"Emerging" through Foreign Investment: Investment Development Path Estimation of "MINT" Economies

Abstract

This article aims to analyze the relationship between the foreign investment, both inward and outward, and the development levels of the emerging market economies: Mexico, Indonesia, Nigeria and Turkey (MINT). Dunning's IDP (Investment Development Path) theory has been used as the basis for empirical analysis covering the recent globalization era: 1990-2013. The fixed effects longitudinal data analysis for the four countries demonstrated that MINT economies are at the 2 nd stage of IDP. At the same time, increasing level of inward FDI flows into these countries prove the potential of these economies to be represented as "second generation of fast growing developing countries" after the BRICS. Thus, this study aims to improve our understanding on the emerging economies by focusing on a new group (MINT) and it demonstrates the interaction of inward/outward FDI and the GDP growth in that group of countries.

Level of Income and the Investment Development Path Theory: Evidence From Africa

“…The sign and significance of the coefficients in model A suggest a quadratic curve for Africa, using the whole sample. The quadratic function was reported by Boudier-Bensebaa (2008) and Paul (2014) for Central and Eastern European countries and Satoglu (2017) for Mexico, Indonesia, Nigeria, and Turkey as a collective.…”

“…Stage III found deviates from the investment development path theory that places developing countries in stage I or II. Dunning (1986), Frenken and Mbuvi (2017) as well as Satoglu (2017) found stage II for developing countries. This is one stage ahead of Central and Eastern European countries (Boudier-Bensebaa, 2008; Duran & Ubeda, 2001; Gorynia et al, 2010b; Kalotay, 2008; Paul, 2014).…”

“…However, Dunning (1986) noted that a great majority of the developing countries are either in stage I or II. Using data on Mexico, Indonesia, Nigeria, and Turkey, Satoglu (2017) found a significant negative coefficient for the GDPPC and a significantly positive coefficient for GDPPC 2 variables. Based on the data covering 1990 to 2013, Mexico, Indonesia, Nigeria, and Turkey were found to be in stage II of the investment development path.…”

“…From the literature (e.g., Paul, 2014; Satoglu, 2017), equation (1) rarely fits the data. Rather, pairs of powers of GDPPC are fitted.…”

“…Some studies tested the investment development path theory. Dunning (1986) and Satoglu (2017) for developing countries, Frenken and Mbuvi (2017) studied emerging and developed countries whilst Andreff (2003) examined 176 developing, transition, and developed countries. None of these explored the role of the level of income of countries or groups of countries.…”