RTAs' Proliferation and Trade‐diversion Effects: Evidence of the ‘Spaghetti Bowl’ Phenomenon

This paper investigates the trade‐diversion effects of regional trade agreements (RTAs), so‐called spaghetti bowl phenomenon (SBP), in multilateral trade. The SBP is due to the proliferation of RTAs. Thus, I investigate the relationship between the number of RTAs concluded by a country and the additional trade value attributed to a RTA. Using bilateral trade data in a sample of 119 countries, from 1995 to 2012, my main finding reveals a negative trade effect between them, confirming the existence of SBP in multilateral trade. However, results could not conclude the evidence of a negative effect of overlapping RTAs, involving the existence of SBP, within North–North, North–South or South–South trade. But, the additional trade value attributed to a RTA concluded with EU countries or US seems to confirm significantly a trade‐diversion effect because of the number of RTAs signed by these countries.     

Does the Notion of ‘Doing Well by Doing Good’ Prevail Among Entrepreneurial Ventures in a Developing Nation?

The rise in ethical and social responsibility awareness in contemporary businesses has led to assumptions that the associated behaviours would enable competitive advantage to be attained as a firm distinguishes itself from its competitors through such practices. This paper reports on a study conducted on the prevalence of such practices among entrepreneurial ventures in an emerging economy (Malaysia), and the effect of such practices on both financial and non-financial performance. A sequential inter-method mixing design was employed in which during stage 1, a series of semi-structured interviews with ten Malaysian SME founder-owners were conducted. Stage 2 involved a survey in which a total of 212 usable questionnaires were received. The results of the first phase of the research (qualitative) found evidence that entrepreneurial ventures in Malaysia do generally engage in both ethical and socially responsible practices. The subsequent model testing using SEM, however, revealed that while ethical practices were positively associated with venture performance, socially responsible practices were not. This may indicate that while entrepreneurial ventures in emerging economies like Malaysia become quickly aware of the more serious consequences of not adopting ethical practices, the concern for social issues may still be lacking, i.e., in terms of motivations, they may be closer to the profitable end of the philanthropy versus profitability spectrum. While the findings may be equivocal, we believe that the paper makes the following two significant contributions: (1) it provides an empirical test of the importance of ethical and socially responsible practices to entrepreneurial venture performance and (2) it furthers understanding of how and why this may be different in an emerging economy context.     

Geographical indication regulation and intra‐trade in the European Union

Protection of indications of geographical origin (GIs) can reduce information asymmetry between producers and consumers, and potentially enhance trade. However, GIs can also possibly divert trade. We rely on panel data about agri‐food trade among the 27 countries of the European Union to investigate these issues using variations of estimators proposed by Head and Mayer ( 2000 ) and Santos Silva and Tenreyro ( 2006 ). Our findings suggest that the protection of GIs creates trade when the importing and exporting countries have GI‐protected products. There is also empirical evidence regarding a trade‐diverting effect when the importing country does not have GIs and a border enlargement effect arising from European GI‐protection.     

Modus operandi of transnational transfer pricing for window dressing

A goal of transfer pricing may be to maximize after tax revenue by setting transfer prices that reduce the total tax paid. ＂Transfer pricing＂ is the pricing of products or services provided by one division to other division of the same corporate entity. Most of the corporate entities are using the method of ＂Window dressing＂, which is a technique used in preparation of financial statements of corporate entities. A transnational corporation is any enterprise that undertakes Foreign Direct Investment （FDI）, owns or controls income gathering assets in more than one country, produces goods or services outsides its country of origin, or engages in international production. Profitability of the transnational corporate entities is being manipulated by the technique of transfer pricing. Abuse of transfer prices is a key tool used by the corporate entities to think that they have virtually no profit; hence, they shouldn＇t pay any taxes. India needs to realize the fundamental need for co-operation among tax administrations in order to remove the obstacles that international double taxation presents to the free movement of goods, services and capital between various countries. In this context, one needs to consider that transactions among associated enterprises may take place under different conditions from those taking place among independent enterprises, while enforcing the act of transfer price mechanism. This paper focuses on transfer pricing and its implications in transnational transactions.     

Modelling the Ecological Comorbidity of Acute Respiratory Infection,Diarrhoea and Stunting among Children Under the Age of 5 Years in Somalia

The aim of this study was to assess spatial co‐occurrence of acute respiratory infections (ARI), diarrhoea and stunting among children of the age between 6 and 59 months in Somalia. Data were obtained from routine biannual nutrition surveys conducted by the Food and Agriculture Organization 2007–2010. A Bayesian hierarchical geostatistical shared component model was fitted to the residual spatial components of the three health conditions. Risk maps of the common spatial effects at 1×1 km resolution were derived. The empirical correlations of the enumeration area proportion were 0.37, 0.63 and 0.66 for ARI and stunting, diarrhoea and stunting and ARI and diarrhoea, respectively. Spatially, the posterior residual effects ranged 0.03–20.98, 0.16–6.37 and 0.08–9.66 for shared component between ARI and stunting, diarrhoea and stunting and ARI and diarrhoea, respectively. The analysis showed clearly that the spatial shared component between ARI, diarrhoea and stunting was higher in the southern part of the country. Interventions aimed at controlling and mitigating the adverse effects of these three childhood health conditions should focus on their common putative risk factors, particularly in the South in Somalia.     

The expectation hypothesis in emerging financial markets: the case of Malaysia

This article deals with the expectation hypothesis of the term structure of interest rates. It is argued that the rapid progress and financial market liberalization that is occurring in emerging financial markets could provide additional evidence for testing the expectation hypothesis. This article employs data from the Malaysian government securities market which represents one of the examples of an emerging financial market. Cointegration and error correction analyses show significant empirical validity for the expectation hypothesis. The long- and short-term interest rates are shown to be cointegrated and subject to a long-run equilibrium path. In addition to shedding some light on the experience of emerging financial market, this article explicitly identifies the process of adjustment towards the long run equilibrium. For the long-run, the results are in favour of the long-to-short version of expectation hypothesis with longer-term interest rates playing a greater role as equilibrium attractor. However, in the short run causal impact runs from short- to long-term interest rates. The empirical findings of the article generally support the proposition of expectation hypothesis.     

Innovation,competition and firm size distribution on fragmented markets

This paper presents a simple model of firm and consumer behavior. We formulate a sub-market entry game, where boundedly rational firms decide on investing in R&D for inventing new products that will appeal to targeted groups of consumers. The success depends on the amount of resources available for the project as well as on the firm’s familiarity with market characteristics. Successful innovation feeds back into the firm size and (potentially into) market knowledge and increases the future R&D productivity. A new product decreases the market-shares of incumbents. However, this business stealing effect is asymmetric across incumbent population. We identify the section of parameter space where firms have an incentive to diversify horizontally. In this section, the model results in rich industrial dynamics. Firm size heterogeneity emerges endogenously in the model. Equilibrium firm size distributions are heavy tailed and skewed to the right. The heaviness of the tail depends on submarket specificity of firm’s market knowledge. This relationship is non-monotonic, emphasizing two different effects of innovation on industrial dynamics (positive feedback and asymmetric business stealing).     

What drives global B2B e-commerce usage: an analysis of the effect of the complexity of trading system and competition pressure

The purpose of this paper is to examine the conditions in which B2B e-commerce is most likely to diffuse widely at the country level. This paper examines the role of trading system complexity and pressure of competition on B2B EC diffusion by controlling Gross domestic product (GDP) per capita and Information and Communication Technology (ICT) infrastructure. Our sample comprises a pool of country-year dataset from 143 countries over a three-year period (2014–2016). The data were collected from Network Readiness Index Report and Global Competitiveness Report. The findings provide evidence that greater the complexity of trading relationships with the global economy and high level of pressure from the competition are the main forces for B2B use across countries. Consequently, the authors suggest that having a strong trade relationship with developed countries with matured B2B e-commerce practice is helpful in sustaining B2B e-commerce use across countries.