FUTURE PATHWAYS FOR FOREIGN DIRECT INVESTMENTS: ANALYZING THE NEXUS OF OBSTACLES AND INCENTIVES IN MIDDLE INCOME COUNTRY
DOI:
https://doi.org/10.18623/rvd.v23.6680Palavras-chave:
Foreign Direct Investment, Middle-Income Countries, Firm Specific Data, Logit MethodResumo
Attracting foreign direct investment is of great importance for middle-income countries in terms of economic growth and global competitiveness. In this context, accurately analyzing the incentives and barriers that shape foreign investment decisions is of great importance for countries seeking to attract a larger share of global capital flows and achieve sustainable development goals. This study examines how foreign direct investment in middle-income countries is influenced by incentives and obstacles. Using firm-level data from the World Bank’s 2019 Global Investment Competitiveness Survey, it analyses foreign-invested firms across Brazil, China, India, Indonesia, Malaysia, Mexico, Nigeria, Thailand, Türkiye, and Vietnam. The study evaluates incentives such as tax exemptions, reduced corporate tax rates, cash grants, and infrastructure support, alongside obstacles like investment approval requirements, mandatory foreign partnerships, and local content rules. Findings from the Logit method reveal country-specific variations: cash grants positively impact FDI in India, Indonesia, and Türkiye, while some incentives negatively affect China. Obstacles generally have strong negative effects, especially in India, Mexico, and Vietnam. The study concludes that improving investment conditions requires country-specific policy mix balancing incentives with the removal of obstacles. A comprehensive policy framework is essential for sustainable FDI growth, considering each country’s unique economic and institutional context.
Referências
Ali, S., & Guo, W. (2005). Determinants of FDI in China. Journal of Global Business and Technology, 1(2), 21–33.
Blomstrom, M., & Kokko, H. (2003). The economics of foreign direct investment incentives (NBER Working Paper No. 9489). National Bureau of Economic Research.
Boly, A., Coulibaly, S., & Kéré, E. N. (2019). Tax policy, foreign direct investment and spillover effects (Working Paper Series No. 310). African Development Bank.
Busse, M., & Hefeker, C. (2007). Political risk, institutions and foreign direct investment. European Journal of Political Economy, 23(2), 397–415.
Cameron, C., & Trivedi, P. (2010). Microeconometrics using Stata. Stata Press.
Canh, N. P., Binh, N. T., Thanh, S. D., & Schinckus, C. (2020). Determinants of foreign direct investment inflows: The role of economic policy uncertainty. International Economics, 161, 159–172.
Choi, S. W., & Samy, Y. (2008). Reexamining the effect of democratic institutions on inflows of foreign direct investment in developing countries. Foreign Policy Analysis, 4(1), 83–103.
Christo, I. (2021). Special economic zone: A path to foster Chinese FDI in Brazil. Journal of Special Jurisdictions, 1(2), 252–281.
Cleeve, E. (2008). How effective are fiscal incentives to attract FDI to Sub-Saharan Africa? The Journal of Developing Areas, 42(1), 135–153.
Davies, B. R., & Ellis, C. J. (2007). Competition in taxes and performance requirements for foreign direct investment. European Economic Review, 51, 1423–1442.
Dawson, J. W. (1998). Institutions, investment and growth: New cross-country and panel data evidence. Economic Inquiry, 36, 603–619.
Desai, M. A., Foley, C. F., & Hines, J. R. (2004). Foreign direct investment in a world of multiple taxes. Journal of Public Economics, 88, 2727–2744.
Devereux, M. P., & Freeman, H. (1995). The impact of tax on foreign direct investment: Empirical evidence and the implications for tax integration schemes. International Tax and Public Finance, 2(1), 85–106.
Djankov, S., Ganser, T., McLiesh, C., Ramalho, R., & Shleifer, A. (2010). The effect of corporate taxes on investment and entrepreneurship. American Economic Journal: Macroeconomics, 2(3), 31–64.
Globerman, S., & Shapiro, D. (2002). Global foreign direct investment flows: The role of governance infrastructure. World Development, 30(11), 1899–1919.
Gordon, R. H. (1992). Can capital income taxes survive in open economies? Journal of Finance, 47(3), 1159–1180.
Gropp, R., & Kostial, K. (2000). The disappearing tax base: Is foreign direct investment (FDI) eroding corporate income taxes? (ECB Working Paper Series No. 31). European Central Bank.
Halvorsen, R. (1995). Fiscal incentives for investment in Thailand. In A. Shah (Ed.), Fiscal incentives for investment and innovation. Oxford University Press.
Hsu, M., Lee, J., Leon-Gonzalez, R., & Zhao, Y. (2019). Tax incentives and foreign direct investment in China. Applied Economics Letters, 26(9), 777–780.
Hu, X., Wan, G., Yang, C., & Zhang, A. (2023). Inequality and the middle-income trap. Journal of International Development, 35(7), 1684–1710.
Hunady, J., & Orviska, M. (2014). Determinants of foreign direct investment in EU countries — Do corporate taxes really matter? Procedia Economics and Finance, 12, 243–250.
Janicki, H. P., & Wunnava, P. V. (2004). Determinants of foreign direct investment: Empirical evidence from EU accession candidates. Applied Economics, 36(5), 505–509.
Katitas, A., & Pandya, S. (2024). Investment incentives attract foreign direct investment: Evidence from the Great Recession. Public Choice, 200(1), 323–345.
Klemm, A., & Van Parys, S. (2009). Empirical evidence on the effects of tax incentives (IMF Working Paper No. 09/136). International Monetary Fund.
Kobrin, S. J. (1976). The environmental determinants of foreign direct investment: An ex-post empirical analysis. Journal of International Business Studies, 7(2), 29–42.
Lodhi, K. M. (2017). Tax incentives and impact on investment in Pakistan. Abasyn Journal of Social Sciences, 10(1), 192–211.
Manrejo, S., & Yulaeli, T. (2022). Tax compliance model based on taxpayers planned behavior in Indonesia. Journal of Tax Reform, 8(3), 298–311.
Mohamed, S. E., & Sidiropoulos, M. G. (2010). Another look at the determinants of foreign direct investment in MENA countries: An empirical investigation. Journal of Economic Development, 35(2), 75–95.
Morisset, J., & Pirnia, N. (1999). How tax policy and incentives affect foreign direct investment: A review (World Bank Policy Research Working Paper No. 2509). World Bank.
Nene, M., & Pasholli, A. (2011). Financial incentives and their impact for attracting FDI: Survey with foreign investitures in Albania. Journal of Knowledge Management, Economics and Information Technology, 7, 1–14.
Osman, C. (2000). Policy competition for foreign direct investment: A study of competition among governments to attract FDI. OECD.
Popescu, G. H. (2014). FDI and economic growth in Central and Eastern Europe. Sustainability, 6(11), 8149–8163.
Simmons, R. S. (2003). An empirical study of the impact of corporate taxation on the global allocation of foreign direct investment: A broad tax attractiveness index approach. Journal of International Accounting, Auditing and Taxation, 12, 105–120.
Slemrod, J. B. (1990). Tax effects on foreign direct investment in the United States: Evidence from a cross-country comparison. In Taxation in the global economy (pp. 79–122). University of Chicago Press.
Thuita, G. W. (2017). An investigation of the effect of tax incentives on the FDIs: A case of EPZs in Athi River Kenya. Journal of Accounting, Finance and Auditing Studies, 3(1), 17–36.
Tung, S., & Cho, S. (2000). The impact of the tax incentives on foreign direct investment in China. Journal of International Accounting, Auditing and Taxation, 9(2), 105–135.
Wells, L. T., Allen, L. J., Morisset, J., & Pirnia, N. (2001). Using tax incentives to compete for foreign investment: Are they worth the cost?. Foreign Investment Advisory Service, World Bank.
Wheeler, D., & Mody, A. (1992). International investment location decisions: The case of U.S. firms. Journal of International Economics, 33(1–2), 57–76.
Wilson, J. (1996). The tax treatment of imperfectly mobile firms: Rent seeking, rent protection, and rent destruction. In R. Feenstra, G. Grossman, & D. Irwin (Eds.), The political economy of trade policy: Papers in honour of Jagdish Bhagwati. MIT Press.
World Bank. (2020). Global Investment Competitiveness Survey (GICS) 2019. https://microdata.worldbank.org/index.php/catalog/3804
Downloads
Publicado
Como Citar
Edição
Seção
Licença
Submeto (emos) o presente trabalho, texto original e inédito, de minha (nossa) autoria, à avaliação de Veredas do Direito - Revista de Direito, e concordo (amos) que os direitos autorais a ele referentes se tornem propriedade exclusiva da Revista Veredas, sendo vedada qualquer reprodução total ou parcial, em qualquer outra parte ou outro meio de divulgação impresso ou eletrônico, dissociado de Veredas do Direito, sem que a necessária e prévia autorização seja solicitada por escrito e obtida junto ao Editor-gerente. Declaro (amos) ainda que não existe conflito de interesse entre o tema abordado, o (s) autor (es) e empresas, instituições ou indivíduos.
Reconheço (Reconhecemos) ainda que Veredas está licenciada sob uma LICENÇA CREATIVE COMMONS:
Licença Creative Commons Attribution 3.0
