Search

This study analyses the effects of government subsidies for foreign direct investment (FDI) on employment at the municipal level in Serbia. It finds that the positive correlation of subsidies with employment is limited to the creation of subsidized jobs. In other words, subsidies are ineffective in creating additional jobs, beyond the jobs created by subsidized multinational enterprises (MNEs). There is no crowding-in and there is some evidence of crowding-out in the least developed municipalities. The municipalities that received subsidized investments did not experience higher employment in comparison with the period of no subsidies and in comparison with municipalities that never received subsidized investments. Some positive effects emerge, with a two-year lag, in the municipalities which, conditional on the level of development, lowered wages. The key policy implication is that subsidy-driven FDI policy, based on financial subsidies per job created, does not lead to a sustained employment growth pattern. Policymakers might need to target high value-adding activities of MNEs that induce the creation of domestic value added. Keywords: employment, foreign direct investment, local development, subsidies, 1. Introduction At the 2016 'EBRD Western Balkans Forum', the Serbian prime minister made an announcement to foreign investors that 'whichever country makes you a subsidy offer, come to us [...]

The use of tax havens by multinationals is a pervasive activity in international business. However, we know little about the complementary relationship between tax haven use and foreign direct investment (FDI) in the developing world. Drawing on internalization theory, we develop a conceptual framework that explores this relationship and allows us to contribute to the literature on the determinants of tax haven use by developed-country multinationals. Using a large, firm-level data set, we test the model and And a strong positive association between tax haven use and FDI into countries characterized by low economic development and extreme levels of capital flight. This paper contributes to the literature by adding an important dimension to our understanding of the motives for which MNEs invest in tax havens and has important policy implications at both the domestic and the international level. Keywords: capital flight, economic development, institutions, tax havens, wealth extraction, 1. Introduction Multinational enterprises (MNEs) from the developed world own different types of subsidiaries in increasingly complex networks across the globe. Some of the foreign host locations are characterized by [...]

This study draws on preliminary case evidence to explore the motivations and advisability of engagement by African multinational enterprises (MNEs) in outward foreign direct investment (FDI) activities outside their home region. It complements recent research on MNEs from emerging markets, focused on the BRICS (Brazil, the Russian Federation, India, China, and South Africa) economies, with virtually no attention to potentially important players from rising Africa. The MNEs explored in this study are active in the energy, manufacturing, construction, chemicals, agribusiness, extractive/mining, and financial services sectors, and they have investment footprints both in countries in the North and the South. Their investment decisions are motivated by the search for market opportunities, strategic assets/resources and performance-boosting relationships, though more advanced economies appear to attract more strategic asset-seeking FDI from African MNEs. The paper argues that intra-regional investments by African MNEs should continue to be prioritized, but selective and strategic extra-regional FDI, undertaken with an eye on furthering global competitiveness, also requires appropriate policy support. This seems even more sensible given that the acceleration of borderless digital internationalization and the increasingly blurred nationality of MNE affiliates are lessening the relevance of regional distinctions. Key words: Foreign Direct Investment, Africa, Multinational Enterprises, Extra-regional FDI Footprints., 1. Introduction Outward foreign direct investment (FDI) from the developing 'South', or by emerging market multinational enterprises (MNEs), have witnessed significant growth over the past few decades. The latest UNCTAD [...]

In recent years, emerging market multinational corporations (EMNCs) have conducted a record number of cross-border acquisitions (CBAs). EMNCs consider developed markets appropriate destinations because EMNCs can benefit from more advanced technology and managerial know-how, as well as the brand image and distribution channels established by the target firms in developed markets. Built on the literature on institutional theory and stakeholder theory, the current paper provides one of the first research endeavors to theorize how EMNCs' CBAs in a developed market are likely to require EMNCs' compliance with the established standard of corporate socially responsible (CSR) practices in the host market and as a result, subsequently improve their corporate social performance in the host-developed market. Further, this paper proposes that the frequency and media coverage of EMNCs' CBAs in a developed market lead to EMNCs' adoption of substantive CSR practices. Finally, the cultural characteristics of the EMNC's home market also offer unique challenges or opportunities for adopting CSR practices in the host-developed market., Foreign direct investment by corporations in emerging economies has achieved unprecedented growth in recent years (UNCTAD, 2013), and thus, emerging-market multinational corporations (EMNCs) have become important players in the global [...]

ABSTRACT Despite significant flows of Foreign Direct Investment (FDI) and the perceived benefits (i.e. in terms of economic growth and innovation of productive techniques) that this type of flows can [...]

Intellectual capital (IC) is considered as a key resource in business. However, it is difficult to measure and compare across firms due to its intangible nature. The Value Added Intellectual Coefficient (VAIC) model proposed by Pulic (1998; 2000) might be used to overcome these issues. The purpose of this study is to apply the VAIC model to investigate the impact of IC on market performance among R&D engaging firms. The sample for this study comprises multinational firms listed on the United States (U.S.) stock exchanges which engaged in R&D activity during the period 2006-2013. The sample employed consists of 1,328 firm-year observations and the data were obtained from the Compustat database. Market performance is measured using the market-to-book ratio and Tobin's q ratio. The study employs the VAIC model to measure aggregate IC efficiency and its elements: human capital efficiency, structural capital efficiency and tangible capital efficiency. The study also controls for the effects of size, leverage, year and industry on market performance. The data were analyzed using descriptive, correlation and multiple linear regression analyses. From the regression analysis, the results indicate that aggregate IC efficiency has a positive and significant association with market performance among R&D firms. However, among the components of aggregate IC efficiency, human capital efficiency has no significant association with R&D firms' market performance while structural capital efficiency and tangible capital efficiency have a positive and significant association with market performance. The findings suggest that the synergy derived from the combination of IC and tangible resources has a significant influence on the market valuation of R&D firms. The finding also suggests the importance of structural and tangible capital over human capital in R&D engaging firms. The findings provide not only empirical evidence on the relationship between IC and market performance among R&D engaging firms, but also provides important further evidence on the VAIC model as an IC measurement method. Empirical studies to date have found mixed evidence on the adequacy of the VAIC model. In respect of structural and tangible capital the results of this study provide support for the VAIC model; but not in respect of human capital. JEL Classifications: L10, O34 Keywords: Intellectual capital, market performance, R&D firms Corresponding Author's Email Address: arifatul@uum.edu.my, INTRODUCTION Intellectual capital (IC) is defined as the knowledge used to generate profit and add value to firms (Stewart 1997). IC is considered as a key resource in business and [...]

Economic zone or export processing zone in a country is a purpose-built industrial park with infrastructure designed to suit the needs of foreign as well as local investors. In order to tempt foreign investors into the zones the host developing countries offer a variety of incentives. By encouraging and motivating the multinational companies to settle their Greenfield investments in developing countries, the economic zone scheme acts as a tool for empowering the local economy to gain multiple capabilities and go global increasingly to facilitate income convergence between the industrialized and the developing countries through equitable sharing of the gains from trade. Nonetheless, it is not a magic wand. Its experiences in Malaysia and Bangladesh clearly show that it can create wonder only when it is appropriately designed and managed. It is suggested that Bangladesh borrows a leaf from the rich experiences of Malaysia's economic zone model, to restructure and revitalize her economic zone scheme for greater success. JEL Classifications: F21, H87, J24, L52, O14, O25 Keywords: Economic Zone, Globalization, Industrialization, Malaysia, and Bangladesh, INTRODUCTION Industrialization is a phase of a country's economic development in which industries grow faster and gradually come to play the leading role in the economy. This necessitates pursuing an [...]

Offshoring effects on domestic employment are regularly part of discussions on international economic policy. Some argue that offshoring--that is, basing some of a company's activities overseas to take advantage of [...]