Foreign Direct Investment and the Flying Geese Model: Japanese Electronics Firms in Asia-Pacific

2000 ◽  
Vol 32 (2) ◽  
pp. 281-304 ◽  
Author(s):  
David W Edgington ◽  
Roger Hayter
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Asia Pacific ◽  
Critical Examination ◽  
Host Countries ◽  
Billiard Ball ◽  
Firm Level ◽  
Geographical Patterns ◽  
Japanese Fdi

This paper is a critical examination of the ‘flying geese’ and ‘billiard ball’ models of foreign direct investment (FDI) and their ability to explain the spatial expansion of Japanese electronics multinationals (MNCs) in Asia-Pacific countries from 1985 to 1996. Data on Japanese FDI are analyzed in this region at the aggregate, sectoral, and firm level. The paper commences with a review of the flying geese model, especially that version which interprets Japanese FDI as a catalyst for Asian development, and the billiard ball metaphor which suggests a mechanism for host countries to ‘catch up’ with Japan. The authors then turn to an analysis of Japanese FDI in Asia-Pacific together with employment data for fourteen major firms. This allows an evaluation of the two models in terms of recent geographical patterns of investment and employment growth by electronics MNCs. A special case study of Matsushita Electric Industrial Co. Ltd (MEI) helps flesh out the evolving geography of Japanese electronics firms in Asia-Pacific. Although the results support the overall patterns suggested by the two models, the authors argue that metaphors and analogies such as flying geese and billiard balls should not be used casually and as a substitute for analysis.

scholarly journals Climbing the Rungs of the Quality Ladder: FDI and Domestic Exporters in Romania

2020 ◽  
Vol 130 (628) ◽  
pp. 937-955
Author(s):  
Matej Bajgar ◽  
Beata Javorcik
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Multinational Enterprises ◽  
Positive Relationship ◽  
Host Countries ◽  
Firm Level ◽  
Level Information ◽  
Quality Ladder ◽  
Quality Of Products

Abstract This article argues that inflows of foreign direct investment can facilitate export upgrading in host countries. Using customs data merged with firm-level information for 2005–11, it shows a positive relationship between the quality of products exported by Romanian firms and the presence of multinational enterprises (MNEs) in the upstream (input-supplying) industries. Export quality is also positively related to MNE presence in the downstream (input-sourcing) industries and the same industry, but these relationships are less robust. These conclusions hold both when the product quality is proxied with unit values and when it is estimated following the approach of Khandelwal et al. (2013).

INCONSISTENCIES IN ICSID AWARDS ON DISPUTES RELATED TO MFN AND UMBRELLA CLAUSE

2021 ◽  
Vol 6 (2) ◽  
pp. 247-264
Author(s):  
Herliana Herliana
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Case Study Method ◽  
Host Countries ◽  
Foreign Investors ◽  
Investment Arbitration

Investment arbitration has been acclaimed as an important part of Foreign Direct Investment (FDI) movement around the globe because it provides a neutral and trustable forum for settling investment dispute. However, many argue that investment arbitration often becomes advocates of foreign investors and neglect the developing country’s interests as the host of investment. This paper aims at studying the investment arbitration awards rendered by International Center for Settlement of Investment Dispute (ICSID) tribunals launched against developing countries. The question is whether and to what extent those awards have equally observed the interests of foreign investors and host states of investments. To answer the questions, this paper employs case study method and use publicly available ICSID cases. This research shows that some ICSID tribunals have inconsistent reasoning which led to contradictory decisions. Apparently, as some cases indicate ICSID tribunals gave more weight to the need to protect foreign investors rather than host countries’ development interests. As a consequence, inconsistency and ambiguity have led to uncertainty and unpredictability of the forum. This is not only disadvantaged the parties due to inability to foresee the likely outcome of the disputes but also endanger the ICSID tribunals’ credibility as neutral and reliable forum.

scholarly journals Foreign direct investment in the storm of the COVID-19 pandemic and the example of Visegrad countries

2021 ◽  
Vol 71 (S1) ◽  
pp. 73-92
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Policy Framework ◽  
Host Countries ◽  
Geographical Patterns ◽  
Investment Promotion ◽  
International Production ◽  
The Impact ◽  
Perfect Storm ◽  
Visegrád Countries

Abstract The immediate effects of COVID-19 on the global flows of foreign direct investment (FDI) were devastating, resulting in a large drop. Flows to the Visegrad countries were also affected but less than the world average. The fall in FDI was the result of underlying trends that started before the pandemic but accentuated by the latter, creating a “perfect storm”. These secular trends include the digitalisation of production and the birth of Industry 4.0, resulting in more asset-light international production and reorganisations of company networks, the sustainability imperative, making the impact of FDI more relevant than its quantity, and a slowdown in the liberalisation of the policy framework for FDI both in individual countries and at the multilateral level. The recovery of FDI from the shock of 2020 is expected to be long and it will be impossible to return to the pre-pandemic structural and geographical patterns. Building resilience and diversification of production at the expense of the search for the lowest-cost locations will be the top priorities of investors, forcing the host countries to revise their investment promotion strategies focused on cost reduction. In the Visegrad countries, the model based on low labour costs will sooner or later reach its limits.

scholarly journals Foreign Direct Investment and Economic growth in Member Countries of Asia Pacific Trade Agreement

2019 ◽  
Vol 8 (2S10) ◽  
pp. 145-155
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Developing Economies ◽  
Lao Pdr ◽  
Trade Agreement ◽  
Ordinary Least Squares ◽  
Asia Pacific ◽  
Causality Test

The economic growth depicts prosperity and self sustainability of nation. Foreign Direct Investment considered as handful tool for growth of host nation is a general perception all over the globe. Now due to global webbed market, countries worldwide are anxious to exploit Asia-Pacific’s huge market and rich culture. The empirical evidence and fact-based case study poses FDI and economic growth on fringe due to variation in during the different span of time. This study attempted to analyze the relationship between FDI and economic growth into Bangladesh, China, India, Lao PDR, Mongolia, Korea Republic and Sri Lanka. It is assumed that blend of developed, emerging and developing economies taking as base for comparison will derive the more satisfactory result. Also, it consists of large market driven economies in the world due to strong market base. To attain the result of GDP growth, Inflation rate and Unemployment rate has taken as economic growth indicator. The Ordinary Least Squares, Augmented Dicky-Fuller and Granger Causality test is used to estimate the effect of FDI on economic growth. The result shows that in spite of consistent pattern in FDI inflow not all the countries have experienced the significant effect of FDI on economic growth of nation. The implications in nation’s policies are discussed in the study

Location Determinants of Indian Multinationals: A Multilevel Analysis

2019 ◽  
Vol 21 (5) ◽  
pp. 1200-1217
Author(s):  
Munmi Saikia
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Outward Foreign Direct Investment ◽  
New Wave ◽  
Host Countries ◽  
Firm Level ◽  
The Past ◽  
Country Level ◽  
Location Determinants ◽  
Multilevel Linear Regression

The study investigates a simultaneous act of country-level determinants and firm-level heterogeneity on location distribution of the new wave of outward foreign direct investment (OFDI) from India. Indian firms are nested within host countries. Therefore, the current study employs mixed multilevel linear regression model to analyse multilevel and longitudinal data. Using firm-to-destination data, the study finds that location distribution of Indian multinationals is simultaneously driven by firm-level heterogeneity and country-level determinants. The study shows that location determinants of the recent wave of OFDI of Indian firms are significantly different from the past wave.

THE IMPACT OF INSTITUTIONAL AND SOCIAL CHARACTERISTICS ON FOREIGN DIRECT INVESTMENT: EVIDENCE FROM JAPAN

2013 ◽  
Vol 08 (02) ◽  
pp. 1350010 ◽  
Author(s):  
NAVINA LUCKE ◽  
ALEXANDER KARMANN ◽  
STEFAN EICHLER
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Cultural Distance ◽  
Developed Countries ◽  
Legal Framework ◽  
Social Characteristics ◽  
Host Countries ◽  
Japanese Fdi ◽  
Open Markets ◽  
The Impact

We examine the determinants of Japanese foreign direct investment (FDI) focusing on institutional and social factors. Using panel data on 59 countries from 1995 to 2008, we find that host countries with free and open markets and greater cultural distance from Japan attract Japanese FDI. Good institutions, such as a well-developed legal framework and an effective government, are important in promoting Japanese FDI to emerging economies, whereas fewer regulatory restrictions, lower tax burden, and more religious diversity attract Japanese FDI to developed countries. We find that corruption stimulates Japanese FDI to developed countries, which is contrary to most previous research.

scholarly journals The dissuasive effect of U.S. political influence on Chinese FDI during the “Going Global” policy era

2017 ◽  
Vol 20 (1) ◽  
pp. 38-69 ◽  
Author(s):  
Jing-Lin Duanmu ◽  
Francisco Urdinez
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Political Influence ◽  
The United States ◽  
Chinese Government ◽  
Host Countries ◽  
Firm Level ◽  
Economic Diplomacy ◽  
Country Level ◽  
Political Determinants

AbstractBuilding on the growing debate on political determinants of foreign direct investment, we investigate the relationship between U.S. political influence and the global distribution of China's outward foreign direct investment (OFDI). Using country-level and firm-level datasets of China's greenfield investment, we find strong evidence that Chinese state controlled firms strategically reduce investment in host countries under significant political influence of the United States. Our results are robust to alternative specification and two falsification tests. The findings suggest that the Chinese government uses FDI as a way of economic diplomacy.

scholarly journals Troubled Banks, Impaired Foreign Direct Investment: The Role of Relative Access to Credit

2002 ◽  
Vol 92 (3) ◽  
pp. 664-682 ◽  
Author(s):  
Michael W Klein ◽  
Joe Peek ◽  
Eric S Rosengren
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Real Exchange Rates ◽  
The United States ◽  
Data Sets ◽  
Firm Level ◽  
Access To Credit ◽  
Japanese Firms ◽  
Level Data ◽  
Japanese Fdi

During the 1980's, theories were developed to explain the striking correlation between real exchange rates and foreign direct investment (FDI). However, this relationship broke down for Japanese FDI in the 1990's, as the real exchange rate appreciated while FDI plummeted. We propose the relative access to credit hypothesis and show that unequal access to credit by Japanese firms contributes to the explanation of declining Japanese FDI. Using bank-level and firm-level data sets, we find that financial difficulties at banks were economically and statistically important in reducing the number of FDI projects by Japanese firms into the United States.

scholarly journals Foreign Direct Investment and the Role of Government: A Case Study of South Korea

1997 ◽  
Vol 12 (0) ◽  
pp. 57-79
Author(s):  
Pan Suk Kim
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
International Perspective ◽  
Host Countries ◽  
Free Markets ◽  
Role Of Government ◽  
Security Issues ◽  
Regional Basis

As industrial economies have prospered, their business firms have also grown and matured resulting in increased foreign direct investment (FDI) and thus foreign direct investment has become a major issue for analytical discussion in an international perspective. Foreign direct investment is a major source of international resource transfer. The tremendous competition generated among host countries, regions, and localities for FDI has created an abundance of literature, some favorable some not so favorable. Those favorable writings are generally in defense of free markets and include Becker (1989) and Reich (1990). Unfavorable discussions usually express concerns over domestic economic and national sovereignty, and security issues. Recent criticisms of FDI feature the works of: Tolchin and Tolchin (1988), Burstein (1988), Prestowitz (1988), Glickman and Woodward (1989), Spencer (1988) and Frantz and Collins (1989). Other discussions by Morgan Guaranty (1989), Reich (1991), Peterson (1989) and Fry (1980) provide excellent, balanced arguments. Discussions of FDI in literature have focused mainly on the national economy as a whole, while FDI considerations on a regional basis, or more specifically on an urban basis, have been somewhat ignored. And while there is an established research base concerning the factors which attract industries to an urban regions, research on the role of government in encouraging foreign direct investment- based economic development is absent of any serious analytical discussion. The main objective of this paper is to fill the gap created by this absence.

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