The Effects of Greenfield FDI and Cross‐border M&As on Total Factor Productivity

We examine the effects of greenfield FDI and cross‐border mergers and acquisitions (M&As) on total factor productivity (TFP) in developed and developing host countries of FDI. Using panel data for up to 123 countries over the period from 2003 to 2011, we find that greenfield FDI has no statistically significant effect on TFP, while M&As have a positive effect on TFP in the total sample. Greenfield FDI and M&As both appear to be ineffective in increasing TFP in the subsample of developing countries. In contrast, M&As have a strong and positive effect on TFP in the subsample of developed countries.     

FDI and Growth: What Cross‐country Industry Data Say

The theoretical literature has discussed different channels through which foreign direct investments (FDI) promote host country’s economic growth, but empirical analyses have so far been rather inconclusive. In this paper, exploiting the information of a disaggregated data set on a panel of 14 manufacturing sectors for (a sample of) developed and developing countries over the period 1992–2004, we are able to provide robust evidence on the positive and statistically significant growth effect of FDI in recipient countries. Moreover, we find that this effect is stronger in capital‐intensive and technologically advanced sectors. The growth enhancing effect comes primarily from an increase in total factor productivity (TFP) and from factors accumulation. Our results are robust to the inclusion of other determinants of economic growth and to controlling for potential endogeneity.     

Cross‐border Economic Activities,Human Capital and Efficiency: A Stochastic Frontier Analysis for OECD Countries

We study the growth effects of outward‐ori,ented econ,o,mies by using sto,chas,tic fron,tier anal,y,sis to mea,sure the effi,ciency exter,nal,i,ties of three forms of eco,n,omic cross‐bor,der activ,i,ties – inter,na,tional trade, for,eign direct invest,ment (FDI) and migra,tion – for OECD coun,tries. The study also exam,ines whether the effi,ciency of these cross‐bor,der activ,i,ties is affected by the level of human cap,i,tal in the host coun,try. We find that inter,na,tional trade and FDI are impor,tant chan,nels for improv,ing effi,ciency, as is human cap,i,tal accu,mu,la,tion, and that the positive effects of inter,na,tional trade, FDI, and migra,tion depend cru,cially on the level of accu,mu,lated human cap,i,tal. Our results show that the impact of human cap,i,tal is impor,tant for increas,ing effi,ciency via inter,na,tional trade flows and FDI flows, while immi,gra,tion into coun,tries that are richer in human cap,i,tal enhances their effi,ciency rel,a,tively more than immi,gra,tion into coun,tries with lower human cap,i,tal. These results remain robust to alter,nate mea,sures of human cap,i,tal, con,trols on edu,ca,tion lev,els among immi,grants, and to a non‐para,met,ric esti,ma,tion of the model.     

Political Connections,Government Intervention and Acquirer Performance in Cross‐border Mergers and Acquisitions: an Empirical Analysis Based on Chinese Acquirers

The extant literature suggests that the political connections enjoyed by Chinese acquiring firms have both positive and negative effects on their performance in cross‐border mergers and acquisitions (CBMA). We employed firm‐level data on Chinese acquirers from 2001 to 2012, demonstrating that the effect of political connections on mergers and acquisitions performance is determined by external government intervention. Holding the level of political connections constant, the greater the degree of government intervention is, the worse the acquirer's performance in cross‐border mergers and acquisitions will be. We also demonstrated that political connections affect acquirer performance in cross‐border mergers and acquisitions through the channel of preferential access to bank financing, and the acquiring firms' high cash holdings, which are encouraged by the ease of bank financing, have a negative effect on acquirer CBMA performance. Using the Blinder‐Oaxaca decomposition, we investigated changes in the Chinese acquirers' performance following changes in the external policy environment in 2008 and the effect of political connections and other factors on this change.     

Globalisation and Inter‐occupational Inequality: Empirical Evidence from OECD Countries

How does globalisation affect inter‐occupational wage inequality within countries? This paper examines this by focusing on two dimensions of globalisation: openness to trade and openness to capital flows, using a relatively new data set on occupational wages. Estimates from a dynamic model for 15 OECD countries spanning the period 1983–2003 suggest that increased openness increases occupational wage inequality in poorer OECD countries as predicted by the Heckscher–Ohlin–Samuelson model, but for the more advanced OECD countries, we find no significant effect. The absence of the expected result for the latter category can be due to a rapid increase in the supply of skilled labour, to outsourcing of skilled jobs or because changes in the trade flows are too small to have any significant effect in those countries.     

Short‐term Consequences of Trade Reform for Industry Employment and Wages: Survey of Evidence from Colombia

Recent research has focused on the short‐ to medium‐term implications of trade reforms for the labour market outcomes and poverty in poor economies. This article summarises the evidence on the short‐term consequences of the Colombian trade reform initiated in 1985 for industry employment and industry wages. Although the reform reduced manufacturing tariffs on average by 40 percentage points from 1984 to 1994, tariff declines were not significantly associated with labour reallocation across sectors. The reform, however, was associated with bigger declines in relative industry wages in sectors that experienced bigger tariff cuts. This evidence is in line with the predictions of short‐ to medium‐run models of trade in which labour is not mobile across sectors. It is also consistent with the predictions of models where imperfectly competitive industries share rents with workers and trade reduces the firms’ profit margins and thus workers’ rents.     

International Migration,the Brain Drain and Poverty: A Cross‐country Analysis

The aim of the paper is threefold. First, it empirically investigates the effect of international migration on poverty in origin countries, using data from a cross‐country analysis. Second, it explores the specific part of the income distribution from which migrants are drawn, by comparing the effect of international migration on different income quintiles of the population. Finally, given that the selection of migrants depends not only on the income level of their households, but also on the skill levels of movers, the paper casts some light on the implications of the emigration of skilled workers on poverty. This article shows that the stock of international migrants have a positive effect on the income of the poor while it does not have a significant impact on the income of the middle and top quintiles of the population. In particular, a 10 per cent increase in the per capita stock of migrants resident in OECD nations augments the income of the poor by 1 per cent, on average and ceteris paribus. Finally, the poverty‐reducing effect of migration holds even when the emigration process selects the best and the brightest.     

The impact of migration on the cross‐border M&A: Some evidence for Japan

Facing the rapidly ageing society and shrinking of markets at home, Japanese firms are expanding outbound mergers and acquisitions (M&A) activity at a record pace. This study examines the determinants of Japanese cross‐border M&A activity focusing on the role of migrant networks in overcoming the informational barriers to such activity. Migrants include immigrants residing in Japan as well as Japanese citizens residing abroad. Our results suggest that the presence of immigrants and of Japanese citizens residing abroad both increase the probability of acquiring assets in a potential target country. Moreover, both communities exert positive effects on the number and value of outbound M&A deals.     

Consequences of concern: ethics,social responsibility,and well‐being

Prior research has studied the antecedents of beliefs regarding ethics and social responsibility (ESR). However, few studies have examined how individual well‐being may be related to such beliefs. In this exploratory study, we assessed the relationship between perceived importance of ESR – both individually and of one's company – and indicators of physical and psychological well‐being. Results demonstrated that perceived importance of ESR was associated with three aspects of well‐being: exuberance for life, sleep problems, and job stress. The results are discussed in terms of future directions for research, and the need for a conceptual framework connecting individual and organizational perceptions of ESR and outcomes of well‐being.     

Processes and Consequences in Business EthicalDilemmas: The Oil Industry and Climate Change

We present a model of rational behavior by which we characterize business ethical dilemmas as trade-offs between processes and consequences. As an illustration, we formulate the oil industry's business ethical dilemma as a trade-off between a socially detrimental process (emitting greenhouse gases, hence inducing a risk of climate change) and a self-interested consequence (profits). The proposed framework allows us to specify two types of strategies, differing by whether priority is given to the consequences or to the processes. We analyze and illustrate these strategies at both the behavioral and the discursive levels. In particular, communication strategies raise questions about good faith in business argumentation, in the sense that business discourse may or may not be consistent with actual assumptions and/or actual behaviors. We conclude on possible drivers of more ethical business behavior.     

Industrial Specialization,Catching‐up and Labour Market Dynamics

This paper presents a dynamic model as a heuristic tool to discuss some issues of changing industrial specialization which arise in the context of catching‐up processes of (technologically) less advanced economies and the impact which various scenarios of such catching‐up processes might have on the labour market dynamics both in the advanced and in the catching‐up economies. In analysing the evolution of international specialization, we demonstrate the twin pressures exerted upon the industrial structures of “northern” economies: competition from “type‐A southern” economies, which maintain a comparative competitive strength in labour‐intensive and less skill‐intensive branches, and competition from “type‐B catching‐up” economies, whose catching‐up increasingly focuses upon branches in which the initial productivity gaps and hence the scope for catching‐up are the highest. The contrast between these two catching‐up scenarios allows the explicit analysis of the implications of “comparative advantage switchovers” between northern and southern (type B) economies for labour market dynamics.     

Globalisation and Industrial Policy: The Case of China

After a quarter of a century of industrial policy, China's objective of nurturing a group of globally competitive state‐owned enterprises appears to have succeeded beyond most expectations. However, China's SOEs are far from catching up with the world's leading firms. Protection through state ownership in a massive, fast‐growing economy has permitted China's SOEs to earn large profits and achieve high market capitalisations, but this is not the same thing as building globally competitive firms. The fact that China's industrial policy has been unsuccessful after a quarter of a century of intense effort demonstrates how difficult it is to construct an industrial policy in the era of capitalist globalisation, which has produced intense global industrial concentration across large parts of the global value chain. Although the detailed content of the next stage of reform of China's large state‐owned enterprises is unclear, China's determination to build a group of globally competitive large companies remains undimmed.     

Picking cherries or lemons: A unified theory of cross‐border mergers and acquisitions

This article provides a theoretical framework that enhances understanding of empirical evidence suggesting that international mergers and acquisitions, a key source of foreign direct investment, seemingly target in‐country firms that are at the extremes of the productivity spectrum—either high‐productivity firms, so‐called cherries, or low‐productivity firms, the “lemons.” The framework demonstrates that foreign firms with intermediate inputs seek high‐productivity domestic firms, while foreign firms with managerial expertise seek low‐productivity domestic firms. We also show that because of the difference in available outside options, high‐productivity domestic firms can demand a significantly higher portion of profits in the partnership than low‐productivity domestic firms.