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Resource Nationalism - Limits to Foreign Direct Investment

Gavin L. Kretzschmar, Axel Kirchner, Liliya Sharifzyanova

Year: 2010
Volume: Volume 31
Number: Number 2
DOI: 10.5547/ISSN0195-6574-EJ-Vol31-No2-2
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Abstract:
Despite a global trend toward the privatization of state assets, host governments are consolidating ownership over strategically important domestic oil and gas resources, effectively limiting corporate foreign direct investment. These findings are supported by an analysis of global reserve acquisitions for the period 2000 � 2006, a period which saw listed national oil companies (NOCs) acquire over 82% of their reserves domestically, compared to only 25% for commercial operators. We also perform a regression analysis and find that political risk and reserve size are strongly related to state ownership retention, while the degree of state control is positively related to OPEC membership. Foreign direct investment is shown to be increasingly constrained to assets in low-risk developed countries or marginal oilfield assets.



Is energy market integration a green light for FDI?

Maria T. Costa-Campi, Jordi Paniagua, and Elisa Trujillo

Year: 2018
Volume: Volume 39
Number: Special Issue 1
DOI: 10.5547/01956574.39.SI1.mcos
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Abstract:
This paper contributes to a better understanding of the effects of the European single market strategy by studying the effect of energy market integration (EMI) on foreign direct investment (FDI). Enforcing an EMI diminishes energy uncertainty and price volatility and signals stronger and credible institutions. FDI may, as a result, increase both within and outside the EMI area through two channels: first, via energy price converge and, second, via price dispersion reduction. We develop a formal model to explain how these mechanisms affect the capital invested abroad by heterogeneous firms. The Iberian Electricity Market (MIBEL) integration of 2007 is used to quantify the effect of EMI on FDI empirically. Gravity estimates on a global dataset including bilateral FDI data show that the integration of Portugal and Spain's electricity market increased both the amount of FDI's participants and the number of foreign projects. In line with our theoretical expectations, our estimates show that the increase of FDI is mainly due to the reduction in price dispersion. However, the institutional credibility signal sent by MIBEL had a greater influence than expected by the actual price reduction. Furthermore, we also observe a positive increase in FDI from neighboring countries (in this instance, France), albeit lower in magnitude.



Distinguishing the Complex Effects of Foreign Direct Investment on Environmental Pollution: Evidence from China

Jianxun Chen, Hui Tan, and Yingran Ma

Year: 2022
Volume: Volume 43
Number: Number 4
DOI: 10.5547/01956574.43.4.jche
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Abstract:
We attempt to investigate how and when foreign direct investment (FDI) impacts different types of environmental pollution in host countries. Using provincial data from China between 1995 and 2015, we find that FDI mitigates air pollution, yet it has insignificant effect on water and solid pollution. We further reveal that it is the combination of the technology, scale and structure effects that jointly determines the impact of FDI on environmental pollution. Among them, the technology effect takes the most dominant role, followed by the scale effect and structure effect. In addition, by considering the time effect on environmental policy change, we suggest that the pollution halo effect mainly occurs after air pollution policy revision. Our findings provide insight on the complex mechanisms and theoretical boundary of FDI on different types of environmental pollutants.





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