Social and Behavioral Sciences Commons^™

Cross-Border Technology Investments In Recession, Juliana Yu Sun, Huanhuan Zheng

Research Collection School Of Economics

Utilizing industry-level foreign direct investment (FDI) from 72 source markets to 122 destination markets between 2003 to 2018, we evaluate how cross-border technology investments respond to economic recessions. We find that FDI embedded with intensive research and development (R&D) drops when the destination market is in a recession and the source market is in a normal state and recovers to the pre-recession levels when both destination and source markets are in recession. However, there is little evidence that recessions affect cross-border investments in other aspects of technology measured by the penetration of robots, intellectual property products and information and communications …

Are The Informal Economy And Cryptocurrency Substitutes Or Complements?, Rajeev K. Goel, Ummad Mazhar

Faculty Publications – Economics

This research considers a new dimension of the effects of the underground sector by examining the spillovers on cryptocurrency holdings. Cryptocurrencies offer a relatively greater ability to dodge taxes and ensure the anonymity of holders, providing attractive avenues for underground operators to stash their informal-sector earnings. Our results, based on data from more than 50 nations, show that a greater prevalence of the underground economy in a nation is indeed associated with greater cryptocurrency holdings. This result holds across an alternative measure of the shadow economy, and when the bi-directional causality between the shadow economy and cryptocurrency holdings is considered. …

Capital Nationality And Economic Development, Guilherme Klein Martins

Economics Department Working Paper Series

This paper reviews different literature strands and performs an empirical test to evaluate how capital ownership, particularly its nationality, might affect long-run economic develop- ment. Our results indicate that low and middle-income countries with larger foreign capital stock in 1980 had lower economic growth over the next 39 years. The estimations also indi- cate that these economies developed a less specialized export basket, which became relatively more concentrated in low-tech goods. The results are inverted to high-income economies, for which the effects are positive on GDP growth and export specialization and complexi- fication. The results are in line with the …

Cross-Border Technology Investments In Recessions, Juliana Yu Sun, Huanhuan Zheng

Research Collection School Of Economics

Utilizing industry-level foreign direct investment (FDI) from 72 source markets to 122 destination markets between 2003 to 2018, we apply a differences-in-differences approach to evaluate the response of technology FDI to recessions. We find that research and development (R&D) intensive FDI drops when the destination market is in recession and the source market is in a normal state, and recovers to the pre-recession levels when both destination and source markets are in recession. The result is particularly pronounced in deep and long recessions, during the propagation stage of recessions, and in destination markets with stronger intellectual property protection, looser FDI …

Foreign Direct Investment And Industrial Agglomeration: Evidence From China, Wen-Tai Hsu, Yi Lu, Xuan Luo, Lianming Zhu

Research Collection School Of Economics

This paper studies the effect of foreign direct investment (FDI) on industrial ag-glomeration. Using the differential effects of FDI deregulation in 2002 in China on different industries, we find that FDI actually affects industrial agglomeration neg-atively. As FDI brings technological spillovers and various agglomeration benefits, other forces must be at work to drive our empirical finding. We propose a simple theory that FDI may discourage industrial agglomeration due to fiercer competition pressure. We find various evidence on this competition mechanism. We also examine an alternative theory based on spatial political competition, but find no evidence sup-porting it. On industrial growth, …

Environmental Regulations And Foreign Direct Investment, Valri Nesbit

Student Papers in Local and Global Regional Economies

I am writing a literature review of whether stronger environmental regulations affects foreign direct investment (FDI). Logic would tell you that the FDI would go to those countries that have lower environmental regulations because this results in lower costs to the corporation overall. I am a firm believer that corporations meet the definition of a sociopath: “a person…whose behavior is antisocial and who lacks a sense of moral responsibility or social conscience.”¹ Therefore, my belief is that these sociopathic corporations, which are deemed to be people pursuant to Santa Clara County v. Southern Pacific Railroad Company,² will continue …

The Impact Of Mnc Involvement On The Lives Of Workers In Developing Economies Of Latin America, Gabriel Moss

WWU Honors College Senior Projects

It is clear that multinational corporations (MNCs) have significant impact in the growth trajectory of developing countries. The nature of this relationship, however, is heavily debated. What is the downstream impact from MNCs on the lives of workers in developing countries? Are countries perversely incentivized to repress and exploit their unskilled labor forces to attract investment? Do multinationals promote better working conditions and raise standards of living for workers? In this essay, I argue that multinationals have the potential to bring massive benefits to the working class in developing countries. If the government of the host country develops strong linkage …

Income Distribution, International Trade And Foreign Direct Investment With Heterogeneous Firms, Feifei Wang

FIU Electronic Theses and Dissertations

This dissertation investigates the factors that firms take into consideration when they decide in which manner to expand internationally (i.e. foreign direct investment and international trade). Another component of the investigation focuses on what types of firms benefit the most and what are the associated benefits with expanding internationally.

I investigate self-selection and learning-by-exporting hypothesis by applying matched sampling techniques and non-structural econometric models. Using a Chinese firm-level dataset, I find that firms that start exporting are more productive than non-exporting ones. Additionally, in most industries exporters become more productive in time.

I then investigate how income inequality leads firms …

East Asia, Investment, And International Law: Distinctive Or Convergent?, Beth A. Simmons

All Faculty Scholarship

International investment agreements (IIAs) are the primary legal instruments designed to protect and encourage foreign direct investment world-wide. This article argues that Asia has used IIAs just as much as have other regions of the world to attract foreign direct investment, but that Asia’s pattern of agreement provisions is somewhat distinctive. States in East and Southeast Asia have tended to enter into agreements that strike a balance somewhat more favorable to host states than to foreign firms, at least when compared to the rest of the world. This may be due to high growth in the region, which tends to …

Fire-Sale Fdi? The Impact Of Financial Crises On Foreign Direct Investment, Olga B. Stoddard, Ilan Noy

Faculty Publications

We analyze the evolution of foreign direct investment (FDI) inflows to developing and emerging countries around financial crises. We empirically examine the Fire-Sale FDI hypothesis and describe the pattern of FDI inflows surrounding financial crises. We also add a more granular detail about the types of financial crises and their potentially differential effects on FDI. We distinguish between mergers and acquisitions(M&A) and greenfield investment, as well as between horizontal (tariff jumping) and vertical (integrating production stages) FDI. We find that financial crises have a strong negative effect on inward FDI in our sample. Crises are also shown to reduce the …

Does Heterogeneity In Transfer Pricing Regulation Affect Foreign Direct Investment?, Quoc Hung Tran

Economics Faculty Publications

Does multinational firm take advantage of arbitrage opportunities when heterogeneity in transfer pricing regulations exist between home and host country? Using data on U.S. based multinational firms’ reinvestment earnings abroad as a proxy for FDI activity, provided by the BEA Survey of U.S. Direct Investment Abroad and the Balance of Payments Survey, we analyze the effect of transfer pricing regulation of multination firm FDI’s decision. The analysis results provide no empirical evidence that differences in transfer pricing regulation between home and host country affect FDI activity by U.S. based multinational firms. Host country’s specific characteristics such as market size, distant …

The Interaction Between Fdi And Infrastructure Capital In The Development Process, Farrokh Nourzad, David N. Greenwold, Rui Yang

Economics Faculty Research and Publications

This paper focuses on the possible interaction between foreign direct investment (FDI) and the host country’s infrastructure base. Its central hypothesis is that the effect of FDI on per capita real income depends, at least in part, on the size of the recipient country’s infrastructure. This hypothesis is tested in a panel of 46 countries and 5-year averages over the 1980–2000 period using the size of three types of infrastructure capital: telecommunication, power generation, and network of roads or highways. The results indicate that the size of the host country’s infrastructure base helps to improve the marginal effect of FDI …

How Foreign Firms Transformed Ireland’S Domestic Economy, Paul Donnelly

Articles

Today, Ireland is host to 1,033 multinational corporations. They directly employ 152,785 and account for 70 per cent or €122.5bn of exports. It’s a story that has its roots in the 1940s.

International R&D Transfer And Technical Efficiency: Evidence From Panel Study Using Stochastic Frontier Analysis, Miao Wang, M. C. Sunny Wong

Economics Faculty Research and Publications

We study the effect of foreign research and development (R&D) transferred through imports and foreign direct investment (FDI) on domestic technical efficiency using stochastic frontier analysis. Unbalanced panel results from a 77-country sample over 1986–2007 show that FDI- and imports-transferred foreign R&D have a significant impact on domestic country’s technical efficiency. Furthermore, we observe a complementarity between FDI-transferred R&D and domestic human capital. In other words, the domestic country needs to obtain a threshold level of human capital to benefit from FDI-transferred R&D. Other macro conditions such as infrastructure, political stability, and urbanization also help to improve the technical efficiency …

Fdi, Education, And Economic Growth: Quality Matters!, Miao Wang, M. C. Sunny Wong

Economics Faculty Research and Publications

In this paper, we revisit the results from the influential study by Borensztein et al. (Journal of International Economics 45:115–135, 1998), which argues that inward foreign direct investment (FDI) promotes the economic growth in a less developed host country only when the host country obtains a threshold level of secondary schooling. Borensztein et al. (Journal of International Economics 45:115–135, 1998) only focus on the quantity of education. We take into consideration both the quantity and the quality of education. We adjust the original schooling data in Borensztein et al. (Journal of International Economics 45:115–135, 1998) by two quality of education …

Three Essays On Fdi In China, Mingming Pan

College of Business: Dissertations, Theses, and Student Research

Foreign Direct Investment (FDI) has contributed a great deal to China’s extraordinary growth by injecting capital into the economy, creating jobs, transferring technology and knowledge, enhancing trade, bringing in competition for local enterprises, improving the quality of local labor and intermediate goods suppliers, and connecting China’s gradually opening economy to the global market. For over a decade, China has been the second largest recipient of inward FDI in the world behind the United States. In 2009, China received $95 billion, which is 8.5% of the world’s total. However, the large amount of inward FDI has been unevenly distributed across Chinese …

The Role Of Institutional Quality In Fdi Inflows In Sub-Saharan Africa, Mulugeta Kahsai, Yohannes G. Hailu, Chali Nondo, Peter V. Schaeffer

Regional Research Institute Working Papers

During the period 2000 to 2008, Africa’s collective GDP grew at an annual rate of 4.9 percent. Even though previous studies argue that strengthened and improved institutional quality is key determinant for attracting foreign direct investment to Africa, we find no evidence to that effect. Using a panel data for 45 Sub-Saharan African countries (SSH), we estimate the role of institutional quality (governance) in attracting FDI inflow during the 1996-2007 period. After controlling for country and time specific effects and the economic environment of the host country, we find no significant evidence of the impact of institutional quality on FDI …

The Effects Of Economic Factors In Determining The Transition Process In Europe And Central Asia, David A. Lopez

Award Winning Economics Papers

This paper examines how economic determinants affect foreign direct investment into a sample of Western European and transition countries from 1990 to 2003. The observed differences in the flow of foreign investment into the transition countries, relative to those in Western Europe, provokes the question of whether this phenomenon was determined by the economic factors present in those countries. Using a conceptual model constructed from economic factors that affect FDI inflows, this study considers the sample set for two sub-periods in the transition process, namely the early period from 1990 to 1998 and the later period from 1998 to 2003. …

Globalization And The Wage-Working Conditions Relationship: A Case Study Of Cambodian Garment Factories, Cael Warren

Economics Honors Projects

The wage premiums for firm-level foreign exposure (exporting and foreign ownership) have been well documented in the literature, and their potential sources have been studied in depth. Compensating differentials and efficiency wages are two distinct explanations (with radically different implications for worker welfare) for wage gaps that persist between firms despite controls for firm and worker characteristics. We use a comprehensive dataset of working conditions and wage compliance in Cambodia’s exporting garment factories to explore (1) the impact of foreign ownership on wages and working conditions, (2) whether the relationship between wages and working conditions within these exporting factories more …

Openness And The Efficiency Of Fdi: A Panel Stochastic Production Frontier Study, Farrokh Nourzad

Economics Faculty Research and Publications

This paper uses a stochastic translog production frontier to estimate technical inefficiency indices whose conditional mean is specified as a function of FDI and its interaction with openness of the economy. The model is estimated using an annual panel of 46 countries for the years, 1981–2001. The results suggest that increased FDI increases potential output in both developed and developing countries with the effect being more profound in the former. It is also found that increased FDI reduces technical inefficiencies the more open is the economy but that this effect holds only for developed economies. Thus qualified support is found …

Jobless Growth In The Central And Eastern European Countries, Özlem Onaran

PERI Working Papers

This paper estimates a labor demand equation based on the panel data of manufacturing industry in the Central and Eastern European Countries (the Czech Republic, Hungary, Poland, Slovakia, Slovenia, Lithuania, Bulgaria, and Romania) in order to test the effect of domestic factors (wages and output) and international factors (exports, imports, and FDI) on employment during the era of post-transition recovery. The findings indicate that employment does not respond to wages in more than half of the cases. The output elasticity of labor demand is mostly positive, but low, with a number of cases where employment is completely de-linked from output. …

Provincial Development In China: Lessons From Eu Regional Policy Experience, Phillip J. Bryson, Keren Sun

Faculty Publications

Regional development in the Chinese provinces and in the regions of the EU countries are evaluated and compared. Development efforts in southern Italy, northeast England and eastern Germany are reviewed along with EU, Community-wide regional development programs. Equity concerns suggest promotion of regional policy, but the pursuit of maximum national economic growth would avoid it, since it sacrifices some economic growth. The impact of FDI and domestic investments on individual Chinese provinces is compared with their impact in Europe. There is an implicit contrast between public sector regional development programs and more effective private foreign direct investments.

Foreign Direct Investment And Transition Economies: Empirical Evidence From A Panel Data Estimator, Kamal Upadhyaya

Economics & Business Analytics Faculty Publications

This paper identifies the factors that determine FDI inflows in the former socialist countries of Eastern and Central Europe. In our analysis, FDI inflows are modeled as a function of the market size (i.e., real GDP), inflation, the current account balance, the real exchange rate, openness and government regulation -- for the host country. Using data from 1995 to 2004, a panel data estimator suggests that the real exchange rate, openness of the economy and deregulation are the primary factors determining FDI inflows in these countries.

Foreign Aid, Fdi And Economic Growth In East European Countries, Kamal P. Upadhyaya, Gyan Pradhal, Dharmendra Dhakal, Rabindra Bhandari

Economics & Business Analytics Faculty Publications

This paper examines the effectiveness of foreign aid and foreign direct investment in the Czech Republic, Estonia, Hungary, Latvia, Lithuania and Poland. The model includes the labor force, capital stock, foreign aid and foreign direct investment, and is estimated using pooled annual time series data from 1993 to 2002. Before carrying out the estimation, the time series properties of the data are diagnosed and an error-correction model is developed and estimated using a fixed-effects estimator. The results indicate that an increase in the stock of domestic capital and inflow of foreign direct investment are significant factors that positively affect economic …

Wage Share, Globalization, And Crisis: The Case Of The Manufacturing Industry In Korea, Mexico, And Turkey, Özlem Onaran

PERI Working Papers

The aim of this paper is to analyze the changes in the wage share in manufacturing industry in Mexico, Turkey, and Korea in the era of globalization. The focus is on the one hand over the effects of globalization on the wage share , which are measured by the effects of international trade and FDI intensity of the economy. On the other hand, the process of opening up has been accompanied by major currency crises in most developing countries in the last decade, which has affected the wage share through exchange rate depreciation and economic recession. The paper develops a …

Infrastructure And Fdi Inflows Into Mexico: A Panel Data Approach, Andre V. Mollick, Rene Ramos-Duran, Esteban Silva-Ochoa

Economics and Finance Faculty Publications and Presentations

In December 1993, restrictions to foreign ownership across major Mexican economic sectors were abolished. This paper studies output, industrialization intensity, \"international infrastructure\", and government expenditures on infrastructure as determinants of FDI inflows into Mexican states over 1994-2001. We conduct a \"general to specific\" estimation strategy across Mexican states. Telephone lines appear to be very important to FDI as their coefficients are around 2.0 in Random Effects Models. Industrialization is also important, with coefficients varying from 0.62 to 0.67. Allowing for endogeneity between FDI and real output, dynamic GMM panels confirm the robust effects of telephone lines on FDI. International infrastructure …