The Effect of China's Rise on <scp>FDI</scp> Competition in East Asia: Crowding‐out or Crowding‐in?

Sohn, Chan-Hyun

doi:10.1111/sjpe.12113

Cited by 8 publications

(8 citation statements)

References 20 publications

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“…The inconsistent trends in FDI inflow and the drop in DI rates during the Asian crisis raised debates among the academia and researchers on the issue of whether FDI affects DI positively or otherwise. Most of the studies, such as Haq and Zhu (2016), Sohn (2014), and Tang, Selvanathan, and Selvanathan (2008) found that FDI contributes a positive effect to DI. Thus, this study dug deeper into this issue with the assumption of an inextricable link existing between the two types of investment, namely FDI and DI.…”

Section: Introductionmentioning

confidence: 99%

Does Foreign Direct Investment Crowd in or Crowd out Domestic Investment? Evidence from Panel Cointegration Analysis

Budang¹,

Hakim²

2020

IJAREMS

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This paper investigates the crowding effects of foreign direct investment (FDI) on domestic investment (DI) in 38 Asian countries throughout 1993-2016. A first-generation panel unit root test was undertaken, and the relationship among variables in the long-term period was confirmed by the results generated by Kao-type cointegration and Westerlund-type cointegration estimators. Consequently, the fixed effect regression model suggested a significant but negative effect of FDI on the performance of DI. The long-term crowding effects equation was performed to support the regression results, and it revealed the existence of the crowd-out effect of FDI on DI. In short, FDI is significant in influence the performance of DI although the effect on local firm is unfavourable. Thus this study concludes that FDI inflows by no means always promise a good effect. In fact, instead of helping local firms out, the inflow of FDI may endanger local firms by crowding them out of the Asian business market.

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Section: Introductionmentioning

confidence: 99%

Does Foreign Direct Investment Crowd in or Crowd out Domestic Investment? Evidence from Panel Cointegration Analysis

Budang¹,

Hakim²

2020

IJAREMS

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“…The theory does not put forth any clear prediction regarding the impact of distance on FDI inflows to the host country. Moreover, the variable impacts trade and investment, so the sign of its coefficient is ambiguous (Sohn, 2016). However, prior empirical studies suggest an adverse impact of distance on FDI inflows (Cieslik, 2020; Kristjansdottir, 2010; Nguyen et al, 2019).…”

Section: Hypotheses Of the Studymentioning

confidence: 99%

“…In other words, this variable represents the horizontal motivation of FDI since the motive of horizontal FDI is to further serve the host country's market with its increasing size. Thus, GDP sum is expected to positively associate FDI for its horizontal inflows (Carr et al, 2001;Kristjansdottir, 2010;Sohn, 2016…”

Section: Hypotheses Of the Studymentioning

confidence: 99%

Trends and Determinants of FDI with Implications of COVID-19 in BRICS

Chattopadhyay

Rakshit

Chatterjee

et al. 2022

Global Journal of Emerging Market Economies

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Foreign direct investment (FDI) movement to any country is recognized as an important criterion for economic strength and potentiality. Hence, the present study analyzes the motives of FDI inflows through the determinants and channels, namely horizontal or vertical FDIs and the impact of COVID-19 on FDI Inflows in BRICS countries during the period 1990–2020. The Kinked Exponential (deterministic) trend, and Zivot and Andrew’s trend equations are applied for the growth analysis of FDI inflows. Regarding the estimation of channels of FDI inflows in terms of horizontal, vertical, and hybrid motivations, dynamic panel data analysis using GMM for BRICS economies together and ARDL-PMG for individual countries is made. The findings show significantly positive growth in FDI inflows in all BRICS countries except India during the first decade of the present century. After that, these countries have experienced either significantly or insignificantly declining trends, except India, where the trend has significantly increased during this later period. From the overall analysis, we see that both horizontal and vertical motivations play a dominant role in determining FDI inflows for the BRICS countries. However, from country-wise estimations, it is observed that both horizontal and vertical motives are dominant factors for FDI inflows to India and Russia. In contrast, the horizontal motive of it is significant for China. For Brazil and South Africa, no motive behind FDI inflows appears significant. The pandemic situation significantly impacts attracting FDI in Brazil, while it remains insensitive in the rest of the BRICS countries. The findings reveal that FDI determinants are country-specific. So, the BRICS countries can design proper FDI policy and adopt more reforms in attracting FDI that may help improve their economic situation.

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“…A study of FDI by Sohn (2014) applied the Knowledge-Capital model (CMM) where they concluded that FDI inflow of China does not pose a threat to neighbouring ASEAN countries unless they are complementary to each other. Another study done by Ang (2009) investigated the long run relationship between private domestic investment, public investment and FDI in Malaysia during the period of 1960-2003.…”

Section: Literature Reviewmentioning

confidence: 99%

The crowding effects of foreign direct investment on domestic investment: Evidence from Asia

Budang¹,

Hakim²

2019

IJBED

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The Effect of China's Rise on FDI Competition in East Asia: Crowding‐out or Crowding‐in?

Cited by 8 publications

References 20 publications

Does Foreign Direct Investment Crowd in or Crowd out Domestic Investment? Evidence from Panel Cointegration Analysis

Does Foreign Direct Investment Crowd in or Crowd out Domestic Investment? Evidence from Panel Cointegration Analysis

Trends and Determinants of FDI with Implications of COVID-19 in BRICS

The crowding effects of foreign direct investment on domestic investment: Evidence from Asia

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