Restructuring of the Polish Passenger Car Industry through Foreign Direct Investment

A U.S.-based geographer discusses the effects of foreign direct investment (FDI) in the Polish passenger car industry. The paper illustrates the magnitude of enterprise restructuring and changes in a significant economic sector. Using the case study approach, the author focuses on three of the largest foreign-owned passenger car makers in Poland: Fiat Auto Poland, Daewoo-FSO, and Opel Polska. He then considers FDI in the rest of the Polish automobile industry, noting inter alia Poland's proximity to West European markets and the country's low-cost labor. The case studies, based in part on recent interviews, discuss investment policies, enterprise restructuring, production trends, and effects of FDI in the supplier bases of car makers. Journal of Economic Literature, Classification Numbers: D20, F21, L62. 6 figures, 1 table, 76 references.     

ASSESSING THE REGIONAL IMPACT OF GRANTS ON FDI LOCATION: EVIDENCE FROM U.K. REGIONAL POLICY, 1985–2005

ABSTRACT The paper implements a methodology for assessing the regional impact of investment grants on foreign direct investment (FDI) location, taking data for U.K. regional policy over the period 1985–2005. Using a Generalized Methods of Moments estimator it finds that each £25 million of grant changes the regional location of about six inward FDI projects. On average, projects have 150 jobs and each job diverted costs £27,500 (1995 prices). It also finds that the size of the area designated for grants has a positive location effect. The effect is small in relation to the overall scale of FDI, which may explain the weak grant effect found in recent plant‐based location studies.     

FDI and Local Economic Development: The Case of Taiwanese Investment in Kunshan

The extent to which foreign direct investment (FDI) can foster the long-term economic development of lagging regions remains a highly debated issue in the literature, even in the current era of intense territorial competition for mobile investment and resources. The emergence of new industrial spaces in China that have flourished through FDI offers a good opportunity to revisit the topic. Kunshan in Suzhou, China has evolved from an impoverished area into a world-class information technology (IT) centre within 25 years. FDI, mainly from Taiwan, has enabled Kunshan to gradually upgrade its economy, following a development path that has been largely based on the transplant of entire production chains from Taiwan. Local innovative strategies for attracting and increasing the embeddedness of Taiwanese FDI are also an important element of Kunshan's success. This paper discusses the positive aspects, as well as the potential costs and negative facets, of FDI in Kunshan, with the view to draw some policy lessons regarding the impact of FDI on the economic development of lagging regions.     

Region‐specific determinants of the foreign direct investment in China

This study revisits region‐specific determinants of foreign direct investment (FDI) in Eastern, Central, and Western China using econometric and spatial analyses. It uses a data set covering 31 Chinese provinces and autonomous regions spanning the period 2005–15, together with panel data regression. Our statistical results show that in Eastern China, FDI is significantly associated with bilateral trade, orientation towards the service industry, industrialisation level, and availability of strategic assets in the region. In Central China, FDI is mainly pulled by availability of the domestic market and strategic assets in the region. In Western China, FDI inflows are mainly determined by natural resource endowment, industrialisation level, and regional innovation and production effectiveness in information and communication technology industries. Our analysis also reveals the impact of FDI in China's regional development and its capacity to hollow out the three Chinese macro‐regions. Our findings for China lead us to suggest that those governments seeking to attract FDI should not solely rely on it to facilitate local economic development and should make use of local circumstances in combination with FDI to boost their economies.     

FOREIGN DIRECT INVESTMENT AND URBAN CONCENTRATIONS: UNBUNDLING SPATIAL LAGS*

ABSTRACT Foreign direct investment (FDI) is seen as a way to import technology and catch up with economic leaders. It is therefore important to understand why some countries attract more investments by multinationals than others. We expand the set of common determinants of FDI with urban agglomerations and ask the question whether the accessibility of market potential and the number of potential investment locations, in the shape of urban concentrations, matters, since the importance of urban agglomeration economies for FDI has not been investigated before. We show that countries with several medium‐sized cities attract more foreign investment, especially if they are close to main agglomerations, but too much concentration (primacy) reduces the inflow of FDI. Moreover, we unbundle spatially lagged FDI by including spatial lags of the determinants of FDI. It is important to disentangle such third‐country effects in order to understand how FDI flows depend on the complex ways in which multinationals fragment sales and production across countries. Using a panel of U.S. affiliates’ sales in foreign countries between 1984 and 1998, we find evidence that cities are important drivers of FDI. Furthermore, third‐country effects suggest that horizontal and complex forms of FDI coexist.     

Foreign Direct Investment and Regional Export Performance in China

This paper investigates the impact of foreign direct investment (FDI) on the export performance of China at the provincial level. First, it presents a theoretical discussion of the impact of FDI on foreign trade, and then an empirical study of the impact of FDI on the export performance of regions in Chin. It has been found that the impact of FDI on exports differs across three macro-regions in China. The effect is stronger in the coastal region than in the inland regions. Although FDI shows a positive and significant impact on exports from the central region, its impact on the western region is found to be insignificant.     

Foreign Direct Investment and State Export Performance

Since the early 1980s, there has been widespread debate over the impacts of rising levels of inward foreign direct investment (FDI) on the U.S. economy. A frequently noted, but little studied, issue within the debate is the impact of FDI on U.S. foreign trade, and particularly, on the foreign trade of U.S. regions. This study assesses the effects of FDI on the manufacturing export performance of U.S. states during the period from 1980 to 1991. Results indicate that increased levels of FDI are positively related to future improvements in state manufacturing export performance.     

The Location Choice of Foreign Direct Investment Within Turkey: An Empirical Analysis

This paper investigates the location choice of foreign direct investment (FDI) in Turkey over the period 1996–2003. Using FDI data at the provincial level and negative binomial model, the empirical evidence confirms that agglomeration economies and information costs are the most important determinants of FDI location in Turkey. Specifically, both foreign and domestic agglomerations and in particular urbanization economies strongly affect the location decision of foreign investors. The results also suggest that foreign investors are attracted to provinces with fast growing market, more educated labour force, high density of road network, greater public investment, milder climate, larger area and better quality of life. On the other hand, the empirical findings show that wage, productivity, labour availability, unionization, sea and air transportation, free zones and instability have no significant impacts on the location decision.     

The Republic of Korea's Foreign Direct Investments in Australia: The Chaebols Down Under

The objective is to explain why the total value of foreign direct investment (FDI) from the Republic of Korea (hereafter ‘Korea’) remains small in Australia. Internationalisation of Korean production has proceeded rapidly since 1987 following changes in both the domestic and international business environments. Total outgoing FDI increased from US$ 356 million in 1987 to US$ 1,600 million in 1990. Australia, in comparison, received a cumulative FDI of only US$ 128 million in 1990. In terms of Korean FDI, Australia is a marginal location. Low FDI from Korea occurred despite being given priority status by Austrade in 1990 as a source for overseas capital and both countries being in each others top ten export destinations since 1989. Australia as a host nation for Korean corporations (chaebols) is discussed within Edgington's (1988) and Porters (1985) theoretical frameworks which consider overseas investment strategies.     

Agglomeration economies and the location of foreign direct investment: A meta‐analysis

This paper undertakes a meta‐analysis of the effect of agglomeration economies on foreign direct investment (FDI) location. It finds strong differences in these economies arising from both measurement and study‐specific characteristics. Economies generated from domestic rather than foreign activity have the strongest effects on FDI, with the latter only significant if related to the home country of the investor. Support is also found for studies that identify different sources of agglomeration economies, although this is largely underexplored in the empirical literature. The average agglomeration economies estimate is not influenced by publication bias and indicates genuine effects for agglomeration economies on FDI location choice.     

Russia's Inward and Outward Foreign Direct Investment: Insights into the Economy

A prominent British economist reviews the recent growth, partner-country composition, and sector composition of foreign direct investment in and out of Russia from a comparative international perspective, based on UNCTAD and Central Bank of Russia data as well as selected case studies. Two hypotheses are tested: that foreign policy significantly affects the host-country pattern of Russia's outward foreign direct investment (OFDI) and that domestic institutions significantly impact the host-country pattern of Russia's OFDI and the sectoral pattern of its inward foreign direct investment (IFDI). Quantitative evidence of foreign-policy influence could not be found, while domestic institutional influences do appear to be present, most notably in the form of system-escaping OFDI.     

Foreign direct investment and renewal of industries: framing the reciprocity between materiality and discourse

ABSTRACT

Informed by the evolutionary literature on economic geography, this paper develops a conceptual framework for analysing the complexity between foreign direct investment (FDI) and renewal of industries. Present contributions tend to explain the impact of FDI on regional industry evolution as a static, output-oriented phenomenon, that is, informed by an instrumental rationale in which the dynamism of FDI and regional industry development is linked to polarization of stagnation/decline vs. growth/development. Opposing this, we argue for an epistemological shift in approach to the reciprocity between FDI and renewal of industries as dynamism between material outcomes and discursive processes. To accomplish this, we build on key concepts and understandings from evolutionary economic geography; review the regional effects of FDI literature and build a framework sensitive to contextual dimensions of FDI. We focus on multinational companies’ practices and material outcomes in terms of regional spillovers and the discursive processes in terms of FDI narratives. This framework is exemplified by data from the salmon farming industry and the subsea industry in Hordaland and the oil and gas industry and the mining industry in Finnmark.     

Foreign direct investment and international trade: evidence from the US and Japan

This paper examines the question of whether foreign direct investment(FDI) creates or replaces international trade. Theoretical andempirical studies in the past have shown that FDI tends to replacetrade, but more recent evidence suggests the opposite, thatis, FDI creates and complements trade. We analyse the outwardinvestment of Japan and the United States to 29 and 32 countriesrespectively for the period 1996 to 1999. Our analysis indicatesthat trade creating effect dominates on the whole, and thatthis effect also varies significantly across countries.     

Agglomeration,foreign firms and firm exit in regions under transition: the increasing importance of related variety in Hungary

ABSTRACT

Related variety of economic activities is widely recognized to induce regional development; however, it is not clear how this mechanism takes place in regions that go through major structural and institutional transformation. Furthermore, foreign direct investment (FDI) is typically a major source of structural change in these areas; and we still need a better understanding on how foreign-owned (foreign) firms affect the dynamics of domestic-owned (domestic) companies. For these reasons we analyse firm-level exit in Hungarian city regions between 1996 and 2011, over the late post-socialist transition in manufacturing industries, focusing on the difference between foreign and domestic firms. Introducing ownership into the related variety calculation, we estimate the probability of firm exit with the region-level related variety calculated separately for foreign and domestic firms. Our results suggest that related variety of foreign firms decreases the probability of domestic firm exit earlier during the economic transition compared to the related variety of domestic firms. This finding supports the idea that FDI plays a formative role in regions under transition, and shows that domestic firms benefit from being in agglomerations where foreign firms are technologically related to each other.     

Market Potential,Productivity and Foreign Direct Investment: Some Evidence from Three Case Studies

This paper aims at analysing the importance of local determinants to foreign direct investment (FDI) in three European regional case studies. The originality of the approach lies in the use of disaggregated data by sector and by region. The results are three-fold. First, regional demand and productivity are fundamental FDI determinants, confirming most studies with national data. Second, regional FDI inflows are more dependent on regional than national determinants. Finally, the effect of market potential measured with absolute gross domestic product (GDP) on regional FDI diminishes linearly with distance and does not when measured with GDP per capita.     

厦门特区利用外商直接投资探析

本文分四个阶段回顾了厦门利用外商直接投资推动特区经济发展的历程 ,从投资主体、投资方式、投资领域和投资规模的角度 ,分析了厦门利用外商直接投资的特点并细致考察了厦门利用外商直接投资发展迅猛的动因 ,阐述了利用外商直接投资对特区经济发展起到的推动作用 ,作者针对厦门特区再利用外商直接投资中仍存在的若干亟待解决的问题 ,提出了积极的建议     

The Global Economic Crisis and Foreign Investment in Russia from the EU: Empirical Evidence from Firm-Level Data

This paper empirically examines the impact of the recent global economic crisis on foreign investment from EU countries in Russia by estimating a location choice model for foreign firms' entry in Russian regions for the period 1997-2011. It also examines the relative importance of various determinants of location choice on the redistribution of foreign-owned firms among Russian regions before and after the crisis. Strong evidence during the post-crisis period (2008-2011) of a decrease in market-seeking foreign investment in manufacturing and resource-seeking foreign investment in trade is examined not only in light of the crisis but also (in the latter case) within the context of the new Russian law for foreign investment in strategic industries, which went into effect in 2008.     

Foreign Trade in China's Electronics Industry

Three Taiwan-based economists examine the effects of GDP, per capita GDP, geographic distance, FDI outflows and inflows, openness to trade, bilateral investment treaties, and other factors on the volume of bilateral trade between China and 40 of its trading partners in the up-, mid- and downstream segments of the country's electronics industry. Pooled cross-section and time-series data are employed in an empirical estimation for the period 1995-2005, which indicate that the Chinese electronics sector's import/export volumes have grown substantially alongside China's economy. The authors address a specific set of issues questioning whether FDI inflows have created a trade effect in the electronics industry, whether they have lead to a measure of import substitution in China's electronics industry, and whether the net impact of opening the market has been positive or negative on the sector's foreign trade. Journal of Economic Literature, Classification Numbers: F14, F21, L63, O53, P33. 6 tables, 23 references.     

Migration and the location of MNE activities: Evidence from Italian provinces

We investigate the migration-inward foreign direct investment (FDI) nexus in narrow geographies. A novel two-stage empirical strategy allows us to investigate the role of migration as a determinant of multinational enterprises (MNEs) location choices and unpick heterogeneity in foreign investors' preferences towards the presence of migrants in the host location. This allows us to shed light on the relative importance of the underlying mechanisms linking migration and inward FDI. Relying on 1113 greenfield investments by 895 MNEs in Italian NUTS3 regions over 2003–2015, we find that immigrants from the country of origin of the investor exert a positive but highly heterogeneous effect on MNE location choices. Investors are more sensitive to the presence of migrants from their country of origin when they lack experience in the destination country (first-time investors) and when their investments concern market-access or business-services (downstream) activities. This is consistent with the view that migrants act as information brokers that bridge the fixed costs of international business activities.