Due to the success of the 'Go Global' policy, in recent years there has been a dramatic increase in overseas direct investment made by Chinese state-owned enterprises (SOEs). However, Chinese SOEs' overseas investment has been viewed with suspicion and several attempted acquisitions discontinued in the face of strong opposition from host countries. This article analyses the plausibility of some common fears about Chinese SOEs' overseas direct investment and evaluates critically the regulatory responses of the US, Canada, Australia and the European Union motivated by such fears. The article argues that though some fears are legitimate, they are grossly exaggerated in view of the SOE reforms in China over the past three decades. The policy implications of this finding for both host countries and China's ongoing SOE reforms are also explored.
{"title":"When China's National Champions Go Global: Nothing to Fear but Fear Itself?","authors":"Ming Du","doi":"10.54648/trad2014040","DOIUrl":"https://doi.org/10.54648/trad2014040","url":null,"abstract":"Due to the success of the 'Go Global' policy, in recent years there has been a dramatic increase in overseas direct investment made by Chinese state-owned enterprises (SOEs). However, Chinese SOEs' overseas investment has been viewed with suspicion and several attempted acquisitions discontinued in the face of strong opposition from host countries. This article analyses the plausibility of some common fears about Chinese SOEs' overseas direct investment and evaluates critically the regulatory responses of the US, Canada, Australia and the European Union motivated by such fears. The article argues that though some fears are legitimate, they are grossly exaggerated in view of the SOE reforms in China over the past three decades. The policy implications of this finding for both host countries and China's ongoing SOE reforms are also explored.","PeriodicalId":388027,"journal":{"name":"PSN: Foreign Direct Investment (International) (Topic)","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2014-09-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114969758","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The competitive advantages of foreign direct investment can be largely dependent on location. In this study, we develop an innovative model to deal with this crucial step for any multinational involved in expanding its operations abroad. The model has a pure financial perspective and is based on a binomial approach. An application of the model explores its practical implementation and outlines the extent to which different financial variables impact on the location choice of foreign direct investment.
{"title":"FDI Location Choices Under Uncertainty: A Binomial Options-Based Approach","authors":"F. Caló, F. Pizzutilo","doi":"10.12691/JFE-2-3-3","DOIUrl":"https://doi.org/10.12691/JFE-2-3-3","url":null,"abstract":"The competitive advantages of foreign direct investment can be largely dependent on location. In this study, we develop an innovative model to deal with this crucial step for any multinational involved in expanding its operations abroad. The model has a pure financial perspective and is based on a binomial approach. An application of the model explores its practical implementation and outlines the extent to which different financial variables impact on the location choice of foreign direct investment.","PeriodicalId":388027,"journal":{"name":"PSN: Foreign Direct Investment (International) (Topic)","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2014-03-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121069246","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We investigate competition for FDI within a region when a foreign multinational firm can profitably exploit differences in statutory corporate tax rates by shifting taxable profits to lower-tax jurisdictions. In such framework we show that targeted tax competition may lead to higher welfare for the region as a whole than lump-sum subsidies when the difference in statutory corporate tax rates and/or their average is high enough. Tax competition is also preferable from an efficiency point of view (overall surplus) by changing the firm's investment decision when profit shifting motivations induce the firm to locate in the (before tax) least profitable country.
{"title":"Competition for FDI and Profit Shifting: On the Effects of Subsidies and Tax Breaks","authors":"O. Amerighi, G. de Feo","doi":"10.2139/ssrn.2352374","DOIUrl":"https://doi.org/10.2139/ssrn.2352374","url":null,"abstract":"We investigate competition for FDI within a region when a foreign multinational firm can profitably exploit differences in statutory corporate tax rates by shifting taxable profits to lower-tax jurisdictions. In such framework we show that targeted tax competition may lead to higher welfare for the region as a whole than lump-sum subsidies when the difference in statutory corporate tax rates and/or their average is high enough. Tax competition is also preferable from an efficiency point of view (overall surplus) by changing the firm's investment decision when profit shifting motivations induce the firm to locate in the (before tax) least profitable country.","PeriodicalId":388027,"journal":{"name":"PSN: Foreign Direct Investment (International) (Topic)","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2013-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131147472","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2013-07-10DOI: 10.4225/50/583E272920DAE
This paper examines how swiftly core characteristics of the global economy are changing and the implications for Foreign Direct Investment (FDI) into Australia, especially FDI from China. The paper focuses on how state investment capital is an increasingly important strategic priority for governments, regulators, finance sector participants and other stakeholders. This is of the utmost strategic significance for Australia, given that its stability and economic well-being is increasingly intertwined with Asian jurisdictions, many of whom are active state investment actors.
{"title":"State Capital: Global and Australian Perspectives","authors":"","doi":"10.4225/50/583E272920DAE","DOIUrl":"https://doi.org/10.4225/50/583E272920DAE","url":null,"abstract":"This paper examines how swiftly core characteristics of the global economy are changing and the implications for Foreign Direct Investment (FDI) into Australia, especially FDI from China. The paper focuses on how state investment capital is an increasingly important strategic priority for governments, regulators, finance sector participants and other stakeholders. This is of the utmost strategic significance for Australia, given that its stability and economic well-being is increasingly intertwined with Asian jurisdictions, many of whom are active state investment actors.","PeriodicalId":388027,"journal":{"name":"PSN: Foreign Direct Investment (International) (Topic)","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2013-07-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132173858","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Foreign direct investment (FDI) plays an important role in India’s growth dynamics. There are several examples of the benefits of FDI in India. FDI in the retail sector can expand markets by reducing transaction and transformation costs of business through adoption of advanced supply chain and benefit consumers, and suppliers (farmers). This also can result in net gains in employment at the aggregate level. This paper brings forth a few conceptual issues and analysis of qualitative information, data and stylized facts on these issues.
{"title":"Foreign Direct Investment in India’S Retail Sector: Some Issues","authors":"Murali Patibandla","doi":"10.2139/ssrn.2114075","DOIUrl":"https://doi.org/10.2139/ssrn.2114075","url":null,"abstract":"Foreign direct investment (FDI) plays an important role in India’s growth dynamics. There are several examples of the benefits of FDI in India. FDI in the retail sector can expand markets by reducing transaction and transformation costs of business through adoption of advanced supply chain and benefit consumers, and suppliers (farmers). This also can result in net gains in employment at the aggregate level. This paper brings forth a few conceptual issues and analysis of qualitative information, data and stylized facts on these issues.","PeriodicalId":388027,"journal":{"name":"PSN: Foreign Direct Investment (International) (Topic)","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2012-06-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128877893","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper presents an empirical analysis of how foreign direct investment impact on the export performance of pharmaceutical firms in India. The hypothesis is examined using panel data analysis. The results show that foreign ownership has a negative impact on export performance. Unlike other industries, it is observed that in pharmaceutical industry foreign owned firms export less and focus more on domestic demand and host country specific advantages. Our findings provide rich source of information to policy makers, researchers and the management of both foreign and domestic owned firms.
{"title":"Foreign Direct Investment and Export Performance of Pharmaceutical Firms in India: An Empirical Approach","authors":"K. Sudershan, Venkata Reddy Muppani, M. Khan","doi":"10.5539/IJEF.V4N5P216","DOIUrl":"https://doi.org/10.5539/IJEF.V4N5P216","url":null,"abstract":"This paper presents an empirical analysis of how foreign direct investment impact on the export performance of pharmaceutical firms in India. The hypothesis is examined using panel data analysis. The results show that foreign ownership has a negative impact on export performance. Unlike other industries, it is observed that in pharmaceutical industry foreign owned firms export less and focus more on domestic demand and host country specific advantages. Our findings provide rich source of information to policy makers, researchers and the management of both foreign and domestic owned firms.","PeriodicalId":388027,"journal":{"name":"PSN: Foreign Direct Investment (International) (Topic)","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2012-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122780572","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper applies a novel empirical approach to characterising the horizontal-ness and vertical-ness of affiliates based on Yeaple's complex FDI concept. In its simplest form, horizontal-ness is measured as affiliates' local sales share while their vertical-ness is measures as their share of non-local sourcing of intermediates. Japanese affiliates in most sectors and nations are partly vertical and partly horizontal but those in North American are far more 'horizontal' than those in the EU and Asia. Affiliates became more vertical between 1996 and 2005. A four-way sales and sourcing split (host, home, regional and RoW) suggests that affiliates act as nodes in regional production networks - especially in Asia. We posit several hypotheses that could be tested with our empirical approach.
{"title":"Networked FDI: Sales and Sourcing Patterns of Japanese Foreign Affiliates","authors":"R. Baldwin, Toshihiro Okubo","doi":"10.1111/twec.12116","DOIUrl":"https://doi.org/10.1111/twec.12116","url":null,"abstract":"This paper applies a novel empirical approach to characterising the horizontal-ness and vertical-ness of affiliates based on Yeaple's complex FDI concept. In its simplest form, horizontal-ness is measured as affiliates' local sales share while their vertical-ness is measures as their share of non-local sourcing of intermediates. Japanese affiliates in most sectors and nations are partly vertical and partly horizontal but those in North American are far more 'horizontal' than those in the EU and Asia. Affiliates became more vertical between 1996 and 2005. A four-way sales and sourcing split (host, home, regional and RoW) suggests that affiliates act as nodes in regional production networks - especially in Asia. We posit several hypotheses that could be tested with our empirical approach.","PeriodicalId":388027,"journal":{"name":"PSN: Foreign Direct Investment (International) (Topic)","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2012-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122239726","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study examines whether a host country’s industry-specific technology advantage increases the propensity of emerging market multinational enterprises (EMNEs) to invest in the host country. The study further explores whether inward FDI in EMNEs’ home markets, by generating knowledge spillovers in the relevant industries, decreases EMNEs’ propensity to invest overseas for knowledge seeking. We test our arguments using a longitudinal dataset of the overseas investment activities of Chinese manufacturing firms. We find strong support for our hypotheses after controlling for other important outward FDI motives. We discuss the implications of our results for research and practice.
{"title":"Knowledge Seeking and Outward FDI of Emerging Market Firms: The Moderating Effect of Inward FDI","authors":"Jing Li, Yong Li, D. Shapiro","doi":"10.2139/ssrn.2046753","DOIUrl":"https://doi.org/10.2139/ssrn.2046753","url":null,"abstract":"This study examines whether a host country’s industry-specific technology advantage increases the propensity of emerging market multinational enterprises (EMNEs) to invest in the host country. The study further explores whether inward FDI in EMNEs’ home markets, by generating knowledge spillovers in the relevant industries, decreases EMNEs’ propensity to invest overseas for knowledge seeking. We test our arguments using a longitudinal dataset of the overseas investment activities of Chinese manufacturing firms. We find strong support for our hypotheses after controlling for other important outward FDI motives. We discuss the implications of our results for research and practice.","PeriodicalId":388027,"journal":{"name":"PSN: Foreign Direct Investment (International) (Topic)","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2012-04-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115196067","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper explores ASEAN's attempts at investment liberalization. Investment liberalization is variously associated with net positive effects on inflows of investment capital, technology transfer, employment, export generation, economic growth and development. As a net historical beneficiary of investment flows, the paper hypothesizes that ASEAN's stated commitment to investment liberalization should by now be realizing progress in each of four areas: a). absolute reductions in national autonomy in relation to investment screening and conditionality provisions; b). increased transparency in respect of member-states national investment regimes; c). enhanced standardization and codification of regulatory standards governing investment related provisions across member states; and d). enhanced centralized coordination and decision making in respect of investment governance. Each of these areas is investigated in relation to ASEAN's three primary investment agreements and the ensuing regimes that govern investment provisions and policy practices among member states.
{"title":"Foreign Direct Investment and Investment Liberalization in Asia: Assessing Asean's Initiatives","authors":"D. S. L. Jarvis","doi":"10.2139/SSRN.1160074","DOIUrl":"https://doi.org/10.2139/SSRN.1160074","url":null,"abstract":"This paper explores ASEAN's attempts at investment liberalization. Investment liberalization is variously associated with net positive effects on inflows of investment capital, technology transfer, employment, export generation, economic growth and development. As a net historical beneficiary of investment flows, the paper hypothesizes that ASEAN's stated commitment to investment liberalization should by now be realizing progress in each of four areas: a). absolute reductions in national autonomy in relation to investment screening and conditionality provisions; b). increased transparency in respect of member-states national investment regimes; c). enhanced standardization and codification of regulatory standards governing investment related provisions across member states; and d). enhanced centralized coordination and decision making in respect of investment governance. Each of these areas is investigated in relation to ASEAN's three primary investment agreements and the ensuing regimes that govern investment provisions and policy practices among member states.","PeriodicalId":388027,"journal":{"name":"PSN: Foreign Direct Investment (International) (Topic)","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2012-03-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132015392","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper compares the current foreign direct investment (FDI) recession with FDI responses to past economic crises. The authors find that although developed country outflows have taken an equally big hit as major developed countries have after past crises, outflows seem to be bouncing back more slowly this time. By contrast with the overall decline in recent years, inflows to emerging markets often remained stable during their past economic crises. Both patterns indicate that the global scale of the current crisis has led to a greater FDI response than after individual country crises in the past. Compared with global economic downturns since the 1970s, the current FDI recession has also been greater in magnitude. The exception is the FDI plunge in the early 2000s, despite the much smaller economic crisis at the time. The authors conclude by recommending that policymakers not just further liberalize FDI regimes--as they find was the typical pattern during earlier crises--but rather use the downturn to rethink their FDI policies with an enhanced focus on "sustainable FDI" promotion.
{"title":"Foreign Direct Investment in Times of Crisis","authors":"Lauge N. Skovgaard Poulsen, G. Hufbauer","doi":"10.2139/ssrn.1747969","DOIUrl":"https://doi.org/10.2139/ssrn.1747969","url":null,"abstract":"This paper compares the current foreign direct investment (FDI) recession with FDI responses to past economic crises. The authors find that although developed country outflows have taken an equally big hit as major developed countries have after past crises, outflows seem to be bouncing back more slowly this time. By contrast with the overall decline in recent years, inflows to emerging markets often remained stable during their past economic crises. Both patterns indicate that the global scale of the current crisis has led to a greater FDI response than after individual country crises in the past. Compared with global economic downturns since the 1970s, the current FDI recession has also been greater in magnitude. The exception is the FDI plunge in the early 2000s, despite the much smaller economic crisis at the time. The authors conclude by recommending that policymakers not just further liberalize FDI regimes--as they find was the typical pattern during earlier crises--but rather use the downturn to rethink their FDI policies with an enhanced focus on \"sustainable FDI\" promotion.","PeriodicalId":388027,"journal":{"name":"PSN: Foreign Direct Investment (International) (Topic)","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2011-01-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"120870325","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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