minimum wages and training revisited theory predicts that minimum wages will reduce employer provided on the job training designed to improve workers skills on the current job but it is ambiguous regarding training that workers obtain to qualify for a job we estimate the effects of minimum wages on both types of training received by young workers exploiting cross state variation in minimum wage increases much of the evidence supports the hypothesis that higher minimum wages reduce formal training to improve skills on the current job but there is little or no evidence of offsetting increases in training undertaken to qualify for or obtain jobs

the nexus between sectoral fdi and institutional quality empirical evidence from pakistan abstractthis study investigates short and long run bidirectional causality between institutional quality and sectoral level fdi in pakistan by using the ardl technique the results confirm that long run bidirectional causality exists between institutional quality and aggregate fdi the in depth sectoral level fdi analysis substantiates the presence of long run bidirectional causality between institutional quality and fdi in services and manufacturing sectors while no long run causality is observed between institutional quality and fdi inflows in primary sector furthermore the results in the study reveal short run bidirectional causality only between institutional quality and manufacturing fdi and report insignificant short run causal link between institutional quality and fdi in primary and services sectors the overall findings of the study suggest that in the long run institutional quality attract fdi and fdi inflows particularly to manufacturing and services sectors significantly enhance the qual

capital quality improvement and the sources of economic growth in the euro area sources of growth europe s growth slowed in the 1990s reinforcing the overall impression of a need to catch up with the us regarding standards of living in reaction eu leaders adopted the famous lisbon agenda in 2000 the agenda is now under review the aim being to determine why progress on its pro growth goals has been unsatisfactory and what can be done about it the first crucial step in this process is to understand the true sources of the european growth slowdown sources of growth calculations have always been imprecise but evidence from the us suggests that quality upgrading especially in capital goods has substantially worsened the precision problem since the 1990s unfortunately quality adjusted sources of growth calculations however have not performed satisfactorily for europe so europe s leaders are working with potentially misleading accounts of europe s growth slowdown redressing this omission is the goal of this paper failure to account properly for capital quality improvements leads to two mistakes first overall gdp is underestimated our calculations for example show that euro area gdp growth was underestimated on average by 0 7 percentage points annually in the late 1990s however similar quality adjustment figures raise us growth figures in the same period by even more so quality adjusting suggests that the us eu growth gap was even more pronounced than previously believed secondly the sources of growth calculations used to prioritize europe s pro growth policies are skewed our calculations show that the contribution of the slowdown in disembodied technical progress to the overall slowdown is more pronounced after quality adjustment our findings point to the need for adoption of microeconomic measures aimed at enhancing overall efficiency and boosting innovation activity such measures would aim at a better business environment e g by easing regulatory and administrative burden and liberalizing energy and telecommunications markets plutarchos sakellaris and focco vijselaar

the transition to the knowledge economy labor market institutions and income inequality in advanced democracies the transition from fordism to the knowledge economy in the world s advanced democracies was underpinned by the revolution in information and communications technology ict the introduction and rapid diffusion of ict pushed up wages for college educated workers with complementary skills and allowed top managers and ceos to reap greater rewards for their own talents despite these common pressures income inequality did not rise to the same extent everywhere income in the anglo saxon countries remains particularly unequally distributed to shed new light on this puzzle the authors carry out a panel data analysis of eighteen oecd countries between 1970 and 2007 their analysis stands apart from the existing empirical literature by taking a comparative perspective the article examines the extent to which the relationship between the knowledge economy and income inequality is influenced by national labor market institutions the authors find that the expansion of knowledge employment is positively associated with both the 90 10 wage ratio and the income share of the top 1 percent but that these effects are mitigated by the presence of strong labor market institutions such as coordinated wage bargaining strict employment protection legislation high union density and high collective bargaining coverage the authors provide robust evidence against the argument that industrial relations systems are no longer important safeguards of wage solidarity in the knowledge economy

japanese and u s firms as foreign investors do they march to the same tune during the 1980s u s and japanese multinationals were attracted by some similar country characteristics low wage inflation low country risk good infrastructure and an educated work force both groups of investors displayed a persistence being strongly attracted to locations with significant past investment japanese firms started the decade as somewhat more fluid but as their investment levels surged they became much more persistent overall u s firms were more influenced by domestic market conditions and moved contrary to changes in host country trade intensity japanese investment had a somewhat greater affinity for trade reflecting their long standing interest in east asia some limited evidence suggests that factors driving the two groups of investors converged in the second half of the 1980s

the effect of environmental regulation on the locational choice of japanese foreign direct investment this article assesses the impact of environmental regulation er in host countries on japanese foreign direct investment fdi decision making it tests the pollution haven hypothesis using data on national er standards and japanese inward fdi in five dirty industries iron and steel industry nonferrous metals industry chemicals industry paper and pulp industry nonmetallic products industry the results do not support the pollution hypothesis on the contrary inward japanese fdi appears to be attracted to countries which have committed themselves to a transparent and stable environment regulatory environment suggesting that the quality of the regulatory framework in terms of its certainty and transparency has a greater influence on foreign investors choice of location than the level of environmental regulatory measures

governance and agricultural productivity a cross national analysis abstract in this study we examine the relationship between governance and agricultural performance by employing the world bank s aggregate governance indicators based on a cross country panel sample two methods are employed to test the hypothesis that better governance fosters agricultural productivity the empirical results of both methods support the hypothesis as for the first method the estimation results of the widely used inter country aggregate agricultural production function show that a country with better governance can produce more agricultural outputs given the same amounts of agricultural inputs the same education level and the same climate condition as for the second method the empirical results of a structural equation model reveal that given the same amounts of agricultural capital stock and land an agricultural worker in a country with better governance produces more better governance can indirectly improve agricultural productivity by driving agricultural capital accumulation our empirical work lends support to the claim of hayami and ruttan hayami y ruttan v 1985 agricultural development an international perspective john hopkins university press baltimore that governance is a basic factor explaining the poor economic performance of many developing countries in order to improve the agricultural performance of many developing countries apart from physical and education investments more emphasis should be placed on improving the governance infrastructure of these countries

short run strategies for attracting foreign direct investment this paper empirically investigates the effectiveness and feasibility of two fdi policies fiscal incentives and deregulation aimed at improving the attractiveness of a country in the short run using disaggregated data on sales by us mnes foreign affiliates in 43 developed and developing countries over the 1982 94 period results show that the provision of fiscal incentives or the deregulation of the labour market would exert a positive impact on total fdi given the drawbacks frequently associated with the use of incentive packages economy wide policies which ease firing procedures and reduce severance payments would certainly be the best policy option this paper also highlights the different aggregation and omitted variable biases that have affected results of previous studies and provides some support to recent theoretical models of fdi by showing that third country effects and spatial interdependence influence respectively the location of export platform fdi and vertical fdi

why don t poor countries catch up a cross national test of an institutional explanation early neoclassical analyses predicted that poor countries would grow faster than wealthy countries because of technological advances and diminishing returns to capital in the latter the reverse has occurred poor countries are falling back rather than catching up we suggest here that deficient institutions underlie this divergence employing various indicators of institutional quality including the rule of law the pervasiveness of corruption and the risk of expropriation and contract repudiation we show that the ability of poor countries to catch up is determined in large part by the institutional environment in which economic activity in these countries takes place jel o00 o10

are firm specific advantages location specific too much of the research on the role of firm specific advantages on firms subsidiary ownership preferences has been undertaken in the context of advanced country multinationals specifically u s mncs research has found that u s firms derive ownership advantages from their size experience and technological and marketing superiority perhaps having operated in the most developed and sophisticated home market many u s firms generate unique skills that give them absolute advantages over firms in almost all foreign host locations developing country mncs do not have absolute ownership advantages similar to those of the u s firms the relevance of a particular firm specific characteristic for a developing country mnc may be contingent not only upon the home country characteristics as in the case of u s mncs but also upon host country characteristics this study investigates the subsidiary ownership preferences among korean mncs and finds that the influence of three firm specific advantages technological intensity product differentiation and capital intensity on subsidiary ownership levels is contingent upon whether the subsidiary is located in a relatively less developed or a more developed country as compared to the home country although some authors have suggested that the influence of firm specific advantages may be contingent upon the characteristics of both home and host country locations empirical investigations to this effect have been nonexistent

energy consumption political regime and economic growth in sub saharan africa abstract in this paper we examine the relationship between energy consumption and economic growth and how democracy moderates this relationship using panel data of 16 sub saharan african ssa countries for the period 1971 2013 employing a panel vector autoregressive model pvar in a generalized method of moments gmm framework the findings support the feedback hypothesis for energy consumption and growth second the interaction variable energy consumption and democracy is positively and significantly related to economic growth supporting the view that democracy moderates the energy consumption and growth nexus further the results provide strong evidence of a uni directional relationship from trade openness to energy consumption additionally impulse responses and variance decompositions also confirm positive feedback relationships between energy consumption and economic growth energy prices and economic growth

dreaming big self valuations aspirations networks and the private school earnings premium an important axis of inequality in britain is the private state school divide the success of private schools in britain in delivering high academic achievements and better paid jobs has been attributed to these schools engendering high self evaluations greater aspirations and social networks using recently repaired data on secondary school type from the 1970 british cohort study we find that internal locus of control aspirations and access to networks but not self esteem are raised by private schooling locus of control and aspirations but not networks or self esteem each have modest effects on earnings at age 42 yet only a small part of the private school earnings premium is accounted for by all these factors much of the premium is due rather to educational attainments this evidence suggests that strategies to strengthen self evaluations or aspirations in state schools will contribute little on their own to the objective of greater equality or social mobility

electricity consumption employment and real income in australia evidence from multivariate granger causality tests this paper examines the relationship between electricity consumption employment and real income in australia within a cointegration and causality framework we find that electricity consumption employment and real income are cointegrated and that in the long run employment and real income granger cause electricity consumption while in the short run there is weak unidirectional granger causality running from income to electricity consumption and from income to employment

intellectual property protection market orientation and location of overseas r d activities by multinational enterprises abstract this paper develops an analytical framework to explain the determinants of location of overseas research and development r d by multinational enterprises mnes in terms of the nature and extent of foreign direct investment fdi and host country resources and policy regimes empirical findings for us mnes suggest that mnes prefer to locate their r d activities in countries that are able to offer them among other things larger markets technological resources and infrastructure host market oriented affiliates are more likely to have r d units than the export oriented ones especially in developing countries the relative strength of the patent regime appears to affect the direction rather than the magnitude of r d investments made in a country

government policies market imperfections and foreign direct investment the internalization eclectic theory of foreign direct investment includes the important insight that government policies create market imperfections which make foreign direct investment an economically rational strategic alternative for firms this paper reexamines the effects of government policies on market imperfections and foreign direct investment fdi it broadens and refines the analysis of the impact of government policies by developing the following arguments 1 there is a wide range of government policies that affect firms fdi decisions via their effects on market imperfections 2 there are numerous dimensions of variability in government policies that need to be identified in order to understand fully the effects of government policies on market imperfections and hence fdi flows 3 some of the effects of government policies on market imperfections and fdi are the opposite of those previously noted in the fdi literature 4 the effects of government policies vary across the several individual components of fdi flows the paper thus examines the following variables and relationships more extensively and precisely than has the previous literature government policy variables as causal factors affecting fdi market imperfection variables as intervening factors in the causal connections between government policies and fdi and the multiple indicators of the various dimensions of fdi as dependent variables

the effect of school quality on educational attainment and wages the paper examines the effects of school pupil teacher ratios and type of school on educational attainment and wages using the british national child development survey ncds the ncds is a panel survey which has followed a cohort of individuals born in march 1958 and has a rich set of background variables recorded throughout the individual s life the results suggest that once we control for ability and family background the pupil teacher ratio has no impact on educational qualifications or on male wages it has an impact on women s wages at the age of 33 particularly those of low ability we also find evidence that those who attend selective schools have better educational outcomes and in the case of men higher wages at the age of 33 the impact is higher for the type of individuals who are less likely not to attend selective schools but for whom a comparison group does exist among those attending

the macroeconomics of specificity specific quasi rents arise in a variety of economic relationships and are exposed to opportunism unless fully protected by contract rent appropriation has important macroeconomic consequences resources are underutilized factor markets are segmented production suffers from technological sclerosis job creation and destruction are unbalanced recessions are excessively sharp and expansions run into bottlenecks while depending on the shock expansions may require reinforcement or stabilization recessions should typically be softened in the long run institutions may evolve to alleviate the problem by balancing appropriation technology choice will also be affected with the appropriated factor partially excluding the other from production to reduce appropriation

an evolutionary approach to understanding international business activity the co evolution of mnes and the institutional environment this paper examines the co evolution of mne activities and institutions external and internal to the firm we develop a theoretical framework for this analysis that draws on the more recent writings of douglass north on institutions as a response to complex forms of uncertainty associated with the rise in global economic interconnectedness and of richard nelson on the co evolution of technology and institutions we link historical changes in the character of mne activities to changes in the institutional environment and highlight the scope for firm level creativity and institutional entrepreneurship that may lead to co evolution with the environment we argue that the main drivers for institutional entrepreneurship are now found in the increasing autonomy of mne subsidiaries thus mne agency derives from more decentralized forms of experimentation in international corporate networks which competence creating nodes of new initiatives can co evolve with local institutions unlike most other streams of related literature our approach connects patterns of institutional change in wider business systems with more micro processes of variety generation and experimentation within and across individual firms this form of co evolutionary analysis is increasingly important to understanding the interrelationships between mne activities and public policy

institutions investment and growth new cross country and panel data evidence this paper outlines the alternative channels through which institutions affect growth and studies the empirical relationship between institutions investment and growth the empirical results indicate that i free market institutions have a positive effect on growth ii economic freedom affects growth through both a direct effect on total factor productivity and an indirect effect on investment iii political and civil liberties may stimulate investment iv an important interaction exists between freedom and human capital investment v milton friedman s conjectures on the relation between political and economic freedom are correct vi promoting economic freedom is an effective policy toward facilitating growth and other types of freedom jel o17 o40 p51

natural disasters and foreign direct investment the world s population has witnessed the concurrence of two powerful global trends an unprecedented growth in foreign direct investment fdi and an increase in natural disasters since investment decisions are based on an evaluation of expected risks and returns we consider whether fdi decisions are influenced by natural disasters we do so by considering the relation between fdi in 94 countries between 1984 and 2004 and the number of disasters striking those countries across a variety of empirical tests that control for two way fixed effects we find natural disasters to be negatively and statistically significantly associated with a country s fdi

killing the goose that lays the golden egg institutional change and economic growth in hong kong i introduction hong kong became a special administrative region sar after its sovereignty reverted to chinain july 1997 since then the basic law which is the sar s mini constitution has functioned as the foundation of one country two systems in the sar it is true that hong kong sar has enjoyed a high degree of autonomy under this arrangement but its sovereignty resides with nondemocratic institutions ultimately chosen by the central government in beijing what are the effects if any of the rapid change of institutions from a colony to a sar on the quality of governance in hong kong more importantly has the prosperity of hong kong been compromised by such a drastic change of its institutions these are serious questions deserving a formal analysis as one of the asian tigers the rapid growth of hong kong s economy during the colonial period has been widely documented with its real gross domestic product gdp per capita of us 26 699 in 2000 hong kong is now one of the five richest economies in the world surpassing even industrialized countries such as japan great britain and france 1 the precise factors that account for its miraculous growth have been the subject of considerable debate however a consensus seems to have emerged that a major part of hong kong s success is due to its reliance on market oriented laissez faire policies and the rule of law tradition moreover it has been observed that hong kong s hands off approach to development under colonial rule differed fundamentally from the more interventionist strategies adopted by japan korea singapore and taiwan the uniqueness of hong kong s past success coupled with its rapid but peaceful institutional change in 1997 provides a rare opportunity for a case study of the relationship between institutions and economic performance since the changeover of sovereignty in july 1997 a series of government decisions and policies appears to have negatively affected the quality of institutions and confidence in the sar most noticeably the plan to introduce the national security legislation article 23 sparked off a massive but peaceful demonstration on july 1 2003 even before this huge public display of dissatisfaction with chief executive tung chee hwa s administration there were already widespread concerns and discontent with certain controversial government decisions first decisions by the hong kong executive in 1999 and in january 2001 to refer judgments of the hong kong court of final appeal on individuals right of abode to the standing committee of the national people s congress raised serious concerns about the autonomy of the hong kongjudiciary second in his first policy address in 1997 mr tung announced a target of supplying 85 000 public housing units a year which has been blamed for the downward spiral of housing prices and the protracted economic recession 2 third mr tung was reappointed by an 800 strong election committee for a second 5 yr term as the chief executive on july 1 2002 despite his consistently poor popularity ratings fourth in april 2004 the standing committee of the national people s congress in china ruled out the possibility of introducing universal suffrage in electing the chief executive in 2007 and the legislative council in 2008 these were controversial decisions and policies that sparked opposition from a large segment of the population 3 in the empirical literature researchers find strong evidence to indicate that institutional quality is one of the most important factors of long run economic growth the protection of property rights efficiency of the bureaucracy and effectiveness of the rule of law are the most widely used aspects of institutions that have been found to significantly affect the long run income level or growth rate in cross country econometric studies 4 more recent studies have even gone beyond correlations to establish causation between the protection of property rights and the higher income levels as in acemoglu johnson and robinson 2001

the changing economic advantage from private schools private schooling is an important feature of education systems across the world despite its relatively small size the british private school sector has a long history and plays a prominent role in society we provide evidence showing that private schools have been successful in transforming their ability to generate the academic outputs that are most in demand in the modern economy the private state school wage differential has risen significantly over time and a significant factor has been faster rising educational attainment for privately educated individuals

regulation and investment use newly assembled data on regulation in several sectors of many oecd countries to provide evidence that regulatory reform of product markets is associated with an increase in investment a component of reform that plays a very important role is entry liberalization but privatization also has a substantial effect on investment sensitivity analysis suggests that our results are robust jel e22 l5

promise and pitfalls in the use of secondary data sets income inequality in oecd countries as a case study this paper examines the role of secondary data sets in empirical economic research taking the field of income distribution as a case study we illustrate problems faced by users of secondary statistics showing how both cross country comparisons and time series analysis can depend sensitively on the choice of data after describing the genealogy of secondary data sets on income inequality we consider the main methodological issues and discuss their implications for comparisons of income inequality across oecd countries and over time the lessons to be drawn for the construction and use of secondary data sets are summarized at the end of the paper

accounting for intergenerational income persistence noncognitive skills ability and education we analyse in detail the factors that lead to intergenerational persistence among sons where this is measured as the association between childhood family income and later adult earnings we seek to account for the level of income persistence in the 1970 bcs cohort and also to explore the decline in mobility in the uk between the 1958 ncds cohort and the 1970 cohort the mediating factors considered are cognitive skills non cognitive traits educational attainment and labour market attachment changes in the relationships between these variables parental income and earnings are able to explain over 80 of the rise in intergenerational persistence across the cohorts

capital deepening and wage differentials germany versus us in flexible labour markets capital increases the productivity of skilled workers more than that of unskilled workers and in the us faster investment is associated with wider wage inequality but labour market institutions that keep unskilled workers wages high also imply that firms may find it profitable to invest so as to boost those workers productivity our empirical analysis based on industry level data confirms that a higher capital intensity in germany is associated with smaller wage differentials and with a larger share of unskilled workers in the labour costs changes in capital labour ratios during the 1980s reduced wage differentials by 5 8 in german industries while in the us capital deepening in such industries as machinery and retail was accompanied by an increase of wage differentials larger than 7 winfried koeniger and marco leonardi

causality between economic growth and immigration an ardl bounds testing approach abstract this paper aims to investigate the causal relationship between immigration and per capita economic growth using the ardl approach to cointegration we find evidence of long run causality from per capita economic growth to immigration but not vice versa

trust and inter firm relations in developing and transition economies the role of trust in facilitating economic growth has been highlighted in previous contributions to this journal in order to take this debate forward this article argues 1 that more attention needs to be given to the relationship between sanctions and trust and 2 that it is worth distinguishing between the minimal trust for making markets effective and the extended trust required for deeper kinds of inter firm co operation to work the article goes on to ask why minimal trust is lacking and so hard to construct in the republics of the former soviet union it then examines how extended trust grows or can be made to grow in industrial supply chains and clusters in developing countries

some contacts are more equal than others informal networks job tenure and wages the explanation typically given for longer tenure among workers who use informal contacts to find jobs is that relatives and friends reduce uncertainty about the quality of the match between worker and employer an alternative explanation is that workers rely on informal information sources as a last resort such workers remain at their current jobs mainly because they have few alternative choices rather than because of better match quality this article shows that the two different explanations are simultaneously valid for different types of contacts and can account for differences in the wage effects of job contacts

host country reforms and fdi inflows how much difference do they make summary this study examines the effects of various policies on foreign direct investment fdi flows from the perspective of the eclectic theory of international investment and hence the advantages of foreign ownership host country location and internationalization host country policies can influence fdi flows primarily through their influence on the advantages of location in the host country pooled cross section and time series data for 49 less developed countries ldcs over 1970 95 are used to examine the effects of several different types of policy institutional variables including corporate tax rates tariff rates the degree of openness to international capital flows exchange rate distortions contract enforcement nationalization risk bureaucratic delay and corruption a multivariate analysis of the effects on fdi flows of each type of policy with and without controls for other relevant determinants is conducted two different sources of fdi data are employed as well as two different measures of capital controls although there are methodological problems in estimation and especially collinearity problems and relatively severe availability constraints for some of the relevant measures the results demonstrate the relevance and importance for fdi flows of many of the policy institutional variables under study they also indicate that the results from panel methods yield results that differ rather significantly from those obtained from pure cross section analysis because of complementarity between the various elements of a healthy investment climate the effects of some policy reforms estimated from models which do not control for changes in other policies may overstate the effectiveness of individual policy reforms

economic development as self discovery in the presence of uncertainty about what a country can be good at producing there can be great social value to discovering costs of domestic activities because such discoveries can be easily imitated we develop a general equilibrium framework for a small open economy to clarify the analytical and normative issues we highlight two failures of the laissez faire outcome there is too little investment and entrepreneurship ex ante and too much production diversification ex post optimal policy consists of counteracting these distortions to encourage investments in the modern sector ex ante but to rationalize production ex post we provide some informal evidence on the building blocks of our model

do electoral rules matter political institutions and foreign direct investment in latin america despite the growing importance of domestic institutions in the political economy literature few studies explore the effects of disaggregated measures of political institutions specifically electoral rules and systems on foreign direct investment fdi building on institutional accounts this articles tests the effects of electoral rules on fdi inflows for 16 latin american countries from 1978 to 2000 using panel data and controlling for common explanations in the fdi literature the authors find that candidate centered electoral systems increase political access for voters and industries supportive of fdi inflows the results show the benefits of unpacking political institutions to explain fdi inflows paving the way for many new research avenues

institutions and inflows of foreign direct investment a fuzzy set analysis this study addresses the essential question of causal complexity and diversity related to the influence of institutions on the direct investments fdi of multinational enterprises using a relatively new methodological approach of fuzzy set analysis and 47 host countries from the period 1999 to 2003 the paper analyses how and why countries with different degrees of membership in different institutional constraints either attract or do not attract fdi the findings show that institutional factors have diverse influences similar institutions may even be associated with different outcomes if different regional categories of countries are examined countries may neither be attractive nor unattractive owing to the presence or absence of a single institutional factor instead the outcome usually results from a combination of institutional conditions moreover there typically are several possible paths to a specific outcome the study confirms some of the propositions of previous theory but most importantly it explains why earlier research has provided conflicting conclusions related to institutional factors the study also offers an approach for future international business research to apply fuzzy set methods and develop mid range theories

fdi trade and spillover efficiency evidence from china s manufacturing sector using firm data from the 1995 third industrial census of china this paper finds that the presence of foreign ownership has a positive and significant effect on domestic firms productivity moreover trading with more advanced countries helps china gain access to new technology and information which improves its productivity and enables it to compete in international markets it is found that china s imports from oecd and the four asian tigers and exports to oecd have positive effects on domestic firms productivity by dividing industries into high technology gap and low technology gap groups it is found that the spillover effects of fdi are larger for the low technology gap group than for the high technology gap group however the estimation results of the trade induced technology spillover effect support the technology gap learning theory and the significance of importing appropriate technology

out of africa locational determinants of south african cross border mergers and acquisitions abstractsouth africa is the africa s biggest source of outward foreign direct investment this study examines the principal locational motives of cross border mergers and acquisitions cbma by south african firms for the 1990 2014 period the role of inter country cultural and economic linkages is also studied firm level data of south african merger and acquisition activities in 74 host countries are used to estimate a number of model specifications that control for host country economic geographical cultural and institutional characteristics estimations are carried out using random effects negative binomial panel model capturing the host economy market and enhancing efficiency are found to be the two major motives driving south african corporations cbma activities natural resources acquisition seems a less important motive while strategic assets such as patents and technology do not appear to be attractive the role of cultural and economic linkages between the home and the host country is found t

foreign direct investment the role of institutional and cultural determinants abstractusing panel data for 29 source and 65 host countries in the period 1995 2009 we examine the determinants of bilateral fdi stocks focusing on institutional and cultural factors the results reveal that institutional and cultural distance is important and that fdi has a predominantly regional aspect fdi to developing countries is positively affected by better institutions in the host country while foreign investors prefer to invest in developed countries that are more corrupt and politically unstable compared to home the results indicate that foreign investors prefer to invest in countries with less diverse societies than their own

labor market institutions and wage inequality the authors investigate how labor market institutions such as unemployment insurance unions firing regulations and minimum wages have affected the evolution of wage inequality among male workers results of estimations using data on institutions in eleven oecd countries indicate that changes in labor market institutions can account for much of the change in wage inequality between 1973 and 1998 factors found to have been negatively associated with male wage inequality are union density the strictness of employment protection law unemployment benefit duration unemployment benefit generosity and the size of the minimum wage over the 26 year period institutional changes were associated with a 23 reduction in male wage inequality in france where minimum wages increased and employment protection became stricter but with an increase of up to 11 in the united states and united kingdom where unions became less powerful and in the united states minimum wages fell

politics economics and investment abstract few economists or laypeople would deny that political events can have an important sometimes even overwhelming impact on economic decisions in general and investment decisions in particular the first goal of this paper is to integrate a number of political and non traditional economic variables into the standard theory of investment based on the maximization of the expected value of the firm the second goal is to test this generalized investment theory on a particularly fertile field for gauging the interaction of political and economic factors the plant and equipment spending of foreign manufacturing affiliates of us multinationals in argentina brazil and mexico the results of these tests show that the generalized theory is far superior to the traditional alternatives in explaining the real investment of the sample for the 1958 1989 period

climbing to the top foreign direct investment and property rights this article operates at the interface of the literature on the impact of foreign direct investment fdi on host countries and the literature on the determinants of institutional quality we argue that fdi contributes to economic development by improving institutional quality in the host country this proposition is tested within a large panel data set of 70 developing countries for the period 1981 2005 we show that fdi inflows have a positive and highly significant impact on property rights results are very robust and not affected by model specification different control variables or estimation technique to our knowledge this is the first article to empirically test the fdi property rights linkage jel f23 o43 p48

firm heterogeneity in capital labour ratios and wage inequality author s leonardi marco abstract this paper documents the increasing dispersion of capital labor ratios across firms in the us and provides some empirical evidence of a positive correlation at the two digit industry level between the dispersion of capital labor ratios across firms and residual wage inequality to explain this empirical fact the paper adopts a search model where firms differ in their optimal capital investment the exogenous decline in the relative price of equipment capital makes the distributions of capital labor ratios more dispersed in a frictional labor market this force generates wage dispersion among identical workers ols estimates of the relationship between capital dispersion and the relative price of equipment capital support the main hypothesis of the model

the effect of population health on foreign direct investment inflows to low and middle income countries this paper investigates the effect of population health on gross inflows of foreign direct investment fdi we conduct a panel data analysis of 74 industrialized and developing countries over 1980 2000 our main finding is that gross inflows of fdi are strongly and positively influenced by population health in low and middle income countries our estimates suggest that raising life expectancy by one year increases gross fdi inflows by 9 after controlling for other relevant variables these findings are consistent with the view that health is an integral component of human capital for developing countries

the saving and investment nexus for china evidence from cointegration tests the saving and investment nexus as postulated by feldstein and horioka fh 1980 is revisited the saving investment correlation for china is estimated over the periods 1952 1998 and 1952 1994 the latter culminating in a period of fixed exchange rate regime amongst the key results it is found that saving and investment are correlated for china for both the period of the fixed exchange rate and the entire sample period with high saving investment correlation the results suggest that the chinese economy is in conformity with the fh hypothesis this is a valid outcome for in china capital mobility was fairly restricted over the 1952 1994 period as indicated by the relatively low foreign direct investment

unbundling institutional determinants of multinational investments abstractprevious studies often examined how a broad based institution affects foreign direct investment fdi flows across countries however analysis of differential impacts of two or more constituent institutions within a broad based institution appears to be more useful for policy decision making there is a paucity of studies on how constituent institutions within a broad measure of institution affect fdi across countries our article constitutes the first attempt in bridging this gap in this article we examine the relative effects of property rights institution pi and contracting institution ci on investment flows our results show that pi is much more important than ci in determining the cross border flows of fdi and affiliate sales moreover pi is found to be more important for fdi than for affiliate sales indicating that final goods are less of a concern for being expropriated by governments and powerful elites than capital goods through unbundling a broad based institution and examining

policy and non policy determinants of u s equity foreign direct investment this study examined the effects of policy and non policy variables on the location of new u s direct investment abroad as distinct from reinvested earnings of existing affiliates using 1977 and 1982 benchmark data the data revealed statistically significant effects for investment incentives positive performance requirements negative and host country effective tax rates negative with interesting differences between the two time periods and between developed versus developing countries significance was also found for non policy variables such as political stability cultural distance gdp per capita and infrastructure

governance infrastructure and us foreign direct investment this paper examines the statistical importance of governance infrastructure as a determinant of us foreign direct investment fdi in broad terms governance infrastructure represents attributes of legislation regulation and legal systems that condition freedom of transacting security of property rights and transparency of government and legal processes our econometric analysis uses a two stage estimation procedure in the first stage the probability that a country is an fdi recipient is estimated the results indicate that countries that fail to achieve a minimum threshold of effective governance are unlikely to receive any us fdi countries that receive no us fdi are typically countries that do not promote free and transparent markets that have ineffective governments and that often have legal systems that are not rooted in english common law in the second stage the analysis is restricted to those countries that did receive fdi flows the estimated equations focus on the determinants of the amount of fdi received given that a country is a recipient of us fdi governance infrastructure including the nature of the legal system is an important determinant of the amount received

international investment location decisions abstract in international location tournaments governments compete for foreign investment with tax and other short run incentives such tournaments can be won if agglomeration economies are sufficiently powerful to overcome investors desire to spread investments as a hedge against risk we focus on manufacturing investments by u s multinationals in the 1980s our econometric results suggest that agglomeration economies are indeed the dominant influence on investor calculations paradoxically short run incentives have limited apparent impact on location choice we conclude that high cost tournament play is unnecessary for countries with good infrastructure development specialized input suppliers and an expanding domestic market

explaining the differential distribution of clean development mechanism projects across host countries the clean development mechanism cdm of the kyoto protocol represents an opportunity to involve all developing countries in the effort to reduce greenhouse gas emissions while also promoting sustainable development to date however the majority of cdm projects have gone to emerging markets such as china india brazil and mexico while very few least developed countries have hosted projects this paper investigates the differential distribution of cdm activities across countries we develop a conceptual model for project profitability which helps to identify potential country level determinants of cdm activity these potential determinants are employed as explanatory variables in regression analysis to explain the actual distribution of projects human capital and greenhouse gas emission levels influenced which countries have hosted projects and the amount of certified emission reductions cer created countries that offered growing markets for cdm co products such as electricity were more likely to be cdm hosts while economies with higher carbon intensity levels had greater cer production these findings work against the least developed countries and help to explain their lack of cdm activity

the 45 years of foreign direct investment research approaches advances and analytical areas what are the main tenets associated with foreign direct investment fdi what research has been performed in the area of fdi to date which direction should research in this field proceed in the days to come as there is no article with comprehensive coverage of all the studies on fdi we review empirical research in this area between the years 1970 and 2014 as an attempt to answer these questions we identify the advances and analytical areas of fdi research list out the impactful research papers and authors theoretical and methodological approaches leading journals and variables of interest that exist in the area of fdi research as the research into the fdi has advanced significantly over the last two decades we have also tried to point out the gaps in the literature taken together our paper highlights the heterogeneous nature of fdi across countries and firms

political variables in cross country growth analysis the recent boom in cross country growth analysis has renewed the empirical interest in political sources of economic growth a large number of studies have tested political variables in growth regressions and a very heterogenous set of variables has been proposed to measure economically relevant differences in the political systems of countries this paper distinguishes five categories of relevant political variables democracy government stability political violence policy volatility and subjective perception of politics for each of these categories the specification testing method and results of the most relevant studies are presented and are critically discussed the paper concludes that measures of democracy are least successful and measures of policy volatility and subjective perception of politics most successful as explanatory variables in cross country growth regressions

global foreign direct investment flows the role of governance infrastructure abstract it is widely argued that a country s economic performance over time is determined to a great extent by its political institutional and legal environment we refer to these institutions and policies as the governance infrastructure of a country we utilize newly developed indices to examine the effects of governance infrastructure on both foreign direct investment fdi inflows and outflows for a broad sample of developed and developing countries over 1995 97 in addition we examine the role of other forms of infrastructure including human capital and the environment the results clearly indicate that governance infrastructure is an important determinant of both fdi inflows and outflows investments in governance infrastructure not only attract capital but also create the conditions under which domestic multinational corporations emerge and invest abroad it would appear that investments in governance infrastructure are subject to diminishing returns so that the benefits in terms of inflows are most pronounced for smaller and developing economies