Empirical evidence on the operational efficiency of National Oil Companies

On the basis of application of both data envelopment analysis and stochastic frontier estimation applied to a panel of 78 firms, we present empirical evidence on the revenue efficiency of National Oil Companies (NOCs) and private international oil companies (IOCs). We find that with few exceptions, NOCs are less efficient than IOCs. In addition, much of the inefficiency can be explained by differences in the structural and institutional features of the firms, which may arise due to different firms’ objectives.     

Keynes’s Principle(s) of Effective Demand: Redefining His Revolution

Much of critical social science today argues that the oil crisis must be resolved by getting away from it: Alternative energy is the only answer to peak oil. Yet, recent massive and continuing oil discoveries in Africa have been offered as a potential stop-gap measure to simultaneously improve socio-economic conditions and enhance energy security on that continent, as well as to bridge global income inequalities, while supporting the energy needs of richer countries, especially at a time of continuing disquiet in the major oil producing centers in the world. Memories of plunder of African resources, formed by years of “resource curse,” however, erect dark clouds over the possibility of using oil to achieve the seemingly irreconcilable aims of oil benefit to both Africa and the rest. Australia finds itself at these crossroads: It has a looming oil crisis and an emergent relationship with Africa. In this paper, I argue for a non-determinist, research-led approach to resolve this imbroglio.     

Oil shale and climate policy in the shift to a low carbon and more resilient economy

Policy makers worldwide are recently debating options to implement an effective climate policy that would put a cap on green house gas emissions. At the same time, investors are carefully evaluating the profitability of unconventional fossil fuels such as shale oil. To enhance the understanding of the impacts of a climate policy such as the American Clean Energy and Security Act of 2009, on oil shale production – and vice versa – we have customized an integrated assessment model, the Climate and Energy Assessment for Resiliency model for Unconventional Fossil Fuels to the U.S. Western Energy Corridor. Our analysis indicates that while the bill would increase the production cost of oil shale, the industry remains highly profitable in the longer-term, generating a potential profit of about $10 to $16 billion per year by 2040 at 2.5 million barrels per day. These results suggest that the oil shale industry may comfortably face the enactment of a carbon policy, albeit with some caveats. Furthermore, while its potential economic impact on non-compliant industries may be severe, it would generate mounting profits for those achieving energy efficiency gains, thereby increasing the profitability of energy efficiency investments.     

Cyclical comovements in energy-related venture capital investments

This article examines the cyclical comovements of venture capital investments in the energy sector and key macroeconomic variables. In particular, we decompose the cyclical component of two venture capital investment series (clean technology and industrial/energy) and several macroeconomic factors including oil prices. A number of important cyclical relationships are documented such as increases in crude oil prices tend to signal future venture capital investment in both energy-related sectors and these investments tend to move concurrently with movements in the overall economy     

Who benefits more from higher household consumption? The intra-household allocation of nutrients in China

Previous studies find that human capital investments in boys are less income elastic than investments in girls, attributing this result to favoritism toward boys. I show theoretically that it is plausible for more productive or favored household members to have higher income elasticities. I then investigate this question empirically, utilizing panel data on individual nutrient intake from the China Health and Nutrition Survey (CHNS) to analyze how changes in household per-capita nutrient intake affect the intra-household allocation of nutrients. To deal with potential biases due to omitted variables and simultaneity, I use measures of rainfall variation as instruments. I find that nutritional intakes are more elastic for males (especially prime-age men) than for females, and significantly less elastic for the elderly.     

The effect of school capital investments on local housing markets and household sorting in California

In this paper, I investigate what effect school capital investments have on housing values and household location choice in the context of the Tiebout model. This research identifies an exogenous variation in school capital investments by exploiting the lottery allocation of entitlement to an interest-free construction bond among districts in California. Although the lottery is exogenous, additional non-lottery allocation complicates identification. This paper develops an empirical model based on sample selection methods in order to create a counterfactual state in which additional non-lottery allocation would not have existed. I find that receiving the interest-free construction bond increases school capital expenditure and housing values at the district level. I view the increase in housing values as the capitalization of school capital investments. I find little evidence for the effect of the interest-free construction bond on household sorting and student’s academic outcomes.     

Practitioners' forum

The concept that information technology can be used as part of an organization's strategy changes its role in the organization. Whilst investments associated with current or 'more of the same' computer systems are proposed by the data processing manager, requests for investments associated with the use of IT as a competitive weaponcome from a much wider audience within the organization.Since the size of the investment may be large and its potential impact on the organization profound, there is a need to objectively analyze and manage such investments at the strategic level. There are some fairly sophisticated models in the academic literature, but the consensus of opinion in the general management literature and several management consultant reports suggests that successful analysis is not merely a case of quantitative justification: management requires both 'vision' and organizational changes to pursue the full potential of investments.     

Impact of energy infrastructure investments on renewable electricity generation in major Asian developing economies

The prime objective of this research is to empirically investigate the impact of energy infrastructure investments (public-private-partnership) on renewable electricity generation in major Asian developing economies (China, India, Indonesia, Malaysia, Pakistan, the Philippines, and Thailand). In doing so, we use the annual data of variables from 1993 to 2017. To achieve the study objective, the authors employ numerous panel econometric approaches such as the Grouped-Mean and Augmented Mean Group estimators. The overall conclusion of the findings is that investments in energy infrastructure play a significant role in promoting renewable electricity generation in Asian developing economies. The results also reveal that financial development, economic development, and openness further rise renewable electricity generation. Based on the findings, the authors attempted to provide novel implications for the promotion of energy infrastructure investments and sustainable development policies for the Asian developing economies. For instance, the authors suggest that governments and policy makers should realise the significance of greener energy and promote investments via public-private partnerships for renewable energy projects.     

Voluntary Environmental Investment and Responsive Regulation

Instances of corporate voluntary environmental investments have been rising in recent years. Motivations for such activities include corporate image building, regulatory preemption, and production cost savings. While some of these investments arise from industry attempts to set environmental standards where none currently exist, many investments seem to be aimed at reducing the costs of complying with existing regulations. Using a simple game-theoretic model, we investigate firm motivations for, and welfare consequences of, these types of voluntary investments by focusing on the role regulatory enforcement might play. We find that such investments unambiguously increase when an enforcement regulator acts as a Stackelberg follower (a regulatory structure we refer to as responsive regulation) in setting its monitoring and enforcement strategy. These additional investments may be socially undesirable, necessitating a restructuring of non-compliance penalties.     

Cross-country diffusion of photovoltaic systems: Modelling choices and forecasts for national adoption patterns

In this paper we propose an innovation diffusion framework based on well-known Bass models to analyze and forecast national adoption patterns of photovoltaic installed capacity. This allows for interesting comparisons among several countries and in many cases highlights the positive effect of incentive policies in stimulating the diffusion of such a technology. In this sense, the Generalized Bass Model proves to be essential for modelling and forecasting. On this basis, we observe important differences in the investments made by countries in the PV sector and we are able to identify whether and when these investments obtained the expected results. In particular, from our analysis it turns out that in some cases incentive measures have been certainly effective in facilitating adoption, while in some others these have not been able to produce real feed-back. Moreover, our cross-country approach is able to forecast different stages in PV evolution: whereas some countries have already entered the mature stage of diffusion, others have just begun. This result may suggest various considerations about the competitive advantage of those countries that invested in alternative energy provisions. In spite of a very diversified scenario in terms of historical patterns of diffusion, we may report, as a general result, the fragile role of innovators for this special market and the dominance of imitative behaviour in adoptions.     

Costly switching and investment volatility

Summary. This paper extends the literature on the optimal switching rule between two investments by considering the case where switching between investments is costly. The model builds on the classic framework of the multi-armed Bandit problem by explicitly incorporating two key assumptions. First, switching investments is costly. Second, only the investment operated by the investor evolves as a random walk. The objective of the investor is to maximize the discounted sum of expected net profits over the infinite horizon. The main result is that when the volatility of profits from investments increases, so does the minimum profit gain needed for an investor to switch investments.JEL Classification Numbers: C44, C61.I am indebted to Prajit K. Dutta for his guidance throughout this research. I am grateful for Presidents Summer 2000 Research Fellowship of Columbia University. I appreciate the comments from the anonymous referee. I also thank Lalith Munasinghe and Rajiv Sethi. I also thank Dr. Jong Myeon Kim for editing this version of the paper.     

Economic impact assessment of mega infrastructure pipeline projects

The economic development features for the decades after the Second World War provide evidence that investments to new infrastructures are a key driver in strengthening the national economy and enhancing nation’s productivity, as it creates economic benefits and additional income. However, the decision for fund allocation and investments in mega infrastructure pipeline projects often must be made in conditions that are much more fraught with uncertainty. The key question in such decisions is if the economic impact caused by the new project could be able to essentially boost the economy by creating new jobs and generating new income on one hand; and which are the business sectors expected to archive the benefits of this investment. This article deals with the estimation of the mega infrastructure pipeline project economic effects in economy. The methodological framework is based on input–output approach providing quantitative estimations about the economic impact of the project in terms of new income and jobs. The numerical application deals with the assessment of a cross-border crude oil pipeline project, connecting the ports of Burgas (Bulgaria) and Alexandroupolis (Greece), establishing a new transportation corridor for the crude oil from Black Sea to Southeast Mediterranean.     

Leave it in the ground? Oil sands development under carbon pricing

We evaluate the impact of internalizing the carbon emissions externality on new oil sands projects. Using data from recent oil sands projects and estimates of both the social costs of carbon and carbon prices consistent with meeting global climate change targets, we estimate the potential impact of action on climate change on the economic viability of oil sands investments. Our results indicate that oil sands are a marginal resource before they incur any carbon costs. Incorporating carbon costs, we find that the viability of oil sands depends on the coverage of carbon pricing across the life cycle emissions from oil sands and on the equilibrium incidence of carbon prices on producers. We show an important interaction between resource royalties and carbon charges that implies that the impact carbon pricing depends on not only the stringency and coverage of the carbon price but also its point of application of a carbon price. Finally, we explore the potential for technological change to mitigate the impacts of carbon pricing on oil sands investment viability.     

The varying shadow of China's banking system

The rapid rise of shadow banking activities in China since 2009 has attracted a great deal of attention in both academia and policy circles. Most existing studies and commentary on China's shadow banking have treated it as a recent phenomenon that appeared after the Global Financial Crisis and China's response to it. In this paper, I argue that shadow banking is not a new phenomenon; it has always been a part of China's financial system since the 1980s, and arose from the need to get around various lending restrictions imposed by the central government on banks. I also emphasize that there are two types of shadow banking activities, those initiated by banks and those initiated by local governments or state-owned enterprises. I provide evidence suggesting that the shadow banking activities initiated by banks prior to 1996 helped directing credits to the more productive non-state sector and were efficiency enhancing. In recent years, however, I find that the shadow banking loans have a positive effect on real estate investments only, and their effects on investments by private firms outside the real estate sector have been negative.     

Monetary and fiscal coordination in preventing bank failures and financial contagion

This paper uses a theoretical model to analyze the optimal combination of monetary response (lowering of interest rates) and fiscal bailouts in preventing bank failures and financial contagion. I show that the optimal way of rescuing failing banks is to combine the two. This is because lower interest rates reduce the size of the bailout required to rescue failing banks as they reduce the cost for banks to raise and retain deposits. The main result of the paper is that banks are willing to monitor their investments more closely when they anticipate a monetary response in addition to bailouts in case of a banking crisis. Additionally, capital requirements such as the Basel Accords do not always incentivize banks to monitor their investments if there is a potential contagion from unhealthy to healthy banks.     

Technology-related factors as determinants of export potential of Nigerian manufacturing firms

A critical input that enables capacity for export is investment in technology at the firm-level. Using a survey data, this study investigates technology investments by firms in Southwest Nigeria and how technology investment related factors affect the export potential of firms. Results demonstrate that investments in technology are dominated by imported technologies, investments in ICTs are becoming widespread, and technology investments are not directly targeted at improving the export potential of firms. The results also showed that firm size has a strong positive relationship with export potential, and it is the most important factor that affects the export potential of firms. The coefficient of firm size is the only parameter estimate that is consistently statistically significant at 1% level for all four export models estimated. Other technology investment related factors that impact positively on export potential include skills intensity, investment in skills upgrading, and investment in quality management.     

Does the Energy-Efficiency Paradox Exist? Technological Progress and Uncertainty

We explain why firms may choose not to undertake investments inenergy-saving technologies that appear profitable from a net presentvalue perspective. As future technological advances are inherentlyuncertain and investments in new technology are, at least partly,irreversible, it may ``pay' to postpone investments in energy savingand wait for the arrival of improved varieties. This insight casts doubton the existence of so-called ``low hanging fruits in energy saving'(although we do not wish to deny that organisational failures may alsobe important). Failure to appreciate the underlying stochasticity oftechnological progress may obscure the insight that there is value inwaiting, and costs involved in terminating the option to invest. Theappetite for low-hanging fruits will be less when these costs areincorporated in the analysis. We demonstrate that the effect of thearrival rate of new technologies on the adoption lag for a rational firmis ambiguous. The same holds for the effect of the expected ``jump' inefficiency of new technologies. Government policies aimed at enhancingthe adoption of new technologies through stimulation of R&D maytherefore be counterproductive.     

Predicting FDI inflows: Exploring a nonlinear relationship between peace years,oil wealth,and the rule of law

Despite previous studies investigating the impacts of various factors such as peace years, natural resources, and the rule of law on foreign direct investment (FDI), empirical findings remain inconclusive. Therefore, this study investigates the interplay between these factors in shaping host country conditions that facilitate FDI inflows. Using generalized additive models, we examine the simultaneous effects of peace years, oil wealth, and the rule of law on FDI inflows in a sample of non-OECD countries from 1970 to 2009. Our results reveal that established peace is a critical factor in attracting FDI inflows for both oil-exporting and non-oil-exporting countries. However, the effects of the rule of law vary depending on oil wealth. Oil-exporting countries receive more FDI inflows when they have a weak rather than a strong rule of law, while non-oil-exporting countries tend to receive more foreign investments when they have a moderately strong rule of law. We argue that countries with oil wealth combined with a moderately weak rule of law provide an environment that is conducive to multinational corporations (MNCs) in extractive industries seeking monopoly rents. Conversely, countries without oil wealth should create stable yet efficient environments that protect property rights and promote labor market flexibility to appeal to non-resource-seeking MNCs.     

The effect of sample size on European Union’s renewable energy investment drivers

Macroeconomic modelling results based on relatively varying sample sizes may lead to incoherent results. Such effects have not been adequately understood in the renewable energy literature regarding the European Union (EU). This study focuses on the comparison of results obtained for renewable energy investment drivers (for solar and wind energy investments) on different samples of EU countries, including all EU-27, former EU-15 and 11 high renewable investment EU countries. The study used a random effect panel data modelling approach over the period 1995–2011 for studying the impact of the levelized cost, regulation perception, carbon emissions and climatic condition on wind and solar investments over the three samples. The results demonstrate the importance of trustable regulation schemes to ensure that regulation will not have a significant negative effect on investment, showing also the need to further extend the model to include support schemes as fundamental drivers for investment.     

More for everyone: The effect of local interests on spending on infrastructure

A central question in political economy is whether decision-making in representative democracies is biased towards local public investments or other types of policies which have locally concentrated benefits. The model by Weingast et al. (1981) predicts that a legislature with members from different areas will spend more in total on local public goods when the geographic constituency of each member is small. I test this prediction using panel data on the 18 Norwegian regional councils, exploiting that the geographic allocation of regional council seats varies considerably over time. Consistent with the theory, I find robust evidence that investments in regional public roads are lower when many council members come from the more populated areas in the region. This gives a more direct test of the prediction by Weingast et al. (1981) than existing empirical evidence, which concerns the relationship between public spending and legislature size. I find similar but less robust results for the maintenance of existing roads.