International Economics Commons^™

Money Moves: An Analysis Of Chinese Foreign Direct Investment In Europe, Susan Soh

Honors Theses

In recent years, China has begun engaging in outward foreign direct investment (FDI). There is a significant amount of literature dedicated to understanding China’s FDI in developing nations. However, very little research has been conducted over Chinese FDI in advanced economies. As a result of this gap in existing literature, the question arises, what explains Chinese FDI in Europe?

As FDI is a transaction to which both the donor and recipient countries must agree, this thesis has a dual focus. One chapter of the thesis analyzes the effects of and motivations for Chinese FDI on European nations. In this chapter, …

Primitive Accumulation And Multinational Corporations: The Evolution Of Dispossession And Exploitation In The Rubber Industry, Matthew Rochat

The Journal of International Relations, Peace Studies, and Development

I examine how the process of primitive accumulation has led to evolving forms of dispossession and exploitation carried out by multinational corporations in the rubber industry. After a brief review of relevant literature, I outline a novel analytical approach to multinational corporations engaged in natural resource extraction, referred to as the Parasitic Extraction Model. I then demonstrate this approach using three case studies. The first, Leopold II’s Congo, showcases the barbaric underpinnings of primitive accumulation in the rubber industry in its crudest form. The subsequent section shifts to the interwar period with Fordlândia in the Brazilian Amazon where I analyze …

External Sector Liberalization And Output Growth In Nigeria, Emmanuel A. Onwioduokit, Obong E. Effiong

Bullion

The paper investigates the impact of external sector liberalization (foreign direct investment, external debt stock, trade openness and exchange rate) on the output growth in Nigeria from the period 1981 to 2019, utilizing correlation analysis, Granger causality test and vector autoregression (VAR). The results indicate that foreign direct investment, external debt stock, trade openness and exchange rate all correlate positively with gross domestic product. Also, the granger causality test indicates that foreign direct investment, trade openness and exchange rate granger cause the output growth in Nigeria. From the VAR result foreign direct investment exerted positive and significant impact on the …

Three Essays On The Relationship Between Policy Uncertainty And Foreign Direct Investment, Chikezie Kenneth Okoli

Dissertations

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 …

Pitfalls In The Use Of Foreign Direct Investment Statistics, Clare O'Mahony, Frank Barry

Articles

Foreign direct investment (FDI) statistics are widely used to study the impact of international capital movements and multinational enterprise (MNE) activities. FDI-intensity is also an important indicator of globalisation and economic integration. Datasets spanning long time periods and with broad country coverage have been employed in numerous studies to analyse various aspects of the determinants and consequences of FDI. Focusing on a relatively homogeneous group of six Western European EU countries, the present study finds major inconsistencies in the construction and coverage of these data both through time and across countries, leading to large discrepancies. Asymmetries will be far greater …

Chinese Economic Development And Its Global Implications, Robert T. Hill

Honors Undergraduate Theses

While Chinese economic development is often at the forefront of conversations by scholars shaping economic policy, further investigation into the state of China's economy has left a gap in research. Through analyzing the 13th Five Year Plan (FYP) and looking specifically at the effect it will have on unemployment, international trade, overcapacity rates, and the Belt and Road Initiative, the goal of this research is to understand if China will be able to obtain sustained economic growth. In order to achieve this, this research employs a qualitative discourse analysis, focusing on pre-existing works that discuss Chinese economic development. It will …

Why Not Mexico? Policy Recommendations For A Globally-Oriented Economic Strategy, Víctor Manuel Hernández-Rodríguez

CMC Senior Theses

Mexico, one of the world’s largest economies and an increasingly relevant actor in international affairs, is at a crucial point in defining its future policy course. Given the uncertainty surrounding the global economy, as well as the political situation in Mexico, it is important to have a clear vision for policy going forward. This thesis offers a foundation for a national economic strategy with a long-term vision, upon which future administrations can build as appropriate to maximize on the country’s economic potential. The task is undertaken through a three-part approach. First, a thorough and analytical overview of the country’s economic …

Factors That Influence Economic Growth In Brics Member Countries And Oecd Developed Countries: A Panel Data Analysis, Xuran Zhang

Empirical Economic Bulletin, An Undergraduate Journal

This paper investigates the factors that affect economic growth in developed nations, such as the U.S., the United Kingdom, France, Germany, Australia and others. It also includes developing countries such as Brazil, Russia, India, China and South Africa (BRICS). This study incorporates several independent variables to examine their influence on economic growth in these two groups of nations. The study looks at contributing factors for economic growth, such as life expectancy, primary education, secondary education, expected import, expected export, population growth rate, FDI level, and public expenditure, using macro-level data from two sources: the World Bank and the Organization of …

Us Net Foreign Direct Investment: Determinants And Implications, Ryan Gomez

Honors Theses

Political campaigns always churn the political spectrum on the issue of outsourcing and international trade with the 2017 presidential primary being no exception. Are politicians, like Bernie Sanders and Donald Trump, correct when preaching the economic negatives associated with outsourcing? Are they considering the right factors? Could it be that a strictly negative outlook on outsourcing is economically inappropriate in determining future policy? In an attempt to answer these questions, this paper will critically analyze the impact of incoming and outgoing Foreign Direct Investment (FDI) in the USA. Specifically, this study will use determinants of Net FDI (NFDI), where NFDI …

Crime, Institutions And Sector-Specific Fdi In Latin America, Luisa Blanco, Isabel Ruiz, W. Charles Swayer, Rossitza Wooster

Economics Faculty Publications and Presentations

In this article, we explore how crime and institutions affect the flow of capital in the form of foreign direct investment (FDI) to Latin American and Caribbean countries in the primary, secondary and tertiary sectors during the 1996-2010 period. We use three different variables related to violent crime: homicides, crime victimization, and an index of organized crime. We find that there is a correlation between the institutional and crime variables, where the significance of institutional variables tends to disappear when the crime variables are added to the model. We find that higher crime victimization and organized crime are associated with …

Innovation And Productivity: Evidence From China, Jingying Xu

Honors Theses

This paper investigates a lesser-known effect of innovation on the productivity of manufacturing firms in China using data that cover more than 330,000 firms across 40 sectors from 1998 to 2008. Innovation plays a key role in the productivity of firms and it matters for all types of firms, new as well as established. The ratio of new product output to the firm’s total outputs is used to measure innovation ability in this paper. A higher ratio is expected to have a positive impact on a firm’s productivity since new products are likely to be more differentiated than old products …

Two Essays On Governance At The National And Corporate Level, Laura Savory Miller

HCBE Theses and Dissertations

ESSAY 1
We examine the effect of governance environment on the composition of a country's external capital structure, specifically foreign equity investment. In addition to the absolute quality of the host country's governance environment, we consider the host country's governance quality relative to that of the source (investor) country. Unlike previous studies, which utilize country totals, we examine foreign investment positions between pairs of individual countries. Our sample includes 3,891 bilateral investment positions among 49 source countries and 69 host countries for years 2009 through 2011. We find that relative governance, rather than absolute governance, plays a role in foreign …

Rethinking The Development Of The Automobile Industry In China, Chen Gu

Electronic Theses and Dissertations

Governmental industrial policies have significant influence on industrial performance. Many developing countries that lack capital and a good technology base use foreign direct investment (FDI)-dependent governmental policies to induce multinational corporations (MNCs) to invest in their indigenous immature industries. In this article, the Chinese automotive industry, which is regulated directly under the Chinese central government, is used to illustrate the interactions between the complex FDI-dependent governmental policies and the industrial development of developing countries. According to changes in Chinese automotive industry policy, the Chinese auto industry’s development process is divided into four phases: extremely passive FDI-dependent policy phase, partial strategic …

Determinants Of Fdi Inflows Into South America, Dario Castro

Empirical Economic Bulletin, An Undergraduate Journal

This study provides a panel data analysis of the key determinants of FDI as determined by the market such as market size, economic stability, trade liberalization, population, growth prospects, and exchange rates. Additionally, other variables such as physical infrastructure, quality of institutions and central bank exchange rate regimes. This paper seeks to show the major policy implications of variables that can be influenced through government intervention. The empirical research is conducted with focus on South American FDI inflows over the last three decades, due to the great presence of natural resources and cheap labor in the region which have contributed …

Financial Development, International Capital Flows, And Aggregate Output, Jürgen Von Hagen, Haiping Zhang

Research Collection School Of Economics

We develop a tractable two-country overlapping-generations model and show that cross-country differences in financial development can explain three recent empirical patterns of international capital flows: Financial capital flows from relatively poor to relatively rich countries, while foreign direct investment flows in the opposite direction; net capital flows go from poor to rich countries; despite its negative net international investment positions, the United States receives a positive net investment income. International capital mobility affects output in each country directly through the size of domestic investment and indirectly through the aggregate saving rate. Under certain conditions, the indirect effect may dominate the …

Risk And The Technology Content Of Fdi: A Dynamic Model, Pao Li Chang, Chia-Hui Lu

Research Collection School Of Economics

This paper incorporates risk into the FDI decisions of firms. The risk of FDI failure increases with the gap between the South's technology frontier and the technology complexity of a firm's product. This leads to a double-crossing sorting pattern of FDI—firms of intermediate technology levels are more likely than others to undertake FDI. It is with the attempt to relax the upper bound of the technology content of FDI, we argue, that many FDI policies are created. The theory's predictions are consistent with the empirical patterns of FDI in China by US and Taiwanese manufacturing firms.

International Capital Flows With Limited Commitment And Incomplete Markets, Jürgen Von Hagen, Haiping Zhang

Research Collection School Of Economics

Recent literature has proposed two alternative types of financial frictions, i.e., limited commitment and incomplete markets, to explain the patterns of international capital flows between developed and developing countries observed in the past two decades. This paper integrates both types of frictions into a two-country overlapping-generations framework to facilitate a direct comparison of their effects. In our model, limited commitment distorts the investment made by agents with different productivity, which creates a wedge between the interest rates on equity capital vs. credit capital; while incomplete markets distort the investment among projects with different riskiness, which creates a wedge between the …

Risk And The Technology Content Of Fdi: A Dynamic Model, Pao Li Chang, Chia-Hui Lu

Research Collection School Of Economics

This paper incorporates risk into the FDI decisions of firms. The risk of FDI failure increases with the gap between the South's technology frontier and the technology complexity of a firm's product. This leads to a double-crossing sorting pattern of FDI firms of intermediate technology levels are more likely than others to undertake FDI. It is with the attempt to relax the upper bound of the technology content of FDI, we argue, that many FDI policies are created. The theory's predictions are consistent with the empirical pattern of FDI in China by US and Taiwanese manufacturing firms.

The Gift That Keeps Giving: Fdi Inflows In China, Joseph Chang

CMC Senior Theses

This paper investigates the primacy of foreign direct investment inflows in liberalizing China’s economy and whether the long-term gains from economic openness will justify its inefficient energy uses and growing regional income disparities. By examining the history of FDI inflows in China, it becomes evident that FDI inflows were an instrumental part in institutional and technological development in China. I extend the argument to take into account how these developed infrastructures react to China’s growing energy demand in light of a shrinking world supply. Lastly, I perform a meta-analysis on the Environmental Kuznets Curve theory and the Pollution Haven Hypothesis, …

Reconsidering International Tax Neutrality, Michael S. Knoll

All Faculty Scholarship

For decades, U.S. international tax policy has shifted back and forth between territorial-source-exemption taxation and worldwide-residence-credit taxation. The former is generally associated with capital import neutrality (CIN) and the latter with capital export neutrality (CEN). One reason why national tax policy has shifted back and forth between those benchmarks is because it is widely accepted that a tax system cannot simultaneously satisfy both CEN and CIN unless tax rates on capital are harmonized across jurisdictions. In this essay, I argue that the international tax literature contains two different and conflicting definitions for CIN. Under one definition, which goes back at …

Issues On International Trade And Investment And Its Implications For Further Research, Angelo B. Taningco

Angelo King Institute for Economic and Business Studies (AKI)

Recent developments in the field of international trade and investments worldwide have led to contemporary literature that encompass international trade in goods and services, trade policies, bilateral and regional free trade agreements (FTAs) as well as multilateral trading arrangements, trade facilitation measures, and foreign direct investment (FDI) policies. Given the increasing significance of multilateral trade and FDI flows between regions in recent years, there is a need of further research especially for developing countries like the Philippines. As such, it will be possible to develop efficient trade and investment policies, which relate to inclusive growth and development. Results suggest that …

International Capital Flows And Aggregate Output, Jurgen Von Hagen, Haiping Zhang

Research Collection School Of Economics

We develop a tractable multi-country overlapping-generations model and show that cross-country differences in financial development explain three recent empirical patterns of international capital flows. Domestic financial frictions in our model distort interest rates and aggregate output in the less financially developed countries. International capital flows help ameliorate the two distortions. International flows of financial capital and foreign direct investment affect aggregate output in each country directly through affecting the size of aggregate investment. In addition, they affect aggregate output indirectly through affecting the composition of aggregate investment and the size of aggregate savings. Under certain conditions, the indirect effects may …

Financial Development And The Patterns Of International Capital Flows, Jurgen Von Hagen, Haiping Zhang

Research Collection School Of Economics

We develop a tractable, two-country, overlapping-generations model and show that cross-country differences in financial development can explain three recent empirical patterns of international capital flows: Financial capital flows from relatively poor to relatively rich countries while foreign direct investment flows in the opposite direction; net capital flows go from poor to rich countries; despite its negative net international investment position, the US receives a positive net international investment income. We also explore the welfare and distributional effects of international capital flows and show that the direction of capital flows may change along the convergence process of a developing country. Matsuyama …

International Capital Flows And World Output Gains, Jurgen Von Hagen, Haiping Zhang

Research Collection School Of Economics

We develop a two-country overlapping-generations model with domestic financial frictions and show that cross-country differences in financial development explain three recent patterns of international capital flows. In our model, domestic financial frictions distort the interest rates and production efficiency in the less financially developed country. Capital flows not only lead to cross-country resource reallocation, but also trigger within-country resource reallocation among firms. From the efficiency perspective, full capital mobility raises the world output higher than under international financial autarky. If the mobility of either financial capital or foreign direct investment is restricted, the world output may be lower.

How Does Foreign Direct Investment Affect Growth In Developing Countries? An Empirical Investigation, E. M. Ekanayake, John R. Ledgerwood

Publications

This paper analyzes the effects of foreign direct investment on the economic growth of developing countries. The study uses annual data on a group of 85 developing countries covering Asia, Africa, and Latin America and the Caribbean for the period 1980-2007. We explore the hypothesis that foreign direct investment can promote growth in developing countries. We test this hypothesis using panel data series for foreign direct investment, while accounting for regional differences in Asian, African, Latin American, and the Caribbean countries as well as the differences in income levels. While the findings of previous studies are generally mixed, our results …

The Importance Of Bits For Foreign Direct Investment And Political Risk Insurance: Revisiting The Evidence, Lauge Skovgaard Poulsen

Lauge N. Skovgaard Poulsen

Bilateral investment treaties (BITs) are typically presented as vital risk-mitigating instruments providing foreign investors with “credible commitments” that their assets will not be expropriated, discriminated against, or otherwise maltreated post-establishment. Accordingly, developing countries wanting to attract foreign investment should become more attractive destinations for multinationals when signing the treaties. A great number of studies and surveys indicate, however, that the vast majority of multinationals do not appear to take BITs into account when determining where - and how much - to invest abroad. Apart from reviewing such evidence, this paper discusses the feedback from a series of interviews. Firstly, BIT-negotiators …

The Corporate Income Tax And The Competitiveness Of U.S. Industries, Michael S. Knoll

All Faculty Scholarship

Hit hard by the financial crisis and recession, U.S. auto producers are seeking a massive bailout from the U.S. Congress. Many reasons are given for the U.S. auto industry’s lack of competitiveness including the U.S. corporate income tax. Although it is regularly asserted that there is a direct connection between the corporate income tax and competitiveness, what that connection is has not been carefully spelled out. In this essay, I describe how the corporate income tax directly harms the competitiveness of U.S. industries. I show that the mechanism differs depending upon whether the U.S. industry is defined as the global …

The Investigation Of Foreign Direct Investment Patterns In Russia, Tamilla Curtis, Tom Griffin, Lucyna Kornecki

Dr. Tamilla Curtis

No abstract provided.

Globalization And The Wage-Working Conditions Relationship: A Case Study Of Cambodian Garment Factories, Cael Warren

Economics Honors Projects

The wage premiums for firm-level foreign exposure (exporting and foreign ownership) have been well documented in the literature, and their potential sources have been studied in depth. Compensating differentials and efficiency wages are two distinct explanations (with radically different implications for worker welfare) for wage gaps that persist between firms despite controls for firm and worker characteristics. We use a comprehensive dataset of working conditions and wage compliance in Cambodia’s exporting garment factories to explore (1) the impact of foreign ownership on wages and working conditions, (2) whether the relationship between wages and working conditions within these exporting factories more …

An Analysis Of The Intra-Regional Trade In The Middle East And North Africa Region, E. M. Ekanayake, John R. Ledgerwood

Publications

This paper analyzes the intra-regional trade and investment flows in the Middle East and North Africa (MENA) region using an augmented gravity model applied to panel data. The study uses annual trade and investment data for the period 1980-2006. There is a growing awareness among countries in the MENA region regarding the importance of international trade and foreign direct investment for stimulating growth and integrating into the world economy. The research will attempt to achieve the following objectives: (a) analyze the intra-regional trade and investment flows in the MENA region; (b) identify the major determinants of trade and investment flows …