China’s regulatory framework for outward foreign direct investment

China has become the world’s third largest outward investor, behind the United States and Japan. A growing body of literature suggests that China’s regulatory framework for outward foreign direct investment (OFDI) is a determinant of the country’s rising OFDI. This article presents a holistic review of that framework, including some possibilities for its improvement. Overall, China’s framework serves two objectives: to help Chinese firms become more competitive internationally and to assist the country in its development effort. In pursuing these objectives, the regulatory framework has moved from restricting, to facilitating, to supporting, to encouraging OFDI, but there are still strong elements of administrative control that make it cumbersome. State-owned enterprises (SOEs) seem to benefit particularly from the current framework when internationalizing through FDI.     

Factor analysis and structural equation model for patent analysis: a case study of Apple’s technology

In this study, we analyse patent data for technology analysis (TA) because patents are rich in information on developed technology. The results of TA can be used to perform more efficient research and development (R&D) planning. Most companies are trying to develop new and innovative technologies to improve their competitive positions. Research involving TA has been introduced in a variety of fields. Most of the published research analysed original variables related to a target technology. However, it is necessary to analyse the latent variables as well as the original variables included in the technology to achieve a better TA model. Therefore, we propose a factor analysis and a structural equation model for patent analysis. In addition, we use Apple’s patents to determine the target technology. In our case study, we analyse Apple’s technologies by latent variables. Our case study shows how the proposed model is applied to Apple’s R&D planning.     

Growing China’s renewables sector: a developmental state approach

Over the last decade China expanded its renewable energy sector with unprecedented speed. This success story presents a challenge to Western modes of environmental governance, where stakeholder participation is often deemed a necessary pre-condition for effective policy outcomes. Drawing on new research (including previously unpublished interview data), the article first discusses established modes of environmental governance before examining the growth of China’s renewables sector through the theoretical lens of the ‘developmental state’. The article then analyses renewable energy policy design and implementation in China, illustrating how top-down command and control strategies have successfully diffused renewable energy technology from a standing start. We argue that (1) China’s distinct approach to the sector differs from Western modes of environmental governance and (2) this has revealed a new path towards renewable energy diffusion that authoritarian states in particular might regard as an attractive alternative to participatory models.     

The effects of shocks on the Austrian unemployment rate – a structural VAR approach

Assuming full hysteresis in the Austrian labour market, a simple macroeconomic framework is used to model the effect of four structural shocks, i.e. shocks to productivity, demand, wages and labour supply. By using SVAR analysis, we derive impulse-response functions that show the effects of these shocks on unemployment. What constitutes a distinctive feature of our study is the deliberate use of overidentifying restrictions, allowing for a likelihood ratio test. The objection to SVAR methodology, that it relies on arbitrary assumptions, can thus be overcome, as invalid sets of identifying restrictions are rejected. First version received: September 2000/Final version received: March 2002 RID="*" ID="*"  I thank Juan F. Jimeno, Martin Wagner, Helmut Hofer and Bernhard B?hm for their assistance; Robert Kunst and Martin Spitzer for their discussion of an earlier version of this paper; Thomas Sparla, Michael Roos and two anonymous referees for their helpful comments.     

Impact of regional interactions on China’s trade performance: evidence from a spatial econometric approach

ABSTRACT

In this paper, we examine the impact of regional interactions on China’s trade performance as supported by infrastructure development, using exports and imports of Chinese-owned and foreign-owned firms disaggregated for 28 provinces. Taking into account the disparities in the regional economic activities, we use five spatial weight matrices in a spatial panel lag and spatial panel error frameworks in the period 1996–2016. The spherical distance and the gasoline usage weight matrices measure the impact of ground connections on China’s trade flows. The nautical miles and the river distance weight matrices measure the impact of maritime and river connections on trade flows for provinces along the sea coast, in the Yangtze valley, and along Zhu river, respectively. We find significant cross border effects on provincial trade flows. The effects vary between areas and firms. Overall, our findings show positive influence of regional interactions on China’s international trade performance.     

Building ‘mass’ and ‘momentum’ – a latecomer country’s passage to large technological systems – the case of China

This paper focuses on how a latecomer country can bring a large (infrastructural) technological system (LTS) to a market already dominated by the entrenched systems of global technology leaders. We construct a conceptual framework, building on Hughes LTS theory (1983) and insights from social studies of technology into the specificities of infrastructural sociotechnical systems to analyse the development of China’s 3rd Generation mobile telephony system. We explore the complex dynamics surrounding the distributed governance of innovation, highlighting changes in key system builders. We note the role of the state in addressing critical problems (‘reverse salients’), both in terms of aligning players through legitimating and sense-making and also, building the necessary mass and momentum. This includes a more radical reconfiguring of the field to secure the substantial commitments needed to materialise and embed a new LTS infrastructure.     

China’s regional rebound effect based on modelling multi-regional CGE

Improving energy efficiency has been regarded as an important measure to reduce energy consumption, yet the rebound effect has greatly shrunken the energy saving consequences of this measure. To investigate regional rebound effect in China, a multi-region computed general equilibrium (CGE) model is established in this paper. The results show that there are obvious regional differences in the rebound effect in China. The primary energy rebound effects are positive, whereas the production-side power rebounds are below zero in most regions. We also simulated the energy subsidy reform scenarios, which indicates that reducing or even eliminating coal and oil subsidies will increase the production-side rebounds. Finally, feasible policy recommendations are put forward based on the results.     

Macroeconomic impacts of China’s foreign exchange reserve accumulation: a vector autoregression analysis using pure-sign-restriction approach

This study employs pure-sign-restriction approach analysing the macroeconomic impacts of foreign reserve accumulation and discusses the foreign exchange sterilization behaviour of the People’s Bank of China (PBoC). Sign restriction analysis shows that the effects of reserve accumulation shock are initially ambiguous on all variables, but later a positive influence only on base money can be observed. With regard to sterilization intervention, the effect is significant even though it degrades gradually over time. In China, the monetary authority actively undertakes sterilization intervention in order to remove the influence of passive release of base money caused by foreign reserve accumulation.     

‘Hybrid’ open source software virtual communities of practice – a conceptual framework

‘Hybrid’ open source software communities are conducive to knowledge integration and innovation, and can be seen through a community of practice lens. In this paper, we develop an integrated process theory of structural attributes and social mechanisms of hybrid virtual communities. We offer a dynamic view of knowledge integration and innovation in such communities. We also emphasise the multi-faceted nature of virtual communities and identify factors that regulate participation and sustain such communities. This has implications for theorising about knowledge integration and innovation in hybrid virtual settings. Finally, virtual ethnography and multi-level research are suggested for future research.     

The myth of China’s monetization

This article develops a simple model of M2/GDP based on the money demand function of Milton Friedman. This model proves that M2/GDP is positively related to the expected wealth and negatively related to the opportunity costs of holding money. China’s extremely high monetization ratio as measured by M2/GDP is the result of a decades-long rapid economic growth and a depressed financial system. Fast economic growth leads to high expected wealth. A depressed financial system leads to low opportunity costs of holding money. The combination of those two factors increases money demand and leads to very high M2/GDP. The model is verified indirectly by testing two implied testable hypothesizes. The study of this article raises questions on the accuracy of M2/GDP as a measure of monetization.     

The future of food production – a text-mining approach

ABSTRACT

The system of food production is facing grand challenges, such as a rising population, climate change, degrading bio-productivity of agricultural land and over-fishing. Agriculture and food production are becoming more innovative and implement new infrastructure, IT-platforms or biotechnologies, like gene editing or synthetic food production. A more advanced knowledge base about food innovations helps customers to build informed opinions of new technologies and provides policy makers and industry actors with better information for strategic decision-making. As the amount of available information exceeds expert knowledge or manual filtering of data outputs, this paper presents a text mining study on science and technology in food production based on more than 30 million documents. The proposed methodology which we demonstrate on the example of the future of food production can be applied each time new data becomes available and can serve as an early warning system for a changing technology landscape.     

The Time-varying Impact of China’s Economic Rebalancing on Korea’s Exports to China

While China seeks to shift from exports and investment to a consumption-oriented economy and to increase the self-sufficiency rate of exports, this study uses time-varying parameter vector autoregression (TVP-VAR) to examine the impact of economic structural changes in China on Korea’s exports to China over time. The study results suggest that the impact of China’s export shocks on Korea’s exports has weakened, which demonstrates the slowdown in regional production fragmentation, considering that Korea’s export goods are mainly intermediate goods. Instead, the influence of China’s domestic demand shock on Korea’s exports has expanded, which implies that China has increasingly become the final destination of intermediate goods made in Korea.     

Reappraisal of outbound open innovation under the policy of China’s ‘Market for Technology’

China’s ‘Market for Technology’ policy has attracted much interest over the past decade. In light of a relative emphasis on the spillover effects of joint ventures, this study examines the transferring effects of Multinationals’ (MNCs) outbound open innovation in such a context. A survey of 2071 research and development (R&D) contract transactions between Chinese entities and MNCs indicates both internal factors (e.g. organisational capabilities) and external factors (e.g. the role of Intellectual Property protection) affect the transferring effects, which reformulate the focus of the Policy from the relational dimension of ‘Government vs. MNCs’ to the transactional dimension of ‘Domestic entities vs. MNCs’. We thus conclude that MNCs’ active initiative in the involvement of technology transfer and the success of domestic transaction partners combine to contribute to the technology progress within China’s ‘Market for Technology’ policy.     

China’s CO2 emissions from power generating stations and the role of subsidies – a first exploration

Our analysis is the first of its kind to explore patterns of subsidization and CO₂ emissions in China’s electricity-producing sector. Applying data for all power plants across China and controlling for the age, capacity and location of generating stations, we find that plants attracting a higher government subsidy are also the plants generating a disproportionate share of CO₂ emissions. This distortion is incongruent with China’s aspiration for a greener economy but may be eliminated if China delivers on its November 2013 announcement to review many industry subsidies on its way to a fully fledged market economy.     

On the optimality and sustainability of Turkey’s current account

We analyze Turkey’s current account optimality and sustainability between 1992 and 2004. Using the intertemporal benchmark model for Turkey’s current account we test for its intertemporal solvency. Based on traditional and alternative tests (which account for persistence in the current account), we conclude that Turkey breached the intertemporal solvency condition in the sample period. In addition, stationarity tests of the deviation between actual and optimal net external liabilities series confirm that Turkey’s current account deficit was unsustainable for that period. However, further econometric investigation and analysis of reforms causes us to question our conclusions of non-optimality and unsustainability of the Turkish current account for the latter part of the period. We are indebted to two anonymous referees for insightful comments and suggestions. We would also like to thank seminar participants at Middle Eastern Technical University, Ankara, Turkey, for comments on an earlier version of this paper. Responsibility for all errors remains with the authors.     

Sugden’s critique of Sen’s capability approach and the dangers of libertarian paternalism

The force of Sugden’s critique of Sen’s capability approach depends on the interpretation of the approach adopted. It is persuasive when public reasoning about what is good (or best) for people can justify policies which promote opportunity through (potentially objectionable) restrictions on liberty. Sunstein’s discussion of preference formation and politics shares key elements of Sen’s views. His proposals for democratic controls illustrate the potential danger Sugden signals about application of the capability approach. Sugden is also critical of paternalist views inspired by the findings of behavioural economics. One of these—Sunstein and Thaler’s ‘libertarian paternalism’—is a worrying extension of Sunstein’s earlier views and opens the door to a much wider range of interventions. Sugden rightly and forcefully resists it. His critique of the capability approach may, by contrast, be better seen as sounding a cautionary note than as an act of resistance.     

Estimating domestic content in China’s exports: Accounting for a dual-trade regime

This paper identifies the heterogeneity issue as a key challenge that is central to but not fully addressed when measuring global value chains. To resolve this issue, we propose an extended input-output model that is consistent with the theoretical framework of heterogeneous firms. Empirically, we use China as a prominent example of a country that is engaged in both normal trade and the processing trade under a dual-trade regime, and we synthesize methods for constructing China’s extended input-output dataset for the period 1997 to 2015. Our results show that when alternative generic datasets are used, this is likely to result in overestimating the domestic content in China’s exports by as much as 44%, compared to a model that uses an extended database that incorporates production heterogeneity, as does the one in this study. This paper’s proposed methodology and rich dataset may be useful to a wider range of empirical applications.     

Adam Smith’s division of labor and structural changes

This paper considers two different cases of division of labor: (i) the subdivision of different operations in order to produce a particular product in a given firm or plant; (ii) the specialization of firms in the same industry. Division of labor of the former type is limited by demand for output of a particular firm or plant, while division of labor of the latter type is limited by demand for the industry as a whole. It is argued that, in the case of an industry producing a homogenous product, an increase in the scale of production of any particular firm is likely to be associated with changes in the internal division of labor. In the case of inter-firm division of labor, decreasing unit costs may result from lateral disintegration. Finally, in the case of an industry producing a composite commodity (that is, a commodity composed of many different sub-commodities), firms’, disequilibrium behavior may lead to concentration of each firm to fewer sub-commodities, in the anticipation of the entry of new firms, or as a result of it.     

Forest carbon sequestration and China’s potential: the rise of a nature-based solution for climate change mitigation

ABSTRACT

A growing interest has recently been placed on the potential of nature-based solutions to help mitigate climate change, reflecting the importance of natural ecosystems as sources and sinks for greenhouse gases. Forests are of the hot debate – that sequester and also emit carbon dioxide (CO₂). In this paper, we estimate the forest carbon sequestration potential for China. We show that, as the government plans, by 2020, the size of China’s forest carbon stock will reach 12.87 billion tons, among which 5.73 billion tons will be from afforestation and reforestation (A/R). From the up-to-date data on AR activities (by 2018), we find that only 80% of the target sinks have been met. Scenario analysis shows that the carbon sequestered by the forests in 2020 is equivalent to 13%-17% of the industrial CO₂ emission that year, with 6%-8% by A/R, 4%-6% by forest-management, 3%-4% by reduced-deforestation-and-forest-degradation, and 1% by wood-product-sink.     

What drives compliance? An application of the theory of planned behaviour to urban water restrictions using structural equation modelling

This article presents analysis of households’ intentions to comply with government constraints on the use of urban water, or so-called water restrictions. The data are drawn from Australian cities and was collected during a severe drought. Structural equation modelling is employed to operationalize constructs taken from the theory of planned behaviour and to answer important policy questions related to compliance. The modelled data support the view that attitudes, social norms and perceived behavioural control (PBC) have a positive and significant influence on intentions to comply. PBC has the strongest influence on intentions, suggesting policy directed at assisting households to meet regulatory criteria might be at least as effective as advertising expenditures aimed at shaping attitudes and norms. Importantly, intentions to comply are also shown to have a positive and significant influence on reported compliance behaviour.