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This paper studies the real effects of foreign real estate capital inflows. Using transaction-level data, we document (i) a "China shock" in the U.S. housing market characterized by surging foreign Chinese housing purchases after 2008, and (ii) "home bias" in these purchases, as they concentrate in neighborhoods historically populated by ethnic Chinese. Exploiting their temporal and spatial variation, we find that these capital inflows raise local employment, with the effect transmitted through a housing net worth channel. However, they displace local lower-income residents. Our results show that real estate capital inflows can both stimulate the real economy and induce gentrification. [ABSTRACT FROM AUTHOR]

AbstractThis paper investigates the impact of foreign direct investment (FDI) on zombie firms at both the macro and micro levels, revealing a significant negative effect on their prevalence at the city level. Our results show that FDI accelerates zombie firm exits as local governments cease subsidies, recognizing that foreign firms can sustain local economic growth. This result is robust to alternative methods of identifying zombies, alternative measures for FDI, and diverse regression methodologies. This shift is predicated on the recognition that foreign firms can sustain local economic growth. Consequently, financial constraints and profitability among zombie firms deteriorate significantly, while healthy firms remain unaffected. These results support the crowding-out effect but find no evidence for technology spillover, challenging some conventional expectations about the benefits of FDI. Our findings contribute to a nuanced understanding of FDI spillover effects and its role in the targeted disposal of non-viable firms. [ABSTRACT FROM AUTHOR]

West Africa has been grappling with various security challenges prompting governments’ intervention via military expenditure both at the country and regional level. Given the sporadic surge in military expenditure in the region and the potential effect such expenditure may exert on investment which is a sin qua non to the development process of any economy or region, this study utilizes the augmented mean group (AMG) approach and the Granger non-causality test in investigating the impact and causal relationship between investment and military expenditure in the Economic Community of West African States (ECOWAS) between 1980 and 2020. With country-specific cross-dependence and heterogeneity adequately accounted for, the study found that military expenditure has a dampening impact on investment at both the panel and country levels; unemployment adversely impacts investment; whereas economic growth stimulates investment (catalytic effect) in the ECOWAS, although at differing levels of significance. The study also established a long-run relationship among the variables; with only economic growth Granger causing investment. The study thus recommends that country-specific and regional-based military policies be established to glean economic growth through viable investment.

This study investigates the impact of foreign direct investment (FDI) on bank stability in the Gulf Cooperation Council (GCC) region, differentiating between Islamic and conventional banks. The results reveal a negative relationship between FDI and bank stability, and Islamic banks can mitigate this impact, enhancing overall stability. Notably, during recent crises (the global financial crisis (GFC) and the COVID-19 pandemic (COVID-19)), FDI's effect on bank stability intensified, and the GFC had a stronger influence than COVID-19. Islamic banks were more resilient to FDI during these crises, highlighting their pivotal role in strengthening the banking system across the member countries in the GCC. The study offers critical insights for regulators, policy makers, and risk managers, advising cautious supervision over FDI in order to preserve monetary and financial stability.

The present study examines the patterns of foreign direct investment (FDI) in Kazakhstan and draws comparisons with global trends. Based on statistical data spanning from 2000 to 2022, the study reveals that the growth of FDI in Kazakhstan has exhibited greater volatility and speed compared to developed nations. However, it is strongly associated with global FDI inflows and the growth of gross domestic product (GDP). This article aims to examine the patterns and determinants influencing FDI in Kazakhstan and to juxtapose these patterns with global trends. The main approach used in the study was systematic. The article’s contribution lies in its provision of novel insights into the dynamics of FDI in Kazakhstan and its correlation with economic growth. Furthermore, the article elucidates the various factors that contribute to the expansion of FDI in Kazakhstan, while also offering suggestions for the development of public policy in this domain. The article provides a comprehensive examination of FDI patterns in Kazakhstan, comparing them to global trends and identifying the factors that influence the dynamics of FDI. Furthermore, the article offers suggestions for expanding the economic base of Kazakhstan beyond its reliance on the oil and gas industry, enhancing focus on high-tech and innovative sectors, and enhancing the institutional framework.

Foreign investment can mitigate the foreign exchange constraint of developing countries. It can also influence the economy's international competitiveness through appreciating or depreciating exchange rates. The exchange rate impact of domestic investment is also not straightforward and depends on some critical factors. These issues of investment often pose a policy dilemma. Against this backdrop, this paper assesses the relative impacts of foreign direct investment (FDI), domestic investment (DI), and external debt on India's real effective exchange rate and the rupee/dollar real rate for the liberalized regime for trade, investment, and exchange rates. The autoregressive distributed lag bounds testing approach to cointegration, followed by its error correction representation, finds that real exchange rate variations are associated with FDI, debt, DI, and some control variables. FDI and debt depreciate real exchange rates, indicating that these have not exacerbated the economy's international competitiveness. However, DI causes real appreciation. These findings are consistent across estimations involving alternative specifications of control variables. Offsetting impacts of FDI and DI is an interesting finding. This can stabilize the exchange rates by undermining appreciating or depreciating exchange rate trends. [ABSTRACT FROM AUTHOR]

Purpose: The present study aimed to examine the effect of received remittance inflows on the price level ratio of the purchasing power parity conversion factor to the market exchange rate in 36 developed and developing countries from 2004 to 2020. Design/methodology/approach: The panel data conducted a comparative analysis and used panel least squares, regression with Driscoll-Kraay standard errors of fixed effect, random effect, feasible generalised least squares and maximum likelihood robust least squares to overcome the heterogeneity issue. Furthermore, the two-step difference generalised method of moments to overcome the endogeneity issue. Diagnostic tests were used to increase robustness. Findings: In the studied countries, there was a statistically significant negative relationship between received remittance inflows and the price-level ratio of the purchasing power parity conversion factor to the market exchange rate. This relationship explains why remittance flows depreciate the real exchange rate. The study's results also indicated that attracting investments can improve the quality of institutions despite high tax rates, leading to low tax revenue. Originality/value: The current study findings enrich the understanding of policies of how governments should minimise tariff rates on capital imports and introduce export-oriented incentive programmes. The study also revealed that Dutch disease can occur due to differences in the demand structure and manufacturing development policy. [ABSTRACT FROM AUTHOR]

This paper revisits the key factors that drive foreign direct investment (FDI) flows into Africa. The approach departs from previous cross-country studies, which pool all countries together in one sample without due consideration for structural or behavioral differences between them. Instead, it involves a novel analytical classification of African economies based on economic and institutional fundamentals that account for the heterogeneity between countries. This involves classifying countries as fragile, factor-driven, or investment-driven. The main objective of this paper is to examine and uncover any nuances or variations in the factors that attract FDI into different categories of African economies. Using a panel cointegration approach for the period 1996–2018, the empirical analysis reveals that the factors influencing the flow of FDI vary significantly across the different analytical country classifications developed. The study finds that natural resource abundance is a crucial factor in the short term for all countries. However, in the long term, it is only important for fragile and factor-driven economies, not for investment-driven economies. While government effectiveness is an important factor for all countries, political stability is important only for investment- and factor-driven countries. Contrary to conventional wisdom, openness is only important for investment-driven countries. Similarly, macroeconomic stability and domestic investment are also found to be important only for investment-driven economies. The findings suggest the need to emphasize different policies in various countries or groups of countries. [ABSTRACT FROM AUTHOR]

South Korea is considered one of the leading countries in innovation and research and development (R&D), in particular in renewable energy R&D efforts, but it is also one of the more polluting countries. So, understanding the interplay between these variables is of great interest. The main objective of this article is to examine the relationship between carbon dioxide (CO2) emissions, economic growth (GDP), renewable energy consumption (RE), foreign direct investment (FDI), home patents (HP), and foreign patents (FP) in South Korea using data ranging from 1980 to 2018. For this purpose, the autoregressive distributed lag (ARDL) approach and Granger causality tests were employed. Estimates of long-run elasticity point to a positive relationship between GDP and CO2 emissions. FP and RE have a negative influence on CO2 emissions but they have a favorable effect on GDP. FDI and HP have positive impacts on CO2 emissions. Granger causality outcomes demonstrate that CO2 emissions, GDP, RE, and FP have long-term bidirectional causal relationships. In the short-run, there are unidirectional causalities running from FP and FDI to RE and from FDI and HP to GDP. Besides, there is a bidirectional causality between GDP and RE. South Korea should continue to promote renewable energies and facilitate the use of foreign patents, particularly those relating to renewable energies. This will lead to a reduction in its carbon emissions while benefiting its economic growth. [ABSTRACT FROM AUTHOR]

This paper examines a causal relationship between foreign direct investment (FDI) and firms' pollution intensity by exploiting the policy of China's FDI access relaxation in 2002. The result shows that FDI leads to a significant reduction in firms' pollution intensity. The mechanism tests find that FDI reduces pollution intensity by increasing firms' productivity, pollution management abilities, and the output of lightly polluting firms. The effect primarily acts on firms in lightly polluting industries and firms in the eastern region. The findings support the pollution halo hypothesis and provide implications for developing countries like China by evaluating the effectiveness of policies to attract FDI. [ABSTRACT FROM AUTHOR]

Developing countries have more than 1300 investment treaties with developed countries. Investment treaties are often alleged to constrain developing countries' climate policies. This paper examines four treaty reforms that are often suggested as remedies to such regulatory chill. It considers an investment treaty that protects a stranded developed country investment in a developing country. The reforms are compared with regard to whether they can induce the developing country to regulate the investment, and their political attractiveness. The reforms are shown to have features that seem to have gone unnoticed in the debate. Exclusion of investor-state dispute settlement (ISDS) may be ineffective due to a hold-up problem, and if effective requires unlawful regulation by the host country. A shortening of a sunset period applicable to unilateral withdrawal can postpone regulation. A reduction in the amount of stipulated compensation can induce the developing country to phase out the stranded investment, but will require a compensation payment from the developing country to the developed country investor. The reform with best potential to address stranded investment problems appears to be an increase in a carve-out from the compensation requirement for measures with sufficiently positive climate effect. [ABSTRACT FROM AUTHOR]

AbstractThis study aims to investigate how Foreign direct investment (FDI) and trade openness influenced economic growth in BRICS countries from 1990 to 2022, using the Pooled Mean Group Autoregressive Distributed Lag (PMG-ARDL) and System Generalized Method of Moments (System-GMM) methods. Our findings show that these two variables boost economic growth by 0.172, 0.021, 0.291, and 0.072%, respectively. Additionally, the results indicate that BRICS countries have demonstrated greater resilience in terms of FDI and trade before and after the COVID-19 pandemic and the Russia-Ukraine war, underscoring the effectiveness of their investment and trade policies in maintaining economic growth amidst global disruptions. [ABSTRACT FROM AUTHOR]

This paper focuses on analysing the effects of sector orientation and the origin of FDI on the types of corruption. The GMM technique and the IV-2SLS on a panel of Sub-Saharan African countries were used. Globally, we find that FDI increases political corruption in SSA. Moreover, the study shows that sector orientation and the origin of FDI have significant effects on each type of corruption. Primary sector FDI enhances public sector corruption and reduces judicial corruption. Secondary sector FDI increases executive, public, and judicial corruption. In the tertiary sector, executive and public corruption are enhanced while judiciary corruption is reduced. Regarding the origin, FDI from France increases public sector corruption whereas FDI from China and the USA reduces it. Executive corruption is reduced by FDI, regardless of its origin. FDI from France and the USA discourages judiciary corruption while FDI from China increases it. FDI from China reduces legislative corruption, while FDI from the USA tends to increase it. Furthermore, the analysis of the transmission channels shows education and development levels as important channels through which FDI could reduce corruption in SSA. Relevant policy implications derived from this study include the necessity for policy-makers to combat all types of corruption and mostly public corruption. [ABSTRACT FROM AUTHOR]

Purpose: Tax evasion and money laundering have become important sources of illicit financial flows in developing countries. Foreign capital flows used by shell corporates are generally with no real economic activities but motivated by harmful tax practices, thereby inducing loss of revenue for developing countries. Despite the coercive actions, such as backlisting of noncooperative jurisdictions to anti-money laundering and countering terrorism financing standards, illicit financial activities are still eroding the tax base in developing countries. The purpose of the paper is to assess the blacklisting effectiveness as a coercive policy against illicit financial activities. Design/methodology/approach: This paper applies a propensity score matching strategy to a sample of 118 developing jurisdictions from 2009 to 2017 to evaluate changes in illicit financial activities following the blacklisting. Findings: The results show that rather than altering illicit inflows in blacklisted countries, financial restrictions have produced the inverse, causing a boomerang effect on financial crime activities. The illicit share of capital inflows increases on average by 6 percentage points and 0.7% of GDP following the blacklisting. These results are robust to alternative matching methods and to the hidden bias problem. Originality/value: Most of the previous research analyzed the link between blacklisting and fiscal revenues. However, here, the study analyzes whether blacklisting makes countries more cooperative in terms of fighting illicit financial flows. [ABSTRACT FROM AUTHOR]

We examine the effect of outward foreign direct investment (OFDI) on total factor productivity (TFP) of home (source of FDI) countries in a global sample of 85 economies, distinguishing between outward greenfield FDI (OGFDI) and outward cross-border merger and acquisition (M&A) purchases. The goal of the study is to test for reverse technological spillovers to the FDI source country. The hypothesis is that OGFDI and M&As have different capabilities of carrying out reverse technological spillovers, which would affect the TFP of home countries differently. We apply a two-step system generalized method of moments (GMM) to deal with possible endogeneity and find the following results. First, total OFDI has no effect on the home country's TFP. Second, disentangling OFDI by mode of investment reveals both positive and negative reverse spillovers from FDI to TFP. While OGFDI produces negative reverse spillovers on the TFP of an MNE's home country due to displacement of production and reduced competition at home, M&A purchases produce positive reverse spillovers on the TFP of an MNE's home country due to their potential to acquire high-value knowledge assets. Third, home countries' human capital development positively moderates the impact of OGFDI and M&A purchases on TFP, while trade openness positively moderates only the M&A impact on TFP. Our findings imply that policies that seek to promote OFDI can be beneficial once countries have reached a certain degree of human capital development and participation in international trade.

To explain the remarkable increase in the amount of outward foreign direct investment (OFDI) from China, we utilize firm-level OFDI data and employ a difference-in-differences design to identify the causal effect of the Property Law enacted in 2007 on firms’ OFDI decisions. The results reveal that, first, the enactment of the Property Law increases the likelihood and the frequency of OFDI. Second, financial constraints are the main driving force motivating firms’ OFDI. Third, the enactment of the Property Law has heterogeneous effects. Firms located in regions with a low degree of financial marketization or a high degree of government intervention experience a more pronounced effect. This suggests that the quality of the institutions is important. Overall, we present a novel explanation for the sharp increase in the amount of OFDI from China after 2007 and provide new empirical evidence on the effect of security interest system reform. [ABSTRACT FROM AUTHOR]

China–Malaysia economic engagement has deepened since the 1990s. The scale and scope of this relationship has also expanded significantly following the 2013 announcement of the Belt and Road Initiative. Offering a context-rich, historically-nuanced perspective, this paper analyses how Malaysian policymakers have engaged with economic opportunities opened up by the burgeoning Chinese market. In particular, it examines how Chinese foreign direct investment has contributed to industrial upgrading trajectories in Malaysia. The paper makes two inter-related arguments. First, it uncovers a correlation between closer Chinese–Malaysian economic integration and services liberalization, which results in Malaysia's lower emphasis on manufacturing and 'proper' industrialization. In other words, structural transformation has occurred, but it is geared towards the services sector. Relatedly, Chinese investment entering Malaysia, notwithstanding its relatively recent status, is composed primarily of service industries. The services-heavy nature of Chinese investment results in a relatively modest economic multiplier effect, potentially exacerbating some societal tensions and inequality. [ABSTRACT FROM AUTHOR]