Policy uncertainty and foreign direct investment

Choi, Sangyup; Furceri, Davide; Yoon, Chansik

doi:10.1111/roie.12495

Cited by 61 publications

(34 citation statements)

References 79 publications

(144 reference statements)

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“…However, lags of domestic economic uncertainty up to seven lags have significantly negative impact on FDI inflows. Up to seven lags of domestic uncertainty results are in line with Canh et al, 2020;Choi et al (2020). In addition to that, this result is contracted with Suleyman (2020).…”

Section: Estimate Of the Error Correction Representationsupporting

confidence: 65%

“…In addition to that, the level of uncertainty is significantly higher in developing countries and positively associated with EUI and stock market volatility and negative with stock market growth. Choi et al (2020) studied on policy uncertainty and foreign direct investment. This study has been investigated the effect of domestic policy uncertainty on FDI inflows into 16 countries using the OECD bilateral FDI panel data set end economic policy uncertainty index from 1985-2013.…”

Section: Real Option Theorymentioning

confidence: 99%

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Impact of Economic Uncertainty on Foreign Direct Investment Inflows of Sri Lanka

Rodrigo

Randika

2022

EJBMR

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Foreign direct investment is the heart of economic growth. Sri Lanka faces foreign reserve shortage. Therefore, the researcher studied how foreign investors react on investment flows of Sri Lanka under world, regional, and domestic uncertainty situations of Sri Lanka. The researcher studied on impact of economic uncertainty on foreign direct investment inflows using world, regional and domestic uncertainty indexes which are newly constructed indexes. This study has been used quantitative analysis for impact on economic uncertainty on foreign direct investment inflows of Sri Lanka. The researcher used secondary data for the sample period of 1st quarter, 1996 to 4th quarter, 2019. The researcher used the autoregressive distributed lag model, error correction model for analyzing the short-run and long-run impact on economic uncertainty on FDI inflows of Sri Lanka. Regional economic uncertainty has a significantly impact on foreign direct investment inflows of Sri Lanka in short run and long run. In domestic economic uncertainty has significantly impact on foreign direct investment inflows of Sri Lanka in short run and long run. However, World economic uncertainty has not significantly impacted on foreign direct investment inflows of Sri Lanka This study has used world, regional, and domestic uncertainty of Sri Lanka indexes, which were newly built to capture uncertainties. Findings of the study could be used for the changes of policies to attract foreign direct investment inflows of Sri Lanka.

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Section: Estimate Of the Error Correction Representationsupporting

confidence: 65%

Section: Real Option Theorymentioning

confidence: 99%

Impact of Economic Uncertainty on Foreign Direct Investment Inflows of Sri Lanka

Rodrigo

Randika

2022

EJBMR

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“…In countries where Covid-19 damage is severe, the fixed cost of investment, for instance, various search costs for workers and places will probably moreover, be significantly higher. Additionally, the pandemic's different forms of uncertainty deter FDI flows (Azzimonti, 2019;Choi et al, 2021;Gao et al, 2019;Julio & Yook, 2016) In the same context, by lowering investment capital, the intensity of Covid-19 in the home country can also have a detrimental effect. Investors may have heightened domestic business restraints, a need to minimize domestic business loss, and an inability to finance international investments.…”

Section: Literature Reviewmentioning

confidence: 99%

FDI During the First Covid-19 Year in a Developing Country

2023

EJBM

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This study addresses the FDI flows into developing countries during the first COVID-19 pandemic year, regarding their resilience countries or not. From a realistic perspective, unlike previous crises, the Covid-19 pandemic is a health crisis affecting all of society, and secondly an economic crisis. We Used the percentage change in FDI flows between 2018-2019, and 2020 and other explaining indicators to illustrate the effects. the results revealed Covid-19 has affected FDI flows into developing countries severely by negatively affecting FDI flows to you through indices. Infrastructure, education, export, and death rate. In contrast, the positive impact on GDP, the workforce, openness, and trade in services. In terms of countries, the effects of Covid-19 are negative in terms of FDI flows in Asian countries, led by Macao while India and China resisted steadfastly as China focused on IT industries, while India focused on digital investment. The most vulnerable is Africa, which relies on FDI for its growth and development, despite Africa's lag in foreign direct investment flows, while the Central African region resisted due to oil exports, as well as Senegal due to investments in energy in 2020. Finally, the state of weakness also extended to a large extent, Latin American countries appear to have had a history of grappling with structural development challenges before the onset of the pandemic, adding to its impact.

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“…In addition, having a higher percentage of small firms in the economy is associated with increases in disparities in Total Factor Productivity (TFP), particularly in LA economies (see, for example, Busso et al, 2013 ; Camino‐Mogro, Armijos‐Bravo, & Cornejo‐Marcos, 2018 ; Cole et al, 2005 ). Finally, it is well known that uncertainty decreases FDI, specifically in countries with less financial development (Choi et al, 2021 ), political instability and an external debt burden (Lemi & Asefa, 2003 ) a year before a national election (Julio & Yook, 2016 ). All of these characteristics are present in the Ecuadorian economic‐political context.…”

Section: Introductionmentioning

confidence: 99%

Short‐term effects of COVID‐19 lockdown on foreign direct investment: Evidence from Ecuadorian firms

Camino‐Mogro

Armijos

2021

J of Intl Development

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We exploit the exogenous variation that comes from the COVID‐19 and the subsequent lockdown in Ecuador. We estimate a regression discontinuity in time (RDiT) design using official administrative FDI data from January to May 2020. We observe an overall large decrease in FDI inflows. We assess differences across FDI sources and find stronger effects coming from capital increases compared with new firm constitutions. In addition, we find that the negative effects are mostly from inflows coming from North and South American investments. We also assess whether partial reopening of activities positively affects FDI. We do not find any significant effect.

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Policy uncertainty and foreign direct investment

Abstract: Foreign direct investment (FDI) has long been recognized as a channel for economic growth via the transmission of new ideas and technologies. Numerous empirical and theoretical studies in the literature have examined the link between FDI and growth (e.g.,

Cited by 61 publications

References 79 publications

Impact of Economic Uncertainty on Foreign Direct Investment Inflows of Sri Lanka

Impact of Economic Uncertainty on Foreign Direct Investment Inflows of Sri Lanka

FDI During the First Covid-19 Year in a Developing Country

Short‐term effects of COVID‐19 lockdown on foreign direct investment: Evidence from Ecuadorian firms

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