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Patterns of Foreign Direct Investment in Transylvania

Patterns of Foreign Direct Investment in Transylvania

Foreign direct investment (FDI) has gained signifi cant importance over the past decade as a tool for accelerating growth and development of transition economies. It is widely believed that the advantages that FDI brings to the standard of living and prospects for economic growth of the host nation largely outweigh its disadvantages. Despite the growing interest in the subject, to our knowledge, there is still no satisfactory empirical work which can explain the determinants of the spatial distribution of FDI fl ows into the separate regions of Roma- nia, one of the largest new EU-member states. Thus, this research attempts to fi ll this gap by using a primary data from a questionnaire that covers the entire transition period. The main goal of this study is to identify the main determinants of the direct foreign investments in Central, West and North West Romanian regions. Basically, the study is constructed so, that it will provide a list of the main strengths and weaknesses of Center, West and North West regions, that would infl uence a foreign investor to choose the proper location for a future investment when developing his strategy.
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Foreign direct investment spillovers: additional lessons from a country study

Foreign direct investment spillovers: additional lessons from a country study

As regards specification, two further points have been raised. First, modeling with product market variables and indicators of sector structure seems to have reached its limits. New explanatory variables, bringing forward the factors markets and the intersectoral dimensions, for instance, are needed to produce more consistent views. Second, either with the same model or in a system of equations, when the analysis comprises a sufficiently big and diversified region as most countries are (even smaller ones like Portugal), the spatial dimension, in its agglomeration aspects, must also be considered. These two issues call for more theory before pursuing the empirics, to avoid a senseless proliferation of ad hoc models with a marginal contribution to the subject.
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Analysis of absorptive capacity and foreign direct investment in the productivity of Brazilian municipalities

Analysis of absorptive capacity and foreign direct investment in the productivity of Brazilian municipalities

Kumari & Sharma (2017) analyzed the main determinants affecting the flow of FDI in developing countries using an unbalanced panel data set (1990-2012). The findings reveal that market size, trade openness and human capital have a positive association with FDI inflows. This study has significant implications for policy makers, managers and investors. Policy makers will be able to understand the importance of the key determinants of FDI mentioned in the document and take steps to formulate policies that encourage FDI.

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The determinants of foreign direct investment: what is the evidence for Africa?

The determinants of foreign direct investment: what is the evidence for Africa?

In  the  context  of  the  Johansen  VECM  specification,  the  factors  that  were  found  to  either  impede  or  induce  FDI  flows  into  South  Africa are  the  following:  labour  capital  ratio;  market  size;  corporate  taxation;  wage  costs;  openness  of  the  economy  and  the  political  institutional structure. The negative sign for labour capital ratio found from their estimations  suggests  that  FDI  in  South  Africa  has  tended  to  be  capital  intensive  and  thence  the  preponderance of horizontal over vertical FDI in South Africa. In addition, reducing political  risk,  ensuring  property  rights,  bolstering  growth  in  the  market  size,  as  well  as  wage  moderation  (ideally  lowering  real  wages),  lowering  corporate  tax  rates,  and  ensuring  full  integration  of  the  South  African  economy  into  the  world  economy  follow  as  policy  prescriptions from the empirical findings of this paper.  
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The determinants of foreign direct investment distribution among the Brazilian states

The determinants of foreign direct investment distribution among the Brazilian states

FDI has played an important role in Brazi l’s push towards a market oriented economy. From 1995 to 2012, Brazil has received $ 511.5 billion dollars in FDI. In 2012 Brazil was the second largest developing country recipient of FDI and the fourth worldwide (UNCTAD).Due to geographical concentration, Brazilian states which are considerably less developed and poorer, and as a result, in greater need of capital investment, have not played host to FDI in a significant way. In 2010, states with the largest stocks of FDI were São Paulo with 42.3 percent of the total ($ 99.9 billion dollars), Rio de Janeiro with 13,3 percent ($ 31.4 billion dollars) and Minas Gerais with 10,6 percent of the total ($ 25.1 billion dollars). As can be observed, only three of the twenty-seven Brazilian states received around 66 percent of the total FDI intended to Brazil.Given such differentiation in the distribution of FDI among Brazilian states, this study seeks to explain if tax benefit is also a determintant of FDI inflow, besides the other variables already considered as determinant. Given the limitation of data, we performed two econometric analysis with panel data: 1. using six key variables: size of the consumer market, quality of workforce, transportation infrastructure, cost of labor, tax burden and tax benefit (by macro regions), in the years 1995, 2000, 2005 and 2010; 2. using five key variables: the same as the first model, excluding the cost of labor (for lack of data) and using the tax benefit data by state, in the years 2010, 2011 and 2012.
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Foreign direct investment in oil and gas in Colombia: qualitative research of main barriers

Foreign direct investment in oil and gas in Colombia: qualitative research of main barriers

There is a positive perception, there is a an even more positive image outside of the country than inside. In my personal opinion, I have a big concerns with the peace agreements , because and above everything in the 1st agreement has lots to do about illegal plantations, there is a series of decisions and approaches that are going to create some barriers. This is my personal opinion , especially when it comes to previous consultation, is going to create more barriers in the rural sector of the country. There is going to be a much severe protection to the social protest, much more than what we have today, even in the peace agreement they even talk about unrests so to certain point the public order alteration is institutionalized. I don't know how the ruling is going to work, and the concept of the difficult ruling. I don't understand how the alteration of the public order , small or bigs there are some elements that can generate a feeling of uncertainty for the investors, even though the perception outside is really positive.
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Impact of real exchange rate volatility on foreign direct investment inflows in Brazil

Impact of real exchange rate volatility on foreign direct investment inflows in Brazil

 Exchange Rate Volatility – In this study REER is defined as the relative consumer price index (through following the Law of One Price (LOP) 5 and Purchasing Power Parity (PPP) 6 ). The real effective exchange rate volatility is estimated following Wakelin & Gorg (2002), Furceri & Borelli (2008) and Schmidt & Broll (2009) measurement, through the annual standard deviation of the monthly changes in the REER. Other alternatives to measure volatility, would be the Generalized Autoregressive Conditional Heteroscedasticity (GARCH) developed by Bollerslev (1986), which is the improved version of the Autoregressive Conditional Heteroscedasticity (ARCH) developed by Engle & Granger (2007). The standard deviation as an unconditional measure, does not condition upon the information that is available today, it simply takes into account the past average of historical observations, therefore it ignores stochastic problems through time. However the volatility of the exchange rates in this study is aimed to explore the existence of long and short-term connection with FDI in the past, which for the simplicity of the volatility measure, allows this variable to be used through the unconditional measure. Taking into account the Brazilian currency’s development through this observation period and its possible influence on a macroeconomic level, the variable REER volatility is expected to have a negative relationship with Brazilian FDI inflows.  GDP Growth – Emphasized by the majority of the papers as an important variable (
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Foreign direct investment spillovers in Portugal: additional lessons from a country study

Foreign direct investment spillovers in Portugal: additional lessons from a country study

The estimation results are reported in Table 6. It is interesting to compare the coefficients in this table with those in the related column of Table 4. The four significant independent variables’ coefficients in the fixed-effects model are as well in Table 4, with the same signs and, but for the concentration index (H), roughly the same value. Two major changes then occur for variables FP and SL: their coefficients change sign and become not significant. On the other hand, all idiosyncratic effects are positive and significant – most at the 1 per cent level – showing that there clearly exists a sectoral effect. Indeed, it seems to be more important than those previously accounted for the foreign presence (FP) and the skilled labour ratio (SL). In other words, they leave no room for spillover effects.
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Taxation as a driver for Portuguese foreign direct investment in Netherlands: myth or reality?

Taxation as a driver for Portuguese foreign direct investment in Netherlands: myth or reality?

Notwithstanding, is important to mention that these companies use its parent company as an economic guarantee to obtain their funds, which means that a keep well agreement, so contract between the parent company and its subsidiary exists to ensure the solvency of the subsidiaries. Those companies have been using Netherlands as a financial hub to locate its financial function, playing a prominent role in the funding of the group companies. They were externalizing the financial function and consequently dividing their value chain across countries, locating the different stages of the value chain where could obtain more competitive advantages. In these regard there are a business motive underlying the location of those companies in Netherlands. The companies under analysis only grant loans to group companies. Considering the Dutch tax system any amount of stamp tax was due regarding this intragroup loans and the underlying interests, which means that to the profits obtain with the financial activity perform by the sub- holdings under analysis was only applied the CIT. The financial companies are currently taking advantages of the inexistence of stamp tax in Netherlands, which gave to that country a competitive advantage when compared to Portugal.
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Multiple finances, margins of foreign direct investment and aggregate industry productivity

Multiple finances, margins of foreign direct investment and aggregate industry productivity

ses (proposition 5) and some relatively less productive FDI irms are forced to exit from FDI. As a result of withdrawing capital from FDI, these irms issue fewer bonds. In this case, deteriorative bank credit results in shrinking bond issuance, which we call the complementary effect of bond issuing and bank borrowing. In contrast, however, those irms that are productive enough to maintain FDI un- der a worse credit condition issue more bonds as a substitution for reduced bank credit and keep the working capital for foreign production unchanged, which we call the substitution effect of bond issuing and bank borrowing. Because of the possibility of issuing bonds as an alternative form of inance, irms do not neces- sarily experience production contraction when facing credit tightness, which im- plies the signiicance of multiple sources of inance in smoothing investment. Figure 1 intuitively depicts the change in A with decreased m (from m to m’) and the differentiation of irms in inancing. As we mentioned above, only those irms with productivities that are higher than the cutoff productivity for FDI keep reser- ve fund A. The more productive the irm is, the more A it raises (proposition 3). Therefore, A is 0 for irms with productivities lower than j *
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The impact of foreign direct investment on economic growth: the Portuguese experience

The impact of foreign direct investment on economic growth: the Portuguese experience

Hermes and Lensink (2003) introduce some channels in which FDI has positive effects. First, FDI stimulates competition and consequently the growth. Second, FDI through channel of learning labor force may affect on the growth. Third, technology imitation by domestic firms raises the growth. Forth, FDI via upgrading managerial and technological processes increases the economic growth. In general, the spillover of FDI on domestic labor efficiency increase in competition, upgrading the products' qualities and development of markets are other factors that are important in affecting FDI on the growth.
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Foreign Direct Investment, Economic Freedom and Economic Performance in Sub-Saharan Africa

Foreign Direct Investment, Economic Freedom and Economic Performance in Sub-Saharan Africa

Bengoa and Sanchez-Robles (2003) explored the interplay between economic freedom, foreign direct investment and economic growth us- ing panel data for a sample of 18 Latin American countries over the pe- riod spanning 1970 through 1999. Their results suggest that fdi is posi- tively correlated with economic growth. They also observed that the host country requires adequate human capital, economic stability and liber- alized markets to beneits from long-term capital lows. Azman-Saini, Baharumshah, and Law (2010) also investigated the systemic link be- tween economic freedom, foreign direct investment (fdi) and economic growth in a panel of 85 countries. The empirical results, based on the generalized method-of-moment system estimator, reveal that fdi by it- self has no direct (positive) efect on output growth. Instead, the efect of fdi is contingent on the level of economic freedom in the host coun- tries. This means the countries promote greater freedom of economic activities gain signiicantly from the presence of multinational corpora- tions (mncs). To date, empirical studies on fdi-growth relationship still largely remain limited particularly with respect to the efects of ef on fdi spillovers.
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Going international to the united arab emirates

Going international to the united arab emirates

Gelpeixe is currently present in Angola, Macau, Cape Verde and Luxembourg and its interest and willingness to invest in the Middle East region and Dubai in particular is a clear example of the findings provided by Johanson & Vahlne (2009) research where companies start in foreign markets that are close to the domestic market in terms of cultural and mentality aspects, and then move gradually into markets that are further away in terms of cultural or mentality aspects. The proposed internationalization strategy for Gelpeixe also follows the predicted by Czinkota and Ronkainen (2004) where internationalization is a gradual process for organizations through a series of phased developments. Gelpeixe will continue with its exporting strategy as the first approach to the market and only after it gets more involved will start developing new strategies. According to Root (1994), only after some success in casual export or licensing, do some companies start to think about what is needed to create positions in foreign markets that can be sustained over the long run. This is exactly what is suggested to Gelpeixe through the above mentioned three phases. First it starts with a soft approach, direct export with local agency, to the local market (Phase 1 – Active Involvement and Market Evaluation) and only after, if successful, will proceed to the presence in the neighbouring markets through direct export with local agency or partnerships (Phase 2 – Involvement and Expansion into Neighbouring Markets) and finally will conclude with a local physical presence in the region through direct investment in the form of a Green Field or Brown Field project (Phase 3 – Physical Presence in the Local Market). Related to the proposed internationalization strategy through phased developments the same findings are in compliance with the findings provided by Johanson & Vahlne (1977) research where the internationalization of a firm is a step by step process of increasing commitments as a firm develops international experience.
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How can small municipalities attract foreign direct Investment? Case study

How can small municipalities attract foreign direct Investment? Case study

accessibility. The telecommunications’ infrastructure compares, very advantageous, with the European average. Moreover, about half of the electricity comes from renewable sources. As part of the EU, Portugal has a similar access and availability of financial services when compared with other major competitors for FDI, such as the case of France or Spain. Portugal has a relatively low minimum wage, when compared with other western EU countries, such as France or the UK, which is also a positive factor for FDI attraction, specially for industries that are highly sensitive to labor costs. Portugal also has a very good quality of life, overall: the warmest month registered 24º C, on average, while the coldest recorded an average of 11ºC 5 , hence demonstrating quite attractive weather conditions which aligned with the culture, security and gastronomy, delivers an attractive location for expatriates and travelers. The average quality and easy availability of both public and private health and education services is also an important factor. Portugal is also recognized by the availability of qualified labor, as about 20 000 students graduate, every year, in areas such as science, engineering and mathematics. 2
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RAM, Rev. Adm. Mackenzie  vol.18 número4

RAM, Rev. Adm. Mackenzie vol.18 número4

According to Filatotchev and Wright (2011), the forms of internationalization of assets (foreign direct investment, international joint ventures, subsidiaries, global business groups) have more risks, because they establish an infrastructure in a foreign country. This process increases the management complexity and, as a consequence, the agency costs to articulate the interests of shareholders and managers of the head office and the branch abroad. However, a higher risk may provide a higher return, as the company will have broader access to suppliers, finance, and consumer markets, which can affect the delisting of multinational companies that present mainly non- equity internationalization with potentially lower returns.
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FDI Spillovers at Regional Level: Evidence from Portugal

FDI Spillovers at Regional Level: Evidence from Portugal

Foreign direct investment (FDI) is recognised today as one of the most vital motors for the stimulation of a country’s development, and of real convergence with more developed economies. In addition to the direct effects of FDI, such as capital formation, job creation, increased tax revenues and transformation of the productive and export structures of the host countries, the attempts by countries to attract FDI are also motivated by the expectation of gaining access to more advanced technology. It is worth highlighting that the latter refers not only to the technical processes of production and distribution, but extends to management and marketing techniques (Blomström and Kokko, 1998). Domestic firms can benefit from the superior technology possessed by a multinational company (MNC) through a variety of channels and, by so doing, achieve increased productivity. If these gains are not fully absorbed by the MNCs, FDI externalities (spillovers) will be generated for the domestic firms. These externalities may occur when the foreign firm and the domestic firm operate in the same sector (horizontal spillovers) and/or in different sectors vertically related (vertical spillovers).
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What drives foreign direct investment: the role of language, geographical distance, information flows and technological similarity

What drives foreign direct investment: the role of language, geographical distance, information flows and technological similarity

highlighted the strong impact of language on IB, and the distinct effects of language and culture. In this study, by language we mean the same language type that is internationally standardized but with local differences in terms of dialect (a particular form of a language specific to a region), specific vocabulary or grammar tradition. For instance, the Portuguese language used in Portugal, Brazil, Cape Verde or Angola is the standard Portuguese in its essence. However, in each country the language has evolved revealing national differences in vocabulary, accent or grammar tradition due to external influences from local (native) culture and longstanding political independence from Portugal. Moreover, by language proximity we consider the language family that is a group of languages descending from a common language root. For instance, language commonalities between Portuguese and Spanish, or Spanish and Italian allow a certain ease of common communication between speakers without translation. In both cases, language is not the obstacle in communication or business interaction. This positioning is in line with recent research on language in IB literature by Tenzer et al. (2017) and Hejazi and Ma (2011).
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Rev. adm. empres.  vol.51 número2

Rev. adm. empres. vol.51 número2

These results also corroborate those found by Macaulay (1985) and Williamson (1985), which have already been mentioned. According to these authors, investments in non-specific sectors of the economy are not governed by contracts and, therefore, do not generate transaction costs. Williamson (1985) attributes these results to the fact that the rationality of individuals is limited and the fact that the cost of monitoring and obtaining information is often very high. Therefore, they suggest that an investor does not have perfect information about other countries and transaction costs are therefore not determinants of direct foreign investment. On the other hand, the investment rate is related to domestic investment in a country, as can be verified in models I and II. As they are in their own country, investors have more access to information, so transaction costs are bound to have an impact on the country’s investment rate. Other works also found no evidence that transaction costs affect foreign investors, for instance Putterman (1996) and Richardson (1972).
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The promotion of outward foreign direct investment: a comparative analysis of Bric countries

The promotion of outward foreign direct investment: a comparative analysis of Bric countries

In the 1990s, things start to change, although rather slowly, as the country began to embrace a structural liberalization of the economy and face increasing current account deficits. In 1992, the requirement for Brazilian outward investors to compensate foreign currency remittances abroad associated with OFDI by selling an equivalent amount of gold to the Central Bank was abolished. The MCTF market was enlarged to encompass transactions regarding Brazilian OFDI, but a complex approval system remained in place. The approved amount of outward investment was limited to US$1 million, for a period not less than 12 months, without prior approval of the Central Bank. Yet, it required a wide range of documents for registration. In 1994, the limit was once again raised to US$5 million. Investments above this sum required the approval of the Central Bank. The long list of documents, besides the limit, remained a constraint for outward investors. Further liberalization occurred in terms of portfolio investments during the following years. However, OFDI regulations remained the almost unchanged until 2005, in contrast to China and India that strongly liberalized in the end of the 1990s and early 2000s.
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Determinants of foreign direct investment in ASEAN: A panel approach

Determinants of foreign direct investment in ASEAN: A panel approach

to 1998. He found that the exchange rate and market size were factors influencing significantly on FDI flows into MERCOSUR. Meanwhile, FDI flows into ASEAN were only affected by the exchange rate. The analysis also explains why foreign capital flows contribute to print for a regional integration process a higher vertical degree in ASEAN than in MERCOSUR. Ismail (2009) used a semi gravity model to identify the determinants of FDI in ASEAN countries covering the period from 1995 to 2003. The dataset covers 18 source countries from various investors in the world and 9 host countries, which include all ASEAN members except Cambodia. The results revealed that besides the market size for host and source country, other criteria such as the shorter the distance, common in language and border, the extended market relative to distance also attracts more foreign investors. Other macroeconomic factors such as lower inflation rate, the slightly higher in exchange rate and good management of the government budget are among the key factors that attract more FDI. In addition to economic factors, social factors such as good telecommunication and infrastructure and non-economic factors such as transparency and trade policy also encourage more investors to the ASEAN. Masron and Abdullah (2010) studied the impact of institutional quality on FDI flows into ASEAN for the period 1996-2008. Adopting panel data models methodology, they found an indication that improving the institutional quality was also crucial as part of future policy strategy to further attract new FDI flows into the region. Besides, they also found positive effects of market size, human capital, and the opening of the economy for FDI flows into ASEAN.
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