The choice and timing of foreign direct investment under uncertainty

This paper sheds new light on why timing and entry mode should be considered simultaneously in the international investment literature. We derive the profit levels at which it is optimal to switch from exporting to setting up a wholly owned subsidiary, creating a joint venture, or licensing production to a local firm. The preferred entry mode depends on uncertainty about future profits, tax differentials between the home and the foreign country, the cost advantages of local firms, institutional requirements, and the degree of cooperation between partners in a joint venture.     

The contribution of a satellite market to price discovery: Evidence from the Singapore exchange

The Singapore Exchange (SGX), a small satellite market, successfully competes with a large home market, the Osaka Securities Exchange (OSE), in trading the Nikkei 225 futures index. In this paper, we investigate the contribution of the SGX to price discovery and shed light on the reasons for its continued success. Evidence is provided from information revelation and price discovery of three competing but informationally linked markets of the Nikkei 225 index—domestic spot (Tokyo Stock Exchange), domestic futures (OSE), and foreign futures (SGX), which represents the satellite market. Overall, the futures market contributes 77% to price discovery, with the satellite market contributing 42% of the futures and 33% of the total price discovery. These figures, surprisingly, far exceed the satellite market's share of trading volume. Support is provided for the extended trading hours on the SGX for three of the four non‐overlapping trading sub‐periods. © 2004 Wiley Periodicals, Inc. Jrl Fut Mark 24:981–1004, 2004     

A theoretical framework to evaluate different margin‐setting methodologies

The margin system is the first line of defense against the default risk of a clearinghouse. From the perspectives of a clearinghouse, the utmost concern is to have a prudential system to control the default exposure. Once the level of prudentiality is set, the next concern will be the opportunity cost of the investors, because high opportunity cost discourages people from hedging futures, and thus defeats the function of a futures market. In this article, we first develop different measures of prudentiality and opportunity cost. We then formulate a statistical framework to evaluate different margin‐setting methodologies, all of which strike a balance between prudentiality and opportunity cost. Three margin‐setting methodologies, namely, (1) using simple moving averages; (2) using exponentially weighted moving averages; (3) using a GARCH approach, are applied to the Hang Seng Index futures. Keeping the same prudentiality level, it is shown that the one using a GARCH approach by and large gives the lowest average overcharge. © 2004 Wiley Periodicals, Inc. Jrl Fut Mark 24:117–145, 2004     

The politics of ethnic integration in Singapore: Malay ‘regrouping’ as an ideological construct

Research on ethnic residential patterns is overwhelmingly empiricist in focus. The discursive context surrounding the socio‐spatial phenomenon needs to be acknowledged since it can have concrete impacts on the practice of urban social planning as well as the spatial behaviour of individuals and groups. Using Henri Lefebvre's insights into the production of social space, this article looks at how a dominant representation of space is constructed, with its implications for ‘lived’ spaces and the spatial practices which circumscribe them. The case of Singapore is examined, where the government has appropriated the discourse surrounding ‘ethnic regrouping’ in an attempt to legitimize the unpopular policy of ethnic quotas in public housing. Alleging that ‘ethnic regrouping’ had been taking place during the 1980s, this was portrayed as undesirable and contrary to the ideal of integration. The imposition of ethnic quotas was thus justified as necessary and appropriate. Systematic analysis using the index of dissimilarity, however, problematizes this representation of space. The rhetoric surrounding ethnic regrouping is revealed to be a means of social discipline whereby the government imposes a particular representation of space and seeks to manipulate the social landscape via technocratic means. Les recherches sur les modèles résidentiels ethniques débordent d'empirisme. Or, le contexte discursif du phénomène socio‐spatial doit être reconnu puisque celui‐ci peut avoir des incidences tangibles sur l'exercice de l'urbanisme social, ainsi que sur le comportement des individus et groupes dans l'espace. A partir des idées d'Henri Lefebvre sur la production de l'espace social, l'article analyse comment s'élabore une représentation dominante de l'espace, avec ses implications sur les espaces ‘vécus'et les pratiques spatiales qui les délimitent. Dans le cas de Singapour, le gouvernement s'est approprié le discours autour du ‘regroupement ethnique’ dans le but de légitimer la politique impopulaire des quotas ethniques dans les logements publics. Sous le prétexte que le ‘regroupement ethnique’ s'était déroulé dans les années 1980, il a été présenté comme indésirable et contraire à l'idéal d'intégration. Les quotas ethniques ont donc été justifiés comme nécessaires et pertinents. Cependant, une analyse systématique utilisant l'indice de dissemblance remet en cause cette représentation de l'espace. La rhétorique entourant le regroupement ethnique apparaît comme un outil de discipline sociale grâce auquel le gouvernement impose une représentation particulière de l'espace, cherchant à manipuler le paysage social par des moyens technocratiques.     

WINDOW ON EASTERN EUROPE: Ethical Perceptions of Polish Business Students

An experienced educationalist comments on the views of top Polish business students on ethics in public life, government and business in modern Poland. The author is Wicklander Professor of Professional Ethics at DePaul University, Chicago, and also served recently as Visiting Fulbright Professor at the Adam Mickiewicz University in Poznan, Poland. He is currently President of the Society of Business Ethics in the USA.     

Human Capital and Growth Cycles

This paper studies the dynamic interaction between human capital accumulation and economic growth. Capital market imperfections and an indivisibility in human capital investment prevent poor agents from accumulating skills, the acquisition of which positively affects technological progress. More productive technologies in turn require more sophisticated qualification and involve higher training costs. The equilibrium dynamics can be characterized by the joint evolution of productivity growth, the schooling costs, and the income distribution. Under our assumptions, individual incomes follow a non-linear Markov chain. This non-linearity generates endogenous fluctuations of schooling activities and the rate at which productivity improvements occur. We thank an anonymous referee for many helpful suggestions. Support from the German Research Foundation (DFG) under grant KA1519/2-2 is gratefully acknowledged.     

Multiplicity of Cournot Equilibria and Involuntary Unemployment

In an overlapping generations model with Cournot competition on the goods market it is shown that a continuum of stationary states and perfect foresight trajectories exists with unemployment at arbitrary low wages. Decisive for this is the influence that different forecast functions have on the objective demand curve, even though they are consistent with perfect foresight. With an example it is shown that simple adaptive and constant memory forecast rules generate such unemployment equilibria. The corresponding temporary equilibrium dynamics may display stable unemployment and unstable full employment equilibria.Journal of Economic LiteratureClassification Numbers: D43, D51, E24     

Bootstrap and Pretest J-Type Non-Nested Tests for Orthogonal Regression Models: Some Monte Carlo Evidence

This paper compares the size and power of two J-type tests for weakly correlated or nearly orthogonal non-nested regression models: a bootstrap and a pretest test. The latter seems to outperform the former in terms of its size characteristics, especially when the alternative model has more non-nested regressors and the orthogonality between the two sets of regressors is severe. The bootstrap test does better in terms of power.