Foreign direct investment‐facilitated development: the case of the natural gas industry of Trinidad and Tobago

Since the last decade, governments in less‐developed countries have increasingly viewed foreign direct investment (FDI) as a catalyst for economic growth and transformation. The early literature argues that FDI‐facilitated development occurs when a less‐developed country assimilates, adapts and diffuses the positive externalities arising from the interaction of the multinational enterprise's (MNE) ownership advantage with its locational attributes. This paper, however, posits that FDI‐facilitated development is not an effortless process. It occurs only when host developing‐country governments implement intervention policies that are aimed at increasing indigenous technological capabilities. These policies enhance the absorptive capacity of host countries, allowing them to capture the spillovers arising from the MNE activities. The paper explores this for Trinidad and Tobago, a recipient of substantial FDI inflows in its natural gas industry for the last decade. It shows that FDI‐facilitated development only occurs when governments in less‐developed countries pursue credible intervention policies.     

Spatial distribution pattern and its optimization strategy of China’s overseas farmland investments

Overseas farmland investment is an “external program” contrary to the “internalization program” such as multiple planning integration and farmland protection, to solve the contradiction of food security and urbanization during the process of China’s development. Though overseas farmland investment being a new investment tide for decades, research on overseas farmland investment is still in its infancy, with limited research dimensions and insufficient depth. How to establish a scientific and reasonable selection model of the host country for China as well as other countries has become an urgent academic and practical issue to decrease the investment risks. This paper analyzes the spatial distribution of China’s overseas farmland investment with the investment samples from 2000 to 2017 and proposes its operational strategy. Here are the conclusions. (a) The obvious imbalance of the distribution of China’s overseas farmland investment. Further research from a global perspective finds that the existent distribution pattern of China is not optimal. (b)The correlation analysis result shows the trends of overseas farmland investment with political stability and benefits seeking. (c) Host countries most suitable for overseas farmland investment are concentrated in Southeast Asia and along the equator in Africa and Latin America. (d) The existent distribution pattern for China’s overseas farmland investment needs some proper adjustment. China should increase the scale of overseas farmland investment in non-traditional regions while strengthening the status of the core investment regions in Southeast Asia, especially in Sub-Saharan Africa and Latin America.     

International Tax Co-operation and Capital Mobility

The international mobility of capital and the geographical dispersion of firms have clear advantages for the growth and modernization of developing countries. They also create fundamental challenges for national tax authorities. Modern principles of capital taxation for the open developing economy indicate the need to find the correct balance between the encouragement of private investment and the finance of social infrastructure, both of which are necessary for sustainable growth. This balance can be sub-optimal where countries compete for inward investment by granting tax incentives or exercise conflicting principles in determining the tax base. The current practice of international taxation indicates that fiscal authorities in Latin America and the Caribbean could attain a more equitable share of capital tax revenue without depressing investment and growth. This might be achieved through more effective regional tax rules, double taxation treaties, information sharing and treatment of offshore financial centres along the lines already promoted for OECD members. These findings have wider implications for developing countries as a whole.     

Mapping fragmentation: Electronics and automobiles in East Asia and Latin America

"Fragmentation", the relocation of processes or functions across countries in response to cost and other differences, has important implications for development. We discuss the drivers of fragmentation and map it for electronics and automotives in East Asia (EA) and Latin America. For technical reasons, electronics is fragmenting faster world-wide than the auto industry. Electronics networks are more advanced, widespread and integrated in EA than Latin America and the Caribbean (LAC), and are largely responsible for EA's rapid export growth. The auto network is more advanced in LAC but is slower growing and is not integrated into a regional system. Apart from Mexico, LAC lacks an electronics network, partly accounting for the region's weak export performance. We offer insights into the following: Why do industries fragment differently? How can fragmentation be measured? Why does fragmentation in developing countries concentrate on EA and LAC? Why has fragmentation evolved differently in these two regions? Can other developing regions attract and benefit from fragmentation?     

Livestock pricing policy in sub-Saharan Africa: objectives,instruments and impact in five countries

Livestock pricing policies in many developing countries are often instituted without a good appreciation of the consequences of such policies for allocative efficiency, output and trade. This paper evaluates, in a comparative cross-country context, the objectives and instruments of livestock pricing policy in five sub-Saharan African countries: Ivory Coast, Mali, Nigeria, Sudan and Zimbabwe during the period 1970-86. It assesses the extent to which pricing policy objectives have been attained, and also estimates the effects of price interventions on output, consumption, trade and government revenues in order to draw out lessons for the future. The empirical results indicate that in comparison with real border prices, a certain degree of success was achieved in stabilising real domestic producer prices in the study countries. The results also show that since the early 1980s, there has been a gradual shift away from taxation of producers. However, consumers still appear to gain as much as producers in three of the study countries, with negative consequences for foreign exchange earnings and government revenues. The analysis reveals the importance of domestic inflation and exchange rates as key variables for livestock pricing policies and highlights the need to address the macroeconomic imbalances that cause exchange rate distortions and high domestic inflation at the same time that direct price distortions are being tackled.     

Foreign Direct Investment and International Skill Inequality

This paper focuses on the effects of foreign direct investment (FDI) on skill inequality amongst countries. New growth models and international business studies predict that when countries liberalize their trade and investment regime in an environment of imperfect technology transfers, they will specialize in activities depending on the initial conditions such as skill endowments. Countries with few skills tend to specialize in low-skill intensive production, while countries with a high innovation rate and skill endowment tend to specialize in the production of high-skill intensive goods. The econometric evidence, based on an unbalanced panel for 111 countries over seven 5-year time periods from 1970 to 2000, confirms that FDI enhances skill development (particularly secondary and tertiary enrolment) in countries that are relatively well endowed with skills to start with. There are important policy conclusions for national governments when FDI tends to raise international skill inequalities. In particular, developing countries with low-skill endowments that attract investors would do well to co-ordinate actively their human resources policies with investor needs in order to bring the country to a higher skill path.     

Trade and agroindustrialization in developing countries: trends and policy impacts

There have been important changes in the international trade of processed and high-value added food products from developing countries over the past several decades. One of them has been the emergence of oilseeds and fruits and vegetables, replacing traditional products such as sugar, coffee, and cocoa as the main exports from developing countries. Another trend has been the collapse of African agroindustrial exports and the increase of exports from Asia. The paper highlights key trends, and explores possible reasons for the trends, focusing on trade policies in less-developed countries (LDCs) and developed countries (DCs). The paper argues that national trade policies and other economic policies appear to have been relatively supportive of agroindustrial production and exports in Asia. In contrast, policies have had more mixed effects in Latin America and the Caribbean (LAC), and seem to have been just one component in a larger array of forces inhibiting economic development in Africa. The performance of agroindustrial production and exports from LDCs may be now more dependent than ever on the completion of reforms in the agricultural trade policies of DCs. For Africa, however, a more supportive international environment and better macroeconomic and trade policies will not be enough to ensure a thriving agroindustrial sector within a broader process of economic development until military confrontations stop.     

Incorporating Trade into the Investment Development Path: A Case Study of Korea and Taiwan

We suggest that there is some interface between the investment development path (IDP) and the trade development path (TDP)-with both trade and foreign direct investment (FDI) of created asset-intensive products increasing their significance relative to gross national product (GNP) of countries. The proportion of intra-industry trade and FDI to total trade and FDI also increases as an economy develops, particularly so for created asset-intensive products. We have taken the FDI intensity of manufacturing sectors as a proxy for a created asset intensity, and classified it into three categories, viz. above, average and below created asset intensities. Trade and FDI data from the Korean and Taiwan economies between 1968 and 1997 generally support the idea of an integrated TDP and IDP. The growth of trade and FDI tends to be positively correlated with GNP per capita and with the created asset intensity of products.     

International trade and agricultural development in developing countries: Significance of the Uruguay Round of GATT negotiations

Liberalization of world trade in agricultural products ranks high on the agenda of the Uruguay Round. After a period of more than six years, however, the negotiations have not been concluded. Nevertheless, an outcome seems to be in sight. The agreement will most likely not result in a move to freer trade. It seems that domestic policies will become even more regulative than in the past in an attempt to cut exportable surpluses and to ease trade tensions among the main exporting nations. This paper explores possible impacts of the GATT Round on agricultural development in developing countries. Agricultural development is more than only growth in agricultural production or productivity. However, it is argued in the paper that other variables which also indicate agricultural development are often closely correlated with growth in production and productivity. Trade in agricultural products is not always an engine for agricultural development. If internal divergences are not accounted for by appropriate domestic policies, trade may be even harmful to agricultural development. Hence, empirical research based on cross-country analysis does not provide a clear answer about the role of trade for development. Past policies in industrialized countries have most likely had a negative effect on developing countries as a group; however, the effects differ widely across countries. Liberalization policies in industrialized countries would not just reverse these negative effects for developing countries. Price reduction in industrialized countries may not result in the often-cited production decline in the short term. Present X-inefficiency in agriculture will be reduced by liberalization, leading to an outward shift of the supply curve. Hence, liberalization may not lead to higher world market prices for temperate-zone products in the short and medium term. Apart from this, empirical models differ widely in the price effects they predict. The expected outcome of the Uruguay Round – increased regulation of domestic policies – is likely both more negative for developing countries than past protectionist policies and worse than an overall liberalization. World market prices will increase, uncertainty and instability can be expected to grow, and food aid may become less available. There will be a need to react to these challenges with measures on the international and national level. Initiatives to deal with food crises in developing countries and to stimulate liberalization in developing countries should be considered. Finally, developing countries should be made aware that their own domestic policies have a much greater economic impact than policies in other countries, even if the latter are as protectionist as current agricultural policies in the industrialized world.     

Industry and migration of farm workers

Globalization has changed economic realities. First, the competences of multinational enterprises (MNEs) are becoming increasingly mobile and knowledge-intensive. MNEs thus give more attention to the availability and quality of the created assets of alternative locations. Second, among developing countries there are now considerable differences between the catching-up countries (e.g. newly industrialized countries) and falling behind , less developed countries. These developments have helped change the opportunity sets of both MNEs and host countries. Foreign direct investment (FDI)-based development strategies are now commonplace among less developed countries, but there is also increased competition for the right kinds of investment. In general, the balance in bargaining power has shifted in favour of the MNE, and less developed countries increasingly need to provide unique, non-replicable created assets to maintain a successful FDI-assisted development strategy.     

The effect of violent crime on sector-specific FDI in Latin America

ABSTRACT

This article looks at the impact of violent crime on FDI into Latin America and the Caribbean during the 1996–2010 period. FDI is disaggregated into primary, secondary and tertiary sectors and three variables related to violent crime are used: homicides, crime victimization and organized crime. Controlling for institutions and the traditional determinants of FDI, we find that the impact of crime on FDI depends on the sector and types of crime considered. Higher homicide rates are associated with less FDI in the secondary sector while organized crime reduces tertiary sector FDI. Crime victimization has a robust significant negative impact on the tertiary sector and in some estimations of the secondary sector. Crime has no impact on primary sector FDI. Our study highlights the need to continue efforts to decrease crime as we show in our analysis that crime has a negative effect on FDI in the secondary and tertiary sector.     

Industrial land price between China’s Pearl River Delta and Southeast Asian regions: Competition or Coopetition?

The planned economy system’s previous form of industrial land market control in China has led to current market failure because of a large amount of industrial land being sold at a very low price, causing extensive overuse of land and negative effects on land management. As the “World Factory”, the Pearl River Delta (PRD) is well known for its rapid urbanization largely driven by Foreign Direct Investment in labor-intensive industries. A low-land price strategy has been commonly adopted by the local government in order to attract industrial investment. In the past decade, the PRD has increasingly faced the increasing competition from its neighboring competition from its neighboring countries in Southeast Asia that have established preference policies to attract FDI and foreign enterprises. Despite a growing body of literature on the internal forces of industrial land in China, little is known of the external forces involved except for the importance of FDI and the intensity of interregional competition between China and other countries in attempting to attract foreign investment. This research fills the knowledge gap by modeling the situation in the form of an international cooperative game model aimed at revealing the industrial land price formation mechanism between the PRD region and Southeast Asian regions. The conditions of industrial land in the area and several Southeast Asian countries are first analyzed for their industrial land price movements in recent years. A game theoretic model is then built that exhibits similar characteristics. The result indicates that the governments’ low land price strategy and the competition between the PRD and its neighboring countries have created unnecessarily high social and environmental costs. Policy suggestions are made to encourage a more appropriate use of industrial land in China, and the most important being the need for a mindset shift from competition towards coopetition between the PRD and Southeast Asian regions.     

The Impact of FDI on CO2 Emissions in Latin America

This paper uses panel Granger causality tests to study the relationship between sector-specific foreign direct investment (FDI) and CO₂ emissions. Using a sample of 18 Latin American countries for the period 1980–2007, we find causality running from FDI in pollution-intensive industries (“the dirty sector”) to CO₂ emissions per capita. This result is robust to controlling for other factors associated with CO₂ emissions and using the ratio of CO₂ emissions to GDP. For other sectors, we find no robust evidence that FDI causes CO₂ emissions.     

Does agricultural official development assistance facilitate foreign direct investment in agriculture: Evidence from 63 developing countries

Although past studies have separately explored the direct impact of agriculture official development assistance (ODA) and foreign development investment (FDI) on agricultural production, the nexus between these two elements is often neglected. This article aims to understand the linkage between agricultural ODA and FDI, using data from 63 developing countries from 1991 to 2019. Poisson pseudo maximum likelihood estimations reveal that agricultural ODA considerably promotes FDI in the agriculture, fishery and forestry sectors (FDI_aff) by approximately 0.5%, while its impact on FDI in the food, beverages and tobacco industries (FDI_fbt) is overall insignificant. Geographical and ecological conditions play a decisive role in accounting for FDI in agriculture. While coastal and land-rich countries receive a significantly higher amount of FDI_aff and FDI_fbt, tropical countries are evidently more attractive destinations for FDI_fbt. The empirical analysis also shows that a peaceful social environment encourages FDI_aff. Well-established legal systems and reductions in corruption facilitate FDI_aff, whereas the impact of overall institutional quality on agricultural FDI is insignificant. Results suggest that donors prioritise agricultural initiatives with higher positive spillover effects, such as programmes supporting food crop production and agricultural research.     

Trade,policy, and food security

Food insecurity is extensive throughout the world and hunger and malnutrition are expected to remain serious humanitarian and political concerns, both in the short term and for the foreseeable future, particularly in low income developing countries where many rural and urban households are both income and asset poor. In those countries, domestic agricultural production is expected to be especially vulnerable to the impacts of climate change over the next 30 years. Thus international markets for staple agricultural commodities, which have become increasingly important as sources of nutrition for both developing and developed countries over the past 60 years, are likely to become even more important in the future. Free trade policies allow countries to exploit their comparative advantages in economic activity, increasing average per capita incomes, longer term growth rates and a country's capacity to fund social safety nets for the poor. However, many countries abandoned those policies in favor of domestic protections in their efforts to mitigate the effects of short run food crises. The policy challenge is therefore to resolve the tension between optimal long run policies and short run initiatives to address food security concerns.     

影响中国林业企业对俄直接投资的经济、资源和制度因素

以2005—2017年中国对俄罗斯的FDI数据为样本,建立多元回归模型,实证分析了影响中国林业企业对俄直接投资的经济、资源、制度因素。结果表明:提高中俄贸易关系紧密度和人民币对卢布汇率能够促进中俄两国的林业投资合作,俄罗斯森林资源禀赋和原木产量的提高推动着中国林业企业在俄罗斯开展直接投资,中俄两国的法律制度差异、话语权和问责差异与中国林业企业对俄罗斯的FDI流量为负相关,然而两国的腐败遏制差异、政府效率差异对于中国林业企业在俄罗斯开展直接投资有着显著的正向影响。因此,应加强中俄两国政府的政策沟通和经济合作,有效规避汇率风险;增加中国的人工林培育面积;积极完善俄罗斯的制度质量,降低中国林业企业在俄罗斯的投资成本。     

THE IMPACT OF CHANGES IN TRADE POLICY ON DEVELOPING COUNTRY AGRICULTURE*

The Uruguay Round of trade negotiations has attracted much attention in the developing countries. It promises to weaken moves towards bilateral trade agreements, break open trade in temperate agricultural products, and should remove the last vestiges of protection against tropical products – although tariff escalation will remain. Overall, the main gains for the developing world will probably accrue to exporters of temperate products, above all those in Latin America; whilst for some of the poorer countries, losses may occur as the benefits of special and favoured access to the industrialised countries' markets will be eroded.     

The Impact of Seed Policy Reforms and Intellectual Property Rights on Crop Productivity in India

The growth of private investment in developing‐country agriculture, new advances in the biological sciences, and rapid integration of developing countries into the global trading system has heightened interest in the topic of seed market and intellectual property rights’ (IPRs) policies among public policy‐makers, corporate decision‐makers and other actors in the agricultural sector. But there are still unanswered questions about whether emerging and evolving seed policy reforms and IPR regimes in developing countries will contribute to increasing crop productivity and improving food security. This paper attempts to answer some of these questions by focusing specifically on the case of India, the regional leader in implementing seed policy reforms and IPRs in agriculture. Findings indicate that maize and pearl millet yields grew significantly during the last two decades due partly to the combination of (1) public policies that encouraged private investment in India’s seed industry during the 1980s, and (2) biological IPRs conferred by hybridisation that conveniently married the private sector’s need for appropriability with the nation’s need for productivity growth. Although past lessons are not an indication of future success, this convergence of policy solutions and technology opportunities can be replicated for other crops that are vital to India’s food security.     

Sources of EC horticultural import growth from developing countries

A decomposition analysis of horticultural trade flows is carried out to identify the main sources of change in EC horticultural imports from different LDC regions. Sources of change are associated with each region's international competitiveness, the relative openness of the EC market, the degree of trade preference enjoyed by the region, and the EC global import growth. The main contribution to the LDC export growth of fruit and vegetables to EC between 1975–79; and 1985–89 is found to be attributable to the global import growth effect. However, it has been significantly counteracted by the negative effect of a declining share of non-EC suppliers as a group. Marked interregional differences in changes in regional preferences show a lack of a strong correlation between LDC export performance and the existence of preferential trade agreements with EC. While the potential for LDC export growth to EC is clear, the results seem to indicate that in general EC protection policies have adversely affected import growth from LDCs. Various factors influencing LDC export performance in horticultural products are discussed. Apart from EC protection policies and changes in trade preferences, domestic supply factors are of significance in explaining export growth, including a liberal trading environment, but also specific policies to promote exports of horticultural products. While non-price competition weakens the discriminatory effect of preferential tariffs, there is a pressing need for developing countries to adapt to the demands of the European distribution system relating to quality, grades, and regularity of supplies.     

Economic growth,convergence, and agricultural economics

After nearly two centuries of lagging behind the industrial countries, growth in many developing countries has surged since the early 1990s. This outperformance has major implications for almost all areas of agricultural economics and, if continued, will likely do so into the future. This article aims to identify the key ways in which the changes in rich and poor country growth rates matter for agricultural economists, as a basis for formulating better research agendas. A key impact arises through sharp increases in demand for agricultural resources as demand for livestock products increases. This changing structure of food demand has important implications for nutrition studies and policies, with the emergence of a double burden of malnutrition. On the supply side, growth in developing countries tends to increase domestic food supply, which is also boosted by increases in research and development spending. Growth in developing countries both stimulates and benefits from increases in infrastructure investment, evaluation of which requires new analytical tools. Negative impacts include the contribution of increased demand for livestock products to global greenhouse gas emissions. In terms of trade policy, growth in developing country is tending to lead to convergence of agricultural policies with the pattern of assistance seen in today's developed countries, raising concerns about the future need to deal with collective action problems, particularly those that increase the volatility of world prices.