The Effect of Home-country and Host-country Corruption on Foreign Direct Investment

2012 ◽  
Vol 16 (4) ◽  
pp. 640-663 ◽  
Author(s):  
Josef C. Brada ◽  
Zdenek Drabek ◽  
M. Fabricio Perez
Keyword(s):  
Foreign Direct Investment ◽  
Host Country ◽  
Direct Investment ◽  
Home Country

Evaluating Foreign Direct Investment Projects

2018 ◽  
pp. 193-239
Keyword(s):  
Foreign Direct Investment ◽  
Host Country ◽  
Direct Investment ◽  
Home Country ◽  
Investment Project ◽  
Cash Flows ◽  
Parent Company ◽  
Investment Projects ◽  
Country Level ◽  
At Home

As explained in the foregoing chapter, once the relevant cash outflows and inflows associated with a foreign direct investment project are estimated so as to calculate the net cash flows, the desirability of the investment project should then be determined in terms of its economic profitability. Therefore, in this chapter the methods widely used in evaluating investment projects are discussed and their advantages as well as shortcomings are highlighted. Later in the chapter, evaluating foreign direct investment projects from the viewpoint of the parent company is elaborated in terms of profit and/or income transferred to the home country. The same investment evaluation techniques were applied to the net cash flows transferred to the home country of the parent company. The possible income and/or dividends to be remitted to the home country of a parent company are identified and discussed so as to reflect the viewpoints of investing parent companies when planning foreign direct investments. This two-level evaluation approach is generally followed in practice to make sure that direct investments are profitable at both host and home country levels, since an investment project that is not profitable at host country level would not be profitable at home country level either or a project that is profitable at host country level may not be profitable at home country level.

scholarly journals Inward FDI: Characterizations and Evaluation

Encyclopedia ◽  
2021 ◽  
Vol 1 (4) ◽  
pp. 1026-1037
Author(s):  
Aneta Bobenič Hintošová
Keyword(s):  
Foreign Direct Investment ◽  
Host Country ◽  
Direct Investment ◽  
Home Country ◽  
Business Interests ◽  
Business Operations ◽  
New Business ◽  
Material Information ◽  
A Company

Definition: Foreign direct investment can be defined as an investment made by an entity (usually a company) incorporated in a home country in the business interests of a host country, in the form of either establishing new business operations or acquiring controlling interest in existing business assets. Foreign direct investment is expected to meet the following characteristics: (1) the capital movement is typically accompanied by further technological, material, information, financial or personnel flows; (2) the foreign direct investor effectively controls facilities abroad; and (3) the investor has a long-term interest in the host country.

scholarly journals Is Russia successful in attracting foreign direct investment? Evidence based on gravity model estimation

2016 ◽  
Vol 16 (3) ◽  
pp. 245-267 ◽  
Author(s):  
Oleg Mariev ◽  
Igor Drapkin ◽  
Kristina Chukavina
Keyword(s):  
Foreign Direct Investment ◽  
Gravity Model ◽  
Host Country ◽  
Direct Investment ◽  
Recipient Country ◽  
Developed Countries ◽  
Likelihood Method ◽  
Empirical Estimation ◽  
Fdi Inflows ◽  
Russian Economy

Abstract The aim of this paper is twofold. First, it is to answer the question of whether Russia is successful in attracting foreign direct investment (FDI). Second, it is to identify partner countries that “overinvest” and “underinvest” in the Russian economy. We do this by calculating potential FDI inflows to Russia and comparing them with actual values. This research is associated with the empirical estimation of factors explaining FDI flows between countries. The methodological foundation used for the research is the gravity model of foreign direct investment. In discussing the pros and cons of different econometric methods of the estimation gravity equation, we conclude that the Poisson pseudo maximum likelihood method with instrumental variables (IV PPML) is one of the best options in our case. Using a database covering about 70% of FDI flows for the period of 2001-2011, we discover the following factors that explain the variance of bilateral FDI flows in the world economy: GDP value of investing country, GDP value of recipient country, distance between countries, remoteness of investor country, remoteness of recipient country, level of institutions development in host country, wage level in host country, membership of two countries in a regional economic union, common official language, common border and colonial relationships between countries in the past. The potential values of FDI inflows are calculated using coefficients of regressors from the econometric model. We discover that the Russian economy performs very well in attracting FDI: the actual FDI inflows exceed potential values by 1.72 times. Large developed countries (France, Germany, UK, Italy) overinvest in the Russian economy, while smaller and less developed countries (Czech Republic, Belarus, Denmark, Ukraine) underinvest in Russia. Countries of Southeast Asia (China, South Korea, Japan) also underinvest in the Russian economy.

FOREIGN DIRECT INVESTMENT IN SERBIA

2021 ◽  
pp. 253-265
Author(s):  
MILOŠ PJANIĆ ◽  
MIRELA MITRAŠEVIĆ
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Financial Markets ◽  
Direct Investment ◽  
Employment Growth ◽  
Home Country ◽  
New Technology ◽  
Foreign Direct Investments ◽  
Education Innovation ◽  
National Economies

In the process of globalization, the importance of foreign direct investment has changed significantly, because today they represent one of the most important factors of competitiveness, development and application of new technology, education, innovation and economic development. As a significant form of financing national economies, foreign direct investment is a form of investment that is realized outside the home country, where one of the most important goals of both developed and especially developing countries is to attract as much foreign direct investment. A large number of developing countries, including Serbia, have liberalized restrictions on foreign investment and free trade in the last two decades, liberalized national financial markets and begun privatization processes. Due to numerous problems and consequences of economic crises they have faced, many developing countries, as well as Serbia, view foreign direct investment as one of the most important factors for stimulating trade, employment growth, openness of national economies, and establishing overall macroeconomic stability. The aim of this paper is to point out the importance and dynamics of foreign direct investments in Serbia, as well as the key incentives for their attraction. Also, in addition to the theoretical review of foreign direct investments, the effects of foreign direct investments are presented in the paper.

Economic Policy Uncertainty, Bilateral Investment Treaties, and Chinese Outward Foreign Direct Investment

2021 ◽  
Vol 94 (3) ◽  
pp. 519-557
Author(s):  
Yue Lu ◽  
Linghui Wu ◽  
Ka Zeng
Keyword(s):  
Economic Policy ◽  
Foreign Direct Investment ◽  
Host Country ◽  
Direct Investment ◽  
Policy Uncertainty ◽  
Outward Foreign Direct Investment ◽  
Bilateral Investment Treaties ◽  
Economic Policy Uncertainty ◽  
Chinese Investment ◽  
Investment Treaties

This paper examines the effect of bilateral investment treaties (BITs) in promoting Chinese outward foreign direct investment (COFDI) in the presence of rising economic policy uncertainty in China's partner countries. We postulate that the signing of BITs should help stimulate COFDI because the treaties send a credible signal to foreign investors about the host country's intent to protect Chinese investment, and make it more difficult for the host country to violate its treaty obligations. BITs that contain rigorous investment protection and liberalization provisions, in particular, should be more likely to encourage COFDI as they directly influence Chinese investors' expectations about the stability, predictability, and security of the host market. However, while BITs generally promote COFDI, host country economic policy uncertainty may also limit their effectiveness. This is because uncertainty tends to undermine investor confidence, trigger capital flows from high- to low-risk countries, and dampen commercial activities. Poisson pseudo-maximum likelihood (PPML) estimation models of the determinants of COFDI to 188 countries between 2003 and 2017 lend substantial support to our conjectures.

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