Does foreign direct investment promote institutional development in Africa?

Fon, Roger; Filippaios, Fragkiskos; Stoian, Carmen R.; Lee, Soo Hee

doi:10.1016/j.ibusrev.2021.101835

Cited by 29 publications

(12 citation statements)

References 95 publications

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“…The growth in outward foreign direct investment (OFDI) by emerging market multinational enterprises (EMMNEs) has challenged the prevailing notion that a higher quality of governance in the recipient country equates with higher levels of FDI, even leading to questions about the effect of EMMNEs' FDI on the formal institutions in the least developed countries (Fon, Filippaios, Stoian, & Lee, 2021).…”

Section: Introductionmentioning

confidence: 99%

Governance, foreign aid, and Chinese foreign direct investment

Fon

Alon

2022

Thunderbird Intl Bus Rev

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This article examines how Chinese foreign aid interacts with the quality of the host country's governance in shaping Chinese state-owned enterprises' (CSOEs') foreign direct investment (FDI) in Africa. By analyzing the firm-level greenfield FDI data of CSOEs between 2003 and 2014 and distinguishing between China's official development assistance and less concessional forms of Chinese foreign aid, we reveal two main findings. First, the quality of the host country's governance negatively affects CSOEs' FDI. Second, other official aid and loans from China negatively moderate the relationship between the quality of the host country's governance and FDI by CSOEs. Specifically, the tendency for CSOEs to invest in locations with weak governance increases when their investments are integrated with less concessional forms of Chinese foreign aid in the form of other official flows and loans. Our results are robust to alternative measures of the governance and different methodological approaches. The article challenges the traditional notion of institutional theory which assumes a positive relationship between governance quality and FDI attraction.

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Section: Introductionmentioning

confidence: 99%

Governance, foreign aid, and Chinese foreign direct investment

Fon

Alon

2022

Thunderbird Intl Bus Rev

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“…2018; Ramasamy and Yeung 2020; Shao 2020; Zheng and van Vliet 2018); (ii) the sustainability of affiliated investments (Bandiera and Tsiropoulos 2020; Carmody 2020); (iii) its ability to bring about developmental gains in recipient countries (Chen 2021; Fon et al . 2021); and (iv) its environmental effects (Chernysheva et al . 2019; Liu et al .…”

Section: Introductionmentioning

confidence: 99%

“…Much of the literature on the BRI has emphasized its role as a diplomatic tool and presented it as a corollary of China's aspirations to expand its global influence and its ability to exert power over and extract resources from different territories (Flint and Zhu 2019;Jakim ów 2019;Katsumata and Nagata 2019;Kim 2019;Rana 2019;Sneddon 2015;Sparks 2018). The recent literature has increasingly discussed the political economy of the BRI in terms of (i) Chinese OFDI (Liu et al 2018;Ramasamy and Yeung 2020;Shao 2020;Zheng and van Vliet 2018); (ii) the sustainability of affiliated investments (Bandiera and Tsiropoulos 2020;Carmody 2020); (iii) its ability to bring about developmental gains in recipient countries (Chen 2021;Fon et al 2021); and (iv) its environmental effects (Chernysheva et al 2019;Liu et al 2020;Nedopil 2021). While China-led infrastructure construction within the global South is viewed as an opportunity for industrial development by some (Arrfat 2020, 204), others have critiqued the BRI for failing to bring about 'local capacity building and knowledge transfer' (Khalili 2021).…”

Section: Introductionmentioning

confidence: 99%

Chinese Investment in Turkey: The Belt and Road Initiative, Rising Expectations and Ground Realities

Gürel¹,

Kozluca²

2022

European Review

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Turkey’s inclusion in the Belt and Road Initiative in 2015 has raised the expectations of Turkish businesses and government concerning growth-generating investment from China. Existing studies on Chinese investments in Turkey lack sufficient data on the volume of investment, types of firms, and sectoral composition. Based on a novel dataset of Chinese investments in Turkey, this article contributes to filling this gap. We show that although Chinese investment in Turkey has increased considerably in recent years, it remains quite modest compared with investments from the West. Moreover, despite the expanding activities of Chinese technology companies, more than half of Chinese investment in Turkey consists of low value-added manufacturing, extraction of raw materials, and marketing of Chinese products. Overall, the developmental potential of Chinese investment in Turkey has not been radically different from other countries’ investments.

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“…This will provide income for the state through taxes, and of course with the increase in production volume it can attract the attention of foreign investors to invest in the country. The entry of foreign investors can be utilized by domestic producers to collaborate either through direct investment or investment through companies that already exist in the country (Fon et al, 2021). Foreign Direct Investment (Foreign Direct Investment) is generally considered as an instrument of how to stimulate the economic growth of any country, for that the governments of countries are trying to encourage the entry of foreign direct investment by various steps (Szkorupová, 2015).…”

Section: Introductionmentioning

confidence: 99%

Business Capital Funding Through the Financial Sector to Reduce Unemployment in Indonesia

Kusuma

Muthmainnah

2022

JEP

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This research aimed to study the role of the financial sector and foreign investment in increasing domestic production output. Where the increase in production output will increase the factors of production, one of which is labor. The data used in this study are annual time series data from the 2004 to 2021, and this study employed the Error Correction Model (ECM) approach to estimate the short-term effect and OLS to determine the long-term effect. The results showed that funding growth through the financial sector to the industrial sector in Indonesia has grown consistently since 2004 which has continued to encourage improved economic performance after the 1998 crisis. There is also a relationship between financial variables and fiscal policy on unemployment in both the short and long term. There are several ways to deal with unemployment both in the long term and in the short term, such as when an economic slowdown occurs. By increasing FDI, bank credit and funding in the the capital market, the private sector can continue to expand its business. This private expansion phase will increase the output of goods or services. With the increase in production output, employment will continue to be positive.

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Does foreign direct investment promote institutional development in Africa?

Cited by 29 publications

References 95 publications

Governance, foreign aid, and Chinese foreign direct investment

Governance, foreign aid, and Chinese foreign direct investment

Chinese Investment in Turkey: The Belt and Road Initiative, Rising Expectations and Ground Realities

Business Capital Funding Through the Financial Sector to Reduce Unemployment in Indonesia

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