Changing factor market conditions in South Africa: The capital market – a sectoral description of the period 1970–97

This article explores changing conditions in South African real capital markets. Noteworthy is the evidence of strong restructuring in this market during the 1990s. Whereas the 1970s and 1980s showed the best investment performance among primary commodity sectors and sectors with strong parastatal involvement, the highest investment rates of the 1990s have been associated with the manufacturing industry. We show that the real user cost of capital and capital productitivity contribute plausible determinants of investment rates in South Africa. The extent to which market forces are allowed to bring in line marginal cost and marginal return on capital appears to influence the sustainability of investment.     

The Impact of Macroeconomic Risk on Asset Prices in Ghana, 1997–2002

Abstract: The dwindling nature of overseas development assistance in the early part of the 1990s called for the establishment of capital markets in some African countries, including Ghana, with the view to increasing foreign direct investments and achieving sustainable inflows, growth and development. One important factor which affects the determination of prices and the growth of capital markets is macroeconomic risk which is quite high in developing countries. Following works done on advanced stock markets, this study seeks to investigate the impact of six macroeconomic risk factors on asset pricing in the various industrial classification — financial, manufacturing, food and beverages, distribution and mining under the Ghana Stock Exchange (GSE) for the period January 1997 to December 2002. Using the arbitrage pricing methodology developed by Ross (1976) and Chen et al. (1986) , the study revealed that investors in Ghana considered three main macroeconomic risk factors — short‐term interest rate risk, inflation risk and the term structure of the country's interest rate in the determination of the various industrial asset prices during the period under consideration. Analysis of the risks and returns profile of the industries also shows that financial assets made the best gains on the market. Both general and specific policy recommendations aimed at improving the performance of the GSE are explored.     

Capital-market Liberalization, Globalization, and the IMF

One of the most controversial aspects of globalization is capital-marketliberalization—not so much the liberalization of rulesgoverning foreign direct investment, but those affecting short-termcapital flows, speculative hot capital that can come into andout of a country. In the 1980s and 1990s, the IMF and the USTreasury tried to push capital-market liberalization aroundthe world, encountering enormous opposition, not only from developingcountries, but from economists who were less enamoured of thedoctrines of free and unfettered markets, of market fundamentalism,that were at that time being preached by the international economicinstitutions. The economic crises of the late 1990s and earlyyears of the new millennium, which were partly, or even largely,attributable to capital-market liberalization, reinforced thosereservations. This paper takes as its point of departure a recentIMF paper, to provide insights both into how the IMF could havegone so wrong in its advocacy of capital-market liberalizationand into why capital-market liberalization has so often ledto increased economic instability, not to economic growth.     

Foreign direct investment in China: Policy,recent trend and impact 1

One of the most important elements of China's economic reform has been the promotion of foreign direct investment (FDI) inflow. Government polices on FDI have gone through different stages in their main objectives since the late‐1970s, from gradually opening to foreign investors, to actively encouraging inward investment, directing FDI in accordance with domestic industrial restructuring, and complying with China's World Trade Organization (WTO) obligations. FDI in China has experienced rapid growth especially since the mid‐1990s, as well as structural change. Most of the earlier investments were small scale, labor‐intensive and export‐oriented. In recent years, more investment has been large scale and more capital and technology intensive, aiming at both domestic and export markets. Moreover, increasingly more investment has come from the industrial world, and has located along the eastern coastal regions, in additional to the two southeastern provinces. FDI has played a crucial role in China's rapid growth, economic transition, and, mostly importantly, integration with the world. China's recent accession to the WTO provides more incentives to foreign investors. At the same time, it will also result in more intense competition for domestic firms.     

The Impact of the US Interest Rate Hike on Emerging Market Economies and the Belt and Road Initiative

Since the end of 2015, the US Federal Reserve has raised its benchmark interest rate nine times. This has led to capital outflows and asset depreciation in many emerging market economies. The present paper examines the factors that determine the financial volatility of emerging markets in the face of external shocks. By calculating the capital flows of 30 emerging markets from 1990 to 2018 and conducting panel regression, this paper finds that countries with good infrastructure facilities, a sound banking system and high economic growth have significantly lower cross‐border financial risks. An implication from the empirical analysis is that emerging countries would benefit greatly by actively taking part in the Belt and Road Initiative. The framework of the Belt and Road Initiative allows emerging countries better access to China's massive consumer market to promote trade and long‐term growth. Their quality of infrastructure can be improved through cooperation with China in infrastructure investment. They can also jointly establish a cooperative financial framework to enhance regional financial stability. These strategies will reduce systematic financial risks and counteract the negative impacts of US interest rate hikes.     

产业集群发展中人文因素的作用分析——以浙江绍兴纺织产业集群为例

人文因素是在人们的长期交往中形成的,涵盖传统文化、人文网络等要素,它在产业集群发展中经历了一个功能转变的过程。从对浙江绍兴纺织产业集群的研究可见,在市场发展早期要素市场缺失的情况下,人文因素对产业集群中集群主体和要素资源的聚集发挥了重大作用。但随着市场经济的发展,产业集群中的人格化交易日益成为市场交易的障碍,人文因素治理经济交易的功能制约了区域经济发展。因而,在产业集群发展过程中,保持人文因素的开放性、实现与外部环境的同步变化就显得十分重要。     

Measuring the market power in the ceramic tile industry: An international comparison

This paper measures the degree of competition faced by Spanish and Italian exporters of ceramic tiles in several European Union member states. The results indicate that Spanish producers have a substantial market power while Italian exporters face a high degree of competition. This finding is consistent with the significant gain (loss) in the world production and export shares that Spanish (Italian) producers experienced during the 1990s. The results are also consistent with accounting data. Furthermore, comparisons in the extent of market power across source countries and European destination markets reveal that most variation in the data is related to the source country. JEL no. F12, F14, L13, L60     

Fund Mobilization and Investment Behavior in Thai Manufacturing Firms in the Early 1990s*

This paper investigates capital structure and investment behavior in Thailand in the early 1990s. Various features of financial markets are considered, and the possibility of applying the ‘pecking order hypothesis’ to developing countries is discussed. By estimating the determinants of the capital structure and the investment functions, three major results are obtained. First, the lower debt ratio of listed firms is realized by an increase in the capital surplus gained by initial public offering. Second, firms’ participation in the securities market accommodates agency costs both in the equity and bank‐loan markets. Third, ‘financial conglomerate’ firms are inactive investors and are dependent upon informal financial transactions, whereas foreign firms borrow less and invest more.     

Norwegian seter-farming

Abstract

This article compares financial groups in Japan and Sweden in order to examine functional and structural changes and continuities since the 1980s. The main question is to what extent controlling blocks and symbiotic relationships to banks have faded away in favor of arm's length distance between actors and a more market-oriented system reminiscent of those in the United Kingdom and the United States. The article gives an insight into how the industrial finance system in Japan and Sweden have responded to the deregulation of the credit market in the 1980s, the financial and industrial crises in the early 1990s and early twenty-first century, and the globalization of markets and businesses. The choice of Japan and Sweden is motivated by the fact that these countries by tradition have been two of the strongest representatives of a control-oriented industrial finance system in the world. In this article, a diachronic and synchronic comparative analysis is used, with focus on four distinctive parameters of the industrial finance system: ownership and control, bank relationships, crisis management and personal networks. The article draws on empirical findings from a variety of sources, including archives.     

Economic policy uncertainty and firm’s cash holding in China: The key role of asset reversibility

This paper investigates how asset reversibility affects the sensitivity of firm’s cash holding to economic policy uncertainty in China. Using the 2012 national input-output table for 139 industries, we measure the industry-level asset reversibility and match them with nonfinancial publicly listed firms over 2007−2017. The results show that asset reversibility has a significant and negative effect on the positive uncertainty-cash holding sensitivity, especially for firms with more severe financial constraints. Furthermore, we find that firms with higher asset reversibility invest more in fixed assets, suggesting that real investment is an important mechanism. In addition, baseline results are robust to potential endogeneity and alternative measures of asset reversibility and economic policy uncertainty. Our findings reveal that asset market friction is a critical determinant of firm’s cash holding.     

THE CHANGING EFFICIENCY OF AFRICAN STOCK MARKETS

This paper classifies formal African stock markets into four categories and discuses the principal characteristics of the seven markets covered in this study: South Africa, Egypt, Morocco, Nigeria, Zimbabwe, Mauritius and Kenya. Using a GARCH approach with time‐varying parameters, a test of evolving efficiency (TEE) is implemented for periods starting in the early 1990s and ending in June 2001. This test detects changes in weak form efficiency through time. The TEE finds that the Johannesburg stock market is weak form efficient throughout the period, and three stock markets become weak form efficient towards the end of the period: Egypt and Morocco from 1999 and Nigeria from early 2001. These contrast with the Kenya and Zimbabwe stock markets which show no tendency towards weak form efficiency and the Mauritius market which displays a slow tendency to eliminate inefficiency. The paper relates weak form efficiency to stock market turnover, capitalisation and institutional characteristics of markets.     

Foreign Manufacturing Investment in China： The Role of Industrial Agglomeration and Industrial Linkages

This paper investigates the forces that determine the industrial distribution of foreign manufacturing investment. It highlights the importance of industrial agglomeration and industrial linkage in attracting foreign investment to manufacturing industries. Using panel data for two-digit manufacturing industries in Beijing during the period of 1999-2004, this study finds that geographically agglomerated industries with strong intra-industrial linkages are indeed attractive to foreign investment. Previous foreign investment has led to the current industrial concentration or foreign investment. Investors also favor capital-intensive and technology-intensive industries, and they tend to be attracted to the most profitable and exporting industries, but avoid industries with high real labor costs and high entry barriers. Competitive local industries that possess comparative advantages are critical for attracting foreign investment. The existence of industrial clusters certainly enhances a city＇s attractiveness to foreign investment.     

人力资本存量、R&D投资与中国工业增长转型

工业是中国当前三大产业中的支柱产业,工业增长模式的体制转轨很大程度上反映了中国经济增长模式的转轨方向和现状。文章借助1990年-2007年的统计数据进行计算和实证检验发现：中国工业企业从上世纪90年代初以依靠人力资本存量和物质资本存量积累的增长模式转变为新世纪以来以R＆D投资带来的技术进步和工业劳动力投入为主要产出支撑的新模式,虽然这种增长转轨并未彻底完成,但已经证明集约化增长模式将逐步成为中国经济可持续发展的主要途径。     

The emergence of agricultural commodity markets in China

By conscious design, reformers in China only gradually focused their efforts on expanding the role of markets for the allocation of goods and services in the economy. As a result, markets—especially in the agricultural sector—developed slowly. Throughout the 1990s there was a heated debate about the degree to which markets had emerged. The main goal in this paper is to bring together a number of simple and revealing facts on the emergence of China's markets. To do so we examine several sets of price data and analyze spatial patterns of market prices contours over time and text the extent to which market prices are integrated among China's regions. According to our analysis, we find that to a remarkable degree, agricultural commodity markets have emerged; price patterns look much like those in market economies in the rest of the world and prices are highly integrated across space.     

Investment Valuation Tools and Techniques for Determining the Value of Any Asset

Valuation is at the heart of every investment decision, whether that decision is to buy, sell, or hold. But the pricing of any financial asset has become a more complex task in modern financial markets. Now completely revised and fully updated to reflect changing market conditions, Investment Valuation, Second Edition, provides expert instruction on how to value virtually any type of assettocks, bonds, options, futures, real assets, and much more. Noted valuation authority and acclaimed NYU finance professor Aswath Damodaran uses real-world examples and the most current valuation tools, as he guides you through the theory and application of valuation models and highlights their strengths and weaknesses.     

UK investment trust portfolio strategies before the First World War†

UK investment trust companies were at the forefront of financial innovation during the so-called first globalization era before the First World War. This study examines their portfolio strategies in detail, using a unique dataset of 115 portfolio observations for 30 different investment trust companies, comprising a total of 32,708 portfolio holdings. Our results reveal strong performance and relatively sophisticated asset management, which was based on a mixture of a buy-and-hold investment strategy and active portfolio management. Investment trusts employed global rather than domestic diversification. The early predominant investment in bonds in the 1880s gradually declined in favour of ordinary and preferred shares. North and Latin American markets were the main geographical target of UK investment trusts, with less appetite for domestic investments and negligible interest in continental European financial securities. There is significant cross-sectional variation in asset allocation between investment trusts; they thus avoided herding behaviour in portfolio choice and developed a wide range of different portfolio strategies.     

Wage misalignment in CFA countries: were labour market policies to blame?

Wage rigidity, stemming from highly distortive labour marketpolicies, is a natural candidate to explain the overvaluationof the CFA franc after the adverse external shocks of the 1980s.This paper uses a variety of data sources to assess wage rigidityin CFA countries until the 1994 devaluation, and to analysewhether it was due to labour market policies. The paper showsthat wages were high in CFA countries, compared with both wagesin similar countries and the labour earnings of similar individualswithin the same countries. It also shows that wages were rigidin real terms, in the sense of following closely the fluctuationsof government wages and consumer prices, but it finds no evidenceof nominal wage rigidity, though. From an international perspective,minimum wages were not high enough to account for the observedwage misalignment. Moreover, their adjustment over time washighly responsive to real shocks. Private sector unions, inturn, seemed more instrumental in achieving wage moderationthan wage drift. Their members usually had lower wages thansimilar, non-unionised workers, which probably reflects the'subordinate' nature of the labour movement. The most likelycandidates to explain wage misalignment and real rigidity inCFA countries in the 1980s and early 1990s are therefore governmentpay policies and (possibly) limited competition in product markets.     

Labour Market Flexibility,Wages and Incomes in Sub‐Saharan Africa in the 1990s

Abstract: This paper provides an overview of how African labour markets have performed in the 1990s. It is argued that the failure of African labour markets to create good paying jobs has resulted in excess labour supply in the form of either open unemployment or a growing self‐employment sector. One explanation for this outcome is a lack of labour market ‘flexibility’ keeping formal sector wages above their equilibrium level and restricting job creation. We identify three attributes of labour market flexibility. First, whether real wages decline over time; secondly, the tendency for wages to adjust in the face of unemployment; and thirdly, the extent of wage differentials between sectors and/or firms of various size. Recent research shows that real wages in Africa during the 1990s may have been more downwardly flexible than previously thought and have been surprisingly responsive to unemployment rates, yet large wage differentials between formal and informal sector firms remain. This third sense of the term ‘inflexibility’ can explain a common factor across diverse African economies — the high income divide between those working in large firms and those not. Those working in the thriving self‐employment sector in Ghana have something in common with the unemployed in South Africa — both have very low income opportunities relative to those in large firms.     

转型后俄罗斯资本市场的演进分析

俄罗斯资本市场在短短十几年的时间里,走过了成熟市场国家数十年的历程,其中既有股指高涨、曾经位居世界第一的辉煌,也有资本市场崩溃、甚至导致国债市场一度关闭的低谷。文章通过对俄罗斯资本市场演进的回顾,总结并分析了资本市场发展的特征,不仅有助于加深对俄罗斯资本市场的认识,而且对转型市场经济国家具有现实的借鉴意义。     

People's Republic of China and its Neighbours: evidence on regional trade and investment effects

The very rapid economic growth of the People's Republic of China (PRC), its dramatic success in world export markets and its heavy receipts of foreign direct investment (FDI) have generated much thought and debate in policy and business circles in different parts of the world. This paper surveys evidence from research by ADB Institute staff and Visiting Fellows conducted over the last two years that sheds light on these issues. The paper examines differences in trade structure between the PRC and its trading partners, finding that the PRC's current structure is closest to that of Korea and Taipei, China in 1990. It also considers changes in market share and finds that the PRC exports are eroding the market share of its regional neighbours in the USA and Japan, particularly in products in which trading partners are most specialised. There is no evidence of FDI diversion from elsewhere in the region to PRC. The trade diversion effects in the US and Japan are offset however by strong trade creation as the rapid growth in PRC leads to a substantial rise in its imports.
The paper surveys the projections of models that demonstrate the gains in greater trade and income for the region from closer trade links with the PRC. The broad conclusion that emerges is that whilst there may be risks to individual sectors in all countries concerned, the pattern of regional trade and investment that is emerging is mutually beneficial, provided enterprises and governments representing the PRC's regional partners respond effectively to the adjustments required.