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This paper provides a sectoral examination of the impact of trade policies and custom valuation procedures on estimating the dollar value of time varying import content of Japanese transplant automobiles. Using monthly data from 1985 to 1992, we introduce an error correction model (ECM) and a state space vector auto regression (SS-VAR) model to purify trade data of measurement errors induced by unobserveable prices and customs valuation procedures. Data show that US import of Japanese auto parts are elastic to the fleet of active Japanese automobiles in the U.S., inelastic to transplant production and that disequilibrium adjustments relative to transplant production are corrected in oneperiod. Further, changes in imports are responsive to the cyclical behavior of Big 3 production and the debt burden of automobile consumers. Moreover, we find that productivity trends in the automotive industry are not a significant determinant of imported parts. The model predicts that Japanese manufacturers will shift more production to the US in response to yen appreciation against the dollar. We show that import content decreased following the Fair Trade in Parts Act and the Omnibus Trade and Competitiveness Act of 1988, but increased shortly thereafter and predictions are that it will continue to increase. Therefore the empirical evidence suggests that direct trade policies designed to reduce the dollar value of import content and increase domestic sourcing of auto parts are not effective in the long run.

We identify strong cross-border institutions as a driver for the globalization of in-novation. Using 67 million patents from over 100 patent offices, we introduce novel measures of innovation diffusion and collaboration. Exploiting staggered bilateral in-vestment treaties as shocks to cross-border property rights and contract enforcement, we show that signatory countries increase technology adoption and sourcing from each other. They also increase R&D collaborations. These interactions result in techno-logical convergence. The effects are particularly strong for process innovation, and for countries that are technological laggards or have weak domestic institutions. Increased inter-firm rather than intra-firm foreign investment is the key channel.

Information asymmetries constitute a significant obstacle to capital flows across international borders, and in particular to flows of foreign direct investment (FDI) to emerging markets. Many governments aim to reduce information barriers by engaging in investment promotion activities. Despite potentially large benefits of FDI and popularity of investment promotion intermediaries (IPIs), relatively little is known about their effectiveness. This study uses data collected through the Global Investment Promotion Benchmarking (GIPB) exercise to examine whether higher quality of IPI services translates into higher FDI inflows. The analysis, based on information on 156 countries, suggests that countries with IPIs able to handle investor inquiries in a more professional manner and IPIs possessing higher quality Web sites tend to attract greater volume of FDI. These results are robust to using sector-level data and instrumental variable approach. (JEL codes: F21, F23, H11) Copyright The Author 2012. Published by Oxford University Press on behalf of Ifo Institute, Munich. All rights reserved. For permissions, please email: journals.permissions@oup.com, Oxford University Press.

We use a panel of 20 OECD countries over a 30-year period to investigate empirically the implications of international capital mobility for aggregate unemployment dynamics. To this aim, we employ standard regression analysis and dynamic simulations to illustrate the channels through which international capital mobility impacts unemployment adjustments to productivity shocks and in turn quantify its effect on unemployment volatility. We find that capital mobility plays a significant role in generating unemployment responses to idiosyncratic productivity shocks which are wider but less persistent. Moreover, the evidence we provide suggests that the responsive- ness effect dominates the persistence effect, implying a net increase in unemployment volatility due to higher international capital mobility. Finally, if we simulate the effects of an increase of international capital mobility of the same order of magnitude of that occurred in the OECD countries after the mid-80s, we obtain a rise in the volatility of unemployment rate which is comparable to that observed in those countries in the same years.

За сучасних тенденцій трансформації й розвитку міжнародної діяльності формуються нові умови функціонування базових її ланок – окремих підприємств, управління якими у міжнародному контексті потребує не тільки визначення стратегічних пріоритетів розвитку, а перш за все пошуку джерел, що забезпечать цей розвиток, сприятимуть збільшенню ефективності міжнародної діяльності підприємства, відкриттю нового рівня міжнародних можливостей реалізації власного потенціалу. У статті викладено теоретичні засади інвестиційного забезпечення розвитку міжнародної діяльності підприємства. Розглянуто підходи різних наукових шкіл та течій до трактування поняття «інвестиції». Визначено сутність інвестиційної діяльності, її роль в сучасних умовах та вплив на діяльність суб’єктів господарювання. Розглянуто сутність міжнародної діяльності підприємства. У роботі було проаналізовано систему механізмів інвестиційного забезпечення, в якій виокремлено такі три основні групи як: механізми мобілізації власних коштів, механізми позичених коштів, механізми залучених коштів. Запропоновано модель функціонування системи інвестиційного забезпечення міжнародної діяльності підприємства, у якій акцентується увага на необхідності інвестиційного забезпечення систем дослідження та розробок експортоорієнтованих продуктів та створення на цій основі експортоорієнтованих виробництв. Авторами досліджено та виявлено вплив набору факторів, які визначають особливості інвестиційної підтримки міжнародної діяльності підприємства. Виокремлено зовнішні та внутрішні фактори, які впливають на міжнародну діяльність підприємства. У роботі було розглянуто поняття «інвестиційного потенціалу». Проаналізовано види інвестицій залежно від цілей інвестування і виокремлено прямі, портфельні та інші інвестиції. Проаналізовано динаміку прямих іноземних інвестицій в Україну з 2009 р. по 2018 р. та їх вплив на здійснення міжнародної діяльності. Запропоновано заходи економічного сприяння у системі інвестиційного забезпечення, що здатні стимулювати міжнародну діяльність підприємства.. Визначено роль інвестицій у досягненні цілей розвитку міжнародної діяльності підприємства. According to the current trends of transformation and development of international activity, new conditions for the functioning of its basic units - individual enterprises, whose management in an international context requires not only the definition of strategic development priorities, but, above all, the search for sources that will ensure this development, will contribute to increasing the efficiency of international activities of the enterprise , the opening of a new level of international capabilities to realize its own potential. The article outlines the theoretical principles of investment support for the development of international activity of the enterprise. The approaches of different scientific schools and currents to the interpretation of the concept of "investment" are considered. The essence of investment activity, its role in modern conditions and influence on activity of business entities are determined. The essence of international activity of the enterprise is considered. In the work the system of mechanisms of investment support was analyzed, in which the following three main groups were identified as: mechanisms of mobilization of own funds, mechanisms of borrowed funds, mechanisms of borrowed funds. The model of functioning of the system of investment support of the international activity of the enterprise is proposed, in which the emphasis is placed on the need for investment support of research and development systems for export-oriented products and the creation of export- oriented production on this basis. The authors investigate and identify the influence of a set of factors that determine the peculiarities of investment support of the international activity of the enterprise. The external and internal factors that influence the international activity of the enterprise are distinguished. The concept of "investment potential" was considered in the work. The types of investments are analyzed depending on the purposes of investment and the direct, portfolio and other investments are distinguished. The dynamics of foreign direct investment in Ukraine from 2009 to 2018 and their assistance in the system of investment support that can stimulate the international activity of the enterprise are offered. The role of investments in achievement of the goals of development of international activity of the enterprise is determined.

The European Commission has been supporting a transition from a system of separate accounting to formula apportionment. After its 2011 draft directive was rejected by the Council, the Commission presented two new draft directives in October 2016, one stipulating rules for a common tax base and another the terms for consolidation and apportionment. The aspired system of unitary taxation is considered more resistant to profit shifting and assumed to reduce compliance costs. However, there are also doubts about the extent, to which such a system will eradicate tax-planning activities of MNEs. Other concerns have arisen about the practical issue of enforcing uniform rules for asset valuation throughout the member states. We use a dynamic model of tax accounting based on neoclassical investment theory and effective tax rates to determine to what extent formula apportionment mitigates the efficiency of typical profit-shifting strategies. We focus on the roles of transfer pricing and intragroup debt financing (through loans and leases) under both separate accounting and formula apportionment. We also take into account a possible leeway for inconsistent valuation. Our results show that instead of eliminating tax planning strategies, the proposed system might simply induce a shift from manipulating reported profits to influencing the apportionment key. Inside the European Union, the CCCTB may be able to render thin capitalisation rules and transfer pricing documentation redundant. However, formula apportionment invites for new forms of tax planning. It is therefore essential to give credit to these new kinds of tax incentives when implementing a system of unitary taxation.

Current data provide macroeconomic information for a large number of countries and for a long period of time (macro panels). This causes that in these panels slope heterogeneity and cross-section dependence (CSD) are a rule rather than the exception, leading to fixed effects slope estimators to be biased and inconsistent. This paper analyzes gross capital flows to emerging economies employing the Augmented Mean Group (AMG) model to account for slope heterogeneity and CSD. The results suggest that the AMG performs better than the fixed effects model. In addition, this work also suggests that not only the heterogeneity across countries is important to analyze capital inflows to emerging economies, but also the different responses of the different types of capital inflows to movements in macroeconomic variables.

Why doesn't capital flow into fast-growing countries? In this paper, we provide a quantitative framework incorporating heterogeneous producers and underdeveloped domestic financial markets to study the joint dynamics of total factor productivity (TFP) and capital flows. When an unexpected once-and-for-all reform eliminates non-financial distortions and liberalizes capital flows, the TFP of our model economy rises gradually and capital flows out of it. The rise in TFP reflects efficient reallocation of capital and talent, a process drawn out by frictions in domestic financial markets. The concurrent capital outflows are driven by the positive response of domestic saving to higher returns, and by the sluggish response of domestic investment to the higher TFP--the latter being another ramification of domestic financial frictions. We use our model to analyze the welfare consequences of opening up capital accounts. We find that the marginal welfare effect of capital account liberalization is negative for workers and positive for entrepreneurs and wealthy individuals.

In the context of the recent deceleration of growth in emerging Europe, we reassess empirically the effect of foreign direct investment (FDI) inflows on economic growth in Central and Eastern European countries (CEECs) through an analysis carried out over the period 1993-2013. In a first step, we show that the main domestic determinants of FDI inflows are the market size, risk premia, unit labour costs, the openness, as well as progress in structural reforms (mainly related to privatisation process and banking sector) and institutional reforms (namely the lack of trade barriers, the ability for individuals to accumulate private property and progress in fighting corruption) in the host economy. Moreover, the macroeconomic conditions in the euro area also play an important role in explaining FDI flows to the region. In a second step, we analyse the impact of FDI inflows on economic growth. Our findings add to the strand of literature pointing out a positive effect of FDI inflows on growth. We consider the occurrence of the 2007 and 2011 crises and show their negative impact on the FDI - economic growth link, both crises reducing the positive impact of FDI on economic growth.

Studies of the relationship between FDI and domestic investment levels reachcontradictory findings. We revisit this empirical relationship and argue that someof the conflicting evidence may be explained by the use of poor proxies for the true underlying variables and by questionable methodological choices. Using more appropriate proxies and statistical models, we conclude that FDI inflows contributepositively to domestic investment levels. We also find weak evidence that goodgovernance, proxied with using the Worldwide Governance Indicators and tworent seeking indicators we built, encourages investment. Theoretical argumentssupport either positive or negative interaction effects of good governance and FDIon investment, invoking either technological spillovers or rent seeking behaviour.We tend to conclude that the negative rent seeking effect is dominant.

espanolAunque durante mucho tiempo se ha reconocido que la gestion activa es un tema importante en el area de la evaluacion del rendimiento de los fondos de inversion, el consenso alcanzado acerca de la contribucion al valor anadido de los fondos por las habilidades de los directivos es limitado. Este estudio intenta explorar tanto las caracteristicas de los gestores como las de los propios fondos en si mismos con el fin de entender su influencia en la eficiencia conseguida para una muestra de fondos de inversion espanoles. Estos temas son explorados a traves de un enfoque de dos etapas, teniendo en cuenta los estimadores de fronteras parciales (orden-m y el orden α-) para evaluar el desempeno en la primera etapa, y asi como un enfoque de regresion cuantil para analizar los determinantes de la eficiencia en la segunda etapa. Nuestros resultados son relevantes especialmente desde el punto de vista de los inversores, al encontrar diferencias notables entre la influencia de los gestores de los fondos y las propias caracteristicas de los fondos. Nuestro analisis proporciona algunos argumentos como guia en la seleccion de fondos, asi como algunas caracteristicas de los gestores a tener en cuenta. Ademas, algunas de las diferencias de rendimiento entre los fondos encontrados son complejas, debido a que tanto la magnitud de los coeficientes de regresion estimados como su significado varian en funcion del cuantil de la distribucion del rendimiento de los fondos evaluado. EnglishWhile it has long been recognized that active management is an important issue in the area of mutual fund performance, little consensus has been reached about the value managers’ abilities can add. This study attempts to explore both fund and manager characteristics in order to understand their influence on the efficiency achieved for a sample of Spanish mutual funds. We explore these issues in a two-stage approach, considering partial frontier estimators (order-m and order-α) to assess performance in the first stage, and regression quantiles to isolate the determinants of efficiency in the second stage. Our findings shed light mainly on investors’ concerns, since differences do indeed arise among both funds and managers. Our analysis provides some arguments as a guide in selecting funds and some managerial features to be taken into account. In addition, some of the performance differences found among funds are rather intricate because both the magnitude of the estimated regression coefficients and their significance varies depending on the quantile of the distribution of fund performance.

We investigate the importance of worldwide demographic evolutions in shaping capital flows across countries and over time. Our lifecycle model incorporates cross-country differences in fertility and longevity as well as differences in countries’ ability to borrow inter-temporally and across generations through social security. In this environment, global aging triggers uphill capital flows from emerging to advanced economies, while country-specific demographic evolutions reallocate capital towards countries aging more slowly. Our quantitative multi-country overlapping generations model explains a large fraction of long-term capital flows across advanced and emerging countries.

This paper presents and describes a new dataset of capital control restrictions on both inflows and outflows of 10 categories of assets for 100 countries over the period 1995 to 2013. Building on the data first presented in Schindler (2009) and other datasets based on the analysis of the IMF's Annual Report on Exchange Arrangements and Exchange Restrictions (AREAER), this dataset includes additional asset categories, more countries, and a longer time period. The paper discusses the manner in which information in the AREAER is translated into a usable dataset. The paper additionally characterizes the data with respect to the prevalence of controls across asset categories, the correlation of controls across asset categories and between controls on inflows and controls on outflows, the aggregation of the separate categories into broader indicators, and the comparison of this dataset with other indicators of capital controls.

Several recent studies document that the extent to which banks transmit shocks across borders depends on the type of foreign activities these banks engage in. This paper proposes a model to explain the composition of banks’ foreign activities, distinguishing between international interbank lending, intrabank lending, and cross-border lending to foreign firms. The model shows that the different activities are jointly determined and depend on the efficiencies of countries’ banking sectors, differences in the return on loans across countries, and impediments to foreign bank operations. Specifically, the model predicts that international interbank lending increases and lending to foreign nonbanking firms declines when banks’ barriers to entry rise, a hypothesis supported by German bank-level data. This result suggests that policies that restrict the operations of foreign banks in a country may move activity onto international interbank markets, with the potential to make domestic credit overall less resilient to financial distress.

The welfare effects of capital market integration are examined under a model of tax competition with two asymmetric countries. The asymmetry is expressed through the labor market: one country has a perfect labor market whereas the other country is unionized. Our results show that the welfare effects of capital market integration are different depending on whether governments play an active role in attracting capital: in the absence of active governments, the capital market integration benefits the country with a competitive labor market and harms the unionized country. If the governments are active and compete for mobile capital using tax/subsidy, the market integration benefits both countries. The government fs incentive to participate in a tax/subsidy game is also examined in the integrated capital market. We find that the unionized country always prefers to participate in the tax/subsidy game, but the non-unionized country avoids the game if it is a capital importer.

This paper provides preliminary evidence on the use of non-equity modalities by transnational corporations (TNCs) in the hotel industry and discusses the conditions that may favor the choice of one of these modalities as a substitute for foreign direct investment (FDI). Based on secondary data and interviews with experts of the hospitality industry, the study looks at the expansion of the major international hotel chains and focuses on the issues of control, transferability of resources and institutional framework to explain the choice of a non-equity governance form. Concentrating on three of the main growth markets in the hospitality sector, China, India and the United Arab Emirates (UAE), the study highlights some implications of non-equity modalities in terms of host country impact, emphasizing the issues of skill development, knowledge transfer and procurement linkages, and identifies areas for further research.

Despite the microeconomic evidence supporting the superior idiosyncratic productivity of multinational firms (MFN) and their affiliates, cross-country studies fail to find robust evidence of a positive relationship between Foreign Direct Investment and growth. In order to study the aggregate implications of MNF entry and production, I develop a Dynamic Stochastic General Equilibrium model with firm heterogeneity where MNF sort according to their own productivity. Entry and production of MNF contribute to aggregate productivity growth at decreasing rates over time but potentially crowd out domestic producers due to increased product and factor market competition. I compare the aggregate benefit of productivity contributions with the cost of crowding out and argue that composition and crowding-out effects can help explain the conflicting evidence on the impact of Foreign Direct Investment on growth.

The purpose of this paper is to empirically explore two dimensions of the firm hierarchy of international market-specific linkages, using data on Swedish manufacturing firms from 1997 to 2007. First, we investigate the productivity ordering with respect to three international linkages; importing, exporting and investing abroad. Second, we explore whether differences in the productivity ordering across industries correlates with industry and country characteristics. Our findings support a general productivity hierarchy from importing to exporting and from exporting to investing abroad, as well as from a low to a high number of linkages (measuring the complexity of firms’ international linkages). However, an industry-by-industry examination shows that the hierarchical structure is only generally upheld when it comes to the number of international linkages, while the ordering of import, export and investment linkages does not exhibit the same regularity across industries. Extending the analysis, we find that the lack of a hierarchical structure is more likely in industries focusing on larger and less distant markets.

Fiscal considerations may shift governmental priorities away from environmental concerns: Finance ministers face strong demand for public expenditures such as infrastructure investments but they are constrained by international tax competition. We develop a multi-region model of tax competition and resource extraction to assess the fiscal incentive of imposing a tax on carbon rather than on capital. We explicitly model international capital and resource markets, as well as intertemporal capital accumulation and resource extraction. While fossil resources give rise to scarcity rents, capital does not. With carbon taxes the rents can be captured and invested in infrastructure, which leads to higher welfare than under capital taxation. This result holds even without modeling environmental damages. It is robust under a variation of the behavioral assumptions of resource importers to coordinate their actions, and a resource exporter's ability to counteract carbon policies. Further, no green paradox occurs - instead, the carbon tax constitutes a viable green policy, since it postpones extraction and reduces cumulative emissions.

Although cross-border bank lending has fallen sharply since the crisis, extending our bank ownership database from 1995-2009 up to 2013 shows only limited retrenchment in foreign bank presence. While banks from OECD countries reduced their foreign presence (but still represent 89% of foreign bank assets), those from emerging markets and developing countries expanded abroad and doubled their presence. Especially advanced countries hit by a systemic crisis reduced their presence abroad, with far flung and relatively small investments more likely to be sold. Poorer and slower growing countries host fewer banks today, while large investments less likely expanded. Conversely, faster host countries’ growth and closeness to potential investors meant more entry. Lending by foreign banks locally grew more than cross-border bank claims did for the same home-host country combination, and each was driven by different factors. Altogether, our evidence shows that global banking is not becoming more fragmented, but rather is going through some important structural transformations with a greater variety of players and a more regional focus.

The paper discusses the trajectories of the Greek public deficit and sovereign debt between 1980 and 2010 and its connection to the political and economic environment of the same period. We pay special attention to the causality between the public and the external deficits in the period after 1995, the post–Maastricht Treaty period. We argue that, due to the European monetary unification process and the adoption of the common currency, causality ran from the external deficit to the public deficit. This hypothesis is tested econometrically using both Granger causality and cointegration analyses. We find empirical support for this hypothesis.

__Abstract__ We find that investor sentiment should affect a firm's employment policy in a world with moral hazard and noise traders. Consistent with the model's predictions, we show that higher sentiment among US investors leads to: (1) higher employment growth worldwide; (2) lower labor productivity, as the growth in employment is not matched by real value added growth; and (3) positive wage growth in countries with a greater proportion of high-skill labor, but negative wage growth otherwise. We also find evidence that sentiment induces greater labor instability during financial crises, which sheds new light on the view that financial development has a "dark side". Overall, the results suggest that sentiment has real effects, especially in countries that attract more foreign direct investments from the US and that are perceived as more popular among US investors.

Paper downloadable at: http://ssrn.com/abstract=2399390; We study portfolio allocation in the international financial market when investors exhibit ambiguity aversion towards assets issued in foreign locations. Entrepreneurs located in each country have access to a risky technology and want to attract capital. We characterize contracts issued by firms in such an environment. Increases in the variance of the risky production process causes firms to increase the variable payment (equity) offered to investors. On the other hand, increases in investor ambiguity lead to less risk-sharing. Entrepreneurs located in countries with low levels of domestic wealth issue assets with a higher fixed payment and a lower risky payment. As a result, they are exposed to higher volatility per unit of consumption as they finance themselves relatively more through debt than equity. An increase in ambiguity or ambiguity aversion that characterizes crises may explain flight of capital to capital-abundant countries - dubbed sometimes as "flight to quality".

none 2 si Inventors and organizational assets are inputs of inventive activities which are often provided at a global scale, where countries might specialize in the provision of one or the other type of inputs. We introduce a new patent-based metric, the ‘inventor balance’, to quantify this type of functional specialization, which we discover to be considerable, and we propose a conceptual framework to explain it. We observe a progressive ‘decoupling’ of national sub-systems providing respectively inventors and organizational assets. Moreover, we find that countries with a high level of innovativeness relative to their economic development, high technological specialization, and strong individualistic cultural traits, contribute relatively more inventors than organizations to the global production of inventions. mixed Picci, Lucio; Savorelli, Luca Picci, Lucio; Savorelli, Luca

Following the introduction of the one-child policy in China, the capital-labor (K/L) ratio of China increased relative to that of India, and, simultaneously, FDI inflows relative to GDP for China versus India declined. These observations are explained in the context of a simple neoclassical OLG paradigm. The adjustment mechanism works as follows: the reduction in the growth rate of the (urban) labor force due to the one-child policy permanently increases the capital per worker inherited from the previous generation. The resulting increase in China's (domestic K)/L thus "crowds out" the need for FDI in China relative to India. Our paper is a contribution to the nascent literature exploring demographic transitions and their effects on FDI flows.

This article examines the problems of the defining investment activity of natural persons in the Russian Federation and in the world community and provides offers on its stimulation. In modern Russia, much attention is paid to the taxation policy in the line of stimulation of enterprises investment activity. Thus, an extremely important task is that of state stimulation of investments in the creation and development of the profitable enterprises. In the article, we consider the issue of creating a favorable taxation climate for innovation activity. The taxation system of the Russian Federation should provide the possibility for the creation of a demand for investments in new technologies, equipment modernization and introduction of research results. Human capital is the main factor of economic development. Nowadays, negative trends exist in the development of human potential, characterized by a low quality and decrease of the social education services accessibility level.

The study finds the impact of the percentage of total annual sales of a firm paid as informal payments to public officials (bribes) on foreign ownership of firms in Africa while controlling for other variables outside the country of origin of investment. The study used secondary data from the World Business Environment Survey (WBES) conducted by the World Bank. In all 3,290 firms made up of the manufacturing, services and retail sectors are included in the analysis. The Tobit and probit estimation techniques were used. The results indicate that the percentage of total annual sales of the firm paid as informal payments to the public officials has a negative and highly significant impact on foreign ownership of firms in Africa. African leaders should therefore institute policies to control corruption in order to boost foreign investors’ confidence in their economies.

During the Euro Area crisis contractions in international capital flows occurred along with a high level of economic uncertainty. While both factors are able to trigger or amplify economic shocks posing a threat for economic activity, it is a natural question whether they are related. The aim of this paper is to analyse the link between different measures of uncertainty and episodes of extreme capital flows for the EMU-12 countries using gross capital flows. We find that country-specific risk factors seem to play an important role in indicating periods of extreme capital flows. Moreover, country-specific uncertainty seems to be more relevant for foreign direct investors and for those in stressed countries of the Euro Area.

Much discussed and analyzed globalization is a multidimensional and complex process having today a significant magnitude as compared to the past, manifested through various forms of internationalization of production, foreign direct investment (FDI) flows, transnational corporations (TNCs), technology transfers, capital movements, migration flows, amplifying competition between investors and the connections between markets. The complexity phenomenon of globalization contributes to the diversification of opportunities for the development of national economies through effects in economic, political, social, technological, cultural sphere, intensifying the economic and financial relationship between economies and the interdependence between them. The purpose of the current attempt of research is to analyze the link between FDI and globalization, the paper focusing on FDI as one of the most powerful evidence of economic globalization.

Countries with weaker domestic investor protection hold less diversified international portfolios. An equilibrium business cycle model of North-South capital flow with corporate governance frictions between outside investors and corporate insiders explains this phenomenon through two channels. First, weak governance leads to concentrated ownership in the South because international diversification by insiders is penalized by lower stock market valuation. This reduces the float portfolio, or the supply of South assets. Second, weak governance tilts the demand of South outside investors towards domestic assets to hedge labor income risk. This is due to a higher share of labor in income, which increases labor income risk. In addition, the dynamics of investment under insider control leads relative dividend and labor income to be more negatively correlated in the South, making domestic assets a better hedge against local labor income risk. I find that the insider ownership and hedging channels are responsible for at least 29% and 11%, respectively, of the cross-country variation in international diversification. Thus, weak institutions lower international diversification primarily through concentrated ownership of firms, with outsider hedging also playing a quantitatively significant role.

Foreign Direct Investment originating from East, Southeast, and South Asian developing countries has increased significantly since 1980. This paper examines the extent and determinants of Foreign Direct Investment outflows from these countries between 1980 and 2011. We use selected home country-specific macroeconomic variables and identifies the key determinants of Foreign Direct Investment outflows using correlation and regression analysis. The results show that Foreign Direct Investment outflows are closely associated with high levels of Gross Domestic Product, high domestic savings, large foreign reserves, export orientation, and relatively large Foreign Direct Investment inflows in the source countries, with the strength and importance of each factor varying with the level of development. Our main conclusion is that, although non-traditional Foreign Direct Investment outflows have so far been confined to a limited number of developing countries, mostly Asian, other developing countries could also become capital exporters with a supportive international environment and appropriate domestic policies.

The purpose of this analysis is to analyse the connection between foreign direct investments and economic growth in transition economies during a period of increased integration of financial systems in the global financial system. The research focuses on the relationship between foreign direct investments and economic growth during 1970-2013, by means of methods such as the graphic, the regression and the correlation ones. The research findings show that there is a direct and strong connection between the inward financial flows of foreign direct investments and the GDP during the period under analysis in transition economies. In transition economies, a high inward flow of foreign direct investments leads to an increase of the Gross Domestic Product per capita, while a positive development of the standard of living will attract new inward FDI flows, since transition economies are seen as attractive recipients/hosts for foreign direct investments.

The aim of this paper is to assess the role of human capital in attracting FDI in the light of selected empirical studies conducted in Poland and globally. The literature on factors determining FDI location, including those relating to the importance of human capital, is dominated with studies at national or supranational level. Attracting foreign investment has become a key component of national strategies for the CEE countries. The paper makes an attempt to assess the relevance of human capital for FDI inflow at regional and local levels in Poland. At the same time, results of analyses were contrasted with quantitative surveys conducted in Central and Eastern Europe. Investing in education and human capital is important for creating good climate for investment. Evidence shows that achieving a certain minimum level of education is the precondition for a country to attract and maintain foreign direct investment and maximise indirect effects connected with human capital and resulting from the presence of businesses with foreign capital and maximise indirect effects connected with human capital and resulting from the presence of businesses with foreign capital. We should also stress that such a minimum is different for different sectors of the economy. Results of the study conducted in the Lodz Region demonstrated that human capital is an important factor, which attracts FDI to the region.

The international portfolio diversification is a function of correlation of equity markets across countries and the amount of correlation one market has with another, decides the scope of portfolio diversification. The market having high correlation with other markets generally has less scope for portfolio diversification. This research study investigated the existence of long run portfolio diversification benefits and opportunities of eight emerging stock markets in Asia and three top, benchmark index of Developed Markets. Models such as Factor Analysis, Principal Component (PC) and Maximum Likelihood (ML), Correlation Matrix and Graphical Price Movement Diagram were used for estimating the portfolio diversification opportunity and benefits. It is suggested from overseas portfolio diversification analysis that in Asian emerging stock markets (especially China, India, Malaysia, Taiwan, Indonesia and Thailand), there are good opportunities for overseas portfolio diversification and the investors may earn high return.

Due to the extent of markets globalization and of cross-border fragmentation of world production, the international value-added chains development brought about new challenges for emerging countries, many from SEE area, including Romania. The benefits for host countries arising from global production relocating on their territory could be significant in terms of employment, but maintaining active and even enriching the local work skills and cultural heritage. At the same time, these international transactions (through processing trade and/or FDI inflows) create vulnerabilities at the local level. The risks for host countries associated to other areas relocation of production could be mitigated by developing innovative and entrepreneurship heritage as drivers of sustainable growth and post-crisis economic recovery.

Martin Stuart ("Marty") Feldstein, currently George F. Baker Professor of Economics at Harvard University and President Emeritus of the National Bureau of Economic Research, Inc. (NBER), is an American economist who has made important contributions to public finance, macroeconomics, international economics, social insurance, health economics, the economics of national security, and many other fields of economics, trained a large number of prominent economists, served as President of the National Bureau of Economic Research for some thirty years, and served as President Ronald Reagan's chief economic advisor.

The controversies that trailed whether direct impact of Foreign Direct Investment (FDI) on growth are conditional on a certain intermediating links or not, has made an inquiry into the likely mediating links in the FDI growth space a recurring subject of discourse.While the importance of institution has prominently featured as playing a vital role on the one hand, economic freedom (a key institutional component) has consistently been elected, as a good candidate surrogate on the other hand. It is against this backdrop this study examines the effect of FDI inflow on economic performance in the SSA region giving prominence to economic freedom. The results support the view that economic freedom is germane in influencing the economic-wide performance in the region but have insignificant effects on the different sector performances. It is recommended that economic freedom be given priority in the region and FDI should be attracted to other sectors other than the primary sector, as it is the case.

The paper studies the role of incentives provided by local government units (LGUs) in attracting foreign direct investment (FDI) to Poland’s Lodz province. The authors draw conclusions based on the results of a direct study using two types of questionnaires, one for foreign investors in the province and the other for LGUs. To ensure the accuracy of the study, the authors conducted an array of statistical surveys and tests. The eta correlation coefficient was among the most important measures, the authors say. It was used to assess the relationship between the inflow of FDI to Lodz province and the investment incentives offered by local government. The method helped verify a hypothesis concerning the significance of statistical relationships between the analyzed variables. The obtained results demonstrate that most LGUs were interested in attracting investors, both Polish and foreign, the authors note. Incentives targeted exclusively at foreign investors were rare, according to the authors. Financial incentives were offered by only 7% of the districts and counties. Tax relief and allowances in property fees and local charges were the most popular types of financial incentives. Many LGUs resorted to various promotional methods. The results of the study show that investment incentives were of secondary importance to the inflow of FDI to Lodz province, the authors conclude. Nor was this kind of support a key factor behind the decisions of foreign investors to continue operating in the region.

In this article, we analyse the impact on domestic employment resulting from outward FDI performed by Spanish firms, using industry data for the period 1995–2011. Together with the effects on the total employment, we differentiate the effects according to the particular groups of countries and activities to which those FDI outflows are addressed. In addition, the impact of outward FDI on the demand for labour is also analysed separately for high and low skill levels of the labour force.

Cet article evalue l’empreinte economique et financiere de la Chine en Afrique. Les echanges ont ete « gagnant-gagnant » pour les exportateurs africains de petrole et de produits miniers qui ont beneficie de la hausse des cours et diversifie leurs debouches ; dans les annees a venir, d’autres pays pourraient en beneficier. En investissant en Afrique, les entreprises chinoises ont privilegie les mines et le petrole, et leurs investissements manufacturiers sont limites. Les entreprises chinoises sont tres presentes dans la construction ou elles beneficient de l’appui financier chinois. En moins de dix ans, la Chine est devenue le premier creancier de l’Afrique du fait de son aide, proche de l’aide francaise, et plus encore de ses credits. Son empreinte financiere est offshore car ses credits ne transitent pas par les systemes financiers africains. On assiste a l’utilisation croissante du RMB dans les echanges bilateraux. En conclusion, l’article propose un indicateur synthetique de l’empreinte chinoise dont l’importance est assez correlee a l’essor des economies.Classification JEL : F21, O16, O55.

This study is intended to demonstrate that the downturn in fixed capital formation and investment surpassed the decline in GDP; among the OECD countries Hungary witnessed the 9th largest shortfall of the investment rate compared to pre-crisis levels. The growth rate of Hungarian working capital outflows surpassed that of FDI inflows. The service fee payment of PPP investment contributed to the budget deficit by around 0.5 per cent of GDP per annum. The structure of whole-economy fixed investment underwent a considerable transformation: manufacturing saw a spectacular expansion, while the share of public administration and water supply grew to a lesser degree. The contribution of real estate, electricity and gas supply, education and transportation decreased markedly. The structural changes in public sector investment are reflected in the output of fixed capital formation, which increased by 2.1 in the central budget and by 12.3 per cent at local governments. The total amount of investment grants doubled in the period between 2009 and 2013. In the sector of non-financial corporations, the ratio of grants to GDP rose to 1.3 per cent in 2011, 1.4 per cent in 2012, and 1.9 per cent in 2013 compared to 1.2 and 1.1 per cent in 2009 and 2010, respectively. Besides net EU transfers, the expansion of grants was also an important contributor to the upswing in investment activity in 2013–2014.

Les grands groupes français se sont fortement internationalisés depuis dix ans. En particulier, la contribution de leurs filiales étrangères a représenté plus des deux tiers de leurs résultats nets courants en 2012 et 2013, contre un peu plus de la moitié de 2005 à 2007.

After decelerating for two years, in 2009 the Mexican economy suffered a contraction only matched, in its modern history, by the one recorded in 1995, in the wake of the peso crisis of December 1994. As in the latter crisis, the economy immediately bounced back, posting positive growth in 2010. Compared with the sharp rebound of exports, though, the overall recovery was weak, with GDP and industrial production surpassing (barely, in the latter case) their pre-crisis levels only in 2011. Motivated by these observations, the paper studies the transmission channels behind the 2009 recession in Mexico, the reasons for the weakness of the 2010?2011 recovery, and ?based on that analysis? some of the risks the country faces for sustaining stronger economic growth in the future.

This study contributes to the literature on FDI in Latin America using cluster analysis, a technique rarely employed in studies on this topic, to examine the FDI performance of Latin American countries. The empirical findings reveal three clusters in 2011, compared to just two in 2005. The cluster with better FDI performance (Chile, Panama, Uruguay, and Costa Rica) also performs better in terms of variables such as market size, trade openness, and human capital. Between 2005 and 2011 Argentina left the best-performing cluster and the cluster with poorer performance split into two, indicating heterogeneous evolution of economies in the region.

The changing direction of foreign direct investment towards developing countries has been attracting more attention in recent literature. As one possible source of the changing direction of FDI, the relationship between FDI inflows and some indicators of business friendliness (investment climate) of countries is investigated in this paper. The study covers the years from 2004 to 2013 and mainly focuses on developing countries. The results show that countries with better records of doing business tend to receive more FDI inflows. Improvements in the selected ease of doing business indicators, such as starting a business, protecting investors, and easiness of international trade, have a significant explanatory power in determining higher FDI flows to developing countries.

The aim of this paper is to support a methodology proposal for the analysis of the impact on commercial globalization trend in relation to the internationalization of Mexicans firms. Also this paper analyzes the advantage the Mexican firms took in the liberalization agenda of the Mexican government with the multilateralism and regionalism policies. For this purpose, the statistic descriptive modeling methodology is used to relate grow of the internationalization of the Mexican firms. The impact in the foreign investment of the main multinationals in Mexico is forcing them to centering in competitive productive processes and improving their internal organization, innovation and development.

Competition for foreign direct investment (FDI) among developing countries has intensified in recent years. Using a sample of 68 developing countries across different regions, with data from 1975-2005, this paper investigates whether Latin America and the Caribbean (LAC) differs from non-LAC regions in regard to determinants of FDI; the evidence suggests that there are differences. In particular, the stock of infrastructure attracts FDI to LAC and constraints on the executive and high debt discourage FDI to non-LAC. These findings are robust to sample size, different estimators, endogeneity, and country fixed effects.

An endogenous growth model with two goods, tradable (manufactur- ing) and non-tradable (non-manufacturing) is presented. Domestic technological knowledge is produced only in the tradable sector. This knowledge overflows into the non-tradable sector. The government is- sues external debt to finance part of its spending on tradable goods. The domestic interest rate equals the world interest rate plus the coun- try risk premium. The country risk depends positively on the level of external public debt. Households can borrow abroad and have an ex- ternal credit constraint. An inverted U-shaped nonlinear relationship between the external public debt to GDP ratio and the growth rate is obtained in the steady state. There is empirical evidence showing the existence of this non-linearity between public debt and growth, for both developing and developed countries.

This paper highlights the role of international mergers and acquisitions in corporate integration. The factors that stimulate mergers and acquisitions activities bring real changes in the world economy. Mergers and acquisitions are a form of expansion: mergers can take place either as a statutory merger or consolidation and minority, majority or full acquisitions dominate the international market. It is very important to not confuse the meaning of the two terms. Multinational companies are forced by the competitive environment to adopt new strategies to penetrate a particular market and decrease the position of competition on global market or to counteract competitor action on the other market. Cross-border M and A is functionally classified in horizontal, vertical, concentric and conglomerate. The balance between these types of M and A has been changing over time and the distinction among these four categories is not always clear-cut.