Nudging farmers in crop choice using price information: Evidence from Ethiopian Commodity Exchange

The lack of reference price information is often regarded as one of the most pervasive aspects of incomplete commodity markets in developing countries. Previous studies on the effects of price information emphasize the market participation and performance of rural households. This paper argues that access to reference price information influences farmers’ crop choice decisions, the most important decision in farming activity. The study exploits the variation in timing and spatial distance of the publicly run Ethiopian Commodity Exchange (ECX) price tickers as an indicator for variation in the intensity of access to reference price information among rural villages in Ethiopia. The paper finds that access to price information increases the average farm-gate prices for traded commodities and incentivizes farmers to allocate more land, fertilizer and improved seeds to commodities traded in the ECX. It also nudges farmers to produce more of the traded commodities, increasing the output share of ECX-traded commodities.     

Formal institutions and foreign direct investment

This study examines the impact of formal institutions on foreign direct investment. First, the quality (strength or weakness) of formal institutions in host countries is analyzed. Second, the absolute differences in the quality of formal institutions between the host and home countries are examined. The results show that (1) strong formal institutions in host countries positively influence FDI flows and (2) the larger the institutional distance between the home and host country, the lesser the FDI inflows. © 2009 Wiley Periodicals, Inc.     

The impact of a food security program on household food consumption in Northwestern Ethiopia: A matching estimator approach

With the financial support from various development partners, Ethiopia has designed and implemented several programs to improve household food security. Yet, food insecurity is still a major challenge to several millions of people in the country and it is questionable whether the different food security programs implemented over the past years have been successful. Using a propensity score matching method to control for pre-intervention differences, this study examined the impact on household food calorie intake of an integrated food security program (IFSP), which had been implemented in Northwestern Ethiopia by two non-governmental organizations as a case study. The estimated results provide evidence that IFSP has a positive and statistically significant effect on food calorie intake. In particular, IFSP has raised physical food calorie intake by 30% among the beneficiary households. However, we also found that IFSP has differential impact depending on family size, landownership and gender of head of household. Overall, the paper provides evidence that supporting integrated food security programs is important to improve food security in rural areas.     

Information,motivation and resources: the missing elements in agricultural pesticide policy implementation in Ethiopia

To promote pesticide governance that protects the environment and human health, Ethiopia has developed a legal framework for pesticide registration and control. However, in Ethiopia, pesticides are still registered, traded and used inappropriately. This research analyses how Ethiopia's pesticide policy is implemented and identifies the barriers for an effective implementation of this policy. With a theoretical framework based on the information, motivations and resources of relevant actors, data are collected from state pesticide experts, traders and end users (farmers) through in-depth interviews. The overall result reveals that major gaps exist between pesticides policy on paper and its implementation in practice. The key policy actors scored low on each of the three characteristics: they have poor information available, have low motivation to implement policies and lack sufficient resources. Involvement of and collaboration with private actors is likely to improve the implementation of pesticide governance, and contribute to sustainability in agricultural and food systems in Ethiopia.     

Export Controls and International Business: A Study with Special Emphasis on Dual-Use Export Controls and Their Impact on Firms in the US

The production of hazardous materials that can be used for civilian and military purposes (dual-use items) has led the U.S. government to impose export controls in order to prevent the proliferation of risky materials falling into the wrong hands — a concern in this age of international terrorism. Export controls are prudent government responses to the emergence of a new and widely perceived threat to national security. However, existing controls have failed to keep up with rapid global economic and technological changes, and are likely to have adverse effects on firms’ economic performance. This article suggests regulatory and policy reforms, as well as corporate strategies for dealing with U.S. export controls in order to make such controls effective and relevant to changing technological developments. Among the problems the article identifies are the negative effects of these export controls on firm innovation, market competitiveness, investment, and trade flows. These issues point to a pressing agenda for regulatory reform. Reforms can focus on limiting control lists, enhancing the bilateral or multilateral cooperation in export controls, improving the efficiency and transparency of the licensing system, improving resources and the outreach to small and medium-size exporters, and compensation for the loss of market share.     

Trade Liberalization in Textiles and Clothing and Developing Countries: An Analysis with Special Emphasis on the US Import Market

This article examines the role and importance of the textiles and clothing sector in the economies of the United States and developing countries as well as the qualitative changes in the dynamics of the industry. After briefly looking at the history of protectionism in the industry, the article addresses the impact of quota elimination on developing countries' exports to the United States. It also discusses the role of China as the dominant supplier. It suggests that with the elimination of quotas, most of the benefits will probably accrue to a handful of efficient suppliers, notably China and India. The article concludes by providing some recommendations to enable many developing countries to cushion the sudden effects of trade liberalization.     

Patent protection and foreign direct investment

The importance of development and use of products embodying intellectual property rights has increased dramatically. The growing share of knowledge‐intensive products in worldwide trade, together with the increase in international technological competition, has magnified the importance of patents and other forms of intellectual property. The objective of this study is to examine the effect of patent protection on inward foreign direct investment (FDI). It also examines the relative importance of other variables such as market size, trade orientation, unemployment rates, and so on. The findings are supportive of the fact that the level of patent protection is a strong determinant of investment flows. A proper understanding of this relationship will help firms and governments devise appropriate intellectual property policy to encourage the growth and expansion of FDI. © 2006 Wiley Periodicals, Inc.     

Market performance implications of modularization: Evidence from global auto firms operating in China

Auto firms play an increasingly important role in national economies. However, their internationalization strategies, especially the trend towards modularization has been underexplored in the international business literature. Drawing on the resource based theory, we develop hypotheses on the link between modularization and market performance. Analyzing a sample of 262 auto parts suppliers in China, the study shows the positive influence of modularization on firm performance and the moderating role of knowledge sharing tools and physical proximity in this relationship. In addition, these relationships are channeled by firms’ strategic actions to maintain superior business performance against competitors (firm positional advantage).     

Idiosyncratic Risk,Investor Base,and Returns

Using four different proxies for a firm's investor base we demonstrate that idiosyncratic risk premiums are larger for neglected stocks and smaller or economically insignificant for visible stocks. Since neglected stocks have greater idiosyncratic volatility (IV), the total IV risk premium (price × quantity) for neglected stocks will be greater than that of visible stocks. Additionally, we find a positive size effect and negative beta effect after controlling for IV. Overall, our results provide strong support for Merton's theory that market segmentation induced by incomplete information is an important component of the influence of IV in the cross‐section of returns.