Sense and sensibility: The role of business incubator client advisors in assisting high-technology entrepreneurs to make sense of investment readiness status

For high-technology entrepreneurs, attaining an appropriate level of investment to support new ventures is challenging as substantial investment is usually required prior to revenue generation. Consequently, entrepreneurs must present their firms as investment ready in the context of an uncertain market response and an absence of any trading history. Gaining tenancy within a business incubator can be advantageous to this process given that placement enhances entrepreneurial contact with potential investors whilst professional client advisors (CAs) use their expertise to assist in the development of a credible business plan. However, for the investment proposal to be successful, it must make sense to fund managers despite their lack of technological expertise and product knowledge. Thus, this article explores how incubator CAs and entrepreneurs act in concert to mould innovative ideas into plausible business plans that make sense to venture fund investors. To illustrate this process, we draw upon empirical evidence which suggests that CAs act as sense makers between venture fund managers (VFMs) and high-technology entrepreneurs, yet their role and influence appears undervalued. These findings have implications for entrepreneurial access to much needed funding and also for the identification of investment opportunities for VFMs.     

The relationship between trade,FDI and economic growth in Tunisia: An application of the autoregressive distributed lag model

The relationship between foreign direct investment (FDI), trade openness and economic growth in host countries remains one of the most important issues in the economic literature and met with renewed interest in recent years mainly for countries suffering from unemployment problems and lack of technological progress. This paper examines this issue for Tunisia by applying the bounds testing (ARDL) approach to cointegration for the period from 1970 to 2008. The bounds tests suggest that the variables of interest are bound together in the long run when foreign direct investment is the dependent variable. The associated equilibrium correction is also significant, confirming the existence of a long-run relationship. The results also indicate that there is no significant Granger causality from FDI to economic growth, from economic growth to FDI, from trade to economic growth and from economic growth to trade in the short run. Even though there is a widespread belief that FDI can generate positive spillover externalities for the host country, our empirical results fail to confirm this belief for the case of Tunisia. They go against the generally accepted idea considering the positive impact of FDI on economic growth to be automatic. The results found for Tunisia can be generalized and compared to other developing countries which share a common experience in attracting FDI and trade liberalization.     

Services trade restrictiveness and manufacturing export sophistication

This paper highlights the importance of services trade liberalization. It is well-known that there is a strong relationship between the level of economic development of a country and the quality of its export basket. Since the pioneering work of Hausmann, Hwang, and Rodrik (2007), several studies have attempted to identify the determinants of export sophistication. In this paper, based on the existing literature, we argue that restrictiveness of services sector trade can have a negative impact on the level of export sophistication. Using panel data from 36 countries over the 2005–2014 period, we show that the impact of services sector trade restrictiveness on export sophistication is negative and statistically significant. We find that this negative effect has increased in the post-2007 period. Furthermore, restrictiveness of trade in modern services is relatively more detrimental to manufacturing export sophistication. A series of endogeneity and robustness tests confirm the reliability of our main empirical result. Our analysis suggests that services sector trade liberalization can also be used as a development strategy by developing countries.     

On the performance of the tick test

In financial research, the sign of a trade (or identity of trade aggressor) is not always available in the transaction dataset and it can be estimated using a simple set of rules called the tick test. In this paper we investigate the accuracy of the tick test from an analytical perspective by providing a closed formula for the performance of the prediction algorithm. By analyzing the derived equation, we provide formal arguments for the use of the tick test by proving that it is bounded to perform better than chance (50/50) and that the set of rules from the tick test provides an unbiased estimator of the trade signs. On the empirical side of the research, we compare the values from the analytical formula against the empirical performance of the tick test for fifteen heavily traded stocks in the Brazilian equity market. The results show that the formula is quite realistic in assessing the accuracy of the prediction algorithm in a real data situation.     

人民币实际汇率与中国进出口贸易结构变迁(1997～2007年)——基于多种模型的动态分析

为分析人民币实际汇率对中国进出口贸易结构变迁的影响,基于1997～2007年季度SITC二位数水平下的中国进出口贸易面板数据、人民币实际汇率和中国及其贸易伙伴GDP季节时序数据,本文对相关变量进行了异质面板和单时序季节单整和协整检验,并进一步构建异质面板季节误差修正模型,对人民币实际汇率对中国进出口贸易结构变迁的长短期动态影响进行了实证分析,并针对中国当前的对外经贸和宏观经济发展现状提出了相应的政策建议。     

Impact of trade liberalization on firm's labour demand by skill: The case of Tunisian manufacturing

This paper investigates the impact of the trade liberalization process in Tunisia on employment by distinguishing different skills and different types of firms using micro level data covering the period of 1983–1994. There is considerable disagreement among analysts on the impact of recent trade reforms upon labour. Our contribution to these debates in this paper is essentially an empirical issue. The analysis of a Tunisian firm's data may be viewed as an attempt to apprehend how employment in Tunisia, a developing country, adjusted to the trade reforms. Using micro-level detail on individual firms, we are able to trace the relationship between changes in trade policies and manufacturing employment at firm level and by skill. Although trade reforms are generally implemented at the sector level, their effects may vary significantly across firm characteristics such as output orientation. We measure the effects of trade policy on employment according to different types of firms. We also associate changes in employment directly with a measure of change in trade protection, rather than linking them to changes in imports and exports which would be more common. The results suggest that the impact of trade liberalization on labour demand depends on a firm's characteristics. In particular, the estimates obtained suggest that trade liberalization has beneficial effects on employment for exporting-firms. Conversely, trade liberalization has negative and disciplinary effects on employment for domestically oriented firms. The reduction in tariff levels conducted in this first phase of liberalization in Tunisia seems to have had effects with different intensity on unskilled labour and on skilled labour; this justifies the examination of these two skills.     

The exchange value of the dollar and the U.S. trade balance: An empirical investigation based on cointegradon and Granger causality tests

This article performs tests of Granger causality in the relationships between the nominal ad real exchange rates of the dollar and the U.S. trade balance as well as its price and quantity components over the period 1973:IIQ–1989:IIIQ. Our results suggest: (i) weak statistical evidence of unidirectional causality running from the nominal exchange rate to import prices and nominal trade balance (ii) no statistical support for the proposition that the real exchange rate simply “accommodates” changes in the real trade balance, and (iii) strong (no) causal links between the nominal and real exchange rates and export (import) volume. We tentatively conclude that movements in the exchange rate have a rather limited effect on the trade balance and that this effect is more likely to materialize on the export side of the trade balance.     

Vertical specialization across the world: A relative measure

This article investigates the dynamics and the international distribution of vertical specialization (VS) - the use of imported inputs to produce goods that are afterwards exported. We propose a relative measure of VS-based trade that combines information from Input-Output matrices and international trade data, producing results for a large sample of countries with a detailed product breakdown. We illustrate this measure by showing the evolution of VS activities at the world level over the 1967-2005 period. The results are consistent with partial evidence existing in the literature, pointing to a substantial increase of VS in high-technology products and in East Asia.     

A nonlinear investigation of the twin deficits hypothesis over the business cycle: Evidence from Turkey

In this paper, we analyze the twin deficits hypothesis covering the period from 1994 to 2012 in Turkey. In contrast to previous studies on Turkey, the existence of twin deficits is investigated by regime-dependent impulse response functions and forecast error variance decompositions based on a multivariate two-regime threshold VAR (TVAR) model. Our results suggest that the dynamics between the current account and budget account variables are affected by macroeconomic activity: twin deficits are only the case in the upper regime, when the economy operates above its potential level. When the economy is in the lower regime, budget and trade deficits show divergent movements. The results are consistent with Kim and Roubini (2008), indicating that the divergence of fiscal balance and current account might be explained by the cyclical fluctuations of output.     

Strategic Decision Making for the Triple Bottom Line

Corporate social responsibility (CSR) has become a mandate for strategic managers and is often an important element of a differentiation strategy, but there is little research on how managers can make socially responsible decisions within the context of competitive strategy. In this study we explain how data envelopment analysis (DEA) results can be used to determine the trade‐offs inherent in managing the triple bottom line of profits, people and the planet. Once the trade‐offs are well understood, managers can implement sustainable competitive strategies that incorporate socially responsible decisions. Using public data from the electric power generation industry, we demonstrate how DEA can be utilized to determine the trade‐offs between efficiency, costs and pollution reduction, allowing managers to make and champion socially responsible decisions. We discuss the general applicability of our method for making strategic decisions incorporating the triple bottom line. Copyright © 2014 John Wiley & Sons, Ltd and ERP Environment     

How does history matter? Hysteresis in Canadian trade

Should trade economists account for hysteresis when estimating gravity models, as [Eichengreen, B., & Irwin, D. A. (1998). The role of history in bilateral trade flows. In J. A. Frankel (Ed.), Regionalization of the world economy. Chicago: University of Chicago/NBER] recommend? Are the effects on trade of key variables, such as a national border, mismeasured when hysteresis is not accounted for? Using a unique panel data set on Canada's international trade over 1988–1996, and building on recent advances in fixed effects approaches to gravity estimation, we find strong evidence that history does matter in determining trade. But exporter and importer fixed effects, as opposed to lagged dependent variables, appear adequate to capture history. Omitting lagged dependent variables matters little to measured parameters like the border effect. After accounting for history we find Canada's overall border effect to be large with little evidence of diminishment in this period.     

International trade of GMO-related agricultural products

This paper examines the international trade of a variety of genetically modified (GM) food products over a 27-year period (1984–2011) with data from the United Nations using the tools of social network analysis. The results indicate that each of the different crops have a distinctive pattern of trade that has changed over time due to a number of different factors. Also, trade in agricultural commodities became more diversified over time, dominated less by the United States and other nations central in the trade networks and trade in the individual GM crops was stable over time. Countries maintained their trading partners for specific crops, despite the adoption of the genetically modified varieties. The economic implications of these results are discussed for specific countries.     

S-curve dynamics of trade between Sweden and her trading partners

The S-curve sums up the dynamic relationship between terms of trade and trade balance. This pattern has received weak support in some developed and less developed countries when aggregate trade data are used. Empirical regularities based on aggregate trade data can be biased since aggregation can potentially suppress some of the patterns observed in trade at the bilateral level. This paper overcomes this problem by employing bilateral trade data from Sweden and finds that the S-curve is invariant to this level of disaggregation. Indeed, Sweden has a bilateral S-curve with 12 out of 17 cases examined for the 1980Q1–2005Q1 period.     

Multilateral Trade Liberalisation and Foreign Direct Investment Inflows

This paper investigates two questions: how does multilateral trade liberalisation affect inward foreign direct investment, and does this impact (if any) depend on the domestic trade policy? The analysis uses a panel data set comprising 171 countries spanning the period 1995–2012. Results indicate that multilateral trade policy liberalisation is conducive to higher FDI inflows in host countries. Furthermore, our evidence suggests that domestic trade policy almost always positively drives inward FDI in a context of multilateral trade policy liberalisation. Countries which initially have the most restrictive trade policy regimes appear to be the greatest beneficiaries of FDI inflows when they liberalise their trade policy in the context of multilateral trade liberalisation.     

Can we identify Walrasian allocations?

Abstract. We consider a discrete time, pure exchange infinite horizon economy with consumers and consumption goods per period. Within the framework of decentralized mechanisms, we show that for any given consumption trade at any period of time, say at time one, the consumers will need in general an infinite dimensional (informational) space to identify such a trade as an intertemporal Walrasian one. However, we show a set of environments where the Walrasian trades at each period of time can be achieved as the equilibrium trades of a sequence of decentralized competitive mechanisms, using only both current prices and quantities to coordinate decisions. Received: 1 December 1999 / Accepted: 31 October 2000     

Trade creation and diversion revisited: Accounting for model uncertainty and natural trading partner effects

The effect of preferential trade agreements (PTAs) on trade flows is subject to model uncertainty stemming from the diverse and even contradictory effects suggested by the theoretical PTA literature. The existing empirical literature has produced remarkably disparate results and the wide variety of empirical approaches reflects the uncertainty about the ‘correct’ set of explanatory variables that ought to be included in the analysis. To account for the model uncertainty that surrounds the validity of the competing PTA theories, we introduce Bayesian model averaging (BMA) to the PTA literature. Statistical theory shows that BMA successfully incorporates model uncertainty in linear regression analysis by minimizing the mean squared error, and by generating predictive distributions with optimal predictive performance. Once model uncertainty is addressed as part of the empirical strategy, we find strong evidence of trade creation, trade diversion, and open bloc effects. Our results are robust to a range of alternative empirical specifications proposed by the recent PTA literature. Copyright © 2010 John Wiley & Sons, Ltd.     

Short sales,stealth trading,and the suspension of the uptick rule

Prior work contends that informed short sellers do not stealth trade because the uptick rule produces “execution uncertainty” and does not afford short sellers the opportunity to spread their trades across time. Contrary to this idea, our results show that informed short sellers tend to use larger trade sizes, instead smaller trade sizes, after the suspension of the uptick rule. Further, we find that the use of smaller short sales during the post-suspension period, which is documented in prior studies, is not a result of greater stealth-trading activity and is instead explained by a reduction in liquidity that occurs when the uptick rule is suspended.     

Trade spends and profitability of promotions

This paper examines the prevalent mechanism of financing advertising and temporary price reductions through trade spend budgets. A manufacturer and a retailer interact for a number of periods with a plan to hold a sale in the last period. During the nonpromotional periods, the retailer accumulates the funds in this budget in proportion to the size of its order from the manufacturer. In the sale period, the budget is used to finance the discount offered by the manufacturer and advertising. I find that the manufacturer drops its price in the sale period to increase the profitability of promotions for the retailer. To be able to sell more units during the sale period, the retailer needs to accumulate a larger trade spend. This is accomplished by setting a smaller mark-up over the manufacturer's price in the regular periods. The manufacturer takes advantage of the retailer's softer pricing by increasing its regular wholesale price. As long as such trade spends are used to finance advertising, the total profits of each firm increase. Using fixed trade spends, where the manufacturer allocates a fixed amount for the retailer, does not lead to an increase in profits.     

A revisit to economic exposure of U.S. multinational corporations

To shed light on the influence of U.S. major trade partners’ currencies on MNCs’ firm values, this study investigates the asymmetric effects and the determinants of appreciated and depreciated economic exposure of the U.S. MNCs. Our empirical results reveal several findings: (1) The influences of exchange rate fluctuation on stock returns vary enormously for different currencies. (2) During the U.S. dollar appreciating period, MNCs benefit very little from this appreciation against major trade partners’ currencies, but most MNCs see harmful impacts from a U.S. dollar appreciation against the Brazilian real. (3) During the U.S. dollar depreciating period, most U.S. MNCs benefit from this depreciation against the European Monetary Union’s euro, Mexican new peso and Brazilian real; however, they overall suffer losses against the Chinese yuan, Japanese yen, and British pound. (4) The level of foreign sales is the key determinant of economic exposure.     

The Role of Interregional Trade in Generating Change in the Regional Economies of Japan, 1980-1990

An earlier analysis (Hewings et al., 1998) revealed the 'hollowing-out' process, a decrease in the level of intraregional intermediation, in the Chicago economy during the period 1975-2011. The main force underlying this structural change has been the change in regional trade patterns in a way that interregional trades across economies has replaced the local purchases of intermediate inputs. The issue addressed in this paper focuses on the decomposition of structural change into changes in interregional trade and in technology, in order to investigate the nature of structural change over time and across sectors. The empirical realization is provided by reference to a series of regional input-output tables for a nine-region division of the Japanese economy (1980-1985-1990). The results revealed that interregional trade has played a key role in determining regional output level while technology itself had a tendency to decrease further.