified annexes, including a list of parastatal entities and supporting analysis, which by definition would have included Rosneft. Although Rosneft’s rapid international expansion is too recent to assess definitely, this paper describes some of Rosneft’s overseas ventures and explores possible motivations, economic and political, behind them.
Topic:: Energy Policy, Oil, Foreign Direct Investment, Sanctions, Gas, Transparency, and Private Sector
Political Geography:: Russia, United States, Europe, and Eastern Europe

94. Quarterly Review of the Georgian Economy (IV Quarter of 2017)

Author:: Merab Kakulia, Nodar Kapanadze, and Lela Bakhtadze
Publication Date:: 04-2018
Content Type:: Special Report
Institution:: Georgian Foundation for Strategic International Studies -GFSIS
Abstract:: The Quarterly Review of the Georgian Economy is an electronic publication of the Georgian Foundation for Strategic and International Studies (Rondeli Foundation), which aims at informing readers about the ongoing processes within the country’s economy. The review is based on data of official statistics and on expert estimates.
Topic:: Debt, International Trade and Finance, Foreign Direct Investment, Budget, Employment, Economic Growth, Banks, and Inflation
Political Geography:: Eurasia, Caucasus, and Georgia

95. Quarterly Review of the Georgian Economy ( I Quarter, 2018)

Author:: Merab Kakulia, Nodar Kapanadze, and Lela Bakhtadze
Publication Date:: 07-2018
Content Type:: Special Report
Institution:: Georgian Foundation for Strategic International Studies -GFSIS
Abstract:: The Quarterly Review of the Georgian Economy is an electronic publication of the Georgian Foundation for Strategic and International Studies (Rondeli Foundation), which aims at informing readers about the ongoing processes within the country’s economy. The review is based on data of official statistics and on expert estimates.
Topic:: Debt, International Trade and Finance, Foreign Direct Investment, Budget, Employment, Economic Growth, Banks, and Inflation
Political Geography:: Eurasia, Caucasus, and Georgia

96. Quarterly Review of the Georgian Economy ( II Quarter, 2018)

Author:: Merab Kakulia, Nodar Kapanadze, and Lela Bakhtadze
Publication Date:: 10-2018
Content Type:: Special Report
Institution:: Georgian Foundation for Strategic International Studies -GFSIS
Abstract:: The Quarterly Review of the Georgian Economy is an electronic publication of the Georgian Foundation for Strategic and International Studies (Rondeli Foundation), which aims at informing readers about the ongoing processes within the country’s economy. The review is based on data of official statistics and on expert estimates.
Topic:: Debt, International Trade and Finance, Foreign Direct Investment, Budget, Employment, Economic Growth, Banks, and Inflation
Political Geography:: Eurasia, Caucasus, and Georgia

97. 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

98. The Development of U.S.-China Trade and the Result of Conflict

Author:: Ma Tao
Publication Date:: 06-2018
Content Type:: Working Paper
Abstract:: The very success of globalization has flourished since World War II. The benefits of economic globalization are not evenly distributed among countries, especially among different groups within a country. Before the financial crisis in 2008, as the major promotors of globalization, developed countries intensified their internal contradictions. So populism, protectionism and isolationism are rising in many developed countries, which are the main features of anti-globalization. Brexit happened against the polls in 2016, in large part, because of the migrant crisis tipping the British towards protection of its borders. In the beginning of his presidency, Donald Trump declared to withdraw from TPP, build Mexican border wall, renegotiate NAFTA and so on. Trump’s protectionism policies may be gradually implemented in 2017. Going on like these, the tide of anti-globalization may be further strengthened in the future.
Topic:: Globalization, Bilateral Relations, Foreign Direct Investment, Trade Wars, and Trade
Political Geography:: China, Asia, North America, and United States of America

99. Country-Risk Rating of Overseas Investment from China (2018)

Author:: CROIC-IWEP
Publication Date:: 01-2018
Content Type:: Working Paper
Abstract:: China's outbound direct investment hit a new high in 2016, reaching $196.15 billion, making the country the world's second-largest overseas investor. The volume of its outbound direct investment increased by 34.7% year-on-year in 2016 and accounted for 13.5% of the world's total — the first time it exceeded 10%. Since 2003, when the Ministry of Commerce joined hands with the National Bureau of Statistics and the State Administration of Foreign Exchange to start releasing authoritative investment data annually, China's outbound direct investment has kept increasing for 14 consecutive years. From 2002 to 2016, the annual average growth of its outbound direct investment reached 35.8%. In 2016, China's outbound direct investment once again exceeded the foreign direct investment it received, making it a net capital exporter for two consecutive years. Meanwhile, its outbound direct investment stock hit $1.35739 trillion at the end of 2016, the 6th largest in the world, two notches up compared with in 2015. In 2016, China had the most overseas M&A deals in history in terms of both number and value of M&A deals. In the future, China is expected to bring out more of its investment potentials and build a win-win cooperative relationship with other countries following its economic transition and upgrading, rising competitiveness of Chinese enterprises in overseas markets and steady advancement of the Belt and Road Initiative.
Topic:: Economics, Foreign Direct Investment, and Investment
Political Geography:: China and Asia

100. Volume 68 Issue 2

Author:: Haluk Alkan
Publication Date:: 06-2018
Content Type:: Journal Article
Journal:: Istanbul Journal of Economics
Institution:: Istanbul University Faculty of Economics
Abstract:: Istanbul Journal of Economics-İstanbul İktisat Dergisi is an open access, peer-reviewed, scholarly journal published two times a year in June and December. It has been an official publication of Istanbul University Faculty of Economics since 1939. The manuscripts submitted for publication in the journal must be scientific and original work in Turkish or English. Being one of the earliest peer-reviewed academic journals in Turkey in the area of economics, Istanbul Journal of Economics-İstanbul İktisat Dergisi aims to provide a forum for exploring issues in basicly economics and publish both disciplinary and multidisciplinary articles. Economics is the main scope of the journal. However, multidisciplinary and comparative approaches are encouraged as well and articles from various social science areas such as sociology of economics, history, social policy, international relations, financial studies are welcomed in this regard. The target group of the journal consists of academicians, researchers, professionals, students, related professional and academic bodies and institutions.
Topic:: Economics, International Political Economy, Foreign Direct Investment, Economic Growth, Political Science, and Banking
Political Geography:: Turkey and Global Focus

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COLUMBIA UNIVERSITY PRESS