Three Essays on the Impacts of Risk and Uncertainty on Foreign Direct Investment (FDI) and Remittances Flows Into Developing Countries PDF Download
Are you looking for read ebook online? Search for your book and save it on your Kindle device, PC, phones or tablets. Download Three Essays on the Impacts of Risk and Uncertainty on Foreign Direct Investment (FDI) and Remittances Flows Into Developing Countries PDF full book. Access full book title Three Essays on the Impacts of Risk and Uncertainty on Foreign Direct Investment (FDI) and Remittances Flows Into Developing Countries by Blen Solomon. Download full books in PDF and EPUB format.
Author: Blen Solomon
Publisher:
ISBN:
Category : Africa
Languages : en
Pages : 0
Get Book Here
Book Description
This three-essay dissertation focuses on the two most important and most stable sources of finance to developing countries, namely Foreign Direct Investment (FDI) and remittances. The first essay examines the roles of exchange rate uncertainty and political risk in determining FDI inflows into African economies. The past few decades have witnessed a surge of FDI inflows to developing regions. However, FDI inflows to Africa still remain relatively small and investor surveys show political risk and macroeconomic uncertainty to be strong deterrents of FDI inflows into Africa. In this essay, I use a sample of 12 African countries and employ Fixed Effect and Arellano-Bond GMM estimators to investigate the impact of exchange rate uncertainty and political risk on FDI inflows into African economies. The results confirm the predictions of the theoretical model presented, showing both macroeconomic uncertainty and political risk to be deterrents of FDI inflows into these African economies. The second essay is concerned with the unbalanced FDI inflow patterns across developing regions. 1 In addition to the traditional determinants of FDI, such as infrastructure development, market size, and labor force availability, the question of whether political risk and exchange rate uncertainty play a role in determining these patterns is addressed. This essay employs data on FDI inflows into Africa, Asia, and Latin America to conduct a cross-region comparison on the impacts of risk and uncertainty on FDI inflows. Parametric as well as semiparametric results show that risk affects FDI into Africa more severely than other developing regions. In addition, it is shown that even after controlling important FDI determinants, African countries receive less FDI compared to other developing countries. The third essay focuses on remittances which are becoming an increasingly important and highly stable source of external finance for many developing countries. The stable and counter-cyclical nature of remittances exerts a stabilizing influence and helps insulate vulnerable developing countries from economic shocks. Hence, the third essay analyzes the effects of uncertainty and risk in affecting remittances inflows into these economies. This essay mainly focuses on Latin America since it is now the main remittance recipient region in the world.
Author: Blen Solomon
Publisher:
ISBN:
Category : Africa
Languages : en
Pages : 0
Get Book Here
Book Description
This three-essay dissertation focuses on the two most important and most stable sources of finance to developing countries, namely Foreign Direct Investment (FDI) and remittances. The first essay examines the roles of exchange rate uncertainty and political risk in determining FDI inflows into African economies. The past few decades have witnessed a surge of FDI inflows to developing regions. However, FDI inflows to Africa still remain relatively small and investor surveys show political risk and macroeconomic uncertainty to be strong deterrents of FDI inflows into Africa. In this essay, I use a sample of 12 African countries and employ Fixed Effect and Arellano-Bond GMM estimators to investigate the impact of exchange rate uncertainty and political risk on FDI inflows into African economies. The results confirm the predictions of the theoretical model presented, showing both macroeconomic uncertainty and political risk to be deterrents of FDI inflows into these African economies. The second essay is concerned with the unbalanced FDI inflow patterns across developing regions. 1 In addition to the traditional determinants of FDI, such as infrastructure development, market size, and labor force availability, the question of whether political risk and exchange rate uncertainty play a role in determining these patterns is addressed. This essay employs data on FDI inflows into Africa, Asia, and Latin America to conduct a cross-region comparison on the impacts of risk and uncertainty on FDI inflows. Parametric as well as semiparametric results show that risk affects FDI into Africa more severely than other developing regions. In addition, it is shown that even after controlling important FDI determinants, African countries receive less FDI compared to other developing countries. The third essay focuses on remittances which are becoming an increasingly important and highly stable source of external finance for many developing countries. The stable and counter-cyclical nature of remittances exerts a stabilizing influence and helps insulate vulnerable developing countries from economic shocks. Hence, the third essay analyzes the effects of uncertainty and risk in affecting remittances inflows into these economies. This essay mainly focuses on Latin America since it is now the main remittance recipient region in the world.
Author: Chikezie Kenneth Okoli
Publisher:
ISBN:
Category : International economic relations
Languages : en
Pages : 163
Get Book Here
Book Description
Foreign direct investment (FDI) occurs when an entity in one country establishes a significant degree of ownership in an enterprise in another country. FDI is a critical component in ensuring the development of any economy. It often aids with the development of an industry or sector within an economy by bringing in capital, new technologies, manufacturing methodologies, and managing expertise to the receiving country. This dissertation examines the relationship between policy uncertainty and foreign direct investment (FDI) in developed economies. The first essay focuses on U.S. policy uncertainty and its effects on U.S. FDI inflows, while the second essay focuses on the cross-border effect of U.S. policy uncertainty on its neighbours FDI inflows. The third essay focuses on how policy uncertainty affects the investment entry mode choices of multinational enterprises. In the first essay, I add to the discussion surrounding Foreign Direct Investment (FDI) and its relationship with policy uncertainty by employing novel measures of policy uncertainty in the United States. Drawing some conclusions from the Real Options investment theory, I examine the relationship between policy uncertainty and FDI inflows using different measures of policy uncertainty. Overall, I find that an increase in the Partisan Conflict (PC) index increases the flow of FDI into the United States. This finding appears at odds with what has previously been found in the literature regarding political uncertainty and FDI. Using other measures of policy uncertainty such as the Economic Policy Uncertainty index (EPU) and the categorical EPU (CPU) index the estimated results show policy uncertainty as measured by the EPU index, decreases FDI into manufacturing sectors and decreases FDI into non-manufacturing sectors. This effect varies depending on the sample period being examined. However, when policy uncertainty is measured by the CPU index, policy uncertainty has no impact on FDI inflows to the United States regardless of the type of industry or capital intensity. The second essay examines how U.S. policy uncertainty spillovers affect its neighbours within the context of FDI inflows. Adopting a common framework employed in the literature, I utilize a Vector Autoregressive (VAR) model to examine the contemporaneous relationships between the endogenous and exogenous variables. The two spillover transmission methods examined in this paper are Direct Transmission and Indirect Transmission. The empirical analysis conducted showed that the significance of U.S. policy uncertainty spillovers varied by country and the method of transmission. Canadian FDI inflows from the United States and from the rest of the world were shown to be more susceptible to the negative effects of U.S. policy uncertainty spillovers via the direct channel. But the results remained mixed when considering the indirect channel. For Mexico, the results showed that only U.S. FDI inflows to Mexico were susceptible to the negative effects of U.S. policy uncertainty via the indirect channel. Furthermore, when policy uncertainty spillovers were defined between Partisan Conflict (PC) index and the Economic Policy Uncertainty (EPU) index, the results showed that only EPU spillovers were significant in affecting FDI across Canada and Mexico. The third essay examines the mode of entry that Japanese multinational enterprises (MNEs) adopt in the presence of host market policy uncertainty. Employing a two-stage framework, I examine how Japanese MNEs establish foreign affiliates in 25 countries. In the first stage, the firms decide whether to adopt a direct or an indirect mode of entry in the presence of host market policy uncertainty. A direct entry mode is when the MNE has an ownership share in the affiliate that is greater than 10% while an indirect entry mode is when the MNE has no ownership shares in the affiliate but sets the operational and business goals of the affiliate. The results show that Japanese MNEs preferred an indirect mode of entry when faced with medium levels of policy uncertainty. In the second stage the estimated results show that relatively high levels of policy uncertainty caused Japanese MNEs to prefer minority Joint Ventures over establishing Wholly Owned Subsidiaries. Since 58% of observed investments occur in two countries (China, the United States) it is possible that the results of the analysis are being driven by the concentration of investments in both countries. Therefore, I re-examine the model to focus exclusively on investment activities in China and the United States. These results show that the previously described results were due to the investment activity in these two countries.
Author: Md Abdullah
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Get Book Here
Book Description
This dissertation comprises three essays on macroeconomic impacts of foreign direct investment (FDI). The first essay analyses the impact of FDI on the growth rate of total factor productivity of host countries. The essay focuses on 77 low- and middle-income countries and is based on balanced panel data for the period 1980-2008. The system GMM and common correlated effects (CCE) panel data methods are applied to estimate the models. Estimated coefficients show that FDI does not have any significant impact on the growth rate and the levels of TFP. The second essay investigates the relationship between FDI and domestic investment focusing on low- and middle-income countries, and using panel data for the period 1980-2012. It applies common parameter and heterogeneous parameter, static and dynamic, single equation and simultaneous equation panel data econometric techniques to study the relationship. Empirical findings suggest that FDI crowds our domestic investment. Our estimated coefficients also suggest that countries that have weak institutions, less developed financial systems, less human capital, less developed infrastructure, or economies that are more open, are more exposed to foreign competition and experience stronger crowding out from inward FDI. In the third essay, the influence of capital flows on the real exchange rate of recipient countries is analysed. The influence of three important capital flows, viz. foreign direct investment (FDI), foreign aid, and remittances, are assessed on the real exchange rate, using data for 45 middle- and low-income countries for the period 1980-2013. Both heterogeneous and homogeneous panel data methods are applied to estimate the real exchange rate models. The estimated coefficients of these models imply that foreign direct investment (FDI) and remittances do not influence the real exchange rate. Aid tends to depreciate the real exchange rate. Findings also suggest that financial development does not influence the exchange rate impact of aid in our sample countries. The study further finds that while aid tends to increase real exchange rate volatility, FDI and remittances do not have any robust influence on volatility.
Author: Youngchae Lee
Publisher:
ISBN:
Category : Developing countries
Languages : en
Pages : 0
Get Book Here
Book Description
"My dissertation is motivated by the question, "In an era of ever-increasing global economic integration, why do some developing countries continually struggle to attract foreign direct investment (FDI)?" I explain this phenomenon by highlighting the interaction between international law and domestic institutions, and illustrating how this dynamic affects FDI in developing countries. My methods involve large-N quantitative analyses of developing countries, supported by case studies. The first chapter, "The Effects of Federalism and decentralization on the Business Environment for Foreign Direct Investment," shows that while developing countries often sign bilateral investment treaties (BITs) to commit to a stable policy environment, the effectiveness of these treaties in improving policy stability is reduced by federalism and decentralization. According to international law, national governments are legally responsible for any BIT violations that occur within their territories, even when the violation was committed by a subnational-level government. One implication of this is that when foreign investors initiate international arbitration claims over alleged BIT violations, the respondents are always national governments. This gives subnational governments weaker incentives than national governments to comply with BITs, which decreases the effectiveness of BITs in promoting policy stability in countries where subnational governments are relatively powerful. The second chapter, "Can Rational Choice Explain Bilateral Investment Treaties? How Lack of Legal Capacity Affects BIT Signing," argues that a country's legal capacity affects its ability to fully evaluate the consequences of BITs. I show that countries with federal and decentralized governments are more likely to be embroiled in international investment disputes over alleged violations of BITs, but that only countries with higher legal capacity are likely to adjust for this increased risk by signing fewer BITs. This demonstrates that a country's ability to behave in a "rational" manner when signing international treaties is dependent on its level of legal expertise. The third chapter, "The Effects of Judicial Independence on Foreign Direct Investment and International Arbitration Laws," studies how developing countries with institutional disadvantages use international alternatives to promote FDI, and how this differs by regime type. I show that in democratic countries, a decrease in judicial independence is associated with lower FDI inflows. Countries facing this problem respond by being more likely to adopt laws that provide investors with the option of international arbitration. These patterns are, however, not observed in autocratic countries. This is because in autocratic countries, the government can provide foreign investors with opportunities to collude with the government and extract rents at the expense of the public, making them less dependent on judicial independence to attract FDI"--Pages vii-ix.
Author: S. Motamen-Samadian
Publisher: Springer
ISBN: 0230597963
Category : Business & Economics
Languages : en
Pages : 194
Get Book Here
Book Description
This book presents the latest findings on the impact of capital flows and foreign direct investments (FDI) on macroeconomic variables and financial development of emerging markets. Each chapter concentrates on a different region and explores the significance of specific factors that can attract FDI to that region. They highlight the importance of political stability, as well as social and economic freedom in attracting FDIs. The studies also show the extent by which African and Middle Eastern countries have lagged behind other emerging markets and the need for urgent adjustment policies.
Author: Alassane Drabo
Publisher: International Monetary Fund
ISBN: 1513585630
Category : Business & Economics
Languages : en
Pages : 42
Get Book Here
Book Description
The three main financial inflows to developing countries have largely increased during the last two decades, despite the large debate in the literature regarding their effects on economic growth which is not yet clear-cut. An emerging literature investigates the dependence of their effects on some country characteristics such as human and physical capital constraint, macroeconomic policy and institutional capacity. This paper extends the literature by arguing that climate shocks may undermine the effect of Foreign Direct Investment (FDI), official development assistance (ODA) and migrants’ remittances on economic expansion. Based on neoclassical growth framework, the theoretical model indicates that FDI, ODA, and remittances improve economic growth, and the size of the effect increases with good absorptive capacity. However, climate shocks reduce this positive effect of financial flows in developing countries. Using a sample of low and middle-income countries from 1995 to 2018, the empirical investigation confirms the theoretical conclusions. Developing countries should build strong resilience to climate change. Actions are also needed at global level to reduce greenhouse gases emissions, and build strong structural resilience to climate shocks especially in developing countries.
Author: Michael U. Klein
Publisher: World Bank Publications
ISBN:
Category : Crecimiento economico
Languages : en
Pages : 50
Get Book Here
Book Description
In the 1990s, foreign direct investment began to swamp all other cross-border capital flows into developing countries. Does foreign direct investment support sound development? In particular, does it contribute to poverty reduction?
Author: Mr.Ali J Al-Sadiq
Publisher: International Monetary Fund
ISBN: 1475517939
Category : Business & Economics
Languages : en
Pages : 28
Get Book Here
Book Description
Over the past two decades, the growth rate of outward foreign direct investment (FDI) from developing and transition economies has increased significantly. Given the role of physical capital accumulation in determining the economic growth rate, it is important to assess how domestic investment responds to such outflows. This study empirically examines the effects of outward FDI on domestic investment in developing countries. Using data from 121 developing and transition economies over the period 1990–2010, the results suggest that FDI outflows negatively impact the rate of domestic investment.
Author: Nagesh Kumar
Publisher: Routledge
ISBN: 1134655037
Category : Political Science
Languages : en
Pages : 253
Get Book Here
Book Description
In this book, Nagesh Kumar and expert contributors examine and explain the emerging patterns in international technology transfers and foreign direct investment flows (FDIs) over the past two decades. They analyse the trends in internationalization of corporate activity in individual source countries, discussing outflows from both major and emerging source countries. This departs from the existing treatments of FDI as homogenous resource and allows for a more detailed prediction of future outflow patterns. Throughout, the research focuses upon the implications of new trends for developing countries. Kumar concludes by outlining the policy implications for the governments of such countries seeking to mobilize technology and FDI for their industrialization and further integration into the international community. Controversially, he cautions against excessive optimism about the potential of FDI inflows as an agent of development. This book draws together much data and information which is not readily available and provides reflections upon international business negotiations from a developing country's perspective.
Author: David Woodward
Publisher: Zed Books
ISBN:
Category : Business & Economics
Languages : en
Pages : 264
Get Book Here
Book Description
Foreign direct investment has been heralded as the key benefit which globalization offers the South and the mechanism to kickstart economies into rapid growth. This careful and penetrating economic study analyzes what is actually happening to direct investment, its various impacts and just how little we know about it. It assesses the scale of the flows involved; their systematic under-valuation in official statistics; their geographically skewed distribution; the very high rates of return; the risks of large substantial outflows of resources; the massive shift towards foreign ownership required to avoid them; the potentially depressive effect of over-investment on the prices of many traditional Third World exports; and the adverse implications for national sovereignty, social welfare and democratic rights. More dramatically, David Woodward shows how FDI may have contributed to the Asian financial crisis and could lead to a new wave of similar financial crises throughout the developing world.
