Threshold Effects in the Capital Account Liberalization and Foreign Direct Investment Relationship

This paper examines how capital account liberalization （CAL） affects foreign direct investment （FDI） inflows. Authors use a dynamic panel model encompassing 14 Middle East countries over the period from 1985 to 2009. The findings suggest that countries that are able to reap the benefits of the capital openness policy satisfy certain threshold conditions regarding the level of financial development and institutional quality. Thus to promote FDI, governments in this region should develop a set of policies that not only focus on financial openness, but also on the improvement of the financial system and legal institutions.     

Cost-effectiveness analyses using real-world data: an overview of the literature

Abstract

Objectives: Real-world evidence (RWE) may provide good estimates of absolute event probabilities and costs in patients in actual clinical practice, but their use in decision-analytic models poses many challenges. A literature review based on a systematic search was conducted to summarize the limitations of using RWE in decision-analytic modeling reported in the literature, but also to identify existing recommendations about real-world modeling.

Methods: A literature search was performed on Medline and Embase databases, as well as relevant websites. No restrictions in language or geographical scope were imposed.

Results: A total of 14 references were included. RWE is recognized as a valuable source of data for market access and reimbursement, and as a complement to clinical trial evidence for treatment pathways, resource use, long-term natural history, and effectiveness. The main limitations identified in the literature were: confounding bias, missing data, lack of accurate data related to drug exposure and outcomes, errors during the record-keeping process, protection of private data, and insufficient numbers of patients. Although most submission guidelines recognized the potential biases associated with RWE, guidance on the appropriate methods to deal with these biases, and approaches to review different relevant evidence to inform model development, were scarce. Several initiatives have attempted to provide guidance on the use of RWE in decision-modeling.

Conclusions: RWE is likely to be particularly valuable for informing healthcare policy-makers when formulating appropriate treatment pathways, encouraging the optimal allocation of scarce resources, and improving aggregate patient outcomes. However, little guidance is available on the relative merits of using efficacy and/or effectiveness evidence in Health Technology Appraisal submissions. Further research is needed to better understand these methods and their potential applications in a broader range of scenarios and simulation studies, and their impact on economic modeling.     

Corporate leverage and the terms of employment: evidence from French small businesses before and during the global crisis

Despite the particular importance of corporate leverage and human capital for small businesses, little is surprisingly known about the relationship between these two factors for this category of firms. Accordingly, this article tries to fill this gap by investigating the relationship between leverage and human capital examined through the investment in employee-related expenditure. The analysis focuses on a sample of French listed small businesses before and during the recent global crisis. The empirical findings show that leverage serves as a monitoring mechanism of corporate managers prone to over or underinvest in employee-related expenditure to obtain private benefits. Due notably to the availability of debt, this monitoring is more effective before the crisis period, especially for low growth firms. Overall, these results provide support to the theory that leverage has a disciplining role. Simultaneously, they lead to moderate the strength of this role according to the global crisis. Thus, they should provide useful insights for academics, regulators, managers and credit institutions.     

The Impact of Regulations on Agricultural Trade: Evidence from the SPS and TBT Agreements

According to World Trade Organization rules, countries may adopt regulations under the Agreements on Sanitary and Phyto-Sanitary (SPS) and Technical Barriers to Trade (TBT). We analyze the structure of these measures in agricultural trade. The inventory approach suggests that European countries have among the lowest coverage ratios of all OECD countries. Using a gravity equation, we also estimate their stringency. Our results suggest that they significantly reduce developing countries' exports to OECD countries, but do not affect trade between OECD members. Furthermore, European imports are more negatively influenced by SPS and TBTs than imports of other OECD countries.     

Irreversibility, sunk costs and investment under incomplete information

Despite its importance to economic growth, the investment behavior of firms remains poorly understood. Existing models ignore irreversibility and the opportunity to wait for new information. Even if some recent literature accounts for these two characteristics, these models ignore information costs. This paper presents a framework for the valuation of investment opportunities accounting for information costs regarding the project cash‐flows.
We develop some basic models of irreversible investment to illustrate the option‐like characteristics of investment opportunities under incomplete information. We show how optimal investment rules can be obtained using option pricing theory under incomplete information. It is possible to value real options and investment decisions using our approach in a context of incomplete information. Simulations are provided to illustrate our main results.     

Foreign direct investment in tourism,poverty alleviation,and sustainable development: a review of the Gambian hotel sector

Despite the growing importance of foreign direct investment (FDI) in tourism for developing countries and its perceived developmental importance, there are few empirical impact studies. This paper explores tourism FDI and poverty alleviation through both the literature and a detailed review in The Gambia of the relative contribution of foreign versus locally owned hotels to development and poverty alleviation. Data was collected via an in-depth questionnaire with senior hotel management and through key informant interviews with tourism officials and stakeholders. The study provides empirical evidence of the relative characteristics, performance, and benefits of foreign investments, suggesting that different forms of hotel ownership have complex advantages and disadvantages for poverty alleviation. FDI was concentrated in larger, upmarket hotels, which tended to employ more staff, pay higher wages, and provide more training. However, they had a lower proportion of women employees and employment was more likely seasonal. They have more high-skilled positions, potentially offer staff mobility, but have more expatriates in management roles. Local food purchases were similar across hotel ownership types, as were local philanthropic initiatives, although there were differences of approach. Some resident foreign owners were involved in successful best practice community-linked businesses, driven by social service and environmental ethics.     

Use of real-world evidence in meta-analyses and cost-effectiveness models

Abstract

Real-world evidence (RWE) provides external validity, supplementing and enhancing the randomized controlled trial data with valuable information on patient behaviors and outcomes, turning efficacy and safety results into real-world effectiveness and risks, but the use of RWE is associated with challenges. The objectives of this communication were to (1) summarize all guidance on how to conduct an RWE meta-analysis (MA) and how to develop an RWE cost-effectiveness model, (2) to describe our experience, challenges faced and solutions identified, (3) to provide recommendations on how to conduct such analyses. No formal guidelines on how to conduct an RWE MA or to develop an RWE cost-effectiveness model were identified. Using the context of non-vitamin K antagonist oral anticoagulants in stroke prevention in atrial fibrillation, we conducted an RWE MA, after having identified sources of uncertainty. We then implemented the results in an RWE cost-effectiveness model, defined as a model where all inputs come from RWE, including all parameters related to treatment effect. Based on challenges faced, our first recommendation relates to the necessity of conducting sensitivity analyses, either based on clinical or methodological considerations. Our second recommendation is the need for extensive collaboration with a wide range of experts, during the development of the analyses protocols, the implementation of the analyses and the interpretation of the results. RWE may address a number of gaps related to the treatment effect, and RWE economic evaluations for the treatment effect can provide extremely valuable insights into real-world economic value of interventions. As the increased recognition of the value of RWE could influence health technology assessment decision, and current practices, this communication supports the urgent need of more formal guidelines.     

Institutional Determinants of Financial Development in MENA countries

Developed and well regulated financial markets are usually seen as a precondition for an efficient allocation of resources and can foster long term economic growth. This paper explores the institutional determinants for financial development in the countries of the Middle East and North African (MENA) region. Institutional conditions are from the International Country Risk Guide. Panel‐econometric techniques are applied to assess the development in the banking sector and the stock market. As a main finding, institutional conditions are important in both financial segments, even after controlling for standard macroeconomic determinants and fixed effects. For the banking sector, corruption seems to be most decisive. For the stock market, the impact of corruption and law and order appear to be relevant. While per capita income and inflation do not seem to play a vital role, openness to foreign trade is quite important for all areas of financial development. Hence, overall, faster real economic integration is of key policy priority to improve financial development as a condition for higher GDP growth. Better law and enforcement practices and anti‐corruption policies are strategies to accompany this process.     

TOURISM, TRADE AND DOMESTIC WELFARE

Abstract.  Tourism has been regarded as a major source of economic growth and a source of foreign exchange. It has also been viewed as an activity that imposes costs on the host country. Such costs include increased pollution, congestion and despoliation of fragile environments, and intra-generational inequity aggravation. One aspect that has been ignored is the general equilibrium effects of tourism on other sectors in the economy. This paper presents a model that captures the interdependence between tourism and the rest of the economy, in particular agriculture and manufacturing. An important result obtained is that the tourist boom may 'immiserize' the residents.