Purpose While Austrian foreign direct investment (FDI) in Asian economies experiences a rising trend, the following question arises: Why does Austria invest more in certain economies over others? This study intends to assess the factors that drive Austrian investment in Asian economies. Design/methodology/approach Based on the ownership, location and internalization framework and the knowledge capital approach, this study hypothesizes that knowledge capital significantly attracts FDI from Austria. Meanwhile, this study applies the panel-corrected standard error method to analyze data for 11 Asian economies from 1990 to 2022. Findings After considering endogeneity, the results show a positive and significant correlation between expenditure in research and development per gross domestic product (GDP) in the host economies and FDI inflow from Austria. In addition, the study reveals that factors such as market size, trade openness and natural resources in the host economies significantly influence Austria’s FDI, which indicates that Austrian investors fall into the three main FDI typologies: market-seeking, resources-seeking and efficiency-seeking. Originality/value This study fills the literature gap by becoming the first to analyze the determinants of Austrian FDI in Asian economies, thus enriching our understanding of Austria’s global investment pattern.

Purpose This investigation aims to determine the effect of trade uncertainty on domestic investment (DI) and foreign direct investment (FDI) for the Turkish economy from the first quarter of 2005 to the first quarter of 2020. Design/methodology/approach The authors adopt the vector autoregression (VAR) model augmented with Fourier terms. Using this methodology, the authors obtain the empirical results of the impulse-response functions and the variance decomposition analysis. Findings The empirical results demonstrate that a shock to trade uncertainty has a slight negative impact on DI for up to approximately 1.5 years, whereas its impact on FDI is negative but long-lasting. Moreover, the contribution of trade uncertainty to FDI is relatively higher than to DI in the error variance decomposition for the investigated period. These empirical results can be beneficial for shaping the Turkish authorities' trade policies in the following periods. Research limitations/implications These findings have implications within the macroeconomic setting. Government authorities can provide tax exemptions for specified sectors and debureaucratize investment processes for both domestic and foreign entrepreneurs. Additionally, institutional quality and property rights should be protected strictly and developed gradually. Originality/value This study is the first to examine the impact of world trade uncertainty on Turkiye’s DI and FDI. Because trade uncertainty might act as fixed costs, this creates the option value of waiting and seeing the market, and firms hesitate to incur investment.

Purpose This study considers the “technology creation” characteristic of technical knowledge-intensive business services (T-KIBS) and examines how human capital and intellectual property rights (IPR) protection affect the location choice of foreign direct investment (FDI) in China for two types of T-KIBS: (1) information transmission, software and information technology (ICT) services and (2) scientific research and technology (SCI) services. Design/methodology/approach Our empirical analysis is based on panel data on 22 Chinese provinces from 2009 to 2017. We use the generalized method of moments estimation for the regression analysis. Findings FDI in ICT services prefers regions with high human capital, while FDI in SCI services favors regions with good IPR protection. Research limitations/implications Future research could use more comprehensive data and qualitative interviews to enhance the findings. Practical implications These findings provide a foundation for China’s future policy on attracting FDI into T-KIBS, especially in areas related to human capital and IPR protection. Originality/value This study bridges the research gap on the FDI location choice of T-KIBS in China by clarifying the influences of human capital and IPR protection and providing theoretical support for the location choice of T-KIBS FDI.

Purpose This study examines the impact of structural shocks and policy interventions on the India/US exchange rate post the 1991 economic reforms in India. The study aims to improve forecasting accuracy by incorporating macroeconomic and microeconomic factors into the analysis using the threshold regression model (TRM), a nonlinear approach to estimation. Design/methodology/approach Extending Dornbusch’s (1976) overshooting model, the study incorporates micro factors, such as investor behaviour, beliefs and preferences, alongside traditional macroeconomic variables. Additionally, it introduces a capital control variable to assess monetary policy interventions. Using quarterly data from 1996Q2 to 2019Q3, TRM identifies two distinct economic regimes, providing a comprehensive understanding of India’s exchange rate dynamics. Findings The study reveals that macro and micro factors have varying effects on the exchange rate across regimes, reflecting India’s different economic conditions and policies. Furthermore, the TRM-based model achieves superior out-of-sample forecasting accuracy compared to the random walk model across all forecast horizons. Originality/value Unlike prior studies, where not all variables were deemed significant, our analysis demonstrates that all factors significantly influence the exchange rate. The innovative use of TRM deepens understanding of exchange rate behaviour, particularly in response to structural shocks and policy shifts. By identifying distinct economic regimes, the model offers insights into targeted policy measures tailored to India’s economic conditions, a previously unexplored perspective.

Purpose This study investigates the causal impact of pilot free trade zones (PFTZs) on Chinese outward foreign direct investment (OFDI). Design/methodology/approach The study uses the concept of ownership advantage (OA) to derive the conceptual link between PFTZs and OFDI. Using Chinese provincial data from 2003 to 2022, the study employs various difference-in-difference estimators to estimate homogeneous and heterogeneous treatment effects. Findings Assuming a homogeneous treatment effect on the treated, implementing a PFTZ spurs OFDI. However, considering heterogeneity in treatment effects over cohorts and time diminishes the evidence for a positive impact. A positive causal effect on OFDI is established only for the Shanghai (China) PFTZ. Practical implications As China is a leading emerging economy with a state-driven development model, this study has significant implications for other developing and middle-income countries seeking to leverage PFTZs – or similar special economic zones – to stimulate OFDI. Originality/value This study conceptually links PFTZs to OFDI through the OA framework and explicitly models heterogeneity of effects across batches of PFTZs and over time. The latter is essential, as institutional differences across PFTZs may result in varying degrees of generation and overseas exploitation of OAs.