2017 Annual Competitiveness Analysis and Impact of Exchange Rates on Foreign Direct Investment Inflows to Sub-National Economies of Indonesia

10.1142/11042 ◽  
2018 ◽  
Author(s):  
Khee Giap Tan ◽  
Mulya Amri ◽  
Nursyahida Ahmad ◽  
Diamanta Vania Lavi
Keyword(s):  
Foreign Direct Investment ◽  
Exchange Rates ◽  
Direct Investment ◽  
National Economies ◽  
Foreign Direct Investment Inflows

scholarly journals Sustainable Exchange Rates When Trade Winds Are Plentiful

2008 ◽  
Vol 204 ◽  
pp. 98-107 ◽  
Author(s):  
Jan Babecký ◽  
Aleš Bulíř ◽  
Kateřina Šmídkova
Keyword(s):  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Exchange Rates ◽  
Direct Investment ◽  
Real Exchange Rates ◽  
Import Demand ◽  
Trade Winds ◽  
Foreign Direct Investment Inflows

Estimation and simulation of sustainable real exchange rates in a sample of EU member countries find vulnerabilities connected to the adoption of the euro if the rate vis-à-vis the euro were to be fixed with weak fundamentals and inappropriate policies. Sample countries have benefited from dramatic improvements in their external positions, in part driven by inflows of foreign direct investment. As a result, exchange rate misalignments have narrowed in most countries and, looking ahead, are expected to narrow further. These results are conditional, however, on optimistic projections with respect to world import demand and foreign direct investment inflows.

scholarly journals Real Effective Exchange Rates and Foreign Direct Investment Inflows: Empirical Evidence from India’s Sub-National Economies

2020 ◽  
Vol 6 (2) ◽  
pp. p78
Author(s):  
Tan Khee Giap ◽  
Sasidaran Gopalan ◽  
Sarthak Luthra
Keyword(s):  
Foreign Direct Investment ◽  
Exchange Rates ◽  
Direct Investment ◽  
Negative Impact ◽  
National Level ◽  
Asymmetric Distribution ◽  
Fdi Inflows ◽  
Effective Exchange ◽  
National Economies ◽  
The Impact

This paper investigates the impact of real effective exchange rates (REER), both in terms of levels and volatility, on foreign direct investment (FDI) inflows for a panel of 35 Indian sub-national economies over the period 2000-2013. In light of the asymmetric distribution of FDI inflows within India, we focus on examining the nexus between FDI inflows at the sub-national level and India’s competitiveness captured by REER. Our empirical analysis reveals that movements in REER have a significant and negative impact on FDI inflows, while REER volatility is found to be inducing FDI. Our results are suggestive that FDI inflows into India are largely domestic market oriented in nature. Purpose: In light of the asymmetric distribution of FDI inflows within India, we focus on examining the nexus between foreign direct investment (FDI) inflows at the sub-national level and India’s competitiveness captured by real effective exchange rates (REER). This paper investigates the impact of REER, both in terms of levels and volatility, on FDI inflows to 35 Indian sub-national economies over the period 2000-2013. Research Methodology: To examine the impact of REER on FDI inflows, we compile a panel dataset for 35 sub-national economies covering the time period 2000 to 2013. We employ panel fixed effects models to explore our relationship of interest between REER and FDI, controlling for other characteristics specific to a sub-national economy.Findings: Our empirical analysis reveals that movements in REER have a significant and negative impact on FDI inflows, while REER volatility is found to be inducing FDI. Our results are suggestive that FDI inflows into India are largely domestic market-oriented in nature. Originality/Value: Considering that India’s FDI inflows exhibit significant concentration patterns among selected regions, we exploit this heterogeneity at the sub-national level to empirically understand the determinants of FDI, with a particular focus on cost competitiveness as captured by REER. The extant literature has not explicitly focused on testing the impact of REER both in terms of its levels and volatility on FDI inflows to India at the sub-national level, especially not at the sub-national level. While admittedly the exchange rate varies only at the national level, the value-addition comes from understanding its interaction with state-varying macroeconomic indicators.

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