Publication Type: Conference Paper/Unpublished Manuscript
Abstract: Southeast Asia is a region that shares inward stock from FDI. This region has several features that attract FDI such as raw materials, natural resources, and low-waged labor. In fact, FDI inflow is important for economic growth and development in the region. During the past few years, FDI inflow of the region had been increasing then decreasing steadily. What causes this up-and-down pattern? The argument is that a pattern of FDI inflow of Southeast Asia is highly conditioned by the region’s relations with the rest of the world. I examine two factors that contribute to this matter: change of China’s FDI and economic and political instability in the region. First, due to the abundant of land and resources, coupled with low-cost labor, China has become the most attractive host countries for manufacturing MNCs. Second, regional problems such as the financial crisis in 1997 and SARS make the region less attractive. In order for Southeast Asia to reduce the vulnerability, I suggest that regional cooperation would replenish a decline of FDI inflow and stimulate economic growth and development. So far, Southeast Asian countries have initiated cross-border investment and mergers and acquisitions (M&A) through regional MNCs. These phenomena have been mostly preceded by “ethnic Chinese” in the region. They are the main driving force of regional investment. Although they also contribute to the increase of inward FDI in China, regional cooperation seems to be an alternative that stimulates economic development in Southeast Asia.

Publication Type: Conference Paper/Unpublished Manuscript
Review Method: Peer Reviewed
Abstract: As the world's second largest recipient of Foreign Direct Investment (FDI), China has become a magnet attracting international technology, management, and capital. China's dazzling performance in FDI inflows, however, comes with a seemingly puzzling phenomenon. Every year Chinese local governments scramble to secure contracts promising investment from foreign investors, which are not fully utilized in practice, thus creating a huge gap between the contracted FDI and the finally realized FDI. This gap is not only an evident indicator of inefficiency in FDI usage, but also an apparent sign of waste in public resources. How is this gap to be explained? What are the plausible policy recommendations to deal with this problem? Important as it is, this issue nevertheless receives only scant, if any, attention in the literature. This paper argues that the gap between the contracted FDI and utilized FDI is a result of the game between the principal, the central government, and the agents, local governments. The agents, local officials, can always claim that the FDI has been realized when indeed it is the contracted FDI, which is very difficult for the central government, the principal, to verify. A case study of Jiangsu Province is done to test our hypothesis. Policy recommendations regarding how to reduce agent costs and improve the efficacy in using FDI are also drawn from our study.

Publication Type: Conference Paper/Unpublished Manuscript
Review Method: Peer Reviewed
Abstract: A puzzling inconsistency characterizes the attitudes of many developing countries toward globalization and the establishment of international rules governing the global economy. While countries have ceded sovereignty in monetary policy and trade policy, they have been much more reluctant to do so in the area of foreign direct investment (FDI). Agreeing to investment rules clearly does entail ceding sovereignty but not necessarily more so than in these other areas in which nations have agreed to comply with international regimes. In fact, there have been attempts � some successful, some not � to establish international rules on FDI. At the most recent round of trade talks in Qatar, nations once again battled over this issue with inconclusive results. Despite this and the failure of the talks on establishing the MAI (Multilateral Agreement on Investment), there are several examples of established rules. Examples include the WTO rules on TRIMS (Trade Related Investment Measures), The GATS (General Agreement on Trade in Services) provisions on investment in service industries, regional and bilateral investment treaties, as well as less formal arrangements such as various codes of conduct that have been established. This paper will examine and explain the variation in the extent to which countries have been willing to cede sovereignty in the area of FDI regulations. The paper will explore when and under what conditions stronger regimes are established and thus help us to understand the prospects for FDI regulation in the future.

Publication Type: Conference Paper/Unpublished Manuscript
Abstract: This paper studies the association between natural resource endowments and FDI inflows. Political science literature has mainly focused on the natural resource dependence on the one hand and political regime type (Ross 2000; Wantchekon 2000; Wantchekon and Jensen 2000), civil conflict (Collier and Hoeffler 2001) and economic growth (Sachs and Warner 1997, 1997, 2001; Rodriquez and Sachs 1999; Leite and Weidman 1999; Gylafson 2001; Manzano and Rigobon 2001) on the other. Interestingly, regime type, civil conflict and economic growth are some of the industry standard independent variables in the FDI literature as well. But this complexity of relationships created more questions than answers, instead of giving rise to systematic studies of the association between natural resource endowments and FDI. This specifically applies to regime type/FDI literature. Though there are many studies that do not find any relationship between regime type and FDI, or negative relationship between democracy and FDI (Oneal 1994; Alesina and Dollar 1998; and Jessup 1999), Jensen?s (2003) finds a positive association between democracy and FDI, and at some point he tries to explain this result by natural resource factor. But after finding evidence for the aforementioned claim in a cross national study looking at 1980s-90s, he still finds a positive relationship between democracy and FDI in his time series models that look at 1970-1997, though not controlling for the resource variable this time. Other scholars of regime-FDI too seem to be aware of the considerable potential role of natural resource in terms of FDI, and regime FDI association eventually. Jessup, for instance, excludes oil in his study implying its, among other natural resources, special attractiveness for FDI (1999, 21). Yet still, he finds different association between regime type and FDI inflows than Jensen (2003), which in turn makes the relationship between natural resources and FDI on the hand, and the way this relationship affects the association between regime type and FDI inflows on the other, more puzzling. This paper is an attempt at a systematic inquiry into the relationship between natural resource richness and FDI inflows. A secondary aim is to sort out how natural resource variable?s presence affects the association between regime type and FDI. Despite the generally held assumption and some findings, in this paper, those nations with more natural resource endowments are claimed have more bargaining power and thus are expected to be more successful in limiting the participation of MNCs to as small as possible controlling stakes if at all. And since such rich nations, specifically after the wave of nationalizations, had time to accumulate huge financial resources themselves (which can be expected to be positively related to resource abundance), they will need lesser FDI than those with less resources, or those who entered the market lately, like post Soviet states. These, combined with the nationalization waves of the 1970s, whose main target was natural resource related firms (Jodice 1980; Kobrin 1980), can be expected to result in a negative relationship between natural resource endowments and FDI inflows. There are different theories that expect different associations between regime type and the FDI flows. This paper is not directly dealing with it. And thus, whether regime type matters while controlling for the natural resource variable, will be of interest mainly as an empirical question. Yet for the reasons to be explained later, the expectation will be no relationship between regime type and FDI inflows. Variables and Research DesignThe dependent variable is net FDI inflows as a percentage of GDP (Jensen 2003). The main independent variable, Resource, is intended to measure a country?s natural resource abundance. It is taken from Ross (2001), which measures it as the combined value of the exports of fuel, metal and ores as the percentage of GDP. With slight modifications this operationalization is in line with Jensen (2003) and Sachs and Warner (1995). Control variables are mainly taken form WDI 2004, Polity IV (2002) and Banks (2004).

Publication Type: Conference Paper/Unpublished Manuscript
Abstract: This research examines the effects of the post-communist parties in transitional government on foreign direct investment (FDI) inflows. Is there variation in FDI inflows depending on who seizes power in those countries? If so, what kind of government is more likely to induce or prohibit FDI inflows? Why is it so? While FDI into transition economies is reported to have positive effects such as facilitating economic growth and technological innovation and accelerating enterprise restructuring, not all post-communist countries enjoyed the benefits of FDI. In fact, unlike the Czech Republic, Hungary, and Poland, other transitional countries failed to attract much attention of foreign investors. In addition, FDI inflows into the Central and Eastern Europe are relatively smaller than those to other developing countries even though the Central and East European countries are regarded as having greatest development potential (Bandelj 2002). To address these empirical questions, this research explores the determinants of FDI in the post-communist countries with special attention to the role played by the post-communist parties in government.