Guest editorial: FDI divestment inflows and outflows in developing economies

Published date07 April 2023
Date07 April 2023
Subject MatterEconomics,International economics
AuthorBadar Alam Iqbal,Mohd Nayyer Rahman
Guest editorial: FDI divestment
inows and outows in
developing economies
We are delighted that after many concerted efforts,the special issue assigned to us on FDI
[Divestment] Inows and Outows in DevelopingEconomieshas seen the light of the day.
It has been an academic journey towitness many submissions on the theme from across the
globe. The special issue on FDI divestment demonstrates essential takeaways for the
developing economies. FDI divestment will remain a tool of de-internationalisation and can
have negative consequences for the host country,such as reduced investment, employment
and technology transfer. Therefore, understanding FDI divestment inows and outows in
developing economies is a strategic issue for planners and policymakers to promote
sustainable economic development. Several factors, including changes in the global
economic environment,strategic business decisions by foreign investors and the availability
of investment opportunities in other countries, can cause FDI divestment inows and
outows. It is a common phenomenon in developing economies and can have far reaching
implications for these economies. Developing economies often need more institutional
frameworks to encourage investors to remain in the country. Inconsistent institutional
frameworks can lead to a lack of condencein the local economy, leading investors to divest
their investments.
Factors for FDI divestment
Several factors contribute to FDI divestment in developing countries. One of the primary
factors is political instability. Political unrest can cause investors to lose condence in the
host countrys economy and the security of their investments. Another factor that can
contribute to FDI divestment is changes in the global economic environment. Global
economic downturns can cause investors to seek more stable investments in developed
countries, leading to decliningFDI in developing countries. A lack of infrastructure can also
contribute to FDI divestment in developing countries. Inadequate infrastructure can
increase the business costs, leading investors to seek more efcient investment
opportunities in other countries. FDI divestment can also have a negative impact on
technology transfer. Foreign investors often bring new technologies and management
practices to the host country. When investors divest their investments, they may also
withdraw their technology and management expertise, leading to a decline in productivity
and competitivenessin the host country.
Furthermore, FDI divestment can lead to a decline in the host countrys overall
attractiveness to foreign investors. Foreign investors may be less likely to invest in the
future if they perceive the host country as unstable or risky, creating a cycle of divestment
that is difcult to reverse, leading to long-term negative impacts on the host countrys
economy. The present special issue is a compendium of divestment studies concerning
economic growth, development, determinants, food security, political instability,
macroeconomic factors and institutional conditions with evidence from developing
Guest editorial
Journalof Chinese Economic and
ForeignTrade Studies
Vol.16 No. 1, 2023
pp. 1-3
© Emerald Publishing Limited
DOI 10.1108/JCEFTS-02-2023-079

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