Special Issue "FDI and Development: Emerging Issues"

A special issue of Economies (ISSN 2227-7099).

Deadline for manuscript submissions: closed (31 May 2017).

Special Issue Editor

Prof. Dr. Eric Rougier
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Guest Editor
GREThA, University of Bordeaux, France

Special Issue Information

Dear Colleagues,

In the current context of an increasingly global and liberal world economy, attracting FDI is becoming a central policy issue for all developing countries, whatever their size or income level. For the last two decades, numerous developing countries have implemented costly infrastructure policies and institutional reforms in order to integrate their domestic firms into the trade in tasks and global value chains. Trade and FDI are therefore becoming growingly complementary and intertwined. However, not all countries have succeeded in reaping economy-wide benefits from FDI in assembly activities, the latter often concentrating its impact on a few local firms without bringing widespread spillovers for the rest of the economy. Moreover, the impact on economic development of new forms of cross-border investment, such as South-to-South FDI, FDI carried out by smaller companies or FDI based on land or intangible assets such as brands or technology, remains largely unknown. Lastly, by modifying the sectoral structure of production and labor demand, FDI certainly has indirect distributive effects that have not been sufficiently analyzed so far, although they will inevitably breed sociopolitical conflict and need to be addressed by national social policies in the future. A finer-grained analysis of the direct and indirect benefits and costs of the various types of FDI flows and investment incentives would certainly provide useful information to both academics and policy-makers. Innovative research papers on the determinants and impacts of FDI by type or by sector, the articulation between trade and FDI, the impact of South–South FDI on both source and host countries and the political economy of FDI and foreign investment policy would be welcomed.

Prof. Dr. Eric Rougier
Guest Editor

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Published Papers (7 papers)

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Research

Open AccessArticle
Does Foreign Direct Investment Harm the Environment in Developing Countries? Dynamic Panel Analysis of Latin American Countries
Economies 2017, 5(4), 39; https://doi.org/10.3390/economies5040039 - 23 Oct 2017
Cited by 4
Abstract
This article sets out to study the FDI–environment nexus within a dynamic panel data framework. To that end, the pooled mean group (PMG) method of Pesaran et al. (1999) is used to assess the impact of FDI on CO2 emissions, controlling for [...] Read more.
This article sets out to study the FDI–environment nexus within a dynamic panel data framework. To that end, the pooled mean group (PMG) method of Pesaran et al. (1999) is used to assess the impact of FDI on CO2 emissions, controlling for income and energy consumption, using a panel of 17 Latin American countries. Our results using the full sample show that FDI increases CO2 emissions, confirming the pollution haven hypothesis. But when splitting the data into different income groups, FDI inflows only in high-income countries increase CO2 emissions. In addition, CO2 emissions with growth tend to increase monotonically within the full sample and middle-income countries. Finally, energy consumption is found to increase CO2 emissions in all cases: the full sample, high-, middle- and low-income countries. Full article
(This article belongs to the Special Issue FDI and Development: Emerging Issues)
Open AccessArticle
Labor Costs and Foreign Direct Investment: A Panel VAR Approach
Economies 2017, 5(4), 36; https://doi.org/10.3390/economies5040036 - 26 Sep 2017
Cited by 3
Abstract
This paper examines the endogenous interaction between labor costs and Foreign Direct Investment (FDI) in the OECD countries via the Panel VAR approach under system GMM estimates for the period 1995–2009. The available data allows identifying the relevance of the components of labor [...] Read more.
This paper examines the endogenous interaction between labor costs and Foreign Direct Investment (FDI) in the OECD countries via the Panel VAR approach under system GMM estimates for the period 1995–2009. The available data allows identifying the relevance of the components of labor costs, and allows a detailed analysis across different sectors. Empirical findings have revealed that sectoral composition of FDI and the decomposition of labor costs play a significant role in investigating the dynamic association between labor costs and FDI. Further, results suggest that labor market policies should focus on productivity-enhancing tools in addition to price hindering tools. Full article
(This article belongs to the Special Issue FDI and Development: Emerging Issues)
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Open AccessArticle
Does Foreign Direct Investment Successfully Lead to Sustainable Development in Singapore?
Economies 2017, 5(3), 29; https://doi.org/10.3390/economies5030029 - 07 Aug 2017
Cited by 5
Abstract
The role of foreign direct investment (FDI) inflows is tested on three main pillars of sustainable development (SD), which consists of economic growth, income distribution and environmental quality for Singapore. The analysis is performed by using Autoregressive Distributed Lag (ARDL) estimation technique. The [...] Read more.
The role of foreign direct investment (FDI) inflows is tested on three main pillars of sustainable development (SD), which consists of economic growth, income distribution and environmental quality for Singapore. The analysis is performed by using Autoregressive Distributed Lag (ARDL) estimation technique. The sample data is based on annual data, covering the period from 1970 to 2013. The estimated long-run elasticity indicated that FDI inflows not only lead to higher economic growth and better environmental quality but also widen the income disparity in this country, which may disrupt its SD mission. The other two introduced variables that could also play a part as potential drivers for sustainable development (SD) are trade openness (TO) and financial development (FD). Based on the outcomes, TO has also led to higher economic growth and lower environmental degradation. However, this variable does not have significant impact on income distribution for Singapore. As for FD, it is found to have a significant and positive impact on economic growth and also successfully reduce the income inequality problem. On the contrary, this variable does not have any significant relationship with environmental quality, as indicated by carbon dioxide (CO2) emissions. Mixed evidence of a relationship is detected for other macroeconomic variables in the three estimates models. As the income inequality issue has become more serious, it is important for Singaporean policymakers to focus on attracting more foreign investors to invest in various sectors, in the hope that these companies can offer better wages to the local workers and thus improve income distribution in the country. More attention is needed to explore the potential role of TO and FD as drivers for SD in this country. Full article
(This article belongs to the Special Issue FDI and Development: Emerging Issues)
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Open AccessArticle
The Relevance of Political Stability on FDI: A VAR Analysis and ARDL Models for Selected Small, Developed, and Instability Threatened Economies
Economies 2017, 5(3), 22; https://doi.org/10.3390/economies5030022 - 22 Jun 2017
Cited by 3
Abstract
This paper studies the relevance of political stability on foreign direct investment (FDI) and the relevance of FDI on economic growth, in three panels. The first panel contains 11 very small economies; the second contains five well-developed and politically stable economies with highly [...] Read more.
This paper studies the relevance of political stability on foreign direct investment (FDI) and the relevance of FDI on economic growth, in three panels. The first panel contains 11 very small economies; the second contains five well-developed and politically stable economies with highly positive FDI net inflows, while the third is a panel with economies that are prone to political violence or targeted by the terrorist attacks. We employ a Granger causality test and implement a vector autoregressive (VAR) framework within the panel setting. In order to test the sensitivity of the results and avoid robust errors, we employ an ARDL model for each of the countries within every panel. Based upon our results, we conclude that there is a long-term relationship between political stability and FDI for the panel of small economies, while we find no empiric evidence of such a relationship for both panels of larger and more developed economies. Similarly to the original hypothesis of Lucas (1990), we find that FDI outflows tend to go towards politically less stable countries. On the other hand, the empiric methodology employed did not find such conclusive evidence in the panels of politically more developed countries or in the small economies that this paper observes. Full article
(This article belongs to the Special Issue FDI and Development: Emerging Issues)
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Open AccessArticle
Does FDI Really Matter to Economic Growth in India?
Economies 2017, 5(2), 20; https://doi.org/10.3390/economies5020020 - 12 Jun 2017
Cited by 3
Abstract
The main contribution of this article is to examine the productivity spillover effects from India’s inward foreign direct investment (FDI), controlling for trade, in the framework of the cointegrated vector autoregression (CVAR). For this purpose, using the Solow residual approach the aggregate total [...] Read more.
The main contribution of this article is to examine the productivity spillover effects from India’s inward foreign direct investment (FDI), controlling for trade, in the framework of the cointegrated vector autoregression (CVAR). For this purpose, using the Solow residual approach the aggregate total factor productivity (TFP) in India is estimated to measure FDI-induced spillovers. The results show that the inflow of FDI to India indeed improves TFP growth through positive spillover effects. We also find that trade appears to have a detrimental effect on TFP growth in India. Full article
(This article belongs to the Special Issue FDI and Development: Emerging Issues)
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Open AccessArticle
Relationship between Institutional Factors and FDI Flows in Developing Countries: New Evidence from Dynamic Panel Estimation
Economies 2017, 5(2), 17; https://doi.org/10.3390/economies5020017 - 30 May 2017
Cited by 2
Abstract
In this paper, we revisit the relation between institutional factors and foreign direct investment (FDI) inflows in developing countries by employing a dynamic panel methodology, which enables us to deal with the persistency of FDI flows and endogeneity issues. We also contribute to [...] Read more.
In this paper, we revisit the relation between institutional factors and foreign direct investment (FDI) inflows in developing countries by employing a dynamic panel methodology, which enables us to deal with the persistency of FDI flows and endogeneity issues. We also contribute to the literature by using various measures of institutions to identify which aspects of institutional quality affect FDI in the developing world. Our empirical findings based on 113 developing countries over the period 2002–2012 show evidence that some institutional factors matter more than others in attracting more FDI flows. We also found that the financial crisis in 2008 and 2009 had a negative impact on FDI flows. Full article
(This article belongs to the Special Issue FDI and Development: Emerging Issues)
Open AccessArticle
The Impact of Foreign Direct Investment (FDI) on the Environment: Market Perspectives and Evidence from China
Economies 2017, 5(1), 8; https://doi.org/10.3390/economies5010008 - 06 Mar 2017
Cited by 13
Abstract
Foreign direct investment (FDI) may have a positive effect on the level of pollution in host countries, as described by the pollution haven hypothesis (PHH). However, this kind of effect may depend on the economic conditions in host countries. In this study, we [...] Read more.
Foreign direct investment (FDI) may have a positive effect on the level of pollution in host countries, as described by the pollution haven hypothesis (PHH). However, this kind of effect may depend on the economic conditions in host countries. In this study, we conduct research on the FDI’s effect on China’s CO2 emissions during the market-oriented reform. The results are as follows. Firstly, FDI directly promotes China’s CO2 emissions. Secondly, with market-oriented reform, this positive effect from FDI is lowering year by year, which indicates that the market-oriented reform could alleviate the positive effect of FDI on China’s CO2 emissions. Thirdly, as China’s market-oriented reform was implemented gradually from experimental zones to the whole country, regional market development is uneven, and as such so is FDI’s effect on local CO2 emissions. Provinces in the eastern area generally evidenced higher market development and lower CO2 emissions from FDI, while four provinces in west area evidenced both lower market development and higher CO2 emissions from FDI. Full article
(This article belongs to the Special Issue FDI and Development: Emerging Issues)
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