Browsing by Subject "Foreign direct investment"
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(2022)Obtaining advanced technology through FDI technology spillover is generally regarded as a crucial channel for transition economies to achieve technological progress. However, in the actual research, the efficiency of technological progress and the intensity of FDI technology spillover in Central and Eastern Europe exhibit noticeable spatial differences, closely related to different countries’ different innovation capacities. Existing literature has proved the existence of FDI technology spillovers and theoretically discussed the implications of innovation capacities on FDI technology spillovers. Nevertheless, this moderating effect’s nonlinear characteristics and threshold effects have not yet been sufficiently explored in transition countries in Central and Eastern Europe. Therefore, this study utilises the macroeconomic data of 11 transition countries in Central and Eastern Europe from 2005 to 2019 to construct a threshold regression model to analyse the moderating effect of innovation capacities on FDI technology spillovers. According to the empirical findings, the country-level innovation capacity of transition countries in Central and Eastern Europe has a significantly and positively moderating effect on FDI technology spillovers, with an apparent single threshold characteristic. This moderating power diminishes when the innovation capacity crosses the threshold. A striking finding is that the threshold effect of the innovation capacities’ moderating effects on FDI technology spillovers disappears when differences in resource endowments between countries are considered.
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(2022)This dissertation explores the relationship between regime types, credible commitment institutions and FDI, aiming to answer the puzzle—how do autocratic countries solve the commitment issues and attract a high level of FDI. To achieve this aim, the dissertation was designed to include two empirical chapters and two additional chapters for the introduction and the conclusion. The first empirical chapter examines the effect of regime types and property rights institutions on FDI. The empirical analysis presents a significant and surprising finding that the regime type is not what foreign firms necessarily care about, and what really matters to foreign investors are specific institutional features of the host country—in the present chapter, the effect of property rights institutions is tested. In other words, countries with sound institutions are not necessary democracies. Autocratic countries with well-established institutions to protect property rights and enforce contracts can also attract high level of FDI inflows. The second empirical chapter only focuses on autocratic countries. No longer view all autocratic countries as a single type opposing democratic countries as in the previous chapter; the great institutional differences among autocratic regimes will be witnessed and discussed. I argue that, besides the property rights institutions, some other institutional features—the power-sharing political institutions in some autocratic regimes, as well as the additional protections from international commitment institutions could help autocratic countries attract more FDI inflows. These effects can also complement property rights institutions and jointly affect FDI. Overall, the major contribution of this dissertation is that it verifies what matters for FDI inflows is not regime types but certain credible commitment institutions. The autocratic countries that can solve commitment issues by establishing strong credible commitment institutions can also attract a high level of FDI.
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(2023)Thirty years after the fall of communism, the post-socialist countries find themselves in a state of economic dependency. The main argument of the thesis is that the Visegrad Four (V4) countries (the Czech Republic, Poland, Hungary and Slovakia) operate in an FDI-led growth model, characterized by strong presence of foreign capital (especially in export-oriented manufacturing sector), but a low level of knowledge spill-overs from foreign-owned sectors to those in domestic ownership, which constraints the productivity growth of the domestic-owned enterprises (the so-called dual economy). Integration into the global economy, conducted in the V4 countries mainly through ties with Germany, was initially highly beneficial, however, it is increasingly becoming a constraint on further development, illustrated e. g. by the inability to achieve full convergence to EU-15. The aim of the thesis is to describe how did the FDI-led growth model developed in the V4 countries between 1990 and 2019; what was the political discussion of the growth model; and the differences in these two spheres between the V4 countries. This is studied on two levels: the FDI-led growth model itself (described using a set of macroeconomic indicators); and analysis of the political discussion. The conclusion is that the V4 countries differ both in terms of development of the FDI-led growth model (the biggest outlier is Poland, which is less reliant on foreign investment then rest of the group), and in terms of the political approach to the model (especially Poland and Hungary after 2010 take active steps to limit the impact of the FDI dependency; the Czech Republic and Slovakia are more or less aware of the dependency, but take no interventionist measures). Given the high levels of economic growth in Poland and especially Hungary after 2014, there is most probably a causality between the efforts to limit the dependency and the economic development (although other factors, such as the size of the economy, play a role too). However, it is also argued that unlike certain level of economic nationalism, populism is not a prerequisite for limiting the dependent growth and in the long run can actually be harmful to economic development.
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(2020)This thesis examines the relation between employment protection and foreign direct investment (FDI) in OECD countries (Organisation for Economic Co-operation and Development). More specifically, it estimates the impact of employment protection legislation on the amount of Japanese foreign direct investment inflows into a set of fourteen OECD countries over the sixteen-year period 1998–2013. Foreign direct investment can have multiple beneficial effects on the host country, such as capital formation and spillover of knowledge and technology, which can improve productivity and lead to economic growth. Because of this, there is an extensive prior theoretical and empirical literature examining the determinants of FDI. This thesis introduces the most relevant theories and empirical results on the topic in the literature review sections, presents empirical analysis on the phenomenon and compares the results to the results of the previous literature. The theory section introduces the most relevant theories of employment protection and foreign direct investment. The theories on the topic are similar in their prediction of a negative relationship between employment protection and foreign direct investment. This suggests that increase in employment protection measures discourages foreign direct investment inflows. The negative relation arises from companies maximising profits by minimising production costs. The costs related to employees are a major expense to large companies, and they want to be able to adjust the number of employees according to current economic situation as easily as possible. The theory states that due to severance payments and restrictions on employment contracts, strict employment protection legislation hinders this adjustment. This makes a country with strict employment protection legislation less attractive investment target for the investor companies. The main econometric method used in this thesis is linear regression analysis. The estimated function is a function with natural logarithm of foreign direct investment as a dependent variable and natural logarithm form of employment protection variable as the independent variable with set of control variables. The data comes mainly from OECD database, apart from data for Japanese bilateral foreign direct investment data, which comes from Japan External Trade Organisation, and the average years of schooling, which comes from Barro and Lee (2010) Educational Attainment dataset, serving as a control for skill level. The baseline ordinary least squares (OLS) estimation results are then augmented with instrumental variable (IV) approach to account for endogeneity issues. The first instrumental variable used is power and political ideology of the ruling party in a country. The second instrumental variable used is unionisation rate. These variables capture variation in employment protection, while being unaffected by foreign direct investment inflows, the dependent variable, thus serving as adequate instruments. The main result of the thesis is that the employment protection seems to have a negligible impact on foreign direct investment. Baseline OLS estimation produces a negative significant coefficient for employment protection, suggesting that increase in employment protection decreases inflow of foreign direct investment. This is predicted by most of the theory. The IV results, however, state that the variable for power and political ideology does not serve as a good instrument, thus this model is discarded. The unionisation rate instrumental variable estimation yields non-significant positive coefficient for the employment protection. This suggests that employment protection is not an important determinant of Japanese foreign direct investment in the fourteen OECD countries selected for the analysis. The results of this thesis fit the prior literature fairly well. In general, the literature on the determinants of foreign direct investment is not unanimous in which country features are important for determining volumes of foreign investment received by a country. In most of the published empirical literature on the employment protection as a determinant of foreign direct investment, the results suggest that the relation is negative, but there are studies finding a complete opposite positive relation. Non-significant coefficients are also fairly common. The direction and magnitude of the impact seems to be sensitive to country and time period samples, as well as model specification. The results also vary depending on which one of the two available measures for employment protection has been used (survey of managers in the Global Competitiveness Report 1999 published by World Economic Forum and OECD employment protection indicators).
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(2023)Foreign direct investments (FDI) has been recognized as an important tool for economic growth in developing countries in past literature. However, its effects within developed countries are relatively unknown due to limited research focusing on the subject, despite the fact that the majority of FDI inflows occur between developed countries. This study aims to examine the effects of foreign direct investments on growth in developed countries. The time frame used in this study ranges from 1993 to 2007. The panel data set utilized in this study consists of 29 OECD members. In addition to the full data set, a further data set consisting of countries classified as International Monetary Fund (IMF) advanced economies in 2007 is examined to address issues generated by data outliers in the full 29-country sample. Averaged data is also used as a comparative measure. A large majority of the data in this study originates from the World Bank's World Development Indicators database. The panel data is analyzed with a fixed effects panel linear regression model. Year and country are considered as the fixed effects in this study. FDI is included together with other relevant variables as explanatory variables to study how they affect the dependent variable, gross domestic product per capita. Lagged values of FDI up to third lag are also included in the later versions of the model. The results suggest that FDI presents a positive, yet statistically insignificant effect on the growth of GDP per capita in developed countries when considering the chosen 5 percent significance rate. Similar results are consistent across all three models used in the study. Unlike the contemporary variable, the lagged FDI variables yield interesting results as they present a statistically significant effect on growth, suggesting that the growth effect might not be immediate.
Now showing items 1-5 of 5