Does foreign ownership matter for the innovative activities of enterprises?

This paper tests the relationship between foreign ownership and the innovative behaviour and performance of enterprises. The analysis uses data from the Community Innovation Survey (CIS 3) for Austria. We employ a kernel-based matching approach as a non-parametric test. After controlling for size, sectoral affiliation, export intensity and other variables that influence innovative behaviour we find that the impact of foreign ownership on innovation input and outcome is not significant in most variables. Membership in a multinational enterprise group, however, significantly helps to overcome different obstacles in the innovation process, such as the lack of financial resources, the lack of technological and market information or organisational problems. The nationality of the parent enterprise does not matter for innovative behaviour and performance except in the case of Anglo-Saxon-owned enterprises.

Bank lending and the business cycle: Does ownership matter in ASEAN countries?

We analyze the lending cyclicality of 213 ASEAN commercial banks over the period 2001–2015. The findings indicate that lending by private banks is procyclical while lending by state banks is countercyclical. Long-term liabilities also move countercyclically for state banks whereas funding for non-state banks in the form of deposit and long-term liabilities is procyclical. Greater lending cyclicality is observed for both private and state banks in Cambodia, Myanmar, Laos, and Vietnam (CMLV) compared to Indonesia, Malaysia, the Philippines, Thailand, and Singapore (ASEAN-5). Lending of non-ASEAN based foreign banks shows greater procyclicality than that of domestic banks for the ASEAN-5 countries, although not for the CMLV countries. During the global financial crisis, lending by non-ASEAN based foreign banks contracted sharply even as lending by ASEAN based foreign banks was unaffected. Overall, our results confirm that bank ownership influences lending and funding sensitivity to economic fluctuations.     

The determinants of service offshoring: Does distance matter?

The importance of distance for international trade remains an unsettled issue. Innovations in information technology have reduced the costs of offshore outsourcing of services. However, empirical studies using the gravity model continue to demonstrate that distance is important for merchandise and service trade. We estimate a gravity model of the determinants of service trade. After we properly control for all non-transport trade costs, including information barriers, and multilateral resistance terms as suggested by Anderson and van Wincoop (2003), we show that the remaining influence of distance is negligible.     

Firm dynamics of hi-tech start-ups: Does innovation matter?

Innovation plays a vital role in corporate issues since it brings potentially appreciable profits and shores up their statuses in certain fields, although it may also harness firms, especially smaller ones, with high survival risks. This concern brings forth our research topic: will participating in innovation activities diminish small firms' risk of exit from the market? Our paper concentrates on hi-tech start-ups and complements existing firm dynamic studies by adopting a comprehensive annual survey dataset from a considerable science park located in Beijing. Using an efficient discrete-time proportional hazards model, and thanks to extensive data available, we can take a deeper investigation into this topic. Our research complies with most of the previous studies that show that the benefit from innovativeness outweighs the cost and we solidify our conclusions by considering a few distinctive features existing in China's economy.     

Does carbon emission trading system induce enterprises’ green innovation?

To control total carbon emissions and achieve the emission reduction target, the Chinese government has implemented the carbon emission trading system (CETS), which has been applied in two provinces and five cities since 2013. This study uses the environmental regulation policy of the pilot CETS as a quasi-experiment to investigate whether the implementation of this environmental policy induces green innovation among enterprises. This study employs a difference-in-differences model to conduct an empirical test using green patent data of A-share listed enterprises from 2002 to 2018. The results indicate that the CETS pilot-policy-induced green invention innovation in enterprises. Notably, compared with non-state-owned enterprises, the pilot policy is more conducive to promoting green innovation in state-owned enterprises.     

Does mixed-ownership reform improve SOEs' innovation? Evidence from state ownership

This paper investigates the impact of the ongoing mixed-ownership reform on the innovation activities of SOEs in China. We find that the reform improves SOE’s innovation, and the impact is heterogeneous, by exploring in different industries and different regions with the influence of macroeconomic environment. This effect is stronger for SOEs in monopoly industries and eastern developed region. As a new form of state-sector reform, this mixed-ownership reform happens not only in SOEs like previous privatization, but also in a reverse direction. We also find its positive impact of improving the innovation for POEs being mix-reformed. To deal with endogeneity concerns, PSM, DiD and IV estimations are used. We also introduce highway as an instrumental variable, All the results in the 2SLS estimations are robust. Additional tests help isolate the effect of intervention from explanations of macro-economic effects, including house price, private employees, credit and equity finance.     

Does religion matter to corruption? Evidence from China

There is a growing interest in understanding how religion affects corruption. Using provincial-level panel data from 1998 to 2009, this paper investigates the effect of religious beliefs on bureaucratic corruption in China. The empirical results show that, bureaucratic corruption is negatively associated with local religious heritage, implying that religious culture plays a positive role in restraining official's corruption since religion has influence on political preference and work ethic. We also find that the negative association between religion and corruption is weaker in provinces with stronger law enforcement, which identifies the substitution effect between religious ethic and legal supervision in curbing corruption. Our findings also reveal that, among the different religions, the anti-corruption effects of China's native religions (i.e., Taoism and Buddhism) are more significant than those of foreign religions (i.e., Christianity and Islam). These conclusions are consistent and robust to various measures of main variables and a variety of robustness checks. Given the very few studies and limited data resources in the context of China, this paper as a tentative study provides new evidences of the relationship between religion and corruption.     

Does history matter? Colonial education investments in India

Can good policy overcome or alter the effects of history? This question is addressed in this article using unique district‐level data for 148 districts of former British India. Controlling for observable differences in geography and income, the ordinary least squares estimates suggest a large and positive effect of colonial expenditures on rural primary education in 1911 on rural literacy up to 1991. However, instrumental variable estimates that control for the endogeneity of colonial investments suggest that the effects of historical spending are significant only up to 1971. Two policy changes can account for these findings: an increase in spending following the 1968 National Education Policy and a greater emphasis on the universal provision of public goods such as schools in the 1970s. Unlike recent studies documenting the persistent effects of historical investments on contemporary outcomes, this study emphasizes how effective policies can overturn the effects of history.     

Does public expenditure management matter for education outcomes?

This paper examines the significance of public expenditure management for primary education outcomes in public schools in two South African provinces (Gauteng and North West). Using cross-sectional data from 175 public primary schools and 13 local education offices, the analysis finds that while misappropriation of education funds (leakages) is not strongly associated with poor education outcomes, delays on the part of the government in disbursing funds to schools are correlated with Grade 5 dropout rates. The paper finds no evidence that public expenditure and total resource wealth (including public and private contributions) are significantly associated with education outcomes. Increased spending on learning and teaching support materials is associated strongly with lower Grade 1 and Grade 7 repetition rates. The paper also finds that repetition rates are driven strongly by poverty indicators at the district level, while dropout rates are driven strongly by district and school inefficiency.     

Climatic impact on China's residential electricity consumption: Does the income level matter?

It is widely accepted that energy use contributes to climate change. However, climate change can also affect energy demand. There is ample proof in the literature that a feedback phenomenon exists. However, empirical evidence of its mechanism and operation in different contexts is missing. As China is the largest consumer of electricity worldwide, a detailed study of its energy consumption patterns would be insightful. Moreover, how the increasing income of Chinese residents affects the climate sensitivity of electricity demand is particularly relevant. Using data from 278 cities in China over the period 2005 to 2015, this study applies a newly developed technique, partially linear functional-coefficient panel data model, which enables disclosure of the role of income levels. The results indicate that climate change significantly stimulates residential electricity consumption in hot weather rather than in cold weather. Additionally, the level of income affects climate sensitivity. Specifically, an increase in income initially increases the marginal effect of cooling degree days (days on which building cooling is desired) on electricity consumption, but the curve of the marginal increment becomes flat as income growth increases further.     

Does corruption matter for sources of foreign direct investment?

Review of World Economics - The paper provides a cross-country empirical analysis of the impact of corruption on foreign direct investment flows. The gravity model augmented with joint effects of...     

Restructuring Indonesia's sub-national public debt: reform or reversion?

Borrowing can be an efficient way for sub-national governments to acquire capital assets, but it also carries risks of fiscal distress and insolvency for borrowers. To minimise these risks, many governments around the world have developed ex-post insolvency remedies, including, most importantly, debt-restructuring mechanisms. In an effort to resurrect borrowing for local infrastructure development, the Indonesian government has designed and begun to implement debt-restructuring programs for sub-national government and sub-national government-owned water supply company defaulters. These programs constitute a major effort to reform an important, long-neglected and problematic aspect of sub-national public finances in Indonesia. There are a number of potential difficulties with the design and execution of the reforms, however, which collectively do not inspire much optimism for rapid progress in reviving financial flows to the sub-national public sector. Still, even halting advances in debt restructuring can substantially increase local infrastructure investment in the long run.     

How Does the Regional Comprehensive Economic Partnership Affect the Restructuring of Global Value Chains?

This paper quantifies the way in which the Regional Comprehensive Economic Partnership (RCEP) affects the restructuring of global value chains (GVCs). It incorporates an input– output structure into a general equilibrium model, highlighting important differences between intermediates and final goods. Using tariff reduction schedules for the RCEP agreement and Asian Development Bank Multi-Region Input–Output database, it evaluates the impact of the RCEP's tariff cuts on vertical specialization and the GVC position index of members. It shows that the RCEP significantly increased vertical specialization and the weighted average number of stages for members for primary factors of production and final consumption, which led to more complex and longer production chains. This was mainly due to the trade creation in intermediates imported from member countries and those outside it. This is an important finding, distinct from traditional trade models without an input–output structure.     

Does an upper limit on foreign direct investment matter?: The case of Taiwan

In this paper, we present a partial least squares (PLS) path model developed to investigate foreign direct investment (FDI) by Taiwan in China. The main purpose of the study is to answer the question, “Has the Taiwanese government's upper limit on investments interfered with Taiwanese firms’ decisions about whether to undertake FDI in China?” The question was answered by testing six hypotheses derived from the model. Using data on Taiwanese manufacturing firms from the Integrated Circuit industry for the years 1998–2007, we found no significant evidence supporting the effectiveness of the upper limit. The most influential of the model's five determinants of Taiwan's FDI in China are factors specific to individual firms. The second most influential is the macroeconomic environment of the host country. Previous studies have paid little attention to the parent country when analyzing FDI, a deficiency we remedied in the present study. Our study reflects an integrated perspective on the FDI literature by including the host country, the parent country, and firm-specific factors as determinants of FDI.     

Quality choice: Does it matter which workers own and manage the cooperative firm?

The information age and the spread of information technology has implications for organizational structure. Accordingly, the age-old issues of product and service quality are put into a new perspective. It is this new perspective that compels analysis and contrast of the joint quality and output choices of a labor-managed (LM) firm with those of its entrepreneurial (PM) twin. It is shown that the LM firm's behavior regarding quality and quantity depends on which workers own and manage the firm and on the way that marginal profit with respect to output is influenced by quality. Similarly, the effects of increases in either fixed costs or demand depend on who owns and manages the LM firm and on the relationship between marginal profit and quality. Thus, whether a cooperative will outperform or underperform its PM counterpart depends on the particulars of the situation. An earlier draft of this paper was presented at seminars at Academia Sinica in Taipei and the Chinese University of Hong Kong. The authors are grateful to the participants in those seminars and most especially to Professors C. C. Mai, Eden Yu, and Dr. Li Tianyou, as well as to an anonymous referee for their comments and helpful suggestions. The authors are responsible for the final version.     

Does immigrant employment matter for export sales? Evidence from Denmark

Immigration impacts on the economy in ample ways: it affects growth, wages and total factor productivity. This study deals with the effects of immigration on firm exports. Can firms benefit from hiring immigrants to expand their export sales? Or do immigrants who live in the firm’s region affect trade? In contrast to the existing literature, we are able to distinguish these two distinct channels. Using matched employer-employee data from Denmark for the years 1995–2005, we provide novel insights in the nexus between exports and immigration. We further contribute to the literature by providing first evidence on the adjustment of firms’ product portfolio in response to immigration. Our empirical results are consistent with the claim that immigration lowers barriers to trade. Both, regional immigration and foreign employment matter for the composition of firm-level exports. As a novel insight, our findings suggest that firms benefit from immigration in terms of expanded export sales, when they hire foreign employees. We only find weak evidence for the local presence of foreigners to increase export sales, which we ascribe to the conjecture that at least some trade-cost reducing forces of immigration like for example intercultural knowledge or personal and business networks abroad, can only be accessed or exploited via foreign employment.     

Does the choice of detrending method matter in demand analysis?

This paper examines the selection of optimal detrending methods in demand analysis with time series data by measuring the distortionary effect of linear filters on the spectrum of detrended time series. The paper identifies substantial distortions of popular detrending methods in economics (including first-differencing and deterministic linear detrending), while the Hodrick–Prescott and Baxter–King filters produce much smaller distortions in detrended time series. Consequences of alternative detrending approaches are further illustrated by estimating the almost ideal demand system in Japan for major consumption categories.     

Remittances and child labour in Ghana: Does the gender of the household head matter?

This study investigates the effect of remittance income on child labour and the role of gender in Ghana. Data were sourced from the Ghana Living Standards Survey Round 6. In order to solve the issue of endogeneity, we adopt the instrumental variable approach. The study finds evidence that, irrespective of whoever is the head of the household, the total effect of remittances on child labour is negative. However, the negative effect is much higher for female-headed households. It is recommended that more mobile money transfer outlets be established and the cost of transferring money be reduced to the barest minimum so as to enable households to maximise the benefits of the remittances they receive. Furthermore, financial transfers should be given to female household heads upon the condition of school attendance by their children so as to reduce child labour.     

Effect of grandchildren on the happiness of grandparents: Does the grandparent's child's gender matter?

Using a representative sample from Japan and a difference-in-differences strategy, we investigate whether the effect of having grandchildren on the happiness of grandparents varies with the gender of their (own) single child. In line with our expectations, we find that maternal grandmothers have more to lose or less to gain from having grandchildren than paternal grandmothers. In contrast, grandfathers’ changes in happiness do not depend on their own child's gender. This result is explained by the fact that grandmothers are more likely to be involved in childrearing when their daughter has a child.     

Does board gender diversity matter in the banking sector? Evidence from Tunisia

The purpose of this paper is to investigate the effects of board gender diversity on banks’ performance and risk for the case of a developing African country. Our sample includes a unique data set of Tunisian banks during the period 2005–2018. We use the two‐way cluster regression proposed by Petersen. This approach corrects for the unobserved firm effect (time‐series dependence) and time effect (cross‐sectional dependence). It gives robust standard errors adjusted for heteroscedasticity, serial correlation, and cross‐sectional correlation. Our results support a positive relationship between gender diversity and banks’ performance measured by ROA and ROE, while women board members are associated with more default risk measured by Z‐score. Our results remain robust to various measures of gender diversity, banks’ performance and risk. The findings contribute to the literature by providing empirical evidence from Tunisia, an African emerging economy, where the examination of the role of board gender diversity on bank governance is unexplored.