Exchange Rates and Foreign Direct Investment in Emerging Asia: Selected Issues and Policy Options

2012 ◽  
Vol 29 (2) ◽  
pp. 166
Author(s):  
Ramkishen S. Rajan
Author(s):  
Tania Megasari ◽  
Samsubar Saleh

This study aims to analyze the determinants of foreign direct investment (FDI) in the Organization of Islamic Cooperation (OIC) country members for the period 2005 to 2018 The determinant variables of FDI are corruption, political stability and macroeconomic variables such as inflation, exchange rates, economic growth, and trade openness. Analysis used in the study  is the fixed effect model (FEM) of the OIC data panel.The results showed that economic growth and trade openness had a significant influence on foreign direct investment (FDI), while the effects of corruption, political stability, inflation and the exchange rate have no significant effect on foreign direct investment (FDI).


2002 ◽  
Vol 34 (2) ◽  
pp. 289-302 ◽  
Author(s):  
Mary A. Marchant ◽  
Dyana N. Cornell ◽  
Won Koo

International agricultural trade has evolved over time. Processed foods and developing countries have become major growth markets for U.S. agricultural exports, and foreign direct investment (FDI) has become even more important than exports as a means of accessing foreign markets. The critical question is whether FDI is a substitute for or a complement of exports. This research builds upon an existing theoretical FDI model and contributes to the literature through the development of a simultaneous equation system for FDI and exports, which is estimated using two-stage least squares. Empirical analyses were used to examine the relationship between U.S. FDI and exports of processed foods into East Asian countries-China, Japan, Singapore, South Korea, and Taiwan-from 1989 to 1998. The results indicated a complementary relationship between FDI and exports. Additionally, these results indicated that interest rates, exchange rates, gross domestic product (GDP), and compensation rates are important variables that influence U.S. FDI in East Asian countries, while GDP, exchange rates, and export prices are important export determinants.


2008 ◽  
Vol 204 ◽  
pp. 98-107 ◽  
Author(s):  
Jan Babecký ◽  
Aleš Bulíř ◽  
Kateřina Šmídkova

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.


Significance The ruling Georgian Dream party faces a more united opposition and mounting pressure from US and EU partners. Economic challenges are increasing as inflation rises, wages remain low and external state debt grows. Impacts Foreign direct investment is set to fall, worsening the outlook for recovery. The Georgian lari is likely to recover but not return to pre-pandemic exchange rates. The government is hoping to open safe 'tourist corridors' to encourage foreign visitors to return. Pro-Russian parties may win some parliamentary seats.


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