Essays on the determinants of aggregate foreign direct investment

A meta-analysis tests the reliability of the previous studies on FDI. Then, a cluster analysis on FDI data reveals the necessary to segment economies, especially by income level, in FDI analysis. A large number of studies emphasize FDI determinants but ignore the income distribution on the results, which biases the estimates. I categorize the countries according to their level of development: high, middle and low income. I further break down the middle income category into upper and lower segments.

I consider level effects and various interactive effects. I find that income levels play a significant role in FDI determination model.

Controlling for income levels corrects the sign and the magnitude of a number of estimates. In particular, results show that low income countries attract more FDI, ceteris paribus. This result is in stark contrast with the traditional consensus that capital flows to rich countries Lucas Moreover, modeling income levels shows that lagged FDI has consistently positive effect on FDI, which is a dynamic model structure. Consistent with the literature, market potential and education boost FDI and results are robust to income levels.

FDI increases with risk levels because during financial or economic crises it replaces other investments. Tax rates overall exert downward pressure on FDI, but mostly when the middle and low income levels are controlled for. This article also supports the Tariff Jumping FDI argument in middle and low income economies, according to which, FDI is a potential substitute for international trade.

My results reject the hypothesis of the wealth effect of exchange rate, and there is weak evidence that the depreciation of local currency discourages FDI in particular in poorer countries. Results are stable for different specifications of income dummies one intercept dummy, two intercept dummies, and slope dummies, etc. Economics Commons. Advanced Search. Privacy Copyright.Foreign direct investment PAGE 3.

Foreign direct investment theories PAGE 4. References Foreign direct investment FDI. This inturn helps improving. Usually, foreign investment in many ways have a positive impact on the economy of the country in which they occur. The introduction of new technologies leads to the modernization. When the individuals or companies from a country invest in another country, it is regarded as FDI.

FDI not only strengthens the manufacturing base of the host country but also contributes to the strengthening of the economic outlook.

Real estate capital

FDI can be seen as an investment that leads directly to job creation in an economy. The unemployment rate decreases due to FDI, which leads to stability in economic, social and.

Openness to foreign direct investment. According to The World Bank n. Qatar is exceptionally open to FDI, as its objective is to become a world-class.

essays on the determinants of aggregate foreign direct investment

Following the same line of literature, this chapter takes the analysis further analysing spatial spillover in Indian manufacturing firms for the period The results from Spatial. The Indian banking system is radically different from those common in other countries due to its unique geographic, social and economic characteristics.

India has a huge population, different cultures in different parts of the country. With the trend of economic integration, FDI has been considered as an important part of boosting the economic development within any country around the world. Foreign direct investments differ entirely from indirect investments such as portfolio management. The direct way of investing in a foreign country can be conducted in a number of ways—either by establishing overseas. Foreign Direct Investment creates a stable, direct and long lasting connections between economies.

It therefore encourages the transfer of technology know how between countries and allow the host country to promote its products more widely in international markets.

It is also and additional source of funding for investments and it can also be an important form of development. Foreign Direct Investment. Firms view overseas expansion as a necessary step to achieve a more effective access in the markets where they presently have low representation as stated by Tyu T.

In order to take advantage of the aggregate economies offered by the blooming innovative environment in that particular region, firms of course will invest. Foreign Direct Investment Words 7 Pages. The determinants of foreign direct investment may be the socio-economic, financial and the cultural factors which usually have positive and negative effect on the foreign direct investment.

The risk is attached to the determinants of foreign direct investment.

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This paper examines the major determinants of foreign direct investment exchange rate, market size, political instability, infrastructure, openness to market and military rule. Data constraints in Pakistan some determinants consider to be the inefficient.When investigating foreign direct investment, scientists focus on different combinations of factors.

They often emphasize the economic ones, while underestimating the others.

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Among the non-economic factors, there are several problems regarding the identification of relevant FDI determinants. The aim of this paper is the provision of a comprehensive review of the factors that are considered to impact the attraction of FDI and the identification of relevant FDI determinants. From the variety of factors, mentioned in the specialty literature, we identified eleven categories of FDI determinants.

We also provided a comprehensive review of categorical and methodological interferences of the identified factors, proposing potential working hypothesis for future researches in the field. The final assessment of this study is the creation of a Synthesis of the factors influencing FDI.

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Arbatli, E. International Monetary Fund Working Paper. Barassi, M. European Journal of Political EconomyVol. Bhardwaj, A. Management International Review, Vol. Crespo, N. World Development, Vol. Dow, D. International Business Review, Vol. Drogendijk, R.

Du, J. Journal of Asian Economics, Vol.

Foreign Direct Investment in the U.S. Is a Win-Win

Esty, D. Gauselmann, A. Post-Communist EconomiesVol. Hayakawa, K.

Foreign Direct Investment

Global Economic Review, Vol. Henisz, W. Economics and Politics, Vol.

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Holmes, R.Foreign direct investment is guided by various theoretical approaches. These theories can either be macro or micro.

As the paper reveals, macro-level theories of FDI explain various macroeconomic factors that are responsible for FDI uptake. Macroeconomic theories of FDI address the force behind foreigners investing in a host country. Some of these motivators may include the GDP of the host country, market size, the presence of natural resources, the state of infrastructure, political position, and the economic growth rate.

On the other hand, micro-level FDI theories explain various factors that come into play at the company level. The capital market theory stipulates that FDI is driven by interest rates.

The theory was developed by Boddewyn in It presents three factors that fuel the adoption of FDI in developing countries. According to Zhangundervalued exchange rates in developing countries pave a way for a low cost of production of goods and services. Secondly, most of the developing countries have no organised securities. Hence, when one makes a long-term investment in such countries, the FDI becomes the securities. This situation makes many people fail to understand why growing economies adopt FDIs that permit the control of assets.

The timing of FDI depends on the changes in the macroeconomic environment. Such macroeconomic factors in the investment environment include domestic investments, the productivity of trade, and openness to exchange, gross domestic product GDPand exchange rates Baltabaev These factors determine how FDI moves in the environment. The theory presents FDI as a long-term strategy in multinational companies. The exchange rate and economic geography theory presents a relationship between exchange rate in a particular country and foreign direct investment.

According to this theory, FDI significantly affects the exchange rates in a host country. It presents FDI as a major tool for the exchange rate reduction in a host country. The theory is anchored on the economic geography of a particular country. It explains the reason why internationally successful companies come up in certain countries.

essays on the determinants of aggregate foreign direct investment

Local resources that a foreign investor may consider before undertaking an investment are controlled by the local government and political systems. Therefore, it is important for the exchange rate and political influence and boundaries to be considered while opting for FDI Zhang The theory elucidates the presence of more economically developed cities, counties, or regions within a given country.

The level of relationships between countries that engage in economic transactions also determines FDI uptake in the respective countries. For instance, close geographical, cultural, or economic relationships enhance the flow of FDI between nations.All Text Images Audio Video. Advanced Search Help. Cite Export Share Print Email. Selected item. Essays on the determinants of foreign direct investment and its impact on home countries.

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essays on the determinants of aggregate foreign direct investment

PDF-1 View Usage Statistics. Staff View. Simple citation Tang, Jitao. Click here for information about Citation Management Tools at Rutgers. Description Title Essays on the determinants of foreign direct investment and its impact on home countries. Date Created Other Date degree.

Subject EconomicsInvestments, ForeignInternational business enterprises. Extent ix, p. Description Both policy makers and policy analysts are interested in the extent to which host country policies influences foreign direct investment FDI.

While much work has focused on the impact of government policies on aggregate FDI, little attention has been paid to the possibility that different types of FDI may respond differently to changes in policies. In this dissertation, I investigate whether local policies affect distinct types of FDI in different ways. In the first chapter, I test the effect of environmental policies in host countries on horizontal, vertical and export-platform FDI.

In a simple model I show how different types of FDI respond to a stricter environmental policy. Using U. Furthermore, I find that in host countries with stricter environmental regulations than U. I extend the analysis in the first chapter to the effect of local corporate tax rates in the second chapter.Globalization which gave birth to the concept of interdependence of countries and their economies has been defined as the process through which regional economies, societies, and cultures have become integrated with the assistance of global network of trade, communication and transportation.

This allowed the investors to invest or transfer their capital where ever they wanted which introduced the concept of Foreign Direct Investment. Since the recent financial crisis in Asia and Latin America developing as well as newly industrialized countries have been advised to rely mainly on FDI for economic development and supplement national savings by capital inflows. Developing countries in particular are in need of investment for their development and the investment amount in majority of cases is greater than the capital internally available.

Therefore, FDI has emerged as most important source of generating capital required for development of emerging countries.

essays on the determinants of aggregate foreign direct investment

Currently Foreign Direct Investment has become one of the major sources of economic development, modernization, employment, income growth, capital generation and a channel for the transfer and access to advance technologies as well as organizational and managerial skills. Recognizing this fact, developing countries try their level best to attract as much as of FDI as they can. But attracting FDI is not that much simple, it requires huge efforts on the part of policy makers and government.

Variety of factors is considered by an investor before making investment in a particular foreign country. Those were labeled as determinants of FDI, and may vary from country to country. Pakistan is currently facing a huge shortfall of capital to finance its major development projects and to run the government operations smoothly. The country requires capital to fulfill the growing needs in defense, infrastructure, education and variety of other aspects of serioussignificance to progress.

Since s there has been noteworthy increase in flow of capital investments to developing countries, which motivateddiscussions in literature concerning determinants of such investment flows.

This trend was result of liberal trade policies, variations in economics related fundamentals of emergent countries, development of capital markets and transformations in economic conditions around the globe. This research paper tries to investigate the role of economic fundamentals in driving investment flows. Past research on the economic fundamentals as determinants of foreign direct investment divided economic fundamentals into two broad categories of pull factors and push factors.

Push factors were considered as those economic fundamentals that relateto industrial or developed countries and motivate capital flows,in contrast pull factors consist of economic fundamentals of recipient countries that attract capital flows.

One of the major push factors as cited in the past research was hold back of the economies of the developed countries Calvo, ; Fernandez-Arias, ; Haque, ; Montiel and Reinhart, Pull factors consist of Supply of money and local productivity of the recipient country Calvoet al.

Calvoet al. Vita and Kyaw suggested that variations in domestic yield and productivity of the foreign country were main determinants of portfolio and FDI flows. Variety of theories have been developed regarding the determinants of FDI such as industrial organization theory, the pure trade theory, classical theory relating international investment flows, and locational factor theories.

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Classical theory relating the international investment flow states that when return on investment crossways countries under autarchy change the investments will shift from lower to higher return providing country. Therefore, this theory assumes foreign direct investment as function of dissimilarity of return on investment. Wilhborg argued that volatility in the exchange rate would decrease the amount of portfolio investment and that had also been valid for FDI Black, According to Kohlhagen the firms that expect devaluation in the currency of foreign country would defer its investment till the time when exporting becomes profitable.

Study also concluded that the higher the exchange rate, the lower the amount of FDI because this phenomena would make exporting relatively less profitable. The first chapter of the research focuses on giving basic view of the research and provides information on the overview, issues, purpose and basic theories on the determinants of FDI.

In the chapter existing work done by various researchers and past empirical studies have been discussed. The third chapter provides details regarding practical carrying out of the research and describes data collection and analysis procedures. Finally, the last chapter gives details regarding the results of the research. The net amount of foreign direct investment received by Pakistan measured in current US dollars. Represents the annual amount spent by government on Pakistan on the development of infrastructure in the country.Cloud ML Engine organizes your trained models using resources called models and versions.

A model is a machine learning solution. For example, you might create a model called census to contain all of your work on a U. The entity you create, named census, is a container for actual implementations of the machine-learning model, which are called versions.

Determinants of Foreign Direct Investment: A Review

Developing a machine-learning model is an iterative process. For that reason, the Cloud ML Engine resource paradigm is set up with the assumption that you'll be making multiple versions of each machine learning model. This terminology can be confusing because a Cloud ML Engine model resource is not actually a machine-learning model on its own. In Cloud ML Engine a model is a container for the versions of the machine learning model.

The "model" that you deploy to Cloud ML Engine as a model version is a TensorFlow SavedModel. You export a SavedModel in your trainer. A model is an organizational tool that you can use however it makes sense for your situation.

It is common, especially after you have a version in production, to keep the inputs and outputs the same between model versions. This enables you to switch versions without needing to change other application structure you may have built around your model. It also makes it easy to test new versions with existing data. If you request predictions specifying just a model name, Cloud ML Engine uses the default version for that model.

Note that the only time the service automatically sets the default version is when you create the very first one. You can manually make any subsequent version the default by calling projects. This enables you to, for example, use a stable default version to serve predictions in production while testing newer versions without creating a dedicated model resource for testing. There are no rules for names beyond those technical requirements, but here are some best-practices:The Cloud ML Engine quota policy sets a limit of 100 models per project and limits the total number of versions (combined between all models) to 200.

Cloud ML Engine needs some information to create your model version. You also have some options you can configure. This section describes the parameters of both types. These parameters are defined in the Version object or added for convenience in the gcloud ml-engine versions create command. You can specify the number of training nodes to keep running for your model version. See the section on scaling for more information.

If you are using the gcloud command-line tool to deploy your model, you can use a SavedModel on your local computer. The tool stages it in the Cloud Storage location you specify before deploying it to Cloud ML Engine. You may have included TensorFlow Ops in your computation graph that were useful primarily in the context of training.

Once you've trained your model, you can remove those ops from your graph before exporting your final version. Much of the advice given in the training application development page is aimed at the prediction experience. In some cases those are changes that you make to your model when the bulk of your training is done and you're ready to start deploying versions.

You can send new data to your deployed model versions to get predictions. The following sections describe important prediction considerations. Cloud ML Engine provides two ways to get predictions from trained models: online prediction (sometimes called HTTP prediction), and batch prediction. In both cases, you pass input data to a cloud-hosted machine-learning model and get inferences for each data instance.

The differences are shown in the following table:The needs of your application dictate the type of prediction you should use. You should generally use online prediction when you are making requests in response to application input or in other situations where timely inference is needed.


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