The effects of transition and political instability on foreign direct investment inflows

Brada, Josef C.; Kutan, Ali M.; Yigit, Taner M.

doi:10.1111/j.1468-0351.2006.00272.x

Cited by 86 publications

(34 citation statements)

References 60 publications

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“…Of course, Political instability is not good since it will adversely affect the country's economic development and growth process by its unhealthy dent on the physical and human resources. When the country's Political Stability condition is not good, foreign investors will hesitate to bring any projects until they are assured that the business environment would be conducive and favorable (Brada et al, 2005;UNCTAD, 2010;Word Bank, 2011). In the case of Pakistan, World Bank report, published in 2011 categorically mentioned that the private sector's low investment in the country is largely attributed to the situation of political instability and corruption.…”

Section: Political Stability and Fdi Inflowsmentioning

confidence: 99%

Effect of Macroeconomic Variables on the FDI inflows: The Moderating Role of Political Stability: An Evidence from Pakistan

Shahzad¹,

Al‐Swidi²

2013

ASS

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This study has examined the moderating role of Political Stability (PS) on the relationships between macroeconomic variables and the Foreign Direct Investment (FDI) inflows in Pakistan. For that purpose, this study used the authentic annual data for the period 1991 to 2011. The empirical analysis involved using the ADF test to check the stationary of the data, the EViews software and hierarchal regression using SPSS 19.0 statistical software package. The results of the study confirmed that that GDP growth rate, exports, imports and balance of payment have positive significant effects on FDI inflows in Pakistan. On the other hand, the inflation rate was not significant in determining the FDI inflows in the country. However, the GDP growth rate and Balance of Payment tends to be a significant determinant of FDI inflows when the moderating effect of the Political stability is accounted for. Based on the findings of this study, it is strongly suggested that political stability is crucial for the country's domestic and foreign investment expansion in the future course of direction.

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Section: Political Stability and Fdi Inflowsmentioning

confidence: 99%

Effect of Macroeconomic Variables on the FDI inflows: The Moderating Role of Political Stability: An Evidence from Pakistan

Shahzad¹,

Al‐Swidi²

2013

ASS

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“…Bevan and Estrin (2004) reported that, based on a panel data of bilateral flows of FDI from Western countries in eleven Central and Eastern European (CEE) countries, key announcements on progress in EU accession had a significant and positive impact on FDI inflows, but FDI flows to transition economies are not influenced significantly by market evaluations of country-specific risk. Brada et al (2006) investigated the impact of political factors on FDI flows into seven transition economies in Europe from 1993 to 2001. They found that the initial cumulative inflation rate, the cumulative GDP decline, the share of the private sector in GDP, and change in the unemployment rate significantly reduced FDI inflows.…”

Section: Locational Determinants Of Fdimentioning

confidence: 99%

A Panel Data Analysis of Locational Determinants of Chinese and Indian Outward Foreign Direct Investment

Duanmu

Gűney

2009

Journal of Asia Business Studies

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The upsurge of Chinese and Indian outward foreign direct investment (FDI) raises an unanswered question about locational determinants of direct investment from the two countries. Using an unbalanced bilateral FDI database, we find that Chinese and Indian FDI are attracted to countries with large market size, low GDP growth, high volumes of imports from China or India, and low corporate tax rates. We also find important differences between China and India. While Chinese FDI is drawn to countries with open economic regimes, depreciated host currencies, better institutional environments, and English speaking status, none of these factors are important for Indian FDI. Chinese FDI is also deterred by geographic distance and OCED membership. However, neither of these has any impact on Indian FDI.

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“…Similar results to our findings were discovered by other studies (UNCTAD, 1998;Büthe and Milner, 2008;Wells and Ahmed, 2007), implying that BITs do not play a primary role in increasing FDI flows. Beside BITs, there are a number of other determinant factors that influence investors' decisions (Schneider and Frey, 1985;Brada et al, 2005). The increase in the number of BITs over the last decade is largely a consequence of the transformation of investorstate relations, in which international investment law has become a significant component of such development (Schill, 2011).…”

Section: Discussionmentioning

confidence: 99%

“…Nevertheless, some other research suggests that beside BITs, a number of economic and political factors seem to be the most significant determinates that influence investors' decisions (Schneider and Frey, 1985;Brada et al, 2005). Although it is widely acknowledged that investors place their capital in countries with stable political environment; however, nowadays, despite political instability, investors will invest in countries, where the ratio of benefit is higher than the risk (Rios-Morales et.…”

Section: Related Literaturementioning

confidence: 99%

Impacto de Tratados Bilaterales de Inversión (TBI) de la Inversión Extranjera Directa Suizo (IED)

Rios‐Morales

Gamberger

Ursprung

et al. 2014

REMEF

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This study examines the impact of bilateral investment treaties (BITs) on Swiss foreign direct investment (FDI). It also investigates the role of BITs as protective tools of Swiss investment. This paper is based on secondary data analysis; data is obtained from various official entities. This study uses statistical and machine learning techniques in order to detect meaningful relationships between BITs and FDI flows. Our findings suggest that the implementation of BITs have an insignificant impact on the increase of Swiss FDI flows. However, from our examination, two interesting findings have emerged suggesting that the completion of BITs may have an impact on the increase of political stability and rule of law of partner countries. ResumenEste estudio examina el impacto de los tratados bilaterales de inversión (TBI) de la inversión extranjera directa suizo (IED). También indaga el papel de los TBI como herramientas de protección de inversiones. Esta investigación se basa en análisis de datos secundarios, los datos son obtenidos de diversas entidades oficiales. Este estudio utiliza técnicas de aprendizaje estadístico con el fin de detectar relaciones significativas entre los TBI y los flujos de IED. Nuestros resultados sugieren que la implementación de tratados bilaterales de inversión tiene un impacto insignificante en el aumento de IED suizos. Sin embargo, desde nuestro examen, dos hallazgos interesantes han surgido, proponiendo que los TBI pueden tener un impacto en el aumento de la estabilidad política y el estado de derecho de los países asociados. JEL Classification: F21, F23, F29

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The effects of transition and political instability on foreign direct investment inflows

Cited by 86 publications

References 60 publications

Effect of Macroeconomic Variables on the FDI inflows: The Moderating Role of Political Stability: An Evidence from Pakistan

Effect of Macroeconomic Variables on the FDI inflows: The Moderating Role of Political Stability: An Evidence from Pakistan

A Panel Data Analysis of Locational Determinants of Chinese and Indian Outward Foreign Direct Investment

Impacto de Tratados Bilaterales de Inversión (TBI) de la Inversión Extranjera Directa Suizo (IED)

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