Foreign Capital,Spillovers and Export Performance in Emerging Economies: Evidence from Indian IT Firms

The role of foreign capital inflow, foreign direct investment (FDI) and foreign portfolio investment (FPI), on export behavior of both recipients and non‐recipient competing firms in the same sector often guides economic development policy. By using panel data of Indian IT firms over 2000–2006, we show that FDI reduces the sunk costs of entering foreign markets and therefore positively effects both the decision to export and the export propensity of recipient firms. Foreign portfolio investment has no effect on the decision to export, but it does marginally increase the volume of exports. Further, these positive FDI and FPI recipient effects do not spill‐over to non‐recipients.     

Taxes,institutions and foreign diversification opportunities

Investors can access foreign diversification opportunities through either foreign portfolio investment (FPI) or foreign direct investment (FDI). The worldwide tax regime employed by the US potentially distorts this choice by penalizing FDI, relative to FPI, in low-tax countries. On the other hand, weak investor protections in foreign countries may increase the value of control, creating an incentive to use FDI rather than FPI. By combining data on US outbound FPI and FDI, this paper analyzes whether the composition of US outbound capital flows reflects these incentives to bypass home and host country institutional regimes. The results suggest that the residual tax on US multinational firms' foreign earnings skews the composition of outbound capital flows — a 10% decrease in a foreign country's corporate tax rate increases US investors' equity FPI holdings by approximately 10%, controlling for effects on FDI. Investor protections also seem to shape portfolio choices, though these results are not robust when only within-country variation is employed.     

融资约束视角下的运营资本对中国企业全要素生产率的贡献*

金融危机后中国经济增长缓慢，产业和总需求分析框架失灵。本文从供给侧动力和非正规金融入手，研究中国企业全要素生产率与运营资本的关系。本文利用1999—2013年非上市企业的动态面板数据，采用系统GMM的方法进行回归分析，研究发现运营资本对中国企业的全要素生产率有显著的影响，而且这种影响是非线性的。但是，这种关系只在民营企业和外资企业中成立，对国有企业并不成立。本文进一步引入融资约束机制，论证了运营资本是中国非国有企业突破融资困境、促进企业全要素生产率提高的重要金融中介。       

Foreign Portfolio Equity Investments, Financial Liberalization, and Economic Development

Reform of local capital markets and relaxation of capital controls to attract foreign portfolio investments (FPIs) has become an integral part of development strategy. The proximity of market openings and large, sudden shifts in international capital flows gave credence to the notion that the liberalization was the primary culprit in precipitating the recent Asian crisis. Hence, this paper reassesses the benefits and costs of FPIs from the perspective of the recipients. Specifically, it discusses the various FPI contributions and presents empirical evidence regarding the relationship between FPIs and market development, degree of capital market integration, cost of capital, cross-market correlation and market volatility. It is clear that the evidence on benefits of FPIs is strong, whereas the policy concerns regarding resource mobilization, market comovements, contagion, and volatility are largely unwarranted. The authors make some policy suggestions regarding preconditions for capital market openings, market regulation, and liberalization sequencing.     

The impact of financial liberalization on capital structure adjustment in Pakistan: a doubly censored modelling

The purpose of the study is to explain adjustment rate towards target capital structure of Pakistani nonfinancial listed firms and to investigate the impact of financial liberalization (FL) on capital structure adjustment rate. We control for the unobserved heterogeneity and the fractional nature of adjustment rate by applying an unbiased dynamic panel fractional estimator on an unbalanced panel data of Pakistani nonfinancial firms listed during 1972–2010. We find that these firms adjust at an annual rate of 24–51% to reach their capital structure targets. We argue that in order to optimize the benefits of FL the government should strengthen financial as well as judicial institutions to enforce the creditors’ rights that will enable access to more options to Pakistani firms to raise cheaper external financing.     

The business environment and Moroccan firm productivity

The paper focuses on the role of the business environment in understanding differences in the total factor productivity of Moroccan firms. The business environment is captured by measures which include the investment climate in which firms operate, i.e. access to credit, regulatory and institutional environment and infrastructure. The evidence on the relationship between credit and productivity is strongly indicative of credit resources misallocation in Morocco. We also find that, heavier bureaucracy and differences in regulations appear to have a negative effect on firm productivity. This last result is particularly relevant for small firms, and/or those that do not export and/or those with no access to foreign capital.     

WHAT MAKES INTERNATIONAL CAPITAL FLOWS PROMOTE ECONOMIC GROWTH? AN INTERNATIONAL CROSS‐COUNTRY ANALYSIS

This paper re‐examines the relationship between international capital flows and economic growth within the context of various ‘conditional factors’ that possibly have the potential to influence such relationships. It achieves this by employing panel data for 80 countries that cover 1976–2007. International capital inflow is broken down into foreign direct investments (FDI) and foreign portfolio investments (FPI). We find interesting evidence that only FDI has a positive effect on growth and that FPI has an unfavorable, if not negative, effect on growth. The conditional variables of banking liberalization, high‐income level, twin crises, lower corruption, and human capital mitigate the positive impacts of FDI on growth. In contrast, the middle‐income level and good shareholder protection have a positive effect. As concerns FPI, the level of financial liberalization, being in a Latin American region, the wealth of countries, and market governance all influence the way that FPI affects growth, whereas the conditional variables of twin crises and human capital do not influence the effect of FPI on economic growth.     

The asymmetric information and price manipulation in stock market

The interaction between asymmetrically informed traders has been mostly investigated in theoretical frameworks. Not only there are relatively few empirical studies but, if any, the mostly focus on cross-sectional analysis and use very short samples. In this study, we blend theoretic with empirical, and propose a new signalling system of turning points in the economy to examine the extent of volatility of these markets relative to their tranquil periods. The signalling system proposed here is based on the Markov-switching model. Differing from the existing literatures, the study employs three phases and time-varying transition probability, and captures the states of volatility. After examining the causality between high volatility and foreign portfolio investment (FPI) by using moving average and generalized autoregressive conditional heteroskedasticity, the portfolio's profitability of FPI and individual investors in different periods are compared. Finally, the investigation of FPI's leading effect is studied.     

Growth under exchange rate volatility: Does access to foreign or domestic equity markets matter?

Employing a firm-level dataset, this paper explores the effects of exchange rate volatility on the growth performances of domestic versus foreign, and publicly traded versus non-traded private manufacturing firms in a major developing country, Turkey. The empirical results using dynamic panel data estimation techniques and comprehensive robustness tests suggest that exchange rate volatility has a significant growth reducing effect on manufacturing firms. However, having access to foreign, and to a lesser degree, domestic equity markets is found to reduce these negative effects at significant levels. These findings continue to hold after controlling for firm heterogeneity due to differences in export orientation, external indebtedness, profitability, productivity, size, industrial characteristics, and time-variant institutional changes.     

略论中国外汇储备面临的潜在资本损失

本文分析了中国巨额外汇储备面临的由本币升值汇率风险而导致的资本损失。文章从两个角度来研究该项损失:一是从央行资产负债表由于货币错配而招致的现实以及潜在资本损失的角度;二是从以一篮子货币或者一篮子商品来衡量的中国外汇储备国际购买力损失的角度。本文的结论是:中国央行资产负债表面临的资本损失是显著的;中国外汇储备国际购买力的波动显著高于市场价值的波动,尤其是用油价来衡量的外汇储备购买力波动相当剧烈。     

风险投资介入与创业企业国际化——基于我国高科技上市公司的实证研究

风险投资对创业企业的成长具有举足轻重的作用;那么,风险投资的介入对其国际化会带来怎样的影响呢?文章基于资源基础观、代理理论和信号传递理论,分析了风险投资影响创业企业国际化的内在作用机理以及风险投资机构特质与创业企业国际化之间的关系,并以我国300家高科技上市公司的非平衡面板数据为样本进行了实证检验.结论表明:(1)风险投资介入不仅能够开拓创业企业国际化的广度,而且也能加强创业企业国际化的深度;(2)不同特质的风险投资机构对创业企业国际化的影响存在差异,有外资背景的、行业专长高的或采取联合投资策略的风险投资机构有利于创业企业在海外市场上的拓展和渗透.文章不仅拓展了现有的企业国际化理论,而且对创业企业的国际化实践也具有借鉴意义.     

劳动力市场比较优势与跨区域资本配置

文章使用手工收集和整理的2001-2013年我国上市公司设置分支机构的数据，考察了地区劳动力市场比较优势与上市公司跨区域资本配置行为之间的关系，以及劳动保护在上述关系中的作用。研究结果表明：(1)获取劳动力市场比较优势是上市公司跨区域资本配置的重要驱动因素之一，表现为上市公司更可能到劳动力资源丰富和劳动成本低的地区设置分支机构；(2)与上市公司注册地相比，一个地区的劳动力市场比较优势越明显，上市公司到该地区设置分支机构的可能性越大；(3)加强劳动保护强化了上市公司的上述行为。进一步研究发现，在民营性质和劳动密集度较高的上市公司中，为了获取劳动力市场比较优势，企业跨区域配置资本的可能性较大，劳动保护对上述关系的强化作用也较明显。     

风险投资背景、持股比例对初创企业技术创新产出的影响

为研究风险投资对初创企业技术创新产出的影响，基于中介效应模型，结合数据包络分析方法和静态面板回归分析方法，对创业板上市公司样本进行了实证分析。研究发现：有风险投资参与的初创企业技术创新产出高于无风险投资参与的初创企业，且风险投资持股比例越高，对初创企业创新的促进作用越显著。不同背景的风险投资对初创企业技术创新产出的影响不同：政府风险投资和外资风险投资持股比例越高的初创企业全要素生产率越高，且政府背景风险投资最为有效，外资背景风险投资次之；研发投入在风险投资与技术创新之间发挥部分中介作用，即风险投资通过直接作用和间接作用共同影响初创企业技术创新产出。     

Corporate Finance in Africa: The Interactive Impact of Firm Nationality and Characteristics

Using a balance panel data of 351 publicly quoted firms in eleven major African stock exchanges, I investigated the impact of the differences in the internal structures of domestic and foreign firms on corporate financial decisions in Africa. I also analyzed the sensitivity of the impact of the internal firm characteristic on changes in the level of exogenous factors such as marginal tax structure and financial system development. The arising results showed that among the selected key internal characteristics of firms, only the impact of profitability and tangibility on financial structure was significantly sensitive to the proportion of domestic/foreign shareholding and that, consistent with capital structure theories, corporate financing decisions in Africa were significantly sensitive to marginal tax policies and the degree of financial system development prevailing in a country. The results suggest that by investing in assets that are acceptable to lenders and investors as collaterals and maintaining reasonable stability in their cash flow positions, domestic firms can in practice enhance their access to strategic investment capital.     

风险投资参与对中资企业首次公开发行折价的影响——不同证券市场的比较

本文考察中资企业在不同市场上市时风险投资的参与是否影响首次公开发行折价。研究发现,在大陆中小板和香港主板市场上市的中资企业中,有风险投资参与的企业IPO折价显著高于无风险投资参与的企业,支持声誉效应假说,即风险投资机构以IPO折价来提早退出投资项目,以此来建立自己的声誉,吸引更多的资金流入。在美国市场风险投资的参与对IPO折价则没有显著影响。本文进一步研究发现从业时间短的风险投资机构,其参与投资的公司上市时的历史也较短;风险投资进入企业的时间越长,IPO折价水平也越高。这两个检验都验证了风险投资机构通过IPO折价提早退出投资项目,进一步支持了声誉效应假说。     

Foreign Debt,Foreign Direct Investment and Volatility

We investigate how foreign debt and foreign direct investment (FDI) affect the growth and welfare of a stochastically growing small open economy. First, we find that foreign debt influences the growth of domestic wealth by lowering the cost of capital, while FDI affects the country's welfare by providing an additional source of permanent income. Second, a decline in domestic investment may improve domestic welfare as FDI replaces the gap. Even when the welfare deteriorates, its magnitude is mitigated, leaving more room for discretionary fiscal policy. Third, a fiscal policy aimed to stabilize domestic output fluctuations needs to be conducted not to crowd out the welfare benefit of FDI too much. Fourth, an economy with both types of foreign capital experiences wider welfare swings by external volatility shocks than the one with foreign debt alone, while the welfare effects from domestic volatility shocks are mitigated. The welfare effects of fiscal shocks are much smaller with both types of foreign capital. Lastly, the first-best labor income tax covers the government absorption by the labor's share of total output, and the capital income tax covers the rest. Investment is penalized or subsidized depending on the social marginal cost-gain differential.     

Corporate transparency, cream-skimming and FDI

We develop a simple information-based model of Foreign direct investment (FDI) flows. On the one hand, the relative abundance of “intangible” capital in specialized industries in the source countries, which presumably generates expertise in screening investment projects in the host countries, enhances FDI flows. On the other hand, host-country relative corporate-transparency diminishes the value of this expertise, thereby reducing the flow of FDI. The model also demonstrates that the gains for the host country from FDI [over foreign portfolio investment (FPI)] are reflected in a more efficient size of the stock of domestic capital and its allocation across firms. These gains are shown to depend crucially (and positively) on the degree of competition among FDI investors. We provide also some evidence on the effects of corporate transparency indicators, such as accounting standards, on bilateral FDI flows from a panel of 24 OECD countries over the period of 1981-1998.     

Foreign capital,credit constraints and continuity of firms’ R&D

In this article, we investigate the role of foreign capital participation as a means for firms to overcome the obstacle posed by credit constraints to sustain R&D investments. Using data for Spanish manufacturing firms in the period 1990–2006, we show that firms with foreign capital are significantly less likely to stop already initiated R&D projects and also more likely to sustain R&D investment when facing credit constraints. Our results are robust to positive selection into foreign capital participation, which we control through a set of variables chosen from a propensity score estimation, and to firms’ fixed-effects.     

Why does China protect its labour‐intensive industries more?*

China's tariff structure favours labour‐intensive sectors, and this is at odds with traditional theory of comparative advantage. The paper argues that tariffs in China are a mechanism for protecting technology‐backward domestic – especially state‐owned enterprises (SOEs) from competition technology‐advanced foreign enterprises producing in China. With relatively integrated labour markets and cross‐firm technology differences, SOEs’ subsistence is supported by subsidized credit and limited access of foreign firms’ local production to tariff‐protected domestic markets. Labour market integration and capital subsidies increase the relative cost of labour in SOEs compared to their foreign competitors, hurting more domestic firms in industries that use labour more intensively. Restrictions to FIEs’ (foreign‐invested enterprises) access to tariff‐protected product markets, which protect more labour‐intensive industries, compensate for the greater cost disadvantage of SOEs in labour‐intensive sectors.     

Local content requirement on foreign direct investment under exchange rate volatility

This paper analyzes the effects of exchange rate volatility of both the host country and the parent country on host-government policy related to local content requirement (LCR) on export-oriented foreign direct investment (FDI) in the context of an oligopolistic market in a third country. We, inter alia, find that an increase in the volatility foreign exchange rate decreases optimal LCR both under free entry and exit of foreign firms and when the number of foreign firms is fixed. We also find that the government uses a less strict LCR policy when the number of foreign firms is endogenous than when it is exogenous.