Diss. Stockholm : Handelshögskolan, 2006.

<p>Although there is a considerable evidence on the link between Foreign Direct Investment (FDI) and economic growth in developing countries, the causal relationship of these two variables still remains an important question. This study attempts to examine the possible causal relationship between FDI and economic growth in Turkey, during the period 1992 (Quarter 2) – 2006 (Quarter 3). We employed the Johansen Cointegration and Granger Causality tests for detecting the long run or short run causality. Our results showed that there is no long run relationship between the variables, which led us to search the causality in the short run. However we couldn’t find any evidence for a causality running from FDI to economic growth or economic growth to FDI in Turkey.</p>

Property rights are an important subject of economic theory and as a product of institutional qualities an essential determinant of Foreign Direct Investment (FDI). The purpose of this study is to examine how middle income countries with, on average, weak property rights can attract investments from abroad, given their (formal) institutions, and if differences in institutional qualities have an effect on FDI inflows. Using a panel approach to observe a sample of 20 countries over ten years, we find that there is mixed evidence supporting this theory. Whilst the theoretical background suggests that institutional qualities do affect a country’s ability to attract or deter investments, we cannot conclude a significant effect in our results. Furthermore, the study concludes that certain products of institutional qualities (democracy, corruption) can lead to mixed effects on the net inflows of FDI, but that an important determinant is the market-size of the country.

We explore some empirical properties of Austria's "Investment Development Path" (IDP) on the macro level as well as on the structural and the bilateral level. Three dimensions are analyzed, namely the growth, the stability, and the sign of the Net Outward Investment Position (NOIP). While the NOIP on the macro level has been negative throughout the last two decades, there is considerable variation on the industry and the bilateral level. Given the small domestic market size, the NOIP of Austria does not reflect the high level of development in terms of GDP. Several explanations for the below-average NOIP of Austria are provided. / Series: Department of Economics Working Paper Series

This study identifies the success and failure factors of foreign direct investment in transnational education. With western tertiary education markets becoming more saturated, it becomes essential for higher education institutions (HEI) to pursue new and lucrative opportunities internationally. One approach to internationalisation is the establishment of international branch campuses (IBC). This method provides the highest level of control but incurs the most risk, and failure can result in irrecoverable damage to reputation and substantial loss of resources. A review of the literature shows that numerous facets should be considered when establishing an IBC, but there are limited studies that holistically address what makes them successful or how success can be measured. Three research questions were devised to address the gaps in the extant literature. A three-stage exploratory mixed methodology is implemented consisting of expert surveys, case studies and a quantitative survey. The results show five factors that contribute to the success of an IBC. Additionally, eight classifications of success measures and a framework for establishing an IBC were identified. A key finding is the importance of the HEI factor; the remaining factors should be considered once it has been established that the HEI is able to open and operate an IBC efficiently. Furthermore, this study is one of few that presents a holistic view of how to operate an IBC successfully. The results of this thesis present HEI managers with the key considerations when developing an IBC and academicians with scope to further understand what makes IBCs successful.

Foreign direct investment (“FDI”) is one of the significant sources of social and economic change in developing countries. It can be used in terms of transferring capital, technology and administrative skills to the host country. The Board of Investment of Pakistan (“BOI”) emphasizes that due to Pakistan’s cheap manpower and low production cost coupled with many other reasons, it is a perfect market and location for FDI. This study has examined several aspects of FDI in Pakistan’s context, such as the role it has played in the growth of Pakistan’s economy and may well play in the future. The factors which play motivational and decisive role in foreign investors’ decisions to invest or withdraw their capital such as economic attractions, deterring factors and legal protections afforded to FDI in Pakistan. Existence of deterring factors requires the host State to adopt special measures and offer added protection to foreign investors such as protection through bilateral investment treaties (“BITs”), investment agreements and domestic laws. Therefore, the main concern of this study is the legal protection afforded to FDI in Pakistan. The study has investigated three fundamental factors, directly related to protection of FDI in Pakistan their role and aftermaths; the BITs, the role of higher judiciary and legal protection under domestic statutes. To investigate the first factor, a number of BITs executed by Pakistan have been selected and examined in the light of old and new treaty arbitration cases against Pakistan. It has been revealed that successive Pakistani governments have used BITs as political publicity vehicle and executed this instrument in a haphazard manner, without meaningful negotiations and without understanding the full legal implications. An absolute lack of competency, skills and know-how to negotiate and draft BITs on the part of the Government of Pakistan (“GOP”) has been revealed. The investigation on the role of judiciary, has found a powerful judiciary the Supreme Court of Pakistan (“SCP”) which has emerged as an assertive organ of the State. In last about one decade the SCP has expended the scope of public interest litigation (“PIL”) for enforcement of fundamental rights under unique ‘suo moto’ jurisdiction and endlessly interfered directly in commercial and FDI matters. The current study differentiates judicial activism and judicial interference and argues that, there is a very thin line between these two, and that encroaching on the sphere of other State organs may possibly convert judicial activism into judicial interference. The study has also examined several domestic statutes related to FDI and has found weak legal protection afforded to FDI under domestic laws of Pakistan. It has revealed that all three factors have exposed Pakistan to costly international arbitration initiated by foreign investors, shattered their confidence which in turn affected inward flow of FDI. To enable GOP to attract the required FDI in the desired sectors this thesis recommends reforms to address these deterring factors and also adopting a pragmatic balanced approach insuring respect of sovereignty of Pakistan and protection of assets of foreign investors.

abstract: This dissertation consists of two essays that deal with the development of open developing economies. These economies have experienced drastic divergence in terms of economic growth from the 1970s through the 2010s. One important feature of those countries that have lagged behind is their failure to build up their domestic innovation capacity. Abstract The first chapter discusses the policies that may have an impact on the long-run innovation capacity of developing economies. The existing literature emphasizes that the backward linkage of foreign-owned firms is a key to determining whether FDI is beneficial or detrimental to a domestic economy. However, little empirical evidence has shown which aspects of FDI policies lead to a strong backward linkage between foreign-owned and domestic firms. This paper focuses on the foreign ownership structure of these foreign-owned firms. I show that joint ventures (i.e, firms with 1%-99% foreign share) have stronger backward linkages than MNC affiliates (i.e, firms with 100% foreign share) with domestic firms. I also find that the differences in backward linkages are strong enough to translate into a positive correlation between domestic innovation and the density of joint ventures and a negative correlation between domestic innovation and the density of MNC affiliates. Finally, I find that the channel through which foreign ownership structure affects domestic innovation raises innovation TFP in domestic firms. My results suggest that policies that affect the foreign ownership structure of foreign-owned firms could have a persistent effect on domestic innovation because they shift the comparative advantage of an developing economy towards the innovation sector in the long run. Abstract The second chapter provides a unified theory to study what causes the divergence in economic growth of developing economies and how the innovation sector emerges in the developing countries. I show that open developing economies become trapped at the middle-income level because they tend not to specialize in sectors that generate spillover or factor accumulation (the innovation sector). Using a dynamic Heckscher-Ohlin (H-O) model, I show that the fast growth of developing economies tends to end before they can fully catch up with the developed world, and the innovation sector will not operate in the developing countries. However, the successful growth stories of Korea and Taiwan challenge this view. In order to explore the economic miracle that happened in Korea and Taiwan, I generalize a dynamic Heckscher-Ohlin (H-O) model by introducing technology adoption and explore how it generates spillovers to domestic innovation. I show that countries with policies that encourage technology adoption will benefit most from FDI: in addition to the fact that foreign technology raises productivity in the host country, the demand for skilled labor to adopt these technologies raises the education level in equilibrium, which benefits domestic innovation and leads to catch-up in the long run. / Dissertation/Thesis / Doctoral Dissertation Economics 2015

A China está se transformando em uma das principais origens mundiais de Investimentos Externos Diretos (IEDs). No Brasil, os Investimentos Externos Diretos Chineses (IEDCs) têm aumentado desde os primeiros anos deste século, registrando grande elevação principalmente a partir de 2010. Os IEDCs no Brasil são investimentos realizados notadamente por Empresas de Propriedade Estatal (EPEs), principalmente Propriedade Estatal Central (EPECs), cujas principais modalidades de entrada são greenfield e fusões e aquisições. Estes investimentos são determinados pela busca de mercados e recursos naturais e estão concentrados na região Sudeste do país. Esse ganho de relevância do Brasil enquanto destino dos IEDCs motivou a presente pesquisa a responder a seguinte questão: Como o Brasil tem se posicionado, nesse início de século, frente aos Investimentos Externos Diretos Chineses para o país? Tem-se como resultado preliminar que o Brasil pode elevar a entrada desses investimentos e possivelmente os seus transbordamentos tecnológicos, compatibilizando seus interesses econômicos e geopolíticos com os chineses. Porém, parece necessário ao Brasil resolver os aspectos conjunturais e estruturais do crescimento do país que entravam as entradas dos investimentos chineses e de outras nações. / China has become one of the main worldwide sources of Foreign Direct Investment (FDI). In Brazil, Chinese Foreign Direct Investments (CFDI) have increased since the beginning of this century, presenting a higher rate of growth starting in the 2010s. CFDIs in Brazil are investments performed by State-Owned Enterprises (SOEs), especially Central State-Owned Enterprises (CSOEs), whose main entry strategy are greenfield, and mergers & acquisitions. Those investments are guided by the search for markets and natural resources and are concentrated in the Brazilian Southeast. This increased relevance of Brazil as CFDIs destination motivated this research to find answers to the following question: How has Brazil stood, in this century, in terms of Chinese Foreign Direct Investments flowing into the country? Preliminary results show that Brazil can increase the entry these investments and possibly their technological spillovers, harmonizing economic and geopolitical interests with the Chinese. However, it seems necessary to Brazil to solve the cyclical and structural aspects of its growth which discourages the entries of Chinese investments and from other Nations.

Chapter 1 ---Does the party of government influence the amount and type of inward foreign investment? The results of a number of correlational studies provide inconsistent evidence. However none of these studies - for any level of government or any jurisdiction - have used methods that allow them to speak to causal effects. Regression discontinuity (RD) method is applied to a set of narrow-margin US gubernatorial elections. Over the course of a four-year term the election of a Republican governor causes a 21% boost in the growth of manufacturing-oriented FDI stock, compared to a Democrat. This effect is robust to a series of challenges. However, the same approach provides no evidence that partisanship matters for the overall level of FDI. Chapter 2 ---Does an economic shock open a window of opportunity for reform, and if it does, how does the institution of a state play a role? The paper investigates how economic shocks affect the structural reforms in various institutions. This paper addresses this issue by using the exogenous variation in the international price of large commodity goods to generate the exogenous change in national income. The analysis relies on a unique mapping between new annual data from 1962 to 2005 on economic shocks from commodity prices and structural reforms in 111 countries. I find significant heterogeneous effects across sectors in autocratic countries. In autocracies, positive economic shocks promote reforms in real sectors, but deter reforms in financial sectors. However the impact of economic shocks on structural reform in democratic countries is nil. Chapter 3 ---The deregulation of branch banking across the United States substantially increased the availability of credit to existing borrowers and others who has previously been excluded. Exploiting the staggered timing of changes across states for identification it is estimated that deregulation caused a 3.3% increase in rates of suicide and a 4.7% increase in rates of divorce. This is consistent with a large body of evidence linking excess debt to various measures of individual and relationship distress. Results are in most cases statistically significant at levels much higher than 1%, and prove resilient in a battery of robustness checks and falsification exercises.

Magister Legum - LLM