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The impact of host country policies upon foreign direct investment : the Asia Pacific experience, 1970-1990 Korompai, Victor Thomas 1996

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T H E I M P A C T O F H O S T C O U N T R Y P O L I C I E S U P O N F O R E I G N D I R E C T I N V E S T M E N T : T H E A S I A P A C I F I C E X P E R I E N C E 1 9 7 0 - 1 9 9 0 by V I C T O R T H O M A S K O R O M P A I B.A. (Honours), Carleton University, 1990 M.A., Tokai University, 1994 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF SCIENCE IN BUSINESS ADMINISTRATION in THE FACULTY OF GRADUATE STUDIES (Faculty of Commerce & Business Administration) We accept this thesis as conforming to the required standard THE UNIVERSITY O F ^ l f l S H COLUMBIA September 1996 © Victor Thomas Korompai, 1996 In presenting this thesis in partial fulfilment of the requirements for an advanced degree at the University of British Columbia, I agree that the Library shall make it freely available for reference and study. I further agree that permission for extensive copying of this thesis for scholarly purposes may be granted by the head of my department or by his or her representatives. It is understood that copying or publication of this thesis for financial gain shall not be allowed without my written permission. Department of The University of British Columbia Vancouver, Canada DE-6 (2/88) A B S T R A C T This paper attempts to examine the relationship between host country policies towards foreign direct investment (FDI) and the amount of FDI that host countries receive. The paper first considers some of the issues involved in FDI and the type of policies developing economies have typically used towards it. Secondly, using World Bank and United Nations information, data on net FDI flows to host countries and on host country policies is presented from 1970-1990. Specifically, the FDI policies of ten Asia Pacific economies is examined over this period and their effects on FDI levels in these economies is assessed. Thirdly, using data from twenty-seven additional developing countries, multiple regression analysis is employed in order to attempt to empirically demonstrate the effect of FDI policies upon FDI levels in developing countries. The analysis suggests that general economic variables have greater significance in explaining the flow of FDI to developing economies, but FDI policies do seem to have a distinguishable effect when viewed at separate points in time. The paper concludes that locational advantages are crucial in attracting FDI flows but that these advantages are enhanced when policies favourable towards foreign investors are utilized. Some suggestions on improving the paper's approach and on possible future research issues are also provided. u TABLE OF CONTENTS A B S T R A C T ii T A B L E O F C O N T E N T S i i i L IST O F T A B L E S v i i i L IST O F F I G U R E S ix A C K N O W L E D G M E N T x i I N T R O D U C T I O N 1 CHAPTER 1 - THE CHARACTERISTICS OF FOREIGN DIRECT INVESTMENT 5 1) . THE ISSUE OF OWNERSHIP AND CORPORATE CONTROL 5 2) . THE DETERMINANTS OF FDI 9 A ) . THE OLI APPROACH 11 3) . HOST COUNTRY CONDITIONS 14 A) DOMESTIC PERFORMANCE REQUIREMENTS 17 I. DOMESTIC PROCUREMENT RULES 17 II. LOCAL HIRING REQUIREMENTS 2 2 B) . FOREIGN EXCHANGE CONTROLS 2 2 C) . EASE OF FDI APPROVAL 2 3 D) . EXPORT PROCESSING ZONES 2 4 E) . FINANCIAL INCENTIVES 2 5 4) . FDI IN THE SERVICE SECTOR . . .26 5) . SUMMARY OF BENEFITS TO HOST COUNTRIES FROM FDI 2 8 CHAPTER 2 - NATIONAL VARIATIONS IN FDI POLICIES IN ASIA PACIFIC 3 3 1) . OVERVIEW 33 2) . DATA 3 8 3) . APPROACHES TO FDI: COUNTY STUDIES 39 A ) . JAPAN 4 2 iii I. O W N E R S H I P 44 II . DOMESTIC P R O C U R E M E N T R U L E S 44 III. L O C A L HIRING R E Q U I R E M E N T S 44 IV. F O R E I G N E X C H A N G E C O N T R O L S 45 V. E A S E O F A P P R O V A L 45 V I . E X P O R T P R O C E S S I N G Z O N E S 45 VI I . E F F E C T S O F FDI POLICY C H A N G E S IN J A P A N 45 B) . SOUTH KOREA 50 I. O W N E R S H I P 51 II . D O M E S T I C P R O C U R E M E N T R U L E S 5 2 III. L O C A L HIRING R E Q U I R E M E N T S 54 IV. F O R E I G N E X C H A N G E C O N T R O L S 55 V. E A S E O F A P P R O V A L 55 V I . E X P O R T P R O C E S S I N G Z O N E S 55 VI I . E F F E C T S O F FDI POLICY C H A N G E S IN K O R E A 56 C) . THE PEOPLE'S REPUBLIC OF CHINA (PRC) 57 I. O W N E R S H I P 58 II . DOMESTIC P R O C U R E M E N T R U L E S 59 III. L O C A L HIRING R E Q U I R E M E N T S 6 0 IV. F O R E I G N E X C H A N G E C O N T R O L S 6 0 V. E A S E O F A P P R O V A L 60 V I . E X P O R T P R O C E S S I N G Z O N E S 62 VI I . E F F E C T S O F FDI POLICY C H A N G E S IN T H E P R C 63 D) . TAIWAN 65 I. O W N E R S H I P 65 II. DOMESTIC P R O C U R E M E N T R U L E S 65 III. L O C A L HIRING R E Q U I R E M E N T S 68 iv IV. FOREIGN EXCHANGE CONTROLS 6 8 V. EASE OF APPROVAL 69 V I . EXPORT PROCESSING ZONES 7 0 VI I . EFFECTS OF FDI POLICY CHANGES IN TAIWAN 7 0 E h HONG KONG 7 0 I. OWNERSHIP 71 II. DOMESTIC PROCUREMENT RULES 7 2 III. LOCAL HIRING REQUIREMENTS 7 2 IV. FOREIGN EXCHANGE CONTROLS 7 3 V. EASE OF APPROVAL 7 3 V I . EXPORT PROCESSING ZONES 73 VI I . EFFECTS OF FDI POLICY CHANGES IN HONG KONG 74 F) . PHILIPPINES 74 I. OWNERSHIP 74 II. DOMESTIC PROCUREMENT RULES 75 III. LOCAL HIRING REQUIREMENTS 76 IV. FOREIGN EXCHANGE CONTROLS 7 6 V. EASE OF APPROVAL 76 VI . EXPORT PROCESSING ZONES 7 7 VI I . EFFECTS OF FDI POLICY CHANGES IN THE PHILIPPINES 7 8 G) . MALAYSIA 79 I. OWNERSHIP 82 II. DOMESTIC PROCUREMENT RULES 84 III. LOCAL HIRING REQUIREMENTS 84 IV. FOREIGN EXCHANGE CONTROLS 85 V. EASE OF APPROVAL 86 V I . EXPORT PROCESSING ZONES 86 v VI I . EFFECTS OF FDI POLICY CHANGES IN MALAYSIA 87 H). SINGAPORE 87 I. OWNERSHIP 88 II. DOMESTIC PROCUREMENT RULES 89 III. LOCAL HIRING REQUIREMENTS 89 IV. FOREIGN EXCHANGE CONTROLS 9 0 V. EASE OF APPROVAL 91 VI . EXPORT PROCESSING ZONES 91 VI I . EFFECTS OF FDI POLICY CHANGES IN SINGAPORE 92 I. INDONESIA 92 I. OWNERSHIP 93 II . DOMESTIC PROCUREMENT RULES 9 5 III. LOCAL HIRING REQUIREMENTS 95 IV. FOREIGN EXCHANGE CONTROLS 96 V. EASE OF APPROVAL 96 V I . EXPORT PROCESSING ZONES 9 7 VI I . THE EFFECTS OF FDI POLICY CHANGES IN INDONESIA 9 7 J ) . THAILAND 9 9 I. OWNERSHIP 100 II. DOMESTIC SOURCING RULES 103 III. LOCAL HIRING REQUIREMENTS 103 IV. FOREIGN EXCHANGE CONTROLS 103 V. EASE OF APPROVAL 103 V I . EXPORT PROCESSING ZONES 104 VI I . EFFECTS OF FDI POLICY CHANGES IN THAILAND 104 4) . SUMMARY OF RESULTS 105 CHAPTER 3 -EMPIRICAL ANAL YSIS 111 vi 1) . REGIONAL OVERVIEW OF FDI POLICIES 111 A) . LATIN AMERICA 111 B) . AFRICA 112 C) . SOUTHWEST ASIA 113 2) . DATA COLLECTION 119 A). VARIABLES 120 I. DEPENDENT VARIABLES 120 II. INDEPENDENT VARIABLES 121 III. POLICY VARIABLES 124 3) . METHODOLOGICAL PROBLEMS 125 4) . STATISTICAL TOOLS 130 5) . HYPOTHESIZED SIGNS OF COEFFICIENTS 130 6) . REGRESSION RESULTS 132 A) . VARIABLE CORRELATIONS 132 B) . MULTIPLE REGRESSION ANALYSIS AND RESULTS 135 CHAPTER 4 - CONCLUSION AND FUTURE EXTENSIONS OF THE RESEARCH 147 REFERENCES 150 APPENDIX 1: CHANGES IN HOST COUNTRY FDI REGIMES, 1970-1990 156 APPENDIX 2: CLASSIFICATION OF FDI POLICY CHANGES IN ASIA PACIFIC 177 APPENDIX 3: TWENTY-YEAR PERIOD DATA SET 189 APPENDIX 4: 3-PERIOD DATA SET 199 APPENDIX 5: CORRELATION REPORTS 202 APPENDIX 6: DETAILED MULTIPLE REGRESSION RESULTS: MAIN MODEL 213 APPENDIX 7: DETAILED MULTIPLE REGRESSION RESULTS: 3-PERIOD MODEL 223 vii LIST OF TABLES Table 1 Total Net Foreign Direct Investment Flows to non-OECD Countries, 1970-1990 37 Table 2 Net FDI Levels in Japan, 1970-1990 .....46 Table 3 Net FDI Levels in Korea, 1970-1990 53 Table 4 Net FDI Levels in China, 1970-1990 61 Table 5 Net FDI Levels in Taiwan, 1970-1990 67 Table 6 Net FDI Levels in Hong Kong, 1970-1990 72 Table 7 Net FDI Levels in the Philippines, 1970-1990 75 Table 8 Net FDI Levels in Malaysia, 1970-1990 83 Table 9 Net FDI Levels in Singapore, 1970-1990 90 Table 10 Net FDI Levels in Indonesia, 1970-1990 94 Table 11 Net FDI Levels in Thailand, 1970-1990 100 Table 12 Classification of FDI Policy Changes by Economy and by Year .....115 Table 13 Classification of FDI Policy Changes in Asia Pacific Economies by Economy and by Year 118 Table 14 Dependent and Independent Variables 123 Table 15 Policy Variables 125 V l l l LIST OF FIGURES Figure 1 Net FDI Flows to Northeast Asia, 1970-1990 40 Figure 2 Country Share of Net FDI Flows in Northeast Asia, 1970-1990 41 Figure 3 Net FDI Flows to Southeast Asia, 1970-1990 41 Figure 4 Country Share of Net FDI Flows to Southeast Asia, 1970-1990 42 Figure 5 Foreign Direct Investment Inflows in Japan, 1977-1990 47 Figure 6 Net FDI as a Percentage of Total Investment in Japan, 1970-1990 48 Figure 7 FDI Inflows as a Percentage of Total Investment in Japan 1977-1990 49 Figure 8 Net FDI Flows and FDI Policy Changes in Japan, 1970-1990 50 Figure 9 Net FDI as a Percentage of Total Investment in Korea, 1970-1990 54 Figure 10 FDI Inflows as a Percentage of Total Investment in Korea 1976-1990 56 Figure 11 Net FDI Flows and FDI Policy Changes in Korea, 1970-1990 57 Figure 12 Net FDI as a Percentage of Fixed Investment in China, 1980-1990 62 Figure 13 Net FDI Flows and FDI Policy Changes in China, 1970-1990 64 Figure 14 FDI Inflows as a Percentage of Total Investment in Taiwan, 1975-1988 67 Figure 15 Net FDI as a Percentage of Total Investment in Taiwan, 1970-1990 : 68 Figure 16 Net FDI Flows and FDI Policy Changes in Taiwan, 1970-1990 69 Figure 17 FDI Inflows as a Percentage of Fixed Investment in Hong Kong, 1970-1990 71 Figure 18 FDI Inflows and FDI Policy Changes in Hong Kong, 1970-1990 73 Figure 19 FDI Inflows as a Percentage of Total Investment in the Philippines, 1977-1990 77 Figure 20 Net FDI as a Percentage of Total Investment in the Philippines, 1970-1990 78 ix Figure 21 Net FDI Flows and FDI Policy Changes in the Philippines, 1970-1990 79 Figure 22 FDI Inflows as a Percentage of Total Investment in Malaysia, 1974- 1990 80 Figure 23 Net FDI as a Percentage of Total Investment in Malaysia, 1970-1990 81 Figure 24 Net FDI Flows and FDI Policy Changes in Malaysia, 1970-1990 82 Figure 25 Net FDI as a Percentage of Total Investment in Singapore, 1970-1990 88 Figure 26 FDI Inflows as a Percentage of Total Investment in Singapore, 1972-1990 89 Figure 27 Net FDI Flows and FDI Policy Changes in Singapore, 1970-1990 91 Figure 28 Net FDI as a Percentage of Gross Capital Formation in Indonesia, 1970-1990 97 Figure 29 Net FDI Flows and FDI Policy Changes in Indonesia, 1970-1990 98 Figure 30 FDI Inflows as a Percentage of Total Investment in Thailand, 1975- 1990 101 Figure 31 Net FDI as a Percentage of Total Investment in Thailand, 1970-1990 102 Figure 32 Net FDI Flows and FDI Policy Changes in Thailand, 1970-1990 102 Figure 33 Primary FDI Policy Objectives by Subject Economy 106 X ACKNOWLEDGMENT In the course of carrying out this research project, I have become indebted to various Faculty members for their very helpful comments, suggestions and criticisms. In particular, I wish to thank Dr. Keith Head for his valuable support, assistance and encouragement as my academic advisor, and Dr. Masao Nakamura for his help in understanding the issues involved in foreign investment in Asia. I am also thankful to Dr. Donald Wehrung for his assistance in improving the paper's content and in stimulating my thinking of the issues involved in this research topic. The patience shown by all three gentlemen as this paper tortuously became reality is gratefully appreciated. Needless to say, any remaining errors or omissions are the author's responsibility. I also wish to express my gratitude to my family who has endured my long absences from them while undertaking this paper. My wife, Yolanda, and daughter, Evelyn, have always been willing to orient their lifestyles around the academic demands of university life, and have constantly supported me in every way. For this I will forever be grateful. X I INTRODUCTION Foreign direct investment (FDI) is somewhat of an oddity. In an era described as consisting of heightened "globalization" and "internationalization", foreign direct investment (FDI) over the period from 1970-1990 was instead characterized by an increasing concentration of foreign capital flows within the industrialized world, and by a corresponding and continual decrease in the amount of FDI outflows to least-developed and developing economies. In real terms, FDI outflows to the latter were actually smaller in the 1980s than in the 1970s 1. This trend is all the more surprising in view of the distinct emphasis towards greater liberalization within the FDI regimes of many countries in the non-industrialized world during the decade of the 1980s. Despite the attempts of many of these countries to formulate their FDI policies in accordance with the popular buzzwords of "deregulation" and "privatization", the anticipated increases in FDI inflows did not materialize, while at the same time industrialized countries (the main sources of FDI) veered towards greater use of protectionist trade measures 2. In short, FDI has often been an elusive and unpredictable commodity. Indeed, as Yoshi Tsurumi noted in his comprehensive 1984 analysis of international management, FDI violates many classical economic conceptions of perfect DeAnne Julius, Global Companies and Public Policy: The Growing Challenge of Foreign Direct Investment (Royal Institute of International Affairs, London: 1990), p. 22. 2 Several studies have confirmed this trend during the past decade. One of the most thorough of these studies was conducted by the United Nations and noted that the attraction of least-developed and developing economies to transnational corporations (TNCs) had diminished considerably during the 1980s. See United Nations Centre on Transnational Corporations, Transnational Corporations in World Development: Trends and Prospects (UN, New York: 1988). In a 1992 report, the International Monetary Fund (IMF) noted that in the 1980s, "the increased focus on market principles in industrial countries did not carry over to trade and industrial policies nor, most notable, to the agricultural sector". The economic climate in the developed world became more protectionist through the use of non-tariff barriers such as anti-dumping suits and voluntary export restraints (VERs). See Margaret Kelly et. al., Issues and Developments in International Trade Policy (International Monetary Fund, Washington: 1992), p. 1. 1 competition3. Far from existing in an environment where no single producer or consumer can affect the workings of the market, FDI has generally been dominated by business enterprises from the industrialized countries (particularly from the member states of the Organization for Economic Cooperation and Development, OECD), with the majority of FDI flows occurring between these same nations. Acute differences in knowledge of marketing, production and financing techniques, combined with varying productivity levels, natural resource bases and consumer markets, has produced an environment in which economic advantages are not shared equally by all countries4, particularly in the service sector which has increasingly become a major recipient of FDI. For the world's developing economies, these inequalities have been of particular relevance to their efforts at obtaining a share of the global FDI inflows accruing to developing countries. One of the ways in which the latter have attempted to deal with these difficulties has been by liberalizing and improving the climate for foreign direct investment within their respective national borders. Such policy changes were based largely upon what the IMF has termed an "emerging consensus" that free-market based economies and liberal FDI regimes resulted in more positive economic performance than heavily-regulated economies5. Naturally, what emerges from this type of "consensus" are two critical questions: first, precisely what types of policy changes to FDI regimes are required in order for a host country to benefit from increased FDI inflows, and secondly, do these changes at all have an impact upon a host country's attractiveness to FDI? 3 Yosh i Tsurumi, Multinational Management: Business, Strategy and Government Policy, 2nd. ed., (Ballinger Publishing Company, Cambridge, Mass.: 1984), p. 193. 4 Ibid., p. 193-194. 5 Kel ly et. al., Issues and Developments in International Trade Policy, p. 4. 2 The objective of this paper is to assess the impact of host country investment policies upon the level of FDI in their economies through two approaches. The first section of this paper will examine some of the issues involved in FDI and the ways through which developing countries have attempted to utilize and, in some cases, control foreign investment. In the second section of this paper, these issues will be placed in the context of ten Asia Pacific economies (Japan, South Korea, the People's Republic of China, Taiwan, Hong Kong, the Philippines, Malaysia, Singapore, Indonesia, and Thailand) over the period from 1970-1990 in order to determine the measures taken by each one towards FDI, and the impact that these policies had on aggregate FDI inflows during the same period. The rationale for focusing upon the Asia Pacific region is simple: it is this region of the globe that has come to dominate as the primary recipient of FDI inflows from the industrialized world. From 1980 to 1990, 7 0 % of global FDI flows to the developing world went to only 10 countries, six of which were Asia Pacific economies (four of these are directly examined in this study). This occurred despite the fact that the overall share of developing countries in global FDI inflows fell from 2 0 % in the early part of the decade (1980-84), to 1 0 % in the later half of the 1908s (1985-90)6. Given this extreme concentration of FDI flows, and the predominance of Asia Pacific economies within these flows, an examination of the relationship between the nature of host country FDI regimes and the level of FDI inflows experienced by host economies in Asia Pacific appears warranted. 6 The ten recipient economies were; Argentina, Mexico , Brazi l , Egypt, Singapore, China, Hong K o n g , Malaysia, Taiwan and Thailand. O E C D , Foreign Direct Investment: OECD Countries and Dynamic Economies of Asia and Latin America ( O E C D , Paris: 1995), pp. 13, 60. 3 The third part of this paper places the issue within a wider geographical framework by including several Latin American, African and other Asian nations in the analysis. Regression analysis is used to test the strength of the relationship between FDI levels and host country policies by taking several other potential macroeconomic variables into consideration, and by testing a larger sample size. 4 CHAPTER 1 - THE CHARACTERISTICS OF FOREIGN DIRECT INVESTMENT 1). T h e i s s u e o f o w n e r s h i p a n d c o r p o r a t e c o n t r o l Generally, foreign direct investment (FDI) is described as a business transaction that confers upon a foreign investing company a controlling interest, or a sizeable degree of managerial influence, within a foreign enterprise. Hill, for example, views FDI as occurring when more than 50% of a company's stock is obtained by an overseas business7, while Froot defines FDI as consisting of "cross-border expenditures to acquire or expand corporate control of productive assets"8. The conception of FDI as involving the attainment of control over another firm's corporate activity is also evident in the analysis of foreign direct investment given by Krugman and Obstfeld who view FDI as not only a part of overall international capital movements, but as distinctly characterized by "the acquisition of control" on the part of the investing enterprise9. The issue of control is also central to the definitions of FDI given by Markusen, Melvin, Kaempfer and Maskus who describe FDI as "an investment in which the investor acquires a substantial controlling interest in a foreign firm or sets up a subsidiary in a foreign country"10. All of these observers view FDI as a process through which a firm undertakes the transformation from being a domestic entity to being a transnational or multinational corporation (TNC or MNC). In the context of such international businesses, control 7 Charles W . L . H i l l , International Business: Competing in the Global Marketplace (Richard D . Irwin, Inc., Boston: 1994), p. 173. 8 Kenneth A . Froot, ed., Foreign Direct Investment (University of Chicago Press, Chicago: 1993), p. 1. 9 Paul R. Krugman, Maurice Obstfeld, International Economics: Theory and Policy (HarperCollins, New Y o r k : 1994), p. 159. 1 0 James R. Markusen, James R. Melv in , Wi l l i am H . Kaempfer, Keith E . Maskus, International Trade: Theory and Evidence (McGraw-Hill, N . Y . : 1995), pp. 394-395. 5 becomes critical to the ability of these investing firms to successfully and effectively diffuse managerial or technical expertise to their foreign subsidiaries, and hence stimulate the expansion of industrialization to other areas of the world. Through the effective use of control, TNCs are often seen as being the "prime movers behind the industrial dynamism" of certain regions, particularly in Asia Pacific, in a process that Ozawa terms "TNC-facilitated economic transformation"11. Although these twin elements of control and financial support from the parent firm to a subsidiary are present in many FDI activities, they may not be valid characterizations of the general nature of FDI. Control is certainly a difficult item to quantify, but it often does not seem to be a requirement for an investing firm to own a majority of a foreign firm's equity in order to exercise control, or to exert considerable managerial influence. Majority control does, however, create greater incentives for a parent firm to share with a subsidiary what is commonly referred to in the literature as tangible or intangible corporate assets, firm-specific assets (i.e. advanced managerial techniques, sophisticated proprietary technologies or technological processes, international credibility, etc.), or what Dunning termed "ownership-specific endowments"12. Since such assets are often sources of competitive advantage for an investing firm, the latter may only be willing to transfer these to a subsidiary if it can reduce the likelihood of these assets spilling over to competing firms, or to potential 1 1 Terutomo Ozawa, "Foreign direct investment and economic development", Transnational Corporations, Volume 1, No . 1, February 1992, p. 28. 1 2 John H . Dunning, "Trade, Location of Economic Activity and the M N E : A Search for an Eclectic Approach", in Bertil Ohlin, Per-Ove Hesselborn, and Per Magnus Wijkman, eds., The International Allocation of Economic Activity: Proceedings of a Noble Symposium held at Stockholm (Holmes & Meier Publishers, Inc., New York: 1977), p. 405. See also Masao Nakamura and Bernard Yeung, "On the Determinants of Foreign Ownership Shares: Evidence from U S Firms' Joint Ventures in Japan", in Managerial and Decision Economics, V o l . 15, 1994, p. 97. 6 competitors in the case of a joint venture. This is often considered best accomplished through ownership 1 3. When considerable differences exist between a foreign investing firm and its joint venture partner(s) in regards to their ability to effectively utilize such firm-specific assets, the possession of these assets can confer de facto control to the foreign investor even though it officially may hold only a minority position in the joint venture. A paucity of similar assets among the local partner firms may render these enterprises dependent upon the competitive capabilities of their foreign partners. This has clearly been the case with the Southeast Asian automobile industry. Thai, Malaysian, and Indonesian firms have generally been the majority-share holders in joint manufacturing ventures with Japanese automobile companies, but the technological superiority and managerial expertise of the latter effectively allowed them to control the operations of many of these enterprises. It can conceivably be argued that even without formal control or ownership, and even without a sizeable equity position in a business, a firm can still engage in overseas business activity and derive the same benefits as it would under a "pure" FDI approach involving a greater degree of control. Dunning 1 4 and Oman have both considered non-equity investment measures which supersede "traditional" FDI. The clearest example is provided by the energy resource industry which began "production-sharing agreements" with the Indonesian petroleum sector in the 1960s. Under such an arrangement, the 1 3 Masao Nakamura and Bernard Yeung, "On the Determinants of Foreign Ownership Shares: Evidence from U S Firms' Joint Ventures in Japan", Managerial and Decision Economics, V o l . 15, 1994, pp. 96-97. The authors note in their study of U S investment in Japan that over 60% of American subsidiaries in that country are wholly or majority-American owned. 1 4 John H . Dunning, Explaining International Production (Unwin Hyman, London: 1988), p. 175. 7 foreign firm conducted the exploratory work and engaged in extraction with a host country enterprise in the event that petroleum deposits were uncovered. In return, the foreign company received a certain pre-arranged percentage of production once its expenses had been covered 1 5 . In this instance, less control was deemed acceptable in return for relatively rapid access to energy deposits. These types of "non-equity arrangements" based upon the possession of firm-specific assets (petroleum extraction expertise in the above example) was noted by the United Nations Centre on Transnational Corporations (UNCTC) to have increased in number in the 1980s as TNCs attempted to utilize investment approaches that could minimize risk and exposure to the economic uncertainty that was plaguing Latin American and other investment locations. In its 1988 report, the UNCTC concluded that possession of firm-specific assets allowed TNCs to benefit from the leverage that those assets confer, even when local partners or international lenders absorb start-up costs and provide working capital. And, what is especially important, such arrangements often mean reduced exposure to the commercial and political risks that accompany FD/16. A minority position in an investment project can also be used to reduce the degree of risk to which the foreign investor is exposed. As Oman notes, a minority position shifts the onus for dealing with price fluctuations, exchange rates, etc. to the host country, thereby possibly more than adequately compensating the investor for a diminished level of control 1 7. 1 5 Charles Oman, New Forms of International Investment in Developing Countries ( O E C D Development Centre, Paris: 1984), pp. 12, 16. 1 6 United Nations Centre on Transnational Corporations ( U N C T C ) , Transnational Corporations in World Development: Trends and Prospects ( U N , New York: 1988), p. 67. 1 7 Oman, p. 107. 8 From this discussion, it appears difficult to formulate a precise definition of FDI that will apply in all instances where foreign investment is undertaken and foreign ownership involved. Direct involvement in a foreign market can be undertaken through numerous channels (creation of a subsidiary, joint-ventures, equity purchases), while control itself can be manifested in a variety of ways under different circumstances. Indeed, it appears that a great deal of FDI does not involve the simple creation of a foreign subsidiary, as many definitions of FDI suggest18. Instead, when considering foreign investment activities in this paper, FDI can perhaps be viewed as a process through which an investing firm acquires the capability of exercising sufficient managerial control over the business operations of an enterprise so as to make the tatter's activities consistent with the investor's long-term corporate objectives. Such a conception of FDI does not limit the methods through which an investment can be made, nor does it limit control to that of one type, such as equity ownership. It also allows for flexibility in the motivations for investment; an investor may not wish to directly exert control over an enterprise, but may simply wish to have a position from which to monitor the enterprise's activities, or to encourage linkages between it and the investor's firm. 2 ) . The Determinants of FDI After having considered the nature of FDI, it would be useful to examine some of the reasons why foreign direct investment at all occurs. The ability of a foreign investor to exert control over an investment is but one factor that influences the decision as to whether or not to undertake FDI. Other considerations may revolve around an investor's See for example Krugman and Obstfeld, p. 159. 9 long-term business strategy. Hill, for example, distinguishes between horizontal and vertical FDI activities. The factors that he identifies as possibly influencing the decision to engage in FDI rather than to undertake more passive forms of international business activity (such as exporting or licensing) are transportation costs, market impediments to exporting, market impediments to transferring firm-specific assets, imitative corporate behaviour, and a desire to expand market control at the expense of competitors19. Transportation expenses are relevant primarily for low value-to-weight products that do not necessarily have to be produced in the investor's country. Transporting such items may therefore seem less cost-effective than local production. This issue, however, is of relatively less importance than the existence of market barriers to exporting and asset-transferring. Hill argues that import restrictions imposed by foreign countries raise the attractiveness of using either licensing or FDI for the exporting country, as occurred in the realm of Japanese automobile exports to the United States. Impediments to the transfer of firm-specific assets may compel firms to undertake FDI due to concerns over diffusion of competitive assets to rivals (i.e. through licensing), loss of control over operations, and the degree of transferability of firm-specific assets. Marketing or manufacturing approaches and corporate philosophies are difficult to effectively communicate to other parties without direct involvement in business operations. A third factor, imitative corporate behaviour, may account for why some firms fear the accrual of first-mover advantage to rivals and therefore imitate their competitors' movements by following them into foreign markets. Finally, with particular regards to vertical FDI, an objective of expanding market power may prompt firms to undertake FDI in order to Hill, International Business, pp. 182-189. 10 strengthen their control over "up-stream" and "down-stream" industrial areas, or to circumvent perceived existing distribution or sourcing barriers 2 0. A ) . T h e O L I A p p r o a c h These five factors considered by Hill are also evident in the OLI (Ownership, Location, Internalization) strategic framework developed by Dunning and further expounded upon by others, such as Markusen 2 1 . Under the OLI approach, three considerations enter into decision-making on the merits or drawbacks of engaging in FDI: 1) the investing enterprise must have what has been labeled an "ownership advantage" through possession of a product or process that provides that firm with a competitive advantage (most studies have identified product differentiation, marketing skills, and technological ability as being among the foremost firm-specific assets 2 2 ) ; 2) the proposed host country must have a particular locational advantage that merits undertaking production in that country; and 3) the advantage of "internalization" requires that the investing firm pursue FDI through the creation or purchase of a subsidiary, rather than through other modes of entry 2 3. For further details on each of these factors, see H i l l , International Business, pp. 182-189. 2 1 Material for this section is drawn from James R. Markusen, "The Theory of the Multinational Enterprise: A C o m m o n Analytical Framework", in Eric D . Ramstetter, ed., Direct Foreign Investment in Asia's Developing Economies and Structural Change in the Asia-Pacific Region (Westview Press, Inc., San Francisco: 1991), pp. 11-35. 2 2 See, for example, Nathan Fagre and Louis T . Wells, "Bargaining Power of Multinationals and Host Governments", Journal of International Business Studies, Fal l 1982, p. 10, and H . H . Aswicahyono and Hal H i l l , "Determinants of Foreign Ownership in L D C Manufacturing: A n Indonesian Case Study", Journal of International Business Studies, First Quarter, 1995, pp. 143-145. Also , Seiji Naya and Eric D . Ramstetter, "Multinationals and Structural Change: Implications of the Asia-Pacific Experience", in Ramstetter, ed., Direct Foreign Investment in Asia's Developing Economies and Structural Change in the Asia Pacific Region (Westview Press, San Francisco: 1991), p. 306. 2 3 Markusen, "The Theory of the Multinational Enterprise", pp. 12-13. Similarly to Dunning, Keun Lee also notes "owner-specific competitive advantages" as one condition that will prompt a firm to favour international production, provided that the "direct interaction" in F D I ventures (especially joint ventures) allows for the effective utilization of these advantages. See Keun Lee, New East Asian Economic Development: Interacting Capitalism and Socialism ( M . E . Sharpe, Inc., N . Y . : 1993), pp. 125-126, 159-160; also Krugman and Obstfeld, pp. 160-161.. 11 Effective internalization allows a TNC to manipulate transfer pricing, to minimize the negative effects of the policy environment in which it is located, and to dissimulate and integrate the benefits of its ownership advantage throughout its corporate structure so as to enhance its competitive ability. An FDI undertaking must therefore be motivated both by the firm's ability to project this internalization capability overseas, and by the potential contribution that the overseas operation will make towards strengthening this competitive advantage24. Additionally, as noted by Nakamura, the utilization of internal firm-specific assets must be achieved at very low cost to the investor. Transfers of such assets, desirable though they may be from a host country's standpoint, will not occur if they are inconsistent with the profit maximization objectives of an investor25. This problem becomes more acute if FDI is pursued through modes of entry other than the OLI's subsidiary-based approach. Transfers of firm-specific assets become more complicated with the presence of another external party and the risk of asset spill-overs increases. Even though it may be advantageous for a local joint venture partner to benefit from its foreign partner's store of firm assets, the foreign partner may be reluctant to transfer assets due to the cost of attempting to keep these assets "in-house" and preventing their diffusion to outside enterprises26. In the context of US investment in Japan, Nakamura has found that material inputs imported by both joint ventures and American subsidiaries has positively affected these businesses' profitability27. For a host country that is seeking to stimulate export growth, however, Dunning, "Trade, Location of Economic Activity and the M N E " , pp. 402, 405. 2 5 Masao Nakamura, "Modeling the Performance of U S Direct Investment in Japan: Some Empirical Estimates", in Managerial and Decision Economics, V o l . 12, 1991, p. 107. Also , Nakamura, "Japanese direct investment in Asia-Pacific and other regions: Empirical analysis using M I T I survey data", in International Journal of Production Economics, V o l . 25, 1991, p. 221. 2 6 Nakamura and Yeung, pp. 97, 103. 2 7 Nakamura, "Modeling the Performance of U S Direct Investment in Japan", p. 111. 12 such an outcome would not be desirable. For these reasons, once non-subsidiary based forms of FDI are considered, the OLI framework becomes less adequate at explaining how investors can successfully make use of their internal firm-specific assets. Having therefore briefly considered the ownership and internalization elements of the OLI framework, attention should now be focused upon the third aspect, namely that of location. Given the extreme diversity in levels of human, natural, and capital resources among potential investment sites, determining what an investing firm seeks in locating its foreign investment is a daunting task. As noted above, an FDI location should allow the investor to successfully extract benefits from the possession of its competitive, internalized firm-specific assets. Locational attributes that serve this purpose may include domestic market size, educational and physical infrastructure, proximity to key export markets, and relative wage levels. Without such attributes, the mere presence of investment stimuli (i.e. import barriers) will not necessarily result in foreign firms undertaking FDI in the host market. If there are no competitive advantages unique to the investing firm that are "best exploited through integrated global management", local producers will be better positioned to serve the domestic market28. Some of the conditions for favourable FDI climates, as outlined by an early study conducted among OECD members, are the perceived level of demand in the prospective FDI location, the relative prices of production inputs, and spending capacity (level or changes in cash flow) of the investment. Overall, general cost factors and investment environment were considered important29. Agarwal also found "market 2 8 Rachel M c C u l l o c h , "New Perspectives on Foreign Direct Investment", in Kenneth A . Froot, ed., Foreign Direct Investment (University of Chicago Press, Chicago: 1993), pp. 42-43. 2 9 Organization for Economic Cooperation and Development ( O E C D ) , Investment Incentives and Disincentives and the International Investment Process ( O E C D , Paris: 1983), pp. 33-34. Some locational 13 attraction" as being a primary consideration , while the UNCTC developed a more extensive set of concerns including macro-economic and political conditions, market size, skill levels, infrastructure, official policies towards FDI, repatriation of profits, stable FDI regulations and the existence of an effective and impartial enforcement authority 3 1. Still other researchers, such as Wallace in her study of approximately 300 U.S. TNCs, concluded that the guaranteed remittance of earnings, the threat of war or hostilities, protection from expropriation, and unfavourable investment laws were the leading considerations influencing an investing firm's decision to undertake FDI 3 2. Another important determinant, particularly for Japanese investors, is the presence of affiliated suppliers and other firms from the investor's respective keiretsu. Thus, areas of initial Japanese investment are often the sites for additional investment by other Japanese firms as the latter attempt to locate in proximity to already established Japanese investors, creating what are known as "agglomeration benefits" 3 3. This has clearly been the case with Japanese automobile, electronics and textile investments in Thailand and Malaysia. 3 ) . H o s t C o u n t r y C o n d i t i o n s attributes, however, may be more influential than others. Kravis and Lipsey, for example, found that the location decisions for U S firms were influenced by large internal markets and a country's propensity to trade, but not by labour costs, at least in export industries. See Irving B . Kravis and Robert E . Lipsey, "The Location of Overseas Production and Production for Export by U .S . Multinational Firms", Journal of International Economics, No. 12, 1982. 3 0 J.P. Agarwal, "Determinants of Foreign Direct Investment: A Survey", Review of World Economics, No. 116, 1980. 3 1 U N C T C , Transnational Corporations and International Economic Relations: Recent Developments and Selected Issues, U N C T C Current Studies Series A , N o . 11 (New York , N . Y . : 1989), p. 25. 3 2 Cynthia Day Wallace, "Foreign Direct Investment In The Third Wor ld: U . S . Corporations and Government Policy" in Cynthia Day Wallace et als, eds., Foreign Direct Investment In The 1990s: A New Climate In The Third World (Martinus Nighoff Publishers: 1990), p. 155. 3 3 Keith Head, John Ries, Deborah Swenson, "Agglomeration benefits and location choice: Evidence from Japanese manufacturing investments in the United States", Journal of International Economics, N o . 38, 1995, pp. 233-235. 14 Additional studies have generally concurred with these considerations, but have particularly noted that "locational advantages" sought by TNCs have been undergoing a transition from micro-considerations at the regulatory and policy level, to an emphasis on resources and low-cost labour, and are increasingly emphasizing skills, infrastructure and backward and forward linkages involving local enterprises and proximity to large and growing markets34. Rather than focusing upon specific investment conditions at a micro-level, the evolution of FDI planning on a broad basis seems to have gravitated from a primary consideration of wage levels and other factor costs, to a more macro-consideration of the overall suitability of a country as an investment site. According to the OECD's perspective, "supply-side factors" (i.e. labour costs) have declined in importance over the 1980s, with a greater role being currently assumed by conditions such as domestic market size35. Certainly in the context of the Asia Pacific region, the focus of FDI has shifted from the resource sector (although that remains important as the earlier discussion noted) to the area of manufacturing and other forms of value-added production36. Henderson and Appelbaum emphasize the importance of macro-economic variables within successful FDI host countries in Asia Pacific as providing the basis for locational advantages37, while in the context of Southeast Asia, Fry has also noted a strong correlation between stable domestic economic environments and higher inflows of FDI38. Based upon these arguments, specific FDI policies can be expected to O E C D , Foreign Direct Investment: OECD Countries and Dynamic Economies of Asia and Latin America ( O E C D , Paris: 1995), p. 35. 35 Ibid., p. 15. 3 6 C H . Kwan, Economic Interdependence in the Asia-Pacific Region: Towards a Yen Bloc (Routledge, N . Y . : 1994), p. 90. 3 7 Jeffrey Henderson and Richard P. Appelbaum, "Situating the State in the East Asian Development Process", in Jeffrey Henderson and Richard P. Appelbaum, eds., States And Development In The Asia Pacific Rim (Sage Publications, Inc., London: 1992), p. 18. 3 8 Maxwel l J . Fry, Foreign Direct Investment in Southeast Asia (Institute of Southeast Asian Studies, Singapore: 1993), p. 58. Khan and Reinhart, however, argue that the process works in reverse; in several countries "the presence of capital inflows and the stronger economic activity were used to implement trade liberalization and domestic financial reforms more rapidly" (Mohsin S. Khan and Carmen M . Reinhart, 15 have a less decisive influence upon the foreign investment decision than does the state of a potential host country's economic fundamentals. FDI policies, however, have been often viewed by host countries, at varying times, as tools with which to further stimulate FDI inflows, control existing and future FDI, or to direct FDI in ways conducive to national development (i.e. employee training and export growth). In order to assess how host countries' usage of FDI-related policies developed over the period from 1970-1990, information was compiled on host country policies in six categories: domestic ownership requirements, domestic procurement rules, local hiring requirements, foreign exchange controls, ease of FDI approval, and the creation of export processing zones (EPZ). Information on host country policies was gathered using primarily UNCTC publications, investment reports and various other publications. An additional UNCTC report entitled Government Policies and Foreign Direct Investment outlined several policy variables the UN used in evaluating the effectiveness of host country policies on FDI flows, among them being ownership rules, currency conversion limits, performance requirements, and application and entry procedures 3 9. Consequently, after examining these sources, it was decided to use domestic ownership requirements in the study given their prominence in FDI regulations. Domestic procurement and local hiring rules are also two of the most prominent performance measures in FDI activities, while foreign exchange controls are generally regarded in studies of FDI as being of considerable importance. Following the UNCTC study mentioned above, ease of FDI approval was included as another policy. Finally, "Macroeconomic Management in A P E C Economies", in Khan and Reinhart, eds., Capital Flows in the APEC Region, p. 29). These stimuli would conceivably lead to a more attractive environment for investing foreign firms. 3 9 U N C T C , Government Policies and Foreign Direct Investment, U N C T C Current Studies Series A , N o . 17 (United Nations, N . Y . : 1991), pp. 7-13. 16 the creation of EPZs was also added as a policy given the relative attraction that EPZs and other special economic areas have drawn in Asia Pacific, particularly in respect to the People's Republic of China. This data on the evolution of host country FDI policies over the twenty-year period under consideration is displayed in the form of a timeline in Appendix 1 which includes the ten economies examined in this paper and twenty-seven additional developing economies. Apart from ownership (which has already been discussed at some length), each policy measure is further discussed below. A) Domestic Performance Requirements I. Domestic Procurement Rules Imperfect markets with their opportunities for monopolistic behaviour and monopoly profits allow for the possibility of increasing economic rents from having a domestic presence for domestic-oriented FDI. It has been suggested that trade related investment measures (TRIMs) can actually bestow a preferential position upon a foreign firm within a host country, in return for commitments by that firm to maximize its use of local inputs in the production process. TNCs may in fact favour the preservation of barriers to entry against other potential investors, allowing both host country and investor to benefit from a venture40. A notable example of this has occurred in the Southeast Asian automobile industry which is dominated by Japanese manufacturers and parts-suppliers. Since all Southeast Asian markets have been protected by high Wheeler and M o d y found that U.S. T N C s were also more attracted to "restrictive economies" that practiced import-substitution. See David Wheeler and Ashoka M o d y , "International investment location decisions", Journal of International Economics, No . 33, 1992, pp. 57-77. 17 tariffs and numerous conditions requiring the use of local parts and labour, Japanese firms have undertaken extensive efforts to develop domestic production and sales networks. American firms, by contrast, chose to exit these markets in the 1970s and are now facing formidable obstacles in attempting to re-enter. One policy measure that would facilitate American entry would be a lowering of the local content levels required for American specialty vehicles, such as for four-wheel drive automobiles. However, Southeast Asian governments (particularly the Thai administration) are under considerable pressure by Japanese manufacturers and Thai businesses dependent upon the automobile industry not to implement such a change that would alter industry benefits. Often there may not exist an explicit requirement that an investor use local materials and/or parts in manufacturing activities, but such a condition can be made apparent from the type of investment incentives offered, or from the form that the investment must take. For example, investors located outside of special export processing zones usually have to pay taxes and duties on imported materials that are locally available, or if a local partner is included in the investment (i.e. a joint venture) there will be a greater expectation that the foreign investor will work with its partner in order to raise the local content level in the investment. An investor may, officially, still be able to undertake FDI if it felt that the financial penalties of using foreign inputs were not onerous, but the investor could find itself hampered as a result by restricted access to local financing, inaccessibility to key government officials, or by a cumbersome approval procedure. 18 The possibility also exists for a host country to use the threat of entry liberalization to obtain concessions from a monopolistic foreign investor, or to actually play off competing investors against each other in order to gain favourable conditions concerning local procurement, employee training and technological transfers. Indonesia, for example, has recently announced the formation of a national car program for automobiles using a higher-than-current level of local components, technology and expertise. Despite the predominance of Japanese joint-venture firms in this industry, the "winner" of such a program would be an Indonesian-Korean venture, which has created concern among the dominant Japanese automobile manufacturer, Toyota41. Similarly, the Malaysian government has been pursuing alliances with Renault and other non-Japanese automobile manufacturers due to Malaysia's perception of Mitsubishi Motors Corporation as being reluctant to transfer technology through its partnership with the Malaysian government in the Malaysian Proton automobile program. The potential opportunity exists for host country governments to try and gain leverage with investors by remaining receptive to many competing firms in a particular sector. Restrictions against foreign investors may also be more prevalent in an environment where a considerable amount of business activity is state-led. A large state sector may impair the ability of foreign firms to gain entry to the domestic market, or the presence of potential domestic competitors may completely deter investors from investing. Conversely, a host country may also provide a more attractive FDI site if it can offer competent joint-venture partners who will facilitate the foreign firm's entry into the market and its dealings with various governmental authorities42. This incentive, "Indonesia's "National Auto' Plan Draws Japanese Cal l for Fair Trade", Asian Wall Street Journal, M a r c h 4, 1996, p. 13. 4 2 A s described by Aswicahyono and H i l l , p. 144. 19 combined with the offer of import protection, favourable tax treatment (to partially compensate an investor for having to develop high-quality local parts producers) and other incentives, may prompt foreign firms to undertake FDI in that country despite the presence of performance obligations. Given the dominance of a few large TNCs in a variety of product areas, the prospect of monopolistic profits may be a strong attraction for investors which, as Oman argues, may prompt foreign firms to willingly endure constraints upon their operations in return for the opportunity to gain these economic rents. A host country may be able to use the prospect of monopolistic gains as a form of leverage with which to obtain benefits from the presence of a foreign firm. OECD research has noted that in several developing nations, "foreign investment and the behaviour of multinational corporations has arguably tended on balance to strengthen, not weaken, oligopolistic concentration and non-price-competitive corporate behaviour" over an extended period of time43. Therefore, the gains from a privileged position within a host country may offset any disadvantages that an investor may encounter in terms of ownership restrictions, infrastructure or labour productivity. This type of import-substituting industrialization, however, has been a double-edged sword, especially in manufacturing industries such as automobiles, where economies of scale are critical in order to achieve profitable production volumes. Although import-substituting has created barriers to entry and the potential for monopoly O E C D , Foreign Direct Investment: OECD Countries and Dynamic Economies of Asia and Latin America, p. 71. Borensztein, De Gregorio and Lee have also noted that such F D I "does not respond to higher efficiency but only to profit opportunities created by distorted markets". See Eduardo Borensztein, Jose D e Gregorio and Jong-Wha Lee, "How Does Foreign Direct Investment Affect Economic Growth", N B E R Working Paper #5057, March , 1995, p. 18. 20 profits, it has not stopped several Japanese and Korean automobile firms from attempting to compete for these profits. The presence of several foreign firms seeking to supply vehicles to a small segment of the domestic population of many Southeast Asian countries has resulted in inefficient production levels and loss of economies of scale44. In addition, as Doner has noted, inefficient production processes make it more difficult for a host country to absorb a mastery of the production technology45. When such import substituting measures are combined with the existence of an extensive state-led sector in the economy, the costs for an investor may rise even further. Host country governments naturally tend to favour domestic enterprises, but this tendency may become quite pronounced if most significant economic activity is confined to an elite class. Both Indonesia and Malaysia, for example, have pursued economic policies along racial lines, seeking to improve the economic status of ethnic Indonesians and Malaysians. This has lent itself to the emergence of "clientelism"46 whereby certain elites who have benefited from these policies, have developed close ties with government agencies so as to maximize their rent-seeking activities. In these types of environments, it is incumbent upon an investor to understand his position relative to these domestic actors, and to ensure that a potential business partner can further the investor's objectives. In a "clientelistic" environment, the costs of aligning with the wrong party can be considerable. 4 4 Krugman and Obstfeld, p. 262. 4 5 Richard Doner, Driving a Bargain: Automobile Industrialization and Japanese Firms in Southeast Asia (University of California Press, Los Angeles: 1991), p. 15. 4 5 A s coined by Andrew Maclntyre, "Business, Government and Development: Northeast and Southeast Asian Comparisons", in Maclntyre, ed., Business and Government In Industrializing Asia (Cornel University Press, N . Y . : 1994), pp. 7-8. 21 I I . L o c a l H i r i n g r e q u i r e m e n t s Although the UNCTC has argued that "specific local employment requirements are rarely included in foreign investment laws"47, there are several countries where such conditions are evident. Ghana, Gabon and the Ivory Coast are the most prominent examples in Africa, while in the Asia Pacific region, India, Malaysia, and Indonesia have placed a strong emphasis upon the "nationalization" of the workforces of foreign investors, particularly at the managerial level. Virtually all developing countries frown upon the extensive use of expatriate staff and often a "phase-out" period can be attached during which an investor is expected to replace a foreign worker with a local employee. B ) . F o r e i g n E x c h a n g e C o n t r o l s Foreign exchange controls have been another instrument with which host countries could traditionally exercise constraints upon the activities of foreign investors as well as to guard their balance-of-payments position. Taxes upon the remittance of dividends and profits provided additional revenue, while limitations upon the form and time-period during which invested capital could be repatriated where often seen as useful in controlling capital outflows, particularly when oil and commodity prices declined thus reducing the earnings of many developing countries' exports. In the case of Japan, Taiwan and Korea, however, foreign exchange controls were primarily designed to allow the state to exert a dominant force upon the allocation 4 7 UNCTC, National Legislation and Regulations Affecting Transnational Corporations (United Nations, N.Y.: 1978), p. 3. 22 of foreign exchange to sectors of the domestic economy that were considered to be of primary importance for future economic development and progress. While in Latin America and elsewhere foreign exchange controls may have had a monitoring purpose (i.e. controlling foreign investors' activities so as to avoid balance of payments difficulties), in Northeast Asia the main function of these controls were to allow the state to directly influence the development of the economy by favouring certain industries over others 4 8. Overall, foreign exchange controls have been characterized by progressive liberalization over the period from 1970-1990. The growth of international capital markets and of the number of financial investment vehicles open to investors has made foreign capital both harder to control for host countries and harder to attract since foreign capital can more easily switch locales today than before. The debt crisis of the 1980s also served to pressure many developing countries into reforming their financial sectors and encouraging FDI inflows, while the orientation towards export-led growth in Southeast Asia created pressures to liberalize foreign exchange controls so as to stimulate export-oriented FDI. C). Ease of FDI Approval One of the most glaring impediments to overseas investing can be the regulatory hurdles that must be overcome in order to obtain investment approval. Multi-tiered approval requirements and extensive document processing, combined with bureaucratic corruption, can create significant delays or completely deter FDI inflows. Not 4 8 See, for example, Barbara Stallings, "The Role of Foreign Capital in Economic Development", in Gary Gereffi and Donald L . Wyman , eds., Manufacturing Miracles: Paths of Industrialization in Latin America and East Asia (Princeton University Press, N.J . : 1990), pp. 55-90. 23 surprisingly, many FDI policy changes (as can be seen from the timeline in Appendix 1) have involved the issuance of new FDI regulations, the clarification of previous legislation, a simplification of approval procedures, or a combination of all three. Many developing countries have also moved towards creating a "one-stop" approval centre where all relevant FDI proposals can be speedily processed. D). Export Processing Zones Several developing countries have created special geographic zones with modern infrastructure facilities wherein which usually export-oriented FDI can be located. Such investments receive favourable taxation treatment and exemptions from a variety of import and export duties and taxes, as well as access to local labour on a privileged basis (i.e. performance requirements regarding local employees may not be applicable). The objective of the investor is to obtain a locale with adequate production and shipping facilities, easy access to required inputs, and with an adequately trained workforce. The host country's goal is to generate foreign exchange earnings with which it can attempt to redress any relevant balance-of-payments difficulties, as well as to facilitate the diffusion of managerial and technical knowledge to the local economy. In addition, EPZs can also serve to attract continued FDI due to the agglomeration benefits referred to earlier; later inflows of investors tend to concentrate around areas where FDI is already concentrated, in these instances, in the EPZs. The relationship between EPZs and knowledge diffusion, however, is not linear and should be an issue of some concern for developing countries. In order for knowledge to transfer effectively, a sizeable and competent local business presence is 24 required. In most EPZs, however, the domestic presence is smaller than the foreign one, or the nature of the domestic firms (small size, unskilled workers, or different industrial background) may preclude them from benefiting from any potential knowledge transfer. In the case of Japanese investors, Boyd has argued that apart from the technical disadvantage that a host country may be suffering from, most Japanese firms are more intent upon maintaining their "contractual ties with firms in their own industry groups" than in cultivating new linkages with potential domestic suppliers49. This would be particularly the case if the "internalization" advantage enjoyed by the foreign firm is dependent upon strong associations with its existing foreign partners. This tendency is compounded by the fact that most investors in EPZs are foreign enterprises that are more familiar with each other than with the local business community. Consequently, the mere presence of EPZs does not imply that meaningful knowledge transfers will evolve and this has been problematic for the Philippines, Malaysia and other host countries. E). Financial Incentives The macro-economic considerations in investing outlined earlier also seem to outweigh the importance of tax rebates, duty exemptions and other financial incentives as significant determinants of FDI location. Head and Ries, for example, have determined that Japanese investment patterns in North America are influenced by fiscal and tax incentives in locating an investment within a particular country50. The choice of which country to invest in, however, does not appear to be greatly affected by these types of investment incentives. Cable and Persaud argue that tax incentive schemes 4 9 Gavin Boyd , Corporate Planning and Policy Planning In the Pacific (St. Martin's Press, N . Y . : 1993), pp. 42-44. 5 0 Keith Head and John Ries, "Rivalry for Japanese Investment in North America", Paper prepared for Industry Canada's conference "The Growing Importance of the Asia-Pacific Region in the W o r l d Economy; Implications for Canada", Vancouver. B C , Dec. 1-2, 1995. 25 "are of modest importance in influencing investment decisions in general" and cannot usually offset more basic problems such as small markets or high operating costs51. Investment decisions are based upon more fundamental economic considerations and tax incentives simply increase the attraction of an already attractive investment site. Perhaps more importantly, intense competition among potential investment sites in providing tax and other incentives can eventually reduce any benefit that those potential locations expected would accrue to them by earning the investment52. Instead, only the investor gains. The use of financial incentives, however, still remains common among many developing nations, possibly because the latter usually have very few non-financial incentives to provide, such as adequate infrastructure, large market size or a skilled labour pool. Among the ten core economies examined in this study, financial incentives appear to have been used moderately over all, with Korea and Indonesia in fact ending the use of special financial incentives in the early 1980s. 4 ) . FDI in the Service Sector One area where FDI policy liberalization has been relatively slow in coming has been in the service sector field which has come to account for a growing proportion of total FDI from industrialized countries. Service sector FDI is generally less affected by micro-economic factors than by the overall business and investment climate in a host 5 1 Vincent Cable and Bishnodat Persaud, "New Trends and Policy Problems in Foreign Investment: The Experience of Commonwealth Developing Countries", in Cable and Persaud, eds., Developing with Foreign Investment (Croom Helm, N . Y . : 1987), p. 11. This is a point supported also by the W o r l d Bank's publication, East Asia's Trade and Investment: Regional and Global Gains from Liberalization (World Bank, Washington, D . C : 1994) and by findings reported in Anwar Shah, ed., Fiscal Incentives for Investment and Innovation (Oxford University Press, Oxford: 1995). 5 2 Helen Hughes and Graeme S. Dorrance, "Foreign Investment in East Asia", in Cable and Persaud, eds., Developing with Foreign Investment (Croom Helm, N . Y . : 1987), p. 63. See also O E C D , Investment Incentives and Disincentives, p. 58. 26 country, which may partly explain the increased emphasis being placed by investors from industrialized economies upon general investment conditions in potential FDI locations. However, since the service sector is usually viewed as an area of future growth and development for an economy, host countries have become more wary of FDI in services out of concern that domestic firms will not be adequately positioned to also benefit from the growth in services. This is partly due to the fact that developed countries tend to dominate FDI services. By the late 1980s, over 5 0 % of FDI from the United States, the United Kingdom and Japan to Latin America, for example, was in the service sector 5 3, while from 1984-87, 5 5 % of FDI outflows from the United States to East Asia were directed at service activities in Hong Kong alone 5 4. The share of services in Japanese FDI to all developing countries rose from 48 .6% in the early 1980s to 75 .4% during 1984-87. Similarly for the US, the figures were 44 .4% and 69 .8% respectively 5 5. While industrial FDI was characterized by a continual liberalization of regulations and a removal of restrictions, the service sector still remains an area of considerable contention, both within international trade negotiations and in the area of FDI policy formulation 5 6. Contrary to traditional manufacturing activities, there is a far lower degree of tradability in services, with the result that a majority of service transactions are usually U N C T C , Foreign Direct Investment in Latin America: Recent Trends, Prospects and Policy Issues, Series A . , N o . 3 (United Nations, N . Y . : 1986), p. 1. 5 4 U N C T C , Transnational Corporations and International Economic Relations: Recent Developments and Selected Issues, Series A , No . 11 (United Nations, N . Y . : 1989), p. 6. 55 Ibid., p. 9. 5 6 "While recently many developing countries have moved to encourage F D I in their industrial sectors, their attitudes towards T N C s in the services sector have changed less and still reflect considerable caution and wariness". Quoted from U N C T C , Transnational Corporations in World Development: Trends and Prospects (United Nations, N . Y . : 1988), p. 5. 27 confined to the market in which they occur. In the context of the Asia Pacific region, the development of the service sector, in general, occurred after the emergence of a sustainable and growing manufacturing sector which provided the required increases in consumer purchasing power and lifestyle levels that create a demand for services, such as financial services. As can be seen from Appendix 1, many of these countries instituted changes affecting FDI in services only in the latter half of the 1980s; Korea (starting in 1988), Taiwan (also in 1988), Malaysia (in 1986), Indonesia (in 1988), and Thailand (in 1986). Until these years, the service sector had been quite stringently protected and liberalization still has occurred much more slowly than in the manufacturing sector. 5 ) . S u m m a r y o f B e n e f i t s t o H o s t C o u n t r i e s f r o m F D I The O E C D has presented FDI as not only a means of providing capital to host nations, but also as a process through which host country enterprises have been exposed to "technology, management know-how, access to markets and a competitive stimulus" that has constituted "one of the major forces fueling the growth of a number of developing countries" 5 7. Several other observers, such as Kwan, also argue that "foreign direct investment, by transferring factors of production (capital, technology and management know-how, for example) from the more advanced countries to the less developed ones, also helps promote the evolution of trade structure" 5 8. The UNCTC has similarly underlined the importance of TNCs as "agents" in these transfusion 5 7 O E C D , Foreign Direct Investment: OECD Countries and Dynamic Economies of Asia and Latin America, p. 24. 5 8 Kwan, Economic Interdependence in the Asia-Pacific Region, p. 83. See also Magnus Blomstrom, "Host Country Benefits of Foreign Investment" in D . McFetridge, ed., Foreign Investment, Technology and Economic Growth (University of Calgary Press, Calgary: 1991), p. 93. 28 processes . Overall, MNCs can serve to further the goals of developing countries by not only transferring technological know-how and managerial expertise to local host country sources, but also by improving domestic businesses through the introduction of foreign competition, by providing additional financial resources to the host country government through taxation revenues, by creating manufacturing and exporting opportunities instead of supporting costly import substitution policies, and by creating opportunities to utilize domestic resources for which the host country lacks sufficient capabilities (i.e. natural resource extraction)60. One of the most prominent motivations for a host country in seeking FDI is the perceived improvement in labour skills and training that a more efficient and competitive foreign firm can offer to the country's domestic workforce. The actual effects of FDI on employment creation and labour upgrading are, however, unclear, and the benefits of possessing EPZs must also be qualified, as noted earlier. McCulloch has argued that the entry of a more competitive investing firm can have detrimental consequences on job growth by discouraging domestic firms from expanding, or by forcing them out of the market altogether. If the new entrant competes directly with domestic firms and can undertake production more efficiently, actual job growth may be smaller than anticipated and could become negative if these new products replace those previously offered by domestic enterprises. Foreign firm business practices may also be at odds with host country objectives. In the context of Japanese FDI activity, Nakamura, for example, has found that exports by Japanese subsidiaries to areas other than Japan tends to aid in increasing employment and investment, yet a great deal of intra-firm trade occurs UNCTC, Transnational Service Corporations and Developing Countries: Impact and Policy Issues, Series A, No. 10 (United Nations, N.Y.: 1989), p. 13. 6 0 As outlined in UNCTC, Transnational Corporations and International Economic Relations, p. 18. 29 between Japanese parent firms and their subsidiaries. This may serve to dampen employment and investment generation effects expected by host countries61. Finally, in keeping with the premise of imperfect markets as being characteristic of FDI activity, entry of a foreign firm into a host country could reduce profits to all the other players, or, through a merger with, or an acquisition of a domestic firm, could reduce the degree of competition and increase the oligopolistic nature of market dynamics62. Concern also exists as to the extent to which service-oriented FDI tends to procure inputs from domestic sources. The UNCTC has noted that many service sector TNCs often operate under strict quality standards that may induce them to procure supplies, equipment and other services from sources outside the host country63. In instances such as these, the ability of FDI to serve as a conduit for technology transfer or skills development is considerably impeded, much to the detriment of the host country. There is also no discernible effect of service activities on the host country's balance of payments; contrary to manufacturing and other forms of FDI which produce foreign exchange earnings that can be used to alleviate a host country's capital needs, service transactions do not usually involve foreign exchange gains on the trade account64. There is, therefore, no clear, direct benefit in liberalizing the service sector to allow FDI as there is in the industrial and manufacturing sectors. Developing countries in Asia Pacific that have served as recipients of FDI have not pursued, in general, a uniform policy towards FDI across all economic sectors65. FDI 6 1 Nakamura, "Japanese direct investment in Asia-Pacific", p. 225. 6 2 See M c C u l l o c h , "New Perspectives on Foreign Direct Investment", pp. 46, 48. 6 3 U N C T C , Transnational Service Corporations and Developing Countries, p. 26. 6 4 U N C T C , Transnational Corporations in World Development, p. 140. 6 5 F D I regimes may be liberalized selectively and certain sectors considered critical to national development are often omitted from deregulation. The U N C T C notes; "Whatever the precise relationship 30 was initially directed towards natural resource industries in the 1970s, then into labour-intensive and manufacturing sectors, followed by an increased focus upon the service sector in the late 1980s and early 1990s. Liberalization measures have followed an almost identical evolution; while industrial FDI has been progressively freed of regulations over time, considerable barriers to entry and governmental constraints exist in the service sector, particularly in the area of financial services. Many foreign providers of service activities entered the domestic markets in an earlier period, but new entrants have often been discouraged or directly barred. It should also be remembered that the largest markets for services are in the industrialized O E C D countries, and the majority of service-oriented FDI has been directed towards the developed world. Apart from Singapore, Hong Kong and Japan, the economic development of most Asia Pacific countries has been focused upon manufacturing and export-led growth, with the service sector achieving prominence only in the latter half of the 1980s. The service component of these countries' FDI inflows, however, has been growing and will undoubtedly serve as a future area of contention between host countries and foreign investors. Government policy and regulation has, consequently, been a prominent feature in the development of FDI in Asia Pacific (and elsewhere) and will continue to be so. Precisely how large an effect the FDI regimes of individual host countries have had on the pattern of FDI inflows into Asia Pacific, however, remains a vexatious question. Does the experience of developing countries in Asia Pacific from 1970-1990 suggest that liberalized investment policies produced higher levels of foreign investment than restricted FDI environments? Did the restrictions and conditions imposed by host countries to counter the possible problems with FDI (as discussed above) hinder the between liberalization of policies and inflow of investments may be, it is certainly not a straight-forward, perfect correlation" ( U N C T C , Transnational Corporations in World Development, p. 9). 31 inflow of investment to those countries, or was it a negligible factor? To adequately understand these types of issues, it would be helpful to examine in detail the evolution of the FDI regimes in each of the ten countries considered in this study, and compare and contrast the results that can be reached. 32 CHAPTER 2 - NATIONAL VARIATIONS IN FDI POLICIES IN ASIA PACIFIC 1). O v e r v i e w The period from 1970 to 1990 was characterized by a marked shift in FDI flows from the developing world (primarily Latin America) to the industrialized world, with the share of FDI outflows to developing countries falling from approximately 2 0 % of total FDI outflows in 1980-84, to about 1 0 % in the period from 1985-1989. Previously, in the 1970s, the share of developing countries had been approximately one-third of global FDI outflows. Latin America's share dropped from 7.4% (in 1980-84) to 3.0% (in 1985-89), while that of Africa declined to 0 .6% (in 1985-89) from 2 .5% (in 1980-84). As the predominance of Latin America diminished, however, that of the Asia Pacific region grew as the latter became the new major host region, with the People's Republic of China emerging towards the end of the 1980s as a significant host to FDI 6 6. The dynamic of host country-investor relationships also underwent a transformation from one based upon confrontation in the early to mid-1970s, to one of greater cooperation in the 1980s. In the 1970s, for example, the number of expropriations conducted by host governments was approximately 75-80 per year, while in the late 1980s, the average was 1-2 per year 6 7. The OECD argues that this dynamic had by then been altered to the benefit of foreign investors, noting that experience taught many multinational corporations...that for many investment projects, a minority equity position or even a contractual arrangement could be more advantageous... many multinationals came to realize that often they could earn attractive returns oh certain non-financial, firm-specific assets... O E C D , Foreign Direct Investment: OECD Countries and Dynamic Economies of Asia and Latin America, p. 60. 6 7 Cited in Cynthia Day Wallace, "Foreign Direct Investment In The Third World: U .S . Corporations A n d Government Policy", in Wallace et. al., Foreign Direct Investment In The 1990s: A New Climate In The Third World (Martinus Nijhoff Publishers: 1990), p. 157. 33 without having to incur the financial costs or even assume the normal commercial as well as the political risks associated with investment projects in developing countries68 The allocation of FDI outflows to Asia Pacific during the 1980s probably became highly noticeable since it occurred at a time when developed countries were usually decreasing their FDI activities in the developing world overall and concentrating them in the advanced industrialized markets. According to the UNCTC, by 1988, global FDI was growing by only 4 % to a total of $150 billion that year, four-fifths of which went to the developed world 6 9 . The United States became the largest host country for FDI in the 1980s, with FDI inflows rising from 1 8 % (1981-1983) to 2 9 % (1984-1988); its global share of FDI inflows amounted to 3 4 % and 4 2 % during these respective time periods, a great deal of which was provided by Japanese and European investors 7 0. The UNCTC also estimates that Japanese FDI directed towards developing countries dropped from 5 7 % in 1975 to 3 3 % by 1986 7 1 . The beginning of the 1980s also coincided with a prolonged decline in primary commodity prices (a 2 7 % drop from 1979-1980) that severely damaged the growth prospects of Asia Pacific economies that were dependent upon natural resources for foreign exchange earnings, such as Indonesia and Malaysia. The appreciation of the dollar from 1980-1985, and the decline in oil prices by 1986 (upon which several developing countries, particularly Indonesia, were dependent), along with a global recession in the early 1980s, made debt repayment extremely difficult for many OECD, Foreign Direct Investment: OECD Countries and Dynamic Economies of Asia and Latin America, p. 65. 6 9 UNCTC, Foreign Direct Investment, Debt and Home Country Policies, Series A, No. 20 (United Nations, N.Y. : 1990), p. 1. 70 Ibid., p. 6. 7 1 UNCTC, Transnational Corporations in World Development, p. 77. 34 developing countries (although the Asia Pacific region was largely exempt from this debt crisis). An increasing technological gap between developed and developing countries, a need for foreign capital to alleviate high debt burdens, a declining interest among FDI providers in most developing countries as potential investment sites, and a growing awareness among developing countries as to the flexible and non-oppressive nature of FDI as opposed to debt, have also been cited as factors that produced a shift in outlook among developing countries towards the desirability of FDI within their national economies 7 3 . The result was a relatively consistent trend overall towards liberalizing FDI regimes and to the removal of restrictions on FDI activities that began in the mid-1980s and which is evident from the timeline in Appendix 1. These policy changes, however, varied considerably from sector to sector, and from country to country. As Chan and Clark have noted, developing nations worldwide varied in their ability to exert influence upon the investment decisions of TNCs, but those in Asia Pacific were, for the most part, able to control the manner in which foreign capital affected them rather than be compelled to offer excessively advantageous terms to potential investors 7 4. Developing countries in Asia Pacific were able to account for the majority of FDI outflows to the developing world in the 1980s. From 1980-85, eighteen economies accounted for 8 6 % of FDI flows to developing countries as a whole. Those eighteen economies included seven of the economies studied in this paper; the PRC, Hong Kong, Indonesia, Malaysia, Singapore, Taiwan and Thailand which received 9 2 % of FDI flows to 7 2 A s outlined by Maurice Lev i , International Finance: The Markets and Financial Management of Multinational Business, 3rd ed. (McGraw-Hi l l Inc., Toronto: 1996), p. 217 and Krugman and Obstfeld, p. 691. 7 3 U N C T C , Transnational Corporations in World Development, p. 262. 7 4 Steve Chan and C a i Clark, eds. The Evolving Pacific Basin in the Global Political Economy (Lynne Rienner Publishers: 1992), p. 11. 35 developing Asia over the same 1980-85 period . By 1993, developing countries in Asia Pacific still accounted for 5 5 % of total FDI outflows to the developing world 7 6 . Argentina, Brazil, Mexico and Chile received the majority of the remaining FDI outflows to non-O E C D countries. These same economies continue to dominate FDI inflows in the 1990s as well. This concentration of FDI outflows to Asia Pacific and Latin America countries is also evident from Table 1. The core economies examined in this paper (minus Japan and Taiwan) received 1 7 % of global net FDI flows in 1970, 3 5 % in 1980 and 5 8 % in 1990. The twenty-seven other developing economies from Latin America, Africa and Southwest Asia entered in the timeline in Appendix 1 (labelled "non-core economies" in Table 1) received 4 2 % of total net FDI flows in 1970, a percentage that rose to 7 0 % in 1980 but declined sharply to 3 3 % by 1990. It appears that as FDI flows to the non-core economies declined in the 1980s, they rose increasingly in the eight Asia Pacific economies. Together, the eight core economies and twenty-seven non-core economies (specifically the Latin American economies, since the share of FDI to African and Southwest Asian countries has tended to be minimal) have dominated total net FDI flows throughout the 1970-1990 period; they received 5 9 % of total net FDI in 1970 and 9 1 % in 1990. UNCTC, Transnational Corporations in World Development, pp. 80, 82. 7 6 World Bank, World Debt Tables: External Finance for Developing Countries 1994-95 (World Bank, Washington, D.C: 1994), p. 160. 36 o O ) • o r-c o o • o HI 0 1 c o c o == u. e iS a •2S Percentage Share of Total Net FDI Flows l T j C D C 3 ) ( D i r ) r o O ) Q O ) O O O C I ) 0 ) C D O ) 0 ) 0 ) 0 ) 0 ) 0 ) Total Net FDI to Sample Economies O n O C M O ) 0 ) N C M ' - O C O n m O t O N N ( D 0 0 1 l O w o c o o i N c o o o t o w c o o i n m c o o o i o n o ) ' -( 0 0 ) i D ( o m o ( D r C D i r i ( o a 3 0 0 0 T - o o ) S * 0 ) T - T - T - c o c \ j i n c o i n m o o o o c o T - c o c o c o o > i n o o ) 0 ) T- T- T- co i - i -Percentage Share of Total Net FDI Flows W N O ) o o m a i o i n a 3 0 i n a ) i n o ) o i o o c o ' - m Total Net FDI to Non-Core Economies 0 ) S O > 0 ) ( O N o m i n c \ i r ^ o o ) < o c o m c o o ) 0 ( o r A i d i f i 6 i r i d m ^ o S ^ 6 i x ) w r o ^ c 6 i r ) T j : 6 i - ; ' - : rofOf(0(DNNtlDWCOO)lX)lfiO(Dmtnini-T - i - c v i T - n N n ^ i o i f i a D o n n i f l c o t D c D c o s Percentage Share of Total Net FDI Flows S S 0 C O r M C D T t ( D T t W i n c O " t C O O ) C O C O ( O l O C O C O o o o o o o o o o o o d d o o o o Total Net FDI to Core Economies N i r ) n N N i r ) T - C O C O C O i r ) i - C O C O i - S O i n i n c » W Total Net FDI Flows 0 ) i - i - ( D C O W C O U ) C O ( 0 0 ) 0 0 ) W ^ a } r D O ) 0 ) N N i n s s T - c o t - i - N T r c o n f i n r o c j r - i n t D m t D N W S S C D ^ l D f f i n f f i t f l J S f f l i f D r M W r M i n f f i C O C O w w r - r r i f i i n o L Q i o c o N n r - c D r o t o c n c O ' - O T -i - i - i - CJ CJ CM S N S S S N N S N S O O C O O O O O O O O O O O C O C O O O O ) O ) O ) 0 ) O > 9 > 0 ) O ) O ) 0 > O ) O ) O ) G ) O ) O ) O 0 > O > O ) 0 > O > I 8 £ ' ° £ • „ E =J w CD . o CO E N cd 15 Q> E S f 3 « 3 c 3 ca £ 5 m CL ' ' . £ co co N ; C3 c o (0 CO E CO = - >-3 ni -ffl fc p co 5 .2 ffl a> ._- co £ •I « - in CO co E S f N co ffl co S •a £ CO « o -CC ca _£0 CD CO CO CO - C ^ - cO a ._- 5 > E « I o> . ra <u - 1 c ° c • 2 C3 " ffl" E .2 aj" co !<2 c Ic — 8 0 s O '= o m" . "5 s S .5 o 2 « 1 « „ - s E ° ffl •S ffl m CO _ -OJ -fj ffl * *~ .co ffl c ~ a . * a. ffl CD o i c c" ffl ffl ° £ Sc T3 c rt CO » 3 ffl JS I u i n § s £ T U -3 - „- CO • ! S « f t - OJ c : c c z 5 ! 5 S f - D l 0," | .ffl .Ol § F N N £ CO Z CO L = CD CO = m T3 ffl CO S ! 9 « 6 Q q -a > 5 S a - .-<5 LU c -K — < - i ffl ,9 oi « CQ <J c £ • ffl ffl X cn >•< » ffl ° „c B i ° . S ? .ffl ; a-s«§ n c c N E • o o o o a. >. C O CO S N . > CO 13 > a >; o ffl o S> o" 5 cl'S •a i -0 § - _ i a .-'E CO ° = 1 " c3 C ? co II " CO ffl" S i 0 1 E o. E O co > CD = co •goo. E m -O - f f l III V cS g» O CO c ? 8 O H & H S § 1 2 " W 8 - CO O S co 2 | | S c '= R ffl o> x CO E 2*i .2 3 IB .SJ > fi - o Iff to ^ ffl g S I CU o o - * < • Q) . 3 E Q P ^ U Q> I £ 8 a o S OJ * 6 a co 2 r < =3 3 >• OJ c O Co co •9 co fi CO S i? 15 rt 1 CQ !=; 5 Q 2 ) . D a t a The type of FDI data collected for the country studies consists of net foreign direct investment inflows/outflows from 1970-1990 obtained from the World Bank World Tables 1995 publication and from the World Bank's STARS (Socio-economic Time-series Access and Retrieval System) Version 3 data diskette. There were two primary reasons for using net foreign direct investment figures. First, net FDI provides an indication of the overall pattern of FDI flows into (or out of) a particular country that may not be evident from a consideration of inflows or outflows only. Outward FDI flows can also be signs of investor unease in a country, or of domestic economic and/or political instability even though FDI inflows alone are positive. Hence, the use of net FDI data allows for an overall assessment of FDI climates and is also consistent with the manner in which net positive or negative FDI policy changes will be calculated later in the paper's statistical section. Secondly, comparable country data on inward FDI that is consistent over the twenty years from 1970-1990 is difficult to obtain. IMF data is mostly limited to the late 1970s or the 1980s, while individual country data suffer from problems with compatibility of FDI definitions and recording. Since the World Bank offered the most consistent set of data for most of the countries in this study, that organization's information sources were used to compile net FDI data for the 1970-1990 period. The drawback to using net FDI figures alone lies in the possibility that economies which liberalized their FDI policies may have encouraged outflows of FDI that pull down net FDI. It may therefore be difficult to correlate increases in FDI with changes in FDI 38 policies for economies that liberalized both inward and outward FDI regulations simultaneously. In general, this appears to have been the case with Japan, Taiwan and, to a lesser extent, Korea, but for most of the developing countries in this paper's sample, FDI outflows have tended to be much smaller than their FDI inflows. Data from the IMF's International Financial Statistics Yearbook 1995 for available years between 1970 and 1990 for the 35 sample economies listed in Table 1 confirms this observation. From among the 35 economies, 22 had FDI inflows account for 65-100% of total FDI. FDI inflows accounted for a similar share in 6 additional economies, but in these outward FDI had been larger in one of the years for which data was available. One other economy had larger outward than inward FDI flows in two of the years for which data was available, another in three of the years, and another in four of the years. Data for 4 economies was not available. Overall, it seems apparent that FDI outflows occur less frequently than FDI inflows and are usually significantly smaller than inward FDI. Hence, net FDI figures can be viewed as approximate indicators of the level of FDI inflows. 3 ) . Approaches to FDI: County Studies An examination of national policies towards FDI in Asia reveals a relatively clear distinction between the often prohibitive restrictions on FDI in Northeast Asia (comprising Japan, Korea and Taiwan) and the controlled FDI regimes of Southeast Asia (consisting of the Philippines, Malaysia, Indonesia and Thailand). The PRC has alternated between these two segments, while Singapore and Hong Kong are notable in their extremely liberal approach to FDI within their borders. 39 F i g u r e 1 Net FDI f l o w s t o N o r t h e a s t A s i a , 1970-1990 4000.0 + 3000.0 + +..o • Q Q) z in c o E .+_. Hang Kong X Taiwan China Korea •2000.0 + •3000.0 x Year Source: World Bank, World Tables 1995. Data for Taiwan from Chi Schive and Jenn-Hwa Tu , "Foreign Firms and Structural Change in Taiwan", in Ramstetter, ed., D i r e c t F o r e i g n I n v e s t m e n t in Asia's Developing Economies and Structural Change in the Asia P a c i f i c Region (Westview Press, San Francisco: 1991). Figures for Hong Kong are FDI inflows only from the U N C T C , World Investment Directory 1992: Volume 1 - Asia and the P a c i f i c (United Nations, N.Y.: 1992). Generally, Northeast Asian economic development was heavily dependent upon the functioning of efficient, bureaucratic-based administrations whose priority it was to foster national enterprises that could use foreign technology in order to become internationally competitive and stimulate economic renewal, with minimal dependence upon foreign multinationals. Whereas several Southeast Asian nations had sizeable natural resources with which import-substituting policies could be attempted, Korea, Japan and Taiwan all possessed limited natural resources and eventually shifted towards export activities in order to garner foreign exchange77. The latter three were also characterized by extensive state involvement (both direct and indirect) in the allocation of economic policy priorities and resources. As Figures 1 and 2 indicate, Maclntyre, pp. 1-29. See also Keun Lee, New East Asian Economic Development: Interacting Capitalism and Socialism ( M . E . Sharpe, Inc.: 1993), pp. 20-34. 40 Korea and Taiwan accounted for a small share of net FDI in the Northeast Asian region; Japan has been a constant net exporter of FDI. By the end of the 1980s, China was becoming a major recipient of FDI, eclipsing Hong Kong's share of net FDI inflows. It should be noted, however, that this was due in large part to a "recycling" of FDI from Hong Kong into China. F i g u r e 2 Count ry Share o f Net FDI f l o w s in Northeast Asia, 1970-1990 40.00 30.00 20.00 o> 10.00 CO S 0.00 o H -10.00 -20.00 -30.00 -40.00 + + x + -x-*- X a—D a a a a o o + + + •+- + ? V -D ' ' X -S" X X x-- "* X X ' Year —o— Korea —•—China X Taiwan —h -~ Hong Kong Source: World Bank. Data for Taiwan from Schive and Tu (1991). Figures for Hong Kong are FDI inflows only from the UN , World I n v e s t m e n t D i r e c t o r y 1992. F i g u r e 3 4000.0 3500.0 -"at 3000.0 lillior 2500.0 (US$, rr 2000.0 -(US$, rr 1500.0 -FDI 1000.0 Net 500.0 -0.0 » -500.0 S Net FDI f l o w s to Southeas t As ia , 1970-1990 •"X" Yea r — X - Fhilippines Malaysia A Singapore — x - Indonesia Thailand Source: World Bank 41 Southeast Asia has traditionally been a far more significant recipient of FDI than its Northeast counterpart (with the exception of China and Hong Kong). Singapore's liberal investment climate resulted in large FDI inflows to that country, while since the mid-1980s Malaysia and Thailand have been among the primary recipients of Japanese FDI to Southeast Asia. Indonesia and the Philippines ranked lower, although by 1990 Indonesia was showing strong increases in net FDI inflows. F i g u r e 4 C o u n t r y S h a r e o f N e t FDI F l o w s t o S o u t h e a s t A s i a , 1970-1990 50.00 -40.00 • 30.00 -• 1 20.00 J-£ *J A » o <r0 V 0 —X- Philippines Malaysia —-A— Singapore X • Indonesia Thailand -10.00 Year Source: World Bank A). Japan Japan is a somewhat difficult country to examine alongside most of its Asia Pacific neighbours since the country's economic development path has been almost unique in regards to the receptivity of FDI. Official governmental policy since 1945 had been to discourage the entry of foreign direct investment, and to emphasize the use of licensing and other forms of technology transfer that did not allow for the possibility of entry by foreign firms into the Japanese market. In fact, immediate post-war U.S. occupation policy was to prohibit F D l i n Japan, and this was continued by Japanese policy-makers in the 1950s and 1960s. Japanese control over economic renewal and 42 development was considered more easily obtainable through means other than inward foreign investment. Consequently, the formal obstacles to the undertaking of manufacturing in Japan by foreign firms became quite formidable, thereby persuading many foreign enterprises to simply engage in licensing and other forms of technology transfer that did not constitute FDI78. In addition, the emergence of corporate groupings (keiretsu) that hinder entry through mergers and acquisitions79, complicated domestic distribution systems, increasing operating and labour expenses, a concentration of share holdings among institutional, rather than individual investors and continued policy biases have also been identified as possible barriers to inward investment in Japan80. These informal barriers are widely considered to have exerted a greater influence upon the outcome of investment proposals than the formal regulatory framework81 since these obstacles allowed for "multiple points of entry" in the economy for state intervention that did not favour FDI82. Daniel I. Okimoto, Between MITI and the Market: Japanese Industrial Policy for High Technology (Stanford University Press, Stanford: 1989), pp. 27-28. Trevor Matthews and John Ravenhill also note that F D I constraints "prevented any foreign manufacturer from gaining a beachhead in Japan. Foreign producers were forced to settle for licensing agreements and government-approved joint ventures". See Matthews and Ravenhill , "Strategic Trade Policy: The Northeast Asian Experience", in Andrew Maclntyre, ed., Business and Government in Industrializing Asia (Cornel University Press, N . Y . : 1994), pp. 46-47. 7 9 Foreign mergers and acquisitions of Japanese firms accounted for only 4% of all such transactions from 1984-1985, and reached in 9% in 1985. See Industry Canada. Occasional Paper N o 1., Formal and Informal Investment Barriers In the G-7 Countries: The Country Chapters, V o l . 1, M a y 1994, p. 155. 8 0 See Masao Nakamura and Ilan Vertinsky, Japanese Economic Policies and Growth: Implications for Businesses in Canada and North America (University of Alberta Press, Edmonton: 1994), pp. 112-115. Also , U S Department of State, Country Reports on Economic Policy and Trade Practices, U S Dept. of Commerce National Trade Databank ( N T D B ) C D - R O M , SuDoc number C 1.88:993/10 (RCM-Librar ies of the University of Missouri-St. Louis), and Industry Canada. Occasional Paper N o 1., Formal and Informal Investment Barriers In the G-7 Countries: The Country Chapters, V o l . 1, M a y 1994. 8 1 Industry Canada. Occasional Paper N o 1., Formal and Informal Investment Barriers In the G-7 Countries: The Country Chapters, V o l . 1, M a y 1994, and U S Department of State, Country Reports on Economic Policy and Trade Practices. Robert Z . Lawrence also notes the obstacles faced by foreign firms in undertaking mergers and acquisitions in the face of Japanese ministerial support for the targeted firms, arguing that cross-shareholdings formed an "explicit device" to prevent entry by foreign firms. See Lawrence, "Japan's L o w Levels of Inward Investment", in Froot, ed., Foreign Direct Investment, p. 105. 8 2 A n argument also developed by Okimoto and discussed in Cheng-Tian Kuo , Global Competitiveness and Industrial Growth in Taiwan and the Philippines (University of Pittsburgh Press, Pittsburgh: 1995), p. 17. 43 I. Ownership FDI policies in Japan remained restrictive until 1973 when wholly-owned FDI was allowed subject to certain constraints. In the later half of the 1970s, further investment liberalization measures were introduced culminating in the replacement of the Foreign Investment Law by The Foreign Exchange and Foreign Trade Control Law in 1980 as Japan's primary investment legislation. FDI remained barred from four sectors (leather and hides, agriculture, forestry and fisheries, oil refining and coal mining) and was curtailed in eleven other "strategic" sectors, but by 1985 FDI in Japan became virtually free of all but a few minor restrictions, with investment regulations applying equally to both domestic and foreign investors. Issues concerning standardization and regulatory supervision, however, continued to slow progress in investment in services. II. Domestic Procurement Rules Procurement rules seem to have had little role to play in Japan's FDI policy regime. Japanese policy initially restricted many forms of FDI in the country and encouraged the formation of Japanese firms thereby making domestic procurement rules unnecessary. III. Local Hiring Requirements Japanese policy towards FDI traditionally encouraged the formation of domestic firms thereby virtually eliminating the government's need to legislate local hiring by foreign investors. 44 IV. Foreign Exchange Controls Foreign exchange controls were most often used in the two decades immediately following 1945, but by the mid-1970s fewer controls existed. Those that did remain were formally ended by 1980. Since then, the value of the Japanese yen relative to the U.S. dollar (especially beginning in 1985) has become a primary factor behind the large rise in Japanese FDI in North America and Southeast Asia. V. Ease of Approval Japan did not adopt the "one-stop" FDI approval policy followed by several other Asia Pacific nations. Throughout the twenty year period, prior approval to the Ministry of Finance and the other relevant ministry(ies) was still required. VI. Export Processing Zones Japan has not undertaken the creation of EPZs, unlike many of its Asian neighbours. Instead of developing particular export areas, Japanese policy encouraged the development of export capabilities in almost all industries. VII. Effects of FDI Policy Changes in Japan It is difficult to assess the correlation between FDI inflows into Japan and the timing of Japan's liberalization measures concerning FDI. Presumably, the informal deterrents to FDI in Japan mentioned above remained after 1980 and possibly became more acute in the later half of the 1980s when the appreciation of the yen and the emergence of the "bubble" economy made Japan an often prohibitively expensive location for business activities. Although data on FDI inflows into Japan varies, the 45 overall patterns revealed have been consistent with the IMF data presented in the Figure 5 below. Inflows grew strongly between 1986 and 1988, but fell sharply after 1988. Beginning in 1990, inflows have resurged. Overall, since the later half of the 1980s there has been a marked increase in the amount of FDI entering Japan, particularly in the high technology sector. According to the Japan External Trade Organization (JETRO), FDI in Japan rose by 7 3 . 1 % in the first half of fiscal 1990 in comparison to the same period a year earlier, while cumulative inward investment from 1987-1989 reached US$8.3 billion 8 3. Table 2 Net FDI Levels in Japan, 1970-1990 Year Net FDI (USS, millions) 1970 -260.0 1971 -150.4 1972 -564.6 1973 -1931.3 1974 -1671.7 1975 -1529.8 1976 -1870.3 1977 -1630.0 1978 -2360.0 1979 -2660.0 1980 -2110.0 1981 -4710.0 1982 -4100.0 1983 -3200.0 1984 -5970.0 1985 -5810.0 1986 -14300.0 1987 -18400.0 1988 -34700.0 1989 -45200.0 1990 -46300.0 Source: World Bank 8 3 JETRO, 1991 JETRO White Paper on Foreign Direct Investment: Direct Investment Promoting Restructuring of Economies Worldwide (JETRO, Tokyo: 1991), p. 33. 46 F i g u r e 5 Foreign Direct Investment Inflows in Japan, 1977-1990 Year Source: IMF, International Financial S t a t i s t i c s Yearbook 1995 However, Lawrence has calculated that the increase in inward FDI into Japan from the U.S. over the period 1982-1990 (from $6.4 billion to $21 billion estimated at historical cost) was due primarily to the activities of foreign firms already present in the Japanese market, many of which entered before the liberalization of Japan's FDI regime occurred, and which maintain majority or wholly-owned subsidiaries 8 4. New foreign entrants into the Japanese market have been relatively few, while inward foreign investment in Japan is still far less than Japan's outward foreign direct investment. Using net foreign direct investment figures to control for FDI outflows, Figure 6 below indicates that inward FDI into Japan has been constantly (and, after 1985) greatly eclipsed by the amount of FDI leaving Japan. 8 4 Lawrence, p. 87. James C . Abegglen and Peter S. Kirby have found that the most profitable foreign firms currently in Japan have generally had a sustained market presence characterized by both managerial and technical control ("Holding the Right Cards in Japan", Asian Wall Street Journal, March 4, 1996, p. 10). 47 F i g u r e 6 NfetFTJ asa Fterosntage of Total Investment in Japan, 1970-1990 Source: IMF, International Financial Statistics Yearbook 1995, World Bank, World Tables 1995. Total investment is defined as gross fixed capital formation plus the change in stocks. Figure 7 reveals a similar trend. FDI attained its highest share of total investment in 1985 and 1987 (approximately 0.15%) before plunging dramatically, probably due to large Japanese FDI overseas in the late 1980s. An increase in inward FDI since 1989 raised FDI's share of total investment to just under 0 .2% by 1990. Inward FDI has clearly not been a significant factor for Japan. Given the informal barriers to foreign investment in Japan and the tendency for successful investors to be previously established firms, as determined by Lawrence, it appears unlikely that liberalization of investment policies in the 1980s was a significant factor in the rise of inward investment in the 1980s. Figure 8 tracks net FDI flows along with Japanese policy changes. No significant changes in net FDI flows can be noticed in conjunction with policy changes until the Plaza Accord arrangement in 1985 which marked the start of a surge of Japanese FDI overseas. Domestic FDI policy measures do not seem to have played a noticeable role in stimulating FDI inflows. 48 F i g u r e 7 F D Inf lows a s a Pe r cen tage of Tota l Investment i n J a p a n , 1977-1980 •0^5 |>»^ii.;.jiii^ij— Year Source: IMF, International Financial Statistics Yearbook, 1995. Instead, Japan's emergence as the technical centre for Asia has served to encourage foreign firms in advanced technology sectors to access the Japanese market, or (as appears to be more often the case) to expand the scale of their activities in Japan, utilizing the advanced technical skills of the domestic workforce, access to sophisticated technologies (what Lawrence has identified as "acquirable assets"85), and proximity to Asia's leading consumer market. Such investments have most often been R&D and service-oriented investments in which operating costs are usually less in comparison to manufacturing. What Wakasugi has labeled "investment costs" seem to be a primary determinant of the nature of inward investment in the country, rather than any specific aspect of Japan's FDI regulatory framework86. Lawrence, p. 99. 8 6 Ryuhei Wakasugi, "Is Foreign Direct Investment in Japan Small?", Journal of Japanese Trade and Industry, N o . 3, June/July, 1993, pp. 40-41. 49 F i g u r e 8 Nst FD RcvjsatxJFO FdicyChanctssin Japan, 1970-1990 \ fe r 0 U,,,,,:^ idiiiiisii i ! d = J - » . U , . , b ; n ni iv v I = 1 0 0 % foreign ownership first allowed II = Foreign Investment Law repealed III = new FDI law requires only prior notification, no foreign exchange controls, 1 0 0 % foreign ownership in almost all areas IV = restrictions on FDI in 11 strategic sectors lifted V = Telecommunications market opened to new foreign and domestic investors, Plaza Accord reached B). South Korea Korean policies towards FDI were specifically designed to encourage the transmission of technology through licensing and contractual arrangements, and not through foreign-controlled investments, in order to foster the creation of competitive domestic producers87. As Mardon and Paik have noted, Korea pursued foreign capital and foreign technology, but not foreign direct investment. Since the state maintained direct control over access to all capital and foreign exchange, it could use its monopoly access to foreign capital to effectively dictate what sectors of the Korean economy would receive preferential support, while also arranging technology transfer agreements Alice H . Amsden notes that the predominance of domestic firms in Korea's industrial development not only confined technical spill-overs and other industrial knowledge to Korean firms, but also enhanced the state's ability to influence economic development and corporate behaviour through its extensive control over foreign exchange and credit allocation. See Amsden, Asia's Next Giant: South Korea and Late Industrialization (Oxford University Press, Oxford: 1989), p. 147. 50 for the dissemination of information to domestic enterprises. FDI, however, was perceived to be not as malleable to domestic control and thus less preferred 8 8. I. Ownership Korea's overall investment strategy from 1970 to the early 1980s was to allow FDI only in sectors where foreign technical assistance was necessary (preferably through joint-ventures), but to bar it from areas where adequate domestic expertise was available 8 9. The central role of the state in Korean industrialization was exhibited even more dramatically in the 1970s when many Japanese firms were forced to either transfer majority equity ownership to their South Korean joint venture partner, or be compelled to leave the Korean market altogether. 9 0 A significant exception to this general trend were high-technology firms or enterprises that the Korean government considered as useful to Korea's economic progress. These businesses, particularly if they were export-oriented activities (such as the electric machinery sector) constituted the "encouraged" industries in which higher foreign ownership was allowed and to which most financial incentives were aimed. Lee and Ramstetter argue that TNCs in these sectors had an impact upon the development of Korea's economic structure 9 1. Certainly, as Table 3 below shows, net FDI in Korea increased strongly after 1983; in 1982 wholly foreign-owned FDI was allowed in encouraged industries and financial Stallings, in Gary Gereffi and Donald L . Wyman, eds., Manufacturing Miracles: Paths of Industrialization in Latin America and East Asia (Princeton University Press, N .J . : 1990), pp. 55-90. 8 9 Russell Mardon and W o n K . Paik, "The State, Foreign Investment and Sustaining Industrial Growth in South Korea and Thailand", in Steve Chan and C a l Clark, eds., The Evolving Pacific Basin, p. 155 90 Ibid., pp. 156-157. 9 1 Chung H . Lee and Eric D . Ramstetter, "Direct Investment and Structural Change in Korean Manufacturing", in Ramstetter, ed., Direct Foreign Investment in Asia's Developing Economies and Structural Change in the Asia Pacific Region (Westview Press, San Francisco: 1991), p. 132. 51 incentives were given these sectors in 1984. From then, until the cessation of fiscal incentives for foreign exporting firms in 1988, net FDI increased almost ten-fold. However, it is difficult to attribute this increase solely to the presence of FDI since many Korean industries were able to profit from export opportunities as well. The overall low proportion of net FDI in total investment suggests that although perhaps influential in certain sectors, FDI as a whole had a small role in overall Korean economic development. In fact, as Stallings has shown, bilateral or multilateral loans constituted a far larger bulk of Korea's capital inflows throughout the 1970-1990 period than did FDI; bilateral loans averaged 19.6% of Korea's long-term net foreign capital, multilateral loans averaged 1 6 % , and FDI averaged 7.9% over the years from 1971 to 1986 9 2 . FDI policies became considerably more liberal in the first half of the 1980s. Investment rules were relaxed and in the following years wholly-owned foreign investments became possible in an increasing number of areas. In 1984 the introduction of a negative list outlined the areas closed to FDI (i.e. retail trade, agriculture, some financial services, entertainment and media industries) and made investment planning easier. By the end of the decade, FDI also became possible in an increasing number of service sectors. II. Domestic Procurement Rules Although FDI did not assume a prominent role in Korean economic development, performance requirements were imposed upon FDI in strategic sectors (primarily automobiles and electronics) in order to conform foreign investment activities to national Stallings, p. 62. 52 objectives. The government actively imposed local-content rules upon producers in both areas and sought to develop the industry as much as possible through licensing and minimal FDI levels. Firms that did not comply with local-content rules were barred from receiving foreign exchange or were not given permission to export their production. In the case of semiconductors, the government even forced foreign telecommunication firms to renegotiate their technology transfer agreements with Korean companies in order to benefit the emergence of a domestic semiconductor industry93. Table 3 Net FDI Levels in Korea, 1970-1990 Year Net FDI (US$, millions) 1970 66.0 1971 38.8 1972 63.0 1973 92.6 1974 104.7 1975 53.4 1976 75.0 1977 73.0 1978 61.0 1979 . 16.0 1980 -7.0 1981 60.0 1982 -76.0 1983 -57.0 1984 73.0 1985 200.0 1986 325.0 1987 418.0 1988 720.0 1989 453.0 1990 -105.0 Source: World Bank Robert Wade, "Industrial Policy in East Asia: Does It Lead or Follow the Market?", in Gereffi and Wyman, eds., Manufacturing Miracles, pp. 250-255. 53 Location in the EPZs was also awarded upon the basis of performance. Foreign firms located in the EPZs, for example, had to export at least 50% of their production in order to benefit from exemptions from import duties and taxes and were often pressured to source components locally. I I I . L o c a l H i r i n g R e q u i r e m e n t s As in Japan, local hiring requirements do not appear to have been a significant component of Korea's FDI policies. Official emphasis was placed upon using FDI as a channel for technology transfers to domestic firms which were the ones expected to generate employment. Ventures with foreign firms were therefore viewed mostly as knowledge providers rather than employment creators. F i g u r e 9 Nst FD asa Percentage of Total Investment in Korea, 1970-1990 -0.5V *~ "~ " - *~ " ~ — ^ -Hear Sources: World Bank; IMF, International Financial Statistics Yearbook 1995 54 I V . F o r e i g n E x c h a n g e C o n t r o l s Steps were taken throughout the 1980s to progressively liberalize the foreign investment environment. Restrictions on foreign currency lending and borrowing were eased in 1979 and the procedure for remitting profits and capital was simplified in 1982 and 1984. However, given the extensive involvement by the state in foreign currency allocation (primarily through its ownership of the banking sector), there was a continuance of some foreign exchange controls at the end of the decade. V . E a s e o f A p p r o v a l Ease of FDI approval has been one of the areas in which policy changes most frequently occurred over the twenty year period. Initially, in the early 1970s, the Economic Planning Board (EPB) was given jurisdiction over FDI; that was later divided between the EPB and a Foreign Review Board in 1980. However, both agencies acted in conjunction with the Ministry of Finance as the main FDI approval organizations. Korea later moved towards a "one-stop" approval process in the 1990s. V I . E x p o r t P r o c e s s i n g Z o n e s Korea created two EPZs in the first half of the 1970s to both stimulate exports and to attract export-oriented FDI in strategic sectors. Special financial incentives were offered to potential investors, as well as various tax and duty exemptions (as noted above). They do not appear to have served as significant channels for technology diffusion since knowledge transfers were more immediately attainable through active government involvement in technology transfer management or by means of licensing. 55 Figure 10 FDI I n f l o w s a s a P e r c e n t a g e o f T o t a l I nves tment i n K o r e a , 1976-1990 c o r ^ o o o o i - c v j c o ^ r u i c o h - c o o j o r ^ r ^ r ^ r ^ c o c o c o c o o o c o c o c o c o c o a > CO CO CO CD CO CO CO CO CO CO CO CO CO CO CO Year Source: IMF, International Financial Statistics Yearbook 1995 V I I . E f f e c t s o f F D I P o l i c y C h a n g e s i n K o r e a FDI levels seem to have been more responsive to policy changes in Korea than was the case in Japan. Throughout the 1970s, FDI was controlled and limited in its growth, but the successive liberalization measures in the early 1980s may have prompted the sharp rise seen in Figure 11. The 1984 liberalization measures, the granting of tax incentives and a reduction in foreign exchange control seem to have assisted in generating a strong rise in FDI levels. The ending of financial incentives for exporting firms in 1988 probably coincided with a rise in operating costs in the country, prompting both foreign and Korean firms to seek exporting locations elsewhere, mainly in China and Southeast Asia. By 1990, net FDI levels were negative. 56 Figure 11 Net H 3 Rows and PTJ Policy Changes in Korea, 1970-1990 Year i II in rv v vi VII vin IX. X Policy Changes I = Mazan EPZ formed; foreign ownership limits set II = Iri EPZ formed; Foreign Inducement Law outlines FDI criteria and incentives III = minimum FDI requirement raised; easing of foreign exchange controls IV = minimum FDI requirements lowered; FDI rules eased, some new sectors opened V = new domestic and foreign banks allowed VI = foreign ownership limits lowered, further easing of foreign exchange controls Vl l = FDI approval simplified and more areas opened; negative list produced; tax incentives offered to important industries; further easing of foreign exchange controls VIII = FDI in some services allowed; financial incentives for foreign exporting firms ended IX = FDI allowed in automobiles and construction; performance requirements ended X = FDI allowed in other service sectors C ) . The People's Republic of China (PRC) Compared to its Asian neighbours, the PRC's exposure to FDI has been considerably shorter, beginning only in 1978 with the initiation of the PRC's modernization drive and "open-door" policy. Initially, FDI inflows into the PRC were influenced by uncertainty regarding the political and economic stability of the Chinese market, with the result that large increases in FDI inflows were not recorded until the beginning of the 1990s. Early FDI inflows were also not manufacturing intensive, despite the presence of Special Economic Zones (SEZs) in coastal regions that were intended to stimulate export-oriented industries through tax holidays and exemptions, duty-free imports of capital equipment, and other incentives. According to the IMF, 7 0 % of FDI from Hong Kong and Macao, as well as 6 0 % of FDI from Japan in the early 1980s, were concentrated in the real estate and natural resource sectors, not in 57 manufacturing. The latter did not come to prominence in FDI inflows until 1987; investment has since then entered the machinery, electronics and electrical equipment sectors, partially spurred by measures taken by the PRC to clarify and simplify investment policies in the country 9 4. I. Ownership Generally, four types of FDI have been undertaken in China; 1) equity joint ventures, 2) contractual joint ventures, 3) wholly-owned foreign ventures, and 4) joint arrangements for natural resource exploration. From 1979-83, the contractual form of joint venture was the primary vehicle for entry due to uncertainties regarding the legal framework for foreign investment, but equity joint ventures became the main form of FDI in the later half of the 1980s as the Chinese government undertook measures to improve the Chinese business environment and clarify investment regulations. The PRC has also preferred this form of FDI as being the one which allows maximum direct Chinese access to Western managerial and technical expertise 9 5. In general, China pursued a progressively liberal policy towards ownership, allowing wholly foreign-owned FDI by 1986. One significant shift has been in policy emphasis from a focus upon the control and the form of a joint-venture (equity, contractual or wholly-owned), to a concern over the type of investment being undertaken (export-led, or technology-enhancing ventures) 9 6. This seems to reflect the PRC's 9 4 IMF, World Economic Outlook 1994 (IMF, Washington, D.C: 1994), pp. 52-53. 9 5 Phillip Donald Grub and Jian Hai Lin, Foreign Direct Investment In China (Quorum Books, N.Y.: 1991), pp. 76-79. Also, Ronald C. Brown, "The role of the legal environment in doing business in the People's Republic of China" in Lane Kelley and Oded Shenkar, eds., International Business in China (Routledge, N.Y.: 1993), pp. 77-78. 9 6 UNCTC, Transnational Corporations in World Development, p. 277. 58 growing confidence in its ability to manage FDI and its concern that FDI activities be directed towards either generating foreign currency earnings or towards obtaining technical knowledge that can be used to improve Chinese industry. II. Domestic Procurement Rules Despite a receptive attitude towards FDI, the PRC contained a number of factors in the 1980s that served to often constrain the activities of foreign firms, such as rigid labour laws, a fledgling but not uniform legal system, as well as shortages of material inputs and foreign exchange. In addition, Chinese requirements for technology dissemination have been hampered by the availability of sophisticated local partner firms. These reasons may possibly explain the low level of manufacturing-based FDI in China's early FDI inflows that was noted earlier. Sourcing locally often involved the creation of an entire business infrastructure and supply chain that involved significant expense and also exposed the investor to a higher level of risk. Investors also faced complexities in obtaining approval for exporting products or for purchasing inputs from outside of the region in which they were located97. In other areas, the state reserved the right of participation forcing investors to work with often inefficient state-run enterprises, particularly in the natural resource sector. Given the varying degrees of competence among Chinese public enterprises, identifying and aligning with a useful local partner has been a problematic exercise for many foreign firms, and probably served to reduce investors' willingness to undertake local manufacturing or materials procurement. Grub and L i n , p. 55. 59 III. Local Hiring Requirements In addition, investments were faced with performance burdens in that Chinese authorities expected FDI proposals to allow for training of local employees. However, at the same time, removing unproductive workers remained initially problematic given legal barriers to doing so, and workplace attitudes toward employment were often at divergence with that expected by investors. The Chinese government, nevertheless, attached considerable importance to the encouragement of FDI that provided for employee training, but did not compile extensive requirements as to the number of workers to be hired, or the number of foreign personnel allowed in an enterprise. IV. Foreign Exchange Controls Currency inconvertibility, restrictions on profit repatriation and capital flows, limited access by foreign firms to local finance, and excessive bureaucratic obstacles have often been cited as significant impediments to FDI inflows in China 9 8 . Initially, in 1981, foreign exchange controls were extensive but the difficulties they generated for foreign businesses prompted reforms to be undertaken in 1986 in which special foreign exchange centres were established to facilitate investors' foreign currency activities. A greater degree of autonomy was also granted to local governments in approving foreign exchange dealings in 1987, but by 1990 serious difficulties continued to exist. V. Ease of Approval Part of the reason for the difficulties in foreign exchange transactions was the general state of FDI approval-making. It was fragmented among central, provincial and 9 8 Grub and Lin, p. 98. 60 local governments with the power of each level of administration varying from location to location. In the SEZs and open cities, local autonomy was much higher, while the central government was the main authority in the Beijing environs and elsewhere. This splintering of approval-making, combined with rampant corruption, made investing a costly and time-consuming proposition. In addition, the communist political system and immature legal system allowed for strong swings in government policy, particularly in 1988. Consequently, many of China's FDI policy changes involved approval procedures and clarification. T a b l e 4 Net FDI L e v e l s in C h i n a , 1970-1990 Year Net FDI i (US$, i m i l l i o n s ) i 1970 0 1971 0 1972 0 1973 0 I 1974 0 1975 0 ! 1976 0 | 1977 0 1978 0 1979 0 1980 57 | 1981 265 1982 386 1983 543 1984 1124 i 1985 1030 1986 1425 1987 1669 1988 2344 1989 2613 1990 2657 [ Source: World Bank 61 Figure 12 N=* FTJ a s a Percentage of Fixed Iroeslrrent i n China, 1930-1990 \fear Source: World Bank VI. Export Processing Zones The SEZs and the special status given to fourteen coastal cities as centres for business activity have been central to China's economic industrialization. As of the end of 1989, 91 .9% of foreign affiliates and 7 8 % of total direct investment was concentrated in these mainly coastal areas" , as investors have sought to focus their investments in areas where other investors, and affiliated suppliers have initially congregated 1 0 0 . Both the open cities and the SEZs offer preferential tax treatment, exemption from duties, and closer adherence to market economics, as well as varying degrees of autonomy in permitting FDI. These favourable investment conditions have typically resulted in higher levels of foreign ownership of FDI ventures located in these areas, suggesting that foreign firms which seek to internalize their operations in response to Chinese market y y J E T R O , 1991JETRO White Paper on Foreign Direct Investment, p. 24. 1 0 0 For a detailed examination of agglomeration benefits for Chinese cities, see Keith Head and John Ries, "Inter-City Competition for Foreign Investment: Static and Dynamic Effects of China's Incentive Areas", Faculty of Commerce and Business Administration, University of British Columbia, February 27, 1995. 62 uncertainty, or which possess distinct firm-specific assets, may prefer these investment locations 1 0 1 . That, in turn, has served to attract additional FDI inflows, resulting in agglomeration benefits and concentrations of FDI in particular regions. The PRC's policy of using coastal cities and SEZs to attract FDI has been motivated to a significant extent by the desire to attract the capital and expertise of the overseas Chinese community, many of whom originate from coastal areas now host to investment locales. Hong Kong, Macao and Taiwan have become leading investors in the PRC due to both these ethnic linkages and to the structural transformations experienced by Taiwanese, Korean and Singapore enterprises that have prompted these businesses to seek more inexpensive locations for light and medium-level manufacturing 1 0 2. Initially, a great deal of FDI from these source countries went to the A S E A N economies, but the PRC's progressive improvements in investment policies led to a surge in FDI inflows in the late 1980s. VII. Effects of FDI Policy Changes in the PRC Despite a plethora of fiscal incentives such as tax holidays and import duty and tax exemptions, by 1986 investment difficulties were serious enough to prompt the PRC government to introduce a new set of regulations allowing 100% foreign ownership, easier access to foreign exchange through the establishment of foreign exchange adjustment centres, and facilitated approval processes for tasks such as purchasing products from outside the province in which an investment was located. Grub and Lin 1 0 1 Yigang Pan, "Influences on Foreign Equity Ownership Level in Joint Ventures in China", Journal of International Business Studies, First Quarter, 1996, pp. 3-4, 16. 1 0 2 Michae l Plummer and Manuel Montes, "Direct Foreign Investment in China: A n Introduction", in Summer J . L a Croix , Michael Plummer, and Keun Lee, eds., Emerging Patterns of East Asian Investment in China: From Korea, Taiwan, and Hong Kong ( M . E . Sharpe Inc., Armonk: 1995), pp. 12-13. 63 argue that these steps and the 1987 investment stimulus measures taken by the PRC prompted FDI to increase by 3 0 % that year, but by 1988, an economic adjustment program halted all new large and medium-sized investment projects, and suspended many on-going negotiations 1 0 3. This contributed to a greater climate of uncertainty within the investment environment, yet net FDI levels continued to rise (see Figure 13). Figure 13 Net FDI F l o w s a n d FDI P o l i c y C h a n g e s i n C h i n a , 1970-1990 P o l i c y C h a n g e s I II III IV V VI VII V l l l 2500 c 2000 4-5) 1500 4-500 1971 1973 1975 1977 1979 1981 I = initial FDI legislation outlines approval criteria and performance requirements; 4 SEZs formed II = foreign branch offices allowed in, financial incentives offered; 4 SEZs formed III = foreign exchange controls outlined IV = criteria for foreign involvement in petroleum industry outlined V = legislation on joint ventures passed; constraints set on FDI in finance and on overseas Chinese VI = 14 open cities designated VII = legislation allowing wholly foreign-owned joint ventures passed; foreign exchange controls eased Vll l = Hainan SEZ formed; economic contraction halts on-going FDI agreements and some new FDI projects. Undoubtedly, China's FDI policy measures from 1979-1981 provided the basis upon which development of the country's investment climate could take place, but after these initial regulations FDI levels in China seem to have continued to expand steadily with only a minor drop in the mid-1980s. Net FDI leveled off after 1989, probably as a result of international reaction to the Tianamen incident, but it is notable that FDI has 103 Grub and Lin, pp. 54-79. 64 increased consistently despite swings in government policy that have constrained FDI activities. Overall, the three areas in which Chinese FDI policy changes appear to have had an effect are EPZ creation, ownership restrictions and FDI policy clarification. D). Taiwan Taiwan's approach to inward investment liberalization has, to some extent, resembled that of Korea. The majority of important measures were taken in steady progression in the late 1980s, but significant controls remained by the end of the 1980s in regards to FDI in the services sector. As with Korea, the military-based government was previously able to utilize its dominant position to control foreign exchange and credit allocation to stimulate specific sectors of the economy. FDI's impact in Taiwan has also been minimal overall (less than 6 % of total investment - see Figure 14), but has been prominent in particular industries such as electric machinery and chemicals. Unlike Korea however, FDI generally composed a larger percentage of Taiwan's total investment, and the investment climate in the country allowed both foreign and domestic investors to benefit from policy changes. Also unlike Korea, Taiwan's net FDI levels were mostly positive until the late 1980s as Taiwanese enterprises began shifting labour-intensive activities to other Asian locations. I. Ownership Cheng has described Taiwan's approach to FDI as consisting of "field manipulation" through the granting of financial rewards in return for compliance with export targets and local procurement, as opposed to Korea's "discretionary control" 6 5 through direct exercise of state authority 1 0 4. Taiwan was more receptive to FDI and sought to guide its role in economic development rather than bar or control it. Consequently, foreign equity ownership was generally allowed except in areas considered to be of national importance. FDI was especially encouraged in the EPZs established in Taiwan in the late 1960s and early 1970s and was primarily concentrated in export industries. Domestic industries were less well penetrated and barriers existed to FDI in many service sectors until the late 1980s. The large number of policy changes recorded for Taiwan in the timeline in Appendix 1 concerning the easing of ownership limits is indicative of the liberalizing measures begun in 1987 in conjunction with tariff reductions and other reforms. II. Domestic Procurement Rules In addition to establishing EPZs to encourage foreign firms, Taiwan pursued a policy of creating concrete, institutionalized linkages with foreign TNCs in all important sectors (EPZ or otherwise) in order to disseminate knowledge within an industry and enhance the capabilities of domestic firms. The most common approach was through industry associations such as the Taiwan Electric Appliances Manufacturers' Association (TEAMA). Foreign firms were compelled to join TEAMA and engage in a local content program in order to source 2 0 % of inputs locally 1 0 5. Domestic procurement rules were most prominent in electronic and machinery sectors that were export-oriented. Tun-jen Cheng, "Political Regimes and Development Strategies: South Korea and Taiwan", in Gereffi and W y m a n , eds., Manufacturing Miracles, p. 157. 1 0 5 K u o , p p . 170-173. 66 T a b l e 5 Net FDI L e v e l s in T a i w a n , 1970- 1990 Y e a r Net FDI (US$, m i l l i o n s ) 1970 61.4 1971 51.4 1972 33.0 1973 66.9 1974 103.2 1975 69.7 1976 86.8 1977 69.8 1978 125.6 1979 118.1 1980 145.5 1981 98.4 1982 127.3 1983 158.9 1984 161.3 1985 261.0 1986 281.7 1987 138.3 1988 -2888.3 1989 n.a. 1990 n.a Source: Schive and Tu (1991) F i g u r e 14 FLU I n f l o w s a s a Percentage of Tota l Investment in T a i w a n , 1975-1988 h ^ r ^ h * h * h * c o o o c o c o c o c o o o c o t x > 0 ) 0 5 0 > 0 > O i O ) C T > 0 ) 0 5 0 5 0 5 0 ) 0 5 0 5 Year Source: Schive and Tu (1991); Statistical Yearbook of the Republic of China 1995 III. L o c a l H i r i n g R e q u i r e m e n t s In order to meet local content targets and assure product quality, TNCs co-operated with fellow industry association members in training development, thereby diffusing technical skills and managerial knowledge, and creating close linkages between foreign and local industry players106. Such industry associations served to proactively form knowledge transfer channels between domestic and foreign firms and thereby mitigated the possibility that inter-foreign firm activity in the EPZs would not result in knowledge transfers to Taiwanese enterprises. Specific domestic hiring requirements, however, do not seem to have been part of Taiwan's FDI policies. Taiwanese emphasis was placed more upon obtaining technical information than upon employment generation by foreign firms. Figure 15 Net FDI as a Percentage of Total Investment in Taiwan, 1975-1988 o. -6 + -8 -10 co CO 03 I--CO 8 CO CD CO Year Sources: Schive and Tu (1991); Statistical Yearbook of the Republic of China 1995 IV. F o r e i g n E x c h a n g e C o n t r o l s Foreign exchange controls were one area in which the Taiwanese state did exert considerable control. Legislation prior to 1970 gave the government the full ability to 106 Ibid. 68 manipulate foreign currency allocation as it desired and this remained relatively unchanged until the late 1980s when progressive steps were taken to liberalize foreign exchange activities, although some controls still remained 1 0 7 . V. Ease of Approval Most of Taiwan's policy changes under this category have dealt with the opening up of new areas (especially services) to FDI. Again, the trend towards liberalization in the late 1980s is noticeable from the timeline. Major legislation released over the twenty years progressively outlined FDI approval criteria, but approval-making itself was divided between the Central Bank and various government ministries. Figure 16 Net FQ Flows and FDI Policy Changes in Taiwan, 1970-1990 Year 500 _ , 0 CO c illio -500 E -1000 m Ul 3 -1500-5 -2000 z -2500--3000-A 1?71 1973 1975 1977 1979 19fi1 1933 19fin 1: • • • • • • H H H H H i II IV V VI vu Policy Changes I = Kaoshiung and Nantze EPZs in place; foreign exchange limited to approved FDI and controlled by Central Bank II = Taichung EPZ formed III = foreign insurance firms allowed to set up branches IV = foreign exchange controls eased V = negative list published; some service sector FDI allowed; entry procedures eased VI = Indirect investment in PRC allowed; foreign exchange liberalized; FDI in service sector further eased VII = further service sector liberalization 107 Lawrence S. L i u , "The Legal Framework for Foreign Investment", in Mitchell A . Silk, ed., Taiwan Trade and Investment Law (Oxford University Press, Hong Kong: 1994), p. 133. 69 VI. Export Processing Zones Taiwan established a total of three EPZs from 1966-1990 which Schive and Tu argue stimulated rapid increases in FDI inflows in the 1970s. Kaoshiung and Nanzte EPZs accounted for 2 3 % of total FDI inflows from 1970-1980 and also received the lion's share of FDI directed at all EPZs (80%) 1 0 8 . The EPZs assisted particularly in the development of electric and electric machinery sectors and in the transfer of technical knowledge through industry associations, as noted above. VII. Effects of FDI Policy Changes in Taiwan Relatively favourable government policies towards both domestic and foreign investment have been cited as one factor in Taiwan's successful economic development, but that influence seems to have been sector-specific rather than comprehensive. Overall, FDI occupied a small role in Taiwan's overall capital flows and as Figure 16 above reveals, by 1987, when the most significant policy measures were begun, Taiwan was already on its way to becoming a net exporter of FDI and an international investor in its own right. E). Hong Kong Hong Kong has embraced the concept of free enterprise completely, with the result that government has a very limited role in administration, apart from being responsible for public services such as the water supply, the post office, and immigration. No formal investment legislation exists in the colony, and there is even no formal record keeping on the amount of FDI that Hong Kong receives. Consequently, 1 0 8 Schive and Tu, pp. 145, 169. 70 data for Hong Kong has been obtained from the UN's World Investment Directory, but these are estimates of the size of inflows. A great deal of the FDI that is formally directed at Hong Kong is actually re-routed to southern China which implies that official FDI amounts for China may be actually higher. The minimal number of significant policy changes recorded for the colony are indicative of the existing liberal business environment. Figure 17 FDI Inflows as a Percentage of Fixed Investment in Hong Kong, 1970-1990 30 25 20 Percentage 15 10-5-0 -5 iri#>:W::::>:^  1 1 1 1 1 t I t | 1 1 1 1 1 1 t T J 1 1 F r > f ^ r ^ r ^ ^ r ^ r ^ r ^ r ^ o D Q a m c w o D a ) c o c o o o eft ro ffl o i o - o o C i O } o c n c f t o i w c B c D O ) ^ ty> c c c > > > Year Sources: World Bank, UN, World Investment Directory 1992 As Figure 17 reveals, FDI has assumed a far more prominent role in Hong Kong than in the other Northeast Asian states, reaching almost 3 0 % of total fixed investment in 1987. I. Ownership There have traditionally been no restrictions upon the activities of foreign firms or upon their entry, apart from a limit on foreign ownership in media services which was raised to 4 9 % from 7 5 % in 1988, and prohibitions against FDI in public services. 71 Table 6 Net FDI Levels in Hong Kong, 1970-1990 Year Net FDI i 1970 (USS, | millions) i 26.1 | 1971 31.7 1972 58.1 1973 141.6 1974 79.4 | 1975 203.4 j 1976 128.5 1977 143.2 | 1978 258.4 | 1979 338.3 j 1980 373.9 | 1981 1088.7 | 1982 652.0 1983 603.7 1984 678.8 1985 -142.1 I 1986 989.0 I 1987 - 3340.0 1988 2443.0 1989 1396.7 1990 n.a. Source: UN , World Investment Directory 1992 II. Domestic Procurement Rules No special fiscal incentives exist for either domestic or foreign investors and no formal procurement requirements have been mandated. III. Local Hiring Requirements Hong Kong's liberal approach to FDI and dynamic economy made government involvement in business matters unnecessary throughout the two decades under consideration here. No regulations exist as to local hiring requirements. 72 IV. Foreign Exchange Controls Foreign exchange controls were completely liberalized in 1973 and no restrictions have existed since then regarding the repatriation of profits, dividends, or capital. V. Ease of Approval No formal screening mechanism exists, but the colonial government does provide a type of investment advisory service through its Inward Investment Division. VI. Export Processing Zones Hong Kong has not created any formal EPZs, but its extremely laissez-faire economic policy has made it somewhat of a de facto EPZ, especially for labour-intensive industries. Figure 18 3500.0 _ 3000.0 • V) | 250QO i= 2000.0 3 1500.0 3 1000.0 0 1 503.0 £ 0.0 -500.0 FD Inflows and FQ Pdicy Changes in Hang Kong, 1970-1930 Policy Changs i- CM "~€» OT~ Year I = foreign exchange controls ended II = restrictions on FDI in media services increased 73 Vll. Effects of FDI Policy Changes in Hong Kong It is difficult to assess what impact FDI policies have had on Hong Kong's foreign capital inflows given the free enterprise orientation taken by the colony early on and the virtual absence of government from FDI approval-making. FDI has been far more influenced by events in neighbouring China and by the rise in business operating costs in Hong Kong in the late 1980s. The sudden plunge in FDI inflows after 1987 appears to have resulted from the increased attraction of China as an investment location given the FDI reforms introduced that year in the PRC. F). Philippines Philippine economic policy tended to initially favour import-substituting policies that benefited domestic business elites through the FDI controls that such policies involved (i.e. performance requirements). Ownership tended to be limited to a 4 0 % level throughout the 1970s, with exceptions for export-oriented FDI. The decline of the Marcos administration in the first half of the 1980s, followed by the internal political and military insurrections faced by the Aquino government rendered the investment climate unstable; hence the dearth of FDI policy measures throughout the 1980s. I. Ownership Philippine policy emphasized domestic involvement and control of domestic market-oriented FDI, but allowed for an easing of ownership limitations for FDI that was export-oriented. Foreign ownership was generally set at 4 0 % but this was altered depending upon the importance of the investment. Initially wholly-foreign owned 74 investments were often required to divest to a minority position. The possibility of suspending this requirement was introduced in 1981, and 100% foreign ownership became permissible in 1983. New areas were opened to FDI as well, but no additional significant policy changes occurred after that date. T a b l e 7 Net FDI L e v e l s i n t h e P h i l i p p i n e s , 1970-1990 Year N e t F D I ( U S $ , ( m i l l i o n s ) j 1970 -29.0 I ii 1971 ii -6.0 | 1972 -20.6 | 1973 53.6 j 1974 3.6 1 1975 97.1 | 1976 125.8 | 1977 211.01 1978 101.0 1979 7.0 I 1980 -106.0 | 1981 172.0 | 1982 16.0 I 1983 105.0 I 1984 9.0 I 1985 12.0 j 1986 127.0 | 1987 307.0 I 1988 936.0 i 1989 563.0 | 1990 530.0 | 1 Source: World Bank II. Domestic Procurement Rules As with many other Asian economies, domestic procurement requirements were usually more prominent in certain industrial sectors than in others. Motor vehicle and motorcycle parts manufacturing, along with machinery production, were characterized by conditions that foreign investors achieve a specified local content requirement. 75 Maximum foreign ownership limits were designed to encourage joint-ventures through which the Philippine partner could benefit from the foreign entity's technical expertise and thereby stimulate the growth of local industries. Financial incentives were available, but were primarily designed for export industries. To further stimulate export growth, the importation of capital equipment was allowed tax and duty-free in 1987. I I I . L o c a l H i r i n g R e q u i r e m e n t s Investors were also expected to employ local personnel to the maximum extent possible, although this does not seem to have been formally emphasized as in Indonesia and Malaysia. I V . F o r e i g n E x c h a n g e C o n t r o l s Foreign currency controls do not seem to have been prevalent in the Philippines where export-oriented FDI was granted free repatriation of profits and capital as early as 1973. V . E a s e o f A p p r o v a l Two major pieces of FDI legislation (in 1970 and 1981) outlined FDI approval procedures and criteria. The Board of Investment served as the central screening and approval-making body, with an Export Processing Zone Authority in charge of EPZ-related FDI. 76 V I . E x p o r t P r o c e s s i n g Z o n e s From 1970-1990, the Philippines created four EPZs to stimulate export growth and granted investors the right to import capital goods, raw materials and other inputs duty and tax free provided that the majority (or all) of production was exported. As with many of its Southeast Asian neighbours, the intent behind the creation of the EPZs was to diffuse managerial and technical expertise and thus strengthen the ability of domestic industries to compete. F i g u r e 19 FDI Inf lows as a Percentage of Total Investment in the Phil ippines, 1977-1990 Year Source: IMF, International Financial Statistics Yearbook 1995 What is noticeable from the Philippines, and from overall Southeast Asian experience is that in the absence of mandatory, institutionalized contacts between foreign and local firms (as in the case of TEAMA in Taiwan), very little diffusion did occur. Many TNCs, located in EPZs close to transportation facilities, such as the Manila International Airport, simply imported components and other supplies, processed the products and shipped them back to their parent f irms 1 0 9 . EPZs per se did not serve as 77 effective conduits for foreign technology, and their role was further limited by the tendency for local business elites to protect their domestic position and not cooperate extensively with foreign enterprises. Figure 20 Ne t FDI a s a P e r c e n t a g e of T o t a l I n ves tmen t i n the P h i l i p p i n e s , 1970-1990 2.50 , -2.00 1 Source: World Bank; IMF, International Financial Statistics Yearbook 1995 VII. Effects of FDI Policy Changes in the Philippines Figure 20 shows that until 1984, net FDI in the Philippines accounted for a maximum of 2 % of total investment; after dropping to almost zero in 1984, the percentage rose back again to about 2 % before leveling off in 1988. Since few significant FDI policy changes are recorded after 1983, this would suggest that investment responded positively after the removal of the Marcos regime but then fell off as political instability and institutional fragility began to plague the country. FDI did not seem to respond to any particular policy change; often declines can be noted after the introduction of a positive policy change, as occurred in 1981 and 1983 (see Figure 21). 78 Figure 21 Net FDI Rows and FDI Policy Changes in the Philippines, 1970-1990 Policy Changes Year I = Export Incentives Act outlines FDI criteria and incentives for exporters II = 1 EPZ formed III = foreign exchange controls eased for export-oriented FDI IV = 2 EPZs formed V = financial incentives for exporters increased; 2 EPZs formed VI = Investment Code eases ownership limits Vll = conditions for 100% foreign-owned FDI eased; new areas opened to FDI VIII = capital equipment imports allowed tax and duty-free G). Malaysia Political considerations have dominated FDI policy-making in Malaysia since the early 1970s. The dominance of ethnic Chinese in commerce and business created resentment among majority Malays in the 1970s who felt deprived of opportunities to progress economically. In an attempt to respond to these concerns, the Malaysian government, buoyed by rising oil prices after the first oil shock, instituted the New Economic Plan (NEP) that placed limitations upon foreign ownership in favour of indigenous Malays (bumiputra), encouraged the creation of Malay businesses, and emphasized the development and expansion of Malay managerial and technical expertise. 79 Figure 23 shows that after a rise in FDI in the period of the first oil shock, net FDI as a percentage of Malaysia's total investment declined constantly until the second oil shock possibly generated a second increase in FDI. The decrease in FDI was also accompanied by a drop in domestic investment as ethnic Chinese businessmen reacted to the pro-Malay economic policies by curtailing their activities. This double impact forced Malaysia to attempt to improve its FDI climate, but FDI flows only recovered in 1979 when renewed oil wealth attracted investment110. Figure 2 2 FDI In f lowsasa Percentage of Total Investment in Malaysia, 1974-1990 25.00 5.00 0.00 CD cn co ro ro o i -oo co ro ro c\j oo ro Year CO co ro co ro in oo ro co oo ro oo ro oo cn o oo oo ro ro ro ro Source: IMF, International Financial Statistics Yearbook 1995 See Alasdair Bowie, "The Dynamics of Business-Government Relations in Industrializing Malaysia", in Andrew Maclntyre, ed., Business and Government In Industrializing Asia (Cornel University Press, N . Y . : 1994), pp. 167-216. 80 F i g u r e 23 Net FDI as a Percentage of Total Investment in Malaysia, 1970-1990 25.00 20.00 + 8, 15.00-5.00 4-0.00 —I T— —I 1 1 T 1 r- * — 1- • 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 Year Sources: World Bank; IMF, International Financial Statistics Yearbook 1995 Malaysia, however, constrained its FDI climate by attempting to undertake a heavy industrialization policy through state-led enterprises in the late 1970s and early 1980s. The subsequent failure of the heavy industrialization policy, combined with continuing declines in international commodity prices (such as rubber and tin which comprised important Malaysian exports) forced the government to more vigorously promote the inflow of foreign capital and to embrace export-based economic activities. FDI levels began to rise again in the late 1980s (Figures 22 and 23). Malay business, however, was probably inexperienced and ill-prepared for export production. Foreign firms in the EPZs had little contact with Malaysian businessmen and there had been limited managerial and technical diffusion 1 1 1. The Promotion of These conditions are discussed more fully in Andrew Maclntyre, "Business and Government in Industrializing Asia", in Maclntyre, ed., Business and Government in Industrializing Asia, pp. 172-175. Al so see, Alasdair Bowie, "The Dynamics of Business-Government Relations in Industrializing Malaysia", in Maclntyre, ed., Business and Government in Industrializing Asia, p. 188. The W o r l d Bank argues that investments by T N C s in Malaysian E P Z s (particularly in electronics) have resulted in backward and forward integration and in the development of linkages with "ancillary industries", along with industrial 81 Investments Act in 1986 eased performance requirements and allowed foreign firms to obtain exemptions from hiring quotas, ownership restrictions and other regulations imposed by the earlier NEP. The realignment of currencies following the Plaza Accord of 1985 combined with this liberalization to place Malaysia as a significant location for Japanese, Korean and (to a lesser extent) Taiwanese investment. Beginning in 1987, annual net FDI inflows grew considerably to US $2.3 billion in 1990. F i g u r e 2 4 Net FDI Rows and FDI Policy Changes in Malaysia, 1970-1990 Policy Changes 0 1 ii III rv v vi VII vin ix x 0.0 I I 1 1 1 1 ! 1 1 1 1 1 i ! i H 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 Year I = liberal investment climate II = creation of EPZs begun; export incentives offered III = 4 more EPZs created IV = 3 additional EPZs formed V= Petroleum Development Act restricts oil/gas development to the state VI = Industrial Co-ordination Act begins FDI restrictions Vll = Senai EPZ formed VIII = Malaysian control exerted over shipping industry IX = Promotion of Investments Act eases FDI restrictions X = foreign securities houses allowed to increase equity in domestic brokerages. I. O w n e r s h i p A central tenet of the NEP was to increase Malay participation in enterprises by limiting foreign equity in most joint ventures (export industries were often exempted) to training (see East Asia's Trade and Investment, pp. 50-51). This, however, appears to be more descriptive of the state of affairs in the last half of the 1980s than of the situation in the 1970s and early 1980s. 82 3 0 % . The result was a dramatic increase in Malay ownership of businesses; Ariff and Lim have calculated that the foreign share of the corporate capital sector in Malaysia declined from 6 2 % in 1971 to only 2 4 % by 1983 1 1 2 . A glance at the policy changes undertaken by Malaysia that are recorded in the timeline confirm this focus upon ownership; there are five instances in which foreign ownership restrictions were increased. The overall high number of FDI restrictions (11) imposed by Malaysia over the twenty year period are probably indicative of the nationalistic objectives of FDI policy in the 1970s and early 1980s. T a b l e 8 Net FDI L e v e l s in M a l a y s i a , 1970-1990 Y e a r Net FDI (US$, m i l l i o n s ) 1970 94.0 1971 100.3 1972 114.0 1973 171.7 1974 570.8 1975 350.5 1976 381.3 1977 405.9 1978 500.0 1979 573.5 1980 933.9 1981 1264.7 j 1982 1397.2 1983 1260.5 [ 1984 797.5 1985 694.7 1986 488.9 1987 422.7 1988 719.4 I 1989 1667.9 1990 2332.5 J Source: World Bank 1 1 2 Mohammed Ariff and Chee Peng Lim, "Foreign Investments in Malaysia" in Vincent Cable and Bishnodat Persaud, eds., Developing With Foreign Investment (Croom Helm, N.Y.: 1987), p. 102. 83 By 1986, however, apart from certain sectors reserved for the state (including petroleum), most areas of economic activity were opened to FDI. The service sector, however, remained regulated by 1990. FDI in financial service was strictly controlled with foreign banks being required to sell 7 0 % of equity to Malaysian nationals. Those' foreign banks already established could not open new branches, and the entry of new banks was restricted. I I . D o m e s t i c P r o c u r e m e n t R u l e s Although not as extensively protected as the Indonesian market, Malaysia did impose local content requirements in areas where it believed the country could develop competitive industries, such as automobile manufacturing and electronics. It was also expected that foreign investors would work with Malaysian partners to transfer technical expertise and abilities. I I I . L o c a l H i r i n g R e q u i r e m e n t s The main area of performance conditions in Malaysia lay in obligations by investors to employ Malays in all possible positions. The tenure for expatriates in executive positions was limited to a maximum of ten years, during which locals were to be trained, while the tenure for non-executive expatriates was only 5 years 1 1 3 . Legislation, such as the National Economic Policy, required between 30-70% local involvement in enterprises while in other areas, such as shipping, Malaysians were required to form the majority of employees in certain categories. Overall, legislated 1 1 3 ASEAN Secretariat, Investing in ASEAN (Jakarta: 1990), p. 57. 84 Malay inclusion was aimed at increasing Malay economic control, assisting in knowledge transfer and at building a domestic economic base. However, as Maclntyre and others have noted, increased participation did not usually equate with control. Foreign partners often were interested in obtaining access to a Malaysian quota or license which could only be obtained through adherence to domestic performance requirements. Once the rents from these began to accrue to the foreign partner, the latter had little interest in promoting Malaysian managerial or technical expertise, particularly in the EPZs where greater interactions between foreign enterprises were possible and domestic firm involvement was limited. By 1986, the Promotion of Investments Act shifted FDI towards export industries and offered various financial incentives for exporters among which were exemptions from ownership and employee hiring obligations. I V . F o r e i g n E x c h a n g e C o n t r o l s Malaysia began the 1970s with a very liberal foreign exchange rate regime, but progressively tightened restrictions during the decade in order to funnel capital to its NEP and heavy industrialization programs. By the mid-1980s, however, in order to support its attraction as an export platform, the country allowed free repatriation of capital and profits subject to some limitations 1 1 4. OECD, Foreign Direct Investment Relations Between the OECD and Dynamic Asian Economies, pp. 168-169. 85 V . E a s e o f A p p r o v a l The Malaysian Industrial Development Authority (MIDA) served as a central screening agency for FDI in the country, and also promoted Malaysia's advantages as an investment site overseas. MIDA typically included representatives from various other ministries and provided a "one-stop" approval service since the late 1970s. V I . E x p o r t P r o c e s s i n g Z o n e s By 1980, Malaysia had established ten export processing zones located in Penang, Selangor and Malacca states. Firms undertaking production in these EPZs had to export a minimum of 8 0 % of their products and could import raw materials and other inputs freely, although use of domestic supplies was encouraged. The 1986 Promotion of Investment Act created an even more liberal investment climate allowing exemptions from the performance requirements normally faced by investors 1 1 5. Alongside China, Malaysia had the most number of EPZs among the ten economies studied in this paper, yet the effect of these EPZs had an apparent mixed effect upon FDI flows. As noted earlier, Malaysia faced the same hazard as the Philippines in failing to create strong linkages between domestic and foreign firms. The absence of strong ties to local suppliers until the late 1980s may have allowed for foreign investors to enter and leave the EPZs as circumstances warranted. Although Figure 24 indicates increases in net FDI flows after the formation of the early EPZs, most of the increase can probably be attributed to foreign interest in Malaysia's oil and mineral resource wealth that peaked in the early 1980s. Despite the presence of the 1 1 5 Bowie, pp. 180-181. 86 EPZs, net FDI levels fell afterwards. The EPZs did, however, create the necessary infrastructure with which Malaysia could fortuitously shift again to export-led growth in the mid-1980s. VII. Effects of FDI Policy Changes in Malaysia The example of Malaysia provides one of the clearer instances where government actions had a direct effect on that country's attractiveness as an FDI location. Active government interventions constrained the investment climate in the 1970s and liberalized it in the later 1980s. Through its performance requirements, the government was certainly able to directly affect the operating costs of investors, but that did not deter FDI from rising strongly in the early to mid-1970s and at the beginning of the 1980s, two periods during which FDI controls were particularly acute. This would suggest that Malaysia's endowment of oil and other natural resources was attractive enough for investors to forgo the difficulties of carrying out FDI; locational advantages possibly outweighed the effect of policy restrictions. H ) . Singapore As in the case of Hong Kong, Singapore enjoys a very open investment climate that has been primarily concerned with managing the transition from manufacturing-based FDI inflows to service industry-based FDI. The extensive presence of MNCs in the country, along with the government's active encouragement of FDI, has resulted in there being very few restrictions upon foreign investors. Figures 25 and 26 below reveal the high reliance of Singapore upon FDI. Net FDI as a percentage of total investment in Singapore has risen from under 1 5 % in 1970 to just over 2 5 % in 1990, reaching a peak 87 of almost 4 0 % in 1988 (the large rise beginning in 1985 was most likely due to increased Japanese investment following the Plaza Accord). Similarly, as a percentage of total investment, FDI inflows have constituted a significant portion of Singaporean investment. From just over 2 0 % in 1972, FDI rose to 4 0 % of total investment in 1988, before falling and rising again to that level in 1990. The small number of policy changes undertaken over this period are indicative of the already liberal and receptive attitude towards FDI. F i g u r e 25 Net FQ asa Percentage of Total Investrnert in Sngapcre, 1970-1990 40,00-, 3500 3Q0O tage 2500-Percen! 20.00-Percen! 1500 1Q0O-500 Q00 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 \fear Sources: World Bank; IMF, International Financial Statistics Yearbook 1995 I. O w n e r s h i p Apart from a few industries in the services sector and in public utilities, there are no ownership limitations or entry requirements facing foreign firms. 100% foreign ownership was allowed by 1980. The government is, however, trying to stimulate greater Singapore involvement in the services sector, particularly in financial services, and in the high-technology field. 88 Figure 26 FDI Inflows as a Percentage of Total Investment in Singapore, 1972-1990 5.oo - ^ • • ^ ^ ^ ^ ^ ^ • ^ ^ ^ H i ^ ^ ^ ^ H ^ ^ ^ ^ ^ ^ ^ H i ^ ^ K I ^ H 0.00 -I 1 1 1 1 1 1 1 1 i !—• • 1 1 i 1 1 1 1972 1 974 1 976 1 978 1 980 1982 1984 1986 1 988 1990 Year Source: IMF, International Financial Statistics Yearbook 1995 II. Domestic Procurement Rules Given the variety of firms (both domestic and foreign) present in Singapore, investors have a wide selection of suppliers and other affiliated businesses with which to freely cooperate on a mutually agreeable basis. III. Local Hiring Requirements Singapore has traditionally welcomed skilled expatriate workers. There have been no significant performance obligations in regards to employee hiring. There has been concern, however, over the lack of extensive spill-overs, or linkages, between TNCs and domestic companies. TNCs tend to procure inputs from other foreign firms or from enterprises that import components and supplies, resulting in 89 limited interaction between TNCs and Singapore enterprises 1 1 6. The government is attempting to remedy this by involving state corporations in FDI ventures with TNCs, but no FDI restrictions were imposed in regards to this issue during the period under study here. T a b l e 9 Net FDI L e v e l s in S i n g a p o r e , 1970-1990 Year Net FDI (US$, m i l l i o n s ) 1970 93.0 1971 116.3 1972 140.8 1973 326.8 1974 280.3 1975 253.9 1976 185.8 1977 206.2 1978 186.5 1979 668.6 1980 1138.1 1981 1645.3 1982 1297.6 1983 1084.7 1984 1209.5 1985 809.0 1986 1528.9 1987 2630.1 1988 3537.5 1989 1890.5 1990 3911.1 | Source: World Bank IV . F o r e i g n E x c h a n g e C o n t r o l s Few foreign exchange controls existed throughout the early 1970s and those that were in place were removed in 1978, partly contributing to a noticeable rise in FDI from Pang E n g Fong, "Foreign Investment and the State in Singapore", in Cable and Persaud, eds., Developing With Foreign Investment, p. 97. 90 1978 to 1981 after a period of fairly steady net FDI inflows since 1970. The Plaza Accord also resulted in a surge of Japanese and other Asian investment beginning in 1985 which may account for the strong rise in net FDI after that date. Corporate tax cuts and other incentives offered at that time may also have facilitated investment. F i g u r e 2 7 Net H3 Flows and FD Policy Changes in Singapore, 1970-1990 Policy Changes I II III IV V VI Vll 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 Year I = liberal investment climate already established II = foreign banks allowed restricted banking licenses III = "Open door" policy towards foreign expats IV = foreign exchange controls ended V = foreign firms allowed to have 1 0 0 % ownership of FDI VI = corporate tax cuts and other incentives offered Vll = foreign financial firms limited to 4 9 % ownership of domestic brokerages. V. Ease of Approval The Economic Development Board serves as Singapore's investment agency and the country's overall effective and reliable civil service has made entry into the Singapore market easy to achieve. VI. Export Processing Zones Given Singapore's small size and easy access to shipping facilities, there has been no need to implement EPZs, except for EPZs formed jointly with other countries. 9 1 The country's free trade orientation has not rendered importing and exporting difficult for investors. VII. Effects of FDI Policy Changes in Singapore FDI flows did not become pronounced until after 1978, with two major periods of net FDI increases in 1978 and 1985, which suggests that FDI in Singapore was responsive to foreign exchange liberalization and the realignment of international currencies following the Plaza Accord. This result would be consistent with Singapore's development as an international financial and transportation centre; the republic's excellent infrastructure serves as a significant locational asset that allows it to attract FDI which, in turn, allows the country to further progress as a regional financial hub. FDI policy changes in Singapore have not been as wide-ranging as in other Asian countries but have been focused in the financial services area and have reinforced the country's investment attractiveness. I. Indonesia Indonesian attitudes towards foreign investment have alternated between wariness and outright hostility. FDI was never warmly received during the twenty years under consideration here; more often than not, it was viewed as a necessary evil in order for the country to progress economically and technologically. This is surprising if one considers that Indonesia began the 1970s with a very liberal investment policy that imposed very few limitations upon investors in the hope that the country's reputation as a stable investment location would eliminate concerns over the military coup in 1965 that 92 had brought the Suharto administration to power 1 1 7. However, political considerations soon superseded this objective as riots against ethnic Chinese businessmen and Japanese investors broke out in 1974. Anxious to be seen as a government catering to the concerns of the pribumi (ethnic Indonesians) in creating employment and business opportunities, the government imposed a series of severe FDI restrictions in the mid-1970s that soured the investment environment. In addition, as a major producer of petroleum, Indonesia profited greatly from the increase in oil prices in both the early 1970s and in 1979-80. Consequently, a more assertive, nationalistic economic policy, buttressed by oil wealth, replaced the previously liberal investment behaviour. Indonesia's oil wealth allowed it to undertake import substitution policies in the 1970s, and to place limitations on the operations of foreign firms within the country in terms of hiring requirements, ownership restrictions and accessible investment areas. The advancement of Indonesian nationals in economic activity was one specific objective of the FDI regime, and foreign firms were expected to provide managerial and technical training to Indonesians in order to replace foreign nationals in managerial occupations. Overall, economic development was focused upon serving the large domestic market and upon fostering indigenous industries through prohibitive import barriers. I. O w n e r s h i p Following an initially liberal investment regime in the early 1970s, Indonesia's FDI regulations were changed to limit foreign ownership in favour of pribumi equity participation. Foreign investors were compelled to invest through the form of joint-1 1 7 Hal Hill, Foreign Investment and Industrialization in Indonesia (Oxford University Press, Singapore: 1988), pp. 28-29. 93 ventures with an Indonesian partner (with maximum equity participation of 49%) which allowed access to government credit and foreign exchange. Several sectors were removed from those open to investment, and even those FDI in which majority foreign ownership had been granted were required to divest to local ownership. T a b l e 10 Net FDI L e v e l s in I n d o n e s i a , 1970-1990 Y e a r Net FDI (USS, m i l l i o n s ) 1970 83.0} 1971 139.4 1972 207.4 1973 15.51 1974 -49.31 1975 475.9 I 1976 344.21 1977 235.31 1978 279.1 | 1979 226.0 j 1980 180.0 1981 133.0J 1982 225.o| 1983 292.0| 1984 222.0| 1985 310.0J 1986 258.0ij 1987 385.0J 1988 576.0 1989 682.01 1990 1093.0, Source: World Bank As in other instances, with ownership, however, did not come control. As Hill notes in reference to the work of Oman noted earlier, use of debt and "new FDI" forms allowed investors to circumvent equity limits, or investors simply took a passive attitude towards their joint ventures, taking minimal steps to diffuse technical or managerial 9 4 knowledge. The absence of significant foreign investment in export industries also deprived Indonesia of the opportunity to create foreign currency-generating businesses118. II. Domestic Procurement Rules Indonesia's economic orientation was traditionally focused upon its own domestic market at the expense of export opportunities. Given the emphasis upon pribumi economic empowerment, the state took an active role in encouraging ethnic Indonesian advancement through state-owned corporations and by allocating business privileges to favoured individuals. To do so required an extensive system of licensing and quota allocation which, in turn, prompted a rise in "clientelism" and graft as ethnic Indonesian businesses sought to maximize the economic rents that these licenses and quotas offered. In addition, Indonesia's extensive reliance upon oil had prompted it to make minimal advances in developing a manufacturing base. What did exist in manufacturing was highly protected. Local sourcing requirements in manufacturing (intended to facilitate technological diffusion) made the procurement of reliable quality parts and supplies problematic, thereby forcing most investments to be aimed at low-value added industries, such as footwear, primary lumber processing and natural resource extraction119. III. Local Hiring Requirements As with Malaysia, the placing of nationals in managerial positions was a constant goal of Indonesia's FDI policy. Firms were urged (both directly and indirectly) to employ 8 Ibid., pp. 145-146. 9 Ibid. 95 local workers and restrictions existed upon the use of expatriate staff. However, under earlier investments, little technological diffusion or spread of managerial knowledge occurred due to either the low-end nature of the investment, or due to investors' desire to minimize their involvement in joint-ventures and maintain whatever control they could given the already considerable ownership restrictions they faced. IV. Foreign Exchange Controls Indonesia typically did not use extensive controls on the use of foreign exchange, although it did implement direct credit control in 1974. The small size of most Indonesian businesses prevented them from gaining access to foreign funds anyway, making them reliant upon the allocation of government credit. By the early 1980s, most foreign exchange controls had been eliminated and the rupiah was freely convertible. V. Ease of Approval The problems with bureaucratic red tape are starkly evident when Indonesia's FDI policy changes are examined by the type of change undertaken. An examination of the timeline in Appendix 1 reveals sporadic attempts to improve and clarify the investment process in the late 1970s and early 1980s, followed by a more systematic program of reforms undertaken in 1985 and continued for the rest of the decade. Although the Investment Co-ordinating Board has acted as the central screening agency since 1985, its authority has been subject to question on occasion, and several 96 major FDI categories (particularly in natural resources) are under the jurisdiction of the relevant ministries 1 2 0, thereby further complicating FDI approval procedures. VI. Export Processing Zones As noted above, Indonesia's investment policies placed a heavy emphasis upon development of the domestic market. Two EPZs were formed in 1978, but export industries had not achieved particular prominence by the end of the 1980s. Figure 28 Net FDI as a Percentage of Gross Capital Formation in Indonesia, 1970-1990 12.00 mmmmmmmmMMMMMmmmmmmmmmmmim •mmmm <mmm^^«m^m=s!B!^i -2.00 Year Source: World Bank; IMF, International Financial Statistics Yearbook 1995 VII. The Effects of FDI Policy Changes in Indonesia The impact of Indonesia's FDI policy changes is apparent from an examination of Figures 28 and 29. The beginning of restrictions on FDI in the early 1970s caused FDI as a percentage of capital formation in the country to plunge dramatically and to Ibid. 97 remain at low levels (under 2 % until the mid-1980s) despite a later resurgence in 1975. Net FDI in 1985 (US $310 million) was virtually the same as net FDI in 1976 (US $344.2 million), with consistent decreases in net FDI inflows from 1978-82. Consequently, since 1970, Indonesia has traditionally had a small proportion of its inward capital flows accounted for by FDI and has resorted, instead, to official governmental aid and other international borrowings throughout the 1970s and 1980s. F i g u r e 29 Net F D R o w s a n d FDI P o l i c y C h a n g e s i n Indonesia, 1970-1990 Policy Changes -200.0-I Year I = liberal investment period II = central screening agency formed III = imposition of ownership restrictions and performance requirements IV = FDI approval process reformed V = EPZs formed VI = further FDI restrictions and import licenses imposed Vll = contractual JVs allowed for timber industry VIII = special tax incentives ended IX = new screening agency formed; FDI approval process reformed X = FDI reforms and deregulation XI = deregulation package introduced; foreign banks allowed in JVs XII = negative list released; further deregulation After 1974, net FDI inflows rose strongly with interest in Indonesia's oil and other natural resource reserves. The rise in FDI shortly before 1984 was mainly due to attempts by investors to take advantage of tax benefits before they were scheduled to be removed in that year. By 1986, FDI reform measures were accompanied by continual rises in FDI inflows, yet restrictions on FDI still remained prominent by 1990 despite this 9 8 liberalization. This would seem to suggest that Indonesia's natural resource endowments, rather than any one specific FDI policy measure, have generated investor interest (particularly among Japanese firms) and have maintained that interest despite negative FDI developments. The FDI environment, however, served to raise the cost of undertaking investments in the country, with the result that foreign firm activity in industrialization in Indonesia is quite small and mostly concentrated in natural resource industries 1 2 1. J ) . Thailand Thailand has followed FDI policies opposite to those of Malaysia and Indonesia. While the latter were initially liberal in FDI orientation, then became restrictive, then became liberal again, Thailand began the 1970s with a fairly restricted FDI regime that became progressively liberalized. FDI was first encouraged in the 1970s, followed by an emphasis upon export promotion and export-led growth in the mid-1980s. Throughout Thailand's economic development from 1970-1990, the national government exerted less control over FDI than other Asian governments and has seldom resorted to stringent controls. Thailand's economic focus in the 1980s shifted to the manufacturing sector which accounted for 2 9 % of total FDI inflows in 1974, 32-33% in 1979, and 4 2 % in 1989. The primary stimulus for this growth was the inflow of Japanese and Taiwanese FDI as firms from these sources sought overseas production locations in order to avoid the costs brought about by the appreciation of the yen and the NT dollar in the late M a r i Pangetsu, "Foreign Firms and Structural Change in the Indonesian Manufacturing Sector", in Ramstetter, ed., Direct Foreign Investment in Asia's Developing Economies and Structural Change in the Asia Pacific Region (Westview Press, San Francisco: 1991), p. 59. 99 1980s 1 2 2 . Hence the sharp rise in net FDI as a percentage of total investment after 1987. T a b l e 11 Net FDI L e v e l s in T h a i l a n d , 1970-1990 Y e a r N e t F D I ( U S S . ( m i l l i o n s ) | 1970 43.0 | 1971 39.1 | 1972 68.4 j 1973 77.5 | 1974 188.8 I 1975 22.0 J 1976 79.1 | 1977 106.1 I 1978 49.6 j 1979 51.4 | 1980 186.8 | 1981 288.2 | 1982 188.7 | 1983 348.2 | 1984 400.4 j 1985 162.3 | 1986 261.4 j 1987 182.0 j 1988 1081.2 | 1989 1725.8 | 1990 2303.4 | Source: World Bank I. O w n e r s h i p Foreign firms intending to serve the export market faced few restrictions concerning equity limits or divestment requirements 1 2 3 with wholly-foreign owned FDI permitted by 1977. In regards to the domestic market, however, FDI policies were Somsak Tambunlertchai and Eric D . Ramstetter, "Foreign Firms in Promoted Industries and Structural Change in Thailand", in Ramstetter, ed., Direct Foreign Investment in Asia's Developing Economies and Structural Change in the Asia Pacific Region (Westview Press, San Francisco: 1991), pp. 72-73. 1 2 3 Mardon and Paik, pp. 161-162. 100 tempered with various restrictions on ownership (six negative policy changes regarding ownership and areas open to FDI were recorded), particularly in primary commodities which were mostly controlled by Thai elites 1 2 4 . Certain sectors, such as mining, agriculture, construction, real estate and services restricted or barred FDI, while in other business areas, such as banking, commerce or transportation, Thai FDI policy frequently included limitations on the size of allowable foreign equity (usually not more than 49%) . F i g u r e 3 0 FDI Inflows as a Percentage of Total Investment in Thailand, 1975-1990 8.000 y 7.000 --6.000 --g, 5.000 -| 4.000-O (SL 3 0 0 0 2.000-1.000 --0.000 -I 1 1 1 1 1 1 1 1 1 1 1 1 i 1 f m t D h - c o c n O f - c j c n T t m c D r - c o c n o r^- r^- r-» r-» r - - c o c o c o c o c o c o c o co co co CD Oi O Oi O) 0 ) 0 ) 0 ) 0 ) 0 ) 0 ) 0 0 ) oi CD CD o Year Source: IMF, International Financial Statistics Yearbook 1995 Doner suggests that large FDI inflows sparked a similar nationalistic reaction in Thailand in 1972 as occurred later in Indonesia and Malaysia, resulting in FDI restrictions from 1973-1976 1 2 5, which may account for the sharp drop in net FDI after 1974 (see Figures 31 and 32), and for the fact that wholly-owned investments were expected to revert to Thai control. Ownership restrictions were reiterated in 1977, but Boyd, p. 133. Doner, p. 29. 101 Thailand's increased shift towards export-led growth in the early 1980s served to moderate ownership constraints on export-oriented FDI. F i g u r e 31 Net FTJ asa Percentage of Total Inuedrrent in Thailand, 1970-1990 F i g u r e 32 Net FDI Flows and FDI Policy Changes in Thai land, 1970-1990 Policy Changes 2500.0 Sources: World Bank; IMF, International Financial Statistics Yearbook 1995 I = restricted capital repatriation policy exists II = limited right to remit foreign currency granted III = Alien Business Law bars or restricts FDI in certain sectors IV = BOI formed, 100% foreign ownership allowed for some export FDI V = first EPZ formed VI = 100% foreign ownership allowed in export industries Vll = non-trading commercial offices of foreign firms allowed VIII = new domestic and foreign bank branches allowed. 102 II. Domestic Sourcinq Rules Most of these restrictions were loosened for export industries, but the transfer of managerial and technical knowledge was encouraged, primarily through subcontracting in industries such as automobile manufacturing and electronics. Thai firms became leading parts suppliers to these sectors and some local firms went on to establish their own businesses often with Japanese industry support 1 2 6. III. Local Hiring Requirements Training of local employees was also required in most areas, and especially encouraged in export industries. Given the dominance of Thai businesses in the domestic market, the issue of worker training in that sector was not as pressing. IV. Foreign Exchange Controls Foreign exchange controls on the remittance of profits, dividends and capital existed for the most part of the 1970s, but Thailand's export-push in the following decade created pressures to liberalize these regulations. By 1990, the Bank of Thailand still monitored and approved requests dealing with foreign currency, but approval was usually automatic. V. Ease of Approval Thailand's Board of Investment was created in 1977 and served as the central screening agency. Investment procedures generally afforded no difficulties to investors W o r l d Bank, East Asia's Trade and Investment, p. 48. See also Johzen Takeuchi, '"Technology Transfer' and Japan-Thai Relations", in Shoichi Yamada, ed., Transfer of Japanese Technology and Management to the ASEAN Countries (University of Tokyo Press, Tokyo: 1991). 103 and FDI legislation provided sufficient information as to the FDI climate. Compared to Indonesia or China, the approval process was more efficient and streamlined. VI. Export Processing Zones Thailand's first EPZ was created in 1982. Enterprises situated in the EPZ, as in other countries, could import materials needed for export production, maintain full foreign ownership and also possessed the right to bring in foreign personnel. These conditions were especially satisfactory for TNCs and served to draw extensive Japanese investment after 1985. VII. Effects of FDI Policy Changes in Thailand There appears to be, however, no consensus on the effect that this corporate transformation has had upon the Thai economy by foreign firms. Maclntyre has argued that domestic Thai firms have "not been eclipsed by multinational corporations and thus the problem of businesses being denationalized, as frequently reported in much of Latin America, hardly exists"127. He points to the successful assimilation of the local ethnic Chinese community (unlike the situation in Malaysia and Indonesia) and the prominence of Thai firms as new overseas investors in Asia as evidence of the ability of Thai businesses to develop alongside foreign firms. Certainly, the industry linkages and domestic firm growth in the automobile and electronics sectors mentioned earlier seem to support this. Mardon and Paik, however, have reached a different conclusion, estimating that, due to the liberal investment regulations in Thailand, there have been minimal transfers 1 2 7 Maclntyre, p. 202. 104 of managerial or technical knowledge to Thais, with FDI controlling more than 5 0 % of manufacturing in the country. Japanese firms dominate in the export, import and industrial sectors, while the petroleum industry is also almost exclusively foreign-owned. The authours conclude that this has resulted in the absence of any large diversified industrial corporations", and a scarcity of large, established and Thai-owned 1 PR enterprises . It seems clear, as Figure 32 indicates, that Thailand's export-oriented FDI policies in the early 1980s produced a noticeable rise in net FDI levels and provided a welcome location for Japanese FDI from 1987 onward. Much of this FDI has been concentrated in export industries producing a noticeable foreign presence. However, given the approach of Thailand's FDI policies, domestic business activity is still predominantly Thai-based and new Thai-run enterprises are emerging as manufacturers in fields where only Thai suppliers once existed. Overall, Thailand's positive FDI climate has enabled it to become a significant manufacturing centre for the Asia Pacific region and a primary recipient of foreign investment. 4 ) . S u m m a r y o f R e s u l t s This examination of ten Asia Pacific economies reveals no general systematic pattern between host country FDI policies and the level of net FDI in that country. Changes in net FDI levels do not seem to correspond closely with changes in FDI legislation, although the relationship was more noticeable in some of these economies (i.e. Malaysia) than in others (i.e. Japan or Indonesia), and was more common in export Mardon and Paik, pp. 163-164. 105 industry sectors than in other areas; FDI for domestic markets tended to be highly curtailed. From these considerations, it appears that the nature of national FDI regimes has a varying and inconstant effect on the levels of FDI inflows into a host country. F i g u r e 3 3 P r i m a r y FDI P o l i c y O b j e c t i v e s b y S u b j e c t E c o n o m y Technology Transfer Domestic Employment/ Knowledge Diffusion Competitive Economic Development Korea Taiwan China Japan Malaysia Indonesia Philippines China Thailand Hong Kong Singapore Export Growth | Generation I Thailand Malaysia China This variability is also evident if one classifies these ten economies according to the primary objective of their FDI regulations, as is done in Figure 33. From the previous discussion, it would appear that these ten economies pursued four main goals through the hosting of FDI; technology transfer, domestic employment generation and knowledge diffusion, competitive economic development, and export growth generation. These categories are not mutually exclusive, but they can be helpful in indicating how diverse the objectives of countries in the same region can be. Depending upon the objective, FDI may or may not be the best vehicle with which to achieve it. Technology transfers such as licensing offered more direct domestic control over economic development, yet a physical foreign presence was often needed to provide employment opportunities, to disseminate managerial and technical 106 knowledge in other locations, and to stimulate export production. FDI was also instrumental in helping Singapore and Hong Kong plan their strategies for maintaining economic competitiveness and growth. In general, FDI was more crucial to some economies than to others and that would, naturally, influence that country's attitude towards foreign investment. A country under the competitive economic development rubric would be more accommodating than a government with a more narrow objective, such as access to advanced technology. "Tight" FDI regimes would be found typically under technology transfer; "open" FDI regimes under competitive economic development, and "mixed" FDI regimes under either domestic employment/knowledge diffusion or export growth. Even though FDI policies may ultimately result in an outcome that is considered desirable, are host country policies the primary determinants of the level of FDI inflows? A distinctive feature of most of the Asia Pacific economies examined in this study is the possession of national assets that render them attractive as investment locations. They possess either large domestic markets (the PRC, Indonesia, and Japan), low-cost labour (Malaysia, Indonesia, Thailand, the Philippines, and, to a lesser extent, Hong Kong), a highly-skilled labour force (Singapore, Korea, Japan, Taiwan and, to a lesser extent, the Philippines and Hong Kong), or significant natural resource endowments (Indonesia, Malaysia, Thailand and the Philippines). Many other developing countries lack these attributes ("locational advantages", to use the OLI approach) which may account more for the preponderance of FDI flows to a host country than changes in that country's regulatory framework. The OECD has identified these "location advantages" as having "constituted the major attractions" of the dynamic Asian economies (DAEs)129, 1 2 9 O E C D , Foreign Direct Investment: OECD Countries and Dynamic Economies of Asia and Latin America, p. 24. 107 in contrast to most other developing regions, such as Africa where local markets are small, infrastructure is often rudimentary, labour skills are poor and economic stability is fleeting. For example, in the case of the PRC, the IMF has concluded that "access to China's large domestic market, rather than a low-cost production base, now appears to be the primary attraction for FDI"130. Essentially, sound macroeconomic conditions, together with locational advantages, appear to be considered as the primary determinants of FDI inflows. UN studies have reached a similar conclusion, stating that there "is no conclusive evidence as to the actual impact of liberalization policies of the flows of FDI and technology". Again, host country macro-economic factors and the condition of the world economy were considered to be of primary importance131 . Political factors as well can affect FDI, as was demonstrated by falling levels of FDI in the Philippines during its period of domestic disturbances in the 1980s. Similarly, the World Bank suggests that locational advantages of host countries, together with the ability of multinational corporations to effectively incorporate these advantages with their firm-specific assets ("internalization", using the OLI model), are the primary determinants of FDI inflows. While host country policies can serve to attract FDI, they are "perhaps not sufficient for stimulating large inflows"132. The UNCTC has also concluded that "domestic FDI regulations are of less importance than fundamental economic conditions". The latter should be kept in mind when formulating FDI policies in order to maximize the benefit that a country can receive from FDI and, indeed, to ensure that the FDI being received is at all the type that the host country's economic development requires. Putting forth a package of specific incentives may be ineffective if 1 3 0 IMF, World Economic Outlook 1994, p. 53. 1 3 1 UNCTC, Government Policies and Foreign Direct Investment, UNCTC Current Studies Series A, No. 17 (United Nations, N.Y.: 1991), p. 279. 1 3 2 World Bank, East Asia's Trade and Investment, p. 44. 108 the potential investor does not view these incentives in the same positive manner as the host country. In order to avoid such outcomes, the UNCTC advocates the use of "selective policies" of support for FDI attraction133. Instead of seeking broad-based investment flows, it argues that it appears to be more conducive to a host country's welfare level that FDI be pursued in a way that allows that country's current and future comparative advantages to be sufficiently exploited134. Some FDI policies may in fact hamper the ability of host countries to utilize FDI effectively. Direct competition among host countries for FDI through financial incentives, for example, can have the unintended effect of reducing the level of economic benefits that an investment can generate for a host nation due to the excessively generous financial arrangements that such competition often provides investors135. As noted in the country discussions, performance requirements for FDI may lead to the emergence of privileged domestic economic elites who may hamper future investment liberalization as occurred in Indonesia and the Philippines. The establishment of EPZs, as was noted, often does not lead to effective linkages between foreign and domestic enterprises unless such linkages are actively pursued and monitored. There is also the possibility that talented locals will "defect" to a TNC instead of using acquired expertise to build a domestic industry "from the ground up". The effectiveness of FDI policies in these ten Asian economies has therefore been mixed and has probably been dependent upon the locational advantages and UNCTC, Foreign Direct Investment in Latin America: Recent Trends, Prospects and Policy Issues, Series A, No. 3 (United Nations, N.Y.: 1986), pp. 13, 23. 1 3 4 Ozawa, p. 41. 1 3 5 OECD, Foreign Direct Investment: OECD Countries and Dynamic Economies of Asia and Latin America, p. 71. 109 general macro-economic and political conditions prevalent in the region. To more quantitatively estimate the usefulness of FDI policies as predictors of FDI levels in a host country, regression analysis was used to model the relationship between the FDI policies of various host countries and the level of net FDI that those hosts received. The findings and conclusions are presented next. n o CHAPTER 3 -EMPIRICAL ANALYSIS 1). Regional Overview of FDI Policies FDI policy developments in much of the Asia Pacific region have been discussed in the previous section. However, similar policy data was gathered on 27 additional countries in order to provide a larger pool of data with which to test the relationship between net FDI levels and FDI policy changes in host countries. These additional countries were chosen at random from among developing countries for which data was available and are included in the timeline in Appendix 1. A). Latin America The Latin American countries used were Mexico, Colombia, Chile, Uruguay, Argentina, Bolivia, Brazil, Paraguay, Peru, and Venezuela. Caribbean nations were excluded since many serve as tax havens and therefore influence primarily foreign portfolio investment rather than FDI. Central American countries were also not included due to a scarcity of data and due to the fact that several (i.e. El Salvador, Nicaragua, Guatemala) were plagued by internal unrest or military conflict that made any FDI to that area negligible. Host country FDI policy development in Latin America varied from 1970-1990. Controls over FDI tended to be significant in many nations, such as Venezuela, Mexico, Brazil and the Andean countries, but were considerably liberal in Chile and Uruguay by the end of the 1970s. The parties to the Cartagena Agreement (Bolivia, Venezuela, Peru, Colombia and Ecuador) instituted a particularly restrictive environment for TNCs through Decision 24 (1971) which required mandatory divestment of majority equity i l l holdings and placed other restrictions on FDI within the members' common area. Throughout Latin America, special attention was paid to state ownership of the natural resource sector, although Chile was again somewhat of an exception. The 1980s were partly characterized by a shift toward more liberal FDI regimes and ownership restrictions were lifted in many sectors. However, in services and in advanced technology industries, such as personal computers, restrictions tended to persist 1 3 6 . Approval processes were improved and streamlined, and foreign exchange controls were lifted so as to facilitate capital flows. However, various restrictions continued to exist (i.e. repatriation could occur only after a specified time period, usually 2-3 years) and taxes on such foreign exchange transactions continued so as to encourage the use of capital in the host location. In addition, the end of the 1980s and particularly the beginning of the 1990s saw the emergence of EPZs and their variations in Brazil (1988), Argentina (1992), Ecuador (1990), Peru (1991) and other countries 1 3 7 . Following a sharp decline in FDI inflows for most of the 1980s, Latin America enjoyed a rise in FDI inflows at the end of the decade, 7 0 % of which was directed to only three countries; Mexico, Argentina and Brazi l 1 3 8 . Those nations continue to dominate foreign capital inflows to the region along with Chile. B). Africa Benin, Cameroon, Congo, Cote d'lvoire, Gabon, Ghana, Mauritania, Mauritius, Morocco, Egypt, Nigeria, Niger, and Tunisia formed the sample from Africa. The African UNCTC, Transnational Corporations in World Development, p. 269. 1 3 7 UN, World Investment Directory 1994: Volume IV- Latin America and the Caribbean (United Nations, N.Y.: 1994), pp. 5-15. 138 Ibid., p. 26. 112 continent has consistently attracted little FDI inflows possibly due to political, social and macroeconomic problems, a lack of attractive locational advantages for investors, and underdeveloped FDI policy structures. The majority of FDI has been concentrated in Nigeria, Tunisia and Morocco, although considerable flows have also occurred out of Nigeria139. Some of the factors that may account for Africa's low attraction as an FDI locale include many locational disadvantages such as small domestic markets, inadequate transportation and other infrastructure problems, economic or political instability, military conflict, and corrupt government administrations140. FDI in Africa has been focused mainly upon primary commodities and natural resources, particularly petroleum. Many national FDI regimes are inadequately developed and maintained and there is often very little in terms of official legislation. A common emphasis among developing African nations has been upon encouraging local control and involvement in FDI, with less attention paid to other facets of investment. Foreign exchange controls have also tended to be considerable, but many of the countries in this sample enjoy close ties to France and bestow preferred status to French investors. C ) . S o u t h w e s t A s i a Pakistan, India, Bangladesh and Sri Lanka were also included in the data set. These four countries have not been large recipients of FDI, although Bangladesh U 9 IMF, World Economic Outlook 1994, pp. 49-51. 1 4 0 UNCTC, Transnational Corporations and International Economic Relations: Recent Developments and Selected Issues, UNCTC Current Studies Series A, No. 11 (United Nations, N.Y.: 1989), p. 22. 113 undertook to liberalize FDI in the early 1980s. The region's performance, however, has been overshadowed to date by the economic performance of Southeast Asia. This regional discussion points to a distinct time dimension to the occurrence of policy changes and this is reflected in Table 12 which outlines positive and negative FDI policy changes in the ten core economies and in the other 27 economies in the sample (labelled "non-core"). Policy changes that were favourable to foreign investors were considered to be positive, while changes that hampered foreign investment were viewed as negative. For all 37 economies, the number of positive and negative policy changes from 1970-79 were almost the same (129 and 118 respectively). From 1980-90, however, the number of positive policy changes rose to 148, but the number of negative changes fell to 46. While the ten Asian economies studied here have consistently had a larger number of positive policy changes than negative changes throughout the two decades, a majority of the positive changes (70 or 61%) occurred since 1980 with a majority of negative changes (62%) occurring between 1970 and 1980. For the non-core countries, negative changes outnumbered positive changes from 1970-79 (87 versus 77), but from 1980-90, 78 positive policy changes are recorded as compared to 27 negative changes. Table 13 provides a summary of positive and negative FDI policy changes (derived from the timeline in Appendix 1) for each economy for each year. Here too, it can be noted that the number of positive changes from 1980-1990 for all economies (70) far surpassed the number of positive changes for the years from 1970-79 (46). The reverse holds for negative changes (19 and 31 respectively). 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T - a. .—, o o o o o o o o o o o o o o o o o o T - o o T -X o o o o o o o o o o o o o o o o o o o o X CM o o o o o o o o o o o o o o o o o o o o CM c c (0 CO .1 '5 CO *- o o o o o o T " o o o o o o o o CM CO CO co H H o o o o o o o o o o CM CO T - o o o o CM o o CM O o Et a. o o o o o o o o o CM CO o o o 1 - o o CD CO o o m DC a. o o o o o o o o 1- f- o o o 1- o o o 1- o o m o ^ o o CO o o o o o 1 — co CM co o o o T— CM CM o cc CM cc o o o o o o o o o o o o o o o o o o o o o o c i 1 c (0 CO a (0 o o o 1-o o o o o o o o o 1- 1-o o o o o r~ -)- Q. (0 -s ~» o T— CM co LO co r- oo 0 ) o T— CM CO •^r in CD 00 CT) o r-- 1^  1^  00 00 00 00 00 OO 00 00 00 CO CD 75 O) O) CT) O) O) O) O) O) 0 ) O) CT) CD CD CD CD CD O) CD CD CD CD o c o o number of recorded changes and were also recipients of considerable amounts of FDI. Japan had almost the same number of changes as Singapore, but the majority occurred at one point in time (1980) when Japan's investment law was being fully revised. Most liberalization measures occurred then, but since inward FDI was not a significant issue for Japan, further extensive changes did not follow. Korea, China and Malaysia are conspicuous in their large number of policy changes, but again for varying reasons; Korea was incrementally liberalizing its domestic FDI regime mostly after 1980, China was wrestling with the problem of developing a capitalist system within a communist environment (hence the large number of negative changes), particularly in the late 1980s, while Malaysia's large number of negative changes resulted from the FDI restraints it imposed in the 1970s. Taiwan followed a pronounced liberalizing path since 1987, while Indonesia alternated between FDI controls and reforms since 1970, beginning a series of positive FDI policy changes in 1985. Thailand followed a somewhat even-handed policy with its numerous ownership stipulations accounting for the large number of negative policy results. Overall, these various evolutions in national FDI regimes are consistent with the general observation held by observers, such as the UNCTC and others, that the 1980s were characterized by a general trend towards liberalization in both trade and investment regimes. 2 ) . D a t a C o l l e c t i o n Many studies of FDI appear to focus upon the relationship between foreign capital inflows and a host country's macro-economic performance (such as the rate of export growth or of GDP expansion), or examine more specific issues such as the fiscal performance of FDI projects, or their ownership composition patterns. There appear to 119 be fewer studies that deal specifically with the impact that host government policies have on FDI inflows. One such study, noted earlier, was conducted by the UNCTC entitled, Government Policies and Foreign Direct Investment which used multiple regression to analyze the impact that ownership policies, taxation/subsidies, foreign exchange controls, price controls, performance requirements and sector-specific limitations had upon FDI flows to 46 countries from 1977-1987. This study was used as a guide to assist in the formulation of the empirical section of this paper. A ) . V a r i a b l e s I. D e p e n d e n t V a r i a b l e s The UNCTC study used nine variations of FDI flows from the IMF. However, given the reasons cited earlier in this paper, net FDI figures were used for the dependent variable from the World Bank in formulating regression models. In addition to the consistency over the twenty year period that this provides, net FDI figures also allow for an overall assessment of the state of FDI flows in a particular host country. In most cases, outflows of FDI can be expected to be minimal since, as shown earlier, most countries are primarily recipients of FDI. The forms of net FDI (NFDI) used in the regression were: log NFDI (InNFDI), NFDI divided by country GDP (NFDI/GDP), and NFDI per capita (NFDIPC). The log form of NFDI was used in order to reduce the skewness in the FDI distribution among the economies in the sample. The 35 countries included both economies with very high net FDI levels and several with extremely low net FDI levels. In order to minimize this variation and eliminate the distortions that they would cause, InNFDI was used. Using the log forms also eliminated the problem of net 120 outward FDI flows in the data set. Since outward flows are negative, they cannot take a log form and are consequently excluded from the regressions. The notable exception, in this study, to host countries being net FDI recipients was obviously Japan. Due to the immense distorting effect that this country's FDI outflows would have on the data, as well as due to the type of FDI barriers in the country (more structural rather than based upon formal policy), Japan was removed from the sample. In addition, Taiwan was also dropped since a great deal of economic data for that country could not be obtained. I I . I n d e p e n d e n t V a r i a b l e s Referring back again to the OLI framework and to the importance of locational advantages that is emphasized in the UN study and elsewhere in the general literature, several macro-economic variables were identified that could be used in a regression model so as to test for the significance of general economic conditions as indicators of FDI attractiveness. The UNCTC study used GNP in local currencies and in special drawing rights (SDRs), along with percentage change in GNP, country exchange rates in SDRs, the percentage change in exchange rates, and a political rating index. Following this example, national GDP (GDP) and GNP per capita (GNPPC) were two variables used as proxies in this paper to indicate the size of the host country's economy and the purchasing power of the average resident. Urban population as a percentage of the total population (URBPOP) was used as an indicator both of market size (since urban residents are usually a country's leading 121 consumers) and of the degree of difficulty with which consumers could be reached. A high urban population percentage would allow investors to reach consumers easily whereas a large rural population would render that task more difficult and make a host country less attractive for domestic market-oriented FDI. Tariff levels can also have an effect upon FDI flows. High tariffs, for example, can either discourage FDI since it would be costly for firms to import needed inputs, or encourage transplant FDI that is focused upon the host country's domestic market. However, for a study of this size, it is difficult to obtain consistent and accurate tariff measures over time for each country, and even trade regime classifications are subject to considerable subjective judgment in the general literature141. Consequently, tariff data was not gathered for this study. Instead of tariff levels, openness can be used as an indicator of both tariff levels and of the trade climate in an economy. Typically, openness to trade can be measured as exports + imports over GDP, but not all forms of FDI are affected by both export and import barriers. FDI aimed at the domestic market only would be affected by import restrictions, while FDI that produces for overseas markets would be mostly concerned with export regulations and less affected by import barriers. As has been seen from the previous section, a great deal of FDI to the ten core economies was directed to their EPZs and to export activities, with the domestic markets usually being reserved to host country firms or, at the least, heavily protected. Therefore, increased export activity in a host economy was considered to be one consequence of an FDI presence in that Sebastian Edwards ( "Openness, Trade Liberalization, and Growth in Developing Countries", Journal of Economic Literature, September 1993, Vol. 31, pp. 1358-1393) provides a comprehensive discussion of many of the problems encountered in empirical studies of trade regime liberalization. 122 economy that would serve to attract future export-oriented FDI. Openness was defined as the percentage of exports in GDP (OP(EX)). T a b l e 14 D e p e n d e n t a n d I n d e p e n d e n t V a r i a b l e s Variable Measurement Units Source S NFDI US dollars (millions) World Bank, World Tables | NFDI/GDP NFDI divided by G D P Calculated from World Tables I NFDIPC NFDI divided by j population (US$) Calculated from World Tables I G N P P C US dollars ! World Bank, World Tables | G D P US dollars (billions) World Bank, World Tables | U R B P O P percentage of total | population World Bank, World Tables | OP(EX) exports as a percentage I of G D P World Bank, World Tables I C O S T P P P G D P divided by | exchange rate relative to the US dollar Penn World Tables 5.6 1 | Finally, operating costs are usually regarded as an important determinant of FDI location. Labour costs would provide a common measurement, but again, obtaining data for all the countries for all twenty years was problematic. The Yearbook of Labour Statistics from the ILO contained only incomplete data and could not be used. Instead, overall input costs were measured through aggregate purchasing power parity (PPP of GDP) in national currency value divided by the exchange rate in US dollars (COST). This provided for a comparative indicator between countries of differing price levels due to land and labour prices, two factors that are believed to exert significant influence upon investment decision-making. 123 These five macro-economic variables and the sources from which they were collected are summarized in Table 14 above. I I I . P o l i c y V a r i a b l e s The specific FDI policy variables, included as independent variables were; ownership restrictions (OWN), domestic procurement rules (SUPPLY), local hiring requirements (WORK), foreign exchange controls (FOREX), approval procedures (APPROVE), and the number of EPZs created (EPZ). Following the approach taken by the UNCTC study, each FDI policy category recorded the net number of changes (positive or negative) that occurred under that category for each year based upon the information provided in the timeline in Appendix 1. If a larger number of negative changes than positive changes occurred in a particular year, the net result was negative and indicated a climate of FDI restrictions. The opposite held when positive changes outnumbered negative changes in a given year. An entry of zero indicated that no net changes occurred in the category. This approach avoided the difficulties and complexities of trying to run regressions for individual negative and positive policy changes only. In order to calculate net values for the FDI policy variables, each policy was broken down into positive and negative entries for each year, as shown for the ten core economies in Appendix 2. Net values for each policy variable as well as for the economy's overall FDI policy trend were then calculated. The types of FDI regulations falling under each policy classification are also explained in Appendix 2. 124 To try and control for the effects of only negative or positive policy changes on FDI flows, two additional variables were included that recorded the total number of positive policy changes for a country in a given year (POSPOL) and the total number of negative changes (NEGPOL). The policy variables are summarized below in Table 15. Finally, three regional dummies representing Asia (DASIA), Latin America (LAMER) and Africa (DAFRICA) were also included in the model. T a b l e 15 P o l i c y V a r i a b l e s Variable Measurement <~>WN < S U P P L Y I F O R E X Net number of changes (positive or I A P P R O V E negative) in a given year f W O R K 4 | E P Z Number of EPZs established in a given year | P O S P O L Number of positive changes in a given year | N E G P O L Number of negative changes in a given year | 3 ) . M e t h o d o l o g i c a l P r o b l e m s Using net FDI policy changes, however, presents a host of difficulties many of which were noted in the UNCTC study142. The most apparent problem is that in calculating net changes, all policy changes are considered to be of equal weight; namely, they are all given a value of one. Obviously, some policy changes may be of greater significance than others and more notable in their impact upon investment activities. Given the variety of types of FDI (i.e. greenfield, wholesale, merger and acquisition, etc.), it is possible that the six policy categories studied here do not See UNCTC, Government Policies and Foreign Direct Investment, pp. 35-36. 125 constitute the primary policy considerations for many investment activities. Some forms of FDI may be influenced by other factors such as the presence or absence of suppliers or competitors, or the quality of public infrastructure. However, it is virtually impossible to determine a universal weighting system since some policy changes may affect some investors more than others. Investors' perceptions of the importance of policy changes may very well differ (i.e. depending upon whether they are focused on the domestic market or export-oriented) and there does not appear to be a satisfactory way of accounting adequately for this variation. The use of net FDI policy changes may also make it difficult to determine the precise effect of policy changes since, as can be seen in Appendix 2 and as discussed earlier, positive changes in FDI policies seem to be prevalent among most developing economies in the 1980s. This would suggest that most developing countries were engaged in a liberalization of their FDI regulations at similar points in time. Given this simultaneous liberalization of FDI conditions in many economies that are closely situated to each other geographically, the net effect on FDI distribution among these economies may be zero; a competitive investment position created through policy reforms in one economy may have been cancelled out by identical changes in a neighbouring one. The use of net policy changes for each of the six specific FDI policies was intended to assist in distinguishing changes in certain policies from overall patterns, but this too may be problematic. As the information in Appendix 2 reveals, many of the Asia Pacific economies carried out policy changes in the same areas, most notably in domestic ownership requirements, ease of approval and in EPZ creation. This similarity can be expected to dilute the impact of FDI policies upon FDI flows and increase the importance of locational attributes as determinants of FDI location. 126 Assessing the exact impact that host country policies may have on FDI levels may therefore be impeded by these measurement difficulties with the policy variables. Secondly, there is often a difference between the formal regulatory framework for FDI and the actual manner in which FDI rules are enforced. Simply because a country officially prohibits foreign-owned investments does not necessarily mean that foreign-owned investments are not possible. Rules are often flexibly interpreted, or the existence of corruption within a host country's administration may allow an investor to circumvent restrictions. Consequently, a negative policy change may not cause concern among potential investors. Similarly, a positive change undertaken by a host country may not be perceived as positive by investors due to the presence of other investment impediments, or the relative lack of locational advantages in that country. Any study dealing with policy changes and their effects must therefore be aware of this caveat in interpreting the results. There is also a time dimension to policy changes that must be considered. Announced policy changes can have one of three effects; they can encourage investors to undertake FDI in order to be in a position to take advantage of the change when it is implemented; they can prompt investors to wait and see if the policy change will actually materialize; or they can have no effect on investment levels. A lag can exist between the timing of a policy announcement and its actual implementation. Thirdly, it must be noted that a country may record few policy changes throughout the period from 1970-1990 because it began 1970 already largely liberalized. This has been the case with Hong Kong and Singapore as noted in the country studies. The information on both these economies must be interpreted with this realization in 127 mind. The fact that all the economies are run in the regression together may prevent trends for liberalized or restricted FDI regimes from emerging and may again dilute the effect that policy changes have created. Policies that appear to have been insignificant may turn out to be significant when different groups of economies are compared. It may be desirable in further studies to categorize the countries according to their degree of investment liberalization and run separate regressions for each group. Given the potential variation that may exist in the perceived importance of different policy changes, it would be extremely problematic to construct a weighting method that would be universally applicable. Since this paper is concerned with determining the general relationship between FDI policy changes and FDI levels in host countries, the use of net policy change figures was considered to be sufficiently useful so as to indicate whether an overall liberal or restrictive FDI climate existed in a particular year in a particular country. The breakdown of policy types was designed to allow for an assessment of the importance of various FDI policy changes, but such conclusions must be drawn with a realization of the drawbacks to the paper's approach as mentioned above. To the maximum extent possible, this study attempted to use FDI policy changes with reported implementation dates rather than announcement dates. The changes covered by the UNCTC's series on regulations affecting TNCs provides mostly implementation dates. There may, however, still be a time lag as investors assess the implications of a newly implemented policy before undertaking action. Several studies, however, have found investor response times to be very rapid (1-2 years)143. This study Ibid., p. 43-45. 128 therefore included one-year lagged versions of all the independent variables in several of the regressions in order to examine the time effect on FDI flows. In addition, given that net policy changes were used as the independent variables, it was believed worthwhile to construct versions of the dependent variables based upon year-to-year changes in their values so as to regress changes in FDI against net policy changes. These versions of the dependent variables were labelled DlnNFDI, DNFDI/GDP, and DNFDIPC, and were calculated as the difference between the form of the dependent variable entry at time f and the form of the dependent variable entry at time t-1. Taking the difference of the logs would provide an approximate equivalent to the percentage change between times r and t-1. This approach was intended to allow for observation of the effect that changes in policies had on changes in FDI levels (if any) rather than upon absolute levels of FDI in a given year. Finally, in order to deal with the issue of pre-1970 FDI climates, a second regression model was developed using data from three years, 1970, 1980 and 1990, and the same forms of the dependent variables. The values for G N P P C , GDP , URBPOP , OP(EX) and COST were the same as in the main model, but instead of including the net number of policy changes as in the main model, dummy versions of all five policy variables were used; a value of 1 was used if the country had a liberal policy category, and -1 was used if controls existed in that policy category for a particular year. This assessment was again based upon information gathered from UNCTC publications and other sources noted in the reference section. Such an approach allowed for the existence of liberalized or restricted FDI climates prior to 1970 to be identified. By placing all economies at a common starting point in terms of their FDI receptivity in 129 1970, it was hoped that the effect created by the presence of high FDI levels in already liberal economies could be controlled and the impact of FDI policies better understood. Also for this model, the variable GROWTH that calculates growth in GDP terms for the years 1980 and 1990 was added*. 4) . S t a t i s t i c a l T o o l s Data on the above variables were collected from their respective sources and compiled into the data-set that is produced in Appendix 3. The three-period data set is shown in Appendix 4. Multiple regression analysis was then carried out using NCSS 6.0 statistical software. 5) . H y p o t h e s i z e d S i g n s o f C o e f f i c i e n t s Before undertaking a regression-based examination of the relationship between FDI levels and FDI policy changes, the coefficients of the various independent variables can be expected to assume the following signs: Based upon the emphasis in the general literature on the significance of macro-economic factors, the coefficients for GDP and G N P P C can be expected to have positive signs. High GDP and personal income can be seen as indicative of high levels of economic activity and of growing consumer markets. This would presumably attract FDI aimed at both the host country's domestic market and at exporting activities. This would also be consistent with the global trend in FDI flows noted in the previous section; the economically dynamic region of Asia Pacific became a leading recipient of foreign The variable G R O W T H was calculated in the following manner: G j - G D P i - G D P i - 1 where G G D P j - 1 represents growth in G D P terms, and j represents years 1980 or 1990. 130 capital while areas that suffered from a lack of economic growth (such as Latin America) experienced a drop in capital inflows in the 1980s. The coefficient for URBPOP would also be expected to have a positive sign. Large urban populations provide a readily accessible market for products produced through FDI, as well as more advanced infrastructure that facilitates business operations. Given the emphasis placed by many of the core countries in this study upon exports through the creation of EPZs and other measures, OP(EX) would be expected to be positively related to FDI levels. Domestic markets tended to be restricted to FDI throughout the 1980s, with foreign investor attention being paid predominantly to the export sector. Thus, countries that had a strong export orientation in their trade pattern could be expected to be recipients of higher levels of FDI than countries with a stronger domestic orientation to economic growth. C O S T would be expected to be negatively related to FDI levels. Higher land and labour costs would presumably act as a deterrent to investment, particularly among small-scale, labour-intensive industries. Cost may be a less significant factor for investors from industrialized countries since rising wage and price levels in developing host countries may nevertheless still provide for a less expensive business locale than the advanced markets of these investing countries. Indeed, rising costs may be a result of a large and constant inflow of foreign capital into a host country, but higher costs would be expected to eventually dampen such inflows. Thus, the overall relationship would appear to be a negative one. 131 All of the policy variables would be expected to have positive signs. An increase in the number for one variable (i.e. more positive changes) would suggest a reduction in FDI restraints and more receptivity to foreign investment. It would be expected that higher FDI levels would be associated with such increases. Similarly, POSPOL would be expected to have a positive relationship with FDI levels, while the opposite should hold for NEGPOL . 6). R e g r e s s i o n R e s u l t s A ) . V a r i a b l e C o r r e l a t i o n s A correlation matrix for the main model was first constructed for all of the independent variables and the three versions of the dependent variable of NFDI. The correlations are presented in Table 1 of Appendix 5. Several observations can be made from an examination of this data. In the main model, G N P P C (0.5), GDP (0.5) and OP(EX) (0.35) have a strong positive correlation with NFDI, with the correlation between URBPOP and NFDI being weaker (0.28). OP(EX) is particularly strongly correlated with NFDI PC (0.72) which implies a significant contribution by export activity to attracting FDI to host countries where there is a pronounced export-orientation. COST has an extremely weak correlation with NFDi (0.002), but is positively correlated with G N P P C , URBPOP and OP(EX), possibly suggesting that as economic development progresses and incomes rise the cost of business operations rise as well. OP(EX) is strongly correlated with G N P P C and URBPOP , but has an unanticipated negative correlation with GDP (-0.1). Overall, in the twenty-year model, the general macro-economic variables appear to have 132 stronger relationships with foreign direct investment levels than the specific policy variables. In the three period model, the correlations between NFDI and the variables G N P P C (0.6), GDP (0.4), OP(EX) (0.4), and URBPOP (0.26) are of similar magnitude to the main model results. Significantly, in the three-period model, OP(EX) is strongly correlated positively with NFDI/GDP (0.6) and NFDIPC (0.7), and less strongly correlated with GROWTH (0.2). The data seems to suggest that export-led economic activity has been an important factor in the growth of FDI as a proportion of a host country's overall economic activity. In the main model, the policy variables share weak correlations with NFDI (from -0.005 to 0.04) and the direction of the relationships often vary. POSPOL and NEGPOL are negative with all three dependent variables. POSPOL is mostly strongly correlated with A P P R O V E (0.6) and OWN (0.3) which probably results from the frequency of changes to FDI approval processes and foreign ownership limits among the positive changes undertaken by host countries. The variable EPZ has a stronger positive correlation with GDP (0.11), but generally, the correlations between the policy variables and the macro-economic variables, and between the policy variables and NFDI, are weak. Interestingly, POSPOL and NEGPOL share a positive correlation of 0.29. Although this may seem initially confusing, such an outcome is consistent with the manner in which FDI policies have been changed in many developing countries. As the timeline in Appendix 1 indicates, FDI policy reforms have often included both positive 133 and negative provisions with some restrictions usually being imposed or maintained by host countries; complete liberalization has been rare. Presumably, a host country may feel that certain FDI restrictions will be more palatable to foreign investors if accompanied by a host of "positive" changes; hence, the slight positive correlation between positive and negative policy changes. The three-period model reveals a much stronger correlation between FDI policy variables and NFDI. All of the correlations are positive as anticipated, the strongest one being between EPZ and NFDI (0.35). Correlations between NFDI and the variables OWN (0.3), W O R K (0.25), SUPPLY (0.2), FOREX (0.3), and A P P R O V E (0.12) are all stronger than the corresponding ones in the main model. This result would seem to suggest that when looked at over time, liberal FDI policies (i.e. higher positive values) seem to be associated with higher FDI levels in host countries. This would be consistent with the general trend towards FDI policy liberalization in the 1980s noted earlier in the literature. P O S P O L and NEGPOL, however, have negative signs and weak correlations with NFDI. In regards to the regional dummy variables in the main model, DASIA was positively correlated with GDP (0.2), OP(EX) (0.4), NFDI (0.14), NFDIPC (0.19), and EPZ (0.11). DAFRICA was strongly negatively correlated with G N P P C (-0.22), GDP (-0.35), U R B P O P (-0.36), and NFDI (-0.24), while DLAMER was most strongly correlated with G N P P C (0.15), GDP (0.16), and URBPOP (0.59), with a weaker correlation with NFDI (0.11) and negative correlations with NFDI/GDP (-0.15) and NFDIPC (-0.1). Interestingly, DLAMER was quite negatively correlated with OP(EX) (-0.25) which is perhaps reflective of the region's traditional focus upon its domestic markets. 134 Similarly in the three-period model, DASIA was positively correlated with NFDI (0.18) and NFDIPC (0.19), with DAFRICA having negative correlations with both dependent variables (-0.26 and -0.12, respectively). DLAMER had a weaker positive correlation with NFDI (0.08) and a negative relationship with NFDIPC (-0.08). B ) . M u l t i p l e R e g r e s s i o n A n a l y s i s a n d R e s u l t s Multiple regression analysis was conducted in the following manner. A regression of each of the three dependent variables (InNFDI, NFDI/GDP, and NFDIPC) with the variables for locational attributes was first run. Regional dummies for Africa, Asia and Latin America were then added, followed by POSPOL and NEGPOL . Finally, POSPOL and NEGPOL were removed from the model and replaced with the specific policy variables. Results using NFDI/GDP were considered to be less useful and were consequently omitted for the sake of brevity. They are, however, available from the author and are summarized below. Regressions for the remaining two dependent variables are shown in models 1 and 5 of Appendix 6. The same procedure was carried out after including lagged versions of the dependent variables (L-lnNFDI and L-NFDIPC) in regression models 9 and 13. A possible problem with multicollinearity was observed with three of the independent variables which were strongly correlated with each other (GNPPC, URBPOP and OP(EX)). To remove any possible distortions that multicollinearity could cause, each of these three variables in turn was removed and the regression run again. This was done in regression models 2-4 (for InNFDI), 6-8 (for NFDIPC), 10-12 (for InNFDI in the lagged model) and 14-16 (for NFDIPC in the lagged model). 135 Finally, year-to-year changes in the dependent variables (DlnNFDI and DNFDIPC) were regressed on the locational attributes and policy variables. The results are shown in regression model 17. Overall, these dependent variables were very poor predictors of FDI variation. Consequently, only brief results are provided. The same procedure was followed for the three-period model, except that regressions using lagged variables or differences were not used. The regressions using InNFDI and NFDIPC are shown in models 1 and 5 respectively of Appendix 7. The regressions to control for multicollinearity are models 2-4 (for InNFDI) and 6-8 (for NFDIPC). Detailed results are shown in Appendices 6 (main model) and 7 (three-period model). Overall results are discussed below and several conclusions can be drawn. 1. Dependent Variable (NFDI/GDP): The initial regression using NFDI/GDP as the dependent variable resulted in only OP(EX) being positive and significant. DASIA was also significant (0.006) but had a negative coefficient. From among the specific policy variables, only W O R K (local employee hiring requirements) was significant (0.01) but with a small coefficient of 0.008. In the tests for multicollinearity, OWN and W O R K were consistently significant, but with very small coefficients. The regional dummies were all significant except DLAMER, which was not significant with OP(EX). COST also tended to be positive and significant. The R 2 results ranged from 0.05 to 0.27. In the three-period model, however, overall results were substantially better with an R 2 value of 0.8 in the basic regression. 136 OP(EX) was positive and significant, while DASIA was negative and significant, a finding consistent with the other regressions. In the tests for multicollinearity, DLAMER was negative and significant with GNPPC , while DASIA was positive and significant, another result that is consistent with those from the other tests. A similar result occurred for URBPOP , with no general or specific policy categories being significant. R 2 values ranged from 0.15 to 0.44. With OP(EX) as well, neither policy category was significant, but the R 2 values ranged much higher (0.75 to 0.79), indicating that OP(EX) performs as a significant explanatory variable for the variation in net FDI levels. This observation can be made for all of the regressions of all three dependent variables in both the main and three-period models. This similarity in results suggests that the regressions using NFDI/GDP are picking up the same patterns as the other regressions and can be considered fairly robust. 2 . Locational Attributes: Most evidently, the variables for the locational attributes were found to have the greatest influence upon variations in the dependent variables. Such a result is consistent with findings obtained by the UNCTC study 1 4 4 , and with the general consensus in the literature as to the importance of locational factors as being the prime determinants of the direction of FDI flows. Particularly, InGDP and OP(EX) were often significant, with OP(EX) being statistically significant in virtually all of the models and often having a large and positive coefficient. It had a T value as high as 22.97 in the model using NFDIPC as the dependent variable, and and the regressions in which it was used usually had a lower root mean square error result. The prominence of OP(EX) is not surprising given the emphasis placed upon export promotion in the FDI policies of most developing countries. However, running OP(EX) separately from Ibid., p. 55. 137 InGNPPC and URBPOP appeared to make the coefficients for DASIA and DAFRICA negative and that for DLAMER positive. This unanticipated sign for DASIA (given its strong correlation with OP(EX)) may be due to historical patterns in the flows of FDI from source economies, primarily in the industrialized world. Latin America is closely located to the United States and is somewhat closer to Europe than Asia. The U.S. and Europe have traditionally accounted for the bulk of FDI to Latin America for several decades, while Japan became a significant investor in Asia mainly in the 1980s. The manner in which OP(EX) is calculated does not appear to endanger the validity of this conclusion. Even though the variable measures only exports as a percentage of GDP and does not include imports (which are usually most directly affected by FDI policy changes), earlier research by the author involved calculating a similar openness variable using only imports as a percentage of GDP. Both imports as a percentage of GDP and exports as a percentage of GDP were found to be highly correlated. This would most likely be due to the tendency for most countries to have roughly balanced trade flows. Therefore, the exclusion of imports from the OP(EX) variable in the paper does not weaken the results that can be drawn. However, it does affect the interpretation. It is possible that export orientation is not the most important consideration for an investor, but rather the ability to import intermediate inputs. When GNPPC, URBPOP and OP(EX) were run individually in the models, they were found to be positive and significant in several instances. DASIA, in particular, often changed sign from negative to positive when URBPOP or GNPPC alone were included in the model and the other two variables excluded. Net FDI levels seem to be positively affected by the presence of growing urban centres and rising income in the Asian 138 region. The initially surprising result that URBPOP is negative (in Model 1) may therefore be due in part to the masking of URBPOP's effect by the other two independent variables. Given the correlation between GNPPC, OP(EX) and URBPOP, it seems that the significant effect of the first two variables were weakening the independent significant effect of the URBPOP variable. Running the variables separately indicates that all three may be significant locational attributes. Similarly, COST often became significant and positive when either URBPOP or GNPPC alone were included in the model, as occurred in models 6-8 for example. This change in COST may result from the fact that as host country's urban centres and consumer purchasing power expand, general living and business costs tend to rise as well. This rise in costs may be accompanied by positive FDI inflows as investors interested in the domestic market begin to view the country as a more viable place to do business. This increase in business operating costs has been one factor behind the mobility of a large part of FDI that is more export-oriented. As a host country's wage rate rises, labour-intensive industries, such as textiles and footwear, tend to migrate to lower-cost alternative locations. China, Korea and Taiwan, for example, all began industrialization from such a labour-intensive base. Even more value-added industries such as ship-building, which has migrated first from Japan to Korea, and now increasingly from Korea to China and Malaysia, have been affected by cost considerations. This would suggest a positive relationship between export-growth and business costs as, is indicated in the data. 139 3 . The role of COST: The effect of COST may, therefore, not be as clearly negative as initially hypothesized. Although rising land and labour costs may increase business operating costs, such rising land and labour costs may be a result of increased FDI activity in a host country rather than a condition prior to the arrival of FDI. The agglomeration effects discussed earlier in the paper may be the stimulus to such rising costs as foreign investors compete for favourable locations near previous investors. Costs could thus be positively, rather than negatively, related to FDI. The slight positive correlation between NFDI and COST suggests that this may be the case. Over the longer term, however, COST appears to become more negative in relation to NFDI. In the lagged regression models of the dependent variables, for example, COST'S sign was almost always negative. If labour-intensive FDI is considered, this is not surprising; over time, such FDI would be deterred by high or rising business costs. 4 . Variable Lagging: This time factor appears to be an important one. Using InNFDI as the dependent and lagging the independent variables by one year produced a model with an R2 of 0.8, with L-lnGDP, L-OP(EX) and L-lnNFDI all being significant. This may suggest that host countries with favourable locational attributes initially receive FDI and continue to be the recipients of future foreign capital inflows. This would be consistent with the manner in which FDI outflows have become concentrated over the last two decades, as described earlier in the paper; economies that had an initial locational advantage have possibly maintained those advantages and simply attracted further and further large amounts of FDI. The large presence of foreign investment serves as an indicator for other investors who invest in those economies as well, thereby further perpetuating the cycle. 140 FDI in certain types of industries may be conducive to such a self-reinforcing pattern in FDI flows. The Japanese automobile industry, for example, places tremendous importance upon the smooth flow of automotive parts between suppliers and vehicle assemblers through the "just-in-time" (JIT) system of production. In order to facilitate JIT delivery of parts, suppliers have been compelled to locate overseas within Asian markets in order to service Japanese or joint-venture assembly plants. An initial investment in an automobile assembly site would therefore be expected to lead to further inflows of investment as suppliers and other related businesses follow suit. However, the results from the lagged models may be due to other factors. FDI can, and often is, carried out over a number of years and may also be followed by additional "up-grade" investment. This may account for continued FDI flows to economies that initially began receiving large amounts of FDI. Alternatively, there may be no such causal relationship. The lagged dependent variable in the model may be picking up unobserved economic or policy attributes that are not captured by the independent variables. Individual countries may have unobserved effects such as the overall policy environment, or some other omitted variable that the model does not pick up adequately. These unobserved effects would possibly explain some characteristics of FDI such as the tendency for liberal economies to receive FDI even without undertaking FDI policy changes. Since they are unobserved, however, the lagged model may incorrectly suggest that prior investment is the only key factor in determining the location of FDI. Readers must therefore interpret the results with caution. 5 . Policy Variables: As in the UNCTC study, the addition of the regional dummies and the various policy variables was found not to lead to a significant increase in the R2 results for the main model. The general indication is that the policy variables 141 are poor predictors of net FDI levels in a country. WORK was significant for the model using NFDI/GDP as the dependent, while L-OWN was significant for the lagged model using NFDIPC as the dependent. OWN was sometimes significant when controlling for multicollinearity, probably due to the large number of policy changes that fall under the OWN category. Generally, however, the policy variables were not significant and often had an unexpected negative sign. The one model in which policy variables seem to have a pronounced effect is the three-period model using InNFDI as the dependent. Addition of POSPOL and NEGPOL increases the R2 value from 0.65 to 0.72, although neither of the two variables has its anticipated sign. When the specific policy variables are added, OWN, FOREX, APPROVE and EPZ become significant (although APPROVE and EPZ are negative) with the R2 value rising further to 0.79. Similar results occurred even after controlling for multicollinearity, with an even larger increase, in some instances, in the R2 value after the specific FDI policy variables were added. This would tend to somewhat confirm the observation that, over time, liberalized FDI policies have assisted countries in attracting foreign capital, although this generalization may be difficult to apply to all the policy variables. Developing countries have reformed their FDI frameworks and removed restrictions in several areas but FDI inflows have not materialized, or have in fact been reduced which may account for the negative sign of some of the policy variables. This would imply that the key to drawing and keeping FDI lies in the importance of sound macro-economic factors, as suggested by other studies145. A similar result noted by the UNCTC study, p. 55. 142 Overall, policies can be viewed as having one of three results in the models; they can have no effect; they can have an effect but this may be difficult to interpret due to the way in which FDI is measured, or as the result of some other statistical error; or they may have a very weak effect since the policy variables themselves may not be measured correctly. The first outcome can be ruled out in the context of this paper since policies do seem to have some effect, especially when viewed from three separate periods, rather than by looking at a year-to-year progression. This would suggest that over time FDI policies do have a noticeable effect on the level of FDI in a host country. The other two possible outcomes are relevant to this paper due to the issues raised earlier in the methodological section and elsewhere. Specifically, in regards to the way in which policies are measured, a legitimate issue that seems to be raised by the three-period model is the question of the importance of changes in FDI policies vis-a-vis the importance of states of FDI policies at a given time. The improved performance of the policy variables in the three-period model would seem to suggest that variations in FDI are more strongly influenced by the state of FDI policies in a particular category (liberal or restricted) rather than by the number of changes made under each policy category. In the main model, as a result of factors such as the unmeasured relative importance of different policy changes, the year-to-year changes in FDI policies in this paper may not provide adequate precision in order for their effect to be assessed. Policy states, however, are related to changes in policies; therefore the main model and the three-period model should not be viewed as separate but as interrelated. The main model attempts to explain variations in net FDI based upon year-to-year changes in policies. Such an approach would be effective if every economy began the 143 period from 1970-1990 with the same initial set of policies. However, some economies, such as Hong Kong and Singapore, began the period with more liberal FDI policies than the other economies in the sample and hence recorded fewer policy changes than the more restrictive economies. In this instance, the number of changes in a particular year would not adequately reflect the state of FDI policies in that year. Additionally, policy changes for one, two or three years may not be considerable when viewed from year to year, but when examined over a longer period (i.e. a decade) their collective significance may be greater. In the three-period model, this problem is dealt with by explaining variations in FDI based upon the state (liberal or restricted) of an economy's FDI policies at a specific point; 1970, 1980, and 1990. The model tracks policy states rather than the absolute number of changes and provides a common base from which to compare economies. However, the changes in policy states are a consequence of policy changes that an economy undertook between 1970 and 1980, or between 1980 and 1990; hence the connection between the main model and the three-period model. The main model provides an indication of the number and type of policy changes between these years and the areas in which they occurred. The state of each policy was determined from this information. Thus, policy states in a particular year in the three-period model in this paper are seen as a culmination of policy changes that occurred up to that specific year in question. Considering the economies in the data set, this dual approach seems warranted. Apart from Hong Kong and Singapore, developing countries as a whole very rarely began from a liberal investment position. Instead, independence was frequently 144 accompanied by very nationalistic attitudes which were translated into restrictive FDI environments that were then progressively liberalized over the subsequent years. The state of policies in 1970, 1980 and 1990, as shown in the three-period data set, reflect this evolution. Even with Hong Kong and Singapore removed from the sample, the regression results do not appear to be significantly affected. URBPOP was not significant in the models as a result of the absence of these two densely-populated areas. C O S T was also not significant, and DASIA was both negative and not significant, probably as a result of the removal of the large FDI inflows to the two economies which are among the largest recipients of FDI in Asia Pacific. The other variables were virtually unaffected, and the R 2 and mean square error values were very similar to the results obtained when both Hong Kong and Singapore were included in the regressions in the main and three-period models. Using policy changes, therefore, does not appear to create any immediate difficulties, assuming that the policies have been measured correctly. The results of the regressions with the two models indicate that investors may be more interested in the eventual policy state that FDI policy changes are designed to create than in the actual number of changes themselves, although exceptions to this can clearly be expected. The results of the three-period model suggest that, contrary to earlier expectations, investors may take a more long-term approach and respond over time to a series of FDI changes, although the model does not specifically address the issue of investor response rates. From one year to the next, FDI policy changes do not appear to affect variations in net FDI, but over a longer time-span and with the result that the state of a specific FDI policy category improves, reforms to FDI regulations 145 appear to have stronger influence. The importance of locational attributes, however, remains paramount in both models. 6. Differences in the Dependent Variables: Using DlnNFDI as a dependent variable does not improve the model. POSPOL is positive and both it and NEGPOL have the expected sign, but the R2 result is very poor (0.02). Almost all the independent variables are not significant. Similarly disappointing results were obtained for DNFDI/GDP and DNFDIPC as the dependent variables but were omitted from the paper for the sake of brevity. Overall, variations in year-to-year changes in net FDI are not well explained by FDI policy changes. Other factors, such as economic conditions in the investor's home country or currency fluctuations may account for these immediate changes in FDI flows. 1 4 6 CHAPTER 4 - CONCLUSION AND FUTURE EXTENSIONS OF THE RESEARCH The regression models presented here seem to strongly identify general macro-economic factors as being the primary determinants of FDI flows. Host countries with stable and attractive macro-economic conditions are not only more likely to attract FDI than other host countries, but they are also likely to continue being the recipients of further inflows of foreign capital. FDI policies in themselves do not seem to impact greatly upon the variation in FDI flows from year-to-year, but they do have an effect when viewed over time at different periods. Liberalized FDI climates in host countries appear to be positively associated with FDI inflows, although the effectiveness of particular policies appears to be uncertain; countries can liberalize their FDI policies yet still not experience an increase in foreign capital inflows. Therefore, the desirability of liberalizing FDI policies cannot be generalized to all developing countries - it is very much a country-specific issue. The examples given by the ten Asian economies studied here suggest that host country governments can have a direct impact upon FDI inflows through negative (restrictive) policies, but when liberalizing, host country policies are possibly overshadowed by investors' perceptions of the country's macro-economic situation and of its locational advantages (which must be conducive to the utilization of an investor's proprietary assets - "internalization" in the OLI framework). The results here suggest that these advantages, when combined with positive FDI policies, can serve to attract FDI and continue to stimulate foreign investment in the host country (i.e. agglomeration effects). 147 Other factors have not been included in this paper but could also conceivably influence FDI levels. Political conditions in a country can have an impact, as has been referred to in the country studies. However, including a specific variable for political conditions (i.e. an index rating) may make the extent of the relationship between FDI and political conditions in a host country more apparent. A measurement for political risk may be useful to add in a future examination of this issue. Similarly, external economic conditions may affect FDI flows. Currency realignments, economic recessions or commodity price fluctuations may or may not be significant. Creating dummy variables to indicate the existence of these conditions in a given year may be one way with which to assess the impact of the external economic environment. Within the developing world, different regions demonstrate different economic conditions and approaches. Dividing the sample of developing countries in this paper into industrializing and non-industrializing entries, or into newly industrializing economies (NIEs) and non-NIE categories may demonstrate any particular pattern in the nature of regional FDI policies and in the flow of FDI between regions. More difficult to overcome is the classification of FDI policies. It may perhaps be useful for further research to focus upon a particular industry area within which a weighting of FDI policies may be obtainable. This could be done through surveys or interviews with business organizations representing members of an industry. 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U S Dept. of Commerce National Trade Databank ( N T D B ) C D - R O M . St. Louis: University of Missouri . Wade, Robert. (1990). "Industrial Policy in East Asia: Does It Lead or Follow the Market?". In Gary Gereffi and Donald L . Wyman, eds., Manufacturing Miracles: Paths of Industrialization in Latin America and East Asia. Princeton: Princeton University Press. Wakasugi, Ryuhei. (June/July, 1993). "Is Foreign Direct Investment in Japan Small?". Journal of Japanese Trade and Industry 3: 40-41. Wallace, Cynthia Day. (1990). "Foreign Direct Investment In The Third World: U .S . Corporations and Government Policy". In Cynthia Day Wallace, ed., Foreign Direct Investment In The 1990s: A New Climate In The Third World. :Martinus Nighoff Publishers. Wheeler, David , and M o d y , Ashoka. (1992). "International investment location decisions". Journal of International Economics 33: 57-76. W o r l d Bank. (1994). East Asia's Trade and Investment: Regional and Global Gains from Liberalization. Washington, D . C : Wor ld Bank. . (1994). World Debt Tables: External Finance for Developing Countries 1994-95. Washington, D . C : W o r l d Bank. . (1995). World Tables. Baltimore: John Hopkins University Press. 155 o o O) C O Q ) E "cn 0) or c o o >< Q LU CL Q. < o •g CO o CQ O m e-a> c cu T3 CD N T 3 C CO LU s CO e-a) CD > o N CD CL CO II . N " LU I co CD" E c o o c N O g>LU •<a s tn CD 9>, Z u> II. 1= O X c CO CI) O) c CO .c O 2 a. •c o Q. X LU II N Q . LU i/>| i t ^ § b i -no £ E s 5 .<2 F E 3 'c « 8 S O J O « . S1 S f E co i-P 3 w INI S c O I j Q . qj cd LU cd LL) o 2 N 0) CO LO -& 5 I C LL. O ID c = E 'co _ t a. "D M x a> a" • « ai UJ 1 x 2 £ S >> x 0) ^ UJ ( c co c cu a, ° K CD — ! ° 1 8 S S- g 8 ° £ u •b" <° E 2 1983 Regulations on Joint Ventures Using Chinese and Foreign Investment; additional regulations set limits for foreign financial institutions and overseas Chinese businesses. 1982 100% FDI allowed in "encouraged" industries; up to 50% ownership allowed in 85 other areas; MOF approval not needed for remittance of profits/capital repatriation, but local bank approval is needed Regulations on Exploitation of Offshore Petroleum Resources requires foreign firms to contract with State oil company, transfer technology, and train Chinese personnel. 1981 Entry of new domestic and foreign banks allowed; investment approval responsibility shifted to MOF. Provisional Regulations for Foreign Exchange Control - requires all foreign exchange to be conducted through a central ministerial body; all loans and other borrowings must also be reported. 1980 Foreign Exchange and Foreign Trade Control Law replaces Foreign Investment Law; only prior notification to MOF and relevant Ministry(ies) required; 100% foreign ownership allowed in most areas; no foreign exchange controls; foreign banks allowed in. Minimum FDI requirement lowered to US$100,000; Economic Planning Board given jurisdiction over FDI under US$10 million; Foreign Review Board approves larger amounts; foreign participation rules relaxed and some previously closed sectors opened. Regulations for Control of Resident Offices of Foreign Enterprises in China - allows foreign branch offices; tax legislation provides for tax holidays and rebates; 4 SEZs (Shenzhen, Xiamen, Shantou, & Zhuhai) created. 1979 Foreign Investment Law repealed Minimum FDI investment raised to US$500,000 from US$200,000; limits on foreign currency lending and borrowing lifted. Law on Joint Ventures Chinese and Foreign Investment; various central and local bodies involved in approval; JVs preferred form of FDI; foreign investor must have at least a 25% share; local employee training expected;4 SEZs created 1978 Foreign insurance companies allowed to set up branches 1977 / a / c / o f o Japan S. Korea PRC Taiwan 1990 FDI in cosmetics, wholesaling and information sectors allowed Statute for Promotion of Industrial Upgrading; investment incentives apply to both foreigners and locals; approval procedures relaxed for entry by foreign bank branches and offices; limits on FDI in some service sectors lifted. 1989 Foreign capital allowed in automobile and construction machinery sectors; performance requirements abolished Indirect investment in the PRC permitted; prior approval for inward FDI up to $1 million no longer required; foreign exchange liberalization; entry procedures for foreign financial firms eased. 1988 Limited approval for investment in trade, advertising, life insurance and partial wholesaling; fiscal incentives for foreign firms exporting 50%+ ended; Hainan SEZ created; contractual JVs permitted; economic adjustment program halts all new large and medium-sized FDI projects; on-going FDI agreements delayed or suspended; regulations clarifying issues concerning contractual joint ventures passed FDI by foreign securities firms allowed; negative list for inward FDI first drawn up; foreigners allowed to set up investment holding companies with some restrictions. 1987 Regulations governing wholly-owned FDI introduced; legal status of JVs clarified and steps taken to greater openness in FDI climate; no minimum investment, 100% ownership allowed; foreign exchange access eased; greater autonomy to businesses Many restrictions on repatriation of profits and capital removed; foreign exchange no longer required to be given to Central Bank automatically. 1986 1985 Telecommunications market opened to new domestic and foreign investors; Plaza Agreement arranges US dollar depreciation 1984 Limits on FDI in 11 strategic firms removed Foreign Control and Investment Law modified to open more areas to FDI and ease approval requirements; negative list produced; major tax incentives aimed only at "high-priority" sectors; limits on repatriation of capital and of dividends ended. 14 "open cities" designated 1 / / a / § / o Japan S. Korea PRC Taiwan 3 % 0 O — t Is 11 | s " C O Z P TJ I S J 5? E » S -. 5 j : ™ | o Q. £ I - o a •» ° 2 c ° c a> g •b" j j g g l a s i 5 £ ^ co LO (D ni - «> i s S < 2 o — c EC o 2 s I H LU I 8 o. o. co Q- xi a> J3 CD 1 TJ TJ 5 S i s a l ? 111 ' * i f S ^ S E 2 P Ol ! - - S 2 o « L J S= O CD £ L L £ i i l l _ "o E Q £ o LL T J .« s So V g a .2. I I CO CD to SC E e • 0 . -K c: m w » S) 3 3 O (D J J O O CD IS I I ) C i t ifl > C TJ C « : •= 0) TO 0> : c o - o : 0) .- — [ ^ a Q. w i S" » f E J TJ c g « = i = 7 . F si J o o , .E Z c S _ W 0 ) t Q ~ > L L eg S 3 E < x " E H ~ CD CD J= I S * 0) O CD CL £ £ E E o " . E E 2 0J E LO 5 N c c CD O CO CD CO Si 9- c O CO o , . 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C CO CD CO -O > (fl tB C IS« LU ra £ : (3 CD 5. 1 w F x ' _ * -S ffi | « c o > ~ £ s LL O i= S c 2 T J « ra a °. E I s ? co LU co CD £ O F -n " C .. i o » - s s o cr oi -9 ~ 0) = • a E .B s T J ^- tn oj tr => 2 5 P ra « .E ra a> 2 c -o g co S -° < o> 8 p T J .9 >. LU '5 g 5. ° ra g CO 2 2 g O c E < £ B a i 5 a E 3 ' ra o S E LL q) U Z N c 5 .a 2 « 5 f 8 45 ° in o ra E .9- o c </> c 9 2 E | S E to « -2 8 I Q..2 ra 5-1 § H I | CL S ra to — ra LL .E 1 O f= CL 2 ° c i t a S,-9- ra 2> ra r; "> E o c . . •*-(ft Q. S? g 2 o •= <ft o £ • 0) c ra « 5 i 3 m j 5^ ra ra .9 „ O c CT T J c 'ra 2 o cl CO CJ c W CO CD 1990 1989 Deregulation package introduced, including deregulation of investment licensing; negative list produced outlining areas closed to FDI 1988 Permitted foreign ownership in media and telecommunications reduced from 75% to 49% Foreign securities houses r\farmiHaH trt r\\Air\ rrn tr\ 49% in domestic securities firms Deregulation package introduced; foreign banks allowed to enter JVs bank branches allowed 1987 Capital equipment imports allowed in tax and duty-free. 1986 Promotion of Investments Act grants tax incentives to pioneer and export industries; performance requirements eased concerning hiring, ownership etc Foreign financial firms limited to 49% ownership in domestic brokerages Firms that export 85% of production allowed to invest In almost all areas; reform and deregulation measures begun; exporters allowed to import material directly Foreign firms allowed to establish non-trading commercial representative offices. 1985 Corporate tax reductions and other fiscal incentives granted. Investment Co-ordinating Board created; investment approval procedures simplified. 1984 Special tax incentives ended. Year Philippines Hong Kong Malaysia Singapore Indonesia Thailand Africa Benin co CD lUSt C E o "O to CD srooi stic pris amt ime CD o TJ n ent Ul SS OJ j= UJ & CO OJ sine — TJ 2 sine B 'to JD o LL 3 JD cu 3 tO • - £ ra O £ ra O '5 'S m <JTJ , £ & ra !*!•? ! 1.1 i 2 sg •& g- " E "< " — ra ^ ~ ra o •= 2, 05 ra , - .2 ra •" 2 E .a Q. 2 c « ra ^ 5 — — ra o_ p-E 2 n £ c ra £ ' - c i to S u i " ra « g ra S " I ! ra « ra <S ° .9 : 2 CD ra £ CO o E I g 2 15 $ ra 2 S E OT a -3 ra .91 ra c 'o •= £ 8 '€ T J o ~ ra • c w c c1 " ra % S E B £ S E ra & = 2 M Si £ o . T J LU E E QJ TJ CO E — -- e £ .i 0 ) "CD » "S a- c : O « g ; — o „. > c c ^ 'ra ra o c E ra ra g ra § 2 E T J ° > . = » CD io " to tr ra g = o ra o 2 D ) O o a r- E i ra • | O ! 5 " £ 5 x " T J " to o ra ra c ra 9 E . i 2 S g R | | 8 CD "6 0 £ E to OJ to . O Qj co E E o ^ .1= to CO CL $? 3 C -p U - c r CD O CD O X £ O 5j.y 2 c O CL c CD "O £ S o 1 1 1 * : tn . . O i ° I ^ ¥ J « § o o .'. 2 ra c 9 -ra ° - ra £ 'ra _ E £ § O U 1983 1982 New Investment Code; MOF acts as central agency; no ownership restrictions;capital repatriation is controlled, but entry is free; exchange activities through authorized banks only; 100% foreign ownership allowed; import permits required. New FDI legislation offers tax incentives; majority foreign ownership of JVs allowed; localization content not specified; approval process streamlined. 1981 1980 Additional controls placed upon foreign exchange transactions by foreigners other than those from the French franc zone. 1979 1978 1977 / S / § I o Cameroon Congo Cote d'lvoire Q >-o LU Gabon 1990 1989 New Investment Code replaces 1974 legislation; restrictions on 100% foreign ownership eliminated; FDI areas reduced to tourism, housing, field cultivation and land reclamation; Egyptian participation no longer required; 70-90% of workers to be Egyptians. 1988 1987 Foreign exchange reforms liberalize foreign exchange controls 1986 1985 1984 New Investment Code introduced; 3 FDI zones formed with tax & duty exemptions; prior approval generally not needed, except for priority enterprises. / 3 / 3 Cameroon Congo Cote d'lvoire CL >M LU Gabon (0 O) | | | | | ED "O '-p O Q. E •= ^ S! CO ' CO TJ Q. ™ £'5 ;g C <= 2 c ~ g) S S 2 | 2 ano . c S, - = jj H f p CD CD E Q . O = C 2 ID c.P Q TJ co o o cu 2 E S B " c 5 = • ID (J) E 2 .Q « tu" o a o S "bj ^ O O o <= o cfl — ^ CL > E «> , O CO : .fc JD • i : ill « cr ^ ^ — 5" " S o Ii « "a £ CD LL JD 2 >> c a) ID -2 S> 2 c I , * t S i § 5 > a a) -S o .£ LL | f s | ! " " a i S £ .& o E LU j 1 "S H 1" S t i s M e S ' t ) O CD O § • CQ ^ I 8 » S 2! § | I « | 8 2 2 S -> c 5 o o 9; c > ID a ^ CD ^  £ o E n 2 S Q- !2 2- ° >- a .-t' .2- — co E S 3 CO <D 175 • LU j9 co c » E S S S 2 Z Q co o c ID ^ m •E S c g S ; m <B ^ p S I » c "c to E o Q> =. ™ o > LL P- C C S 3 T J -17) (J § S io" TJ •21 5 S> CD ^ E c E S I . 0 5 0 o — • ts fo ; co t °> 1 § 1.5 0 = 2- u. : a. E .. « a " E £ ° '2 I £ 0 LU CO CD O . 0 I E a. Q E .5 &<5 1^ 1 cd ±1 < to to tp • - - i ^ i » 1 a 8 8 43 is M l e » « s is ? t i l g-s.il : c i ra c ! .2 ? ; ^ 2 CO T>~ c Q. OJ CT £ 3 g - . 5 . o ID «s S I " 5 • o « co "*r O = *° > e • TJ c g ra S 1 E : cn ra •2 £ » •§ .£ o J= •° S 2 S E E — O = O £z u. TJ to ° m e n •JJ O (D Q) '(O t J- CO CO ' o o « -c 0 5 II co TJ 1 3 CT .— t * 3 3 O Z ia £ E E-2 S 3 C o ™ ~ o o £ .9 CO CO O CD E TJ r: TJ .<2 Q. to C D . -I s * i 8 £ z 2 ~ (0 S S = C D O O 1990 Companies and Allied Matters Decree requires foreign firms to incorporate locally in order to do business. 1989 Ban on imports of luxury goods and of goods similar to ones produced in Morocco lifted. 1988 1987 1986 Foreign exchange auction system introduced tor export and import licenses 1985 New investment code; central agency screens and promotes investment; minimum foreign capital requirement; extensive negative list; maximum foreign ownership of 60% in insurance and 40% in banking; free currency repatriation. 1984 Petroleum Law requires agreements for oil industry activities with state oil firm Ghana Mauritania Mauritius Morocco Niger Nigeria 1976 Non-resident enterprises allowed financing through creation of "off-shore" banking system Foreign Investment Law grants foreign and domestic investors equal rights and obligations; 3 categories of FDI created, two needing approval from Pres. or various ministries; some closed sectors opened to FDI; local credit restricted to foreign firms 1975 1974 1973 Investments Commission and the Investment Promotion Agency created to screen FDi. Foreign Exchange Regulation Act regulates all financial activity by foreigners; requires that foreign branches be converted into Indian companies; maximum 40% foreign equity; licensing policy allows foreign expansion in 19 areas; Indianization of firms. 1972 Duty-free zone regime created Progressive inclusion of locals in management required; foreign firms subject to local borrowing ceilings 1971 1970 Investment Code (1969) makes no distinction as to investor's nationality; all areas open to Tunisians are open to foreigners; no general ownership limits, but Tunisian control preferred Industries (Development and Regulation) Act (1951) requires licensing for investments above a certain amount; firms with 40% or more foreign share also require licenses when investing in areas open to FDI; central screening agency in place / & / o / o Tunisia India Pakistan Sri Lanka \L. America I Argentina 1983 1982 Duties and turnover taxes suspension allowed on equipment not produced in Tunisia; turnover tax is also lifted on domestically-produced equipment Liberalized import policy introduced; import controls removed on 85 machinery items, 100 raw materials items, and 97 other items; import licensing regulations not applied to 100% export-oriented enterprises 1981 Tax incentives offered to firms that export part of their production. 1980 Industrial Policy Statement grants additional facilities to FDI in priority sectors, including oil exploration and development; many EPZ incentives granted to exporting enterprises nation-wide (2 EPZs in place). Guidelines for the sale of state-owned firms introduced 1979 Export Development Act provides for tax incentives and no exchange controls for exporters; 2 EPZs established Mining Promotion Law -fiscal incentives, tariff exemptions granted to investors in this sector. 1978 Greater Colombo Economic Commission Law designed to encourage FDI; Economic Commission is the only approval body; 100% foreign ownership allowed in priority areas, 49% outside; local personnel training required; few foreign exchange controls. Contracted firms must bear all financial risks and technical costs in exploring natural resource sector. 1977 Statement of Industrial Policy allows complete freedom to repatriate capital, profits and earnings if done through central bank; only profit transfer by foreign banks require approval Industrial Promotion Law provides incentives for FDI in regional or industrial areas. / £ / c / o Tunisia India Pakistan Sri Lanka L. America Argentina 1990 1989 100% foreign ownership, or branch operations, in service sector allowed Prior investment approval no longer required 1988 Non-Tunisian firms allowed to be involved in promotion and sale of Tunisian goods; repatriation of invested capital and profits guaranteed. 1987 Industrial Investment Code brought in; approval for FDI in export and most other manufacturing no longer required 1986 1985 Incentives created for businesses to employ Tunisians; 6 export processing zones based on major ports;free importation of goods for manufacturing industries; tax incentives offered for solely exporting firms. 1984 Majority of capital of export companies must be Tunisian controlled; tax holidays and duty exemptions possible for exporters. 1/ / s / c / o Tunisia India Pakistan Sri Lanka L. America \ Argentina 1976 All iron and manganese deposits reserved for the State. 50% of maritime transport of import/export products reserved for Chileans 1975 Foreign insurance firms which promote investment in "productive areas" allowed. State oil corporation no longer given exclusive right over oil exploration; private exploration allowed in partnership with state-owned firm. New investments in banking and finance are restricted; existing foreign banks required to divest to 51% ilocal equity by 1978. Renewed FDI in mining for foreign firms subject to a reduction in foreign equity from 34-49% to 25-40%. 1974 Mandatory reinvestment of 50% of profits required for enterprises. Foreign Investment Statute; one central approval body; capital and profit repatriation free;no divestment policy. 1973 Uniform Code on Foreign Investment; Foreign firms that wish to benefit from the Andean Common Market must divest to Colombian control. Promotion of Mexican Investment and Regulation of Foreign Investments outlines approval criteria and areas open to FDI; central screening agency created; 49% foreign ownership limit, subject to change; no controls on foreign exchange transfers. 1972 General Law of Hydrocarbons reserves all petroleum and gas deposit exploration and extraction to the State. 1971 Cartagena Agreement on FDI requires foreign enterprises that seek to enjoy the Andean Group's duty-free provisions to divest to minority positions; free use and convertibility of foreign exchange, but remittances monitored. Up to three agencies involved in FDI screening; minimum 15% local ownership required at start; divestment to local control for all but export industries; foreign exchange transactions done through exchange licenses and certificates. 1970 Reduction of employees at businesses prohibited; 80% of managers of "national" firms must be Bolivian; 51-80% for "mixed" firms, no limit for 100% foreign-owned firms; 85% of employees must be Bolivian; central screening agency. Major FDI legislation introduced in the 1960s; most sectors open to FDI with ownership restrictions in others; two-thirds Brazilian workforce required; all foreign capital uses to be recorded; no centralized approval process; 1 EPZ created in 1967. 2 EPZs created in 1946; two other zones later established. Previous legislation (1960) required foreign firms to register with the State and offer 30% of equity to Paraguayans; hydrocarbon and mineral development-related industries reserved to the State. II Bolivia Chile Brazil Colombia Mexico Paraguay J! .2 - 8 a 2 .g g m 8 OJ TJ ffl 5 Q. a g n 0 ) " oj o o) c ° S 2 8 i a H 1 IS £ 8 S I S 55 75 o Q . QJ E 0) o 2 0) CD £ Z ra c O < o o Q g ft1 E C TJJ SI o C ;t2 S J <D to O — _ to c J2 „ ° « o I I I E IS 2 D ca © o c ,y O TJ •^3 .2 QJ TT •= T3 P (0 C 1 0 I m 3 CD (= 31 i II E 2 ; O Q. < 1 1 -si E £ " 12 1=1 CM IN I 1990 Incentives created for the export of value-added goods using local materials and inputs. 1989 2 EPZs established to promote exports through tariff, duty and tax exemptions, as well as extra access to foreign exchange. FDI in finance and insurance liberalized New System of Incentives for Economic Development introduced to promote FDI; one main approval body; no ownership limits; no exchange controls. 1988 Coastal trade limited to Chileans, but restricted foreign participation allowed. Foreign banks allowed to start commercial banks. 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M ( 0 ' t L O l O M ) J O > O T - ( M n ' t l O l O M D C I ) 0 oo>o><j)<j>0)<j>a>0)0>0)<j)0>a><ji(j><j)a><j)aO) < o o _ i_ • 1 - 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 g to i f z • ra O „ •g j ^ m o - ^ - i - o o o o T - c M o m o m o o o - i - o o o l-uo Creation of Export Processing Zones 3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 , - O T - O O O O O T - T - 0 0 0 0 0 0 0 0 0 0 0 0 0 co 0 0 0 0 CM L O Ease of FDI Approval 3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 J C N O O O O O O O O O O T - O O O O O O O O O Foreign Exchange Controls 3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 J O O O T - O O O O O O O O O O O O O O O O O Local Hiring Requirements 3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 J o o o o o o o o o o o o o o o o o o o o o Domestic Procurement Rules 3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 T o o o o o o o o o - ^ o o o o o o o t - o o o Domestic Ownership Requirements 3 - T - 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 J O O O O O O O O O O O C M O C O O O O O O O O O T - c ^ w ^ i n ( O N c o o ) O T - w « ^ L n c D N c o o ) 0 S S N N S N N N N N C O C O O O C O C O O O C O C O C O C O Q / A Oi Oi Oi Oi Oi Oi Oi Oi Oi Oi Oi Oi Oi Oi Oi Oi Oi Oi Oi Oi Oi ^  o _ i. • O C M O O f M ' ^ - O O O C N O O O O O O O O O O O 5> </> .£> CD i f z S H 1 13 1 10 1 Creation of Export Processing Zones ^ o o o o o o o o o o o o o o o o o o o o o J O T - I - T - I - O O T - O O O O O O O O O O O O O o to CM o C O CM L O C M Ease of FDI Approval 3 o » - o o o o o o o o o o o o o o o o o o o ^ ' - O O O O O T - O O O O O O O O O O O O O O Foreign Exchange Controls ^ o o o o o o o o o o o o o o o o o o o o o " T - 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Local Hiring Requirements ^ O O O O O - I - O O O O O O O O O O O O O O O J o o o o o o o o o o o o o o o o i - o o o o Domestic Procurement Rules ^ O O O O - T - T - O O O T - O O O O O O O O O O O T O T - O O O O O O O O O O O O O O I - O O O O Domestic Ownership Requirements ^ O - I - O O T - C M O O O T - O O O O O O O O O O O J O O O O O T - O O O O O O O O O O O O T - O O o i - w n ^ i f i t D s o o Q O T - w c o ^ i n c o N c o o j o ^ I S S S S N S N N S O O C O C D O O C O C O O O I D C O C O O J < o _ i_ • O O O O O O O O O O O O O O O O T - O O O O g 01 xt a) i f z 5 + C M T - O I - 0 0 0 0 - ^ O I - O O O O I - 0 0 0 0 0 Ul N •e s>| ^ , 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 + 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 . 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 + 1 - 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 . 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 o + 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 .§ s •$ E . O O O O O O O O O O O O O O O O O O O O O + O O O 1 - O O O O O O O O O O O O O O O O O . O O O O O O O O O O O O O O O O O O O O O + 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 - 0 0 0 0 0 p O at = '5 8 a E <= o Q ' O O O O O O O O O O O O O O O O T - O O O O + i - i - O O O O O O O O i - 0 0 0 0 0 0 0 0 0 0 O - « - C \ J O T ^ l 0 C i ) i ^ C 0 r o O T - ( N C 0 ^ U ^ « 3 h - C 0 C 7 ) O Oi a O) a a a a o o> o o Oi o> o) 0 a o) a a* o> o) r r r r r r r r r r r r r r r r r r r r r v . ' O O O O L O O O O O O O C M T - O T - O O O O O O S to S3 CD is z i •S + C \ I O O I - O O O C \ J T - O O O O O O C \ I C \ I O T - C \ I O O 0) Q. = x S UJ N O c c w O V) o a u OJ o UJ £ E. ° .5* O 2 0) I i O u •.= '5 E c ; o o o o o o o o o o o o o o o o o o o o o + 0 0 0 0 0 0 0 0 - 1 - 0 0 0 0 0 0 0 0 0 0 0 0 ^ o o o o o o o o o o o o o o o o o o o o o + 0 0 0 I - 0 0 0 C \ J 0 0 0 0 0 0 0 C V 1 0 0 0 T - 0 . o o o o o o o o o o o o o o o o o o o o o + 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 . 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O O O O O O O O O O O O O O O O O O O O O + 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3 O O C 0 O O O O C N O O O O T - T - O O O O O O O + 0 0 0 0 0 0 0 X - 0 0 0 0 0 I - 0 0 0 0 I - 0 0 •Q c '8 O T - t M O ^ i n i D N c o c D O i - c M i r i ^ i n i D N o o o i o 2 o T - O O O O O O O O T - T - O O O - ^ O O O I - O O O O O O O O O O O ^ - O C V J C O T - O O O O C J O O O O O O O O ^ o o w o o o o o ^ c o w o o ^ o o i - ^ c y ^ o o o o o o o o o c j c o o o o - » - o o c x > c r j o o o o o - ^ o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O - ^ O O ' - O O O O O O O O O O O O O O •>- O O • « - O O O O O O O O O O O O O O O O O O O O O O O O O O T J - ^ O O O ^ J - O O O ^ - O O O O O O O O O O O C M O O O O O O - ^ - ' - O O C N J O O O O O O O O O O O O O O O O O O O O O O O ' - ' - O O O O O O O O O O O O O O O O O I - O O I - O T - O O - ^ O O O O O O O O O O O O O O C M O O O O O - ^ O O O O O O ^ - O O o o o o o o o o o o o o o o O O O T - o o o o o o o o o o o O C M O O O O - ^ O O O O O O O O O • ^ O O O O O O O O - ^ C 0 ' - < M O - ^ O O O - » - ^ - ^ O O O O O O O O O C M i - O O - » — o o o c o ^ o o o o o o o o m o w w c o o w i n o i s ^ o t ^ N w c o c o n i (0 0 ) ( J 1 0 N ^ O ) O t W i » i i ) W C \ I O O ( 0 ^ J | o ^ m s o i o o o i O ' t ' - i o o ) ' t o } 0 ) ( o SC O O O O O O O O O O O O M 1 3 ' - ' t O t O O C O l O ' t W i f i ' - ^ W S c o ^ o o o o o o o o o o o c \ i o d c ^ d d d d o d o d o d d i - ' i - CO i- rt T - i - T - C V J C O C O ^ t C N J O O O O O O O O O O O O ^ C N W I J J ^ L O I ^ C O C O I ^ r ^ ^ ^ O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O - ^ T - O C M o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N ^ t t D N ( D C O C O ( M > - O O i -  ^ - T - ^ V J v ; , — o o o o o o o o o o o o o o o o o — — — ^ - . ^ ^ 0 0 0 0 0 0 - . - . — — -i o o I d d i o o o I d d O CO O CO N • ^ • o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o ^ r - ^ c o ^ - ^ r m s s t o r - ' i o M n N O N > - N m o w i o c o T t w c o w i x i ^ i - i n c N n i O ' t s o ' 1 W CO ' t N r - w c o i n i - o ^ - c o c o c o c o T - CM ' T- T- -i- i- CM <M CM n > - o w u j W o a ) ( D c o s ^ o i i n s o o 3 S ( 0 ' t e o o r - 0 ' t _ ~ . ~ _" _" . _" _" _" _ . [ CO CO CO CTCT)COOJC\JCMOJC\JC^JC\JC^ o o o o o o o o o o o o o o o o o o o o o o h - O) CO i— o ^-r - r - CM CM CM -d d d d d d d d d d d d d o o o o o o » - w ^ L n s c o o c \ i c o u i s c » o c \ j c o i n v B c x i c « T - c > j c o N S d d d d d d d d d d d d d d d d d d d d d d d d i s . r*. , o o o o o o o o o o o o o o o o o o o o o o o o CT>C0I^LOC^T-CDC\J^lfi(£>r^U^ c d a i d c o a D r c p N g 5 w T j - f J l C O C O L O C O S ' J O T - ^ i - W W C O l O C O C O C D N C O C n O ) i - CM CM CO • C O U ^ C D C O L O C D C N l L O L n W L O co m co CM t J r-» CM CM CM CO o o o o o o o o o o o o o o o o o o o o o N T - T * r A J C O C O N W ^ O ) O O T C O C O W ^ O l D u 1 ' -c M c o c j ^ i o c o r s - c D C M L o r ^ c o c o a j ^ c M c o ^ c n • « - T - T - T - l - T - C M C M C M C 0 ^ 1 - L O L O T - 1 - T - T - T - T - T - T" 1~ T~ W CM 0 ) 0 ) 0 1 0 1 0 ) 0 ) IZ c c c c c o o o o o o O O O O O O O O O O O O O O O O O O O O O I X E c c c C i X i X i c r t X L t t X i T t X c C t X r ^ 01 01 01 01 01 01 c c c c c c 0 0 0 0 0 0 X X I X X I O 1 - CM CO L n t D N a D O i O T - w n t ^ c D N c o o j o o T - w n r v r ^ r ^ r ^ F ^ N N N N N C O C O a i C O C O C O C O f f l f f i | NEGPOL | O O O O O O O O O O O O T - O O T - O O O O O O O O O O O O O O O O O O O O O C M O O C M T f O O O C g O O O O O O O | POSPOL | DLAMER o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o | DAFRICA o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o | DASIA | WORK | o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o - ^ - o o o o o o o o o o - ^ | EPZ O O O O O O O O O O O O O O O i - O i - O O O O O t N t M O O O O O O O O O O O O - ^ ^ t C O - ^ O O T - 0 0 0 0 0 0 0 0 0 | APPROVEi O O O O O O O O O O O O O O O C M O O O O O O O O O O T - O O O O O O O O O I - T ^ - O O O O - ^ O O O O O O O O O O | FOREX | o o o o o o o o o o o o o o o o o o - ^ - o o o o o o o o o o o o o o o o o - r - o o o o o o o o o o o o o o o o | SUPPLY| O O O O O O O O O O O O O O O O O O O O O O O O T - O O O O O O O T - O O O O ^ O O T - t - 0 0 0 - ^ - 0 0 0 0 0 0 - ^ | OWN | O O O O O O O O O O O O T - O O T J - O O O O O O O O O O C V J O C O O O O O O O O O T - O O ' - C M O O O - ^ - O O O O O O O | NFDIPC | L n c x j ^ o O ' - L n c o ' ^ c o c o a j o u ^ o o c M h - u 3 c o i ^ o o o o c o - ^ c M L o c T ) O i ^ u ^ ^ - ^ c N i o q ^ c D r ^ ^ c o o i r ^ c q c q ^ o j p p o i T - ' ( D N ^ c 6 w c o u ) i r i o S ( D ( D i r i d d C \ I C 3 U ) t D S i - O J i - C \ J W S O j { " ) ^ I I I i -r- T - T - T f t M C O C ^ C O ^ C O C D C n c O L O ' « f r C O CNJ T~ T - T- ' T— Lf) CM | NFDI/GDP • ' - - ^ - ^ • ^ ' ^ c r i C M C M C M O C M I ^ ' ^ C M O O O O O O O O o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o d d o o o c D o o o d o | NFDI | L O C M T J - W O I N O N C O ' - O O O N O O C O ( D C O ' ' - C O O O O O O O O O O O O O O O O c d r i c d c d r i c d w c o c d w o i d n c D o ) c o d r i o N L r i ^ ^ N ( o w ( D L O c 7 ) O J N O j T f m W N C O i O O N ' T C O ^ ' t C T ) CM 1 CM LO O) CM i- O O h - O T - c \ I O C O ( O C O O ) O ^ N N L n K I O O N C O ( D C T ) ( D O ) 0 ) C D i - T - c M c r > n o c o ( O c o i - C J ) c r ) ^ ( 0 1 1 T - C N * - ^- *- T - co cn LO LO T - T - T - L o c o o r r i D i n m w c o o j N c o ^ T - 1 CO CM T - 1 | COST | c ^ i ^ c o i n c M r ^ - ^ c o i ^ o c o c O ' - c ^ c o d o i d c o u i d a i c o c T J o i w © l ^ c o i ^ c o c O r ^ l ^ L O u ^ L n L n c D c o c D r ^ c ^ |OP(EX)| T - T f t o c \ i s m c \ i o o i u i ( D O ) S s t w o ( o u ) ^ o ) c o N ' - w o < o c n f f l ^ n ^ w i q w ^ c B c q N e q q c x j w q c o n |URBPOP| CJ>CT>CnCJjC7jCT)C )CnC7 )C^ d d d d d o o o d o o d o | GDP | c x i ^ s ^ s o S d a i ^ c r i e o s w ^ r - ' c D N d t r i ^ N o i w N W u o s ' c r i ^ d o S r i N W d ^ ^ r i d ^ ^ ^ d d r i ^ s 1- T-(MCMCMCOCMCOCOCO-^-LO h- T - ^ i - i - i - w w n c o n n c o n w c o c o ^ ' < t T - T - T - C M C M CM CO CO CO CM | GNPPC | o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o ^ s n c o N ^ u ) o o o s i n ( o o ) ^ o w i - i - u j T - S T - c o m c ) ; 0 3 i n ^ N r a OTCMCO^LOCM^r^OCOCr>I^CMO^C^ | COUNTRY | 0> C T )0 }C^ C n C T )0 }0 ]D )0 )0 ) t^ C T } C T ) C T > a ) COCO CO CO CO COCO CO COCO CO COCO CO CO CO CO CO CO CO v9 3 3 3 3 3 3 3 3 3 3 3 3 3 3 " « "°> " w w ' « " w " m * m w 5 5 s ' « " w " » " m " m " w o o o o o o o o o o o o o o o ^ j = - c ^ j = x : j = - C J = j = - C J = - c ^ j = - c r : ^ ^ _ c . C 2 2 2 2 2 2 2 2 2 S 2 2 2 2 2 * > 2 X I I I I I I I I I I I I I I Q _ Q . Q . a L ^ Q . L ^ Q . Q . Q . Q _ Q . Q . Q . a . Q _ Q . L ^ | YEAR | ( D i ^ r o c n o T - c M C T J ' ^ L o c o i ^ r o c ^ r ^ r ^ i ^ i ^ c o c o c o c o c j o c o 0}(^O^CT)C7)0}CT )Cr)ClT)ClT)C^ | NEGPOL| O O O O O O O O O O O O O O O O O O O O i - O O O O O O O O L O O O O O O O C M - ' - 0 * - 0 0 0 0 0 0 * - 0 ' < t O O O O | POSPOL O I - O O C N | I - O * - 0 0 0 0 y- O O O O O - ' - O O O O O C M O O ' - O O O I M T - O O O O O O C M C M O - ' - C M O O I - O O O O O | DLAMER O O O O O O O O O O O O O O O O o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o | DAFRICA | o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o | DASIA | WORK O O O O O O O i - O O O O o o o o o o o o o o o o o o o o o - ^ - o o o o o o o o o o o o o o o o o o - - o o o o 1 EPZ | o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o j o o o o o o o o o o o o o o o o o o o | APPROVE | O O O O O O O O O O O O O O O O O O O O O O O O O O O O T - O O O C M O O O O O O O C \ 1 0 0 0 * - 0 0 0 0 0 0 0 0 | FOREX O O O O O O O O O O O O o O O O O O O O O O O O O O O O O - ^ - O O O O O O O O O O O O O O O O T - ' - O O O O O SUPPLY| O O O O O O O O O O O O O O O O O O O t - O O O O O O O O O O O O O O O O o O O T - o - * - 0 0 - * - 0 0 0 0 0 0 0 0 | OWN | 0 * - 0 0 - t - t - 0 0 0 0 0 0 O O t - O O 0 0 0 - ^ 0 0 0 0 C M 0 0 0 C 0 0 0 0 0 0 0 ^ - - ^ - 0 0 0 * - 0 - o 0 0 0 0 C 0 0 0 0 0 | NFDIPC | 25.618 42.568 95.856 131.039 48.947 61.211 74.105 163.400 140.150 126.950 88.476 98.190 84.773 303.909 494.826 715.348 540.667 451.958 503.958 323.600 611.560 1011.577 1360.577 727.115 1448.556 0.706 1.158 1.681 0.123 -0.381 3.589 2.533 1.692 1.963 1.555 1.214 0.879 1.459 1.858 1.387 1.902 1.554 2.278 3.349 3.895 6.134 1.204 1.060 1.800 1.982 4.685 0.531 1.861 | NFDI/GDP T - C M ^ L f J ^ i n t r s i r j ^ C O C O W S O) r - CO C D C 0 ' f r C 0 C 0 ' a - C 0 0 0 i - o 0 0 * - 0 0 0 0 0 0 0 0 0 0 0 0 0 0 * - 0 0 0 0 T - 0 0 O O O O O O O O O O O O O O O T - O O O O O T - T - 0 - ^ - 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 d d d d d d d d c i o c i c i o o d d d d d d d d d d o d o d d d d d d d d d d o d d o o o d o o o d o d d d o | NFDI N ^ c n m o n c o c o n c n c D c y i n to T - co CD i ^ i n o O T o L O L O o o ^ - ^ j - L o c o c n c j c o - i - o o o o o o o o o o o o o - o ^ - L n c o o - r - ; C M C A S c \ i c o c D d i 6 d c o i r i ( i i c o c o c o L n ^ c n m c d d N d ^ r i o i s i f l c n u i t i r i c r i d d r i u i w w d a ) W T - i f l c o o i ' - ^ w c o m c o o co co co *r cn c o o o w c o o c n I - c o n O ' - ^ r ^ ^ ^ ^ N a ] c o l ^ l O ) r ^ l ^ - l f ) c o ^ c o o ) ^ c o ( D ^ c o o l ^ ^ S CO CO * - * - C O C \ I C \ l * - C \ l i - C O t - C O C M O C \ J C O L O l O L O C O O > CM 1 ' t C O W W W ^ T - C M W W C O W C O L O C O O • r - C M 1 - i - o T - o o C J C O ^ C O COST | C O S f f l i - N C D ' - r O i - S t - O O ^ r - ^ - O ) T- 1"- Tt- N C O C O O ) ^ C O ^ h - O L O ^ O ) 1 0 C O C O C O C D C O C O n ^ ^ ' * ^ L O C O t O I 3 ) C \ I O W ^ O ( D s ^ - r ^ d c D t D L O w d o w c c i ri N ^ ' a> o o i w c r i d ^ d o i t T ^ T t N w ^ N d c d N w c d L r i N L r i o i c d w fl^^^SNcooi-ooico o ) O ) 0 ) O ) co c x a > r o i ^ c o r o r a r o r t c o r t ^ L O L O L O C D L O ' * L O ^ ' 3 - c o c o c o i N W OP(EX) | S N C O ^ C D C n C O O i - S C D C O CD CO i - O O K T - N O C O C D ^ O C M C O O I W C \ l S C O l f l ^ T - m T - T - T r T - c o « t T ) C O T - i n c O C O O ^ C \ I C O C n o j o c y r O ' - o o ) T - s c o c o c o cn co s LO CM raoNsooW'-wwwco^ronoo^^^^^^corococo^TicviwcocO'jcoco d ^ ^ ^ c j c x i ^ o j c g c a c s i c g eg cd co co co c \ j c \ i c \ j c \ i c o c o c d c o d d d d d d d d d d d d d d d d d d d d d d d d o URBPOP| O ^ - C M C O O O O O O O O O o o o o o o o o o o o o o N f f l f f l f f i f f l m o T - T - o i w c O ' t m m c D s c o c f l O T - n f l ^ ^ i n i n i o • ^ T f ^ r ^ f q p p p q p p q p p p p p p q p q q p p q - r - ^ - r ^ - i - T - T - c N i c M c v i c v j w c M GDP | C D h - O ) C 0 C 3 ) C M O ) C \ J C \ i r ^ - C n c O C O T f N . c n CO CO S C O C M N T - i n s c O t O C M C M r - C O T r c O T - C O l o s ^ c o C O ' - O l C O l O ' - ' - ^ C v l c O N C n S ^ ^ N w ^ w w i - i r i i r i i r i i b s o i ^ pj LO" r-^cd N s d T t c r i c d c r i o i T - V N c y c r i a o t c o ^ w ^ i r i s s d L o ^ T r d S N c c i d GNPPC| o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o L O o C 0 0 5 L O O ) L 0 0 0 5 C O L O L O If) CD CO CO CO 0 0 ) N C O N O C M U ) c a O ) O W S n i I ) W C O C i l O N 0 1 C O U ) [ O n w C O ? N T - W C y S ' t ( T J C O O I T - W C O O T - ^ I J I ^ O T - « co CO * - CO CM C O L O L O C O C O O - O L O T - i - T - w w c o c o ^ c o i n i f l i f l i n i n i f l i n i f l i n u i c y w w c y c o c o ^ * - C \ I C \ I C M - » - ' - ' - - ' - C \ I C O C O C O CO Tj" LO LO CO l O S S N C O O i - O I | COUNTRY | Malaysia Malaysia Malaysia Malaysia Singapore Singapore Singapore Singapore Singapore Singapore Singapore Singapore Singapore Singapore Singapore Singapore Singapore Singapore Singapore Singapore Singapore Singapore Singapore Singapore Singapore Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Thailand Thailand Thailand Thailand Thailand Thailand Thailand | YEAR s c o o i o o i - w c o ^ n i o s c o o ) 0 * - CM co -*t i n c o s c o o i o O T - c M c o t i n c D S c o c f t O ^ w n t ' o c o s c o c f l o o i - w c o ^ m t o C O C O C O t J l N S N S S N S S S S CO CO CO C O C O C O C O C O C O C O C f t S N S S N S S S S S C O C O C O C O C O C O c a c o i D I D C n S N N N S S N c n c n c n o i c n c i i o i c n c n c n c n o i o: co cn o i O J o )cncnQcncncno)cna)cncncncncocncncncncnoicncncncncncno)cncno)cncncncncn | NEGPOL| C M O O O O * - * - O O O O O O O O O O O O O C \ J O - i - O O O O O O O O O O O O O O O O i - O O O O O C \ J O O O O O O O | POSPOL C \ I O O O O T - f - O O O O f - O O O O O O O O C \ l * - O t - T - O O O O O O O O * - O O O O O O O O O O O L 0 O O O O O C \ l O | DLAMER | DAFRICA o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o | DASIA | WORK O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O 1 EPZ O O O O O - t - O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O r - O O O O O t - O | APPROVEj • O O O O O O O O O O O O O O O O O O O O T ^ - O O O O O O O O O O O O O O O O O O O O O O O O C M O O O O O O O | FOREX o o o o o o o o o o o o o o o o o o o o - r - o o o o o o o o o o o o o o o o o o o o o o o o * - o o o o o o o | SUPPLY| o o o o o o o o o o o o o o o o o o o o o o * - o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o OWN • ^ - O O O O O O O O t - O o O O O O O O O O O J - r - O o T - O O O O O O O O O O O O O O f - O O O O O O O O O O O - o O | NFDIPC | 0 ) P i i n o c \ i i n i o N O > o i o o n \ n a ) o « ) M n o Q { D n m w i D o n n o s ^ n ( o w o o o o o o o o o o o o o o w c M ' - o c o ^ c u o ^ i ^ o o i c o ( D o i o u ) o L O L o o i r ^ r ^ o o o c o c o ^ c o ^ o o c o c n o o c \ i ^ o o o o o o o o o o o ^ ^ T - q q t q q c q ^ o j n f f l T - o i ^ ^ q n n o o n N N ' - f l N t N o i n i D t D ^ N i a o o o o o o o o o o o o o o o o o o C ^ o o ^ c o c O I ^ i ^ C O ^ C O O J o O O O O O O O O L O O D L O O l O CO CVJCM C O i - ' C O C O L O 1 NFDI/GDP i n w N i D m i n i n O ' t f f l ^ i D ^ s o o o o o o o n T n s f f l n n w o i f l o o i n n o o o o o o o o o o o o o o o o o o O O O O O O O ^ - O O O - t - O J C M O O O O O O O O O O O O O O O T - O O O o T - O O O O O O O O O O O O O O O O O O p q q q p p p q p p q q p q q q q p o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o d d d d o o d d o o d o d d d o d o d o d d o d d o ' d d d d | NFDI | o C D T t o D C a i ^ O J ' ^ - C O ' < t O C \ J C O ' ^ - O O C O L O C D O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O C V l C \ J o ' e f d f f i ^ d o D c d c d d o j o c g o L d d o T ^ c D d d O f i n m m t D ^ o i D t D m i a o i O T - T - ^ r j ^ o o o j a x D r - S T - ^ w c o 1 1- i - < y | ^ n ^ i - « T - o h n • o C M o L o i ^ o o t M O i L O ' - o O c o | COST j t D ' - ^ t o m f f i w w n o © u ) O i n s © o w ^ a ) i n f f l f f i i D « w o ) s s i n ^ m w n o o i T - s o s W ' - i n n o ) a ) N i n ^ i n n w T -c n ' o c o ' d c d c D L O ^ c r i d o ^ u i L o w t D ^ d T ^ c o d OP(EX)| ' - o i i n o i f f l N w o w t M O i o i n a x o w i f l i o u i i o f f l O ' - ^ o w o i c o N O S C N n i J i N s n c \ i i o N ( D m i n i n i o ( D ! f l ( D t o N • ^ • C O T j - t t t t - ^ - T j - T j - ^ T t ^ - L O C D C D O O O O O O O - » - - ^ - T - T - ^ - 0 0 0 » - 0 0 0 - r - 0 O O O O O O O O O O O O O O O O d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d o c i c i o o c i c i c i c i c i o c D o c i o c i URBPOP] ( D f f l N S f f l f f l m o j o O ' - T - N w i D o i o i o O T - T - w w n n n ^ t t w i i i w i D i D i D i D a j m o i o j o i o o i - T - T - N o i o t ' i ^ ^ i n 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 | GDP | a w s « T f ( d ^ T - ' m ' r i d ^ c \ i i r i ^ r i * w o i w ^ f f l ' a i f f i ^ f f l ' * ° { d D i ^ • 0 CM CO CO CO i f C O ^ l f i t D N O O C O O n W N l O m L O i n t O M O ' ^ ' - f f l O O W N ' f 1 - y- y- y- T- r T- T-GNPPC O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O C O P ) o 0 1 C O I ^ I ^ O O ^ O r ^ c O o ^ O r ^ O i n c D r ^ O r ~ C O a D a D o o C f c c \ J o L O r ^ c O o O O C O | COUNTRY | iland iland iland iland iland iland iland iland iland iland iland iland iland ntina ntina ntina ntina ntina ntina ntina ntina ntina ntina ntina ntina ntina ntina ntina ntina ntina ntina ntina ntina ntina adesh adesh adesh adesh adesh adesh adesh adesh adesh adesh adesh adesh adesh adesh adesh adesh adesh adesh | COUNTRY | H h h 1— f— H1— H f — 1—1—1—1—1— < < < < < < < < < < < < < < < < < < < < < ro ca co ro ro co ro ro ro ro ro ro ro ro co ro ro to | YEAR | r ^ r ^ r ^ r a c o c o a D c o c o c o c o c x c j j c r j c n c j j O j C J j c n c n c j j C J ) o o o o o c \ i o o o o o o o o o o o o o o o o o o c o - ^ - » — O ' ^ O ' - O O O O O O O O O O O O O O C O O O O O O O O O C O O O O O C O O O O O O O O O O O O O O O O O O O C M i - O O O t - O T - O O O O O O O O O O O O O C N J O O O O O O O O o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o - ^ • • - ' - O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O C M O O O O O O O O O O O O O O O O O O O O - « - O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O T - O O O O O O O O C \ I O O O O C M O O O O O O O O O O O O O O O O O O - » - O O O O O O O O O O O O O O O O O O O O - > - O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O T - O O T - O O O O O O O O O O O O O O O O - ^ O O O O O O O O o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o • ^ O O O O - ^ O O O O O O O O O O O O O O O O O O O ' - ^ O O i - ' - ^ O O O O O O O O O O O O O ^ - O O O O O O O O . . o t o c o o i o ^ o w c o n c o c y j s f f l o c o c o c o w c o c o N a f f i o o o ^ o i ^ c \ j r s - c o c x ) 0 ) c \ i o o j O O O C M • « - • • - •>— O O O O O - ^ ' - O O O O O O O O O O I N . O C N O U D O T -° 7 9 W ( D C O n W r - T - i - i - W r - O C O ^ W L O C O N ' - W ^ C O o o o c \ j a > c \ j r ^ ^ c r ) ^ ^ ^ c o o < \ i o O O O C M O ^ O O O O O O O O O O O O O O O O O O I ^ O O O T - C T ) O O O ^ T - C V J ^ O O O O O O O O ' - ^ ^ T - T - ^ 0 ^ 0 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ o o o c j o o o o o o o d d d d o d O O ' d d O O ' d d O O i d d O O O ' o d d ' O O O ' o d d O O O ' o d d * o o d d o o d d o o o o o o d d o o o o o o o o o C D O O i ^ O D C O l O C X ) C ^ L f i T - < X ) ^ O O O - ^ - O ^ r - ^ O C D O ' - C D O O O O CM m 1 • i - c o T r r s . c o •*-•<- co i - CM CM p co r . — _ - — — C O N ^ C D t D N C O C O i n m c o w ' - c o t o c o O L n c o t j i o i c o ^ C M C O W i f i i n c n c o T - c D N i - c o c o CO CM CM _ _ _ _" _ T - T - T - C M C M W C O C O C O C O C O r t L D 7 - i n ^ W C O C O T - N C n C M C D O O ( D C D O j C O C O C O C M C M C M C M C 0 C O C O C 0 C O C O co^iflminmLom CO CO CO CO CO t o ( i ) © T - T f r o o i N i O T f T t c o ^ ^ c o c o c o i i o w O O O ^ - ^ O O O O O O O O O O O O ^ T - O O O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 L O C O C O C O O T - C M ^ U ^ C O C O C D O T - ^ ^ T — C M C M C N J C \ J C N C \ J C N J C N J ( 7 : C O C ^ d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d T-| LO ^ | CT) O CM -r- CM CM n c O ^ i n c O N N C O O ) C M ^ O C O T - T - T - C O « 0 t D U ) C O T - i - C T O ^ N C M C M C O N r - c X C M Q C O C O O i q T~• cMCMCMwdcdcMcM ri^^^^cMcricbaiuSdcMcdd Tj" Tj" L O is-O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O C O i n S C O ^ C O f f i T - © O O O ^ C \ | C O { D C D C O L O N C T ) CM CO O t - T t i B O ) v D C O O ) C D C O L f J C O C M t W C M C M C O ^ ^ f C O C O C M W C M C O C O O n C M W O O O O O O O O O i _ » * _ > v - J U W U i - J « - < * - J W W C n O ^ C 0 C 0 ^ S O C M C 0 u 0 S C 0 ^ C 0 0 ) T - 0 ) C 0 0 ) ^ C M C \ l ^ r - T - T - C M C \ I C \ I C M C \ I C 0 ^ T t C 0 C O \ | C N | O O O O O O O O O O C O l f i O C D t O S S L O C O S C D T t L n L O N O ) T - C O ' < f C O (/) <V) (A -S -jr? c c c c c c c c c c c c c c c c c c c c c ^ S ^ S S S ^ S S B S S ^ S S ^ i S S ^ ^ ra to ni ca — — — — — — — — — M « « c c c c c c £ c c c c c c c c c c c c c c > > > | g '> '.> i ^ £ i J | g J I g ^ i l g l S l I l g f f l S o f f l f f l f f l f f l c o f f l f f l 75.T~75.CD CD CD CD CD <D CD CD CD CD CD CD CD CD CD CD CD CD CD CD < D o " o o 7 5 " o " 5 ^ 0 o 1 5 o T 5 o 7 5 ^ 5 o ^ 5 ^ ^ 0 ^ 5 ^  ™ ^  ^ ^ " S £ £ c i c c i C D m c D C Q C Q m c D C Q m m ca co ca co co ca roroooT-cMco^intDNcocno^wcoTfLoc^ C O C O m N N N N N N N N N N O D C O C O C O C O C O C O C O C O C O 0 ) C T ) C f t c n c y ) 0 > c j ) c n c r ) c » 0 ) 0 ) C J i O ) C o o > c o c ^ | NEGPOL | O O O O O O O O O O O O ^ - O O O O O ^ O O O o O O O O O O O O O O O O O O O O i - O O O O O O ^ O O O O O | POSPOL O o O O O O O O O T - O O C J O O O O O O O O O O O O O O O O O O O O O O O O T f C M O C O O O O O O - - O O O O o | DLAMER | DAFRICA | DASIA o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o | WORK O O C D O O O O O O O O O o O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o n 71 • 1 O O O O O O O O O O O O C J O O O O O O O O O O O O O O O O O O O O W O O O O O O C J O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O ^ O O O O O O O O O O T - O O O O O O O O O O O O O O O O O O o o - o o o o o o o o o T o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o O O O O O O O O O - O O O O O O O O T O O O O O O O O O O O O O O T - T - O O O O T O O O O O O O O O O O -! n • 18.759 12.729 18.638 19.953 10.570 11.726 9.344 1.279 7.704 19.430 5.082 1.584 2.462 0.254 0.485 -0.100 1.875 3.419 1.065 0.544 4.110 7.131 12.092 3.389 3.000 6.084 9.495 2.100 0.000 9.905 11.111 1.964 0.635 -8.316 -6.825 -0.111 -0.480 -54.588 4.808 -0.095 1.495 16.389 21.182 19.189 33.894 34.870 11.538 6.555 9.421 9.431 18.400 11.102 I n 0.010 0.007 0.009 0.009 0.007 0.007 0.006 0.001 0.004 0.008 0.002 0.000 0.013 0.001 0.002 0.000 0.006 0.009 0.003 0.001 0.008 0.010 0.014 0.004 0.004 0.007 0.012 0.003 0.000 0.009 0.010 0.002 0.001 -0.009 -0.006 0.000 0.000 -0.051 0.007 0.000 0.001 0.011 0.011 0.008 0.012 0.017 0.007 0.004 0.007 0.007 0.011 0.006 f q q q p q q q q q q q q q s n s B M c o s M a q ^ q q q q q ^ O u 66.4 58.1 62.9 62.0 44.6 42.3 40.9 43.8 45.6 49.5 62.9 67.1 58.2 56.8 62.0 69.7 70.6 81.5 82.2 77.8 87.9 96.7 95.8 88.1 74.0 66.8 61.2 55.0 71.5 82.0 81.1 71.3 76.0 61.7 67.4 75.2 63.2 59.6 43.7 55.2 64.6 64.2 71.3 80.3 82.9 67.2 55.5 49.3 39.2 39.3 40.7 41.9 I 0.07 0.09 0.09 0.07 0.11 0.13 0.11 0.08 0.09 0.10 0.08 0.07 0.17 0.17 0.14 0.22 0.22 0.14 0.16 0.21 0.18 0.19 0.17 0.13 0.13 0.13 0.11 0.09 0.07 0.07 0.08 0.12 0.18 0.14 0.10 0.07 0.11 0.23 0.22 0.22 0.16 0.16 0.20 0.17 0.11 0.15 0.19 0.19 0.22 0.23 0.23 0.28 • 0.65 0.66 0.67 0.68 0.69 0.70 0.71 0.72 0.73 0.74 0.74 0.75 0.20 0.22 0.23 0.24 0.26 0.27 0.28 0.29 0.30 0.31 0.31 0.32 0.33 0.34 0.35 0.36 0.37 0.38 0.39 0.39 0.40 0.75 0.76 0.77 0.77 0.78 0.78 0.79 0.80 0.80 0.81 0.81 0.82 0.82 0.82 0.83 0.83 0.84 0.84 0.84: 1 224.9 234.9 263.4 281.5 203.2 208.9 223 268.1 294.1 329.9 448.8 479.2 1.2 1.2 1.4 1.8 2.3 2.8 3.1 3.4 4.4 5.8 7.5 8.4 7.8 7.9 8 8.1 10.8 12.1 11.5 10.6 11 8.4 10.5 12.3 10.5 11 7.2 9.9 13.4 15.4 20.7 27.6 32.6 24.3 19.8 19.2 16.5 17.7 20.7 24.1 | GNPPC | l i l l l l i l i l l i s s s 88IS5§8g8S8g§Sli lSS8| l |188 |Hl | |g i |S | 1 COUNTRY 1 O O O O O O O O O O O O O O O O O O O O O 1 YEAR 1 0 ) O i - w n t w t D s a ) c 7 i o o r - w c o T t u ) a 3 S f f l h - c o c o c o c o t o a a c o c o c o c o c n | NEGPOL| O O O T J ' O ' - O C J O O O O O O - ^ O O O O O O O O I - O O O O O O O O O O O C O O O O O O O O O C O O O O O O O O O | POSPOL —^ O O O O - ' - O O O O O ^ - O ' — O O O O O O ^ - T - O O O O O O O O O O O O O C O O O O O O O O O C M O O - ^ O O O O O | DLAMER | DAFRICA | DASIA o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o | WORK | o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o 1 EPZ | T - 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 | APPROVE) O O O - ^ - O - ^ O O O O O O O O O O O O O O O O O O O O O O O O O O O O O C M O O O O O O O O ' - O O O O O O O O | FOREX | O O O - T J - O O O O O O O O O - ^ O O O O O O T - O O O O O O O O O O O O O O - ^ O O O O O O O O T - O O O O O O O O | SUPPLY| O O O O O O O O O O O ' - O O O O O O O O O O O O O O O O O O O O O O O - ^ - O O O O O O O O O O O O O O O O O | OWN | O O O C M O Y O C \ J O O O O O O T - - O O O O O O T - 0 ' T - 0 0 0 0 0 0 0 0 0 0 0 ' ^ O O O O O O O O T - O O T - 0 0 0 0 0 | NFDIPC | ^ T T C \ j T - r s . c D C O * - t O ^ C O t A | C O C O C O u i t x > c A ] c o r ^ a>CT>c j3r ^ c o T - i - '— i — •»— CO O J T - T - C M C O L O T J - C O I - I - C M -r- T - CO ->-C\J T - ^ NFDI/GDP O O O O O O O O O O O O O O O ^ ^ C M - ^ O O T - - ^ 0 q q p p p q p p p p p p p p p p p p d d d d d d d d d d d d d d d d d d | NFDI | o o o - r - ^ r ^ a > T - o o o o - ^ o o i ^ o o o o o o o o i ^ N N N O C D ^ - C O N C O T f c n a i c D i ^ c \ i T t c r 5 ^ ' c ^ dtrico-^ojd^^t-cd c o - ^ c o ^ ' ^ c N c o c O ' r - T t a j o u i c ^ c ^ i - ^ c o c o i n c o i - o i f c o - ^ ' - i n c o c D ^ r i - c o T - O J T- w c o L i ) i n o ( O c \ i i - i r i ^ | COST | c \ j d c s J ' r J c > C M ^ T - c o c d d OP(EX) C O I ^ O O ) O C M ^ T - - i - C M C O C \ I C \ | C D r a 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 | URBPOP) 5 i n s c o a ) c n O ' - ^ w c o n ^ i n i n © ( D N c o c o o i c n o n C O C O U ) i n U j l f l ( 0 < D ( 0 ( O C D C O ( 0 ( D c i ) ( D d d d d d d c z ) c z ) d d d | GDP | O J CO T - t - i - ' - ' - C M C M n C O C O C O C O C O C O C O C O T t | GNPPC | o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o L n s t ^ o c o L n o n o ( D N N ( D i n o o T r ^ ( D c o N o c o T f c o i n L n i n c \ i N c \ i c o f f i O i - O C O ^ ^ i n i D C O N C O O W t O C O C O C O W W W C O W O W | COUNTRY | C D C D C U C D C U C U C U C D t D m to 'jl 'X2 'jD 'j3 'j3 11 'jD 'j3 ^ ^ o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o <-* o o o o o o o o o o o o o o o o o o o o o O O O O O O O O O O O O O O O O O O O O O £ 3 3 5 2 . 2 . £ i E i ! 2 . £ O O O O O O O O O O O O O O O O O O O O O o o o o o o o o o o o o o o o o o o | YEAR | CT)CLT)CT)llT)C^C7)CT)CT3C7)C^ l o O O O O O O O O O O O O O O O C M O O O O O O O O O O O O O O C M O O C O O O O C O C M O O O O O O O O O O O O O O lo O O O O C O O O O O O O O O O O C O O O O O O O O ^ O O O O T - O C O O O - ^ O O O O O O O O O O O O O O O O O O O I O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O i - O O O O O O O i - O O O O O O O O O O O O O O O o o o o o c o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o N CL UJ O O O O O C M O O O O O O O O O O C M O O O O O O O - ' - O O O O O O - r - O O T - O O O O O O O O O O O O O O O O O O O - r -I O O O O O O O O O O O O O O O O O O O O O O O O O O O O O T - O O O O ' - O O O O O O O O O O O O O O O O O O O O I O O O O O ^ - O O O O O O O O O O O O O O O O O O C M O O O O O O O O O T - O O O O O O O O O O O O O O O O O O O O _l 0 . Q. CO I O O O O O O O O O O O O O O O O T - O O O O O O O I - O O O O O O T - o o o o o o c o ^ - o o o o o o o o o o o o o o - r -( D O ) O i s i 2 0 0 ) T r c o c o o ) n o o o o ^ oo c o c o a i - s c o i o i n o o j ^ c n i n w c o o o o o c o o c B s ^ w i n i n ^ w c o N ( D ^ ( D S U ) O c o o o o o ^ c » c o c o ^ ( O C O N W i - w w m T f L n c x j c o o c g c D c o ^ t o c q c q p p p p O S T ^ C T J U I ^ C M C ^ C D C O ^ T- i- i- m f- y ' CO CM CM CM CO CM CO CO W W T i - O CO ^ CO f co i n CM i ^ ^ C M S S ^ c r i O N ^ c o V o d d O N L O ^ S N O > C O t C O W ( M N C O m T - C O C O C M ^ r ^ C O t ^ ^ ^ O C M ^ ^ ^ ^ C M C ^ C O 1 ->- - i - f-» LO -»— LO "d" C\J 1^" C\J O i - O CO CM CO ^ to W V ^ C O C O i n N i - T - i - W C J - r - i - - r - i - f- f- i - -r- T - ' C D C O O T f C O C O C O i ^ ^ C O c d c d o J ^ i V c o t i i c r i o J ^ d c o c M i - ' r i © ( D i n i f i ^ ^ L O u l L D U l C D U O L O L n ^ O O O i - i - O C O O h - O C O C O C O C O C O ^ C O C O C O C M C O C O d d d d d d d d d d d O O O I T - N O J T - O J T - O C O ' T O J T - O T - - r - 0 - ^ - - - - ^ - > ~ T - T - 7 - T - T - ^ T - - r -d d d d d d d d d d d d d d d C O W W ^ C D T t C O ^ ^ l f l W ^ ^ ^ W L O C O C O C O C O ^ i -d d d d d d d d d d d d d d d d d d d d d d N c o c o c o c o c o c o c o m c j i o o w o c o n n t c o c o c o r o c r i c o c o c o c r j c r i ^ C M ^ ( D C O C f J N ^ ^ n ^ ( X N n c O C D O ) ^ T + ( 0 d d cb N d CD d d d d d s c d c o c j ) ^ d ^ ^ c d c M r i i r i e o d ^ i r i u S w c o . \ r i d d d CM CM T t c d c d c d c d c o c d c d c d T f i r i c M T- i - i - T - i - i - i - i - C M C M C M C M C O C O C O C O CO CO 0. Q CJ o o o o i -T - CO CM O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O w a ^ c o c n c o ^ c M ^ c o w c o o T - T + S T - o j ^ T t t D O i o O ) C O C 0 C 0 C 0 C 0 O ^ C 0 r ^ < M C M < M C ^ T - C M ^ C O C O C O - ^ T t T t C O C O C O C O C M C O C O C O (DCDCDCDCDCDCDCDCDCUCDCD o o o o o o o o o o o o o o o o o o o o o o o o c n o ^ c M c o ^ i n u D N c o c n o o ^ c M c o ^ L n c D N c o m N c o c o c o c o c o c o c o c o c o c o c n N N N N c n c n c n c n c n c n c n c T i c n c n c n c T i c n c n c n o j O i C n c A O i c n c c c c r z c c n j O O O O O O O C JD u u xi n n ca canjcacacdcaco - c O O O C D O O C 5 C 3 | NEGPOL | o o o O CM o o o O O o o O CM o o o o CM o o CO O o o o o o o O o O o CD o o o o O o o o o o O o o o O o o o | POSPOL o o O O o o O O o o O o tf- o o o o o o o CD o o o o CM O CM O o O o o o o O o CM o o o o o o o o o o o | DLAMER o o o O O o o o O O o o O o CD o o o o o O o o O O o o o o o O O o O o O o o o o O o o o o o o o o o o o o o | DAFRICA O CD CD CD O o o o o o O O CD O o CD CD o o o o | DASIA o o o O o o o o O O o o O o O o o o o o o o o o o o o o o o o o o | WORK o o o O o o o o O O o o o o O o o o o o o O O O O o o o o o O O o O o O O o o o o o o o o o o o o o o o o o | EPZ o o o o o o o o O o o o o o o o o o o o O O O O o o o o o CM o o O o O O o o o o o o o o o o o o o o o o o | APPROVE o o o o o o o o o o o o o o CO o o o o o O CD O O o o o o o O o o o o O O o o o o o o o o o o o o o o o o | FOREX o o o o o o o o o o o o o o o o o o o o O O O O o o o o O o o o o O o o o o o o o o o o o o o o o o o o | SUPPLY| o o o o o o o o o o o o o o o o o o o o o O O O o o o o o O o CM o o O o o o o o o o o o o o o o o o o o o | OWN o o o C\l o o o o o o o o CM o o o o o CM o O CM o o o o o o o O o o O o o o o o o o o o o o o o o o o o | NFDIPC | 1 3.4381 1.264 1.532 1.094 7.235 -1.830 1.882 0.942 -0.267 1.458 1.482 1.430 0.205 0.164 0.444 0.328 0.348 0.357 1.042 0.993 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.012 0.014 0.090 0.086 0.083 0.209 0.266 0.227 0.352 0.420 0.194 0.667 6.250 7.538 7.538 1.462 -87.643 1.143 2.929 1.933 42.133 16.938 7.750 | 9.3751 NFDI/GDPi 1 0.0131 0.005 0.006 0.004 0.025 -0.007 0.006 0.003 -0.001 0.004 0.004 0.004 0.001 0.000 0.001 0.001 0.001 0.001 0.003 0.002 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.001 0.001 0.001 0.001 0.001 0.001 0.004 0.038 0.033 0.033 0.005 -0.245 0.003 0.008 0.006 0.105 0.039 0.018 | 0.019| | NFDI | 1 30.61 11.5 14.4 10.5 70.9 -18.3 19.2 r-O l -2.8 15.6 16.3 16.3 tf CM o CM CO LO CO tf r--tf o LO 15.0 14.8 o CD o d CD d o d CD d CD d o d CD d o d o d o 00 10.0 65.0 63.0 62.0 160.0 208.0 181.0 287.0 350.0 165.0 CO CD LO CO oi CO O) O l -122.7 CO •tf O l CM 63.2 27.1 12.4 I 15.0| | COST 1 71.01 64.6 77.1 81.9 96.7 120.1 172.8 176.4 147.5 189.7 302.0 395.8 247.6 81.5 63.1 53.2 42.4 42.6 40.1 38.1 35.4 35.0 35.8 39.7 41.8 34.4 33.2 33.9 34.2 36.1 36.8 33.1 30.5 29.7 26.6 26.6 26.1 27.0 25.4 23.3 23.1 53.5 54.7 62.4 71.0 67.3 71.4 58.6 61.1 62.7 70.5 74.1 67.3 I 61.6| OP(EX)| 0.131 0.19 0.20 0.21 0.25 0.25 0.28 0.27 0.23 0.20 0.19 0.18 0.12 0.16 0.18 0.16 0.20 0.19 0.19 0.15 0.03 0.03 0.04 0.04 0.04 0.05 0.06 0.05 0.05 0.05 0.04 0.04 0.05 0.05 0.05 0.04 0.04 0.05 0.05 0.06 0.06 0.50 0.50 0.33 0.67 0.50 0.40 0.40 0.40 0.20 0.17 0.29 0.43 I 0.25| URBPOPl 0.29 0.29 0.30 0.30 0.30 0.30 0.31 0.31 0.31 0.31 0.31 0.32 0.32 0.32 0.32 0.33 0.33 0.33 0.34 0.34 0.20 0.20 0.20 0.21 0.21 0.21 0.22 0.22 0.22 0.23 0.23 0.23 0.24 0.24 0.24 0.24 0.25 0.25 0.25 0.25 0.26 0.14 0.15 0.16 0.18 0.19 0.20 0.22 0.24 0.26 0.27 0.29 0.31 I 0.33| | GDP | oj oj LO oj O) CM CO CM CO oi CM CO CO tf •tf •tf CM tf tf tf tf tf LO tf LO LO CM LO CJ LO CM CO 57.6 62.1 66.2 79.6 91.8 O l LO OJ 112.2 OJ 141.6 172.3 O) r-LO 00 201.3 194.6 214.3 229.1 256.9 s CM 272.5 295.8 CM d CM d CO d CO d tf d LO d LO d S'O S'O CO d d d CO d | GNPPC| o OJ o CO OJ o CO OJ O CM CO O O CO 0 01 eg o CO o CO CO o o tf o CO tf O CM tf o r~ CO o CO CO o LO CO o CO CO o o tf o CM tf O tf tf o o tf O O tf o o o CM o •tf o CO o CO o o 0 01 o CM o LO CM o 00 CM o r~ CM o r~ CM o CO CM o 00 CM 0 01 CM o CO CO O CO o I s-CO o CD CO o CO o r-. 0 01 o CM 0 01 CM o CO CO o CD CO o CO CO o CO CO o tf o tf o o LO o > to cd cd cd cd cd a cd ra ra cd cd cd | COUNTF Ghana Ghana Ghana Ghana Ghana Ghana Ghana Ghana Ghana Ghana Ghana Ghana Ghana Ghana Ghana Ghana Ghana Ghana Ghana Ghana India India India India India India India India India India India India India India India India India India India India India Mauritani :  Mauritani ' Mauritani Mauritani Mauritani Mauritani Mauritani Mauritani Mauritani Mauritani Mauritani Mauritani : Mauritani | YEAR CM I-. O l CO N. <31 O l LO o> CO O l r~ i-~ O l CO r~ O i O l O l o CO O) 00 01 CM CO O l CO CO O l s O l LO CO O l CD CO o> h~ CO O l CO CO O l O l CO O l 0 o> 01 0 01 O) CM h-O l CO O l tf O l LO i-. O) CO O l o> 00 f-01 O l O l o CO CD 00 01 CM CO O l CO 00 01 3 O l LO 00 01 CO CO o> CO O l CO CO CO CD CO CD o CD CD o r--cn CD CM O l CO h~ O l tf O l LO O l CO r~ O l r-. O l CO O l O) r~ O l 0 CO 01 CO CJ) CM CO O) | NEGPOL| 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 o 0 0 0 0 0 0 0 0 0 0 0 * - 0 - r - 0 * - 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 C 0 | POSPOL O O O O O O O O C O O O O r - O O O O O O O o O O O O O O O O O O O C O O O O O O O O O O O C O O O O O O O O O O C M | DLAMER | DAFRICA | DASIA o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o | WORK | o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o EPZ | O O O O O O O O O O O O O O O O O O O O O O O O O O O O O C M O O O O O O O O O O O O O O O O O O O O o O O O | APPROVE | 0 0 0 0 0 0 0 0 t - 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 C \ J O 0 O 0 O O 0 0 0 0 * - 0 O O O O O 0 0 0 C \ J | FOREX | O O O O O O O O O O O O O O O O O O O O - i - O O O O O O O O O O O o O O O O O O O O O O O O O O O O O O O O o | SUPPLY O O O O O O O O - o O O O O O O O O O O O o O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O | OWN j O O O O O O O O o O O O t - O O O O O O O O O O O O O O O O O O O o O o O o O O O O O O C M O O O O O O O O O C X J | NFDIPC | ' T O t O N C O l I l O I O O O n t O S ' t O M O S O O O O O O O O n S S ' - N O N t O O O ^ N M D M n ' - ' - ^ S O N ' - i n N T - s c l C JOoC \ J r -~C \ l ' ^ L O O O C O L O l O ' ^ O C O N C O O O O O O O O O L O C g c \ J c o o ^ s s i n c o n o m n i o i O T t o t D N i D w s N i o c o w u i o v s s ^ c n c o N m o n f f i f f i n i - n w ^ n w r a c o c o a J w n ^ c o o d L o ^ o d d o c o c y o o c o d c M c o ' o ^ ' d o d o o ^ c d N 1 1 ' o CM CO CO t-T-f - - r - C N C O T j-<M o Tj- CO CO CO 1 NFDI/GDP c g c M O - ^ C M o T f r ^ c o c D ^ c o o c O T t c M ^ o o o c M o i n N L O O o r ^ c D r o O - o - r - O O O O O O O O O O O O O O O O O O O O O O o - r - o - r - O O O O O O O O O O T - i - T - O O O - r - C M T - o o O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O d d d d d d d d d d o o ' d d d d d o d d d d d d NFDI | ^ i n o r - ^ o u i s t o w w w i D W S L n c o o ) W N N i D c o w i n n f D C f l ^ o c f l S ( i i n o w c o c o o o o o o o o o o o o o o ^ o w o c d i ^ d o ' o c o d o o o d d w a i o - ^ d o d o o ^ c d r ^ r ^ 1 1 1 i - « c o ^ w o o L o s o w i f l w c O L O c o i n ( 0 0 i o i o i T r o i c o c o c \ i c \ i ' - 1 COOCO-^CD(DCDLOODCOoCOCDTt-COTfLOC\(LOOCO -r-cMcg-r- T - c o CM cn 01 COST | o c O O o O C O C O O T o o N r ^ ^ C O U J U J o - ^ O C O O L O o O C O C D C D o L O O C O C O O T f i ^ c d c x i c d d d u ^ L o d d ^ o - ^ c d T t ' i r i d o c d T f o d o LOLn^lf i tOOlOWCOCOCO^^COCOCOCO^COCOCOWOlOICOCOCOCVICO^^WlOLOtOlO^LOLOCOCD^ OP(EX)| c o n N O * o o o o o c o i o n c o c o c o o c o i D N c o i D o i o s o c o m i f l c o c o t 5 ^ c o ^ i n i o c o c o c o c \ ] N i o n i o i n W ' - T - c O ' - w i n d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d URBPOP| lOCOCOOCMCOIONcgCMCOCOCOCOCOCOCOCOCNCMCMCMWooooooOTOooCMCO-^^ C O C O C O - ^ T T T t - ^ ' ^ ' ^ ' ^ ' ^ ' ^ ' ^ T t - ^ ' ^ - ^ ' ^ - ^ T t ' ^ T f ' ^ - ^ ' ^ ' ^ T ^ GDP | ror^r^cqcnooocMcycO'^r^r^r^cqocgooooo C O ^ - ^ L O N O J C n c O O ^ - C n ^ N f l - N C O C M ^ - N O ^ | GNPPC| O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O ^ o o i t - W ' - w o c o o w M D c o o i n T f c o i o c n c o i D w i D i D ' - o n ' - c o o i T - m n O J - N o - o c O T j - m u o o j o o - o c o c o c o r ^ c o a o o c o ^ ^ n ^ ^ i n i O L O w n c o ^ i D N c o o i o w N W T - o o o w c o o T - c o s N c n o n m c o i o s c o c o N c o w ^ w o o i o w c o w w | COUNTRY | Mauritania Mauritania Mauritania Mauritania Mauritania Mauritania Mauritania Mauritania Mauritius Mauritius Mauritius Mauritius Mauritius Mauritius Mauritius Mauritius Mauritius Mauritius Mauritius Mauritius Mauritius Mauritius Mauritius Mauritius Mauritius Mauritius Mauritius Mauritius Mauritius Mexico Mexico Mexico Mexico Mexico Mexico Mexico Mexico Mexico Mexico Mexico Mexico Mexico Mexico Mexico Mexico Mexico Mexico Mexico Mexico Mexico Morocco Morocco Morocco Morocco | YEAR | c o ^ i n c o s c o o i o o i - N c o ^ i n o s c o c n o ^ w c o ^ m a s c o o i o o T - w c o ^ i f i i D s c o o i O ' - p i n ^ i o c o N c o c f i o O ' - w c o C O C O C O C O C O C O i a c n N N N N S N S S S S C O C O C O C O C O C O C O C O C O C O C n N S S S N S N N N S C O C O a O C O C O C O C O C O C O C O C n N N N S C31C3}C3}C^ C3}C31C31C3}C3}C3}CnCJ5C3}0)C3}C35C3}0)0>0>Cn | NEGPOL| O O O O O O O O T - O O O O O O O O O O O O ^ O O O O O O O ^ O O O O O O O O O C X I ^ O O O O C O O O O O C N J O O O | POSPOL O O O O O O O O ' ^ T ' O O O O O O ' — O O O O O ' - O O O O O O O O O O O O O O O O O ' — o o o o o o o o o c o o o o o | DLAMER o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o | DAFRICA | | DASIA | o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o | WORK | o o o o o o o o o o o o o o o o o o o o o - ^ - o o o o o o o - ^ o o o o o o o o o o o o o o o - ^ - o o o o o o o o 1 EPZ | o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o | APPROVE) O O O O O O O O O O O O O O O O O O O O O T - O O O O O O O O O O O O O O O O O O - T - O O O O O O O O O O O O O | FOREX | O O O O O O O O ^ O O O O O O O O O O O O T ^ O O O O O O O O O O O O O O O O O O O O O O O O O O O O O J O O O | SUPPLY| O O O O O O O O - ^ O O O O O O - ^ O O O O O ' - O O O O O O O O O O O O O O O O O T - O O O O O O O O O O O O O O | OWN | O O O O O O O O ^ O O O O O O O O O O O O ^ O O O O O O O O O O O O O O O O O C M C M O O O O C X I O O O C N J O O O O | NFDIPC | N W S l O C O N C O i n N t D C D i n W S T - O O D O D S I D C O i n W O ^ ^ L O C O C O O ^ O T O C O O C N ^ W C M O ^ T - i i n o c D c o c o c N T ^ p ' c \ j c o « c \ j ^ c \ i w |NFDI/GDP| C ^ O r f l i ^ - ^ C M L O ^ U ^ C O ^ C A J O C ^ O O O O O O O O O O O O O O O O O O O O O O r - O O C M i - ^ O ^ O O O O O O O O T - c g v - C N j O - ^ - O O O O O O O O O O o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o ' o o d d d d d d | NFDI | ^ c \ j O T - i ^ u i T t c D L n T - o o i r ) c o L O i - T - T ^ o t D i - T - T t N ^ w s N s w i o i n c o c o ddcdi^r^cocricooSca L r i L o ' i r i c r i i ^ i ^ o S c r i ^ ^ c r i W 1 C O L O ^ C O C O m N ^ ' < t C \ J L O CO CD CD ' T - CO CO ' CN ' ' O C O O N l f i T - t ^ c O ^ O C O ^ f C O ^ O l N | COST | ro^TtQLOT-inini-incocoocD^cow^ ( D ^ L n c o c o o i O L n o N O ^ c O ' t c D N L O ^ i r i o i c d d d d ^ c o c O d c r i i n c b i ^ c d d d ^ d c o c o ^ r o C O C O U ^ L O t D < D C D L D ^ C O C O W C O ( T 3 C O C ^ N N C O C O O I O T - Q C T I O O C O N C O C D O ) X HI £L O W N T r c v j i - c o n L o ^ i n N N ^ i n c o ^ c D w i n c o N w o j w d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d |URBPOP| r ^ C 0 C 0 C 7 ) O O - ' — C N J C N W d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d | GDP | i ^ c T ) CO ^ C N a ) c o c o ^ o > c o •N c r J ^ c d i n c o L o i n c d c N W ^ W W (\i c\i c\i ^ ^ T ^ ^ c \ j c \ i c \ i c N c \ i ^ d r o | GNPPC| o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o ( O u ^ c o ^ c o o c n o ^ c n c o o i c D c o ^ ^ c n c D ^ i n i f i c o © c o c 3 ) 0 ) a ) ( f l c D i n ( D N f f i | COUNTRY | O O O O O O O O O O O O O O O O O Q C D C D a ) p o p p p p p p p p p p p p p p p CTcna)CTO)0)cncj)CTcrjCT fc fc fc fc fc fc fc fc fc fc fc fc fc fc fc fc fc:=:= : = : = : = : = : = : = D 3 0 ) C T c n c n C T C T D ^ c J ) D ^ D ) O T | YEAR | ^ i n t o N o o c n O ' - w n ^ i n c D S c o Q O O i - t N n ^ i o S S S N N N C O C O C O C O C 0 C O C O t D C 0 C O O ) N N N N S S N S S N C O C 0 © C f i C 7 ; C 7 ) C 7 ) C n C J > C X C 7 ^ | NEGPOL| o O o o o O CM o o O o o O o o o o O o O o o o o o CM o o o O o O o o o o o o o o o o o o o CM o o o o | POSPOL o O o o o o O o o o O o o O o o o o O o O o o o o o O o o o O o O o o o o o o o o o o o o Tf o o o o o | DLAMER o o o o o o O o o o O o o O o o o o O o O o o o o o | DAFRICA o o o o o o o o O o o o o o o o o o o o o O o o o O o O o o o o o o o o O o o o o o o o o o o o | DASIA o o o o o O o o o O o O o o o o o o o o o o o o o o o o o o o o | WORK o o o o o o o o o o o o o o o o o o o o o o o o o O o o o O o O o o o o o o o o O o o o o o o o o o o o EPZ o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o O o O o o o o o o o o o o o o o o o o o o o o APPROVE | o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o O o O o o o o o o o o o o o o CM o o o o o o o | FOREX | o o o o o o o o o o o o o o o o o o o o o o o o o o o o o O o O o o o o o o o o o o o o o o o o o o | SUPPLY o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o O o o o o o o | OWN o o o o o o o o o o o o o o o o o o o o o o o o o CM o o o o o o o o o o o o o o o o o o o o o o o o PC CO Tf O) CO CM CO CO Tf CM CO jE o CO CO CO o O) CO CM T t O l o I--o CO LO CO O i CM CO Tf o CO CO Tt CO Tf Tt CM 00 o 3 CM O i CO 00 00 CM 3 Tf r-. o 00 CM LO CO L O o 00 CD Tf i n CM CO O i 1— CO 00 LO CO LO CT) o CD o 00 CO CM CD CT) r~ CO o q CO 00 Tt Oi LO CO CO rs. CO CD CO Oi CM cn [s. LO Nf o LO CM o o o o o o o o o o o o o o o CM fs-CO CO Tf CO oi rs. CM Tf CM cn 00 o CD Tf o NFDI CO Tt d CM CD d d d d d d d d d d d d d d d CM CO oi •< CD CD CD rsl oi d d d d d d CD Tf Tf Tf Tf Tf Tf NFDI/GDP | too' CM CM O CM o o CO o r-. 5 CM o o o o o CM o o o o o o o 5 o CM o o o o o CM o o CM o o eoo' CO o o s o o o o o CM o o 900' eoo s o s o 900 CO o o O O Tt o o O l o o CO O CO o CM O O o o CO O O in o CO o o 900' CO o o o o o o o o o o o o o o o o o o o o o o CO O CO o o fs-o o rs. o o CO o o Tf o o T f o o NFDI/GDP | o d d d d d d d d d d d d d d o d d d d d o o d d o d d d d d d q d d d d o d d d d d d d d d d d d d d d CO O) CO O) o q Tt CO CM CM L O LO T- L O T- 7- CO CO o o o o o CO 1- O l CM t~ Tf o r-. CO CM CO CM rs. i - cn o o o o o Tf Tf CM o O l rs. LO | NFDI CO CO CM o CO CO r~ CO 1882. r»' CO LO CO CM CO *~ CM CO CO CO CO CO cd CO c\i CM cd CM CO Tt r~ d L O CO o LO LO f~ d o CM CO CM oi d CM Tf CM CO CM oi d in oi CM CO CM CO CO iri d d d d d d d rs. fs' L O cd in oi in oi in d CO CO CO CO LO o Tt CO CO O l O l CD Tt T- i— 00 CM r- t~ CD LO CO CM LO Tt O l CD CO o CT) CO CD CO CD cn O l o i — CO o o CM m CO 00 CD O l CO rs. Oi | COS! CO LO Tf CO CO CO CO CO CO T t cd Tt CO CO CO CM CM CM CO 3 3 LO CO cd CO co CO LO CO 3 oi CM 00 CM LO CM Tf CM CO CM CM CO CM CM CO Tt r-' Tt d LO LO Tf CO i r i CO d CO oi LO CM CO d CO r^  CO CO CO in Tf CD Tf Tf Tf iri Tf CO Tf oi Tf CM LO CO LO i d to rsl m d CO CD CD X T t h-CM CM CM LO CM o> CO r-o o CO o Tt CO O l o CO o CO o CO o o o 1— o CO O O l o o CM CM CM Tt Tf CO o LO CO CM Tt CM 01 o fs. o m o CD o LO o rs. o O l o CD o CO CO CM oi Tf o O l o 00 O OP(E d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d 0. n CM CO CO CO T f CO CO L O CO L O CM L O CM CD CM CO CM CD CM CD CM CM r-CM CM CO CM CO CM CO CM O l CM CT) CM o CO o CO o CO CO CO CM CO CM CO CO CO CO 00 CO CO CO O i CO CT) CO o Tf o Tt Tt CM Tt CM Tf CO Tf CO Tf Tf Tf Tf Tf in Tf CO Tf CO Tf rs. Tf CO Tf fs. LO CO m CD in o to S CM CD URBPI ci d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d cp 1— CM CO LO o CO CO CO CO CO CO CO r- T - t - CM O l Tt LO CM o CO c- CO CO L O CO Ti- CO 00 Tf CO Tf CM in rs. Tf Tf CO CM T - O l rs. LO Tf GDP CM CO CO LO CO d oi CD CO CO ui l< oi co CM cd CM d CO cd CM CO CO CO CO CO CO CO d Tt Tf d d d CM CM ed LO to LO Tf" CO CO CO Tf" i d cri cd d CO CD | GNPPC| o CO N-o CO T f 0 01 CO o 3 O LO CO o r~ o o i— o Tt o Tt o LO o 0 01 o CO CM o CD CM O O CO o Tt CO o LO CO o I— CO o CD CO o CD CO o 1— CO o CO CO o Tt o Tt 0 01 Tf o CD CM o i— CM o o CO o CO CO 0 01 Tf o o CO o 3 O CO r-. o Tt CO 1080 1440 1730 1660 1560 1420 1130 0 CO 01 0 CO 01 1080 1100 1150 o CM to o rs. LO o CM CD o o rs. o to CO 1000| COUNTRY | Nigeria j Nigeria Nigeria Nigeria Nigeria Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Pakistan Paraguay Paraguay Paraguay Paraguay Paraguay Paraguay Paraguay Paraguay Paraguay Paraguay Paraguay Paraguay Paraguay Paraguay Paraguay Paraguay Paraguay Paraguay Paraguay Paraguay Paraguay Peru Peru Peru 2 cu CL Peru Peru | YEAR | CO CO CT) CO CO CO cn CT) CO cn 0 cn 01 0 h~ 01 O l CM •— O l CO O l Tf O i L O O i CD O i r~ f~ O l CO I— cn O l O i 0 CO 01 CO O l CM CO O i CO CO CT) s CT) LO CO O i CD CO O l r~ 00 CT) CO CO CD O l CO O l 0 01 O l 0 r~ 01 O l CM O l CO i— CT) Tf O l LO •— CT) CO r-. O) rs. 01 CO rs. cn |s-OJ o CO CO cn CM 00 cn CO CO O l Tf 00 01 LO 00 cn CO CO O l rs. CO O l CO 00 01 cn 00 cn 0 01 cn o rs. cn cn CM rs. O l CO rs. O l Tf |s-cn LO O l NEGPOL| o o O O O o tf- o o o O o o o o o o o o o o o o eg o o o o O o o o O o o O O o o o O o o O O o o o o o o o | POSPOL| o o CO O O o CM o o o O o o o o o o o o o o o o tf CM o o o O o o o O o o o CO o O o O O o o CM o o | DLAMER o o o o o o o o o o o o o O o o o O o o o O o o o O o o O O o o o o o o o o | DAFRICA o o O O O o O o o o O o o o o o o o o o o o o o o o o o O o o o O o o o | DASIA | o o O O O o O o o o O o o o o O o o o O o o O O o o o o o o o o | WORK o o O O o o CM o o o o o o o o o o o o o o o o o o o o o o o o O o o o O o o o O o o O O o o o o o o o 1 EPZ | o o o o o o O o o o o o o o o o o o o o o o o o eg o o o o o o o o o o o O o o o o o O O o o o o o o CO o APPROVE | o o o o o o o o o o o o o o o o o o o o o o CM o o o o o o o o o o o o o o o o o O O o o o o o o o o FOREX | o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o O o o o o o O o o o o o o o o o | SUPPLY| o o o o o o O o o o o o o o o o o o o o o o o O o o o o o o o o o o o O o o o o o O o o o CM o CM o OWN | o o CO o o o O o o o o o o o o o o o o o o o o O o o o o o o o o o o o o CM o o o o o o O o o o o o o o o PC CO O) cn oi CO CO CO h -CO r- s CO CO O CO CO 00 h-LO CD to CTI CO •tf tf CM •tf CO CO tf CM CO s CM tf CM tf CM o tf CM O CO o CO CO o CO Ol o o o o o o CO CO o CD O tf CO eg LO CM Ol c-CO CM tf CO LO LO tf 0 01 o o LO tf CD Ol a r--CM CO LO q o o in r-CO CM CO CD CO CD LO o o CD CO o CO CM CM 00 Is-00 LO CO CD CD LO CD to o Is-co in CO r-LO Is-Is-CD LO CD Is-CM CM | NFDI CO CO CO cd CO CO CO CO CO CO CO CO CO CO CO ci d d d d d d ci d CO CM CO tf CM CM CO CM CM CO iri d CO CD iri Is-' CD CO d LO CO CM LO CO CO NFDI/GDP| tf o o tf o o 900' o o eoo CO o o CO o o eoo' CO o o tf o o CO o o eg o o tf o o CO O O CM O O o o o o o o o o o o o o o o o o o o o o o o o o o o tf o O O CO o O O LO o o tf o o tf o o CD o o CO o o CM o o m o o o o o CM o r-o o o o CM O CO o m o Is-o o CM o m CO o CM o CO CM o o CM o Is-o o NFDI/GDP| d d o d o d d o d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d 1- o CD i— CM CO CO 00 CO CO CO CO CO CO •tf LO CO o CM LO cn o CO CO CO CD 00 CM CM CO in o T- in CM CO CD CO CO CD CM CO CO CD q CO Is-NFDI cg CO eg CO CO CO SS LO CD LO CD CO CO CD CD CD CO CO CD CO CD oS CO cn CO d d d d d d 1 CO tf CO tf oi •tf CO CO CO CM CO tf CM oi CM CO LO CO CM CO cd CM CO in iri CM CD o CO Oi CO 00 CD CO CM d CD CM CO CO CO CM CO CM o CD i- CO CO CO CO O 00 T- LO eg I-. LO CO r*- eg CO CM cn CO eg tf o o CO CM tf CO tf CO CO o CM CO CO 1- CM CD LO to CO CD CO CD CO CO COS! oi LO oi tf LO tf CM LO tf LO d LO CM tf cg tf •tf CO LO tf LO CD •tf LO CM oi LO d tf CO CO tf d tf tf tf CO tf ui CO LO CO d CM CM CM CM CM d CM oi d CM CO oi CD oS CO oS cd in iri LO d to iri CO d r-. CM r-CO CD l< CO CD CD d Is- d Is- Is-' LO LO CD CM CO X CO o LO CM eg CO o o CO CO CO o 00 o LO CO CO CM tf •tf CO o CM o CO Ol CM LO eg CO CM o CM CM CO CM o CM CO CD CM CM CO CM CM m CD CM CM CO CO CO LO CM LO CM o CO in CM co CM CO CM CD o CM OP(E d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d URBPOP| CM CO CO CO CO CO s LO CO LO CO CO CO CD CD CO CO CO CO CO CO cn CO cn CO o CM CM eg eg eg eg eg CM eg eg CM CM CM eg eg CM CM CM CM CM CM CM CM CM CM CM CM CM CM CM CM CM CM ? tn CO CO co CD CD "3- o LO o m LO LO CM m CO LO CO in s URBPOP| d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d LO CM CM LO CO LO CO 00 CO CO T- eg CO CO tf CD O) CD CO CD tf •tf tf- Ol CO CO -r- LO CO 1- T- T- CM in CO LO •t- CD CM Is- T- T- CO CO CO GDP LO • t f c\i LO d CM CM •tf CM Ol oi CD CO eg 1^  CM CD CM d CO CM CM CM CM CO CO CO tf CM CO tf tf LO cb CD CD l< cd CM CM CO iri cd cd CO cd cd CO GNPPC| 10401 o OJ o CO CO o 3 o o o O tf CM O LO CO o o o o O CO O) o CM O O CO o O) CM O o CO o o CO 0 01 o o CM o CO CM o 00 eg o CO o o CO o CO O eg o CM o CO eg o o CO o CM CO o CM CO o LO CO o h~ CO o tf o CO o CD o LO o o CO CM o CM CO o o o r-"d-o CM CO o r-Is-o CO CO o CO CO o LO CD o CO o to CO o CM o CO CM o Is- o LO o CO o CM ITRY 1 2 5 3 2 2 2 2 2 2 3 2 2 2 Lanka Lanka Lanka Lanka Lanka Lanka Lanka Lanka Lanka Lanka Lanka Lanka Lanka Lanka Lanka Lanka Lanka Lanka Lanka Lanka Lanka CO 'to cd 'to cd w co 'w cd 'w cd 'S cd 'w cd 'w cd 'to cd 'to cd cd 'S CO 'to co "co CO "co (0 'to CO "to *~ —i ex* & Lanka Lanka Lanka Lanka Lanka Lanka Lanka Lanka Lanka Lanka Lanka Lanka Lanka Lanka Lanka Lanka Lanka Lanka Lanka Lanka Lanka c c c c c c c c c c c c c c c cz cz COI ex ex CL CL tx CL CL ex CL ex ex ex ex •c CO •c CO •c CO •cz CO •c CO •c CO CO •c CO CO •c CO •c CO CO CO •c CO CO CO CO cn CO CO CO H h- H 1- H H 1- h- I— 1— 1— H f— | YEAR j CO a> CD CO h-CD CD Is-CD o 00 cn 00 O) CM CO cn CO CO Ol tf 00 cn LO CO cn CO CO Ol CO cn CO CO cn cn CO cn o cn cn o 1— cn cn eg cn CO cn tf cn LO I-. cn CO r-Ol r-cn CO cn cn N. Ol o CO cn CO cn CM CO Ol CO CO Ol tf CO cn LO CO cn CD CO Ol co CD CO CO CD CD CO CD o CD CD o o> CD CM CD CO f-CD "3-h-CD in Is-CD CD Is-CD Is-r-CD co Is-CD CD Is-CD o CO CD CO CD CM 00 CD CO CO CD s CD m CO CD CO CO CD Is-| NEGPOL| o o o o o O o O o o o o o o o o o o o o o o CO o o o o CO o o o o o o o o o o o o o o | POSPOL CM CM o o O o O T t o CM o o CM o o o o o o o o o o o o o o o o CM o o o o o o o o o o o CM | DLAMER O O o o | DAFRICA o O o O o o O o o O o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o O | DASIA O O o o o O o O o o O o o O o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o O | WORK O O o o o O o O o o o O o o o o o o o o o o o o o o o o o o o o o o o o o o o o o O 1 EPZ O O o o o O o o o o CM o o O o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o O | APPROVE CM o o o o O o o CM o O o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o O | FOREX O o o o O o o o O o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o | SUPPLY O o o o o o o o o o o o CM o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o O | OWN | O o o o o o o O o o O o o o o o o o o o o CM o o o o CO o CM o o o o o o o o o o o | NFDIPC | 1 11.9081 7.474 9.329 9.136 0.000 0.000 0.000 0.000 0.000 0.000 0.000 22.759 44.414 74.310 99.828 16.759 -4.567 -1.867 -1.133 -2.633 10.833 15.067 14.355 0.000 0.000 -2.170 19.182 -32.982 -7.119 -35.246 32.913 -67.863 -0.221 4.786 6.111 3.691 12.026 16.115 5.309 -0.181 3.333 -25.371 -0.889 1.141 4.074 4.9741 | NFDI/GDP; 0.0091 0.006 0.007 0.006 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.016 0.026 0.030 0.029 0.004 -0.002 -0.001 -0.001 -0.002 0.006 0.006 0.006 0.000 0.000 -0.002 0.014 -0.023 -0.004 -0.014 0.013 -0.024 0.000 0.001 0.002 0.001 0.002 0.003 0.001 0.000 0.001 -0.007 0.000 0.000 0.002 0.0021 | NFDI | 1 90.51 58.3 73.7 74.0 o ci o o' o ci o ci o ci o ci o CD 66.0 128.8 215.5 289.5 48.6 -13.7 -5.6 T f CO -7.9 32.5 45.2 44.5 o ci o ci -23.0 211.0 -376.0 -84.0 -430.0 418.0 -889.0 -3.0 67.0 88.0 55.0 184.0 253.0 86.0 o cp 57.0 -444.0 -16.0 21.0 77.0 96.0| 3ST 44.5 44.9 41.5 45.7 51.9 58.1 44.7 59.7 66.2 54.1 51.7 54.8 57.9 73.2 89.0 85.8 73.1 44.8 42.1 39.6 43.1 46.6 46.9 47.5 48.8 71.0 69.6 68.3 71.5 74.7 72.3 72.1 73.1 73.3 76.0 81.3 83.1 83.6 82.4 58.1 58.3 57.1 41.2 47.2 36.1 36.7| O |OP(EX)| 1 0.231 0.24 0.28 0.28 0.09 0.07 0.09 0.09 0.11 0.11 0.14 0.15 0.14 0.11 0.11 0.11 0.11 0.20 0.19 0.19 0.19 0.16 0.18 0.20 0.20 0.24 0.21 0.18 0.24 0.37 0.28 0.25 0.22 0.19 0.25 0.28 0.22 0.21 0.18 0.26 0.26 0.14 0.22 0.16 0.29 0.37| URBPOP 1 0.541 0.55 0.55 0.56 0.82 0.82 0.83 0.83 0.83 0.83 0.84 0.84 0.84 0.85 0.85 0.86 0.86 0.86 0.87 0.87 0.88 0.88 0.88 0.89 0.89 0.72 0.74 0.75 0.76 0.77 0.78 0.79 0.80 0.81 0.82 0.83 0.84 0.85 0.86 0.87 0.87 0.88 0.89 0.89 0.90 I 0.911 GDP r-oi 10.1 10.2 12.5 CO CM CM CM CM CM CO CO CO LO CO CO CO T t cn T t CM 10.1 = oi LO CO T t r-T t cn to CO CO 00 Tt 00 13.4 14.7 16.4 20.1 o CO 32.5 37.5 43.8 CO T t 57.6 69.4 CO 79.3 81.2 59.9 CM CO 60.5 CO T f 60.2 43.6 48.6| | GNPPC | I 12601 1350 1340 1450 O T f f ~ O r» CO O CO CO 1020 1200 1410 1440 1430 1620 2170 2930 3630 3190 2040 1740 1490 1730 2170 2490 2600 2640 1250 1270 1380 1660 2130 2600 3000 3190 3450 3930 4410 4940 4850 4570 4110 3760 3670 3420 3460 2630 2680| TRY 1 Tunisia 1 Tunisia Tunisia Tunisia fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr fr >. ca fr >. ca jela jela jela jela jela jela jela jela jela jela jela jela jela jela jela jela jela jela jela jela jela I | COUN' 1 Tunisia 1 Tunisia Tunisia Tunisia Urugi Urugi OJ S Urugi CT) 2 ID Urugi Urugi Urugi Urugi Urugi Urugi Urugi Urugi Urugi Urugi O) 2 O) 2 D Urugi Urugi CD 2 Urugi Venezi Venezi Venezi Venezi Venezi Venezi Venezi Venezi Venezi Venezi Venezi Venezi Venezi Venezi Venezi Venezi Venezi Venezi Venezi Venezi I Venezi | YEAR i--CO O) CO CO cn O i CO cn o CD cn o r-O) cn CM r--O) CO t ~ cn T t I-. O) LO O) CO c-o> r--t ~ cn CO cn O) t ~ O) o CO cn 5 O) CM CO cn CO CO cn T t CO cn LO CO O) CO CO O) t -CO CD 00 00 O) O) CO O) o O) O) o r-O) £ cn CM h-O) CO f-cn T t f ~ cn LO h~ cn CO t ~ cn r-O) CO r» cn O) f -cn o CO O) 5 cn CM CO O) CO CO O) 3 CT) LO 00 CD CO CO cn CO cn CO CO CD cn CO CD o O) O) CO Tt « g Q z o UJ ~ Q. a> CL 0. < n * - ^ O O O O O O O * - O O O O O O O O O O O * - O O O O O O C M O O O O C 0 O O C 0 O O T | - I - O O O O O O O T -T - C O T - O C O O O O O C O O O T - O O C M O O O O O O O O O O O O O O O O O O O O O O O O T - T - T - O O O O O O -O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O i - i - i - O O O O O O i - ^ ' - O O O O O O ' -O O O T - T - T - 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O O O O S N ^ O t n N W C O ^ I S S S f f l M O t D t D S O N r a O O O W C O ' - t O ^ _ o o o o o o i - o o o i - c \ J c o L O T r c n o o o i - o o o j o o T - o o o o j o o i s . - r - o i - o o i - i - o o o o o o i - o O O O O O O O O O O O O O O O O O T - O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O - ^ O O O O O O i - C D o q o q f f l i n q r r q q q q i D ^ q d u i o T r d c M c d o d ^ d d d d d c o - ^ C M O C O C D C O C O O C O i - 00 CO 0) * (D O i -• T - L O CD co i - c n T - O l - c o ' CM i— CO i - OJ O O O O O l s - C O C O O i L O T - ^ O O O O C J C O O O O O ' ^ O O c o c b d d c d c o ^ ^ L r i c d c d ^ t o c o S T f w o ^ n i - o N T - ^ n LO c o c o LO CO ' LO CM T- 1 CM CM Tt C O i ^ C O O i ^ l O T i - C M i - l O T f O ^ C O O TrcrJcor^dcoi^cdcMcricd O O O O O O i - i - C M O O O O O i - C M C O o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o s w m c n a o w ^ c o N r o N w n o o o N W T - n s N o n o d d d d d d d d d d d d d d O T~~ CD CO L O C O o o C O C O TJ1 d CM T -iri c\i O Tt co CO LO C O CO ^ O CO O CO LO iri d C O CM d d c n c o s c o c o o c o u i N N i n T - W L n c o c n N W c o c M d c M d L o c d r ^ ^ d c M T r T t T r e M co m n o i i n w N C O T T CM Tt CM i— i - CO i— i— CM TT O O O i - C O C O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O N n i n i n n c o o N o w c f j r f c f i o o j L n n W N S N N W C B i n T - N i D N n c o c o o i - L n i n i o w N i n r v j c o n ^ i - w ^ T t n w ^ u O T r i - N ^ m i - L O T - L O C M T— CM T— L O O J T - i - C J CO CM CM CM O J i - i -C O C C C 0 9 ? 2 ? S ? n J 5 2 T 3 T 3 T 3 c o n 3 ( a c / ) t f ) t / ) s ^ v ^ v ^ , , , , . . u u u s_ s_ o o o co in w c c c . c c c to | « c c c .59 .5? .5* a n n ^ ^ ^ ^ a ' a a > > > & & & ? 2 S ™ ™ « H c c n n m 'E 'E 'E > > > cr cr n: a. a. a. U C& § Q) C C C T J T J - O L L I t? J? £? C C C m m c Q t n t O L t J m i : Q C Q O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O N C O Q N C O O ) N O D Q N U O O J N O O O N C O O J N « Q c n Q c n c n c A c n c D c n c n o j C D o c b o c n r o O O O O S CO O N O) a i o CD p p flj QJ OJ E E o o O i CO CO i O O O O O O O CO CD N CO O) 0 ) 0 ) 0 ) 0 ) 0 ) lo lo la o E E E c _o _o _o o o o o O O O O O O O O N CO O) N C D O ) CD C D | NEGPOL | O O C M O O O O O O O O C J O O C J O O O O O O O O O O O O O O O O O O O T - O O O C J O O C M O O O O O O O O O O O | POSPOL O O C O O O O O O O O O C V J O O T - C M O O O O C O O O O O O O O O O O O O O O O O O O O T - O O O O O O O J O O O O O | DLAMER | DAFRICA | DASIA O O O O O O O O O O O O O O T - ^ ^ O O O O T - O O O O O O O O O O O O O T - T - T - O O O O O O ^ ^ T - O O O O O O | WORK 1 EPZ 1 | APPROVE | | FOREX | SUPPLY| | OWN | | NFDIPC j n o o i n n o ^ o o o L ) ( 0 « i O ) O T - o } N ^ i n o o n c y m W ' - r D O c o o u i O r [ D N ( a ( o r N n n n N n o ? ( o ^ o n o i n o n i n o o w i c v n m f f l t r o i o o i - t o D n o N s t ' - N n t t W T - o j o w f l i - n o M f l i D n n s c y o o t w i - u j T - o o o c r J d i i J T ^ c M d r i w ^ c r i d i ^ i ^ d d d d CM T - 1 CM tf T - CO CO CO r- T - ' C O C O | NFDI/GDP ^ o w a n o v ' j w i n a ) T - \ r c y o o i - f l O ) s a 3 i - i D a ) T - i - i n i n ! D i - ( D O ( D c o N w n i n ( D i D n c o n c \ i O T - i n ^ M D o o } 0 C M O C O O O O C M O O O O C O O O O O O O C O O O O T - O T - T - O O O O T - O T - O T - O O O O O T - O O O O ^ - O T - C M O O C M O o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 | NFDI | O N M D O V t N U ) 0 0 1 0 ( D O O O O ' - M D C \ l ? O O O O f l T - ^ 0 ) O N » O r O ( D M * ^ I D t t C Q O i n O ( O O O i n o d O T J ^ o ^ o d r i ^ N i n ^ d a i w d N i d ^ ^ d n d w d f f l i r i d r i i n ' d N c o c d d r i r o o N ^ d d n N c o ^ ^ d o i d tf c o c n c o tf c o ' CM tf co T - c o CM tf CM i n c o CM co CD tf o c o co CM co o c \ i h - m c o < o , t f t f - < - c o r - ~ co LO T - C O ^ C D T - CM lO CM CM CM CM CM ' | COST ^ f f l O i c o t o s N ^ T - i n m n s ^ ^ B T - i n i - a i T - o i n o T - n o n n i n i n T - c o c o o t f T - L O t f c o c o c o c o i ^ c M O t f O c o r ^ c n o c o w w d n d d d ^ ^ i r i w d d a i u i d d r i ^ u i d d d d ^ r i ^ d d i r i d m d r i T - ' r i ^ d ^ d w w d d N d r i d u i T ^ c i c d K l O t f C n C O L O t f C O C O T - C M C O C O C O C O C O C M L O N . L O C O C O C O t f C O t f L O C O t f L O C n l * - O C O t f C O C M t f r ~ t f m L O L O t f C M T - L O r ^ t f L O C O t f 1 OP(EX) | t D ^ ^ n n o n s O i - n a j o i n n T f i f l o f f i o o t D u D n a i ' - n o i o i n ^ w o a i c o N T - ^ S N m ^ t D i - o i n n ^ m a j c n i - o m m n n n r ^ O n i n ' T i - C M ' - O O O i n N i n U i n ^ O O i - T - T - T - O W ' - i - N O O T - r i - O i - ' - i - T - r W N r N N O r N 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 | URBPOP © i - N f f l O N f l V © ( D O C O T - f l O n O ^ O S N N T - 0 1 f f l O i n r - l D C ) W O O S i n i J ) C O « S W C O N i n O W N T - ^ 0 1 D W i n C O C O t f C M C O t f t f t f - t f C M C O t f - C M C O C O C M C M C M * - C M t f t f t f t f i n < O r - ~ C O t f t f O T - C M C M C M C O C M C M C O m c D d d d d c S < i d d d d d d d c D d d d d d d c o G | GROWTH 4.7 0.7 6.3 0.0 2.0 0.6 13.3 0.3 1.0 0.4 2.0 0.7 2.5 0.4 4.5 1.4 4.1 0.3 0.8 0.4 3.2 0.0 6.5 -0.6 1.4 0.7 6.7 0.2 1.9 0.5 0.7 1.0 5.2 0.4 3.4 -0.2 | GDP N f f l ^ w f f l S C O ^ n n i n w f f w i D n o w s o N T - f D o m o o m f f l t D i n i n i o ^ i n o N o t D t D t o N c o n n o T - T N i n n ^ ^ T ^ c M ^ d o i N C M i d d t f i d c M t f d r ^ c M L o d o T ^ d i ^ c M c d t f t f t f T - CMCO LOr ^ C D COCDtfT-CM T - O CO CM tf CMCO T - i -i— CM T - CM | GNPPC| o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o m ^ N o ^ n ^ « s w o i n n o T - u ) ( o a j N o i D < D ^ n ^ N ( c c o o ! i D « » N N a 3 U ) N O ( j ) t D T r i n w o c o a ) c o N m ( D i n ^ c O T f ( D O w o N w i n o ( O i - c o w ^ f l ^ N n ^ T r i n w N o s t t i i D W ( j > 0 ) T - ' T o ^ ^ n T - n ^ N f l ^ i n o o ^ W " t w t o v N O ) i o T - T - tfCO CM CM CM T - T - T - ^ T - T - T - C M C M | COUNTRY j Congo Congo Cote d'lvoire Cote d'lvoire Cote d'lvoire Egypt Egypt Egypt Gabon Gabon Gabon Ghana Ghana Ghana India India India Mauritania Mauritania Mauritania Mauritius Mauritius Mauritius Mexico Mexico Mexico Morocco Morocco Morocco Niger Niger Niger Nigeria Nigeria Nigeria Pakistan Pakistan Pakistan Paraguay Paraguay Paraguay Peru Pem Peru Sri Lanka Sri Lanka Sri Lanka Tunisia Tunisia Tunisia Uruguay Uruguay Uruguay | YEAR | o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o C O O J N C 0 0 1 N C O C O N C O C O N C O C n N r o O ) N C O r o N 0 3 0 ) N C O C f l N C O O > N C O C O N C O C n S ( O C f l S C O ( S S C O f f l N a D f f i S ( D O > N C O O > C T 3 c n c n c n c B c n c n c n c n c n c n c n C T > C D C B c n c n c n c D c n c n c n c n c n c n c n c n c j ) CO o o o a. a UJ z -1 o o CM o a. CO O Q. rr T- T-LU < J • < o o o O DC LL < • o o o < CO < a v T cc O 1- T-N CL LU LU T- T- T-> o rr CL CL < T-X 1 LU rr O LL >- *7 V -I CL CL CO r-z 3 o h- Ol |s-u CO CD CM CO Tt a u. z CM CM O o O Q O o o l/G O d d a LL z O o o Q CO to CO LL CM to cn z q CO rs. h- CO co CO CO O o Tt 00 rs CM CM CO LU O d d ST o a. CM CO O is. CO Oi CL d d d ca cc => X CM CO t Tf d O rr O Ti- TT CO D_ ed OJ 00 Q CO Tt a u o o o a. CM TT CD a. Tf CM z >- co- CO CO CC co CD a> t- Z3 Z3 Z3 z N N N CU CU CD c c C o cu cu CD o > > > o o O rX rs. CO O) < O) O) O) LU > APPENDIX 5 C o r r e l a t i o n R e p o r t s T a b l e 1 T w e n t y - Y e a r M o d e l C o r r e l a t i o n s P e a r s o n C o r r e l a t i o n s S e c t i o n ( P a i r - W i s e D e l e t i o n ) GNPPC InGNPPC L-lnGNPPC GDP InGDP L-lnGDP GNPPC 1.000000 0.824901 0.819312 0.158378 0.276656 0.263693 InGNPPC 0.824901 1.000000 0.991848 0.227949 0.357338 0.342095 L-lnGNPPC 0.819312 0.991848 1.000000 0.217150 0.344639 0.350689 GDP 0.158378 0.227949 0.217150 1.000000 0.742928 0.743521 InGDP 0.276656 0.357338 0.344639 0.742928 1.000000 0.995714 L-lnGDP 0.263693 0.342095 0.350689 0.743521 0.995714 1.000000 URBPOP 0.666222 0.784063 0.785567 0.093396 0.254089 0.250054 L-URBPOP 0.674479 0.787926 0.784124 0.091167 0.252549 0.250077 OP(EX) 0.673618 0.482486 0.472108 -0.102849 -0.004308 -0.010730 L-OP(EX) 0.686228 0.491124 0.473041 -0.104119 -0.003665 -0.013622 COST 0.294827 0.329851 0.301745 -0.115239 -0.085258 -0.112260 InCOST 0.370747 0.451129 0.420872 -0.127181 -0.092251 -0.123096 L-lnCOST 0.377222 0.467205 0.454299 -0.133632 -0.086609 -0.084335 NFDI 0.497178 0.423094 0.415675 0.497658 0.452756 0.447209 InNFDI 0.441876 0.549942 0.541469 0.494274 0.721037 0.709848 L-lnNFDI 0.442701 0.551345 0.547460 0.506123 0.725016 0.717925 NFDI/GDP 0.343719 0.236025 0.231201 -0.087398 -0.082371 -0.088628 L-NFDI/GDP 0.358621 0.247026 0.228462 -0.085496 -0.078766 -0.091196 NFDIPC 0.678632 0.400822 0.393138 -0.030152 0.053639 0.042132 L-NFDIPC 0.711760 0.421622 0.411944 -0.029710 0.054965 0.049291 OWN 0.043943 0.106292 0.125269 0.097957 0.075495 0.089051 L-OWN 0.024487 0.086810 0.099718 0.098980 0.068132 0.072713 SUPPLY -0.000139 0.001472 -0.001754 0.012380 0.022066 0.026789 L-SUPPLY 0.001241 -0.000289 0.001355 0.016724 0.028766 0.026955 FOREX 0.036446 0.065911 0.048846 0.002903 0.035218 0.027044 L-FOREX 0.047234 0.070609 0.062763 0.010217 0.038307 0.032931 APPROVE -0.070434 -0.082779 -0.051251 -0.050871 -0.045461 -0.009096 L-APPROVE -0.067091 -0.075060 -0.080454 -0.045871 -0.037482 -0.042094 EPZ -0.043543 -0.020412 -0.025355 0.113404 0.082294 0.075440 L-EPZ -0.050001 -0.033798 -0.038216 0.028928 0.040271 0.036367 WORK 0.042019 0.079901 0.068707 0.000243 0.000721 -0.026070 L-WORK 0.055816 0.091085 0.079772 -0.002991 0.006534 -0.001732 DASIA 0.090676 -0.122182 -0.133643 0.197977 0.361840 0.358810 DAFRICA -0.223541 -0.209488 -0.205014 -0.347166 -0.557109 -0.556892 DLAMER 0.143821 0.352442 0.359699 0.163304 0.215682 0.218633 POSPOL -0.047440 -0.016765 0.018964 0.052030 0.068816 0.107313 L-POSPOL -0.050169 -0.019203 -0.016125 0.070745 0.077148 0.075221 NEGPOL -0.066265 -0.095242 -0.076604 -0.012922 -0.005293 0.020771 L-NEGPOL -0.062574 -0.089775 -0.089275 -0.001135 -0.001037 0.000417 C o r r e l a t i o n R e p o r t P e a r s o n C o r r e l a t i o n s S e c t i o n ( P a i r - W i s e D e l e t i o n ) U R B P O P L - U R B P O P OP(EX) L-OP(EX) C O S T InCOST G N P P C 0.666222 0.674479 0.673618 0.686228 0.294827 0.370747 InGNPPC 0.784063 0.787926 0.482486 0.491124 0.329851 0.451129 L - l n G N P P C 0.785567 0.784124 0.472108 0.473041 0.301745 0.420872 G D P 0.093396 0.091167 -0.102849 -0.104119 -0.115239 -0.127181 InGDP 0.254089 0.252549 -0.004308 -0.003665 -0.085258 -0.092251 L-lnGDP 0.250054 0.250077 -0.010730 -0.013622 -0.112260 -0.123096 U R B P O P 1.000000 0.999853 0.430532 0.428879 0.236179 0.369573 L - U R B P O P 0.999853 1.000000 0.431451 0.431097 0.228603 0.362607 OP(EX) 0.430532 0.431451 1.000000 0.991301 0.215737 0.269121 L-OP(EX) 0.428879 0.431097 0.991301 1.000000 0.219045 0.273884 C O S T 0.236179 0.228603 0.215737 0.219045 1.000000 0.892813 InCOST 0.369573 0.362607 0.269121 0.273884 0.892813 1.000000 L-lnCOST 0.369286 0.365595 0.265951 0.267878 0.835593 0.947056 NFDI 0.278439 0.281271 0.351697 0.350417 0.001516 0.026647 InNFDI 0.410350 0.410334 0.291161 0.292937 0.030170 0.099200 L-lnNFDI 0.415058 0.414357 0.290062 0.285502 0.038903 0.100784 NFDI/GDP 0.188156 0.198739 0.507151 0.510195 0.133989 0.173180 L-NFDI/GDP 0.183579 0.185634 0.495346 0.495710 0.157039 0.199795 NFDIPC 0.337078 0.345056 0.717529 0.727058 0.177534 0.206830 L-NFDIPC 0.346774 0.349279 0.727008 0.739263 0.182989 0.214879 O W N 0.093143 0.091122 0.030985 0.014234 -0.043693 -0.058611 L - O W N 0.087820 0.087499 0.028905 0.031396 -0.054759 -0.071673 S U P P L Y 0.027731 0.024282 -0.017369 -0.015960 -0.033990 -0.036882 L - S U P P L Y 0.028341 0.029212 -0.013441 -0.015966 -0.029397 -0.032938 F O R E X 0.091477 0.085103 0.041737 0.034808 -0.025645 -0.032566 L - F O R E X 0.084978 0.085294 0.049756 0.043757 -0.022298 -0.026351 A P P R O V E -0.031141 -0.027866 -0.018707 -0.036811 -0.065816 -0.067545 L - A P P R O V E -0.029314 -0.029452 -0.026764 -0.017719 -0.065671 -0.067190 E P Z -0.068871 -0.074680 -0.014407 -0.012273 -0.062844 -0.078693 L - E P Z -0.043591 -0.043584 -0.011864 -0.014419 -0.054584 -0.067749 W O R K 0.099006 0.117743 0.059375 0.055112 0.017944 0.029227 L - W O R K 0.100486 0.100181 0.069071 0.060612 0.038177 0.054310 DASIA -0.198043 -0.197089 0.400344 0.398581 -0.273903 -0.375289 DAFRICA -0.355525 -0.356429 -0.157126 -0.155503 0.228138 0.239372 D L A M E R 0.588348 0.588314 -0.251760 -0.251605 0.043974 0.138486 P O S P O L 0.005461 0.014283 0.002230 -0.014278 -0.087646 -0.093298 L - P O S P O L 0.002766 0.002314 0.001386 0.005429 -0.096401 -0.103205 N E G P O L -0.104687 -0.104317 -0.041171 -0.031107 0.000638 0.016342 L - N E G P O L -0.102423 -0.102939 -0.045219 -0.040320 -0.004848 0.007922 Cronbachs Alpha = 0.358254 Standardized Cronbachs Alpha = 0.800037 203 C o r r e l a t i o n R e p o r t P e a r s o n C o r r e l a t i o n s S e c t i o n ( P a i r - W i s e D e l e t i o n ) L-lnCOST NFDI InNFDI L-lnNFDI NFDI/GDP L-NFDI/GDP G N P P C 0.377222 0.497178 0.441876 0.442701 0.343719 0.358621 InGNPPC 0.467205 0.423094 0.549942 0.551345 0.236025 0.247026 L - l n G N P P C 0.454299 0.415675 0.541469 0.547460 0.231201 0.228462 G D P -0.133632 0.497658 0.494274 0.506123 -0.087398 -0.085496 InGDP -0.086609 0.452756 0.721037 0.725016 -0.082371 -0.078766 L-lnGDP -0.084335 0.447209 0.709848 0.717925 -0.088628 -0.091196 U R B P O P 0.369286 0.278439 0.410350 0.415058 0.188156 0.183579 L - U R B P O P 0.365595 0.281271 0.410334 0.414357 0.198739 0.185634 OP(EX) 0.265951 0.351697 0.291161 0.290062 0.507151 0.495346 L-OP(EX) 0.267878 0.350417 0.292937 0.285502 0.510195 0.495710 C O S T 0.835593 0.001516 0.030170 0.038903 0.133989 0.157039 InCOST 0.947056 0.026647 0.099200 0.100784 0.173180 0.199795 L- lnCOST 1.000000 0.018334 0.098997 0.112232 0.157968 0.173027 NFDI 0.018334 1.000000 0.675236 0.615424 0.386093 0.292177 InNFDI 0.098997 0.675236 1.000000 0.884643 0.337543 0.269724 L-lnNFDI 0.112232 0.615424 0.884643 1.000000 0.263483 0.329260 NFDI/GDP 0.157968 0.386093 0.337543 0.263483 1.000000 0.636460 L-NFDI/GDP 0.173027 0.292177 0.269724 0.329260 0.636460 1.000000 NFDIPC 0.201129 0.537786 0.306065 0.275647 0.601101 0.500515 L-NFDIPC 0.213073 0.452324 0.277940 0.311765 0.501795 0.604293 O W N -0.060565 0.035707 0.032969 0.027271 -0.044458 -0.045176 L - O W N -0.062871 0.056733 0.037077 0.036981 -0.009299 -0.042850 S U P P L Y -0.031875 0.015315 0.039595 0.052359 0.012940 0.031575 L - S U P P L Y -0.039794 0.030165 0.049188 0.042702 0.020931 0.012653 F O R E X -0.042106 -0.005049 -0.008114 0.045402 -0.027659 -0.042624 L - F O R E X -0.031104 0.011754 0.029757 -0.009151 -0.012650 -0.026524 A P P R O V E -0.056346 -0.065135 -0.055180 -0.022337 -0.039062 -0.047955 L - A P P R O V E -0.073665 -0.053126 -0.047520 -0.053018 -0.024544 -0.039517 E P Z -0.083244 0.022599 0.055335 0.043903 -0.013544 -0.017294 L - E P Z -0.075553 -0.016567 0.022557 0.031700 -0.006048 -0.006593 W O R K 0.011854 0.039609 0.047181 0.037674 0.097211 0.012739 L - W O R K 0.032240 0.026977 0.059146 0.046638 0.035297 0.098948 DASIA -0.376432 0.136381 0.222796 0.215696 0.099168 0.089414 DAFRICA 0.241081 -0.238038 -0.402991 -0.397590 0.038945 0.049612 D L A M E R 0.137667 0.109910 0.206065 0.208245 -0.145852 -0.147012 P O S P O L -0.071912 -0.034703 0.047188 0.053481 -0.044771 -0.073113 L - P O S P O L -0.103586 0.002715 0.048702 0.056043 -0.009393 -0.043597 N E G P O L 0.036751 -0.043483 0.017613 -0.009497 -0.004057 -0.010991 L - N E G P O L 0.012553 -0.041156 -0.011610 0.021416 -0.003194 -0.004232 Cronbachs Alpha = 0.358254 Standardized Cronbachs Alpha = 0.800037 204 C o r r e l a t i o n R e p o r t P e a r s o n C o r r e l a t i o n s S e c t i o n ( P a i r - W i s e D e l e t i o n ) NFDIPC L-NFDIPC O W N L - O W N S U P P L Y L - S U P P L Y G N P P C 0.678632 0.711760 0.043943 0.024487 -0.000139 0.001241 InGNPPC 0.400822 0.421622 0.106292 0.086810 0.001472 -0.000289 L - l n G N P P C 0.393138 0.411944 0.125269 0.099718 -0.001754 0.001355 G D P -0.030152 -0.029710 0.097957 0.098980 0.012380 0.016724 InGDP 0.053639 0.054965 0.075495 0.068132 0.022066 0.028766 L-lnGDP 0.042132 0.049291 0.089051 0.072713 0.026789 0.026955 U R B P O P 0.337078 0.346774 0.093143 0.087820 0.027731 0.028341 L - U R B P O P 0.345056 0.349279 0.091122 0.087499 0.024282 0.029212 OP(EX) 0.717529 0.727008 0.030985 0.028905 -0.017369 -0.013441 L-OP(EX) 0.727058 0.739263 0.014234 0.031396 -0.015960 -0.015966 C O S T 0.177534 0.182989 -0.043693 -0.054759 -0.033990 -0.029397 InCOST 0.206830 0.214879 -0.058611 -0.071673 -0.036882 -0.032938 L- lnCOST 0.201129 0.213073 -0.060565 -0.062871 -0.031875 -0.039794 NFDI 0.537786 0.452324 0.035707 0.056733 0.015315 0.030165 InNFDI 0.306065 0.277940 0.032969 0.037077 0.039595 0.049188 L-lnNFDI 0.275647 0.311765 0.027271 0.036981 0.052359 0.042702 NFDI/GDP 0.601101 0.501795 -0.044458 -0.009299 0.012940 0.020931 L-NFDI/GDP 0.500515 0.604293 -0.045176 -0.042850 0.031575 0.012653 NFDIPC 1.000000 0.861988 -0.027829 -0.001752 0.007175 0.020011 L-NFDIPC 0.861988 1.000000 -0.028622 -0.031778 0.019990 0.010040 O W N -0.027829 -0.028622 1.000000 0.090025 0.058724 0.017989 L - O W N -0.001752 -0.031778 0.090025 1.000000 0.009739 0.059765 S U P P L Y 0.007175 0.019990 0.058724 0.009739 1.000000 0.059322 L - S U P P L Y 0.020011 0.010040 0.017989 0.059765 0.059322 1.000000 F O R E X -0.005828 -0.013403 0.098390 -0.066352 0.031188 -0.043502 L - F O R E X 0.007076 -0.005054 0.009711 0.090979 0.086240 0.032199 A P P R O V E -0.037196 -0.038167 0.002440 -0.017093 -0.040862 -0.066777 L - A P P R O V E -0.034949 -0.039522 0.026144 0.003097 0.029458 -0.041087 E P Z -0.024831 -0.025623 -0.008924 -0.098509 0.168902 0.067042 L - E P Z -0.026659 -0.027153 -0.016093 0.002398 -0.014324 0.278032 W O R K 0.036332 0.002862 0.153144 0.053219 0.173014 0.060963 L - W O R K 0.031509 0.040075 0.025123 0.153827 -0.014012 0.174370 DASIA 0.191964 0.195214 0.038779 0.036583 -0.021506 -0.018706 DAFRICA -0.099834 -0.099219 -0.045150 -0.039576 0.032247 0.037040 D L A M E R -0.094919 -0.098992 0.007546 0.003891 -0.011893 -0.019962 P O S P O L -0.053817 -0.057006 0.304513 0.008747 0.294254 -0.002601 L - P O S P O L -0.037677 -0.054555 0.046749 0.301244 0.043485 0.293927 N E G P O L -0.021716 -0.016751 -0.518798 -0.040616 -0.173941 -0.009638 L - N E G P O L -0.036264 -0.019522 -0.024635 -0.519420 -0.021768 -0.175513 Cronbachs Alpha = 0.358254 Standardized Cronbachs Alpha = 0.800037 205 C o r r e l a t i o n R e p o r t P e a r s o n C o r r e l a t i o n s S e c t i o n ( P a i r - W i s e D e l e t i o n ) F O R E X L - F O R E X A P P R O V E L - A P P R O V E E P Z L - E P Z G N P P C 0.036446 0.047234 -0.070434 -0.067091 -0.043543 -0.050001 InGNPPC 0.065911 0.070609 -0.082779 -0.075060 -0.020412 -0.033798 L - l n G N P P C 0.048846 0.062763 -0.051251 -0.080454 -0.025355 -0.038216 G D P 0.002903 0.010217 -0.050871 -0.045871 0.113404 0.028928 InGDP 0.035218 0.038307 -0.045461 -0.037482 0.082294 0.040271 L-lnGDP 0.027044 0.032931 -0.009096 -0.042094 0.075440 0.036367 U R B P O P 0.091477 0.084978 -0.031141 -0.029314 -0.068871 -0.043591 L - U R B P O P 0.085103 0.085294 -0.027866 -0.029452 -0.074680 -0.043584 OP(EX) 0.041737 0.049756 -0.018707 -0.026764 -0.014407 -0.011864 L-OP(EX) 0.034808 0.043757 -0.036811 -0.017719 -0.012273 -0.014419 C O S T -0.025645 -0.022298 -0.065816 -0.065671 -0.062844 -0.054584 InCOST -0.032566 -0.026351 -0.067545 -0.067190 -0.078693 -0.067749 L-lnCOST -0.042106 -0.031104 -0.056346 -0.073665 -0.083244 -0.075553 NFDI -0.005049 0.011754 -0.065135 -0.053126 0.022599 -0.016567 InNFDI -0.008114 0.029757 -0.055180 -0.047520 0.055335 0.022557 L-lnNFDI 0.045402 -0.009151 -0.022337 -0.053018 0.043903 0.031700 NFDI/GDP -0.027659 -0.012650 -0.039062 -0.024544 -0.013544 -0.006048 L-NFDI/GDP -0.042624 -0.026524 -0.047955 -0.039517 -0.017294 -0.006593 NFDIPC -0.005828 0.007076 -0.037196 -0.034949 -0.024831 -0.026659 L-NFDIPC -0.013403 -0.005054 -0.038167 -0.039522 -0.025623 -0.027153 O W N 0.098390 0.009711 0.002440 0.026144 -0.008924 -0.016093 L - O W N -0.066352 0.090979 -0.017093 0.003097 -0.098509 0.002398 S U P P L Y 0.031188 0.086240 -0.040862 0.029458 0.168902 -0.014324 L - S U P P L Y -0.043502 0.032199 -0.066777 -0.041087 0.067042 0.278032 F O R E X 1.000000 -0.023323 0.206678 0.026949 -0.006333 -0.028532 L - F O R E X -0.023323 1.000000 -0.049632 0.209470 0.025086 -0.006818 A P P R O V E 0.206678 -0.049632 1.000000 -0.065731 0.016963 -0.017106 L - A P P R O V E 0.026949 0.209470 -0.065731 1.000000 0.008156 -0.000947 E P Z -0.006333 0.025086 0.016963 0.008156 1.000000 0.070792 L - E P Z -0.028532 -0.006818 -0.017106 -0.000947 0.070792 1.000000 W O R K 0.131205 0.061753 -0.130568 0.037617 0.035058 -0.010853 L - W O R K -0.046845 0.132146 0.001380 -0.129634 -0.025914 0.127711 DASIA 0.052510 0.058102 0.017440 0.017889 0.111590 0.101320 D A F R I C A -0.066579 -0.064833 0.012093 0.012405 -0.056713 -0.050167 D L A M E R 0.016039 0.008295 -0.031259 -0.032064 -0.056590 -0.052801 P O S P O L 0.269897 0.053902 0.603464 0.020431 0.236663 0.002637 L - P O S P O L -0.066680 0.263716 -0.091897 0.605656 0.067138 0.337639 N E G P O L -0.295793 0.035532 0.182327 0.007153 0.047480 0.013790 L - N E G P O L 0.024931 -0.298489 -0.010345 0.180272 0.096658 0.072998 Cronbachs Alpha = 0.358254 Standardized Cronbachs Alpha = 0.800037 206 C o r r e l a t i o n R e p o r t P e a r s o n C o r r e l a t i o n s S e c t i o n ( P a i r - W i s e D e l e t i o n ) W O R K L - W O R K DASIA DAFRICA D L A M E R P O S P O L G N P P C 0.042019 0.055816 0.090676 -0.223541 0.143821 -0.047440 InGNPPC 0.079901 0.091085 -0.122182 -0.209488 0.352442 -0.016765 L - l n G N P P C 0.068707 0.079772 -0.133643 -0.205014 0.359699 0.018964 G D P 0.000243 -0.002991 0.197977 -0.347166 0.163304 0.052030 InGDP 0.000721 0.006534 0.361840 -0.557109 0.215682 0.068816 L-lnGDP -0.026070 -0.001732 0.358810 -0.556892 0.218633 0.107313 U R B P O P 0.099006 0.100486 -0.198043 -0.355525 0.588348 0.005461 L - U R B P O P 0.117743 0.100181 -0.197089 -0.356429 0.588314 0.014283 OP(EX) 0.059375 0.069071 0.400344 -0.157126 -0.251760 0.002230 L-OP(EX) 0.055112 0.060612 0.398581 -0.155503 -0.251605 -0.014278 C O S T 0.017944 0.038177 -0.273903 0.228138 0.043974 -0.087646 InCOST 0.029227 0.054310 -0.375289 0.239372 0.138486 -0.093298 L-lnCOST 0.011854 0.032240 -0.376432 0.241081 0.137667 -0.071912 NFDI 0.039609 0.026977 0.136381 -0.238038 0.109910 -0.034703 InNFDI 0.047181 0.059146 0.222796 -0.402991 0.206065 0.047188 L-lnNFDI 0.037674 0.046638 0.215696 -0.397590 0.208245 0.053481 NFDI/GDP 0.097211 0.035297 0.099168 0.038945 -0.145852 -0.044771 L-NFDI/GDP 0.012739 0.098948 0.089414 0.049612 -0.147012 -0.073113 NFDIPC 0.036332 0.031509 0.191964 -0.099834 -0.094919 -0.053817 L-NFDIPC 0.002862 0.040075 0.195214 -0.099219 -0.098992 -0.057006 O W N 0.153144 0.025123 0.038779 -0.045150 0.007546 0.304513 L - O W N 0.053219 0.153827 0.036583 -0.039576 0.003891 0.008747 S U P P L Y 0.173014 -0.014012 -0.021506 0.032247 -0.011893 0.294254 L - S U P P L Y 0.060963 0.174370 -0.018706 0.037040 -0.019962 -0.002601 F O R E X 0.131205 -0.046845 0.052510 -0.066579 0.016039 0.269897 L - F O R E X 0.061753 0.132146 0.058102 -0.064833 0.008295 0.053902 A P P R O V E -0.130568 0.001380 0.017440 0.012093 -0.031259 0.603464 L - A P P R O V E 0.037617 -0.129634 0.017889 0.012405 -0.032064 0.020431 E P Z 0.035058 -0.025914 0.111590 -0.056713 -0.056590 0.236663 L - E P Z -0.010853 0.127711 0.101320 -0.050167 -0.052801 0.002637 W O R K 1.000000 0.028781 -0.007339 0.013218 -0.006426 -0.116485 L - W O R K 0.028781 1.000000 -0.007523 0.013548 -0.006587 -0.007438 DASIA -0.007339 -0.007523 1.000000 -0.555248 -0.456832 0.097126 DAFRICA 0.013218 0.013548 -0.555248 1.000000 -0.486172 -0.068724 D L A M E R -0.006426 -0.006587 -0.456832 -0.486172 1.000000 -0.028546 P O S P O L -0.116485 -0.007438 0.097126 -0.068724 -0.028546 1.000000 L - P O S P O L 0.054329 -0.115880 0.101543 -0.065813 -0.036301 0.064082 N E G P O L -0.562878 0.011726 0.015374 -0.011670 -0.003671 0.288327 L - N E G P O L -0.026861 -0.563377 0.017242 -0.014585 -0.002516 0.014142 Cronbachs Alpha = 0.358254 Standardized Cronbachs Alpha = 0.800037 207 C o r r e l a t i o n R e p o r t P e a r s o n C o r r e l a t i o n s S e c t i o n ( P a i r - W i s e D e l e t i o n ) L - P O S P O L N E G P O L L - N E G P O L G N P P C -0.050169 -0.066265 -0.062574 InGNPPC -0.019203 -0.095242 -0.089775 L - l n G N P P C -0.016125 -0.076604 -0.089275 G D P 0.070745 -0.012922 -0.001135 InGDP 0.077148 -0.005293 -0.001037 L-lnGDP 0.075221 0.020771 0.000417 U R B P O P 0.002766 -0.104687 -0.102423 L - U R B P O P 0.002314 -0.104317 -0.102939 OP(EX) 0.001386 -0.041171 -0.045219 L-OP(EX) 0.005429 -0.031107 -0.040320 C O S T -0.096401 0.000638 -0.004848 InCOST -0.103205 0.016342 0.007922 L-lnCOST -0.103586 0.036751 0.012553 NFDI 0.002715 -0.043483 -0.041156 InNFDI 0.048702 0.017613 -0.011610 L-lnNFDI 0.056043 -0.009497 0.021416 NFDI/GDP -0.009393 -0.004057 -0.003194 L-NFDI/GDP -0.043597 -0.010991 -0.004232 NFDIPC -0.037677 -0.021716 -0.036264 L-NFDIPC -0.054555 -0.016751 -0.019522 O W N 0.046749 -0.518798 -0.024635 L - O W N 0.301244 -0.040616 -0.519420 S U P P L Y 0.043485 -0.173941 -0.021768 L - S U P P L Y 0.293927 -0.009638 -0.175513 F O R E X -0.066680 -0.295793 0.024931 L - F O R E X 0.263716 0.035532 -0.298489 A P P R O V E -0.091897 0.182327 -0.010345 L - A P P R O V E 0.605656 0.007153 0.180272 E P Z 0.067138 0.047480 0.096658 L - E P Z 0.337639 0.013790 0.072998 W O R K 0.054329 -0.562878 -0.026861 L - W O R K -0.115880 0.011726 -0.563377 DASIA 0.101543 0.015374 0.017242 D A F R I C A -0.065813 -0.011670 -0.014585 D L A M E R -0.036301 -0.003671 -0.002516 P O S P O L 0.064082 0.288327 0.014142 L - P O S P O L 1.000000 0.037556 0.287832 N E G P O L 0.037556 1.000000 0.040401 L - N E G P O L 0.287832 0.040401 1.000000 Cronbachs Alpha = 0.358254 Standardized Cronbachs Alpha = 0.800037 APPENDIX 5 Correlation Reports Table 2 3-Period Model Correlations Pearson Correlations Section (Pair-Wise Deletion) G N P P C InGNPPC G D P InGDP G R O W T H U R B P O P G N P P C 1.000000 0.793790 0.209516 0.324739 0.181044 0.615889 InGNPPC 0.793790 1.000000 0.299565 0.442081 0.279058 0.749619 G D P 0.209516 0.299565 1.000000 0.713939 -0.073565 0.130501 InGDP 0.324739 0.442081 0.713939 1.000000 -0.074037 0.279046 G R O W T H 0.181044 0.279058 -0.073565 -0.074037 1.000000 -0.010351 U R B P O P 0.615889 0.749619 0.130501 0.279046 -0.010351 1.000000 OP(EX) 0.670550 0.475109 -0.076121 0.021119 0.196314 0.427381 C O S T 0.370361 0.450177 -0.062861 -0.003191 0.412435 0.327684 InCOST 0.391228 0.496317 -0.072666 -0.029109 0.465643 0.419744 NFDI 0.560964 0.452205 0.398710 0.422098 -0.091735 0.263981 InNFDI 0.454017 0.555339 0.429352 0.725223 -0.016216 0.401697 NFDI/GDP 0.434361 0.248510 -0.105100 -0.082262 0.087910 0.209531 NFDIPC 0.769899 0.396354 -0.022894 0.079534 0.052117 0.343380 O W N 0.303903 0.374614 0.127843 0.140049 -0.353294 0.412848 S U P P L Y 0.346653 0.370908 0.142198 0.080952 -0.209616 0.455162 F O R E X 0.348348 0.394701 0.133526 0.372980 -0.077344 0.242068 A P P R O V E 0.286344 0.308727 -0.049155 0.083277 -0.073711 0.237943 E P Z 0.302532 0.370763 0.389155 0.438244 -0.033612 0.254072 W O R K 0.364878 0.344199 -0.034008 -0.023844 -0.029944 0.356975 DASIA 0.127057 -0.078811 0.177140 0.317712 0.071523 -0.193838 DAFRICA -0.209955 -0.204729 -0.327148 -0.532878 0.073513 -0.354678 D L A M E R 0.089410 0.313323 0.151442 0.206411 -0.124907 0.581705 P O S P O L -0.114326 -0.223274 0.014188 -0.042758 -0.014352 -0.083259 N E G P O L -0.182822 -0.301232 -0.139690 -0.170546 0.028224 -0.129585 Cronbachs Alpha = 0.000000 Standardized Cronbachs Alpha = 0.798104 209 C o r r e l a t i o n R e p o r t Page 2 Database C: \NCSS60\DATA\DATA2.S0 Time/Date 03:00:56 09-07-1996 P e a r s o n C o r r e l a t i o n s S e c t i o n ( P a i r - W i s e D e l e t i o n ) OP(EX) C O S T InCOST NFDI InNFDI NFDI/GC G N P P C 0.670550 0.370361 0.391228 0.560964 0.454017 0.434361 InGNPPC 0.475109 0.450177 0.496317 0.452205 0.555339 0.248510 G D P -0.076121 -0.062861 -0.072666 0.398710 0.429352 -0.105100 InGDP 0.021119 -0.003191 -0.029109 0.422098 0.725223 -0.082262 G R O W T H 0.196314 0.412435 0.465643 -0.091735 -0.016216 0.087910 U R B P O P 0.427381 0.327684 0.419744 0.263981 0.401697 0.209531 OP(EX) 1.000000 0.229192 0.253284 0.413358 0.294071 0.639068 C O S T 0.229192 1.000000 0.937647 0.005733 0.078370 0.140971 InCOST 0.253284 0.937647 1.000000 0.008190 0.095466 0.160385 NFDI 0.413358 0.005733 0.008190 1.000000 0.709002 0.453360 InNFDI 0.294071 0.078370 0.095466 0.709002 1.000000 0.349757 NFDI/GDP 0.639068 0.140971 0.160385 0.453360 0.349757 1.000000 NFDIPC 0.715099 0.192190 0.198186 0.590536 0.316601 0.626194 O W N 0.281876 -0.082932 -0.089948 0.298690 0.304671 0.235953 S U P P L Y 0.327517 0.061448 0.078474 0.187098 0.129880 0.160944 F O R E X 0.264463 -0.137865 -0.164604 0.312957 0.478419 0.186688 A P P R O V E 0.266394 0.029218 -0.018963 0.122429 0.066629 0.070397 E P Z 0.323810 -0.110119 -0.153875 0.351148 0.330344 0.115079 W O R K 0.464051 0.010676 0.049987 0.250808 0.112131 0.279108 DASIA 0.398650 -0.321852 -0.397834 0.176026 0.214013 0.141759 DAFRICA -0.159973 0.222319 0.227903 -0.261372 -0.455916 0.061694 D L A M E R -0.247976 0.090332 0.165766 0.082083 0.217406 -0.223536 P O S P O L 0.036295 -0.145448 -0.169386 -0.126296 -0.096879 -0.068549 N E G P O L -0.120520 -0.086999 -0.060684 -0.130297 -0.071521 -0.120774 Cronbachs Alpha = 0.000000 Standardized Cronbachs Alpha = 0.798104 210 C o r r e l a t i o n R e p o r t Page 3 Database C: \NCSS60\DATA\DATA2.S0 Time/Date 03:00:58 09-07-1996 P e a r s o n C o r r e l a t i o n s S e c t i o n ( P a i r - W i s e D e l e t i o n ) NFDIPC O W N S U P P L Y F O R E X A P P R O V E E P Z G N P P C 0.769899 0.303903 0.346653 0.348348 0.286344 0.302532 InGNPPC 0.396354 0.374614 0.370908 0.394701 0.308727 0.370763 G D P -0.022894 0.127843 0.142198 0.133526 -0.049155 0.389155 InGDP 0.079534 0.140049 0.080952 0.372980 0.083277 0.438244 G R O W T H 0.052117 -0.353294 -0.209616 -0.077344 -0.073711 -0.033612 U R B P O P 0.343380 0.412848 0.455162 0.242068 0.237943 0.254072 OP(EX) 0.715099 0.281876 0.327517 0.264463 0.266394 0.323810 C O S T 0.192190 -0.082932 0.061448 -0.137865 0.029218 -0.110119 InCOST 0.198186 -0.089948 0.078474 -0.164604 -0.018963 -0.153875 NFDI 0.590536 0.298690 0.187098 0.312957 0.122429 0.351148 InNFDI 0.316601 0.304671 0.129880 0.478419 0.066629 0.330344 NFDI/GDP 0.626194 0.235953 0.160944 0.186688 0.070397 0.115079 NFDIPC 1.000000 0.178620 0.206450 0.218050 0.157694 0.163550 O W N 0.178620 1.000000 0.648886 0.502408 0.436862 0.344296 S U P P L Y 0.206450 0.648886 1.000000 0.392386 0.215980 0.218380 F O R E X 0.218050 0.502408 0.392386 1.000000 0.426386 0.444897 A P P R O V E 0.157694 0.436862 0.215980 0.426386 1.000000 0.291470 E P Z 0.163550 0.344296 0.218380 0.444897 0.291470 1.000000 W O R K 0.255758 0.537666 0.649592 0.424957 0.396185 0.254297 DASIA 0.191125 0.043450 0.070485 0.274205 0.170502 0.343256 DAFRICA -0.116024 -0.111917 -0.125436 -0.291801 -0.110624 -0.213436 D L A M E R -0.079202 0.096730 0.089443 0.006267 -0.042258 -0.109871 P O S P O L -0.045942 -0.000578 -0.071233 -0.181280 -0.010769 0.035195 N E G P O L -0.073125 -0.113124 -0.275494 -0.293414 -0.074841 -0.207513 Cronbachs Alpha = 0.000000 Standardized Cronbachs Alpha = 0.798104 2 1 1 C o r r e l a t i o n R e p o r t Page 4 Database C: \NCSS60\DATA\DATA2.S0 Time/Date 03:01:01 09-07-1996 P e a r s o n C o r r e l a t i o n s S e c t i o n ( P a i r - W i s e D e l e t i o n ) W O R K DASIA DAFRICA D L A M E R P O S P O L N E G P O L G N P P C 0.364878 0.127057 -0.209955 0.089410 -0.114326 -0.182822 InGNPPC 0.344199 -0.078811 -0.204729 0.313323 -0.223274 -0.301232 G D P -0.034008 0.177140 -0.327148 0.151442 0.014188 -0.139690 InGDP -0.023844 0.317712 -0.532878 0.206411 -0.042758 -0.170546 G R O W T H -0.029944 0.071523 0.073513 -0.124907 -0.014352 0.028224 U R B P O P 0.356975 -0.193838 -0.354678 0.581705 -0.083259 -0.129585 OP(EX) 0.464051 0.398650 -0.159973 -0.247976 0.036295 -0.120520 C O S T 0.010676 -0.321852 0.222319 0.090332 -0.145448 -0.086999 InCOST 0.049987 -0.397834 0.227903 0.165766 -0.169386 -0.060684 NFDI 0.250808 0.176026 -0.261372 0.082083 -0.126296 -0.130297 InNFDI 0.112131 0.214013 -0.455916 0.217406 -0.096879 -0.071521 NFDI/GDP 0.279108 0.141759 0.061694 -0.223536 -0.068549 -0.120774 NFDIPC 0.255758 0.191125 -0.116024 -0.079202 -0.045942 -0.073125 O W N 0.537666 0.043450 -0.111917 0.096730 -0.000578 -0.113124 S U P P L Y 0.649592 0.070485 -0.125436 0.089443 -0.071233 -0.275494 F O R E X 0.424957 0.274205 -0.291801 0.006267 -0.181280 -0.293414 A P P R O V E 0.396185 0.170502 -0.110624 -0.042258 -0.010769 -0.074841 E P Z 0.254297 0.343256 -0.213436 -0.109871 0.035195 -0.207513 W O R K 1.000000 0.265564 -0.151854 -0.085831 0.009254 -0.198786 DASIA 0.265564 1.000000 -0.525771 -0.466527 0.185370 -0.083499 DAFRICA -0.151854 -0.525771 1.000000 -0.486172 -0.106030 -0.022318 D L A M E R -0.085831 -0.466527 -0.486172 1.000000 -0.092383 0.103954 P O S P O L 0.009254 0.185370 -0.106030 -0.092383 1.000000 0.450497 N E G P O L -0.198786 -0.083499 -0.022318 0.103954 0.450497 1.000000 Cronbachs Alpha = 0.000000 Standardized Cronbachs Alpha = 0.798104 212 CO X Q Z U J 0. 0. < 3 (0 c 0 (0 (0 .Q. 1 o b CO E E 3 t o 8 2 ffi UJ c o £ M 3 co = QJ CT CT) c £ DC g> w B ra o tS cc o n is Ul S w >- 5 £.°c C CD I I CO h - T f i- o o T— cvj d CO CJ) uo o ro o ^ ^ d r-- 7 - o CJ) T f o d cd d CM CO f- CO T f CD CO o d d Ml) O CJ) T f o d cd d o r~ o O) T f o d ro d CM co N d - i - 1 i - i - o o CO T f o f- r-~ T f CM d o o o T- CM O O O O O T f o CM LO OJ T f O O CO CO - d d d d d O O O O T f o OLOOOOOt-CMO O L O O O O O I - T - O n s o i n s t - M o o o * . . , cOT-oocor^ -ocnoi-cocM| d i o ' d d d d * - : * - : d < 0 d o CM co o O CO o LO CO o CM d 7 - T f O LO CO O T— c\i d CO o co d d LO CO O T— CM O CO CO o co o d —^ d CM cd d CM O i - I d o CO 00 O CO o co ro o co CM o d co d iri d LO oo o d co d T f o o LO CD O d cj d O i - o d T f d OTfOOCOOi-CMO OTtOOCOOi-CMO Tfr-ocT)cooi-Tfooc»T-COt-OLOCOOLOCOOi-LOCO| d * d d r i d > : w d l o d O) CO O O N O m T f o T- in co d W d CO • c o c o o o o o o o o o o CM ro CM CO CM O d CM d OICOOfSCVINNO T T C T J O C M L O T - C O T - O d o i d d ^ d r i c c i d c o c o o o c o o o o o o C M O O T - O C O C O O c o c o o o c o o o o o o f-OTfcoT-mcMOOT-O O C M I D T - C O T - O T - I O N I c M d d ' J d c d c d d < 0 d CM 10 O O 00 o d o d o ro in co o o cn CM —^  O T— CO CM d r\i d CD j-J _J O O O O CO O O COOt-COOOOO T - L O O O T - O O O O i n c o ^ r o c o o T f T - o r o c o o r o c o o c o c o o j TfCDLOCMOOCnCMOCOCOOLOCOOOCMCO d d d d r i d d ^ d ^ r i d ^ c o ' d d d d L O T f O T f T - t ^ L O C O T -O J i - O C O O O O T f C O L O ^ i r i d d r d d d d LorocoromOLOi-oro^-ocMcooTf^cD WN^ OIO)OOjnOSO)OIOO)OOCON d d d d w d d ^ d ^ r i d ^ c d d d d d CM i ' coroocoTfinmrocoomo cMCMOcorooini-~TfT-cocM| T-'iriddT- :dddd < 0d T r c M O r o c o o c M i ^ o N O O c O ^ O c o N O i - c o d d ^ d d o i d d C M T t C M o r o O - i - r - ^ C M O T T C O L O L O T - c O T f O c O C O O r - c O C M i J d d f ^ d d c M d < 0 c > 7 - : O 0. a. z o c OL a o c a. 0 01 m rr \u ST O CO o o 2 CD CO X I O 3 LU cr co <P S CC DC 3 Q "co c .o S CD < o DC L L < a cc UJ S < > CD CO O o ci £ CO 3 LU O" CO <P s cc cc 5 c o 1 3 CM InNFDI | > • r - 0 3 T - T - O C O C M C O C O C O C O O O O O ) O C O i r ) T - C D C M O T - ' d d ^ d d d d o T - ' d o c i d d d d ^ d T - 1 InNFDI | = 0.01 0.14 0.89 0.17 2.18 0.03 610 0.65 1.22 InNFDI | = InNFDI | -InNFDI | > ( D i - i - T f o « c o o ) t o t w n o c o ( M n o N O O ) T -T - t O T - T - c O ^ t C M C O C O T f r - O O C M C O O ^ - t D T - L O C O d T ^ d d d d d d d o c M d o o d d d d < 0 d ' i - : InNFDI | = T - O t f O C O C M O O > T -O C M C O C M C O O T - L O e O d o d d c j d ^ d r InNFDI | = InNFDI | -InNFDI | > -0.17 -1.77 0.08 0.20 1.18 0.24 0.33 1.07 0.28 -0.44 -2.19 0.03 0.04 0.30 0.77 0.01 0.14 0.89 610 0.61 1.27 InNFDI | = 0.02 0.24 0.81 0.18 2.26 0.02 610 0.61 1.28 InNFDI | = InNFDI | -InNFDI | > i n c O W T - C O O C M C O C O C O C O C O C O ' t f T - C M C D C M O t D O T - i n T - C M C M C M C O O C M C O h - O O C M C O O C O r - - T - l O C M O T - ' d d T - : o o T - : d o T - ' d o d d o d d < 0 d T - : InNFDI | = C O C O O O C O C D C O O C D O O l O L O T - h - O T - l O C M o 6 b d ' J o t o O T - : InNFDI | = InNFDI | -General Policy Variables POSPOL t value prob. level NEGPOL t value prob. level No. of Observations R-square RMSE Specific Policy Variables OWN / value prob. level SUPPLY tvalue prob. level WORK t value prob. level FOREX t value prob. level APPROVE t value prob. level EPZ t value prob. level No. of Observations R-square RMSE s "D o 5 NFDIPC I > 45.04 1.51 0.13 8.48 4.24 0.00 167.96 25.61 0.00 -21.47 -2.85 0.00 -48.60 -5.66 0.00 0.15 0.02 0.98 45.04 1.51 0.13 NFDIPC I = CT> f-. CM (D U ) O O f O W CO O C \ 1 ^ 0 0 ) 0 ) P ) 0 ) N W cc| i n r tf CM q c o c p o c p c o o r t o o t o o t n i o i n r c d - ^ d c d tf d N i r i ci ^ - w ci c d i r i d d d d t D r ^ d tf CO CM CM • tf ' tf NFDIPC I = m tf c o o - » - o o tf o tf c o T - c o i n o c o i o i n i n T r c o M t f s ip to r - w r - q o > i o p o > c q o w t o o ^ o f f l C D c o i - n i o o o> d cd tf d c d c o d a > c \ J d c o i r i d d d d o i ^ d ^ d w CO CO CM T-- 1 tf • CO NFDIPC I - -54.57 -2.15 0.03 3.74 2.27 0.02 143.79 26.67 0.00 4.86 0.76 0.45 732 0.52 74.34 NFDIPC | > -255.88 -7.64 0.00 -5.99 -2.44 0.01 245.52 12.48 0.00 28.98 3.23 0.00 127.74 12.74 0.00 71.42 6.31 0.00 -255.88 -7.64 0.00 NFDIPC | = -253.47 -7.60 0.00 -5.95 -2.44 0.01 244.24 12.51 0.00 28.81 3.22 0.00 127.69 12.78 0.00 71.63 6.35 0.00 -253.47 -7.60 0.00 NFDIPC | = -262.17 -7.88 0.00 -6.16 -2.52 0.01 236.81 12.28 0.00 32.01 3.60 0.00 125.15 12.53 0.00 68.99 6.13 0.00 -262.17 -7.87 0.00 734 0.28 91.02 NFDIPC | --120.56 -3.51 0.00 -1.01 -0.43 0.67 136.39 7.82 0.00 21.76 2.41 0.02 734 0.12 100.27 NFDIPC | > tf-TJ-OT-cOOlOCDO i n tf tf O C O O i n c O C M t f t f O o i c o o t O N O c q c o q o > p p l o i q q i o o i o o i c o o w c \ i d c d c \ i d c o i r i d cd CM d c d d d ^ c N i d c M c v i d n T - n T" T " 1 T- O T - C M CO T -tf ' tf • NFDIPC | = -427.96 -12.24 0.00 55.88 12.58 0.00 -13.84 -5.37 0.00 19.62 2.12 0.03 95.78 10.50 0.00 22.07 2.29 0.02 -427.96 -12.24 0.00 NFDIPC | = -432.01 -12.38 0.00 55.07 12.50 0.00 -13.92 -5.40 0.00 21.80 2.37 0.02 94.76 10.38 0.00 21.46 2.22 0.03 -432.01 -12.38 0.00 734 0.28 90.74 NFDIPC | -t o t f o o m o m * - " - c \ i o o > t f t - c o q ^ - o c o c o o m r - o o o o> co T - tf ricddsddtDoid d d d N d s r-~ • tf T - > • cn CM NFDIPC | > C O C O N n o i N M C M O C O N O O N O N C O O C O I O O O J * - O C O C O C M t o n o n w s M j q c o c o o q o i o w c D O r ^ T - o c n c M o c o c o o d w d ^ d d ^ t f d d t f d o i o i d d w d i r i s d M c o ' d o i o i d CO T - i - 1 O) r N ' O l ' C O ' C O NFDIPC | = O l O i - ' - C O t f C O C O O C O ' - O C O C O O C D C O - " - C O C O O C O C O O O C O T -0 > l f ) O t f O O ) 0 > O O O C O O C M O O O C O O O O ^ - O C M i - O O J l O O i r i N d d d d i : i r i d « i < f d d d d d o i d i r i s d c i i r i d i f i w d CD i - O ' O C M C M ' C B ' C O ' O ) T-" CM 1 1 • NFDIPC | = O C O - t - C O c n c O T - C M O C O L n O m T - O C D C M - r - O C O O r ~ t f O O C O T - C M C D t f o t f O t f o o o o > o o c n i n o t f C M O O ) L o o L O t f o c o c o o o t f o c o i O L o ricvidddd^iridcjtf'd^ddcdwd c 6 N d c o ' c 6 d r i c J d , , ' d T ^ Oi T- T - • O CM T - ' CJ) ' CO 1 0> Ty CM • 1 1 NFDIPC | -C O L O T - O O C n O C M C M O O C M C M r ^ O T - C M C n C M C M O ) N t O O C O N O C O C M C M c q c O t f O O l O ' - O C D C O l f l N W w d i D ^ d c i i ^ d T J d d o i N d d d d ^ d T i C O 1 T— 1 CO CM 1 1 1-Locational Attributes: 1 Intercept / value prob. level InGNPPC t value prob. level InGDP t value prob. level URBPOP tvalue prob. level OP(EX) t value prob. level InCOST t value prob. level No. of Observations R-square RMSE 1 Regional Dummies: DASIA t value prob. level DAFRICA tvalue prob. level DLAMER f value prob. level No. of Observations R-square RMSE NFDIPC | > -10.89 -2.27 0.02 6.19 0.65 0.52 -1.84 -0.13 0.90 -11.46 -1.10 0.27 -3.05 -0.44 0.66 -1.57 -0.39 0.70 732 0.55 72.57 NFDIPC | = -7.92 -2.37 0.02 5.47 1.37 0.17 732 0.55 72.46 NFDIPC | = NFDIPC | -NFDIPC | > -12.57 -2.08 0.04 3.37 0.28 0.78 -5.06 -0.29 0.77 -18.16 -1.39 0.16 -5.53 -0.63 0.53 -2.55 -0.50 0.62 734 0.29 90.87 NFDIPC | = -11.03 -2.63 0.01 8.15 1.61 0.11 734 0.29 90.67 NFDIPC | = NFDIPC | -NFDIPC | > -13.84 -2.30 0.02 11.55 0.97 0.33 3.94 0.23 0.82 -16.75 -1.29 0.20 1.33 0.15 0.88 -6.12 -1.21 0.23 734 0.29 90.54 NFDIPC | = C D O O C O T - O J C O C M I O o c v i d i r i r ^ c S ^ o o • • cn NFDIPC | = NFDIPC | -NFDIPC | > -8.75 -1.83 0.07 8.80 0.93 0.35 3.83 0.28 0.78 -7.06 -0.68 0.49 -2.03 -0.29 0.77 -2.35 -0.59 0.56 732 0.56 71.58 NFDIPC | = -6.13 -1.85 0.06 2.28 0.57 0.57 732 0.56 71.47 NFDIPC | = NFDIPC | -General Policy Variables POSPOL (value prob. level NEGPOL t value prob. level No. of Observations R-square RMSE Soecific Policy Variables OWN t value prob. level SUPPLY t value prob. level WORK (value prob. level FOREX t value prob. level APPROVE (value prob. level EPZ t value prob. level No. of Observations R-square RMSE k W O O r - O r~- o CM oj o d cd cj cn o o co co m f O l o >- « >-d <* d ci *-* ci O C M O O O O T - C M O Tf O O O O CM oo o i— in o ^ w d d ^ d CM CM OJ O o d d Tf o O d Tf d O C M O O O O i - C M O C M C M O C O C O O > T - I - 0 > O L O C O O O C M T t C O C O d d d d ^ : d u , d d a> •D O S IT- CM O O O O 00 O Tf CM in o o in d «i d d ^ d O C M O O O O T - C M O O T- o o O T f O CM d CM m i - o CM N O O CO* o O Tf o o o o O Tf O O CM O * - c o r - T - T - c M c O T f i o C M C O O - r - C O T f c O C D C O d ^ c i o d o c i c i c i O O O O Tf o O Tf o O CM O CO I— o> O N S o d d i - T f f - T - i n o c O T f i n cMcooi-oOTfcocnco d - r - ' d d d d d d d o o o o o o cn co co 10 cn o co cn co N T- o d d d d * d CD O O CO T- O i - CD o 1^  CM o d Tf d d cd d C M T f L 0 C 0 C D T f 0 > 0 0 C 0 l - O O C M C n O T - C D C O C O C D C O T f C O O ) d r d d d < 5 d c i c i ' r ' d c 3 co r--co r» d " CO CD oo o o r~ co o d d Tf d oo in o co o T- T- o in C D o d iri d d CM* d r~ t-~ o i- o o O CO LO Tf CO CD d d d ^  d d r - r » . T t o o c n c o o r » - C M O N i n i ) S o o i - n o > - n o d d d d c d d d c d d d T f d l~- LO CM o co in o d d r o c o c M c o w c y i n N N * -CMCMOCMCOCMLOlO O T ^ d d d d d d d ^ - r - ^ T f T - o c D O O r ^ O O C M i n m N C M O ' - T r o i - c o o d d d d c d d d c d d d T f d I-- T f CM o CD in o d d cocDcocMOTfinr-r--I - T - C M O C M O O C M L O L O O T ^ d d d d d d d o o o o T - o cu •o o S m o i i n n i D O o c o o M O O WCOinNNOMBOi-nO d d d d c d d d c d d d T f d co CD in o r-~ Tf o d d C O T f C M C M l O C O i n C D L O i - O O T - c M C M O T - c o c M i n i n T t c o o ) d ^ d d d d d d d " l d d C O T f C D T f t - O O C O O O O L O O O i - C O M O O M I O O i - O l O d d d d c d d d c d d d T f d • CM I - I - O O O O O O O O I O O O ' > - O O C O O O T - O O C M O O T - O T - I - O O C D L O O C D O t > - C D T t r ~ - T f O L O C O C M C D C D O h - L O C M i - o i o s o i o o i j n w s o v o i o i i i i c o O ' - i n ' -T - ' r d d d d d d d d i i i d d r d d c o ' d d r d O C M O O i - 0 * - " - 0 O O O O o CD CO *— i — T - CM T t 00 00 a •a o S o r ^ m a j T - o r ^ r ^ - c o r ^ o o o r ^ c D O T - C D O C D O O O C D C O C M r * - O C O l O O r r d d r d d d d d n d d r i d d CM ' CO O O i - o O I - O O I - O T - I - O I O r T - O l O TT CO 00 "> ri ri L O C D C O T - C O O O T - C D C O T f O L O O T f c D T f C D C O r - - C O O - i - C O T - C M C D O O C M C O C M d d d d ^ d d ^ d d i o ' d d d d d n d d r CM 1 • CO .JD a. cu u ro > c CO •a c cu a. cu • O O. a. z (3 c a. a C3 a. o a. m DC X LU ST o to o u c £ cu (fl J3 CU ° O" CO 6 <PS Z DC DC lue\ vel lue vel lue veil 1 •3* I -S; 1 prob. prob. prob. < o DC L L < a cc LU s < > CU co n CD O £ 3 UJ IT CO O Z CC DC CD £1 o CL O UJ z cu CO O & *S = UJ 6 <? 5 Z DC DC o InNFDI | > C 0 i n ( 0 O C 0 l 0 ^ C 0 L f ) ( 0 i - S ^ ^ N C 0 C 0 C 0 T - T - 0 » o o r o - i - ^ ' * o i - o o » - T - c M o o c n o c \ i r - » ' r c o c o " d d d d d d 6 d d r d P d d 6 c i c i ' ' , d d cp ' o 1 1 ' InNFDI | = InNFDI | = InNFDI | -InNFDI | > o o a i o f f l ^ o i - c o T - o i c o o o f f l O ^ c c i ^ c o o i § d d d d d d d d d d d d c d ^ d o d m d c > d InNFDI | = InNFDI | = InNFDI | -InNFDI | > 0.0002 0.00 0.99 0.12 0.91 0.36 0.06 0.27 0.79 0.15 0.98 0.33 0.01 0.13 0.90 -0.07 -0.55 0.58 541 0.80 0.90 InNFDI | = InNFDI | = InNFDI | -InNFDI | > i n > - o ) r - s o ) c o c o a ) N i o i n ' - L f j c o ^ o c D T - i - f l ) o o c n i - o o c o o p j r - - i - i - c > j o o c n o c o N t c o c o § 0 0 0 0 0 0 0 0 0 i - ' o o o o o o o u , o c 5 0 InNFDI | = InNFDI | = InNFDI | -Specific Policy Variables L-OWN (value prob. level L-SUPPLY t value prob. level L-WORK t value prob. level L-FOREX t value prob. level L-APPROVE J value prob. level L-EPZ t value prob. level No. of Observations R-square RMSE CO ID L-NFDIPC | > to s o) i - ro o tfcncvi w ID o to m r - i - o t f ^ - r ^ T - c o i ^ - a ) r^cocotxjcoo in o> co CM CD o t\j CM oi O T - O T - C O N N C O C O oS d d d tf d W d d ci ni d s ^ d ^cvidcJodddd T- CM CO 1 • T - ' • ' T -L-NFDIPC | = m CM to co o co f~ co co oo o tf o o> cotfcocococomcMCD a> o> co co tf o to o CM i - co o w to T- T - r - o o i t o s o i o i c o ci ci ci ci rt ci r -^^d d d d N ^  d tftMOT-^ddddd CM CM in ' • T— • 1 1 CM L-NFDIPC | = 21.69 0.96 0.34 0.81 24.61 0.00 1.71 1.11 0.27 50.58 7.10 0.00 -7.86 -1.37 0.17 -14.43 -2.18 0.03 -1.85 -0.33 0.74 21.69 0.96 0.34 698 0.76 53.52 L-NFDIPC | - -5.54 -0.29 0.77 0.82 25.79 0.00 0.61 0.49 0.62 41.77 7.14 0.00 -0.98 -0.21 0.84 698 0.76 53.63 L-NFDIPC | > -40.40 -1.85 0.06 0.93 35.37 0.00 -2.19 -1.43 0.15 45.75 3.38 0.00 4.29 0.76 0.45 23.80 3.43 0.00 10.94 1.50 0.13 -40.40 -1.85 0.06 L-NFDIPC | = -39.42 -1.82 0.07 0.93 35.49 0.00 -2.05 -1.35 0.18 45.16 3.36 0.00 4.13 0.73 0.46 23.31 3.37 0.00 10.88 1.50 0.13 -39.42 -1.82 0.07 L-NFDIPC | = -39.02 -1.80 0.07 0.93 35.68 0.00 -2.04 -1.34 0.18 ; 46.99 3.57 0.00 3.67 0.66 0.51 23.85 3.48 0.00 11.53 1.61 0.11 -39.02 -1.80 0.07 700 0.75 54.86 L-NFDIPC | - -6.46 -0.33 0.74 0.97 41.10 0.00 -0.83 -0.63 0.53 24.17 2.36 0.02 0.20 0.04 0.97 700 0.75 55.27 NFDIPC | > -65.80 -2.68 0.01 0.94 35.42 0.00 8.30 2.65 0.01 -3.23 -1.96 0.05 4.28 0.73 0.46 16.64 2.68 0.01 0.49 0.08 0.94 -65.80 -2.68 0.01 NFDIPC | = -64.61 -2.66 0.01 0.94 35.63 0.00 8.25 2.66 0.01 -3.10 -1.89 0.06 4.06 0.70 0.49 16.20 2.63 0.01 0.64 0.10 0.92 -64.61 -2.66 0.01 NFDIPC | = -65.23 -2.69 0.01 0.94 35.72 0.00 8.70 2.84 0 -3.13 -1.91 0.06 3.40 0.59 0.56 16.58 2.70 0.01 0.97 0.16 0.87 -65.23 -2.69 0.01 700 0.75 55.04 NFDIPC | - -29.78 -1.45 0.15 0.97 39.76 0.00 6.20 2.16 0.03 -1.26 -0.90 0.37 -1.22 -0.22 0.82 700 0.75 55.30 NFDIPC | > 46.29 1.58 0.12 0.80 23.75 0.00 -3.08 -0.76 0.45 3.18 1.70 0.09 -21.96 -1.12 0.26 62.24 6.26 0.00 -6.32 -1.07 0.29 -28.33 -2.64 0.85 -10.27 -1.29 0.50 46.29 1.58 0.12 NFDIPC | = 47.74 1.64 0.10 0.80 23.82 0.00 -3.06 -0.76 0.45 3.33 1.79 0.07 -22.88 -1.17 0.24 62.50 6.31 0.00 -6.56 -1.11 0.27 -28.88 -2.71 0.01 -10.39 -1.31 0.19 47.74 1.64 0.10 NFDIPC | = 47.02 1.62 0.11 0.80 23.89 0.00 -2.91 -0.73 0.47 3.29 1.77 0.08 -20.50 -1.06 0.29 62.11 6.28 0.00 -7.09 -1.22 0.23 -27.94 -2.64 0.01 -9.47 -1.21 0.23 47.02 1.62 0.11 698 0.76 53.49 NFDIPC | -0)tO«lCMCOOCMO)10STfTj.cO^ (»fcOOCOO)CO»BO) COOO)COtOON'-tO*COS»lf)IOO«!OinWSBNCO r : d d d « i d d d d d d d s d d t ; c d d T ; d d l t d r i r i CM • ' tf • • in Locational Attributes: 1 Intercept t value prob. level L-Dependent Variable t value prob. level L-lnGNPPC tvalue prob. level L-lnGDP t value prob. level L-URBPOP t value prob. level L-OP(EX) t value prob. level L-lnCOST t value prob. level No. of Observations R-square RMSE 1 Regional Dummies: DASIA t value prob. level DAFRICA t value prob. level DLAMER t value prob. level ITU. Ul Uuacl Vdliuilo R-square RMSE i n L-NFDIPC | > 2.34 0.65 0.51 6.35 0.87 0.38 -8.40 -0.81 0.42 1.10 0.14 0.89 -1.33 -0.26 0.80 -1.50 -0.22 0.83 698 0.76 53.69 L-NFDIPC | = Tth-CDCMLOOJCOCDCO « T - c o o ) < o m o ) N i i ) o d d i ^ d d ^ d r o • • m L-NFDIPC | = L-NFDIPC | -L-NFDIPC | > 3.46 0.94 0.35 5.33 0.71 0.48 -8.92 -0.83 0.40 0.95 0.12 0.91 -1.25 -0.24 0.81 -2.64 -0.38 0.70 700 0.75 55.02 L-NFDIPC | = T - II) CM ID S O O 11) N c t n s o i n i n o s o ) d d d c J d d ' ' d » • • U ) L-NFDIPC | = L-NFDIPC | -NFDIPC | > m c j N S i - i D N ^ N N O ^ i o n x o i i o i n o i o o i < D O ) n O O > C < I I I I ( D I O I D M C O i - O O I r . « I O O N r riddcoddcodd^dddddndd^dii) I I . ! IX) NFDIPC | = C D O O C O O ' - C D O i n C O v i n i n c o o i n o s o ^ d d c j d d ^ o i r i i • LO NFDIPC | = NFDIPC | -NFDIPC I > 0 ) C O T - N C \ I O I O C O C O T - T - T - C O C O C O C O C I ) C O » C O ^ » f f l O S O ) W O C O S t n * f l N C O W » - S O ) M O N d d d d d s d d o i d d ^ d d ^ d d ^ d r i I I i i i i m NFDIPC I = CMCOrfOCOLOCOCOCO c o c o s c o c n c o o N i o d 6 d o i d d 1 0 d r i • i LO NFDIPC I = NFDIPC I -General Policy Variables L-POSPOL t value prob. level L-NEGPOL t value prob. level No. of Observations R-square RMSE Specific Policy Variables L-OWN t value prob. level L-SUPPLY t value prob. level L-WORK t value prob. level L-FOREX tvalue prob. level L-APPROVE t value prob. level L-EPZ f value prob. level No. of Observations R-square RMSE DInNFDI | > c o t D o i o K o i n ' - N d i ' - o i i n ^ N O C M T j - c n N c o t o c o o t M c o c o c n C O O M O S t O r C O r T - f f l i - f f l l l l O r C O i - « l « ) r - « H C O O O I d r d o o ' d d d d d o ' d d d d o ^ d o p d p p d d ^ d DInNFDI | -c o s o > c o i n i f i i - o N t o * ' - n c o i t ) n o i i n < O N n c o o c M O N t f O T - o ) T - CM co i - i n m o r - c o o o u ) d T ^ d o o d d d d o o d d d d o o d ^ O T ^ Locational Attributes: 1 Intercept (value prob. level InGNPPC t value prob. level InGDP f value prob. level URBPOP (value prob. level OP(EX) tvalue prob. level InCOST t value prob. level No. of Observations R-square RMSE 1 Reaional Dummies: DASIA t value prob. level DAFRICA fvalue prob. level DLAMER t value prob. level R-square RMSE DInNFDI | > 0.13 1.19 0.23 -0.01 -0.07 0.95 0.20 0.58 0.56 -0.08 -0.32 0.75 0.33 2.01 0.04 0.07 0.83 0.41 698 0.01 1.54 DInNFDI | -General Policy Variables POSPOL t value prob. level NEGPOL t value prob. level No. of Observations R-square RMSE Soecific Policy Variables OWN t value prob. level SUPPLY t value prob. level WORK / value prob. level FOREX t value prob. level APPROVE / value prob. level EPZ (value prob. level No. of Observations R-square RMSE tf tf O T- r-~ CD CO CD O O T - CO d cd ci ci d ci T - CO O O T - o m T - T - o c o o m t f h -C M i n c O " - C M 0 0 C M r ^ t f c i c i c i c i c i c i ^ c i c i CO r- S m o> co d d c o i n o T— o> c o c o o> o o o o ci <6 ci ci ci ci i n CD o c o T- a> c o c o o 1 - tf CD ci 0 ci ci O T - O O T - O T - O O CO tf O CM O tf CO CO O O CM CO d c c i d d d d T - tf o o o o O T - O O O O - ^ - ^ O h- CM O C O C M O C O t f t f N C O O C O O t r O C O T - | T - | 0 > c o c n o o c o r ^ o o i o m i o i - i o i o n o d d ci ci ci ci ci ^ m ci d d d T-' CO T- o cd CM d d i n i d d 0 o * - o o O - i - O O O O C O C M O co CM 00 CM Is- tf ^ d d C O O O T - C O C O O C D C O r ^ c o o o T - 0 0 0 0 5 0 d i r i d d d d c M ^ d C M C M T - t f c O I - ~ C O C M 0 0 C O C O i - C M t f C O C M h - t f d ^ d d d d T - ^ d d O t f O O O O r - r - O o o o m c o c o i O T - T - T - c o c n N - c o c M O o c n c n m c D c o i n c o c i - r ^ c i c i c i c i c i c i c i dW 00 r» h-OJ 1 - co o d d t v i - o i n i n o c D C M h -r ^ c M o o i n m c o o o o CM CM T- T- tj> CO S M 1 CO If) O o d d d T~ c o s o s c O T - m c o o c o i n o t - - C M O c o i n o c o o o o o o c o i n i c o ' d d o i d d ^ d d ^ d tfCOCOT-tfcOCONO c o c o o c o r - t f t - ~ c M O d r d d d d i o c o ' d tfCMOOCOOOtfOOi-o T - CD O) CO CO tf o d d f - O O C D t f T - C O C M C M mcocMcocotfT-coo O T - ^ d d d d t f C M O C O C O C O C M C M O C M I ^ - O i n i n C M r - ~ c n o c o c M O c D t f o o c o i o c o V d d c o ' d d f l d d d d O O O O O O C O T - O C O C D f - t f T - O C D t f O C M C M i n o i o o o o o t f o c o i n o o c o t ^ c j ^ d d c o ' d d i f i d d d d co CD in T- N o o o cn co in co o d d d 7S T - c D i n c o c M c o O T - o c o o c o t f C M C D C M c n o c n r ^ c M o t f T - i n o o o o o j o o o o t f c o r o O ' - r o o c D i n T -c d ^ o d - ^ o d i r i d o d d c M T - ^ O T ^ c M O O T ^ d o * - o o o o c o * - o o o o o c M O o m o o o o c M C M O r - c o o o o o c o N N c o o m c n c o t n C M C O O C n O O C D t f C D T ^ T - ^ d d c M d o o o co TJ O c M c o c M C M r ~ - t f r - c o o i n o c o c o - ^ c o t f t f o o T - c o L O C M c o r - » o o r - ~ i n o o c o L O c o O T O t f C M O ' - C M c o d d d d N d d n i d d d d c j V d ^ c o ' d d d d C 0 C O C O t f O > r - ~ C M C O C M T - l O T -tfcnor^cO'-incMcotDcocM • r ^ - r ^ c i c i ^ c i c i S c i d X a z U J D . 0 . < i : o 3 oc u> c oj § tt » c . 0 35 ffl i * . fl "ft Q I" € (Q CD E "V E 8 3 e cn cu OC 15 to O n O l O l l O I O C O N O S N N C O C O r - T - r - ^ O l C O l O T - N * | | - ~ C 0 T - C O C » O t v C M O O C 0 t f C » C 0 t f C 0 r « - O T - t f C 0 C O l 0 C N r d d r d d i d d d d d d d d d c i d d d d dr-1 3 "5: c . 0 0> c o OL OL z a c OL a a c O OC O a 0 01 m oc 3 X LU ST o to o 0 in c o '43 ca £ a> u> • £ 3 LU 0 a- 03 6 <P 5 z OC OC 5 S to .5 co £ E 3 Q ra c . 0 t l f O < O OC L L < o oc LU < in c o to £ CO CO XI O 3 Ull trto z oc oc •a o S CM •o o 5 S InNFDI | > 0.46 2.30 0.03 -0.47 -2.39 0.02 0.11 0.55 0.59 0.84 4.26 0.00 -0.56 -3.33 0.00 -0.42 -2.30 0.03 61 0.77 1.02 InNFDI | = ( O C O O C O C M C O T - C O I T ) C O O O O C M C M C D C O T -o ' t o ' d ^ ^ c i cj InNFDI | = InNFDI | -InNFDI | > 0.54 2.39 0.02 -0.52 -2.35 0.02 0.15 0.65 0.52 0.92 4.28 0.00 -0.62 -3.30 0.00 -0.38 -1.85 0.07 61 0.72 1.12 InNFDI | = -0.82 -2.61 0.01 1.461 1.49 0.14 61 0.60 1.30 InNFDI | = InNFDI | -InNFDI | > UlOg^ OJCOPJ^ fCOIOi-IOOUlCOOTNtOi-lOlO T t T -O^fCOOOi - C O C D T t O C O C O O I -CMOlOr-O d c i d o ' c j o d d d d ^ d o n d o w d d InNFDI | = h - c M'-Troioi-iOT-NCDOCOOOCOCOCM d w d ^ c\i d c i T ~ InNFDI | = InNFDI | -InNFDI | > v o i o n c o o o ( M s c o o i o i n c M O " i n o i i i s o i d N d o V d d d d d ^ d o ' n d d c J d d o InNFDI | = -0.83 -3.07 0.00 1.30 1.51 0.14 61 0.72 1.11 InNFDI | = InNFDI | -General Policv Variables I POSPOL f value prob. level NEGPOL fvalue prob. level No. of Observations R-square RMSE Specific Policv Variables OWN t value prob. level SUPPLY t value prob. level WORK t value prob. level FOREX tvalue prob. level APPROVE t value prob. level EPZ t value prob. level No. of Observations R-square RMSE s I"-CO NFDIPC | > -44.10 -0.22 0.82 8.68 0.61 0.55 -9.15 -1.12 0.27 271.26 7.52 0.00 -0.47 -0.01 0.99 -52.51 -0.93 0.36 -9.98 -0.22 0.83 -44.10 -0.22 0.82 NFDIPC | = -92.94 -0.55 0.59 8.70 0.72 0.47 -9.46 -1.29 0.20 262.34 8.35 0.00 14.56 0.33 0.74 -46.41 -0.94 0.35 -15.83 -0.37 0.71 -92.94 -0.55 0.59 NFDIPC | = -70.37 -0.42 0.67 6.63 0.56 0.58 -9.34 -1.29 0.20 263.79 8.48 0.00 9.22 0.22 0.83 -53.80 -1.11 0.27 -13.84 -0.33 0.74 -70.37 -0.42 0.67 65 0.64 118.57 NFDIPC | -c n co i n i n >- co n s c o o i o o i M n m n r CM T f i - 1- LO CD CM 00 O i n N O N i - C U C O I D a r ^ T ^ c i * d d oi r d «i oi d s ^ d ci CO 1 T- • T f CO T -T - 1 CM t~ NFDIPC | > -621.98 -2.67 0.01 -24.33 -1.34 0.19 -12.95 -1.22 0.22 574.44 3.47 0.00 88.00 1.37 0.18 289.30 3.84 0.00 113.02 1.58 0.12 -621.98 -2.67 0.01 NFDIPC | = -573.10 -2.78 0.01 -15.89 -1.02 0.31 -9.72 -1.00 0.32 487.90 4.07 0.00 85.71 1.52 0.13 260.04 4.44 0.00 87.12 1.34 0.18 -573.10 -2.78 0.01 NFDIPC | --544.30 -2.67 0.01 -18.89 -1.24 0.22 -9.44 -0.98 0.33 484.96 4.07 0.00 79.25 1.42 0.16 250.21 4.34 0.00 91.73 1.45 0.15 -544.30 -2.67 0.01 65 0.37 156.57 NFDIPC | --114.98 -0.57 0.57 -7.68 -0.51 0.61 3.32 0.32 0.75 335.75 2.92 0.00 3.50 0.06 0.95 65 0.16 177.68 NFDIPC | > -1058.51 -3.97 0.00 125.27 3.10 0.00 -35.55 -1.84 0.07 -22.38 -1.98 0.05 76.67 1.11 0.27 203.11 3.01 0.00 22.97 0.37 0.71 -1058.51 -3.97 0.00 NFDIPC | = f - C O O C O O O C M O O O C D O T T f CM C O CM I D I O O T - O I C O S C O O C O C O O O O C O O L O C O T - L O O O o C M CM C O C O O ^ - ^ - C O C O C O O c M ^ d i r i r i d s ^ d d c M ' d T f ' r ^ d s r i d o i d d c M * d Oi ' y— CM 1 CM 1 h- CO CD ' O) T - ' ' T— CT) NFDIPC | = C M ^ O T - i n O C O C I S T - O ^ i - CO T f O I O O O C M I O C M T O I O I O I O C O C O O C O C O O O C O O C D O O L O-t- C M C O C O O C O C O r ^ C O C O O C D C O C O O T f O L O c d d o i ^ d o i c M d c d ^ d d r i d c c i d d d ^ d d cd r-- • i - CM 1 ••- 1 co C O T - I " - ' m CJ) T— ' ' T— O) T— NFDIPC | --613.12 -3.01 0.00 117.03 3.77 0.00 -17.82 -1.18 0.24 -7.72 -0.80 0.43 -23.02 -0.42 0.67 65 0.23 170.76 NFDIPC | > -6.09 -0.02 0.98 0.22 0.01 0.99 2.92 0.17 0.87 -5.98 -0.62 0.54 -2.40 -0.01 0.99 2308.95 4.74 0.00 -4.84 -0.08 0.94 -52.41 -0.60 0.55 -21.00 -0.32 0.75 -6.09 -0.02 0.98 NFDIPC | = 0 ) C O C O T f C O r - - C M T - C O T r i - T r c O C M i - T f o O O T f O ) C O C D O O O O O C O O C D C D C D ^ o o i T - T - c o i o c o M o t o i n ' - ' - m N o o i n o o ) T - c o c o c g i n c o ^ o o ) c d d d c d d d T f d d i r i d d o i d d T ^ i r i d T f ' d d M ; d d r d d n ' d d T- > ' T- ' T- C D ' C O ' T -co CM NFDIPC | = o o > n M » i n o ( M « ) » o i o M - C M O » r o f f l M ( i c o c o c o T r i - i - o o i c o L O c O T r c o o o i c O T - c o i n c o N ' - c o i n O ' - o i o t M O ^ o o ) o j o n ^ m c o c o o o i o i n c i ^ d d d d d t d d i r i d d o i d d c M i r i d r i d d i r i d d a i d o T ^ d d d cd CM ' 1 ' ' ^ - • ' C M CD 1 CM 1 CM CO i CO • • T -CM NFDIPC | - -76.49 -0.38 0.71 -9.21 -0.26 0.80 1.26 0.11 0.91 -6.40 -0.78 0.44 61.88 0.51 0.61 2026.97 6.61 0.00 20.06 0.47 0.64 65 0.52 132.71 Locational Attributes: 1 Intercept fvalue prob. level InGNPPC t value prob. level InGDP tvalue prob. level GROWTH t value prob. level URBPOP (value prob. level OP(EX) tvalue prob. level InCOST tvalue prob. level No. of Observations R-square RMSE Regional Dummies: DASIA t value prob. level DAFRICA t value prob. level DLAMER t value prob. level No. of Observations R-square RMSE o NFDIPC | > 0 ) ( o w i n o ) P ) O N T - ( D < o ^ c o i n i - c O ' - o o w ^ i n o j d d ^ d d c b d d ^ d d ^ d d j i c i c i d *r • 1 T- • • • • CM T -NFDIPC | = IOT-NCOtO)U)U)T-^ c n c o ^ i - c o c o c o c q ri d d d d d d o i CM 1 T- ' T-NFDIPC | = NFDIPC | -NFDIPC | > 2.12 0.07 0.95 -22.53 -0.74 0.46 -12.40 -0.40 0.69 29.22 1.07 0.29 -21.23 -0.81 0.42 -11.76 -0.42 0.68 65 0.40 162.20 NFDIPC | = -37.27 -1.11 0.27 5.33 0.05 0.96 65 0.39 157.51 NFDIPC | = NFDIPC | -NFDIPC | > C O C O S S > - 0 ) 0 ( C I M D O J t M ( O I M ( 0 ' - ( 0 0 4 i n a i N o o c r j T - o c j j i n i o i n c D c O T t - i o c o i o i n c M c o c o c o c o r d d d d d i i d d N d d d d d i i d d d u i ' CM T - • ' ' CO NFDIPC | = pCDCOCM-^ -COCOCOCO CM d d cd d d d o i CO 1 LO NFDIPC | = NFDIPC | -NFDIPC | > c o c M o o i n o j o o c » » t c o ' - ' ^ c n c o o c n c M C M o o c o L n h ~ d d d i r i d d d d d c i d d d d d i r i d d d o , . . . . q . 1— NFDIPC | = T - C M C O C M C M C O i n C O C O O J C M O O O C M C O C O L O T ^ i r i d d c d d d d cd • 1 i - CO T -NFDIPC | -NFDIPC | -General Policv Variables POSPOL t value prob. level NEGPOL t value prob. level No. of Observations R-square RMSE Specific Policv Variables OWN t value prob. level SUPPLY t value prob. level WORK t value prob. level FOREX t value prob. level APPROVE t value prob. level EPZ t value prob. level No. of Observations R-square RMSE 

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