Export,FDI and firm productivity

Many empirical papers tested the theoretical predictions of Helpman, Melitz and Yeaple (HMY, 2004) which sorts firms at different internationalization states according to their productivity levels. While these papers ignore the fact, that the theoretical predictions of HMY only apply to firms that become engaged in market-driven Foreign Direct Investment (FDI), we apply a more precise methodology using a French firm sample with more than 110?000 observations. Our results show that firms with a broader investment strategy, reflecting a great importance of market-driven motives, show higher productivity levels than firms with less encompassing foreign investment strategies. We conclude that the methodology is well-suited to sort firms according to the importance of market-driven FDI.     

FDI inflows,economic growth,and governance quality trilogy in developing countries: A panel VAR analysis

This study provides evidence of the triangular relationship between governance quality, foreign direct investment, and economic growth. Unlike previous studies in the governance—foreign direct investment—growth literature, this study employed the panel vector autoregressive model to examine the impact of governance quality and foreign direct investment on economic growth. Moreover, we used the impulse response function tool, which was developed in the same context, to better understand the reaction of the two main variables of interest, foreign direct investment, and economic growth, after shocks to the governance quality variable. Finally, the analysis was completed by the variance decomposition of all variables. These analyses were conducted for 102 developing countries from 1996 to 2014. Overall, the results show that inward foreign direct investment has a significant impact and can strongly encourage economic growth. These results indicate that the quality of governance in developing countries does not affect foreign direct investment and economic growth.     

Measuring economic freedom: an alternative functional specification and subsequent ranking

ABSTRACT

The widely cited Economic Freedom of the World index is an aggregate measure of economic freedom calculated by using a simple arithmetic mean of scores over five sub-dimensions: (1) size of government, (2) legal structure and security of property rights, (3) access to sound money, (4) freedom to trade internationally and (5) regulation of credit, labour and business. The use of a simple arithmetic mean implicitly assumes that the different sub-dimensions are ‘perfect substitutes’. To explore the implications of this assumption, we compute an aggregate economic freedom score and ordinal ranking of countries, by taking a geometric mean of the five sub-dimensions. For this alternative specification, the marginal impact of each sub-dimension on the aggregate score is no longer independent of the other sub-dimension scores. Consequently, countries with inconsistent levels of economic freedom across sub-dimensions are ‘punished’ to a greater degree than are countries with less variability across sub-dimensions. Our alternative specification results in considerable movement in terms of country rankings. The geometric mean measure does not appear to explain economic growth as well as the arithmetic mean measure.     

税收优惠政策调整对FDI流入的影响分析

随着新的企业所得税法的实施,税收优惠政策也发生了巨大调整。通过对新税收优惠政策的分析及最新数据的比较得出：企业所得税法税收优惠政策的调整不会阻碍FDI的流入,相反,新政策在目前甚至将来还有助于FDI的质量的提高和数量的增加。     

制度作为区位优势对中国吸引外商直接投资的影响——以引力模型为基础的实证分析

本文运用引力模型检验了中国的制度变量作为区位优势对中国吸引外商直接投资(FDI)的影响.实证分析结果表明,中国与投资国签署双边投资保护协定、文化因素、政策变量以及人民币贬值对中国吸引FDI具有正的显著影响,而中国的关税水平、知识产权保护程度、政府廉洁度对流入中国的FDI的影响在统计上不显著.     

The interaction effect of economic freedom and democracy on corruption: A panel cross-country analysis

This paper examines the effects of economic freedom, democracy and its interaction term on controlling corruption. Interactive results indicate that economic freedom and democracy significantly combat corruption. Economic freedom reduces corruption in any political environment. Democracy increases corruption when economic liberalization is low.     

Political capitalism: The interaction between income inequality,economic freedom and democracy

We study the relationship between income inequality and economic freedom for a panel of 100 countries for the 1971–2010 period. Using a panel Granger non-causality approach, we reject the null hypothesis of Granger non-causality running from income inequality to economic freedom, but not vice versa. From a series of dynamic panel estimations we show that the effect of income inequality on economic freedom is negative and robust to the inclusion of additional controls. In particular, inequality is negatively associated with those components of economic freedom related to international trade, domestic market regulation as well as the rule of law and property rights protection. We argue that the negative effect of inequality on economic freedom is due to the economic elite converting its economic power into de facto political power to defend its economic interests; these interests run counter to economic freedom, discouraging innovation and competition as well as protecting the elite's rents. Finally, we show that economic freedom decreases with income inequality even in democratic countries, suggesting that democratic institutions do not prevent economic freedom from eroding. We argue that the latter finding corresponds to a system of political capitalism or captured democracy, where a powerful economic elite can nevertheless exercise de facto political power by cooperating with politicians and other decision-makers for their mutual benefit.     

The effect of democracy on different categories of economic freedom

Many empirical studies conclude that democracy increases economic freedom. However, these studies use highly aggregated indices of economic freedom, which eliminates interesting information. The purpose of this paper is to study empirically how in developing countries different categories of economic freedom are affected by democracy, measured either as political rights or civil liberties. Democracy appears to have a positive effect on the economic freedom categories Government Operations and Regulations and Restraints on International Exchange, but no effect on the categories Money and Inflation and Takings and Discriminatory Taxation. That a high level of democracy would have a negative effect on economic freedom reform receives no support in this study. The robustness of the results to the model specification and extreme points is tested.     

Index of economic freedom: Unrealized pedagogical opportunities

Although the Index of Economic Freedom appears in many economic textbooks, their coverage of the index misses opportunities to teach statistical and policy-related concepts important for the principles course. The standard textbook presentation passes up an opportunity to examine the statistical issues of weighting in composite index numbers and correlation versus causation. In addition, textbook presentations fail to examine the assumptions made in the indexes about key economic concepts. These include inflation rate targets, appropriate government spending levels, tax rates, labor standards, financial regulation, monetary policy, property rights, government regulation, and even the meaning of economic freedom. This study explores how examining economic freedom index assumptions can help students understand key economic policy debates.     

A note on economic freedom and political ideology

Within the field of public economics, there is the perception that Republicans are associated with ‘small government’ and Democrats with ‘big government’. We test this notion by examining whether economic freedom is affected when a single party is in control of the state legislature. We find no link between party control and our main economic freedom indicator, but we do find a positive link between Republican control and the taxation component of economic freedom, suggesting a Republican legislature leads to lower taxation.     

The welfare effects of FDI: A quantitative analysis

Foreign direct investment (FDI) can increase productivity and wages. However, it is also often accompanied by primary income deficits as foreign-owned firms repatriate their profits. The welfare effects of FDI are thus ambiguous. A particularly illustrative example of this phenomenon are the Visegrád 4 (V4) countries (Czech Republic, Hungary, Poland, Slovakia). This paper investigates whether FDI can be beneficial in the presence of profit repatriation using a general equilibrium model calibrated to the V4 economies. Counterfactual simulations suggest that the benefits of FDI outweigh the costs for these countries. On average, a 1% increase in the share of foreign firms is associated with a 0.17% increase in welfare. However, incentivising foreign firms to reinvest more of their profits domestically is, ceteris paribus, welfare-improving. A 10-percentage-point increase in the profit repatriation rate is associated with a 1.06% welfare gain on average.     

Economic freedom and bilateral direct investment

Economic freedom (freedom from the intervention of government) is essential for doing business, so economic freedom of both the home country and the host country are important for bilateral foreign direct investment. However, though some literature has investigated the role of host country's economic freedom in bilateral direct investment, no literature has studied the role of home country's economic freedom. This paper has studied this issue in a gravity model with a sample of 155 countries. This paper has also employed some effective estimation techniques of gravity model to incorporate the zero observations and adopted quantile regression method. The findings indicate that economic freedom of both the home country and the host country are positively correlated with bilateral direct investment, and the economic freedom of home country has even stronger explanatory power for foreign direct investment. Hence, promoting the economic freedom may encourage more outward foreign direct investment than inward direct investment.     

Catching up of emerging economies: the role of capital goods imports,FDI inflows,domestic investment and absorptive capacity

We show that the impact of capital goods imports and FDI inflows on economic convergence depends on the local capacity of emerging economies to absorb superior technologies.     

我国FDI和OFDI技术溢出效应的实证检验

对国内外有关国际直接投资渠道的技术溢出的研究文献进行了梳理,测算了1994—2008年我国以外商直接投资和对外直接投资反映的外国R&D资本存量,并建立了R&D溢出回归模型,对其进行回归分析。研究结果显示:国内R&D资本和外商直接投资对我国全要素生产率的提升具有促进作用,且国内R&D资本的作用更大;对外直接投资对我国全要素生产率的提升有微弱的阻碍作用。因此,在政策层面上应继续加大国内R&D支出,加强外商直接投资,积极开展对外直接投资,以推动我国技术进步。     

Manufacturing FDI and economic growth: evidence from Asian economies

Previous empirical studies on inward foreign direct investment (FDI) and economic growth generate mixed results. This article suggests that the ambiguous results might be caused by the use of total FDI. We study the heterogeneous effects of different sector-level FDI inflows on host country's economic growth. Data from 12 Asian economies over the period of 1987 to 1997 are employed. Strong evidence shows that FDI in manufacturing sector has a significant and positive effect on economic growth in the host economies. FDI inflows in nonmanufacturing sectors do not play a significant role in enhancing economic growth. Furthermore, without the decomposition of total FDI inflows, the effect of manufacturing FDI on host country's economic growth is understated by at least 48%.     

关于我国中小企业对外直接投资的思考

中小企业是我国经济结构中不可缺少的一部分,在国民经济中占有举足轻重的地位.但面对越来越激烈的国际市场竞争,中小企业如何"走出去"开展对外直接投资,是摆在中小企业面前的一个现实的问题.在分析我国中小企业对外直接投资优势和不足的基础上,提出了加强中小企业对外直接投资的对策.     

Predicting FDI inflows: Exploring a nonlinear relationship between peace years,oil wealth,and the rule of law

Despite previous studies investigating the impacts of various factors such as peace years, natural resources, and the rule of law on foreign direct investment (FDI), empirical findings remain inconclusive. Therefore, this study investigates the interplay between these factors in shaping host country conditions that facilitate FDI inflows. Using generalized additive models, we examine the simultaneous effects of peace years, oil wealth, and the rule of law on FDI inflows in a sample of non-OECD countries from 1970 to 2009. Our results reveal that established peace is a critical factor in attracting FDI inflows for both oil-exporting and non-oil-exporting countries. However, the effects of the rule of law vary depending on oil wealth. Oil-exporting countries receive more FDI inflows when they have a weak rather than a strong rule of law, while non-oil-exporting countries tend to receive more foreign investments when they have a moderately strong rule of law. We argue that countries with oil wealth combined with a moderately weak rule of law provide an environment that is conducive to multinational corporations (MNCs) in extractive industries seeking monopoly rents. Conversely, countries without oil wealth should create stable yet efficient environments that protect property rights and promote labor market flexibility to appeal to non-resource-seeking MNCs.     

外商直接投资对我国工业化进程的效应分析

本文利用误差修正模型考察了外商直接投资(FDI)对我国工业化的效应。一般认为,引进FDI可以有效地并持久地促进工业化进程。在验证这一重要论点之后,本文发现:FDI对我国工业化进程的影响存在着一定的时滞;初始的FDI有助于来年进一步引进FDI。本文异于已有研究处有:采用比较客观的工业化指数测度方法;强调了技术溢出效应在研究FDI与工业化关系中的意义。本文为未来的研究提供了方向。     

A comparison of aggregation methods for measures of economic freedom

Empiricists have used various editions of an economic freedom index (EFI) initially developed by Gwartney et al. (1996) [Gwartney, J., Lawson, R., Block, W., 1996. Economic Freedom of the World: 1975–1995. Fraser Institute, Vancouver.] to examine the relationship between economic freedom and other socio-economic variables, such as growth or investment. The EFI quantifies the level of particular institutional characteristics thought to promote economic freedom and aggregates them into a single index value. The aggregation procedures utilized by Gwartney and Lawson in developing their index have changed over time and other scholars have promoted alternative methods. We examine several index aggregation procedures and show that each design may have potential methodological flaws that can greatly affect the empirical findings.