Foreign Bank Entry: Experience, Implications for Developing Economies, and Agenda for Further Research

In recent years foreign banks have expanded their presence significantlyin several developing economies. In Argentina and Chile in LatinAmerica and in the Czech Republic, Hungary, and Poland in EasternEurope, foreign-controlled banks now hold more than half oftotal banking assets. In other regions the trend is similar,though foreign bank entry has been slower. Despite the growingnumber of countries embracing foreign bank entry, importantquestions are still being debated: What draws foreign banksto a country? Which banks expand abroad? What do foreign banksdo once they arrive? How do foreign banks' mode of entry andorganizational form affect their behavior? This article summarizescurrent knowledge on these issues. Because the existing literaturefocuses heavily on developed economies, it also puts forth anagenda for further study of the causes and effects of foreignbank entry in developing economies.      

Crisis, Adjustment, and Reform in Thailand's Industrial Firms

New data on Thailand's industrial firms shed light on the originsof the East Asian financial crisis and on the response of themanufacturing sector to the structural adjust-ment program supportedby the international financial institutions. Before the crisis,Thai firms had declining profitability, but they neverthelessmaintained high levels of investment, often in domesticallyoriented areas (notably the auto sector). Thai firms financedthese investments with short-term borrowing from financial institutions,which in turn borrowed short term on foreign markets. That only40 percent of firms provided audited financial statements totheir banks meant that the financial sector had poor informationfor assessing the true riskiness of these investments. The financialstructure was thus vulnerable even to small shocks. How well did the adjustment program deal with the crisis? Thaifirms had difficulty increasing their exports quickly becauseof investment in the wrong sectors, a decline in regional demand,and bottlenecks that included red tape and poor customs administration.Because of the poor export response, the brunt of adjustmenthad to come through compression of demand and of imports. Inretrospect, the macroeconomic program— which assumed quickexport recovery— was too tight.      

国际技术溢出、自主创新与服务业发展——基于长三角面板VAR模型的研究

利用长三角1997～2009年的相关数据,运用面板VAR模型研究国际技术溢出、自主创新对服务业发展的影响。研究结果表明,从长期来看,长三角国际贸易技术溢出抑制服务业发展,而外商直接投资技术溢出、自主创新投入的增加和自主创新能力的提高促进服务业发展。从短期来看,长三角国际贸易技术溢出和自主创新能力的提高会抑制服务业发展,而外商直接投资技术溢出和自主创新投入的增加促进服务业发展。方差分解结果表明,长三角自主创新对服务业发展的影响程度大于国际技术溢出对服务业发展的影响程度。     

Effects of Foreign Presence in a Transition Economy: Regional and Industrywide Investments and Firm-Level Exports in Ukrainian Manufacturing

We investigate the effects of regional and industrywide foreign presence and foreign direct investment (FDI) on the export volumes of Ukrainian manufacturing firms using unpublished panel data from 1996-2000. Foreign presence through FDI may have negative competition effects on domestic firms' performance; at the same time, domestic firms' productivity may be increased by technology transfer or training and demonstration effects. From a Cournot competition model that includes negative competition and positive technology spillover effects, we hypothesize that foreign presence and FDI might positively affect domestic firms' output and exports. Our estimation results support these hypotheses, suggesting in particular that large firms and durable goods producers benefit most from foreign presence and investments.     

Knowledge-seeking and firm international performance: Evidence from Chinese multinational enterprises

This study focuses on whether the outward foreign direct investment (OFDI) of Chinese multinational enterprises (MEs) can improve firm international performance by seeking and transferring knowledge from developed markets (DMs). To control for the endogeneity and self-selection problem when deciding whether overseas investment should be accepted, propensity score matching (PSM) and difference-in-difference (DID) methods are combined to test the hypothesis. Samples of Chinese A-share listed firms over the period 2003–2018 are used to test the effects of knowledge seeking on firms' international performance. The empirical results indicate that Chinese EMs' OFDI in DMs can indeed improve their competitiveness in the world market through a combination of reverse spillovers and knowledge transfer.     

商业信用合同的履行概率,其外部性及现金需求——中国案例

本文测算了商业信用合同违约风险对商业贸易和现金需求的影响。结果显示,外国直接投资企业为其贸易伙伴提供了大量商业信用,而中国的企业,无论是私营,还是国有企业,他们交易实行货到即时付款的比例很高。外国直接投资企业之所以是经济交易中信贷的提供者,是因为他们具有较高的商业信用合同执行技术(contract enforcement technology)。我们还发现商业信用合同的执行技术主要包括贸易物品的竞争力、竞争幅度、与地方政府的关系以及公司治理的性质。一个企业具有较高的合同执行概率,就可能提供大量的商业信用,并获得更大的交易量。合同执行技术对贸易交易量的弹性估计约为2.2。模拟显示如果合同执行概率提高,分布在75%,贸易交易量可增加24%,商业信用规模可增加30%。由于商业信用合约的不完备而导致的经济损失则是巨大的。此外,我们证实,高的商业信用合同执行技术通过商业信用量和交易量的增加而在经济中产生正外部效应。     

The Impact of Australian Accounting Education on Repatriates' Career Development

The aim of this article is to explore the impact of Australian accounting education on the career development of Chinese self‐initiated repatriates (SIRs) in different business settings. It is acknowledged in the literature that international education has an impact on the career development of SIRs. However, in this study, we explore the impact in terms of professional knowledge, qualifications and international exposure. A multi‐case study was conducted with Chinese SIRs in different industries in an effort to understand the specific impacts and potential adverse effects across different types of enterprises in China. Our research found that international accounting knowledge has a positive influence on individuals’ careers, especially in foreign enterprises. Skills obtained from international experience are highly valued in the foreign financial industry, while the CPA qualification is highly valued in accounting firms. Readjustment, competition from local counterparts and employers’ unreasonable expectations do have adverse effects. By analysing how SIRs’ professional knowledge in accounting disciplines has impacted their job performance in different industries, this article not only contributes to contemporary literature from a direct perspective but also presents practical recommendations regarding Chinese and Australian professional education.     

Is There a Case for Industrial Policy? A Critical Survey

What are the underlying rationales for industrial policy? Doesempirical evidence support the use of industrial policy forcorrecting market failures that plague the process of industrialization?This article addresses these questions through a critical surveyof the analytical literature on industrial policy. It also reviewssome recent industry successes and argues that public interventionshave played only a limited role. Moreover, the recent ascendanceand dominance of international production networks in the sectorsin which developing countries once had considerable successimplies a further limitation on the potential role of industrialpolicies as traditionally understood. Overall, there appearsto be little empirical support for an activist government policyeven though market failures exist that can, in principle, justifythe use of industrial policy.      

Total Factor Productivity,Foreign Direct Investment,and Entry Barriers in the Chinese Automotive Industry

We explore three questions on foreign direct investment (FDI): (1) What are the differences in entry barriers for foreign, public, and private investors? (2) What are the effects of past productivity levels on future foreign direct investment (FDI) decisions? (3) What is the effect of equity structure on future total factor productivity (TFP) levels? The empirical results based on a monopolistic competition model and using a firm-level data set from the Chinese automobile industry suggest that foreign investors face higher entry barriers and react stronger to past TFP levels. FDI is also found to improve future TFP more than other forms of investment. Finally, World Trade Organization (WTO) accession is found to reduce entry barriers for foreign and domestic private investors while increasing entry barriers for public investors.     

MACROECONOMIC ADJUSTMENT TO CAPITAL INFLOWS: LESSONS FROM RECENT LATIN AMERICAN AND EAST ASIAN EXPERIENCE

Capital inflows to some developing countries have increasedsharply in recent years. Impelled by better economic prospectsin those countries, lower international interest rates, anda slowdown of economic activity in the capital-exporting countries,the inflows have furnished financing much needed to increasethe use of existing capacity and to stimulate investment. Butcapital inflows can bring with them their own problems. Typicalmacroeconomic repercussions have been appreciation of the realexchange rate, expansion of nontradables at the expense of tradables,larger trade deficits, and, in regimes with a fixed exchangerate, higher inflation and an accumulation of foreign reserves. Should government intervene to limit some of these side effects—andif so, how? The question is especially pressing in the wakeof the Mexican crisis of December 1994. This article looks foranswers in the experience of four Latin American and five EastAsian countries between 1986 and 1993, examining the effectsof the capital inflows on the economy and comparing the differentways in which these countries responded to the problem of "toomuch" capital.      

中国吸引外资、对外投资和对外贸易:历史与未来

中国已经成为全球外国直接投资的主要接受者,同时也是世界上第二大对外直接投资国。中国希望通过扩大对外直接投资学习先进技术和管理经验,并帮助国内企业分散风险。在改革开放推动下,中国逐步成为一个世界贸易强国,其主要贸易伙伴遍布欧美、东南亚及日本、韩国等,制造业产品在中国对外贸易中占比较大。     

ALTERNATIVE FORMS OF EXTERNAL FINANCE: A SURVEY

For many developing countries, alternative forms of externalfinance—all forms of finance that are not guaranteed byor mediated through the public sector—have become increasinglyimportant as traditional financing to the public sector hasebbed. Yet a survey of the literature reveals few recent analyticalinsights about alternative financing, which includes foreigndirect investment, project lending, portfolio investment, closed-endequity funds, private nonguaranteed debt, licensing, joint ventures,quasi-equity contracts, and other forms of private, nonrecourselending to private borrowers. The literature offers little solidguidance for distinguishing between alternative and traditionalfinancing with respect to country risk, for establishing themost appropriate and efficient incentive structures and restrictionsin the host country, or for identifying the optimal financingmodes for international firms investing in developing countries.This gap in the analytical literature has important implicationsfor policy formulation. It is not always clear whether a countryis developing incentives and establishing safeguards (for ensuringadherence to project performance requirements) that are mosteffective in attracting alternative forms of finance.      

中国中部地区国际贸易与IFDI关系的实证分析

运用基于VAR模型的脉冲响应函数,对我国中部地区1992-2011年期间外国直接投资流入（IFDI）和进出口贸易之间的长期动态关系进行了分析.结果表明,IFDI对中部地区进口贸易存在长期的正向效应,对中部地区的出口贸易存在明显的波动性,由开始的正向效应逐渐转为负向效应.在以上分析基础上,提出相应政策建议.     

Role of digital finance,investment, and trade in technological progress

The primary purpose of this study is to evaluate the impacts of digital finance, trade, and investment on technological progress in 30 developing Asian economies by employing the FMOLS (Fully Modified OLS) technique and annual data from 2000 to 2020. The findings concluded that digital finance has a positive impact on technology progress. Moreover, trade liberalization may accelerate technological progress. Foreign direct investment has no significant coefficient, interpreting that inward FDI (Foreign Direct Investment) to the examined developing Asian economies is unrelated to technological progress. The causality test confirmed a neutrality hypothesis for the causal relationship between FDI and technological progress. Furthermore, the bi-directional linkage between trade openness and technological progress is confirmed. The paper recommends that developing economies increase the share of investment in technological progress, prioritization of regionalism and trade multilateralism for technology transfer, and establishment of a “digital financial inclusion” framework.     

Much Ado about Nothing? Do Domestic Firms Really Benefit from Foreign Direct Investment?

Governments the world over offer significant inducements toattract investment, motivated by the expectation of spilloverbenefits to augment the primary benefits of a boost to nationalincome from new investment. There are several possible sourcesof induced spillovers from foreign direct investment. This articleevaluates the empirical evidence on productivity, wage, andexport spillovers in developing, developed, and transition economies.Although theory can identify a range of possible spillover channels,robust empirical support for positive spillovers is at bestmixed. The article explores the reasons and concludes with areview of policy aspects.      

遭遇反倾销与多产品企业的出口行为——来自中国制造业的证据

近年来中国出口企业遭遇的反倾销调查越发严重,基于此,本文将反倾销纳入多产品出口企业的分析框架,采用倍差法全面考察了遭遇反倾销对中国多产品企业出口及生产率的影响,主要得到以下结论:遭遇反倾销显著减少了多产品企业的出口数量和出口产品种类,提高了多产品企业的出口价格、出口产品集中度和出口市场多元化,且该效应受到企业全球价值链上游嵌入度、下游嵌入度以及地位指数的制约;异质性分析表明,民营企业会通过集中核心优势出口核心产品、放弃边缘产品出口的方式来应对国外的反倾销诉讼,而遭遇反倾销对国有企业的影响较小。在贸易方式方面,遭遇反倾销对企业出口的消极影响会随着加工贸易比例的提高而增强。最后,通过构造企业层面的产品竞争力指数,我们发现尽管遭遇反倾销总体上不利于企业的出口增长,但也可在一定程度上促进企业出口产品组合向其更具竞争优势的核心产品转变,从而加速多产品企业内部出口产品间的优胜劣汰。     

Investment,leverage and political risk: Evidence from project-level FDI

Does capital structure influence firms' FDI capital expenditure decisions into countries with varying degrees of political risk? We explore this question using a novel dataset that matches 10,000 unique outward foreign direct investment (OFDI) projects with 1135 distinct U.S. firms over the period 2003–2014. We find that capital expenditures allocated to FDI projects are significantly lower for highly leveraged firms, in particular for firms with low growth opportunities. Firms also commit lower capital amounts to investments located in countries characterized by higher political risk. Furthermore, leverage and political risk interact with one another in determining the financial commitment of the FDI, with leverage exerting a significantly stronger negative effect on capital expenditures in countries where political risk is elevated. Our findings are consistent with the monitoring role of debt in curbing exposure to political risk in multinational firms' foreign operations, and corroborate the disciplinary role of leverage on firms' investment decisions.     

Foreign Investment and Productivity Growth in Czech Enterprises

This article uses firm-level data for the Czech Republic toshow that during 1992–96 foreign investment had the predictedpositive impact on total factor productivity growth of recipientfirms. This result is robust to corrections for the sample biasthat arises because foreign companies tend to invest in firmswhose initial productivity is above average. Together, jointventures and foreign direct investment appear to have a negativespillover effect on firms that do not have foreign partnerships.However, with foreign direct investment alone, the magnitudeof the spillover becomes much smaller and loses significance.This result, in conjunction with the fact that joint venturesand foreign direct investment account for a significant shareof total output in many industries, suggests that further researchis required to determine the extent of knowledge diffusion fromfirms that have foreign links to those that do not.     

Russian transnationals and international investment paradigms

This paper explores the main features of outward foreign direct investment by Russian transnational corporations – referred to as ‘eagle multinationals’ in the literature – and some of the implications of their recent rise to global prominence (since the 1990s) for the paradigms of international investment. Surprisingly, lower middle-income Russia is already a net capital exporter, and some of its firms, to mention Gazprom, Lukoil, Mechel, Norilsk Nickel and Severstal, for example, have already leapfrogged to a global status. The paper aims also at identifying issues for further analysis, such as the growing role of the state in controlling natural resource-based firms and its implications for the future of the Russian transnationals. This paper suggests that different investment paradigms fare divergently in trying to explain outward FDI from the Russian Federation. For example, the eclectic paradigm could be applied to Russian transnationals with some extension on home-country factors. Other theories, however, would require more radical re-thinking in future research.     

Federalism, weak institutions and the competition for foreign direct investment

This paper shows that vertical fiscal inefficiencies impede federally organized countries in successfully attracting foreign direct investment. Such countries, particularly if characterized by weak institutions, are disadvantaged in the process of bidding for firms and in their ability to commit to a low overall tax burden. The interaction of these problems deteriorates their competitive position vis-à-vis unitary states in the competition for foreign direct investment. These theoretical considerations are in line with recent empirical evidence that suggests that the number of government layers of host countries has significant and sizeable negative effects on the amount of foreign direct investment inflows.