Facilitating Foreign Investment

The study aimed to address and analyse foreign direct investment and its impact on the national economy. Statistical data were analysed, concluding that a majority of foreign direct investment (37.6-43.7%) was directed to industry, particularly the processing sector (23.7-26.3%), trade (14-15.9%), and financial activities (18.4-19.6%), while the least went to education (0.04-0.08%) and healthcare (0.2-0.3%). Most foreign direct investments inflows came from Cyprus, the Netherlands, Switzerland, Germany, and the United Kingdom. Advantages and disadvantages of attracting foreign direct investment were systematised, and key factors negatively influencing Ukrainian investment market were identified. The study explored the core components that facilitated foreign direct investment inflows as well. A definition of the term “foreign investment” was provided, implemented measures aimed to improve the investment climate, as well as the measures that need to be implemented to promote the attraction of additional foreign investment were analysed. Main statements of legislative and regulatory acts to support strategic foreign investors were systematised. Investment potential of Ukrainian promising sectors was addressed. To trace foreign direct investment dynamics, the volume of foreign direct investment in Ukraine as of 2003-2024 period was considered. Distribution of foreign direct investment by major economic sectors (2007-2024) and by country of origin was analysed. The study explored the correlation between changes in foreign direct investment levels and inflation dynamics in Ukraine using macroeconomic data and the elasticity coefficient for the 2003-2024 period. The influence of internationalisation, globalisation, and transnationalisation on foreign direct investment was addressed. The importance of foreign direct investment as a driver of Ukrainian economic development was substantiated, key challenges in managing foreign direct investment were identified, and recommendations for enhancing investment governance were proposed. The practical significance of the study is determined by the contribution to improvement of the effectiveness of foreign direct investment management and promotion of national economic welfare

India attracts a large sum of foreign investments every year. These foreign investments have a remarkable impact on Indian economy. Real economy is assumed to be affected by foreign investment through its constituents like exchange rate, foreign exchange reserves, economic growth, etc. Exchange rate movements are also believed to affect the foreign portfolio investment, especially foreign institutional investment coming to the country. The unit root test is applied to determine stationary of the time series data. Vector error correction model is applied to determine the dynamics of the relationship between foreign investment and exchange rate. The result shows that foreign portfolio investment, foreign direct investment, index of industrial production, interest rate and wholesale price index have a positive impact on the exchange rate (REER), that is, Indian rupee appreciates whereas import has negative impact on exchange rate in India that is, Indian rupee depreciates. In short, foreign portfolio investment in India may lead to rupee appreciation with several other currencies and their selling and disinvestment may lead to its depreciation.

Many developing and developed countries alike are striving to attract foreign direct investment because of its impact on economic development, transferring expertise, and development of mechanisms for the business models of the host economy. This research drives at studying foreign investments by analyzing their inflows and their relative importance to Egypt; identifying as well, the reasons that prevent outmost and optimal benefit by drawing on the experiments of some countries. The research also aims to examine foreign direct investment in the field of clean energy in Egypt, to study the patterns of joint cooperation between foreign investments and the various ministries and agencies in the energy field; studying as well, the obstacles that prevent some of the memorandums of understanding signed with foreign companies from being implemented. The practical side of the study is explained through the applied study by analyzing the data issued by the Ministry of Planning and Economic Development using descriptive statistical and inductive measures to test the relationship between the study variables. The results of the study showed through statistical analysis when testing the hypotheses that there is a positive significant effect between foreign direct investment and the real economic growth rate, and that it contributes to development but in a small amount due to the nature of these investments and their sectoral distribution. There is a positive non-significant impact between foreign direct investment and total exports and imports as a percentage of the gross domestic product. Its impact is negligible and poor, given that the majority of it flows into the petroleum sector. There is also a positive significant impact between foreign direct investment and total human capital as a percentage of the gross domestic product in a small percentage given that the majority of foreign investments do not require large labor. There is a negative significant effect between foreign direct investment of the inflation rate due to its sector distribution which is mostly focused in the petroleum sector and between tourism and real estate.

INTRODUCTION There has been a considerable increase in foreign direct investment in Indonesia, from USD 22.9 billion in 2010 to USD 50 billion in 2016. Foreign investment rose to USD 57 billion in 2017 and to an estimated USD 78.4 billion in 2019. Sectors such as mining, manufacturing, transport and telecommunications have continued to attract fairly high levels of foreign investment. The biggest investors come from Singapore, the United States and Japan. The growth of foreign investment since 2010 is partly due to Indonesia's stable economic growth, political stability, vast natural resources and its relatively lowcost production base. The increase of investment has a close relation with the government's efforts to attract foreign investment to Indonesia over many years. These efforts are shown in the government's attitude towards foreign investment which has changed over time. The changes are mostly attributable to the changes of government policies towards foreign investment. These attitudes may be classified into three investment attitudes. First, is the ‘closed investment’ phase, from 1945 until 1966. Second is the ‘open investment’ phase, from 1967, when Law No. 1 of 1967 was promulgated, until 1998; and third is the ‘liberalisation of investment’ phase from 1998 to the present date. CLOSED INVESTMENT PHASE The closed investment attitude took place following Indonesia's declaration of independence in 1945. Since 1945, however, the government then, known as the old order regime, closed its door to foreign investment. The government also nationalised foreign plantation companies operating in Indonesia which had operated long before independence. OPEN INVESTMENT PHASE When the old-order government was replaced by the new-order administration in 1966, the attitude towards foreign investment changed. The government promulgated Law No. 1 of 1967 on Foreign Investment. The Foreign Investment Law provided the government's guarantee to foreign investors. The government pledged to protect foreign investment, not to nationalise the foreign investors’ assets, and the government's willingness to settle any investment disputes through international arbitration.

Institutional real estate investors commonly invest in real estate via investments in publicly traded real estate investment trusts (REITs). Recently, the increasing flow of investment from international investors into REITs sector come from foreign institutional investors. Foreign investors vary in sophistication, business strategy and practices, governance, and capital sources, so the handy information from media news will impact their preferences for REITs instantly. The wave of news from media has largely changed the structure of investors' information, which affect investors investment preferences (Ron and Robert 2017). The information availability and quality are important factors that influence foreign investors’ decisions in building their investment portfolios. Although foreign investors could obtain information through various sources, they face significant information disadvantage compared to domestic investors (Choe et al. 2005; Leuz, 2006; Chan et al.2008). Media from the home country of foreign investors (i.e., home media) could minimize these barriers by broadcasting in its home language and commenting on news from its home perspective. This paper aims to investigate whether foreign investors rely more on home media (than domestic media) to make their foreign investment decisions. Furthermore, institutional investors hold large ownership stakes in European REITs. The traditional view is that institutions are both long-term and passive investors (Devos et al.2013), so the institutional investors tend to find out the more efficient information. Most literature suggests that media coverage reduces the information asymmetry in financial markets (Bushee et al. 2010; Blankespoor et al. 2014) and plays a corporate governance role (Dyck et al. 2010; Dai et al. 2015). However, it is not clear whether the domestic and foreign media play a different role in providing information to foreign investors in European REITs. This paper aims to resolve the puzzle by answering that whether higher media coverage from a particular foreign country is expected to increase European REITs’ foreign ownership from that country or not. I investigate this relationship over the period from 2000 to 2017 by matching the second-rate media news with the yearly European REITs ownership data. This paper highlights the different sources of media news impact on foreign institutional investors’ ownership of European REITs, which provides important implications for European REITs...

The analysis of the impact of foreign direct investment (FDI) on the rate of economic growth on the example of China and Ukraine is carried out. It is shown that foreign direct investment has a positive impact, but this is not the only factor that determines economic growth. Apart from the attracted foreign investment, the country must have developed institutions that will protect foreign capital from both the internal political and the external risks. Such an institutional environment will contribute to the growth of foreign direct investment and the effectiveness of their implementation. It is shown that at the same levels of foreign direct investment per capita – investments in China tend to grow steadily and less volatility. At the same time, foreign investment in Ukraine is unstable and highly dependent on macroeconomic factors, such as global economic crises and armed aggression of the neighboring country. To determine the impact of foreign investments on the pace of economic growth, the article used a regression and correlation apparatus. A cross-correlation function was used to assess the lagging impact of foreign investment on economic growth. The novelty of this publication is that by using correlation analysis, a significant difference in the lags of FDI impact on the GDP growth rates for the economies of Ukraine and China has been proved. It is found that Ukraine is characterized by a rapid short-term response to foreign direct investment with zero and single lag, while for the Chinese economy this response is dissolved over time. The main stagnation factors in Ukraine include the following: practical absence of the possibility of direct investment of the population into the country’s economy (underdeveloped stock market), significant political (risks of loss of property), macroeconomic and corruption risks.

In a modern economy, investment activity is one of the main factors of economic development, structural changes and increased competitiveness. A significant part of the countries of the world strive to attract and encourage foreign investments to strengthen productive capacities and sustainable economic development. And for a foreign direct investor, the primary motive for investment is the establishment of long-term relations with the host enterprise, provided that it has a significant influence on its management, as well as increasing profits, reducing taxes, diversifying risks, etc. Currently, the main subjects of foreign direct investment in the global market are international companies and financial groups. However, in reality, foreign direct investment alone cannot guarantee the prosperity of the national economy. The latter, as a development tool, has both its advantages and disadvantages, and in the host country, they contribute to sustainable economic growth only if certain conditions are met. In this regard, the government of the host country is responsible for establishing conditions for foreign direct investment that will contribute to the long-term economic growth of that country, and not only to ensuring the profits of foreign investors. Therefore, the impact of foreign direct investment on the host country depends on many factors, such as the method of entering the market, the sources of financing for direct investment, the latter’s impact on the activities of companies operating in the host country, etc. On the other hand, regardless of the volume of foreign investment, it can also be completely useless and lead to the ruthless waste of the country’s natural resources, as well as the population’s dependence on the outside world for many years. Only with a balanced and considered approach to the joint interests of investors and the host country can it be ensured that foreign investments are effectively attracted and utilised for the benefit of the country’s economic prosperity and the improvement of the population’s living standards.

Foreign investors’ transaction volume in the Tokyo Stock Exchange has grown steadily in the past three decades, and Japanese stocks have become a familiar instrument for international diversification. Rebalancing trades in a local national market by foreign institutional investors holding multi-country asset portfolios, often heavily represented by U.S. stocks, amplify the national market’s stock index co-movements with the U.S. This paper examines the extent to which greater participation of foreign investors is associated with increases in the unconditional correlation of daily returns between the U.S. (S&P 500) and Japan (TOPIX). A Gaussian copula marginal regression model is applied to the monthly series of unconditional correlations. We find that the growth in foreign investors’ transaction share of the Tokyo market’s turnover approximately accounts for the rise in U.S.-Japan correlations for 1990–2019. Foreign investors’ trades improve the informational efficiency of local national markets. Increased correlations lead to smaller potential gains from international diversification, however.

Although the theoretical literature suggests that countries with a strong outward orientation register a faster pace of economic progress relative to those that are inwardly oriented, the empirical evidence is mixed. This thesis re-examines the empirical relationship between outward orientation and economic growth using innovative methodologies drawn from the production frontiers literature and timeseries econometrics. Outward orientation is defined as openness to trade and foreign investment. A key difference between this thesis and the current literature is that the former distinguishes between technology and efficiency externalities of outward orientation and also considers the potential linkages between various channels of outward orientation. The thesis is organized as a collection of three independent empirical studies. In the first study, the efficiency component of productivity growth is isolated, and the effects of trade and inward and outward foreign investment on efficiency is examined; different forms of foreign investment – direct, portfolio and other foreign investment are distinguished. A sample of 20 OECD countries covering the period 1988-2000 is applied in the analysis. In the second study, ‘inefficiency free’ measurements of technology gap are computed. Through second stage regressions of the technology gap measure on trade and foreign direct investment, the effects of outward orientation on technology are gauged. A larger panel dataset of 63 countries covering the period 1982-2000 is applied in this study. The third study, using quarterly data from Australia over the period 1988-2003, evaluates the growth effects of outward orientation while providing for systematic interactions between various types of trade and foreign investment. In addition to the empirical studies, the thesis also includes two literature review chapters: one on the linkages between trade, foreign investment and economic growth, and the other on the use of production frontier methods in macroeconomic applications.

Preferential trade agreements are growing in number and deepening in content by incorporating disciplines that go beyond market access. They increasingly encompass non-trade-related disciplines as diverse as intellectual property rights, environment laws, or labor market regulations. Moreover, because investment is complementary to trade, preferential trade agreements provide relevant institutional frameworks to partner countries that wish to regulate their foreign investments. This paper studies the impact of deep trade agreements on foreign direct investment and examines three sub-questions. First, is the impact of trade agreements on foreign direct investment heterogeneous across types of business activity Second, is this impact heterogeneous across disciplines covered in the agreements Third, does the level of development of home and host countries matter for this impact The analysis exploits the World Bank’s data set on the content of preferential trade agreement and data on announcements of bilateral greenfield investment at the activity level. The findings show that deep trade agreements matter for investment: every additional discipline in a preferential trade agreement increases foreign direct investment by 1.4 percent, on average. Deep agreements do not impact foreign direct investment in natural resources and extractive activities and have heterogeneous effects across manufacturing- and services-related activities. The results also reveal that disciplines that go beyond the mandate the World Trade Organization matter more for foreign direct investment. Disciplines related to investment liberalization and protection, intellectual property rights, or migration increase foreign direct investment, whereas disciplines on labor market regulations reduce investment. The results are mostly driven by investment between developed and developing countries.

I demonstrate how knowledge of firms’ political connections can explain differences in the investment patterns of domestic and foreign stock investors. Previous studies often assume that foreign investors are well-informed politically and react swiftly to domestic political events. I evaluate this claim by comparing the daily stock portfolios of domestic and foreign investors during the unpredictable 2012 presidential election in South Korea. I show that after the somewhat surprising election result, domestic stock investors employed information about firms’ political connections to adjust their investments, while foreign stock investors did not. This finding refines the image of foreign investors and highlights that their understanding of the domestic political landscape in the places in which they invest may not be exhaustive.

The research focuses on analyzing the non-linear effects of international commerce and foreign direct investment (FDI) on the economic growth of Vietnam. This study utilizes the Nonlinear Autoregressive Distributed Lag (NARDL) model to examine the asymmetric impacts of international trade and foreign investment on the Vietnamese economic growth from the first quarter of 2008 to the fourth quarter of 2021. The findings suggest that a rise in foreign investment during the first phase has favorable outcomes for economic growth, with a reported impact of 53%. Nevertheless, it is important to note that FDI does not only contribute to the enhancement of economic development. According to reports, foreign investment has a negative impact of 13% on the rate of economic growth when it exceeds a certain threshold. However, the results of the research also indicate that Vietnam continues to face certain negative implications as a result of international commerce. The study highlights the importance for developing nations, such as Vietnam, to practice prudence in their trade endeavors and the influx of foreign investments to mitigate any negative repercussions on their economies. These insights underscore the significance of strategic economic planning and policy formulation in navigating the complexities of global economic interactions.

Despite efforts to convert from inward-looking economic development strategies to export-promoting alternatives, the Middle East and North African (MENA) region still endures relatively slow growth and high unemployment. Lower trade barriers, privatisation of many industries, and reform of its foreign exchange markets have attracted only modest foreign investment expenditures to the region. Such an outcome may reflect low receptivity levels among MENA members toward investments of multinational enterprises (MNE). Using panel data, this study analyses foreign direct investment (FDI) behaviour in 16 MENA economies over the 2000–2005 period. In particular, the study examines a long-term ‘colonisation memory effect’ on recent foreign investments in the MENA region. Colonisation memory, measured by the temporal proximity of a country's colonised era, may foster anti-MNE sentiments if foreign firms are perceived as exploitative, thus adversely affecting foreign investments in these countries. The statistical results indicate that variations in FDI net inflows and long-term colonisation memory are inversely and significantly correlated. Other important results indicate that variations in real income, international trade openness, and efficiency-seeking investment behaviour show a direct relation with MENA's FDI variations. Variations in hydrocarbon endowment, growth in aggregate output, and the region's foreign exchange markets also have an adverse effect on MENA's net inflows of foreign investments.

The purpose of this study is to review the laws on foreign investment and the changed licensing procedures in Laos and to provide the data for basic understanding of foreign forestation investment in Laos. The conclusions are as follows. The Laos government has been consistently trying to promote foreign investment. In particular, in 2004, the 「Law on the Promotion of Foreign Investment」 was legislated. In 2009, the Foreign Investment Promotion Act and the Domestic Investment Promotion Act to incorporate the principles of the 「Law on Investment Promotion」 were enacted. In Laos, the country’s land is owned by the nation’s community and maintained by the government. Therefore, through the procedures for registration of land, land can be conceded or leased. The ways to invest are joint ventures (where at least 10% of the total capital investment has to be made), foreign sole investment (where the investor must have a minimum capital of $100,000 or more), joint venture agreement and etc. Lastly, the forestation licensing procedures in Laos are carried out in the following order: site selection, business investments feasibility studies, environmental and social impact assessment, forestry permit application.

It is widely known that inward foreign direct investments contribute to the economic growth of a host country. Each country attracts foreign investments by shaping and improving its location advantages, such as geography-driven advantages. Using questionnaire survey data from domestic and foreign direct investments of the main sectors of the Greek economy, i.e. the tourism and transport sector, principal component analysis and multinomial logistic regression models, this paper investigates the influence of the natural geography of Greece, known as ‘first nature’ of geography, and that of the interactions between economic agents, known as ‘second nature’ of geography, on attracting foreign investments in these two sectors in comparison with domestic investments, after controlling for some other characteristics, such as the quality of institutions and infrastructure. As far as the tourism sector is concerned, ‘first nature’ factors are more important than ‘second nature’ ones. The results confirm that climate, quality of natural environment, cultural resources and morphology of Greece are key locational determinants not only for the attraction of domestic investments but also for those of foreign investments. As for the transport sector, sea access, morphology and distance from competitive firms are more important geographic factors when compared with the other sectors of the Greek economy. The results also indicate that the geographic location and climate of Greece are the most important geographic factors in attracting transport foreign investments. Overall, investors recognize geography as a key determinant for the location of an investment.