Foreign Direct Investment,Services Trade Negotiations and Development: The Case of Tourism in the Caribbean

This article examines whether and how developing countries can use services trade negotiations to increase the amount of inward FDI conducive to development. It reviews how services trade rules can affect inward FDI, and employs panel data analysis with innovative use of instrumental variables in the tourism sectors of 9 Caribbean countries during 1997–2003. It argues that Caribbean countries may want to signal openness to inward FDI in GATS, while maintaining a degree of flexibility in the use of policy measures; in the current negotiations with the EU on Economic Partnership Agreements, the focus could be on emphasising the development dimension.     

CLIMBING TO THE TOP? FOREIGN DIRECT INVESTMENT AND PROPERTY RIGHTS

This article operates at the interface of the literature on the impact of foreign direct investment (FDI) on host countries and the literature on the determinants of institutional quality. We argue that FDI contributes to economic development by improving institutional quality in the host country. This proposition is tested within a large panel data set of 70 developing countries for the period 1981–2005. We show that FDI inflows have a positive and highly significant impact on property rights. Results are very robust and not affected by model specification, different control variables, or estimation technique. To our knowledge this is the first article to empirically test the FDI—property rights linkage. (JEL F23, O43, P48)     

Main Determinants of Foreign Direct Investment in the Southeast European Countries

The growth of foreign direct investments (FDI) in the world has been significant in recent years. Between 1990 and 2000 worldwide FDI inflows increased more than five times, and since 2000 they have declined. During the period of FDI expansion, growth was especially strong from 1997 onward. However, most of the FDI transactions were between the developed countries. The distribution of FDI is unequal and less-developing countries face difficulties in attracting FDI. Despite the fact that FDI is increasingly important to developing countries, over the past few years the share of the developing countries in worldwide FDI inflows has been declining. The paper analyses geographical and sector distribution of FDI in the Southeast European countries (SEEC) and compares its amount with that in Central East European countries. According to economic theory, FDI towards developing countries flows for labor-intensive and low-technology production, while towards developed states, it flows for high-technology production. Identification of determining factors of FDI is a complex problem which depends on several characteristics specific for each country, sectors, and companies. All those factors could be grouped in three broad categories: economic policy of host country, economic performance, and attractiveness of national economy. On the desegregated level, FDI depends on size and growth potential of a national economy, natural resources endowments and quality of workforce, openness to international trade and access to international markets, and quality of physical, financial, and technological infrastructure. An important question is how SEEC can attract more foreign investment. To find the answer, this paper uses data on FDI inflows to SEEC to determine the main host country determinants of FDI and provides regression-based estimation of determinants of FDI. Using a sample of SEEC and panel data techniques, the determinants of FDI in this part of Europe are investigated. The paper researches the relationship between FDI, GDP, GDP per capita, number of inhabitants, trade openness, inflation, external debt, and information and communication technology sectors. For SEEC, FDI inflows are largely dependent on the completion of the privatization process and in this paper we include the level of private sector and privatization as explanatory variables. Our findings suggest that certain variables such as privatization and trade regime, as well as the density of infrastructure, appear to be robust under different specifications. A positive significance of the agglomeration factor is also observed, confirming the relevant theoretical propositions. However, certain differential variables, such as the privatization, could not be fully captured due to the statistical homogeneity of the sample.     

Which Domestic Firms Benefit from FDI? Evidence from Selected African Countries

The existing literature on the effects of FDI inflows on domestic firms' performance offers ambiguous evidence. Macro‐level studies suggest that the characteristics of inward FDI and the ‘absorptive capacity’ of the host economy matter in determining the sign (or the mere existence) of these effects. Studies based on micro‐level data have so far mostly focused on finding a nexus between FDI inflows and the productivity of domestic firms, suggesting that the effects might be highly heterogeneous. This article, using a recent firm‐level survey conducted by UNIDO in 19 sub‐Saharan African countries, explores the channels through which multinational enterprises may exert an impact on local firms: products’ market, input availability and costs, access to finance and export opportunities, and analyses the strategic reactions of domestic firms induced by the presence of foreign affiliates.     

The Linkages Between FDI and Domestic Investment: Unravelling the Developmental Impact of Foreign Investment in Sub‐Saharan Africa

While the recent increase in foreign direct investment (FDI) to African countries is a welcome development, the impact of these resource inflows on economic development remains in doubt. This article argues that a key channel is its effects on domestic factor markets, especially domestic investment, and analyses the two‐way linkages between FDI and domestic investment in sub‐Saharan Africa. The results suggest, first, that FDI crowds in domestic investment and, secondly, that private investment is a driver of FDI, implying that African countries will gain much from improving the domestic climate. Moreover, there are alternatives to resource endowments as a means of attracting foreign investment to non‐resource‐rich countries.     

Impact of Political Risk and Uncertainty on FDI in South Asia

This study examines the potential effect of political risk and macroeconomic policy uncertainty on FDI in South Asia. To highlight the affect of political risk and macro policy uncertainty on FDI, we setup a theoretical framework based on oligopolistic and imperfect competition environment in host country. Autoregressive distributed lags (ARDL) is used to examine the impact of political risk and macro economic policy uncertainty index on FDI inflows. Macroeconomic policy uncertainty and political risk indices are constructed for this purpose. The long run results show negative affect of political risk and macroeconomic policy uncertainty indices on FDI inflows. Trade openness shows positive effect on FDI inflows only in short run while in long run it has negative impact on due lack of creditability regarding consistent trade liberalization policy and high trade cost. Furthermore, the market size significantly affects the inflow of FDI both in long run and short run which shows that FDI inflows in South Asia are mainly depend on market size. South Asian economies need to focus on political and macroeconomic factors along with FDI incentives policies to attract more FDI.     

Distributional Effects of FDI: How the Interaction of FDI and Economic Policy Affects Poor Households in Bolivia

This article provides a CGE analysis of the medium to long‐run impact of FDI inflows on poverty and income distribution in Bolivia. The simulation results suggest that FDI inflows enhance economic growth and reduce poverty. However, the income distribution typically becomes more unequal. In particular, FDI widens disparities between urban and rural areas. The Bolivian government may promote the growth‐enhancing and poverty‐alleviating effects by overcoming labour‐market segmentation and providing complementary public investment in infrastructure. But simulated policy reforms or alternative productivity scenarios are hardly effective in reducing the economic divide.     

What Causes the Regional Disparity of FDI in Russia? A Spatial Analysis

We analyse the determinants of the regional disparity of FDI inflows to Russia. The spatial distribution of FDI is attributed to regional and/or trans-regional factors. Region specific characteristics such as wage, education level, transportation as well as gross regional product, which accounts for market size, in host and alternative regions are considered to analyze the spatial interaction between regions employing spatial econometrics. We find that shocks to FDI levels in proximate regions have no effect on FDI inflows to hosts. However, FDI in a region depends on spatial market size and endowment of natural resources in alternative host regions.     

Migration and development in the Caribbean: relating policies and people

Throughout the 20th century, the US has feared that political instability in the Caribbean area could be exploited by adversaries; therefore, the US and the nations of the Caribbean share a compelling interest in the region's development. The dramatic increase in legal and illegal immigration to the US from the Caribbean in the last 2 decades has offered an additional human reason for US interest in the region. This migration has also created a new source of dependence and vulnerability for the region. Curtailment of migration would undoubtedly affect the region, and if the effect were social and political instability, then the US would also share those consequences. The 1984 Conference on Migration and Development in the Caribbean held discussions to 1) enhance the benefits of migration to Caribbean development, 2) identify development strategies, policies, and projects that would reduce pressures that have accelerated the rate of international migration, making it less manageable and more costly, and 3) identify ways to reduce dependence on migration by expanding employment and assisting economies in the region to become more self-reliant. The attitudes of both US and Caribbean participants seemed to reflect a considerable degree of ambivalence on the migration issue. The US views itself as "a nation of immigrants" and yet is troubled by the recent large influx of immigrants, particularly illegal migrants and refugees. While Americans recognize that the "brain" reduces the development capacity of developing countries, the US still needs and benefits from young immigrants trained in the sciences, engineering, and computers. Caribbean participants were also ambivalent about immigration. They consider immigration "a way of life" and a "right," but they also recognize that there are significant developmental costs to some types of migration. While many want the US to keep a wide open door to Caribbean immigrants, they are aware that most Caribbean Community (CARICOM) governments are currently closing the door to immigrants even from other CARICOM countries.     

Voices of Hispanic Caribbean Women

Abstract

Few studies on Caribbean women in the United States are based on women's realities or view these issues from their perspective and even fewer compare Caribbean women living in the United States to each other. Gender as an important factor of emigration experience has been neglected. This article presents (1) the results of a qualitative study describing changes in Caribbean women's lives after living in the United States for a period of ten or more years, and (2) a discussion of problems confronted by Latinas in a society different from their native countries of origin. The voices of Caribbean women on the process of migration, family values, and work experiences, are analyzed from a gender perspective. Implications for human services professions practice and recommendation for future research are also presented.     

The Influence of Attitudes toward Immigrants on International Migration

We investigate whether anti‐immigrant attitudes affect migrant inflows in Organisation for Economic Co‐operation and Development (OECD) countries. Using longitudinal exhaustive data, we find that natives’ hostility, particularly natives’ propensity to discriminate on the labor market, reduces immigration. This effect is comparable to more conventional migration factors. We obtain robust results when we, for example, capture hostility with far‐right parties’ popularity instead and control for tighter immigration policies or multilateral resistance to migration. We find a stronger effect for EU‐to‐EU migrants, migrants from developed countries and linguistically close countries. Our results raise a challenge for policy makers when the demand for foreign workers and anti‐immigrant sentiment are present.     

Policy Reform and Foreign Direct Investment in Africa: Absolute Progress but Relative Decline

Despite improvements in the policy environment, sub‐Saharan Africa's share of foreign direct investment (FDI) in developing countries continues to decline. This article provides an explanation for the deterioration in SSA's FDI global position. It argues that, although SSA has reformed its institutions, improved its infrastructure and liberalised its FDI regulatory framework, the degree of reform has been mediocre compared with the reform implemented in other developing countries. As a consequence, relative to other regions, SSA has become less attractive for FDI. An important implication of these results is that in a competitive global economy, it is not enough just to improve one's policy environment: improvements need to be made both in absolute and relative terms.     

Turning the Immigration Policy Paradox Upside Down? Populist Liberalism and Discursive Gaps in South America

A paradox of officially rejecting but covertly accepting irregular migrants has long been identified in the immigration policies of Western immigrant receiving states. In South America, on the other hand, a liberal discourse of universally welcoming all immigrants, irrespective of their origin and migratory status, has replaced the formally restrictive, securitized and not seldomly ethnically selective immigration rhetoric. This discursive liberalization has found partial translation into immigration laws and policies, but contrary to the universality of rights claimed in their discourses, governments reject recently increasing irregular south–south migration from Africa, Asia, and the Caribbean to varying degrees. This paper applies a mixed methodological approach of discourse and legal analysis and process tracing to explore in how far recent immigration policies in South America constitute a liberal turn, or rather a reverse immigration policy paradox of officially welcoming but covertly rejecting irregular migrants. Based on the comparative analysis of Argentina, Brazil and Ecuador, the study identifies and explains South American “populist liberalism” in the sphere of migration. We highlight important implications for migration theory, thereby opening up new avenues of research on immigration policy making outside Western liberal democracies, and particularly in predominantly migrant sending countries.     

EFFECT OF CAPITAL IMPORTS ON SAVINGS AND GROWTH IN LESS DEVELOPED COUNTRIES

This paper examines some of the arguments of the critics of foreign aid and other capital inflows to less developed countries (LDCs). The paper finds that the critics lack sufficient evidence on the supposedly adverse effect of capital transfers to LDCs on their savings and growth of incomes. This, however, does not mean that these capital inflows always promote growth in LDCs. In particular, it is shown that the relative importance of foreign capital on economic growth of LDCs would depend on the degree to which that growth is constrained by the lack of capital.     

Back to the South: Social and Political Aspects of Latin American Migration to Southern Europe

When migration from the Latin American and Caribbean countries to Europe is studied, a preferential stream can be noted towards southern Europe. There would also appear to have been a remarkable growth in the volume of flows in this direction in recent years. The flows themselves vary: in the case of Spain, nationals from Ecuador, Colombia, Peru and Argentina predominate; Portugal is the recipient of Brazilians; and Italy mainly plays host to nationals from Peru and Ecuador. These flows reveal the importance of various factors: economic push and pull mechanisms; the former presence in the region of Spain and Portugal as erstwhile colonial powers; the earlier waves of emigrants in that direction from Spain, Portugal and Italy; a relatively more favourable social reception; and political initiatives that favour the new sending countries. In other words, economic gaps, former historical links, cultural and linguistic affinities, family ties and diplomatic channels suggest that a special route exists for migrants from Latin America. The topics that will be expanded upon in this paper include the factors explaining recent immigration to southern Europe; the economic incorporation of immigrants; the social framework of flows, including reactions from local populations; and the tentative and multiple policy responses to immigration. Conclusions indicate that the potential for movements from Latin America, resulting from both previous and current links, has proved to be a favourable response to the need for immigrant workers in the case of southern European societies. Despite the familiar path (albeit in the reverse direction), the economic incorporation of immigrants has mainly occurred in the low‐ranking jobs, as was the case with other inflows. This stemmed from market needs, state failures and the importance of the family. However, given the numerous links between Latin America and southern Europe, the social and policy responses adopted towards these immigrants seem to have been more beneficial than towards other groups.     

Workers’ Remittances and Domestic Investment in South Asia: A Comparative Econometric Inquiry

This study explores the effect of workers’ remittances on domestic investment in four selected South Asian countries: Bangladesh, India, Pakistan, and Sri Lanka, using contemporary time series estimation techniques from 1980 to 2017. The estimated results of the ARDL bounds approach to cointegration analysis have revealed that among selected South Asian countries, Pakistan has witnessed a significant negative effect in the long run. Similarly, the findings of other forms of capital flows also revealed varying effects across the countries considered. This study urges the transformation of aggregate economic behaviour from consumption to the production side, by adopting policies that would encourage domestic saving and investment activities. In this regard, among others, reduction in the interest rate and the interest rate spread would be beneficial. It urges the identification of factors that conditions varying effect of workers’ remittances and other capital inflows to mitigate negative effects into positive.     

CAN TRADE REALLY HURT? AN EMPIRICAL FOLLOW‐UP ON SAMUELSON'S CONTROVERSIAL PAPER

This paper investigates Samuelson's [Samuelson, P. A. “Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Supporting Globalization.” Journal of Economic Perspectives, 18(3), 2004, 135–46] argument that technical progress of the trade partner may hurt the home country. We illustrate this prospect in a simple Ricardian model for situations with outward knowledge spillovers. Within this framework Samuelson's Act II effects may occur. Based on industry level panel data for 17 OECD countries for the period 1973–2000 we show econometrically that the outflow of domestic knowledge via exports or foreign direct investment (FDI) to the rest of the world may have a negative impact on industry output in the home country. This is particularly so when exporting to technologically less advanced countries and, more specifically, China. (JEL F10, F11, F14, O30)     

Caribbean immigrants in Britain and Canada: socio-economic adjustment

This paper compares the socioeconomic experiences of Caribbean immigration in Britain and Canada and shows how differing immigration trends together with changing economic circumstances influenced the process of integration. Caribbean immigrants in Canada are more recent arrivals than those in Britain and, in 1981, were still experiencing initial adjustment problems aggravated by an economy in which unemployment is still high. Unlike Britain, which has a large population born in that country of West Indian parentage, the "2nd generation" in Canada is small and mostly still in school. Despite higher levels of education and qualifications than their counterparts in Britain, Caribbean immigrants in Canada faced similar problems. Males were relatively more concentrated in manufacturing industries in Canada and in transportation in Britain, sectors which were undergoing significant structural change and experiencing high levels of unemployment. Earned income was below average in both countries but there were interesting gender differences. Caribbean women experienced the same "earnings gap", relative to men, that characterized most women in the labor force. However, Caribbean women were relatively more successful than men, as measured by unemployment rates and earned incomes. This appears to be due to their qualifications in nursing and other service occupations that continued to expand, and to be in demand in the 1970s and 1980s, when other occupations were declining in response to technological change and "post-industrial" developments. In both countries there were residual disadvantages, faced by Caribbean men and women, which cannot be statistically explained by factors such as age, education, period of immigration, or structural changes in the economy. These can be attributed, at least in part, to the institutionalized prejudice and discrimination against racial minorities which is prevalent in both societies. In absolute terms Caribbean immigrants in Canada are clearly better off than their counterparts in Britain. However, relative to other immigrants, and the native-born population with similar demographic characteristics and educational qualifications, those in Canada experience similar disadvantages.     

Determinants of International Migration Flows to and from Industrialized Countries: A Panel Data Approach Beyond Gravity1

We quantified determinants of international migratory inflows to 17 Western countries and outflows from 13 of these countries between 1950 and 2007 in 77,658 observations from multiple sources using panel-data analysis techniques. To construct a quantitative model that could be useful for demographic projection, we analyzed the logarithm of the number of migrants (inflows and outflows separately) as dependent variables in relation to demographic, geographic, and social independent variables. The independent variables most influential on log inflows were demographic [log population of origin and destination and log infant mortality rate (IMR) of origin and destination] and geographic (log distance between capitals and log land area of the destination). Social and historical determinants were less influential. For log outflows from the 13 countries, the most influential independent variables were log population of origin and destination, log IMR of destination, and log distance between capitals. A young age structure in the destination was associated with lower inflows while a young age structure in the origin was associated with higher inflows. Urbanization in destination and origin increased international migration. IMR affected inflows and outflows significantly but oppositely. Being landlocked, having a common border, having the same official language, sharing a minority language, and colonial links also had statistically significant but quantitatively smaller effects on international migration. Comparisons of models with different assumed correlation structures of residuals indicated that independence was the best assumption, supporting the use of ordinary-least-squares estimation techniques to obtain point estimates of coefficients.     

PRODUCTIVITY GROWTH AND TECHNOLOGICAL DIFFUSION THROUGH FOREIGN DIRECT INVESTMENT

Foreign direct investment (FDI) has dramatically increased worldwide and is the most important form of all private capital flows to developing countries. Yet, it is an important empirical question whether FDI affects total factor productivity (TFP) positively. We investigate the effect of FDI on TFP growth in a large sample of countries in 1970–2000. Our econometric results indicate that FDI has a positive and direct effect on TFP growth. However, we do not find any evidence that the impact of FDI on TFP growth is only conditional on the recipient country's capability to absorb foreign technology. We carefully address the robustness of the empirical results . ( JEL O11, O40, O47, F21)