Hard or Soft? Institutional Reforms and Infrastructure Spending as Determinants of Foreign Direct Investment in China*

Fung, K. C.; Garcı́a-Herrero, Alicia; Iizaka, Hitomi; Siu, Alan

doi:10.1111/j.1468-5876.2005.00342.x

Cited by 55 publications

(22 citation statements)

References 21 publications

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“…Fung et al (2005) classify Infrastructure as hard in the shape of roadways, communications installations and highways and soft infrastructure is termed with transparent institutions and intensive reforms. Soft infrastructure is far important as to hard infrastructure to FDI.…”

Section: Infrastructure and Fdimentioning

confidence: 99%

The Impact of Infrastructure on Foreign Direct Investment: The Case of Pakistan

Rehman¹,

Ilyas²,

Alam³

et al. 2011

IJBM

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Purpose -The purpose of this study is to analyze the role of infrastructure for and in ascertaining captivations of foreign direct investment (FDI). This work aims to investigate the effects of host country's infrastructure availability along with exchange rate and market size on inflows of FDI towards Pakistan.Design/methodology/approach -This study employs autoregressive distributed lag (ARDL) approach to cointegration and an error correction model based on ARDL approach using time series data for the period 1975-2008 in case of Pakistan.Findings -This paper reveals a strong positive impact of infrastructure in attracting foreign direct investment, in short and in long run, in case of Pakistan.Practical implications -The findings can be used to help out government policy makers on FDI as well as are equally important for international financial lender/donor agencies and countries interested in rehabilitation activities of flood-affected areas with special reference to infrastructure and FDI while extending financing facilities to Pakistan.Originality/value -This study contributes in the following manner: first, it gives better impending and understanding for decision making about foreign direct investment in Pakistan. Second, it is the first effort that an exclusive study on FDI with special reference to infrastructure made in Pakistan. Third, it depicts the closer relationship between FDI attractiveness and infrastructure availability.

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Section: Infrastructure and Fdimentioning

confidence: 99%

The Impact of Infrastructure on Foreign Direct Investment: The Case of Pakistan

Rehman¹,

Ilyas²,

Alam³

et al. 2011

IJBM

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“…Behname (2012) used cross-sectional data of Southern Asia countries between 1980 and 2009 to investigate the effect of urban infrastructure on FDI and found out that urban infrastructure impacts FDI positively and recommended that the governments in the southern Asia countries give priority to infrastructural development for FDI attraction. Fung et al (2005) sourced the data used for their analysis data from China Foreign Economic Statistical Yearbook 1994 and Almanac of China Foreign Relations and Trade to examine which type of infrastructure (hard or soft) draws the attention of foreign investor and attracts FDI to China. The empirical result of the estimation of the regression model shows that both soft and hard infrastructure have a significant positive effect on FDI inflow although soft infrastructures persistently outpace hard infrastructure in attracting FDI.…”

Section: Literature Reviewmentioning

confidence: 99%

Impact of Infrastructure on Foreign Direct Investment in Nigeria: An Autoregressive Distributed Lag (ARDL) Approach

2019

JESD

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This study examines the roles infrastructure play in attracting foreign direct investment (FDI) into Nigeria for the period between 1981 and 2014. It also investigates the type of infrastructure that has more impact on FDI attraction. The unit root test results show that none of the variables in the study is integrated of order two, that is, I(2), a condition which justifies the use of Autoregressive Distribution Lag (ARDL) framework. The ARDL Bounds Test approach to cointegration was employed to determine the long-run relationship among the variables in our model and the result shows that there is a long-run relationship between infrastructure and FDI in Nigeria. The result of the estimation of the selected ARDL Error Correction Model shows that none of the infrastructure variables (tractor, telephone lines and electricity) employed in this study is significant to attract FDI into Nigeria in the short-run although electricity production (power supply) was found to influence FDI in the long-run. The study thus recommends that the power sector be revitalized and should be given priority as it will attract FDI, increase national output and move Nigeria closer to actualizing her dream of becoming one of the twenty leading economies in the world by the year 2020.

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“…Furthermore, wages were found to positively affect FDI inflows. Similarly, Fung et al (2005) examined the location determinants of FDI inflows into China from USA, Japan, Hong Kong, Taiwan, and South Korea. They find that the GDP, length of highway, and numbers of special zones in a region have highly significant effects on FDI location decisions, while the average was only negatively significant for Taiwanese investors.…”

Section: Literature Review On Location Determinants Of Fdi Inflowsmentioning

confidence: 99%

Determinants of China’s Regional FDI Inflows

Yiyang¹,

Liu²,

Kevin³

et al. 2013

CUBR

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This paper performs an empirical assessment of China's inward Foreign Direct Investment (FDI) by analysing the relative importance of the potential determinants of FDI inflows across the four regions of China for the period [2001][2002][2003][2004][2005][2006][2007][2008][2009]. The determinants examined: market size, labour cost, labour quality, physical infrastructure development, telecommunication, degree of economic openness, and government incentives to attract FDI. This paper employs a multiple regression model for each region and then compares the results across four regions. The results indicate a mixed picture, for example we find that market size holds priority for FDI inflows into coastal region and northeast regions while the degree of openness is the most important determinant for FDI inflows in the central region. The labour quality has no effect in central region but has a positive impact on FDI inflows into coastal and northeast regions. These results have important implications for China's regional policy makers as they can help them identify the kinds of industries which respond to specific drivers and identify regional social economic characteristics which are more attractive to particular FDI inflows.

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Hard or Soft? Institutional Reforms and Infrastructure Spending as Determinants of Foreign Direct Investment in China*

Cited by 55 publications

References 21 publications

The Impact of Infrastructure on Foreign Direct Investment: The Case of Pakistan

The Impact of Infrastructure on Foreign Direct Investment: The Case of Pakistan

Impact of Infrastructure on Foreign Direct Investment in Nigeria: An Autoregressive Distributed Lag (ARDL) Approach

Determinants of China’s Regional FDI Inflows

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