Search Results (44)

This study examines the impact of inward foreign direct investment (FDI) on economic growth in South and Southeast Asia from 2006 to 2022, using a comprehensive panel dataset and multiple econometric techniques. The baseline estimation employs Feasible Generalized Least Squares (FGLS), with robustness checks using Fixed Effects with Driscoll–Kraay standard errors, the Common Correlated Effects Mean Group (CCEMG) estimator, and Two-Stage Least Squares (2SLS). The results consistently show that FDI and Gross Capital Formation (GCF) significantly promote growth, while the Human Capital Index (HCI), Trade Openness (TO), and Inflation (I) have limited or adverse effects. Government spending (GS) is negatively associated with growth, suggesting inefficiencies in public resource allocation. The findings underscore the importance of enhancing absorptive capacity through investments in education, institutional quality, and trade facilitation. Policy recommendations include adopting performance-based budgeting and independent audits, drawing on Malaysia’s anti-corruption and audit reforms. To address the weak impact of human capital, this study advocates for expanding public–private partnerships in technical and vocational education, modelled on Singapore’s SkillsFuture initiative. Additionally, digital investment platforms like Indonesia’s Online Single Submission (OSS) system and infrastructure upgrades are recommended to reduce trade costs and improve the investment climate. Finally, the study calls for deeper regional integration through harmonized investment regulations under the ASEAN Comprehensive Investment Agreement (ACIA) and the development of cross-border special economic zones (SEZs). These recommendations are grounded in empirical evidence and tailored to the region’s structural characteristics, offering actionable insights for policy-makers. Full article

This study examines the influence of inward foreign direct investment (IFDI) on innovative entrepreneurship across 30 Chinese provinces and three regions (eastern, central, and western). Using nine years of panel data (2010–2018) and a fixed-effects model, we demonstrate that economic institution is a pivotal link connecting IFDI and innovative entrepreneurship. Our findings reveal that marketization exerts a significant partial mediating effect in eastern China, but this mediating role is not evident in the central and western regions. These results underscore the importance of regional institutional development in maximizing the potential spillover effects of IFDI. To optimize these spillovers, China should adopt regionally differentiated strategies to enhance economic institutions and foster the robust growth of domestic innovative entrepreneurship. This study also offers valuable implications for other developing economies by offering valuable implications for constructing a high-quality, open institutional framework that promotes inclusive and sustainable development. Full article

This research looks into the relationship between happiness and foreign direct investment (FDI) in African countries so as to shed light on whether or not the inward FDI stock in African countries has an influence on happiness in the region. The study utilises annual panel data from 2006 to 2022 for 46 African countries and uses the Cantril life ladder data as a measure of happiness. The findings from this research reveal that there is a positive but statistically insignificant relationship between inward FDI stock and happiness in Africa. The results suggest that FDI alone does not directly contribute to economic development in African countries, but rather the benefits of FDI may be contingent on other factors in the country. Nonetheless, the positive relationship observed provides a foundation for policymakers to encourage FDI, as it has the potential to improve happiness levels in African nations. Additionally, the results from this study show that the level of happiness in the previous year and social support have a positive and statistically significant effect on happiness in African countries. Full article

This study examines the factors determining inward foreign direct investment (FDI) and its effects on productivity, ultimately contributing to economic growth. Using a two-step generalized method of moments (GMM) approach, we analyzed a panel of 84 countries, comprising 34 OECD and 50 non-OECD countries, from 2010 to 2019. The findings suggest that FDI positively impacts productivity and benefits both OECD and non-OECD countries. Economic freedom plays a significant role in attracting FDI, particularly in OECD countries, and contributes to economic growth in non-OECD countries. However, economic freedom alone does not guarantee strong economic growth in OECD countries but significantly enhances growth in non-OECD countries. The results also highlight that only economies with robust economic infrastructure and development levels benefit more from FDI. It appears that FDI by itself has no direct effect on output growth. Instead, the impact of FDI is contingent on the level of economic freedom in the host countries. This paper presents a key finding on how policy decisions influence the effects of foreign capital investment on productivity and income. It indicates that countries promoting economic freedom can more effectively leverage productivity gains from FDI. Full article

This paper examines the effects of inward Foreign Direct Investment (FDI) on the female employment rate in the economy and the share of female employment across sectors. The empirical analysis is implemented through the Generalized Method of Moments (GMM) System estimator for dynamic panel models using different empirical specifications and FDI openness indicators. The main results show that the overall effects of inward FDI on the national female employment rate are not statistically significant. However, they reveal that inward FDI has promoted the share of female employment in the service sector and has led to decreases in the share of female employment in agriculture. The FDI effects on the share of female employment in the industrial sector are found to be statistically insignificant. These results are generally supported when running the empirical analysis through alternative FDI openness indicators. Also, supplementary analysis reveals some variations in the magnitude of these effects over different national income categories. The findings in this paper emphasize FDI’s gendered influences in the labour market. They are consistent with the prevalence of macroeconomic channels through which inward FDI impacts female employment across sectors, and they encompass the underlying implications of various counteracting microeconomic factors. Full article

Foreign direct investment (FDI) is essential for enhancing economic resilience and promoting sustainable development. However, inefficiencies in financial connectivity and capital allocation have hindered the facilitation of FDI. Bank linkages between countries in the global sectors of multinational enterprises (MNEs) offer potential solutions to these challenges. In this paper, we focus on whether sustainable FDI can benefit from consolidating bank linkages, which are measured for each pair of countries in each year as the number of bank pairs in both countries that are connected through cross-border syndicated lending. Using the gravity model, we provide empirical evidence based on cross-border data to support the following conclusions: (1) Bank linkages can sustainably enhance the host country’s attractiveness to FDI through information, external financing, and international financial services channels. (2) This positive effect is pronounced in host countries with lower financial development, weaker institution quality, and higher investment risk while remaining insignificant for OECD countries. (3) Bank linkages exhibit a lagged impact on FDI, but newly established bank linkages are more conducive to inward FDI than those established earlier. In this paper, we offer some policy implications for emerging economies and suggest that emerging economies should continue to deepen their financial openness and strengthen international bank links through various means to attract more inward FDI. Full article

Carbon dioxide emissions are the primary driver of global climate change. This study aims to analyze the relationship between inward foreign direct investment in the energy sector and CO₂ emissions in China versus other countries. For this, the co-integration methods were used. The results suggested that China should encourage the adoption of green technologies in order to reduce CO₂ emissions and enforce strict environmental laws. Another necessary step is to stop the licensing of polluting industries that emit high amounts of CO₂ emissions. The present findings can be used to develop state programs for environmental protection. Future research can examine the relationship of FDI in the energy sector with indicators other than pollution with CO₂ emissions, for example, with the consumption of renewable energy sources. Full article

Recently, China has actively advocated green transformation in manufacturing. This paper applies the Malmquist–Luenberger (ML) index method to measure the green total factor productivity (GTFP) and its decomposition of 28 segments of China’s manufacturing industry from 2004 to 2020; then, it empirically investigates their causal relationship and impact mechanism on bidirectional foreign direct investment (FDI). The results show that inward foreign direct investment (IFDI) and outward foreign direct investment (OFDI) significantly inhibit GTFP, whereas the interactive development level between the two (DFDI) significantly promotes GTFP during the sample period. After decomposing GTFP, it is found that IFDI or OFDI has a significant promotional effect on green technical change (GTC) but an inhibitory effect on green technical efficiency change (GEC), while DFDI has a promotional effect on GTC or GEC. Further research also finds that OFDI can effectively weaken the inhibitory effects in the long run; IFDI, OFDI, and DFDI have the same direction of impact on GTFP or GEC, only showing heterogeneity at the significant level, while their impact on GTC has uncertainty in different types of manufacturing industries. The more rational the manufacturing industry structure, the more significant the promotional effect of IFDI, OFDI, and DFDI on GTFP. Full article

An increase in carbon emissions (CO₂) may increase inward foreign direct investment (FDI) in developing countries since they are seen as pollution havens because of lax environmental regulations (pollution haven hypothesis). Developed countries may also attract FDI since stringent environment regulations in these countries working to reduce emissions might be more attractive to foreign investors concerned with their repute from a green perspective. A rise in CO₂ emissions in developed countries therefore deters inward FDI (green haven hypothesis). The existing empirical studies investigate the empirical validity of these hypotheses by focusing on the impacts of environmental policies and regulations on FDI and have yet to produce conclusive results. We examined the effect of CO₂ emissions on FDI and provide a more accurate and novel way of investigating the empirical validity of the pollution haven hypothesis against the green haven hypothesis. Specifically, we examined the non-linear effects of CO₂ emissions on inward FDI in a sample of 124 countries over the period 1997–2022. The results indicate that CO₂ emissions have an inverted-U-shaped relationship with FDI, confirming our hypotheses that higher CO₂ emissions in countries with lax environmental standards attract FDI while environmental degradation in countries with stringent environmental standards deter FDI. Full article

The governance exerted by governments plays a pivotal role not only in driving local economic advancement but also in bolstering environmental management and enhancing Carbon Productivity (CP). This paper investigates the impact of two-way Foreign Direct Investment (FDI) coordination development (DFDI) on China’s CP from the perspective of fiscal decentralization (FD). Utilizing panel data from 30 Chinese provinces spanning 2006–2020, we apply a Spatial Error Model to discern that DFDI effectively elevates CP. However, an excessively high degree of FD constrains the potential environmental performance benefits that FDI might offer. Further analysis using a Dynamic Threshold Model reveals a significant dynamic non-linearity in the impact of DFDI on CP under the threshold effect of FD. In contrast to Inward FDI (IFDI), China’s Outward FDI (OFDI) actually impedes the enhancement of CP. Our results underscore that well-calibrated FD can align economic growth with environmental sustainability. This study offers insights into policy frameworks fostering sustainable development in China and similar economies. It indicates that tailored policies are essential to mitigate the diverse environmental impacts of different FDI flows, supporting sustainable investment practices. Full article

By exploring feasible pathways for coordinating the ecological environment and economic development, this study investigated the impact of FDI in the producer service sector (SFDI) on green total factor productivity (GTFP) across 20 provinces from 2006 to 2019 in China. We employed a panel data regression model and found that SFDI significantly promotes China’s GTFP, verifying the existence of the “pollution halo” effects of SFDI in China, where GTFP is estimated by the global Malmquist–Luenberger productivity index based on the slack-based measure and directional distance function. We also employed mediating and moderating models to test the mechanism and found that SFDI can affect GTFP through competition, green innovation, and resource allocation mechanisms. Notably, the impact of SFDI on GTFP exhibits regional heterogeneity, with the strongest impact observed in the eastern region, followed by the western region, and the weakest in the central region. Further analysis reveals that the enhancement of environmental regulations and the level of factor marketization can amplify the influence of SFDI. Finally, we offer specific recommendations encompassing the enhancement of openness, improvement of factor markets, and strengthening of environmental regulations. Full article

The global value chain has promoted foreign direct investments in emerging markets. Not only resources but also public policies can affect the inflows or outflows of foreign direct investments (FDI). This study investigates the effect of economic policy uncertainty on net foreign direct investment inflows in 48 Asian countries. We use the panel dataset from different sources from 1995 to 2020. Our core dependent variable is net foreign direct investment inflows, and the explanatory variable is economic policy uncertainty. The study’s control variables include trade, GDP per capita, GDP growth, population, financial development, inflation, and employment. We use the generalized system method of moment (SYS_GMM). Furthermore, the robustness of our empirical results is checked by using the different proxy variables of policy uncertainty. Our results confirm the negative effect of policy uncertainty on foreign direct investment inflows in 48 Asian countries. Our results show that foreign investment inflows are more sensitive than domestic investment. The influence of domestic and global uncertainty on inward FDI is greater than domestic investment. Furthermore, the interaction effect of financial development (FD) shows that FD does not affect mitigation of the negative impact of global economic policy uncertainty on foreign investment inflow. In contrast, FD mitigates the adverse effects of domestic policy uncertainty on foreign and domestic investment. The findings imply that policies need to be attractive, effective, and transparent to woo FDI to the emerging markets. Full article

Manufacturing, as an energy-intensive industry, plays a major role in economic growth. Its green growth is the focus of national planning for sustainable development, especially for a country such as Korea, which has a scarcity of fossil energy of its own. While internationalization has brought Korea scarce energy, serious carbon emissions have become a pressing issue. It is still necessary to explore the relationship between globalization and green growth in manufacturing. Thus, our paper aims to observe their relationship by using 24 manufacturing industries from 2011 to 2019. Through the panel Granger non-causality test and the Dumitrescu–Hurlin test, we find that imports and inward foreign direct investment (FDI) causes green growth at the overall manufacturing level, but their causality relationships exist in different industries. The green-growth causality relationship of inward FDI mainly exists in capital-intensive and internationally competitive manufacturing industries (manufacture industries of basic metals; furniture; food products; coke, briquettes, and refined petroleum products; and chemicals and chemical products, except pharmaceuticals and medicinal chemicals). Furthermore, the green-growth causality relationship of imports primarily exists in the fossil-energy-consumption-intensive manufacturing industry (manufacture industries of motor vehicles, trailers, and semitrailers and coke, briquettes, and refined petroleum products). Furthermore, in our regression analysis, we find that only inward FDI robustly promotes the Korean manufacturing sector’s green growth; the positive effect is in the range from 0.005 to 0.009. Though the parameter estimates are positive and significant for FDI, they are close to zero, suggesting very limited positive effects that are close to almost zero. Conversely, imports have no significant impact, which we speculate is related to the import structure of Korea. Hence, the Korean manufacturing development model suggests that developing countries with similar country characteristics need to develop and guide the formation of capital-intensive and competitive industries. Additionally, it is imperative to decarbonize energy-intensive industries and to work on renewable energy development and diffusion. Finally, it is essential to introduce various green monitoring mechanisms to reduce carbon emissions. The government needs to strengthen its support for research and development of innovative technologies to reduce carbon emissions as well as promote the development of environmental and energy-saving related professional service enterprises. Full article

While the rapid development of two-way foreign direct investment (FDI) has boosted China’s economic growth, its impact on environmental quality is uncertain. Based on provincial panel data from China covering the period from 2002 to 2020, this paper proposes an environmental quality assessment index system for China from two aspects: environmentally cleaner production and environmental end treatment. The comprehensive environmental quality index (EQI), environmentally cleaner production index (EPI), and environmental end treatment index (ETI) were all measured, with the geographic information system tool and Dagum Gini coefficient used to analyse the indicators’ differences using a system-generalised method-of-moments (SYS-GMM) estimation to study the impact of two-way FDI on environmental quality in various regions across China. The results demonstrate that during the sample period, inward FDI positively impacted environmental quality and cleaner production but had a negative impact on environmental end treatment. Outward FDI significantly promoted EQI, EPI, and ETI, and the interaction between inward FDI and outward FDI positively impacted environmental quality and environmentally cleaner production, while it negatively impacted environmental end treatment. This indicates that under two-way FDI, China’s relationship with environmental quality has gradually evolved from ‘pollution first and then treatment’ to ‘green development of cleaner production’. Full article

Regional green technological progress is an important driver of regional green technology innovations. To explore in depth the impact of green finance and international technology spillover on regional green technology innovation, this study incorporates green finance, international technology spillover, and green technology innovation into the same analytical framework. In addition, based on a new perspective of regional innovation capabilities, this study analyzes the impact of green finance and international green technology spillovers on green technology innovation. The data were collected in 30 Chinese provinces from 2003 to 2019 and analyzed by a panel fixed-effects model. The interaction between green finance, international technology spillover, and regional innovation capability was investigated to understand the impact of each interaction on green technology innovation. Second, regional innovation capability was used as an intermediary variable to identify its underlying mechanism. Finally, the spatial spillover effect of green technology innovation was analyzed using the spatial Durbin model. We found that: (1) green finance, import trade, outward foreign direct investment (OFDI), and regional innovation capability can promote regional green technology innovation, while inward foreign direct investment (IFDI) has an inhibitory effect on the innovation; (2) the interaction of green finance, international technology spillovers, and regional innovation capacity positively impacts green technology innovation; (3) green finance and international technology spillovers can promote green technology innovation by promoting regional innovation capabilities; (4) and green technology innovations have spatial spillover effects, and innovations in one region can promote the growth of green technologies in adjacent regions. This study provides a reference not only for China but also for other developing countries to promote green technology advancement and achieve sustainable development goals. Full article