Foreign direct investment among developing markets and its technological impact on host: Evidence from spatial analysis of Chinese investment in Africa

Hu, Dengfeng; You, Kefei; Eşiyok, Bülent

doi:10.1016/j.techfore.2021.120593

Cited by 18 publications

(11 citation statements)

References 143 publications

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“…For example, Gorodnichenko et al (2020) showed that FDI flows exert positive spillover effects on product and technology innovation by domestic firms in emerging markets, with these effects occurring essentially for domestic firms engaged directly with multinationals and involved in international trade. Hu et al (2021) have found that FDI inflows from China have contributed to technological progress in Africa, although not for non-Chinese FDI. Interestingly, the authors found that South-South FDI has strongly contributed to technological progress in the host country.…”

Section: B Effect Of Aft Flows On Economic Complexitymentioning

confidence: 97%

“…However, as FDI inflows can be an important vehicle of acquisition and transfer of knowledge, they positively influence economic complexity. FDI inflows can help enhance economic sophistication through (backward) linkages from foreign firms to domestic suppliers (e.g., Görg & Greenaway, 2004;Görg & Srobl, 2001;Gorodnichenko et al, 2020;Hu et al, 2021;Javorcik, 2004;Newman et al, 2015;Smeets, 2008). For example, Gorodnichenko et al (2020) showed that FDI flows exert positive spillover effects on product and technology innovation by domestic firms in emerging markets, with these effects occurring essentially for domestic firms engaged directly with multinationals and involved in international trade.…”

Section: B Effect Of Aft Flows On Economic Complexitymentioning

confidence: 99%

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Effect of Productive Capacities on Economic Complexity: Do Aid for Trade Flows Matter?

Gnangnon

2021

Journal of Economic Integration

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This is the first study to examine the effect of productive capacities on economic complexity and understand whether the Aid for Trade (AfT) flows is important for this effect in recipient countries. The analysis uses a sample of 126 developed and developing countries for 2002-2018 and adopts the two-step system Generalized Method of Moments approach. Results show that strengthening productive capacities enhances economic complexity. Furthermore, productive capacities and total AfT flows are strongly complementary in positively affecting economic complexity, and the degree of complementarity is higher for poor countries than for other AfT-recipient countries. Similarly, productive capacities are strongly complementary with total Non-AfT flows, as well as for total development aid. These findings highlight the need for scaling-up development aid flows, notably AfT flows, in favor of developing countries and poor countries having the lowest levels of productive capacities.

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Section: B Effect Of Aft Flows On Economic Complexitymentioning

confidence: 97%

Section: B Effect Of Aft Flows On Economic Complexitymentioning

confidence: 99%

Effect of Productive Capacities on Economic Complexity: Do Aid for Trade Flows Matter?

Gnangnon

2021

Journal of Economic Integration

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“…However, there is another type of capital, different from foreign debt or aid, known as foreign direct investment (FDI). FDI establishes a symbiotic relationship between the donor and the host countries where both benefit from capital transfer, Research and Development (R&D), technology and knowledge transfer, cheap labor, and institutional development (Arel-Bundock 2017; Hu et al 2021;Liu et al 2016;Ning and Wang 2018;Temiz and Gökmen 2014). While investing, the Multinational Companies (MNCs) primarily focus on the economic globalization, location determinants, infrastructural development, political environment, effective cross-border trade regulations, and institutional factors of the host economies (Alam et al 2019;Contractor et al 2020;Deseatnicov and Akiba 2016;Kleineick et al 2020;Paul and Jadhav 2019).…”

Section: Introductionmentioning

confidence: 99%

Causality analysis of the determinants of FDI in Bangladesh: fresh evidence from VAR, VECM and Granger causality approach

Morshed

Hossain

2022

SN Bus Econ

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We tested the causality between FDI and its determinants in Bangladesh in the presence of structural break harnessing Vector Autoregression (VAR) model and Granger causality test. Regressors such as GDP growth rate, inflation, interest, corporate tax, exchange and wage rate, and trade openness (TO) have been used. VAR model finds that interest, tax, wage, and exchange rate do not affect inward FDI. However, the inflation rate and TO significantly impact the inward FDI in Bangladesh. The Granger causality test reveals a bidirectional causality in the FDIinflation and FDI-TO nexus, whereas other explanatory variables do not cause the FDI granger. Variance decomposition (VDC) and impulse response function (IRF) assessment approve strong, moderate, and poor or no explanatory power of TO, inflation, and other explanatory variables, respectively. Regarding FDI-inflation bidirectional causality, we observed both natural (inflation truly causes FDI) and fake causality (FDI does not necessarily cause inflation). Therefore, when inflation causes FDI, then Bangladeshi Taka (BDT) becomes strong against USD, which increases import and reduces export (import > export). Due to the negative trade balance, this is true for Bangladesh. However, if FDI causes inflation, it will depreciate BDT; consequently, the export will surpass the total import, which is not the case in Bangladesh. Therefore, inflation causes FDI in Bangladesh, and this punch line ends the ongoing debate in the FDI-inflation-exchange rate nexus in Bangladesh. Finally, we recommend decreasing the lending interest rates to encourage further investment, adopting tax holidays, developing a skilled and semi-skilled workforce to harness the advantage of lower wage rates, and being more open to facilitating FDI-led development.

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“…By engaging in global production chains, local firms can access advanced technologies, buy and use new machinery, get technological assistance from foreign suppliers, or learn through disassembling the imported products (Hou et al, 2021). Some studies find that Chinese FDI promotes technological progress in Africa more than FDI from other countries (Hu et al, 2021). This may be because Chinese companies present smaller technology gaps with African firms compared to their European counterparts (Darko et al, 2021; Hou et al, 2021; Wolf, 2016b).…”

Section: The Role Of Chinese Firms In Promoting Productivity Growth I...mentioning

confidence: 99%

Economic transformation in Africa: What is the role of Chinese firms?

Calabrese

Tang

2022

J of Intl Development

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African countries face an economic transformation gap. Given the large and growing Chinese presence on the African continent, a fundamental question is whether Chinese firms contribute to, or hinder, economic transformation in Africa. This article conducts a scoping review of over one hundred sources, examining the pathways through which Chinese firms can affect economic transformation. On balance, the literature points to a positive role of Chinese firms. Africa-China trade leads to mixed results, while Chinese investment and infrastructure construction are found to contribute positively to transformation. Chinese firms are also found to support capacity building, spillovers and innovation in African countries.

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Foreign direct investment among developing markets and its technological impact on host: Evidence from spatial analysis of Chinese investment in Africa

Cited by 18 publications

References 143 publications

Effect of Productive Capacities on Economic Complexity: Do Aid for Trade Flows Matter?

Effect of Productive Capacities on Economic Complexity: Do Aid for Trade Flows Matter?

Causality analysis of the determinants of FDI in Bangladesh: fresh evidence from VAR, VECM and Granger causality approach

Economic transformation in Africa: What is the role of Chinese firms?

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