Multifaceted effects of inward foreign direct investment on new venture creation
Peer-Reviewed Publication
Updates every hour. Last Updated: 22-May-2026 11:16 ET (22-May-2026 15:16 GMT/UTC)
Existing studies have examined the impact of inward foreign direct investment (IFDI) on venture creation mainly at the country level. Now, an international team, including a researcher from Waseda University, has explored the multifaceted effects of IFDI on new venture creation at the industry-regional level, proposing an inverted U-shaped effect driven by learning opportunities and competitive threats. These insights can help local governments calibrate IFDI inflows to maintain a productivity-enhancing balance.
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That's a key finding by Steven Riddiough, an associate professor of finance at the University of Toronto Scarborough and Rotman School of Management, and Huizhong Zhang from Australia's Monash University. They assessed nearly a quarter century of data on cross-border deals involving more than 40 countries and identified a predictive relationship between changes in a country's foreign investment activity and future changes in its economic growth and currency values.
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