The determinants of foreign direct investment in transforming economies: A comment

Conclusion We are deeply convinced that econometric and other statistical methods are essential tools of empirical economic analysis. However, they are useful only if applied properly. There is an overwhelming evidence that Zhen Quan Wang and Nigel J. Swain failed to do so in their referred article. All these problems of the empirical analysis suggest that the claims made by the paper are not supported by the data and the estimated models and can (and should) be considered as the results of pure speculation.     

The Chinese economies in global context: The integration process and its determinants

The linkages between the People's Republic of China and the other Chinese economies of Hong Kong and Taiwan are assessed, and compared against those with Japan and the US. We first characterize the time series behavior of three criteria of integration, namely real interest parity, uncovered interest parity, and relative purchasing power parity. There is evidence that these parity conditions tend to hold over longer periods between the People's Republic of China and all other economies, although they do not hold instantaneously. Overall, the magnitude of deviations from the parity conditions is shrinking over time. Amongst all, however, Hong Kong exhibits indications of a more advanced level of integration with the mainland. We also find that evidence is surprisingly positive for integration with the US. We then turn to examining the determinants of the degree of integration. Regression results suggest that the degree of financial and real integration depend upon the extent of capital controls, foreign direct investment linkages as well as exchange rate volatility. J. Japanese Int. Economies 20 (1) (2006) 128–153.     

Willful default by developing countries in the 1980s: A cross-country analysis of major determinants

Zusammenfassung Willkürliche Zahlungseinstellung von Entwicklungsl?ndern in den achtziger Jahren: Eine Querschnittsanalyse wichtiger Determinanten. — Sollen Souver?nit?tsrisiken im internationalen Kreditgesch?ft abgebaut werden, müssen zun?chst die Determinanten willkürlicher Zahlungseinstellung identifiziert werden. Dies geschieht in dem vorliegenden Artikel, indem verschiedene Variablen, die den Nutzen und die Kosten willkürlicher Zahlungseinstellung widerspiegeln, einer Logit-Analyse unterzogen werden. Es zeigt sich, da\ die Wahrscheinlichkeit einer Zahlungseinstellung sinkt, wenn die Gl?ubiger ein solches Verhalten mit wirksamen Sanktionen belegen k?nnen. Die Aussagekraft der Sch?tzungen reicht jedoch nicht aus, um Zahlungseinstellungen zuverl?ssig vorhersagen zu k?nnen. Entscheidungen über Zahlungseinstellungen werden nicht ausschlie\lich von gesamtwirtschaftlichen Wohlfahrtsüberlegungen bestimmt; offensichtlich h?ngen sie auch von den Eigeninteressen der Regierungen und einflu\reichen Gruppen in den Schuldnerl?ndern ab.

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Résumé Suspension de paiements intentionnelle des pays en voie de développement dans les années 80: une analyse transversale des déterminants importants. — Si les risques de souveraineté aux operations de crédit international doivent être diminués, il faut d’abord identifier les déterminants des suspensions de paiements intentionnelles. Cela arrive dans cette étude d’une analyse logit des variables différentes qui indiquent les avantages et les désavantages d’une suspension de paiements intentionnelle. Les résultats montrent que la probabilité d’une suspension de paiements se réduit si les débiteurs peuvent répondre à un tel comportement avec des sanctions effectives. Mais la qualité des estimations ne suffit pas pour prévoir avec s?reté les suspensions de paiemants. Les décisions concernant les suspensions de paiements ne sont pas seulement déterminées par des considérations macro-économiques du bien-être. De toute évidence elles dépendent aussi des intérêts propres du gouvernement et des groupes d’intérêts puissants dans les pays débiteurs.

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Resumen Moratorias arbitrarias de países en desarrollo en los a?os ochenta: un análisis de déterminantes importantes. — Para poder controlar los riesgos de soberanía en el mercado crediticio internacional hay que primeramente identificar las déterminantes de moratorias arbitrarias. Esto se realiza en este trabajo en el marco de un análisis Logit de diferentes variables que reflejan los costos y beneficios de moratorias arbitrarias. Se muestra que la probabilidad de una moratoria disminuye si el acreedor logra establecer sanciones efectivas. Las estimaciones, empero, no permiten pronosticar moratorias con certeza. La toma de decisiones sobre moratorias no esta determinada solamente por el bienestar de un pais, sino también por los intereses propios de los gobiernos y de grupos de presión importantes de los países deudores.

     

Robust determinants of growth in Asian developing economies: A Bayesian panel data model averaging approach

This paper investigates the determinants of growth in the Asian developing economies. We use Bayesian model averaging (BMA) in the context of a dynamic panel data growth regression to overcome the uncertainty over the choice of control variables. In addition, we use a Bayesian algorithm to analyze a large number of competing models. Among the explanatory variables, we include a nonlinear function of inflation that allows for threshold effects. We use an unbalanced panel data set of 27 Asian developing countries over the period 1980–2009. Our empirical evidence on the determinants of growth suggests that an economy's investment ratio is positively correlated to growth, whereas government consumption expenditure and terms of trade are negatively correlated. We also find evidence of a nonlinear relationship between inflation and economic growth, that is, inflation impedes economic growth when it exceeds 5.43% but does not have any significant effect on growth below that level.     

The determinants of foreign direct investment in transforming economies: Empirical evidence from Hungary and China

The Determinants of Foreign Direct Investment in Transforming Economies: Empirical Evidence from Hungary and China. — This paper analyzes what factors best explain foreign capital inflows into Hungary and China during the period 1978–92. The size of the host-country markets is found to play a positive role, while the cost-of-capital variables and political instability are negatively correlated with investment inflows. It supports the hypothesis that low-cost labour and currency depreciation is an important factor in explaining how much foreign capital flows into a particular country. There is little evidence to support classical hypotheses concerning tariff barriers and import variables. The OECD growth rates show significant positive correlation with FDI in Hungary.     

Regional determinants of life insurance consumption: evidence from selected Asian economies

The life insurance industry in developing Asian economies is under‐developed compared with global standards. The low market penetration is attributed to full or partial government ownership and entry restrictions on foreign insurers. Regulatory changes and adoption of liberal policies have aided the growth of the life insurance industry in the past decade. At the same time, economic and social factors were expected to promote insurance awareness and consumption. In this context, the paper analyses the factors explaining life insurance demand in 12 Asian economies, including economies from the South Asian Association for Regional Cooperation and Association of Southeast Asian Nations regions, as well as China. The results suggest that income, financial depth, inflation, the real interest rate, and the youth dependency ratio are significant determinants of life insurance consumption. Foreign ownership and improved regulations may foster growth. But urbanisation and the literacy rate are among the few determinants found not to have the impact observed in previous studies. The research highlights the limitations of studies using macrodata and contributes to understanding of the growing insurance industry in the region.     

The determinants of export performance: A firm-level study of Italian manufacturing

The Determinants of Export Performance: A Firm-Level Study of Italian Manufacturing. — This paper analyzes some determinants of a firm’s probability of exporting and export intensity and presents the findings of an empirical study carried out on a large sample of Italian firms. On the basis of Probit and Tobit estimates, it emerges that these determinants change according to the size of firms. In particular, only for small firms is the relationship between size and export performance positive. The export activity of small and medium-sized firms decreases with the share of sales due to subcontracting. Larger firms, instead, benefit more from being affiliated with business groups and performing innovative activities of a different nature.     

Estimating output gaps in Asia: A cross-country study

We estimate output gaps for Hong Kong, Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, and Taiwan, using the Hodrick–Prescott (HP) filter, a band-pass (BP) filter, the Beveridge–Nelson (BN) filter and unobservable-components (UC) techniques. Three conclusions are notable. First, the gaps resulting from the BN filter, which is “one-sided,” differ from the other filters that are “two-sided.” Second, the UC approach has the advantage that it allows confidence bands for the gap to be constructed and that it yields estimates of the growth rate of potential. Third, the HP, UC, and BP gaps are similar. J. Japanese Int. Economies 18 (1) (2004) 115–136.     

The reverse home-market effect in exports: a cross-country study of the extensive margin of exports

Do small countries have higher proportions of firms that export in manufacturing industries than large ones? As small countries are well known to be more open than large ones, it may appear uncontroversial to claim that the answer is yes. Nevertheless, this contradicts predictions from many standard trade models positing a home-market effect in the number of manufacturing firms and exporters. In this article, I present a theoretical model where a home-market effect in the number of firms coexists with a reverse home-market effect in the number of exporters: as in standard models, the number of firms in a small country relative to that in a large one is lower than relative income, but, in contrast to standard models, the relative number of exporters is larger. As a consequence, small countries will have higher proportions firms that export in manufacturing industries—a claim I support empirically.     

The determinants and effectiveness of industrial policy in china: A study based on Five-Year Plans

This paper examines industrial policy in China over the period of the 9th - 12th Five-Year Plans (FYPs). Based on China's national and provincial FYPs and data disaggregated to the four-digit manufacturing sector level, it finds that the central government's preferences act as a key determinant of the provincial FYPs. It also shows that policy significantly improves output while it is in effect but there is no evidence of a beneficial effect beyond the end of the particular FYP. The results are consistently robust across a number of tests.     

Determinants of intra-industry trade: A longitudinal,cross-country analysis

Determinants of Intra-Industry Trade: A Longitudinal, Cross-Country Analysis. — This study examines the determinants of intra-industry trade (IIT using longitudinal data for 68 countries for 1970–1987. The analysis distinguishes between manufacturing and nonmanufacturing countries and compares traditional static estimates with dynamic ones. This approach permits distinctions between equilibrium and disequilibrium structures and, similarly, between historical and current sources of IIT. The results are generally supportive of IIT hypotheses, but there are important differences between manufacturing and nonmanufacturing countries and between the static and dynamic structures. Moreover, the extent of IIT appears to be dominated more by preference than by scale differentials, at least among manufacturing countries.     

Trade preferences and exports of manufactures: A case study of Bolivia and Brazil

Trade Preferences and Exports of Manufactures: A Case Study of Bolivia and Brazil. — This paper analyzes the impact of the U.S. Generalized System of Preferences (GSP) on the exports of Bolivia and Brazil, whose levels of economic development differ substantially. While Brazil’s exports under GSP were larger than Bolivia’s, the preferences had a significant impact only on Bolivian exports. These results are consistent with the hypothesis that certain low-income countries have benefitted from trade preferences. Since the GSP is not costly to the U.S. economy, continuation of the program with some modifications to benefit the least developed countries is recommended.     

The determinants of FTA use in Southeast Asia: A firm-level analysis

The spread of free trade agreements (FTAs) in Southeast Asia has ignited a debate about their impact on enterprises including the business costs from the Asian ‘noodle bowl’ effect. This paper undertakes a comparative and firm-level analysis of the determinants of FTA use in Indonesia, Malaysia and the Philippines. The likelihood of firms using important ASEAN+1 FTAs (e.g. the ASEAN-China FTA, the ASEAN-Japan FTA and ASEAN-Korea FTA) is positively associated with acquiring knowledge about FTAs, building technological capabilities, and membership in industrial clusters. Non-use of FTAs is explained by a lack of information about FTAs and the absence of FTAs with major trading partners. Key policy implications are the need to improve business support for FTAs, to conclude FTAs with major trading partners, and to create a database on FTA preference use.     

The determinants of income inequality in Thailand: A synthetic cohort analysis

This paper presents tests and estimates of the human capital model of income inequality using synthetic cohort data for Thailand: 1992–2011. The model focuses on four primary determinants of income inequality: mean per capita income levels, the variances in years of education, in the number of children, and in the number of earners in the household. All of these factors are important sources of income inequality in Thailand, with relative impacts that differ across demographic groups and types of household structure. An inverted-U relation between mean per capita income levels and inequality is found, reflecting gender differences of the head of household, differences in household composition, and variation in access to finance. Although the human capital model emphasizes education, estimates presented here show other household characteristics, such as number of children and number of earners, can be even more important sources of inequality.     

Portfolio adjustment in open economies: A comparison of alternative specifications

Zusammenfassung Portfolio-Anpassung in einer offenen Volkswirtschaft. Ein Vergleich alternativer Spezifizierungen. — Dieser Aufsatz vergleicht zwei Spezifikationen eines Modells einer kleinen offenen Volkswirtschaft: Erstens eine Bestandsgr?Βen-Version, in der die Haushalte die gewünschten Verm?genswerte sofort nachfragen und zweitens eine Stromgr?Βen-Version, in der die Nachfrage eine allm?hliche Anpassung an den langfristig gewünschten Bestand an Verm?genswerten bewirkt. Die beiden Varianten werden bei festen und flexiblen Wechselkursen verglichen, beide jeweils unter der Annahme vollst?ndiger oder fehlender Kapitalmobilit?t. Sie zeigen unterschiedliche Anpassungsverl?ufe bei festen Wechselkursen, wenn das heimische Geldangebot endogen ist, und besonders, wenn es keine Kapitalmobilit?t gibt (wenn das heimische Angebot an Wertpapieren nicht endogen ist).

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Résumé L’ajustement de portefeuille dans des économies ouvertes: une comparaison de spécifications alternatives. — Cet article compare deux spécifications d’un modèle d’une petite économie ouverte: (1) une version de stock, dans laquelle les ménages entrent dans les marchés d’actif avec des demandes de stock immédiates d’actif et (2) une version de flux, dans laquelle ils entrent dans les marchés d’actif avec des demandes de flux reflétant un ajustement vers des demandes de stock à long terme d’actif. Les deux versions sont comparées sous des taux de change fixes et fléxibles chacune couplée avec une mobilité de capital parfaite ou pas une mobilité. Elles se conduisent d’une manière différente sous des taux de change fixes (si l’offre d’argent locale est endogène) et sont très per?antes s’il n’y a pas une mobilité de capital (si l’offre locale d’emprunts n’est pas endogène).

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Resumen Ajustes de portafolio en economías abiertas. Una comparaci?n de especificaciones alternativas. — Este artículo compara dos especificaciones de un modelo de una economía abierta pequena: (1) una version de stock, en la cual los presupuestos familiares entran en el mercado de activos con una demanda inmediata por activos y (2) una version de flujo, en la cual ellos entran al mercado de activos con demandas de flujo que reflejan un ajuste gradual a las demandas de stock por activos de largo plazo. Las dos versiones se comparan bajo tasas de cambio fijas y flexibles, cada una con movilidad perfecta de capital o no. Ellas se comportan en forma diferente bajo tasas de cambio fijas (cuando la oferta de dinero local es endógena) y son muy penetrantes cuando no hay movilidad de capital (cuando la oferta local de bonos no es endógena).

     

A cross-country comparison of the demand for labour in Europe

A Cross-Country Comparison of the Demand for Labour in Europe.-This paper investigates structural differences in the demand for labour in France, Germany, and the UK. It finds substantial differences in the sensitivity of the demand for labour to international product demand and factor prices in all three countries. In particular, it reacts to domestic factor prices in Germany but international cost competitiveness in France and the UK; it depends upon European-wide product demand in France and Germany and a wider measure of product demand in the UK. The authors attribute these differences to product market conditions and institutional factors rather than to differences in the production technology.