PARTIAL PRIVATIZATION, TECHNOLOGY SPILLOVERS, AND FOREIGN OWNERSHIP RESTRICTION

Using a mixed oligopoly model with foreign ownership, this paper examines the interaction between two market-opening policies: the relaxation of foreign ownership restriction and the privatization of domestic public firms. It particularly focuses on technology spillovers, which could be one of the most prominent motivations for introducing foreign investment into a domestic market. The first result demonstrates that the optimal level of privatization is affected by technology spillovers from foreign investment and is negatively related with the magnitude of technology spillovers. The second result shows that the optimal level of privatization is lower when foreign ownership restriction is abolished than that when foreign ownership is not fully allowed. The third result indicates that the government relaxes regulations on foreign ownership of domestic firms only if the magnitude of technology spillovers is significant.     

DETERMINANTS OF FOREIGN DIRECT INVESTMENT – A TALE OF NINE THEORETICAL MODELS

Abstract.  This paper presents a review of nine theoretical models of foreign direct investment (FDI). Discussed are early studies of determinants of FDI (1) as well as determinants of FDI based on the neoclassical trade theory (2), ownership advantages (3), aggregate variables (4), the ownership, location and internalization advantage framework (5), horizontal and vertical FDI models (6), the knowledge-capital model (7), diversified FDI and risk diversification models (8) and policy variables (9). From each of the nine theories, the relevant determinants of FDI are derived. Empirical studies indicate the importance of these determinants in the real world. The paper shows that there is not one single theory of FDI, but a variety of theoretical models attempting to explain FDI and the location decision of multinational firms. Therefore, any analysis of determinants of FDI should not be based on a single theoretical model. Instead, FDI should be explained more broadly by a combination of factors from a variety of theoretical models such as ownership advantages or agglomeration economics, market size and characteristics, cost factors, transport costs, protection, risk factors and policy variables.     

EFFECT OF PUBLIC INVESTMENT ON THE REGIONAL ECONOMIES IN POSTWAR JAPAN

This paper examines the effect of public investment on the regional economies of postwar Japan. It evaluates the effects of efficiency-verses-equity-oriented allocation policies by estimating the aggregate regional production function and calculating the marginal productivity of public capital for each region, using panel data covering the 47 prefectures over the period from 1955 to 2000. The empirical results show that public capital investment has alternated between an allocation policy based on efficiency and one that is based on equity, and, in fact, such investment was used as a policy tool for adjusting income distribution and accelerating economic growth. Numerical simulations are used to analyze the trade-offs between economic efficiency and inter-prefectural equity. The results indicate that in the case of income-elastic labor mobility, an efficiency-oriented allocation policy leads to larger aggregate gross domestic product by promoting both growth and equity simultaneously.     

INFRASTRUCTURE AND REGIONAL DEVELOPMENT IN PAKISTAN

Despite considerable concern by the government, deep regional disparities remain a persistent and troubling feature of Pakistan's economy. Although stark inter-provincial differences have received the most attention, both policy-makers and research scholars also need to address profound intra-provincial inequalities. Using factor analysis, this paper examines the relationship between investments in "hard" infrastructural development and inter-provincial and intra-provincial disparities in Pakistan. Overall, the paper argues that a very close association exists in Pakistan between regional infrastructure endowment and broad levels of socio-economic development. Specifically, data indicate the striking importance of transport within and across regions. The analysis investigates the importance of differing types of transport infrastructure for regional development. The paper concludes with policy recommendations concerning levels, types and mix of hard infrastructural investments that might provide policy-makers with the best opportunity for alleviating income disparities.     

INFRASTRUCTURE INVESTMENT AND PRODUCTIVITY: The Case of Nigerian Manufacturing A Framework for Policy Study*

This paper reviews the Nigerian situation regarding the private provision of infrastructure services by manufacturers with a focus on electrical power generation. While private provision occurs also in water supply, intraurban freight and worker transport, telecommunications, and waste disposal, the degree of its occurence in electrical power generation, a relatively expensive manufacturing input, has the largest economic implications for the firms and the country. The policy framework developed in this paper, however, is applicable to these other subsectors. Manufacturing firms' private provision responses are identified, analyzed, and grouped into seven regimes, four of which are currently observed to occur, and three are precluded from occuring due to existing regulations. A model of public infrastructure supply that is pertinent for developing countries is proposed and discussed. Policy options which could improve the current situation are also examined and discussed. It is argued that the most promising options are likely to be those which encourage new modes of cooperative private provision among manufacturers, accompanied by deregulation, privatization, contestability, modern pricing, and selective maintenance in the public agencies.     

REGIONAL DEVELOPMENT IN CHINA: INTERREGIONAL TRANSPORTATION INFRASTRUCTURE AND REGIONAL COMPARATIVE ADVANTAGE

Significant economic disparities among China's Eastern, Central, and Western regions pose unequivocal challenges to social equality and political stability in the country. A major impediment to economic development, especially in the poor, remote Western region, is the shortage of a transportation infrastructure. The Chinese government has committed to substantial investment for improving the accessibility of this vast, land-locked region as a mechanism for promoting its development. The paper examines the impacts of the intended transportation infrastructure build-up on the Western region's comparative advantage and its interregional trade. The World Trade Model is extended to represent this investment and applied to determine interregional trade in China based on region-specific technologies, factor endowments and prices, and consumption patterns as well as the capacities and costs of carrying goods among regions using the interregional transportation infrastructure in place in the base year of 1997 and that planned for 2010 and 2020. The model is implemented for three regions, 27 sectors, and seven factors. The results indicate that the planned infrastructure build-up will be cost-effective, will increase benefits especially for the Western region, and that it can conserve energy overall at given levels of demand but substitute oil for coal. Based on these and other model results, some recommendations are offered about strategies for regional development in China.     

ENVIRONMENTAL MANAGEMENT IN DANISH MANUFACTURING COMPANIES: ATTITUDES AND ACTIONS

The importance of environmental management has long been recognized and has, among other things, resulted in a number of national and international recommendations and guidelines for sustainable business practice. However, although several examples of the actual implementation of environmental management initiatives have been reported, there is little evidence available for an evaluation of the general situation. This is also true for Denmark. A survey was therefore carried out to obtain some knowledge of the extent and nature of environmental management practice in Danish manufacturing companies. Some of the general results indicate a situation where the major driving factor is legislation and where only a few companies have formulated a general environmental policy and written internal environmental guidelines. Many companies have established practical steps in improving their environmental situation, but mainly because of the cost-saving effects. Only a limited number of companies have introduced techniques which can help to monitor and control the environmental situation and development.