FDI Attractiveness in Greece

This paper investigates the foreign direct investment (FDI) attractiveness for Greece as a host country compared with the rest of the EU countries. The main objective of this work is to identify the factors that improved or worsened Greece’s attractiveness during the last few years. An econometric model and a comparative index of FDI attractiveness have been constructed in order to identify the differences in the attractiveness of the countries. The results obtained prove that during the last few years Greece’s attractiveness as a host country for FDI has not only improved, but it also has a downward trend. The factors identified as crucial for the low FDI attractiveness in Greece are inefficient public governance, high taxation, inefficient infrastructure, and general macroeconomic conditions.

Financial intermediation and growth: causality and causes without outliers

In a seminal paper, Levine et al. (J Monet Econ 46:31–77, 2000) provide cross-sectional evidence showing that financial development has positive average impact on long-run growth, using a sample of 71 countries. We argue that the evidence is sensitive to the presence of outliers.

A reassessment of the Feldstein-Horioka hypothesis of perfect capital mobility: evidence from historical data

This short paper explores the relationship between investment and saving rates in a sample of 13 OECD countries over the period 1885–1992. To this end, I employ panel cointegration tests based on the maximum likelihood approach developed by Johansen (J Economic Dynamics Control 12:231–254, 1988) instead of conventional panel cointegration residual based tests, in order to draw sharper conclusions. Using estimation techniques appropriate for heterogeneous panels I find a low degree of capital mobility for the sub-periods 1921–1992 and 1950–1992. The findings overwhelmingly support the hypothesis of perfect capital mobility in the short run.

Partially sighted persons and the public debt elephant

Recent data on the accumulation patterns of public debt across OECD countries suggests a synthesis is possible between the theoretical and empirical approaches to public debt and also between the traditional and more recent political economy explanations of public debt accumulation. The inductive approach of recent political economy explanations is combined with the intertemporal constraints highlighted in the Ricardian–Barro theory to present a reinterpretation of cross-country debt accumulations patterns. Like the elephant in the blind men and the elephant fable, the conclusion is glaringly obvious. Formal and informal budgetary constraints matter.

The sector bias of skill-biased technical change and the rising skill premium in transition economies

We test the hypothesis that the sector bias of skill biased technical change is important in explaining the rising relative wage of skilled workers in the manufacturing sector in three Central and Eastern European transition countries. The econometric results broadly confirm that the concentration of skill biased technical change in the skill intensive sectors had a significant effect on the skill premium in these transition countries.

A Regional Perspective on Aid and FDI in Southern Africa

During the last decade international aid flows diminished while Africa’s relative share of global foreign direct investment (FDI) declined. This went together with lacklustre growth and low human development levels. In 2005, the G8 countries announced that they would increase aid to Africa by some $25 billion per annum. The pledge for increasing aid seems to have triggered an extensive debate about the role of aid and other international capital flows in the development of poorer countries. This study contributes to this debate. Specifically it addresses the role of foreign direct investment and aid to growth and human development. Panel estimations are used to determine the relationships between aid, FDI and growth in the Southern Africa region from 1990 to 2005. Negative relationships are found between FDI and growth while aid and growth turned out to be unrelated.

Greece’s Potential Trade Flows: A Gravity Model Approach

This paper attempts to access whether Greece’s low openness is a reflection of its low trade integration primarily as a result of the country’s relatively poor goods export performance. The analysis estimates potential trade flows for Greece through a gravity model using a panel of cross-country data, which cover bilateral trade flows concerning the EU member states. These flows are then derived by applying the estimated parameters to the Greek economy. The results show that actual Greek exports fall short of potential ones, while the opposite is true with respect to imports. This becomes more profound when the extent of intra-industry trade is included in the analysis. The findings for the Greek exports differ considerably from the corresponding ones for Portugal, a country with similar characteristics, manifesting the limited convergence of Greece’s trade patterns towards the EU average as well as its unique geographical location relatively to the other EU countries.

Does a non-linear mean reverting process characterize real GDP movements?

This paper uses non-linear models to investigate non-stationarity of real GDP per capita for seven OECD countries over the period 1900–2000. Unit root tests based on non-linear models are more powerful than traditional ADF statistics in rejecting the null unit root hypothesis. Empirical results show that, contrary to what the linear ADF statistics suggest, stationarity characterizes five out of the seven countries. This finding stands at variance with other recent studies which conclude that movements in real GDP per capita can be characterized as a non-stationary process.

The disadvantage of entrants: did transition eliminate it? The case of the Russian footwear industry (1992–2000)

Several studies have analyzed entry in developed capitalist economies coming to the conclusion that entrants are usually smaller, less productive and at higher hazard than incumbents. This study considers if this was the case also in the rather peculiar situation of those firms which entered during the period of transition from planned to market economy, in one of the ex-soviet countries. Additionally this work considers whether or not the uncertain environment generated by transition did activate a process of entry, as situations of uncertainty are generally supposed to do. The main result of this paper is that despite the fact that incumbents were firms created and organized to meet the objectives of the soviet regime, they were not outperformed by subsequently-created firms which were formed to match the needs of a transitional/quasi market economy. These results do not support “vintage” and “liability of obsolescence” models which suggest that new comers are better fitted to match new conditions.

Exploring the relationship between technical and service characteristics

The paper explores the complex relationship between technical and service characteristics discussed by the Saviotti–Metcalfe model of innovation. It is proposed that principal components analysis (PCA) is a more appropriate method of analysing this relationship than approaches previously used. A PCA is performed on a dataset of mobile phone handsets for the period 2003 to 2008. In addition to the relationship between technical and service characteristics, the analysis explores the existence of clusters of ergonomic characteristics within mobile phone handsets. The findings indicate that a limited set of core technology components underpin the large set of service characteristics offered by mobile phone handsets, and that the mapping between technical and service characteristics can be highly complex.

Common Trends and Common Cycles in Per Capita GDP: The Case of the G7 Countries, 1870–2001

In this paper we analyze per capita incomes of the G7 countries using the common cycles test developed by Vahid and Engle (Journal of Applied Econometrics, 8:341–360, 1993) and extended by Hecq et al. (Oxford Bulletin of Economics and Statistics, 62:511–532, 2000; Econometric Reviews, 21:273–307, 2002) and the common trend test developed by Johansen (Journal of Economic Dynamics and Control, 12:231–254, 1988). Our main contribution is that we impose the common cycle and common trend restrictions in decomposing the innovations into permanent and transitory components. Our main finding is permanent shocks explain the bulk of the variations in incomes for the G7 countries over short time horizons, and is in sharp contrast to the bulk of the recent literature. We attribute this to the greater forecasting accuracy achieved, which we later confirm through performing a post sample forecasting exercise, from the variance decomposition analysis.

Trade and productivity: an industry perspective

We use a sample of 14 OECD countries and 15 manufacturing industries to test for the effect of trade on productivity. Endogeneity concerns are accounted for using the geographical component of trade as instrument as suggested by Frankel and Romer (Am Econ Rev 89(3):279–399, 1999). We find that trade, measured in terms of the export ratio, increases productivity, even if country-fixed effects such as the quality of institutions are controlled for, though results are less robust for imports. Estimates at the aggregate manufacturing level turn out much larger, emphasizing the role of inter-industry spillovers.

Measurement of technical and allocative efficiencies using a CES cost frontier: a benchmarking study of Japanese transmission-distribution electricity

This paper estimates the technical and allocative inefficiencies of the transmission-distribution sector of Japanese electric utilities using a panel data during the 1981–1998 period. A stochastic production frontier of the CES form is jointly estimated with input demand equations. Taking advantage of the self-duality, we retrieve the cost frontier by which the impacts of technical and allocative inefficiencies on costs and input demands are measured. The estimated elasticity of substitution is significantly different from unity in favor of the CES specification over the Cobb–Douglas. The results show that observed costs are 9 to 48% higher than the efficient level; technical inefficiency raises costs by 1 to 28%, while allocative inefficiency does so by 8 to 30%. Although their impacts on costs are similar, technical inefficiency more fluctuates so the differences in the performance of utilities are mainly due to technical inefficiency. We also find a substantial over-utilization of capital for all utilities.

Vertical Innovation and Catching-Up: Implications of EU Integration for CEECs-5

We analyze the role of vertical innovation in trade patterns for developing economies trading with technologically advanced countries. A model is presented where the international diffusion of knowledge, promoted by economic integration, is the source of a technological catching up and leads to a convergence in the quality of traded goods, with a positive effect on exports. We then turn our attention on the evolution of trade between the Central and Eastern European countries (CEECs-5) and their European Union partner countries, assessing whether economic integration has increase the quality of the goods produced. For the period 1995–2005, we find evidence of the increasing role of intra-industry trade and vertical differentiation and a process of specialization in higher quality products, especially in the medium- and high-skill sectors.

Is Economic Integration the Solution to African Development?

In the African continent, several regional initiatives have been launched or executed. These gave rise to several groupings including COMESA consisting of 19 countries, ECOWAS (15 countries), ECCAS (10 countries), and SADC with 15 countries. These groupings are not exclusive in that several countries belong to more than one regional group. The road to full integration clearly begins with a regional arrangement. The many groupings in Africa had the long term goal of creating an all inclusive African Economic Union. The objective is to promote the African continent’s economic growth, political stability, and good governance. The paper examines the effectiveness of some of these regional grouping in the context of an all-inclusive African club with the aid of the club model. Using data for the period 1986–2005, costs and benefits of membership are evaluated using the gravity Model. The Helpman’s size dispersion index is used to identify a potential anchor for a regional grouping.

Transaction tax and stock market behavior: evidence from an emerging market

This study examines the impact of a stamp tax rate increase on market behavior, using data from two stock exchanges in China. We find that when the tax rate increases from 0.3 to 0.5% (which implies that the transaction cost increases by about 1/3) trading volume decreases by 1/3. This implies an elasticity of turnover with respect to a stamp tax of −50% and an elasticity of turnover with respect to transaction cost of −100%. The markets’ volatility significantly increases after the increase in the tax rate. Furthermore, the change in the volatility structure indicates that the markets become less efficient in the sense that shocks are less quickly assimilated in the markets.

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On good government

Besley’s treatment of principled agents is a major contribution to public choice and political economy. By focusing on politics as an agency problem, he has shown the way to a new generation of research on the interface of politics and economics.

Complexity of economic structures and emergent properties

This concept revolves around differences of embeddedness of organizations in the macro patterns of routines (economic policy regimes), which in turn may differentially provide them–and the system as a whole–with ‘procedural rationality’ in dealing with identified problems in their relevant complex environment. Regularities of interdependence are specified between different regime patterns and the variety of coordination routines between and inside micro organizations. Corresponding regularities are also observed for internal governance routines of organizations, which in turn determine the behavioral adaptation by self-organization that may be rationally in a local perspective, but–contingent on the organization’s embeddedness in the coordination structure–not necessarily so in a comprehensive one.

Efficiency and productivity in the Indian unorganized manufacturing sector: did reforms matter?

This paper analyzes total factor productivity growth of the unorganized manufacturing sector in India using several rounds of the large scale national sample survey state level data for 15 major Indian states for the period 1978–1979 to 2000–2001. Data envelopment analysis is used to compute Malmquist total factor productivity index and its components. The impact of economic reforms on efficiency and productivity is examined. Evidence suggests that total factor productivity registered a positive growth during the period in the country as a whole. Most states in the country witnessed higher total factor productivity growth in the post 1990s reforms period than in the pre-reforms period. Decomposition of the Malmquist productivity index shows that improvement in technical efficiency rather than technical progress had contributed to the observed acceleration in the growth rate. Econometric analysis of the determinants of total factor productivity growth demonstrates that ownership, literacy, farm growth and infrastructure availability significantly influence total factor productivity growth in the sector.

A switching ARCH (SWARCH) model of stock market volatility: some evidence from Latin America

We use the Markov regime-switching ARCH (SWARCH) model of Hamilton and Susmel (J Econometrics 64:307–333, 1994) to document the presence of high volatility regimes in six Latin American countries (Argentina, Brazil, Chile, Mexico, Peru, and Venezuela). We found four high volatility episodes, each associated to either a local (the Mexican crisis of 1994, the Brazilian crisis of 1998–1999, the Argentinean crisis of 2001–2002) or a worldwide financial crisis (the Asian financial crisis of 1997). However, we found that the effects of each financial crisis are short-lived and that between 2 and 4 months after each crisis, all markets return to low volatility regimes.