National levels of corruption and foreign direct investment

We model the relationship between bilateral foreign direct investment (FDI) and the level of corruption in multinational firms’ (MCNs’) home and host countries. We construct and test a model of bilateral FDI between countries that differ in their levels of corruption. FDI is affected negatively both by the level of corruption in the host country and by differences in home- and host-country corruption. Our model emphasizes that MNCs develop skills for dealing with home-country corruption, and these skills become a competitive advantage in similarly corrupt host countries. We test the model using data on bilateral FDI stocks among a large number of home and host countries, using a variety of specifications and estimation strategies to provide robustness. Our results show that the effects of host-country corruption and of differences in corruption levels between home and host countries are statistically and economically significant.     

Harmonizing national options and discretions in the EU banking regulation

The European Central Bank strives to harmonize over 160 national options and discretions (O&Ds) that contribute to the fragmentation of banking union’s regulatory framework. National authorities seem prepared to accept it, despite previously insisting on the inclusion of all O&Ds into the EU legislation. We analyze a sample of O&D choices and their correspondence to cleavages pertinent to the political economy of EU banking. We find that the 11 post-communist member states use O&Ds more stringently to protect capital and liquidity in the local subsidiaries of foreign-own banks, which may complicate their potential opt-in to the banking union.     

A comparison of technology in centrally-planned and market-type economies

The present paper considers the role of technical progress in centrally-planned and market-type economies using a case study approach of Czechoslovakia and Austria. The paper goes beyond the usual treatment of productivities of prime factors in that the demand for intermediate inputs is specifically considered. The empirical analysis is based on the input-output approach which consists of testing the ‘fundamental’ properties of the input-output tables including triangularity, physical homogeneity and bloc decomposability. The comparisons include new sensitivity tests of ‘critical’ values and new methods of matrix triangulation. It is found that the ‘fundamental’ structures of both Czechoslovakia and Austria were triangular in form and formed a hierarchical arrangement. The findings suggest that the forces generating ‘fundamental’ properties of production structure in developed market economies can be also found in centrally-planned economies.     

DOES INVESTOR PROTECTION INCREASE FOREIGN DIRECT INVESTMENT? A META‐ANALYSIS

We undertake a meta‐analysis of the effects of international investment agreements for the protection of foreign investors on foreign direct investment using 2107 estimates drawn from 74 studies. Our meta‐analysis finds robust evidence that effect of international investment agreements is so small as to be considered zero.  However, our results do not rule out the possibility that the effect of these agreements is, in fact, positive and that current research methods are insufficiently powerful or precise to identify the underlying genuine effect. FDI from developed countries appears to be more responsive to the existence of investment protection, and there is evidence of publication–selection bias in favour of studies that find a positive effect for investor protection.     

Fuzziness and Bias in Decision-Making Processes Using an Arithmetic Mean Criterion

Grade averaging (by arithmetic mean) is often performed as an attempt to assess overall student performance. In the case of grade comparison originating in non-equivalent scales, rank errors and absurd averaging may result. As averages are sometimes used for candidate selection, the paper dicusses how decisions based on arithmetic mean interpretation may be true, false, or fuzzy, according to different categories of participating candidates. A two stage selection process is analyzed from the perspective of candidate categories. The impact of the choice of asessment scale on the decision-making process is also evaluated and statistical biases are identified. The relevance of using a uniformity criterion is demonstrated.     

Monetary policy towards E(M)U accession: A central banker's view

This paper gives a brief overview of the main economic issues related to the forthcoming integration of the new EU member countries into the euro area. Subsequently, it will discuss in more detail three broad issues concerning the monetary side of EU enlargement. First addressed is the timing of euro area enlargement and monetary policy regimes in the run up to the EMU. The next focus is on the ERM II as an interim step towards the euro area. Third, the author expresses his views on the future of the ECB and the euro area, which the Czech Republic will have an opportunity to co-determine after its entry. The paper is based on the author's Distinguished Address, as well as the symposium's panel discussion on the topic at the International Atlantic Economic Conference in Vienna, 14 March 2003.     

The impact of technological differences on east-west trade

Zusammenfassung Die Auswirkungen von Unterschieden in der Technologie auf den Ost-West-Handel. —Aus der empirischen Analyse des internationalen Austauschs von Technologie und technologieintensiven Produkten im Ost-West-Handel ergeben sich zwei klare Ergebnisse. Erstens wird die Ansicht best?tigt, da\ Technologiestr?me im Ost-West-Handel dominieren und da\ die Str?me von technologieintensiven Produkten von den entwickelten L?ndern mit einer Marktwirtschaft zu den L?ndern mit einer Planwirtschaft flie\en. Zweitens ergibt sich jedoch ein anderes Muster der technologischen Abh?ngigkeit, wenn nur die “hohe” Technologie betrachtet wird, hier definiert als stark oder durchschnittlich F-und-E-intensive Güter: Die Rolle dieser “hohen” Technologie im Ost-West-Handel ist relativ gering. Ein wichtiger Grund dafür, da\ stark F-und-E-intensive Güter nicht in gro\em Umfang von den Ostblockl?ndern importiert werden, liegt darin, da\ diese Gruppe Konsumgüter enth?lt (Fernsehen, Hi-Fi-Ausrüstungen, elektronische Güter usw.). Harte Devisen werden aber weiterhin vorwiegend zum Kauf von Investitionsgütern zugeteilt, d. h. für den Kauf von Technologie an sich. Au\erdem verhindern mengenm?\ige Beschr?nkungen im Ost-West-Handel, da\ technologieintensive Produkte in dem Umfang gehandelt werden, wie es gem?\ der Theorie zu erwarten w?re.

---

Résumé L’effet des différences technologiques sur le commerce est-ouest. ⟶euxaspects sont démontrés par l’analyse empirique des flux de la technologie et des produits basés sur la technologie en commerce est-ouest. Le premier résultat confirme l’opinion que le commerce est-ouest est dominé par les flux de technologie et que le flux de technologie incorporée s’écoule des économies de marché développées vers les économies planifiées. Le deuxième résultat, cependant, suggère une structure assez différente de la dépendance technologique si l’on considère seulement la technologie ?haute? définie ici par des produits hautement et modérément R&D-intensifs : Le r?le de la technologie ?haute? est relativement faible. Une raison importante pourquoi les produits hautement R&D-intensifs ne sont pas importés en grande échelle est qu’ils incluent des biens à consommation (télévision, hi-fi équipement, électroniques). Mais les monnaies fortes continuent à être réservées avant tout pour l’achat des biens d’investissement, c’est-à-dire pour l’achat de la technologie ellemême. De plus, les restrictions quantitatives en commerce est-ouest empêchent que les produits intensifs à technologie sont commercés en mesure comme prédite par la théorie.

---

Resumen El impacto de diferencias tecnol?gicas sobre el intercambio comercial entre el Este y el Oeste. -El análisis enxpirico de las corrientes de tecnología y de bienes de base tecnológica intercambiados entre el Este y el Oeste demuestra claramente dos cosas. Primero se confirma la opinión de que en el intercambio comercial entre el Este y el Oeste predominan las corrientes de tecnología y que la dirección de la corriente de tecnologia incorporada es de los países desarrollados de economía de mercado hacia los pafses de economia centralmente planificada. El segundo resultado, empero, sugiere una estructura de dependencia tecnológica diferente, si se considera solamente la ?alta? tecnología, definida como bienes moderadamente y altamente intensivos en investigatión y desarrollo (I&D). La ?alta? tecnología cumple un papel relativamente menor en el intercambio comercial entre el Este y el Oeste. Una de las razones por las cuales bienes muy intensivos en I&D no se importan en gran escala es que incluyen bienes de consumo (aparatos de televisión, equipos de audio, artefactos electrónicos, etc.). El Este continúa con su política de asignar divisas preferentemente para compras de bienes de capital, o sea, para la compra de la tecnología misma. Además, restricciones cuantitativas sobre el comercio Este-Oeste impiden el intercambio de bienes intensivos en tecnología en la medida indicada por la teoría del comercio internacional.