Sectoral FDI cycles in South and East Asia

This study aims to analyze how sectoral foreign direct investment (FDI) inflows in South and East Asian economies respond to changes in the business cycles of the host countries, as measured by their output gaps. We focus on 15 economies during the period 1980–2011 and examine inflows of FDI in extractive industries, manufacturing and services in addition to aggregate FDI by using a dynamic panel Blundell–Bond GMM methodology. We find evidence of countercyclical behavior of services FDI and acyclical behavior of both extractive industries FDI and manufacturing FDI. The coutercyclical behavior of services FDI in South and East Asia has important policy implications.     

中间品进口对我国制造业行业人均产出的影响——对1999-2003年28个行业的实证研究

中间品进口一方面可以促进本国制造业企业的发展,另一方面也会对本国同类中间品生产厂商产生负面的竞争效应.本文综合考虑这两种影响,采用2002年投入产出表和相应行业的进出口数据将中间品进口分为水平型的中间品进口和垂直型的中间品进口.然后分析1999-2003年28个制造业行业的中间品进口对行业人均产出的影响.实证分析表明,水平型的中间品进口对行业人均产出的增长率只存在不显著的抑制作用;但是垂直型中间品进口对行业人均产出增长率有明显的正面影响.     

中国三大都市圈利用外商直接投资的相对规模——市场经济体制转型以来的比较研究

本文采用联合国贸易和发展会议关于外商直接投资(FDI)的相对规模指标,测算了1992年我国市场经济体制转型以来,首都圈、长三角及珠三角这三大都市圈FDI流入量占固定资产形成总额的比例、FDI存量与GDP的比值、人均FDI流入量等利用FDI的相对规模水平,并与全国及世界水平进行了比较。研究表明,三大都市圈利用FDI的相对规模水平总体而言高于全国水平;以相对规模指标衡量,珠三角FDI在经济总量和投资中的地位较长三角和首都圈更为重要;与珠三角和长三角相比,首都圈FDI在其经济总量和投资中的地位尚不突出;在世界范围以人均FDI流入量考量,三大都市圈需进一步扩大利用FDI的规模。     

Re‐Visiting Financial Development and Economic Growth Nexus: The Role of Capitalization in Bangladesh

This paper revisits the relationship between financial development and economic growth in Bangladesh by incorporating trade openness in production function using quarter frequency data over the period of 1976‐2012. We applied combined Bayer–Hanck cointegration approach to examine cointegration among the series. Our empirical evidence suggests that development of financial sector facilitates economic growth but capitalization impedes it. In addition, trade openness stimulates economic growth. Labour is also positively linked to economic growth. The vector error correction model Granger causality results divulge that financial development causes real per capita gross domestic product (GDP) growth, and resultantly, real per capita GDP growth causes financial development in a Granger sense. The results also show that trade and labour Granger cause economic growth. The findings of the paper provide insights for policymakers to use financial development and trade openness as a tool for sustained economic growth in the long run. The paper also suggests policymakers to utilise capitalization in a way that is beneficial for economic growth of Bangladesh.     

Heterogeneous effects of bilateral investment treaties

Bilateral investment treaties (BITs) are an increasingly used policy instrument to encourage FDI inflows, particularly inflows into developing countries. In this paper we estimate a gravity model of FDI flows from a sample of OECD countries to a broader sample of developing economies, examining the impact of BITs on these flows. BITs are signed between highly heterogeneous country-pairs, with important differences found in terms of the institutional and economic distance between BIT signatories. These differences may help explain the mixed results on the effects of BITs on FDI flows in the existing literature, with our exploration of non-linearities in this relationship suggesting that the effects of BITs are increasing in the difference in GDP and GDP per capita between source and host. BITs appear to have no impact upon FDI flows for country-pairs that are too dissimilar in terms of the strength of their political institutions.     

Outward Foreign Direct Investment and Economic Growth: Evidence from Japan

Abstract

This article aims at analysing the role of foreign direct investment (FDI) outflows in economic performance and the impact of economic growth on outward FDI with the data from Japan. Bivariate and multivariate Granger causality frameworks have been used in this study. The results suggest that the conclusion of bivariate framework may not be valid because it allows omission of important variables. The results of the multivariate framework show that there is a long-run positive unidirectional causality from outward FDI to gross domestic product (GDP) per capita. In the short-run, both per capita income and outward FDI do not allow Granger causality.     

Recovery from financial crises in peripheral economies, 1870–1913

What drives recoveries after financial crises? I address this question for the 1870–1913 “first era of globalization,” focusing on whether trade policy changes or positive movements in commodity prices played a bigger role in stimulating output growth after financial crises in peripheral economies. At this time before governments had modern fiscal and monetary policy tools to use while responding to crises protectionism was one of the few national-level policy options available for shaping economic activity. Improving terms of trade is another major factor that could influence output growth in the commodity-exporting countries included in this analysis. While previous studies of this period have looked at longer-run associations between these explanatory variables and economic growth, I focus on the aftermath of crises, and find that tariff rate increases had a positive impact on GDP per capita growth, while positive terms of trade changes did not have a significant effect on output growth. This suggests that governments played a substantial role in shaping post-crisis recoveries during this period.     

Understanding the role of trade agreements in Indonesia’s FDI

In this paper, we develop the hypothesis that trade agreements influence foreign direct investment (FDI). We extend the conventional model of FDI determinants to accommodate the role of trade agreements. Fitting Indonesian data to this model, we discover strong evidence that, while both bilateral and multilateral trade agreements positively influence Indonesia’s FDI, multilateral agreements have a larger effect. We further distinguish FDI by sector and find sector-specific trade agreements play an active role: these agreements positively influence FDI in the primary and service sectors, but not in the manufacturing sector. We also find that trade agreements positively influence FDI through the export and total factor productivity channels, and less so through the economic growth channel.     

Public Debt and Economic Growth in Emerging Market Economies

This paper empirically studies the relationship between public debt and economic growth for selected emerging market economies by performing panel data estimations. The results reveal a statistically significant positive correlation between public debt and the subsequent growth rate of per capita gross domestic product (GDP). Population and investment are also positively correlated with per capita growth, whereas the initial level of real GDP per capita exerts a negative influence on growth, implying conditional convergence. Other variables such as the inflation rate, the trade balance or the exchange rate do not yield a statistically significant effect with respect to economic growth.     

Human capital,FTAs and foreign direct investment flows into ASEAN

In this paper, we examine the impact of foreign direct investment flows into ASEAN in a gravity model using the bilateral FDI data from 2000 to 2009. In particular, we study the key factors that determine the FDI flows into the region including human capital development and whether membership of a bilateral or regional trade agreement has a differential impact on FDI flows using an extended gravity model. The empirical results indicate that free trade agreements do have positive impact on FDI inflows. However, the returns on FDI inflows depend on the domestic absorptive capacity of the economy and region. It is imperative for ASEAN to align its infrastructure, human capital and technologies to provide MNCs with the necessary linkages to the global network and also to move the domestic industries seamlessly up the global production value-chain. The paper highlights that this is crucial for deeper ASEAN integration and for sustainable growth in the region.     

Trade, FDI, and productivity convergence: A dynamic panel data approach in 25 countries

The investigation, described in the paper, included developing and implementing a dynamic panel framework to study and compare the role of trade and foreign direct investment (FDI) in long-run productivity convergence. Specifically, it employed the technique of a recently developed panel unit-root approach to examine and compare time-series behaviors of manufacturing productivity and services productivity of 25 countries from 1975 to 2004. Results indicated that long-run productivity convergence in manufacturing was trade-related as well as FDI-related. The results have also shown that grouping countries according to their trade partners tends to produce more significant evidence for productivity convergence than their FDI partners do. Furthermore, especially services sector shows no or little convergence, while the manufacturing sector shows strong evidence in favor of convergence. The findings suggest that trade and FDI matter for convergence particularly in the manufacturing productivity movement across countries but more specifically that trade proves more important in explaining long-run manufacturing productivity convergence.     

THE DETERMINANTS OF FINANCIAL DEVELOPMENT: INSTITUTIONS, OPENNESS AND FINANCIAL LIBERALISATION

This paper provides new evidence that sheds light on the influence of institutional quality, trade openness and financial liberalisation on financial market development, using data from 27 economies (the G-7, Europe, East Asia and Latin America) during 1980-2001. The dynamic panel data analysis results demonstrate that real income per capita and institutional quality are statistically significant determinants of banking sector development and capital market development. The trade openness, however, is more prominent in promoting capital market development. In terms of financial liberalisation, the empirical results suggest that domestic financial sector reforms tend to promote banking sector development, whereas stock market liberalisation is potent in delivering stock market development. Nevertheless, the financial liberalisation programmes are more responsive in developed economies.     

财政分权、经济增长与外贸依存度——基于1978～2007年改革开放30年数据的实证分析

本文以我国1978～2007年的数据,运用协整、Granger因果检验、脉冲响应函数研究了我国财政分权、经济增长对外贸依存度的动态影响。研究发现:长期内,财政分权会推进外贸依存度的提高,而短期内财政分权对外贸依存度的作用不显著;以人均GDP衡量的经济增长,在短期内可提高外贸依存度水平,而在长期中却会降低外贸依存度。分析表明,财政分权引致的地方政府为经济增长而产生的对FDI和出口的激励,以及贸易升级、产业结构调整、内需导向型经济增长模式,是财政分权、经济增长和外贸依存度之间动态关系产生的内在逻辑。     

The Global Financial Crisis and Sub‐Saharan Africa: The Effects of Slowing Private Capital Inflows on Growth*

Abstract: This paper uses the bias‐corrected least‐squares dummy variable (LSDV) estimator to examine the relationship between economic growth and four different types of private capital inflows (cross‐border bank lending, foreign direct investment (FDI), bonds flows and portfolio equity flows) on a sample of 15 selected sub‐Saharan African countries over the period 1980–2008. Our results show that FDI and cross‐border bank lending exert a significant and positive impact on sub‐Saharan Africa's growth, whereas portfolio equity flows and bonds flows have no growth impact. Our estimates suggest that a drop by 10 per cent in FDI inflows may lead to a 3 per cent decrease of income per capita growth in sub‐Saharan Africa, and a 10 per cent decrease in cross‐border bank lending may reduce growth by up to 1.5 per cent. Therefore, the global financial crisis is likely to have an important effect on sub‐Saharan Africa's growth through the private capital inflows channel.     

Business start-up regulations and the complementarity between foreign and domestic investment

This paper shows that the complementarity between foreign direct investment (FDI) and domestic investment significantly depends on regulations required to start a new domestically owned business in host economies. It finds evidence that FDI crowds out domestic investment in countries with entry regulation cost above a certain level, and many of these countries are in the bottom quartile of GDP per capita. Reforms in business start-up regulations can therefore play a critical role in enhancing the complementarity between foreign and domestic investment and thereby increase entrepreneurship and economic growth in low-income countries. The analysis takes into account other significant factors which affect domestic investment such as the cost of capital, government’s economic growth track record, institutional quality, and market size.     

外商直接投资与科技创新、经济增长——基于西部l0省面板数据的实证分析

选取了西部地区1991-2012年的相关数据,就外商直接投资、科技创新以及经济增长这三个变量的关系进行了研究,结果表明:FDI促进了我国西部区域科技创新能力的提高;FDI的技术外溢效应使本地企业创新产品产值成逐年增长趋势,并辐射周边区域,提高了本地区的人均GDP,带动了经济增长,同时经济进一步发展又促进了更多外资的流入;西部地区在引进外资时不能盲目,应注重对人力资本等的培育,加强对外资的消化吸收能力,最终促进经济进一步地发展提高.     

How will financial liberalization change the Chinese economy? Lessons from middle-income countries

This study projects the impact of financial liberalization in China by drawing on the experiences of 60 middle-income economies over a period of four decades. Our results suggest that comprehensive financial reform could increase GDP growth per capita by up to 1.4% points and raise the real bank lending rate by up to 5.1% points. Perhaps the most unexpected result is a massive increase in net capital inflows by up to 20.1% of GDP, which could plant seeds for financial risks later. The probability of a currency crisis could increase by up to 21.7% points, but the probability of a banking crisis may rise or fall, depending on the quality of bank supervision. We also find different policy impacts of different financial reform measures. Bank ownership reform and regulatory reform are critical in supporting economic growth and financial stability. These findings offer important policy implications on how to derive maximum benefit from financial reforms while effectively mitigating potential risks.     

中国金融服务业贸易模式和影响因素——基于1999～2009年数据的实证研究

本文以静态G—L指数和动态MIIT指数测算了金融服务业产业内贸易水平,然后基于1999~2009年数据,建立计量模型,对影响因素进行了实证分析,包括人均收入水平、金融市场规模、对外直接投资和货物贸易。结果表明人均收入和市场规模与金融服务产业内贸易水平正相关,而FDI和货物贸易的影响与理论预期不一致,对此文中给出了解释分析。本文克服了以往研究在模型设定、因素选取和度量中存在的几点不足,最后给出了几点建议。     

外国直接投资对中国产业结构的调整效应分析

外国直接投资在中国主要投向第二、第三产业。第二产业实际吸引的外国直接投资集中在制造业，第三产业实际吸引的外国直接投资集中在房地产业、批发零售餐饮业和交通运输仓储及邮电通信业。外国直接投资的产业分布与中国产业结构和劳动力就业结构存在显著差异。回归分析表明外国直接投资有利于中国第二、第三产业的发展，不利于第一产业的发展。针对中国产业结构调整目标，本文提出中国吸引外资的建议。     

Financial development,institutions and industrialization in sub-Saharan Africa

Using a panel data covering more than 100 countries worldwide, we have estimated a dynamic panel model to investigate the relationship between financial development and manufacturing industries’ growth. More specifically, we have estimated the effect that institutional quality might have in this relationship in sub-Saharan Africa (SSA). The results show that lower quality institutions in SSA are a hindrance to the role financial development plays in the growth of the manufacturing industrial sector, as compared with developed countries. These findings are robust when a quantile regression model is used. Furthermore, the results confirm that the relationship between per capita GDP and industrialization is nonlinear. Finally, in SSA, the abundance of natural resources has an adverse effect on the manufacturing industrial value added, providing more evidence for the Dutch disease hypothesis.