the cyclicality of international public sector borrowing in developing countries does the lender matter abstract the paper shows that international government borrowing from multilateral development banks is countercyclical while international government borrowing from private sector lenders is procyclical the countercyclicality of multilateral development bank mdb lending is mostly driven by the behavior of the world bank borrowing from regional development banks tends to be acyclical the paper also shows that mdb lending to latin america and east asia is more countercyclical than mdb lending to other regions private sector lending is instead procyclical in all developing regions while the cyclicality of mdb lending does not depend on domestic or international conditions private lending becomes particularly procyclical in periods of limited global capital flows by focusing on both borrower and lender heterogeneity the paper shows that the cyclical properties of international government debt are mostly driven by credit supply shocks demand factors appear to be less important drivers of procyclical international government borrowing the focus on supply and demand factors is different from the traditional push and pull classification as push and pull factors could affect both the demand and the supply of international government debt

the control of technology alliances an empirical analysis of the biotechnology industry we examine the determinants of control rights in biotechnology alliances through three case studies and a quantitative analysis aghion and tirole 1994 argue that control rights will be assigned so as to maximize the value of the final output as long as the r d firm has sufficient financial resources consistent with this framework the allocation of control rights to the r d firm increases with the firm s financial resources the empirical evidence regarding the relationship between control rights and the stage of the project at the time the alliance is signed is more ambiguous

on corporate borrowing credit spreads and economic activity in emerging economies an empirical investigation abstract we document a considerable increase in foreign financing by the corporate sector in emerging economies emes since the early 2000s mainly in the form of bond issuance and claim that it has opened up an important channel by which external financial factors can drive economic activity in these economies such claim is substantiated by a strong negative relationship between economic activity and an external financial indicator that we construct for several emes using micro level data on spreads of bonds issued by emes corporations in foreign capital markets three salient features characterize such a negative relationship first the financial indicator has considerable predictive power on future economic activity in these economies even after controlling for other potential drivers of business cycles such as movements in sovereign spreads and global financial risk among others second on average an identified adverse shock to the financial indicator generates a large and protracted fall of real output growth in these economies and up to 14 of its forecast error variance is associated to this shock lastly fluctuations in this indicator also respond strongly to shocks in global financial risk emanating from world capital markets thereby implying that changes in corporate spreads also serve as a powerful propagating mechanism of the effect of changes in global investors risk appetite in emerging markets

the dynamics of international capital flows results from a dynamic hierarchical factor model abstract the present paper examines the degree of comovement of gross capital inflows which is a highly sensitive issue for policy makers we estimate a dynamic hierarchical factor model that is able to decompose inflows in a sample of 47 economies into i a global factor common to all types of flows and all recipient countries ii a factor specific to a given type of capital inflows iii a regional factor and iv a country specific component we find that the latter explains by far the largest fraction of fluctuations in capital inflows followed by regional factors which are particularly important for emerging markets fdi and portfolio inflows as well as bank lending to emerging europe the global factor however explains only a small share of the overall variation we also employ dynamic panel and time series regressions to explain the determinants of the estimated components the global factor is shown to reflect u s financial conditions

what drives capital flows to emerging markets a survey of the empirical literature this paper reviews the rapidly growing empirical literature on the drivers of capital flows to emerging markets the empirical evidence is structured based on the recognition that the drivers of capital flows vary over time and across different types of capital flows the drivers are classified using the traditional push vs pull framework which is augmented by a distinction between cyclical and structural factors push factors are found to matter most for portfolio flows somewhat less for banking flows and least for fdi pull factors matter for all three components but most for banking flows a historical perspective suggests that the recent literature may have overemphasized the importance of cyclical factors at the expense of longer term structural trends

the shifting drivers of global liquidity abstract the sensitivities of the main global liquidity components international loan and bond flows to global factors varied considerably over the past decade the estimated sensitivity to us monetary policy rose substantially in the immediate aftermath of the global financial crisis peaked around the time of the 2013 fed taper tantrum and then reverted towards pre crisis levels conversely the responsiveness of international bank lending to global risk conditions declined steadily throughout the post crisis period we show that the main driver of the fluctuations in the estimated sensitivities to us monetary policy was the degree of convergence among advanced economy monetary policies meanwhile the post crisis fall in the sensitivity of international bank lending to global risk was mainly driven by increases in the lending shares of better capitalized banking systems

spillovers and governance an analysis of knowledge and reputational spillovers in information technology investigating spillovers potential costs and benefits to a firm that extend beyond an individual transaction i integrate transaction cost theory and the knowledge based view of the firm in an effort to better understand the efficient governance of knowledge contracts with detailed task descriptions were associated with transactions with the potential to generate new and reusable knowledge the risk of a firm s technology spilling over to others and the risk of reputation impairing spillovers were associated with suppliers using their own employees rather than subcontractors thus results suggest that the creation and protection of knowledge are key factors in understanding governance decisions

efficient adaptation in long term contracts take or pay provisions for natural gas to mitigate the inflexibility of long term contracting for natural gas parties will look for terms that minimize the need for costly adjudication while maintaining incentives for appropriate adaptation the authors examine the incident of take or pay provisions in contracts between natural gas producers and pipelines from this perspective they argue that take obligations can be viewed as a mechanism for effecting appropriate incentives for contractual performance and show that efficient breach considerations define an optimal take percentage as a function of characteristics of the transaction these incentives are distorted by regulated price ceilings which cause the adoption of take obligations in excess of optimal levels the findings refute the common perception that take or pay provisions are just an artifact of wellhead price regulation and serve no useful purpose in the absence of regulation 20 references 1 figure 1 table

causes of capital flows in developing countries abstract this paper investigates the causes of capital flows in four developing countries mexico chile korea and malaysia using structural decomposition analysis it finds that the recent resurgence in capital movements is largely due to external reasons such as decreases in the world interest rate or recession in industrial countries domestic factors including country specific productivity shocks and demand shocks are relatively less important another interesting finding is that the fundamental causes of capital flows differ little across the countries under study these results suggest that developing countries need to pay attention to the financial arrangements associated with capital flows and to exchange rate policy as well as macroeconomic fundamentals to avoid financial crises in a world of increased capital mobility

understanding the behavior of bank spreads in latin america abstract over the last decade many countries in latin america have eliminated interest rate ceilings reduced reserve requirements and stopped direct credit controls these market oriented reforms have encouraged financial deepening thereby producing considerable economic benefits to the countries nevertheless the persistence of high interest rate spreads has been a disquieting outcome of the reforms this paper explores the determinants of bank spreads in a systematic way for argentina bolivia chile colombia mexico peru and uruguay during the mid 1990s the analysis shows that high operating costs raise spreads as do high levels of non performing loans although the size of these effects differs across the countries in addition reserve requirements in a number of countries still act as a tax on banks that gets translated into a higher spread beyond bank specific variables uncertainty in the macroeconomic environment facing banks appears to increase interest spreads the combination of these microeconomic and macroeconomic factors is a cause for concern in latin america as spreads widen the cost of using the financial system becomes prohibitive to some potential borrowers in addition the results suggest that bank capital requirements may not prevent excessive risk taking by banks when bank spreads are high

assessing the impact of financial liberalisation on stock market volatility in selected developing countries this article argues for the importance of measuring stock market volatility following financial liberalisation in developing countries three alternative indices for measuring volatility are developed these are used to examine the view that financial liberalisation induces increased asset price volatility based on the limited data available this view is corroborated in the majority of countries investigated

what is the major determinant of cross border banking flows abstract this study examines the major determinant of cross border credit flows through global banks across 70 countries employing a bayesian dynamic latent factor model we decompose volatilities of banking flows into the contribution of a global common factor regional common factor and country specific factor the results indicate that the global and regional common factor explains about 40 50 percent of volatility in overall cross border banking flows in particular the contribution of the global common factor increased in the 2000s simultaneously main determinants are largely heterogeneous across countries this implies that the desirable policy response to credit inflows may differ for each host country

common factors in latin america s business cycles this paper constructs new business cycle indices for argentina brazil chile and mexico based on common dynamic factors extracted from a comprehensive set of sectoral output external trade fiscal and financial variables the analysis spans the 135 years since the insertion of these economies into the global economy in the 1870s the constructed indices are used to derive a business cycle chronology for these countries and characterize a set of new stylized facts in particular we show that all four countries have historically displayed a striking combination of high business cycle volatility and persistence relative to benchmark countries and that such volatility has been time varying with important differences across policy regimes we also uncover a sizeable common factor across the four economies which has greatly limited scope for regional risk sharing

volatility of short term capital flows and private investment in emerging markets abstract using micro level panel data the paper analyses the impacts of short term capital flow volatility on new fixed investment spending of publicly traded real sector firms in three major emerging markets argentina mexico and turkey the empirical results including sensitivity tests suggest that increasing volatility of capital inflows has an economically and statistically significant negative effect on new investment spending of private firms accordingly a 10 per cent increase in capital flow volatility reduces fixed investment spending in the range of 1 1 7 2 3 15 and 1 per cent in argentina mexico and turkey respectively

how responsive is business capital formation to its user cost an exploration with micro data abstract the response of business capital formation to its user cost is critical to evaluating tax reform deficit reduction and monetary policy evidence for a substantial user cost elasticity however is sparse most evidence has been based on aggregate data although several recent studies with firm level data report substantial effects with a particularly rich micro dataset containing over 26 000 observations this paper explores what can be learned about the user cost elasticity while the results depend to some extent on the specification and econometric technique various diagnostics lead us to prefer a precisely estimated but small elasticity of approximately 0 25 this paper is dedicated to the memory of robert eisner who labored early and ably on uncovering the determinants of investment spending and highlighting the importance of the question found in the title of this paper

relational contracts and the theory of the firm relational contracts informal agreements sustained by the value of future relationships are prevalent within and between firms we develop repeated game models showing why and how relational contracts within firms vertical integration differ from those between nonintegration we show that integration affects the parties temptations to renege on a given relational contract and hence affects the best relational contract the parties can sustain in this sense the integration decision can be an instrument in the service of the parties relationship our approach also has implications for joint ventures alliances and networks and for the role of management within and between firms

the role of feed in tariffs in emission mitigation turkish case abstract the aim of this paper is to present the role of feed in tariffs fits on ghg emission reduction in turkey due to insufficient installed capacity turkey can only utilize 27 of its total economically viable renewable energy potential to increase the share of the renewables utilization of these sources has become a top priority in the overall energy agenda thus new regulations and policies are introduced these policies are expected to serve to increase installed capacities of renewable energy power plants and reduce the co2 emissions intensities feed in tariffs is considered as a promising policy to increase share of renewable energy and reduction of co2 however the co2 emission intensity in electricity generation has not changed after the fits were launched indicating that additional policies possibly including a revision of the current renewable energy support mechanism regime should be reconsidered

sharing a ride on the commodities roller coaster common factors in business cycles of emerging economies fluctuations in commodity prices are an important driver of business cycles in small emerging market economies emes this paper documents how these fluctuations correlate strongly with the business cycle in emes a commodity sector is then embedded into a multi country emes business cycle model where exogenous fluctuations in commodity prices follow a common dynamic factor structure and coexist with other driving forces the estimated model assigns to commodity shocks 42 percent of the variance in income of which a considerable part is linked to the common factor a further amplification mechanism is a spillover effect from commodity prices to risk premia

contract duration and relationship specific investments empirical evidence from coal markets this paper examines the importance of specific relationship investments in determining the duration of coal contracts negotiated between coal suppliers and electric utilities data for 277 coal contracts are used to perform the analysis the results provide strong support for the view that buyers and sellers make longer commitments to the terms of future trade at the contract execution stage and rely less on repeated bargaining when relationship specific investments are more important

agency theory and franchising some empirical results this article provides an empirical assessment of various agency theoretic explanations for franchising including risk sharing one sided moral hazard and two sided moral hazard the empirical models use proxies for factors such as risk moral hazard and franchisors need for capital to explain both franchisors decisions about the terms of their contracts royalty rates and up front franchise fees and the extent to which they use franchising in this article i exploit several new sources of data on franchising to construct a cross section of 548 franchisors involved in various business activities in the united states in 1986 the data are most consistent with a model based on two sided moral hazard the empirical models are also more successful at explaining the extent to which franchisors choose to franchise stores than at explaining the terms of franchise contracts finally contrary to the predictions of several theoretical models i find that royalty rates and franchise fees are not negatively related

employment impacts of solar energy in turkey abstract solar energy is considered a key source for the future not only for turkey also for all of the world therefore the development and usage of solar energy technologies are increasingly becoming vital for sustainable economic development the main objective of this study is investigating the employment effects of solar energy industry in turkey some independent reports and studies which analyze the economic and employment impacts of solar energy industry in the world have been reviewed a wide range of methods have been used in those studies in order to calculate and to predict the employment effects using the capacity targets of the photovoltaic pv and concentrated solar power csp plants in the solar roadmap of turkey the prediction of the direct and indirect employment impacts to turkey s economy is possible as a result solar energy in turkey would be the primary source of energy demand and would have a big employment effects on the economics that can only be achieved with the support of governmental feed in tariff policies of solar energy and by increasing research development funds

capital controls spillovers abstract i set up a three country business cycle model with one advanced ae and two emerging economies emes to analyze the spillover effects arising from capital controls following a push factor shock from the ae if one eme tightens capital controls the other eme experiences an additional wave of foreign investments which amplify the macroeconomic boom the spillovers effects are welfare improving for the other eme which can borrow at a lower interest rate moderate capital controls may be useful to emes to affect the interest rate at which they trade international bonds coordination among emes in setting capital controls delivers relatively small welfare gains compared with the nash equilibrium

do country level institutional frameworks and interfirm governance arrangements substitute or complement in international business relationships interfirm relationships among partners from institutionally distant environments are subject to governance difficulties owing to the paucity of shared cognitive and regulatory frameworks we examine the potential of formal contracting and relational governance developed at the partnership level to overcome the formal and informal institutional gap at the country level empirical results from a sample of 184 international partnerships of large us firms support an overall substitutive relationship between informal institutional frameworks and interorganizational relational arrangements whereby the performance benefits of relational governance are reinforced at higher degrees of informal institutional distance contrastingly formal institutional frameworks and contractual governance are found to have a complementary relationship with performance gains from formal contracting undermined at higher degrees of formal distance

forgiveness in vertical relationships incentive and termination effects two types of contractual solutions have been proposed for resolving incentive conflicts in vertical relationships formal and relational i e enforceable or not by third parties much is known about the optimal structure of formal contracts but relatively little is known about the structure of relational contracts we study a core feature of the latter the conditions leading to continuation of the relationship whose prospect gives relational contracts their force we build a formal model of a vertical relationship between two parties that endogenizes the choice of the minimum performance necessary for continuation as a function of the values of contractibles noncontractibles and outside options the model highlights a basic trade off between providing strong incentives for the present incentive effect and safeguarding relationships for the future termination effect the stable relationships that follow from a more forgiving contract are more important under certain conditions when a lot of value is jointly created by exchange partners i e high contractible value high noncontractible value or unattractive outside options however strong incentives from a less forgiving contract are more important under other conditions when a formal contract is insufficient and a relational contract is most important i e high noncontractible relative to contractible value we discuss implications for the choice of governance of interorganizational relationships

daily cross border equity flows pushed or pulled we investigate the conditions under which an intertemporal equilibrium model based on investors portfolio decisions can explain the dynamics of high frequency equity flows our model shows that w

mutual funds flows and the geography of contagion abstract this paper studies the dynamics and geography of investments made by international mutual funds located in advanced markets i identify precise global and regional dynamics in equity and bond flows very few countries receive or lose funding in isolation i also find strong evidence of global contagion when financial conditions in developed markets change emerging markets funding is heavily affected i illustrate this finding by deriving contagion maps showing where contagion spreads and with what intensity in general the results suggest that push effects from advanced market investors affect massively developing countries and expose them to sudden stops and surges

do firms learn to create value the case of alliances we investigate whether firms learn to manage interfirm alliances as experience accumulates we use contract specific experience measures in a data set of over 2000 joint ventures and licensing agreements and value creation measures derived from the abnormal stock returns surrounding alliance announcements learning effects are identified from the effects of unobserved heterogeneity in alliance capabilities we find evidence of large learning effects in managing joint ventures but no such evidence for licensing contracts the effects of learning on value creation are strongest for research joint ventures and weakest for marketing joint ventures these results are consistent with the view that learning effects are more important in situations characterized by greater contractual ambiguity copyright 2000 john wiley sons ltd

instability and volatility of capital flows to developing countries despite the recent recovery in capital flows towards developing countries some of their characteristics have generated serious problems as these flows are increasingly concentrated in a small group of emerging markets most developing countries have been facing a severe scarcity of external resources while for the minority endowed with some measure of access to international financial markets volatility and sustainability remain the key issues financial liberalisation has helped to create new channels for resource transfers from the developed world but it has also generated conditions wherein such transfers can easily be reversed with serious consequences in terms of instability the present study depicts discusses and analyses some of the issues related to capital movements between developed and developing countries section 2 is an overview of the recent controversies on external financial liberalisation section 2 is an surveys the post 1970 developments in capital inflows to developing countries their main components and their contribution to development finance section 4 examines the instability and volatility of total inflows and their components using two different statistical measures section 5 concentrates on a particular type of capital movement i e short term arbitrage seeking capital flows to emerging market economies this analysis requires specific conceptualisation definition and data generation from balance of payments statistics in section 6 a similar analysis of volatility and instability of short term inflows and outflows to emerging market economies is undertaken the penultimate section 7 discusses the policy implications of the foregoing analysis and is followed by a summary and conclusions

equity and bond flows to latin america and asia the role of global and country factors abstract this paper investigates the factors motivating the large capital flows to a number of developing countries in recent years we use monthly us capital flows to nine latin american and nine asian countries to analyze the behavior of bond and equity flows employing a panel data approach we find that although global factors the drop in us interest rates and the slowdown in us industrial production are important in explaining capital inflows country specific developments are at least as important especially for asia we also find that equity flows are more sensitive than bond flows to global factors but that bond flows are generally more sensitive to a country s credit rating and secondary market debt price

fdi waves waves of neglect of political risk studies of the impact of local political risk on foreign direct investment inflows overlook that worldwide fdi comes in waves using a simple model we show that the impact of political risk on fdi inflows is likely to be weaker the larger the worldwide amount of fdi which may question standard estimates and their policy implications using a large sample of developing and developed economies we estimate the sensitivity of the distribution of fdi inflows across countries to the local political risk we find that it is a decreasing function of the worldwide amount of fdi this finding has been upheld after many robustness checks

the contribution of renewable resources in meeting turkey s energy related challenges abstract the aim of this paper is to point out the importance of renewable energy as a key way for resolving the turkey s energy related challenges as a consequence of economic and social development turkey s energy consumption has risen dramatically over the past three decades at present fossil fuels account for more than 90 of the total energy consumption in the country turkey has no large oil and natural gas reserves and it import nearly all of these fossil fuels turkey s current energy mix is not likely to support development of sustainable energy the energy mix shows a relatively small contribution from renewable energy sources in the country they have the potential to make a large contribution to turkey s sustainable and independent energy future in particular they can help to reach the environmental goals of turkey and to increase the security of energy supply by reducing the dependence on imported fuel supplies

financial crises after financial liberalisation exceptional circumstances or structural weakness in this article i argue that emerging economies are systematically becoming more susceptible to both currency and banking crises after financial liberalisation fl using data for 27 emerging economies from 1973 to 1998 univariate and multivariate analyses indicate that the likelihood of currency crises and banking crises increase after fl in particular liberalisation allows more liquidity to enter an emerging economy which finds its way into productive and speculative projects what is common to both types of crises is a significant increase in speculative financing thereby increasing the chance for borrower default thus the outflow of international capital becomes more likely the chance of a crisis occurring in response to changes in short term loans is greater after fl than before similarly the chance of a currency crisis occurring following a currency overvaluation is larger after fl than before in comparison the likelihood of a banking crisis occurring in response to an overvalued curre

an empirical analysis on capital flows the case of korea and mexico this paper discusses causes of capital flows in korea and mexico both countries received substantial amounts of foreign capital in the late 1980s and early 1990s international capital helped these countries achieve a higher standard of living and faster economic growth however undesirable macroeconomic effects such as appreciation of real exchange rate and widening current account deficits usually accompany foreign capital inflows the vector autoregressive var method is applied to investigate the underlying shocks causing the capital inflows the main findings are that the u s business cycle and shocks to foreign interest rates account for more than 50 of capital inflows to both countries in the past two decades

do some forms of financial flows help protect against sudden stops there is a debate on whether some forms of financial flows offer better protection against crises than others using a large panel data set that includes advanced emerging and developing economies during 1970 2003 this article analyzes the behavior of several types of flows foreign direct investment fdi portfolio equity investment portfolio debt investment other flows to the official sector other flows to banks and other flows to the nonbank private sector differences across types of flows are limited with respect to volatility persistence cross country co movement and correlation with growth at home or in the world economy however consistent with conventional wisdom fdi is the least volatile form of financial flow when the average size of net or gross flows is taken into account the differences are striking during sudden stops in financial flows defined as drops in total net financial inflows of more than percentage points of gross domestic product gdp compared with the previous year in such episodes fdi is remarkably stable and portfolio equity seems to play a limited role portfolio debt experiences a reversal though it recovers relatively quickly and other flows including bank loans and trade credit experience severe drops and often remain depressed for a few years

foreign direct investments fdis in turkish power sector a discussion on investments opportunities and risks abstract power sector is important for managing the transition towards sustainable and cleaner energy systems and foreign investments can contribute to overcome the problems encountered in the process despite the vast literature on foreign direct investments fdi in other sectors studies on the power sector have been limited to either developed economies or major developing economies such as china or india therefore this study aims to discuss turkish case by using panel data analysis for 2002 2012 period results have shown that the major drivers of fdi inflows in turkish power sector were privatization and low real effective exchange rate during the period in addition turkey has the potential and opportunities to attract more investments with the recent reforms and increasing incentives for renewable energy technologies however business environment and the quality of institutions may create obstacles for realizing its potential moreover fiscal incentives and macroeconomic stability are important to sustain investments and economic and institutional reforms notably the eu integration process are important for fdi inflows

good bye financial repression hello financial crash some unintended consequences of financial liberalization in latin america are analyzed in this paper intrinsic imperfectious in financial markets and the policy dilemmas they pose are reviewed first the stylized facts of southern cone experiments in financial liberization are then presented alternative ways of organlzing domestic capital markets under latin american conditions are discussed and an eclectic reform mongering program is proposed

mitigating contractual hazards unilateral options and contract length in this article we consider the ways in which the desire for efficient low cost adaptation to change influences the tradeoff between the design and duration of long term contractual relationships we examine the distortions in contract terms occasioned by nonprice competition for natural gas in the presence of wellhead price regulation deviations from optimal contract incentives significantly raise the cost of being bound to long term agreements and shorten the duration of contracts the approach we adopt suggests a method for empirically assessing the efficiency of alternative contracting practices and legal standards

adaptations of renewable energy policies to unstable macroeconomic situations case study wind power in brazil despite the massive cost reduction in the last decade wind power generation is generally still more expensive than conventional energy sources which benefit from the exclusion of externality costs in the price structure support policies for renewable energies guarantee the economic viability of this type of electrical power generation in many european countries in latin america brazil has become the pioneer state for renewable energy with the implementation of the proinfa programme that supports among other sources wind power development of 1100 mw this article presents an overview of the differences between the german and brazilian wind power promotion policies with a special focus on how proinfa can be adapted to the unstable macroeconomic situation of brazil the document specifically examines the adaptation of wind power promotion policies to large inflation and interest rates in brazil

currency crashes in emerging markets an empirical treatment we use a panel of annual data for over 100 developing countries from 1971 through 1992 to characterize currency crashes we define a currency crash as a large change of the nominal exchange rate that is also a substantial increase in the rate of change of nominal depreciation we examine the composition of the debt as well as its level and a variety of other macroeconomic factors external and foreign crashes tend to occur when output growth is low the growth of domestic credit is high and the level of foreign interest rates are high a low ratio of fdi to debt is consistently associated with a high likelihood of a crash

external factors in emerging market recoveries an empirical investigation abstract we estimate conditional duration models to analyse recovery processes in emerging market economies our reduced form specification is parsimonious as we focus on exogenous factors such as the effect of growth in the us eu and japan on the prospects for recovery in emerging market economies experiencing recessions the model confirms the importance of external factors in recovery processes however the short run effect of japanese growth on recovery prospects is unconventional weak economic conditions in japan turn out to facilitate recoveries

explaining capital account liberalization in latin america a transitional cost approach in the past three decades governments around the world have lowered barriers to international capital flows this movement is widely attributed to the forces of globalization as developed nations moved toward relative convergence on international financial openness yet developing nations with much to gain from openness to foreign investment moved only hesitantly and inconsistently in this direction analysis of two decades of capital account liberalization in latin america and the oecd reveals that nations in latin america with weaker domestic financial sectors face higher risks of transitional dislocations following liberalization and move less aggressively toward openness in the oecd by contrast financial weakness is associated with greater movements toward capital account opening as transitional costs are lower and governments are better equipped to ameliorate them examination of the transitional costs of liberalization thus helps to explain how market pressures may impede rather than promote market oriented reform in latin america

incentive conflicts and contractual restraints evidence from franchising abstract this study uses agency theory to develop testable implications about three provisions commonly observed in franchise contracts 1 restrictions on passive ownership 2 area development plans and 3 mandatory advertising expenditures the primary hypothesis is that these provisions are most likely when there are significant externalities among the units within the franchise system the evidence based on a large sample of franchise contracts is generally consistent with this hypothesis the evidence also suggests that these incentive instruments are complements in contrast to the theory most of the results do not support the hypothesis that the percentage of company owned units is related to externalities within the system franchisee risk aversion and or wealth constraints appear more important while the study focuses on franchising the results provide insights into related provisions in other contracts

overview of the photovoltaic technology status and perspective in turkey abstract the republic of turkey located in southeastern europe and southwestern asia that portion of turkey west of the bosporus is geographically part of europe nowadays turkey with its young population and growing energy demand per person its fast growing urbanization and its economic development has been one of the fast growing electrical energy markets of the world for the last two decades unfortunately turkey s energy is largely dependent on foreign countries and the country s energy is imported spending billions of dollars each year on the other hand the effects on global and environmental air quality of pollutants released into the atmosphere from fossil fuels in electric power plants provide strong arguments for the development of renewable energy resources solar energy is one of the best available among renewable energy sources there are possess many advantages of solar energy such as relativity viability silent non polluting little maintenance suitable for remote site application not require any fuel and independent from electricity network turkey has advanced a great deal in the generation of electricity from solar energy because of much higher solar energy potential than lots of developed countries on solar energy applications this study is taken into account that overview of the photovoltaic technology status and perspective in turkey and the contains of photovoltaic power systems utilization and potential status in the world energy consumption and demand in turkey geographic description of the solar energy in turkey pv industry current and potential status in turkey solar energy legislation framework in turkey r d status of photovoltaic industry in turkey future strategy of pv industry in turkey current and future status photovoltaic power systems economics in the world also this paper on the basis of this subjects is analyzed the swot of turkey s photovoltaic industry its advantages weaknesses opportunities and threats

unemployment and the real exchange rate in latin america summary today unemployment rates in several latin american countries are similar or even higher than the highest unemployment rates among oecd economies open unemployment has become for the first time in the region s history a major dimension of the employment problem this paper examines the role of the real exchange rate rer in the recent unemployment performance of latin america it presents a model of the determinants of unemployment the channels through which the rer influences unemployment performance as well as the stylized facts and empirical results about this relationship giving special attention to the cases of argentina brazil chile and mexico 2006 elsevier ltd all rights reserved

legal and managerial implications of the italian contratto di rete today innovation and internationalization processes need more programming and high investments in new knowledge and relationships through trans sectorial and trans territorial networks smes can participate to global dynamics especially in terms of knowledge sharing and absorbing we propose that the contratto di rete network contract is an innovative type of formal contract and a central solution in these dynamics since its introduction in 2009 by means of the law decree 5 2009 the brand new networking tool has achieved broad success among italian entrepreneurs the authors provide an overview of the discipline regulating the tool a background concerning network and contract theory and finally a presentation of some best practices through insightful case studies this approach integrates legal and managerial perspectives delivering useful implications for scholars and practitioners

hot money accounting labels and the permanence of capital flows to developing countries an empirical investigation using maximum likelihood kalman filtering techniques and non parametric variance ratio statistics we gauge the relative importance of permanent and temporary components of capital flows to latin american and asian developing countries over the period 1988 1997 for the broad categories of flows in the capital account equity flows ef bond flows bf official flows of commercial bank credit bc and foreign direct investment fdi we find relatively low permanent components in ef bf and of while commercial bc flows appear to contain quite large permanent components and fdi flows are almost entirely permanent these results have a natural interpretation and clear policy implications

diverging trends in aggregate and firm volatility this note documents the diverging trends in volatility of the growth rate of sales at the aggregate and firm levels we establish that the upward trend in firm volatility is not simply driven by a compositional bias in the sample studied we argue that this new fact brings into question the proposed explanations for the decline in aggregate volatility and that given the symmetry of the diverging trends at the micro and macro levels a common explanation is likely we conclude by describing one such theory

solar energy markets economics and policies abstract solar energy has experienced phenomenal growth in recent years due to both technological improvements resulting in cost reductions and government policies supportive of renewable energy development and utilization this study analyzes the technical economic and policy aspects of solar energy development and deployment while the cost of solar energy has declined rapidly in the recent past it still remains much higher than the cost of conventional energy technologies like other renewable energy technologies solar energy benefits from fiscal and regulatory incentives including tax credits and exemptions feed in tariff preferential interest rates renewable portfolio standards and voluntary green power programs in many countries the emerging carbon credit markets are expected to provide additional incentives to solar energy deployment however the scale of incentives provided by the existing carbon market instruments such as the clean development mechanism of the kyoto protocol is limited despite the huge technical potential the development and large scale deployment of solar energy technologies world wide still has to overcome a number of technical financial regulatory and institutional barriers the continuation of policy supports might be necessary for several decades to maintain and enhance the growth of solar energy in both developed and developing countries

formal and informal governance in biotechnology alliances board oversight contractual control and repeated deals in complex transactions like strategic alliances firms are likely to employ both formal and informal governance mechanisms to achieve effective alliance governance the question of whether formal and informal governance mechanisms are complements or substitutes needs to be addressed within the context of effective governance as a means to economic value creation for the transacting partners rather than an either or choice between the two perspectives the substitute hypothesis and the complement hypothesis on the relationship between formal and informal governance mechanisms i provide evidence from the biotechnology industry that alliances characterized by high levels of exchange hazards utilizing both mechanisms supporting the complements hypothesis whereas those alliances with lower levels of exchange hazards utilize only one type of governance mechanism finding seemingly contrasting results within a single institutional setting suggests that in addition to institution specific characteristics alliance specific characteristics may also be critical for understanding how alliance partners utilize multiple governance mechanisms

the new wave of private capital inflows push or pull abstract this paper studies the determinants and sustainability of the widespread private capital inflows to middle income countries after 1989 the key question is whether these flows are mostly pulled by attractive domestic conditions or pushed by unfavorable conditions in developed countries an analytical model focusing on country risk is developed and used empirically it is argued that the observed improvement in country creditworthiness is mostly due to the decline in international interest rates and that therefore its importance as a proximate cause does not support the pull interpretation all things considered in most countries the key answer that emerges is push

interest rates and investment in east asia an empirical evaluation of various financial liberalisation hypotheses the article attempts to shed light on the appropriate interest rate policy in the process of economic development to this end we examine whether higher interest rates lead to higher investment and growth in four east asian countries we find that the investment rate went up with real interest rates up to 9 per cent in all four countries but started declining at still higher interest rates in two of the countries further a banking crisis occurred in each of the three countries for which the real interest rates exceeded 9 per cent this evidence rejects the neo structuralist argument nor does it support unbridled financial liberalisation yet it provides only limited support to stiglitz s case for mild financial repression real interest rates near zero since reducing real interest rates from say 6 to 3 or 0 per cent would have reduced investment the optimum policy seems to be closest to mckinnon s restrained financial liberalisation policy that is liberalisation with a moderate upper lim

let s work it out or we ll see you in court litigation and private dispute resolution in vertical exchange relationships we examine how partners in vertical exchange relationships actually resolve disputes that are sufficiently serious to get lawyers involved reaching beyond the usual domain of organizational and management research we leverage findings from law and economics to offer a novel organizational perspective on litigation and private dispute resolution and we develop hypotheses about the likelihood of litigation in different exchange settings our empirical analysis generates three sets of new findings first counter to the received wisdom we see that the involvement of lawyers does not necessarily signal the bitter end of an exchange relationship because firms frequently manage to avoid litigation and resolve their disputes privately and they do so in a manner that accords with our theoretical predictions second we see that familiarity with exchange partners does not automatically lead to increased willingness to work things out rather our empirical results suggest that the impact of exchange duration on parties willingness to resolve disputes privately is contingent on the development of norms of cooperation in the event that such norms do not develop the probability of a litigated outcome actually increases over time finally we see that firms willingness to work things out privately is also influenced positively by the shadow of the future these findings are suggestive of a discriminating alignment between exchange characteristics and the choice of dispute resolution procedure and they thus inject important new evidence into ongoing discussions about the legal underpinnings of different governance forms

ride the wild surf an investigation of the drivers of surges in capital inflows over the past 15 years gross inflows to industrial and developing countries have enjoyed a wild ride after reaching record highs in the run up to the global financial crisis they collapsed dramatically in 2008 09 as signs of global recovery reappeared capital inflows resumed although at different speeds the recovery in flows was faster and sharper in developing countries this paper aims at understanding the domestic and external drivers of these surges in gross inflows using quarterly data for 67 countries from 1975 to 2010 it finds that domestic and external factors have significant explanatory power in driving surges of inflows this finding holds for the sample of industrial countries whereas domestic factors play a significantly larger role in explaining surges to developing countries zooming into the findings shows that a financial booms tend to attract massive capital inflows b surges to either industrial or developing countries are driven by regional contagion and c strong growth and natural resource abundance are keys to attract inflows of foreign capital into developing countries

capital inflows external shocks and the real exchange rate abstract this paper examines the effects of a fall in world interest rates on capital flows and the real exchange rate in an optimizing framework with imperfect capital markets a permanent fall leads to a steady state reduction in net foreign assets and a real depreciation regardless of whether the country is initially a net creditor or net debtor on impact the real exchange rate appreciates in the net debtor case but may either appreciate or depreciate in the net creditor case the dynamics associated with a temporary shock depend not only on its duration but also on the initial asset position

capital market liberalization economic growth and instability summary this paper reviews briefly the arguments for capital market liberalization and identifies their theoretical and empirical weaknesses this provides the foundations for the argument for intervention in short term capital flows the paper concludes with a brief discussion of the various ways in which such interventions may be implemented 2000 elsevier science ltd all rights reserved

the catalytic effect of lending by the international financial institutions for many less developed countries ldcs and countries in transition cits external financing is frequently an effective constraint on economic growth and development capital inflows may be used to overcome shortages of domestic saving thereby permitting higher levels of investment as well as shortages of foreign exchange thereby permitting larger quantities of imports

dancing with the enemy relational hazards and the contingent value of repeat exchanges in m a markets i examine the problem of relational hazards between repeat exchange partners and the contingent roles of trade uncertainty and future exchange prospects in moderating the potentially conflicting effects of past exchanges on these hazards thereby facilitating or restraining the formation of relational embeddedness on the data of advisory relationships in u s mergers and acquisitions from 1981 to 2004 i find that firms that repeatedly hire the same investment banks as financial advisors tend to overpay for acquisition targets as reflected by negative investor reactions measured in the cumulative abnormal return in addition the degree of overpayment increases with the frequency of prior exchanges this adverse effect of exchange history grows if the uncertainty regarding the target firm rises however better prospects for future business with acquiring firms help mitigate this negative effect although this moderating effect varies across the types of exchange experience the findings suggest that a potentially complex and nuanced process underlies repeat exchanges which are an oft claimed precursor of relational embeddedness to deliver tangible economic benefits this study contributes to the emerging literature on the dark side of embeddedness and more broadly to the sociology of markets and organizations by substantiating the contingency mechanisms that shape the value of a repeat relationship in market exchanges

complementarity and evolution of contractual provisions an empirical study of it services contracts an increasing volume of business activity appears to be occurring via alliances or other interfirm arrangements in which complex contracts are featured yet there has been relatively little study of contract design in the strategy or management literatures the economics literature on contracting has been extensive but it has been less concerned with learning and evolution phenomena in which strategy and organization scholars are deeply interested in this paper we investigate the relationship between two types of contractual provisions that are important in high technology contracts or contracts for which environmental uncertainty or technological complexity are significant namely contingency planning and task description previous research suggests that contracts can vary significantly in the degree of detail with which such key provisions are written and that they are each subject to learning in this paper we find evidence from a sample of 386 contracts that contingency planning and task description behave as complements in contractual design we argue that this complementarity reflects patterns of learning to contract we also find that repeated exchange between two firms leads to greater effort at contingency planning in subsequent contracts a finding that is also consistent with learning effects but not with frequently made claims that contracts and trust are substitutes

global economic divergence and portfolio capital flows to emerging markets this paper studies the role of global and regional variations in economic activity and policy in developed world in driving portfolio capital flows pcfs to emerging markets ems results suggest that pcfs to ems depend mainly on economic activity at the global level and monetary policy in america and asia positively on the former and negatively on the latters pcfs are procyclical with respect to global activity but countercyclical to regional activity in aggregate regional variations contribute more than global variations this implies that economic divergence in the developed world can have significant effects on ems via pcfs

managing capital accounts in emerging markets lessons from the global financial crisis abstract the global financial crisis forcefully highlighted the importance of curbing the impact of large and volatile capital inflows on growth and financial stability in developing countries it led the imf to reconsider its long standing rejection of capital controls yet its new macroeconomic policy first approach has to be reconciled with the hybrid nature of banking activity and its role in transmitting global shocks a consideration of dominant actors and strategies of intermediating capital inflows offers distinct policy options ranging from carefully designed central bank strategies to institutional changes that realign bank incentives towards longer horizons and sustainable growth models

learning to contract evidence from the personal computer industry organizational forms involving more detailed contracts than are found in traditional spot market exchanges appear to be increasingly prevalent there has been relatively little analysis however of the extent to which firms learn how to use contracts to manage their interfirm relationships over time in this paper we conduct a detailed case study of a time series of 11 contracts concluded during 1989 1997 between the same two partners both of whom participate in the personal computer industry to explore whether and how firms learn to contract we find many changes to the structure of the contracts that cannot be fully explained by changes in the assets at risk in the relationship and evidence that these changes are largely the result of processes in which the firms were learning how to work together including learning how to contract with each other the nature of this learning appears to have been quite incremental and local that is not very far sighted we suggest how and when contracts might serve as repositories for knowledge about how to govern collaborations and suggest some boundary conditions for this phenomenon our findings also provide implications for the debate about whether contracts have a positive or negative effect on interorganizational trust we conclude with suggestions for future research

what drives international portfolio flows understanding what drives international portfolio flows has important policy implications for countries wishing to exert some control on the size direction and volatility of the flows this paper empirically assesses the relative contribution of common push and country specific pull factors to the variation of bond and equity flows from the us to 55 other countries using a bayesian dynamic latent factor model we find that more than 80 of the variation in bond and equity flows is due to push factors from the us to other countries hence global economic forces seem to prevail over domestic economic forces in explaining movements in international portfolio flows the dynamics of push and pull factors can be partially explained by us and foreign economic fundamentals

who i am and how i contract the effect of contractors roles on the evolution of contract structure in university industry research agreements in this exploratory study of university industry sponsored research agreements we investigate how organizational roles direct the relational learning of contracting personnel which subsequently influences contract evolution integrating theory with comments from field interviews we posit that as scientists gain contracting experience with an exchange partner their focus of attention on knowledge creation supports the establishment of a relationship based on technical competence behavioral experience and operational routines that cause the enforcement terms of subsequent contracts to become less detailed we also submit that contract administrators because of their focus on knowledge protection mitigating opportunism and enforcement primarily accumulate joint governance experience and establish administrative routines that cause the enforcement terms of subsequent contracts to become more detailed rich content analysis of monitoring and intellectual property terms of sponsored research agreements supports our theoretically grounded hypotheses

capital flows to developing countries long and short term determinants this article focuses on the determinants of the large portfolio flows from the united states to latin american and asian countries during 1988 92 cointegration techniques reveal that both domestic and global factors explain bond and equity flows to developing countries and represent significant long run determinants of portfolio flows the article also investigates the dynamics of portfolio flows by estimating seemingly unrelated error correction models global and country specific factors are equally important in determining the long run movements in equity flows for both asian and latin american countries while global factors are much more important than domestic factors in explaining the dynamics of bond flows u s interest rates are a particularly important determinant of the short run dynamics of portfolio especially bond flows to developing countries copyright 1997 by oxford university press

network prominence bargaining power and the allocation of value capturing rights in high tech alliance contracts we suggest and provide empirical evidence that the bargaining power of alliance partners stemming from their prominence in alliance networks influences the ex ante allocation of value capturing rights in high tech alliance contracts network prominence can enhance the availability of alternative partners for a firm and thereby elevates the firm s bargaining power and enables the firm to receive i more value capturing rights vis a vis its partner i e more net value capturing rights and ii more rights to the unexpected outcomes vis a vis its partner we empirically investigate the content of research and development r d collaboration contracts between biotech and pharmaceutical firms and show that as the prominence of the client i e pharmaceutical firm increases it is able to attain i more net value capturing rights to outcomes within the area of collaboration and ii more rights to unexpected outcomes by contrast increased prominence of the r d firm i e biotech firm decreases both t

propagation of speculative cycles the exchange rate channel abstract the nominal and real exchange rates are key relative prices within and between economies their volatility and gyrations can have significant cumulative effects on the development pattern of financially integrated economies the article documents the linkage between global risk aversion and the exchange rate of some developed and developing economy currencies characterised by large short term interest rate differentials if capital flows can drive exchange rates and transmit international speculative cycles inside the economic system a careful design of monetary policy exchange rate and capital management regimes is a fundamental ingredient of a successful development strategy

the surge in capital inflows to developing countries an analytical overview after being excluded from world capital markets during the debt crisis many developing countries have experienced large capital inflows during the past five years the challenges that these inflows pose for domestic policy in recipient countries have generated a substantial literature this article presents an overview of that literature describing the characteristics of the new inflows analyzing the policy issues they raise assessing their causes and likely sustainability and evaluating potential policy responses the desirable policy response is tied to characteristics of the flows themselves as well as to the characteristics of the recipient economy

reputation effects and the limits of contracting a study of the indian software industry this paper examines evidence of the role that reputation plays in determining contractual outcomes we conduct an empirical analysis of the indian customized software industry using a data set we collected containing detailed information on 230 projects carried out by 125 software firms we propose a model ofthe industry where reputation determines contractual outcomes the evidence supports the view that reputation matters ex ante contracts as well as the outcome after ex post renegotiation vary with firms characteristics plausibly associated with reputation this holds after controlling for project client and firm characteristics

controls on capital inflows do they work abstract this paper analyzes the effectiveness of controls on capital inflows in particular we analyze in great detail the chilean experience with the use of the unremunerated reserve requirement we examine the effects of the controls applied in chile in 1991 1998 on interest rates real exchange rate and the volume and composition of capital inflows the effects are elusive and it is difficult to pin down long run effects although after the unremunerated reserve requirement was introduced there was an increase in the interest rate differential the econometric evidence does not show it has a significant long run effect also we detect very small effects on the real exchange rate however the more persistent and significant effect is on the composition of capital inflows tilting composition toward longer maturity

sterilization of short term capital inflows through lower interest rates reductions in international interest rates are a major cause of capital flows to emerging economies increases in domestic interest rates are a frequent policy response to the resulting price increases this is often unsuccessful the paper suggests a theoretical explanation based on distinctive features of emerging financial markets including imperfect asset substitutability and imperfect capital mobility for some sectors of the economy it concludes that the appropriate policy response to capital inflows may be lower interest rates

a discussion on recent developments in turkey s emerging solar power market abstract market reform energy security and environmental protection are three primary energy policy goals of turkish government although turkey s abundant solar energy resources can directly address the government s energy policy goals turkey has not utilized solar power yet utilization of country s huge solar energy potential would decrease dependence on imported fossil fuels and contribute to fulfill environmental commitments however lack of regulatory and financial support for the development of solar power has considerably delayed the utilization of country s huge solar potential the government has taken only modest steps to promote investment in solar power until the end of 2010 when a new feed in tariff policy was adapted turkey s solar energy potential pv technology status and prospect for concentrating solar power in turkey have been explored in a number of studies yet literature dealing with recent policy developments associated investment environment and opportunities for solar power investors are limited the aim of this paper is to set out the latest legal framework for investment in turkey s emerging solar power market and to provide some guidelines to potential investors who appreciated country s huge solar energy potential

formal contracts in the presence of relational enforcement mechanisms evidence from technology development projects formal contracting addresses the moral hazard problems inherent in interfirm deals via explicit terms designed to achieve incentive alignment alternatively when firms expect to interact repeatedly relational mechanisms may achieve similar results without the associated costs however as we now know from a growing body of theoretical and empirical work the resulting intuition that relational mechanisms will be substituted for formal ones whenever possible does not generally hold the extent to which firms substitute relational mechanisms for formal ones in the presence of repeated interaction is an empirical question that forms the basis of this paper we study a sample of 52 joint technology development contracts in the telecommunications and microelectronics industries and devise a coding scheme to allow empirical comparison of contract terms counter to the above intuition but consistent with recent research we find that a firm s contracts are more detailed and more likely to include penalties when it engages in frequent deals whether with the same or different partners our results suggest complementarity between formal and relational contracts and have implications for optimal contracting particularly in high technology sectors

an exogeneity test for a simultaneous equation tobit model with an application to labor supply a test of weak exogeneity in the simultaneous equation tobit model is proposed and illustrated using a female labour supply model estimated using cross section data the test statistic can be simply output from any standard tobit maximum likelihood package and is asymptotically efficient the procedure provides consistent estimators for the simultaneous tobit model whose asymptotic covariance matrix is a simple extension of the usual tobit formula we also provide the lagrange multiplier test of weak exogeneity this abstract was borrowed from another version of this item

ex post adaptations and hybrid contracts in software development services we follow the recent literature on ex post adaptations in procurement and argue that highly volatile specifications result in multiple variations of fixed price fp and time and materials t m contracts specifically placing a cap on specification change in fp contracts prevents specification volatility similar to the way that placing a cap on the price in t m contracts prevents price escalation we argue that these hybrid mechanisms are particularly important in software development contracting a new critical business capability involving frequent and costly ex post adaptations to specification change the level of completeness in these contractual archetypes is hypothesized to be determined by contracting costs and benefits where costs are related to project uncertainty and benefits are related to the likelihood of vendor opportunism we test this hypothesis with a unique data set of 270 software development contracts entered into by a leading international bank the analysis confirms the existence of multiple hybrid contracts that mitigate both price escalation and specification volatility it also shows that contracting costs and benefits explain more variance in contract choice when these hybrids are included uncovering the detailed mechanisms used to curb opportunism when the vendor is less familiar to the client

cross country evidence on the link between volatility and growth this paper presents empirical evidence against the standard dichotomy in macroeconomics that separates growth from the volatility of economic fluctuations in a sample of ninety two countries as well as a sample of oecd countries the authors find that countries with higher volatility have lower growth the addition of standard control variables strengthens the negative relationship the authors also find that government spending induced volatility is negatively associated with growth even after controlling for both time and country fixed effects copyright 1995 by american economic association