The effect of covid-19 outbreak on foreign direct investment: do sovereign wealth funds matter?
About: This article is published in Transnational Corporations Review.The article was published on 2021-09-28. It has received 6 citations till now. The article focuses on the topics: Foreign direct investment & Sovereign wealth fund.
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TL;DR: In this article , stylized facts about the fall and rebound of FDI inflows as a result of the COVID-19 pandemic are presented from three angles: macroeconomic shocks to the economy, theories of foreign direct investment, and studies of the economic effects of disasters and crises.
4 citations
TL;DR: A significant positive effect of income on Chinese mental health during the COVID-19 pandemic is found and individuals’ salary satisfaction and interpersonal relationship are shown to be the potential mechanism for the effect of Income on Chinesemental health.
Abstract: Since December 2019, the COVID-19 has continued to rage, and epidemic prevention policies have limited contact between individuals, which may has a great influence on the income of individuals, exacerbate anxiety and depression, and cause serious mental health problems. The current study aims to examine the association between income and mental health during the COVID-19 pandemic by using the data of 9,296 observations from the 2020 China Family Panel Studies. Employing ordinary least squares regression and two-stage least squares regression, we find the significant positive effect of income on Chinese mental health during this pandemic. In addition, the number of cigarettes smoked per day has significant negative effects on mental health. Education levelˎmarriage and exercise frequency have significant positive correlation with mental health. Furthermore, the impact of income on individuals of different groups is heterogeneous during this pandemic. The impact of income for well-educated individuals is less strong than their less-educated counterparts. People who exercise regularly respond less strongly to changes in income than those who do not exercise. Finally, individuals’ salary satisfaction and interpersonal relationship are shown to be the potential mechanism for the effect of income on Chinese mental health.
3 citations
TL;DR: In this paper , the authors explored the role of the COVID-19 pandemic on foreign direct investment in 12 emerging countries for the period between 2014 and 2021, and employed a panel quantile regression approach to analyze the effect of the pandemic in foreign investment inflows.
1 citations
TL;DR: Wang et al. as discussed by the authors discussed the impact and mechanism of corporate digital transformation on supply chain relationship transactions from the perspectives of information asymmetry and agency costs, and showed that digital transformation significantly inhibits the supply chain relational transactions.
Abstract: Taking China's A-share listed manufacturing enterprises from 2014 to 2020 as objects, this paper discusses the impact and mechanism of corporate digital transformation on supply chain relationship transactions from the perspectives of information asymmetry and agency costs. The findings show that digital transformation significantly inhibits the supply chain relational transactions; the mechanism testing results reveal that digital transformation is conducive to the alleviation of information asymmetry and agency costs, which thereby reduces the degree of supply chain relational transactions; the regulatory effect analysis demonstrates that the impact of digital transformation on supply chain relationship transactions becomes more significant in non-high-tech enterprises and enterprises with less fierce industry competition. Finally, this paper confirms that a decline in the proportion of supply chain relationship transactions can significantly reduce the operational risk of enterprises.
TL;DR: In this paper , the authors take a holistic perspective and test a research hypothesis of a negative impact of COVID-19 on relative inward FDI activity on the global scale, and find that market size, access to qualified labour force and quality of governance are the main determinants that trump risks associated with COVID19.
Abstract: Purpose – Foreign Direct Investment (FDI) has been considered a robust element of globalization that was chiefly immune to financial and economic threats. However, late 2019 introduced international direct investors to COVID-19, a yet unknown risk factor. The aim of this study is to take a holistic perspective and test a research hypothesis of a negative impact of COVID-19 on relative inward FDI activity on the global scale.Research method – FDI is modelled with a series of literature-based determinants including aggregate independent variables that allowed to overcome the issue of too many FDI determinants and model underspecification simultaneously. A series of tests is run on two models (n = 152 and n = 141) to assure their econometric validity.Results – Results show that number of COVID-19 related cases and number of deaths have not had an impact on relative inward FDI on the world scale. Originality / value / implications / recommendations – Unlike most studies, this one exa-mines relative FDI host attractiveness from a global/holistic perspective, which provides additional analytical context. Such determinants as market size, access to qualified labour force and quality of governance are shown to trump risks associated with COVID-19 in determining FDI activity. Policymakers should focus on economic growth, access to qualified labour force and political stability. Hence, lockdown policies were not the optimum solution.
References
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TL;DR: In this paper, the theory of interest was restated and the output of capital goods and of consumption was analyzed in terms of uncertainty and fluctuations of investment, and demand and supply for output as a whole.
Abstract: I. Comments on the four discussions in the previous issue of points in the General Theory, 209. — II. Certain definite points on which the writer diverges from previous theories, 212. — The theory of interest restated, 215. — Uncertainties and fluctuations of investment, 217. — III. Demand and Supply for output as a whole, 219. — The output of capital goods and of consumption, 221.
5,476 citations
"The effect of covid-19 outbreak on ..." refers background in this paper
...Indeed, it has been shown theoretically that investment volatility and investors’ wait-and-see behaviour can explain the negative effects of uncertainty on investment (Bernanke, 1983; Bloom, 2009; Keynes, 1937 )....
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TL;DR: In this paper, a model with a time varying second moment is proposed to simulate a macro uncertainty shock, which produces a rapid drop and rebound in aggregate output and employment, which occurs because higher uncertainty causes firms to temporarily pause their investment and hiring.
Abstract: Uncertainty appears to jump up after major shocks like the Cuban Missile crisis, the assassination of JFK, the OPEC I oil-price shock and the 9/11 terrorist attack This paper offers a structural framework to analyze the impact of these uncertainty shocks I build a model with a time varying second moment, which is numerically solved and estimated using firm level data The parameterized model is then used to simulate a macro uncertainty shock, which produces a rapid drop and rebound in aggregate output and employment This occurs because higher uncertainty causes firms to temporarily pause their investment and hiring Productivity growth also falls because this pause in activity freezes reallocation across units In the medium term the increased volatility from the shock induces an overshoot in output, employment and productivity Thus, second moment shocks generate short sharp recessions and recoveries This simulated impact of an uncertainty shock is compared to VAR estimations on actual data, showing a good match in both magnitude and timing The paper also jointly estimates labor and capital convex and non-convex adjustment costs Ignoring capital adjustment costs is shown to lead to substantial bias while ignoring labor adjustment costs does not
3,405 citations
"The effect of covid-19 outbreak on ..." refers background in this paper
...Indeed, it has been shown theoretically that investment volatility and investors’ wait-and-see behaviour can explain the negative effects of uncertainty on investment (Bernanke, 1983; Bloom, 2009; Keynes, 1937 )....
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...(WGI), World Development Indicators (WDI), World Intellectual Property Organisation (WIPO), and Ahir, Bloom, and Furceri (2018). The dependent variable is drawn from the World Development Indicators (WDI) and is defined as net foreign...
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...It has been clearly demonstrated in the literature that the propensity of companies to invest is strongly dependent on the level of uncertainty (Bernanke, 1983; Bloom, 2009)....
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...The data collected are the most recent available from various sources: Worldometer Coronavirus (2020), World Governance Indicator (WGI), World Development Indicators (WDI), World Intellectual Property Organisation (WIPO), and Ahir, Bloom, and Furceri (2018)....
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TL;DR: In this article, the authors build on the theory of irreversible choice under uncertainty to explain cyclical investment fluctuations and show that when individual projects are irreversible, agents must make investment timing decisions that trade off the extra returns from early commitment against the benefits of increased information gained by waiting.
Abstract: This paper builds on the theory of irreversible choice under uncertainty to give an explanation of cyclical investment fluctuations. The key observation is that, when individual projects are irreversible, agents must make investment timing decisions that trade off the extra returns from early commitment against the benefits of increased information gained by waiting. In an environment in which the underlying stochastic structure is itself subject to random change, events whose long-run implications are uncertain can create an investment cycle by temporarily increasing the returns to waiting for information.
2,352 citations
01 Jan 1977
TL;DR: In this article, the authors discuss ways in which production financed by foreign direct investment, that undertaken by multinational enterprises (MNEs), has affected our thinking about the international allocation of resources and the exchange of goods and services between countries.
Abstract: The main task of this paper is to discuss ways in which production financed by foreign direct investment, that is, that undertaken by multinational enterprises (MNEs), has affected our thinking about the international allocation of resources and the exchange of goods and services between countries. The analysis takes, as its starting point, the growing convergence between the theories of international trade and production, and argues the case for an integrated approach to international economic involvement, based both on the location-specific endowments of countries and the ownership-specific endowments of enterprises. In pursuing this approach, the paper sets out a systemic explanation of the foreign activities of enterprises, in terms of their ability to internalise markets to their advantage. It concludes with a brief examination of some of the effects which the MNE is allegedly having on the spatial allocation of resources, and on the patterns of trade between countries.
2,137 citations
"The effect of covid-19 outbreak on ..." refers background in this paper
...The new theory of trade by Markusen and Venables (1998), theories of international trade and production of (Dunning, 1977))....
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TL;DR: The potential consequence of policy interventions, such as the US’ decision to implement a zero-percent interest rate and unlimited quantitative easing (QE), and how these policies may introduce further uncertainties into global financial markets are analyzed.
1,473 citations