Which of the following does not play an important role for fdi?

FDI or Foreign Direct Investment is when the companies purchase capital and then invest in a foreign country. The factors that play a major role for FDI include labour skills, wage rates, infrastructure and transport, tax rates, commodities, property rights, size of economy, exchange rate, and more. Language does not play an important role for it.

Yanyan Huang 1, Fuzhong Chen 2*, Huini Wei 2, Jian Xiang 2, Zhexiao Xu 2 and Rabia Akram 3 • 1Institute of Economic Development and Reform, Huaqiao University, Xiamen, China • 2School of International Trade and Economics, University of International Business and Economics, Beijing, China • 3School of Business, Guilin University of Electronic Technology, Guilin, China With the accelerated development of the global economy, environmental issues have gradually become prominent, which in turn hinders further high-quality economic development. As one of the important driving factors, cross-border flowing foreign direct investment (FDI) has played a vital role in promoting economic development, but has also caused environmental degradation in most host countries. Utilizing panel data for the G20 economies from 1996 to 2018, the purpose of this study is to investigate the impacts of FDI inflows on carbon emissions, and further explore the influence channels through the moderating effects of economic development and regulatory quality. To produce more robust and accurate results in this study, the approach of the feasible generalized least squares (FGLS) is utilized. Meanwhile, this study also specifies the heteroscedasticity and correlated errors due to the large differences and serial correlations among the G20 economies. The results indicate that FDI inflows are positively associated with carbon emissions, as well as both economic development and regulatory quality negatively c...

• Foreign direct investment and its drivers: a global and EU perspective • 1 Introduction • 2 Key developments in global FDI • 3 The structural determinants of FDI • Box 1 MNEs and their investment deals • 4 FDI and exports: substitutes or complementary? • Box 2 The relationship between M&As and the value added embedded in exports • 5 Foreign direct investment in the EU and the euro area • Box 3 The impact of EU and euro area integration on FDI flows • 6 Conclusions Foreign direct investment and its drivers: a global and EU perspective Prepared by Federico Carril-Caccia and Elena Pavlova Published as part of the The relevance of foreign direct investment (FDI) as a source of economic activity has increased rapidly over the last decade. Between 2000 and 2016 the share of FDI stock in global GDP increased from 22% to 35%. Following a decline during the Great Recession, mergers and acquisitions (M&As), the most dynamic component of FDI, have recovered, reaching a record value of USD1.2trillion in the first quarter of 2018. The intensification of FDI activity has important implications for both origin and destination countries in terms of, for example,economic growth, productivity, wages and employment. Moreover, the expansion of multinational enterprises (MNEs) has been accompanied by the creation of complex cross-border production chains, which also has important implications. This article presents several findings regarding the main developments in and determinants of FDI o...

Theoretical studies have shown that there is a direct relationship between human capital and foreign direct investment (FDI). However, only a few available empirical studies have attempted to investigate this relationship simultaneously. Using country level panel data from 55 developing countries over the 1980–2011 period, this paper examines the interrelationship between FDI and human capital. Statistical analysis, based on simultaneous equations fixed effect estimation, reveals significant bi-directional causality between human capital and FDI, which suggests that FDI and human capital development policies need to be coordinated. FDI-led economic growth models may not be entirely suitable for all developing countries aiming to replicate the economic success of countries such as Brazil and China unless attention is also paid to human capital development through increased spending on education and training. At the national level, FDI can also indirectly increase the supply of skilled labour through a number of channels. First, as the demand for skilled labour increases, due to inward FDI, skilled wages also increase. In the long term, increase in skilled wages motivates workers in host economies to upgrade their skills through education and/or training. Second, FDI tends to increase the government tax revenue because of the increased economic activity and output, which allows the government to increase its investment in education. Third, inward FDI is a relatively less vol...

Readers Question: why some countries are more successful in attracting Foreign Direct Investment than others? In summary, the main factors that affect foreign direct investment are • Infrastructure and access to raw materials • Communication and transport links. • Skills and wage costs of labour Factors affecting foreign direct investment 1. Wage rates A major incentive for a multinational to invest abroad is to outsource labour-intensive production to countries with lower wages. If average wages in the US are $15 an hour, but $1 an hour in the Indian sub-continent, costs can be reduced by outsourcing production. This is why many Western firms have invested in clothing factories in the Indian sub-continent. • However, wage rates alone do not determine FDI, countries with high wage rates can still attract higher tech investment. A firm may be reluctant to invest in Sub-Saharan Africa because low wages are outweighed by other drawbacks, such as lack of infrastructure and transport links. 2. Labour skills Some industries require higher skilled labour, for example pharmaceuticals and electronics. Therefore, multinationals will invest in those countries with a combination of low wages, but high labour productivity and skills. For example, India has attracted significant investment in call centres, because a high percentage of the population speak English, but wages are low. This makes it an attractive place for outsourcing and therefore attracts investment. 3. Tax rates Large m...

The correct answer is Language. Key Points • FDI or Foreign Direct Investment is when the companies purchase capital and then invest in a foreign country. • The factors that play a major role in FDI include • Labour skills • Wage rates • Infrastructure and transport • Cost of resources • Administrative procedure • Tax rates • Commodities • Property rights • Size of the economy • Exchange rate, and more. • Language does not play an important role for it. • FDI is an important driver of economic growth. Additional Information • According to the World Investment Report 2020 by UNCTAD, India jumped from 12th position in 2018 to 9th position in 2019 among the world's largest FDI recipient. • It is released by the United Nations Conference on Trade and Development. • It is a permanent intergovernmental body established by the United Nations, headquartered in Geneva, Switzerland.