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Foreign Investment
Abstract
The most striking signs of globalization are undoubtedly foreign capital investments, predominantly made by transnational or multinational corporations (TNCs or MNCs), i.e. companies that have a branch office in at least one other country than their country of origin, in which they hold at least 10% of the capital shares. This definition of UNCTAD is relatively soft, which is why foreign investments and those made by TNCs are almost identical and the number of TNCs thus determined is high and of rapidly increasing nature. But even if one restricts oneself to the 100 TNCs with the highest sales, their share in global production, employment, private sector investment, foreign trade and global technology transfer is very considerable.
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In this paper, we present a synthesis of the literature examining the impact of foreign direct investment on host country exports. We reviewed and summarised 37 theoretical papers, 27 micro‐level empirical studies and analysed 627 specifications from 117 macro‐level empirical studies. In exploring the reasons behind the variations of the reported effects in the empirical literature, we applied meta‐regression methodology. Our results indicate that the existing empirical literature generally reports a positive impact of foreign direct investment on exports, especially in developing countries. The reported effects are sensitive to research design, model specification and the context of the research. No publication bias was detected in the sampled studies. Based on our results, we provide some avenues and guidelines for future research on this topic. Our results could also have some important implications for policymakers.
Although global value chains (GVCs) are often considered a defining feature of the current wave of globalisation, little is known about: i) what drives GVC participation; ii) what the benefits associated to growing participation are; or iii) how developing countries engage and benefit from GVCs. This paper tackles these questions empirically. The evidence indicates there are important benefits to be had from wider participation in terms of enhanced productivity, sophistication and diversification of exports. Structural factors, such as geography, size of the market and level of development are found to be key determinants of GVC participation. Trade and investment policy reforms as well as improvements of logistics and customs, intellectual property protection, infrastructure and institutions can, however, also play an active role in promoting further engagement. A more in-depth analysis of GVC participation and policy context in five developing sub-regions in Africa, the Middle East and Asia highlights key differences and similarities, and can be a starting point for policy makers in the regions to assess their countries’ GVC engagement and to consider policy options.
http://www.oecd-ilibrary.org/fr/trade/participation-of-developing-countries-in-global-value-chains_5js33lfw0xxn-en
World trade and production are increasingly structured around "global value chains" (GVCs). The last few years have witnessed a growing number of case studies describing at the product level how production is internationally fragmented, but there is little evidence at the aggregate level on the prevalence of GVCs. The main objective of this paper is to provide for more and better evidence allowing the examination of countries’ position within international production networks. We propose a number of indicators that give a more accurate picture of the integration and position of countries in GVCs, as well as a more detailed assessment of the value chain in six broad industries: agriculture and food products, chemicals, electronics, motor vehicles, business services and financial services.
The book is devoted to globalization, which has dramatically changed in the 1990s, according to Richard Baldwin, mainly because of transformations in information and communication technology (ICT), resulting in a significant decrease in the costs of moving ideas. This shift indicated a new stage of development of globalization processes and caused a convergence of developed and developing states. This book includes five parts, which discuss the history of globalization, the economics of globalization, the states’ designs of a national policy, and forecasting its future. The Journal of Economic Sociology publishes the introduction to the book, in which the author presents the main idea of his manuscript. He justifies his new perspective on globalization, sequentially describing the processes that accelerate it, including the decreased costs of moving goods, decreased communication costs, and a reduction in moving people. Additionally, the author concludes how the presented changes in globalization affect national economies.
Undoubtedly one of the highlights of the 1999 Conference was the plenary session in which Professors David Held and Mahdi Elmandjra came together to discuss the theme of ‘“Globalization”: Democracy and Diversity’. The Conference also witnessed the launch of Global Transformations (Polity Press, 1999), at which David Held was joined by two of his three coauthors, Professor Anthony McGrew and Dr Jonathan Perraton. Global Transformations is the product of almost a decade’s work by a research team (based at the Open University and supported by the ESRC) who have produced what James. N. Rosenau has called ‘the definitive work on globalization’. It is a study which not only synthesises an extraordinary amount of information from research on globalization in a range of social science disciplines, but also makes its own distinctive contribution to our understanding of the complex range of forces which are reshaping the world order. We are delighted to be able to reproduce here an ‘executive summary’ of Global Transformations that summarises the major findings of this 500-page survey in just six thousand words.
We implement a method to estimate the direct effects of foreign-ownership on foreign firms' productivity and the indirect effects (or spillovers) from the presence of foreign-owned firms on other foreign and domestic firms' productivity in a unifying framework, taking interactions between firms into account. To do so, we relax a fundamental assumption made in empirical studies examining a direct causal effect of foreign ownership on firm productivity, namely that of no interactions between firms. Based on our approach, we are able to combine direct and indirect effects of foreign ownership and calculate the total effect of foreign firms on local productivity. Our results show that all these effects vary with the level of foreign presence within a cluster, an important finding for the academic literature and policy debate on the benefits of attracting foreign owned firms.
Using a dataset which breaks down FDI flows into primary, secondary and tertiary sector investments and a GMM dynamic approach to address concerns about endogeneity, the paper analyzes various macroeconomic, developmental, and institutional/qualitative determinants of FDI in a sample of emerging market and developed economies. While FDI flows into the primary sector show little dependence on any of these variables, secondary and tertiary sector investments are affected in different ways by countries’ income levels and exchange rate valuation, as well as development indicators such as financial depth and school enrollment, and institutional factors such as judicial independence and labor market flexibility. Finally, we find that the effect of these factors often differs between advanced and emerging economies.
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