stock market linkages evidence from latin america abstract this study investigates the dynamic interdependence of the major stock markets in latin america using data from 1995 to 2000 we examine the stock market indexes of argentina brazil chile colombia mexico and venezuela the index level series are non stationary and so we employ cointegration analysis and error correction vector autoregressions var techniques to model the interdependencies we find that there is one cointegrating vector which appears to explain the dependencies in prices the results are robust to sensitivity tests based on translating indexes to us dollars i e a common currency for all the markets and to partitioning the sample into periods before and after the asian and russian financial crises of 1997 and 1998 respectively our results suggest that the potential for diversifying risk by investing in different latin american markets is limited

privatisation in developing countries a review of the evidence and the policy lessons privatisation is widely promoted as a means of improving economic performance in developing countries however the policy remains controversial and the relative roles of ownership and other structural changes such as competition and regulation in promoting economic performance remain uncertain this article reviews the main empirical evidence on the impact of privatisation on economic performance in developing economies the evidence suggests that if privatisation is to improve performance over the longer term it needs to be complemented by policies that promote competition and effective state regulation and that privatisation works best in developing countries when it is integrated into a broader process of structural reform

cross country performance of levy regime switching models for stock markets abstractthis article compares the performance of regime switching levy models across sixteen 16 international stock markets from a cross country perspective the empirical application is dedicated to the study of equity markets in the americas asia and europe the results are of interest for a financial audience in order to document the sensitivity of stock indexes to the intensity of jumps under changing economic regimes expansion or recession we pick up singularities in japan and malaysia compared to other countries and regions of the world

can a liberalization of capital outflows increase net capital inflows abstract facing massive capital inflows that put downward pressure on the real exchange rate some policymakers and analysts have recommended a liberalization of capital outflows empirically however the removal of capital outflow controls has apparently stimulated a net inflow of capital in several experiences such as britain since 1979 italy new zealand and spain in the mid to late 1980s and colombia egypt and mexico in the 1990s numerous measures to liberalize capital outflows in chile during the 1990s have not had a noticeable effect in offseting a surge of net capital inflows how can we explain the apparent paradox that reducing controls on capital outflows can actually increase net capital inflows our theoretical model provides one such explanation a liberalization of capital outflows understood here as a reduction in the minimum capital repatriation period for foreign investment reduces the degree of irreversibility of the decision to invest in a given country this in turn lowers the option value of waiting until uncertainty about a possible change in the rules of the game that affect investment in domestic assets is resolved because in this event foreigners investing at home will be stuck with the low return asset for a shorter period of time thus a reduction in the minimum repatriation period is likely to increase not decrease net capital inflows this result has an important policy implication liberalizing capital outflows may have significant benefits on its own but it may not be the appropriate policy to defend the real exchange rate in the presence of massive capital inflows because it is likely to strengthen those very capital inflows

the role of agriculture and its prerequisites in economic development a vision for foreign development assistance abstract the aim of this paper is to establish a vision for foreign development assistance based upon the evolution of thought and empirical evidence found in the development literature the paper spotlights the agricultural led approach the empirical record shows that agricultural growth had a more pronounced impact on increases in developing country income than did growth in the nonagricultural sector the reason for the differential impact is that developing countries focusing on agricultural development experienced more broad based income growth and increases in the demand for domestically produced goods whereas the developing countries promoting rapid industrialization experienced narrow based income growth with a demand pattern oriented toward nonfood and capital intensive products a precondition for agriculture to play its proper role is the existence of a conducive environment in which private enterprise can flourish developing country governments need to assume responsibility for the creation and maintenance of essential institutions government investments are required in education infrastructure and other areas where the commercial market is not capable of delivering critical services finally governments must responsibly manage the macroeconomy pursuing sustainable pricing policies and fiscal and monetary policies that are consistent with real equilibrium exchange rates

residual state ownership policy stability and financial performance following strategic decisions by privatizing telecoms we question previous research assuming that privatizing firm performance generally benefits from decreasing state ownership and the passage of time both of which purportedly align principal agent incentives promoting organizational decision making that increases shareholder value when state ownership shifts from majority and controlling to minority and non controlling the performance impact may be positive in the short run particularly where there is instability in the local investment policy environment consistent with this proposition we develop and test hypotheses derived from a minority and non controlling or residual state ownership framework grounded in credible privatization and institutional theory we propose that 1 residual state ownership positively affects shareholder returns after strategic decisions by privatizing firms because it signals state support for managerial initiatives 2 the passage of time since initial privatization negatively affects shareholder returns after strategic decisions by privatizing firms because initial undertakings in support of the privatizing firm are reversed and 3 home country investment policy stability moderates these two effects greater stability obviates the need for residual state ownership and slows policy reversals over time we find empirical support for our residual state ownership framework in event study analyses of cumulative abnormal returns cars associated with 196 major investments announced from 1986 to 2001 by 15 privatizing telecoms from around the world cars are positive at 5 25 state ownership levels but turn negative at higher state ownership levels cars turn sharply negative within 1 2 years from initial privatization dates increasing policy stability diminishes positive ownership and negative time effects on cars results confirm the potential supporting role that residual state ownership can play in enhancing strategic decision making and financial performance by privatizing firms particularly where there is instability in the home country investment policy environment

does agricultural growth in poor countries harm agricultural exporting rich countries abstract the commonly held view that agricultural exporting developed countries would lose from agricultural growth in less developed countries lcds is shown to be based on an incomplete argument it considers only the effects on ldc agricultural supply or at best only that and the first round effects of increased farmer incomes on the demand for tradables what also needs to be considered is the effect on the demand for nontradables and hence the second round effects of increased spending by producers of nontradables when all these effects are considered the positive correlations obtained between agricultural output growth in ldcs and agricultural imports from developed countries is not surprising it is then shown that selling or giving away agricultural research and management skills to developing countries can be beneficial to developed countries including agricultural exporters by setting out to do good they may end up also doing well

evolution of international stock and bond market integration influence of the european monetary union abstract this paper examines the dynamic relationship between daily stock and government bond returns of selected countries over the past decade to infer the state and progress of inter financial market integration we proceed to empirically investigate the influence of the european monetary union emu on time variations in inter stock bond market integration segmentation dynamics using a two step procedure first we document the downward trends in time varying conditional correlations between stock and bond market returns in european countries japan and the us second we investigate the causality and determinants of this interdependent relationship in particular whether the various macroeconomic convergence criteria associated with the emu have played a significant role we find that real economic integration and the reduction in currency risk have generally had the desired effect on financial integration but monetary policy integration may have created uncertain investor sentiments on the economic future of the emu thereby stimulating a flight to quality phenomenon

privatization and globalization an empirical analysis abstract this paper examines the link between globalization measured by foreign direct investment fdi and foreign portfolio investment fpi and privatization of state owned enterprises in a multi country sample that focuses on developing countries we hypothesize that privatization has an effect on fdi fpi as the process of fostering private sector participation is often accompanied by liberalization reforms and by allocations of substantial shares of newly privatized firms to foreign investors similarly we expect fdi fpi to foster privatization efforts as new capital inflows technology and managerial skills that accompany fdi fpi make the environment more prone to competition providing governments with incentives to privatize inefficient firms that need to be turned around this relation is assessed in two ways first in a dynamic panel using a generalized method of moments approach and second through panel causality tests we find a bi directional positive relation between privatization proceeds and globalization particularly in the case of fdi

bargaining power ownership and profitability of transnational corporations in developing countries as the bargaining power of the transnational corporations tncs in the sample increased relative to the bargaining power of the host country and as the desire of the tncs for a high level of equity ownership increased the percent equity ownership of the tncs in their subsidiaries increased the relationship between percent equity ownership and subsidiary success from the tncs viewpoint however was j shaped high and low levels of equity ownership were associated with high levels of success control of critical operational variables by the tnc was directly related to success

a framework for integrated risk management in international business treatments of risk in the international management literature largely focus on particular uncertainties to the exclusion of other interrelated uncertainties this paper develops a framework for categorizing the uncertainties faced by firms operating internationally and outlines both financial and strategic corporate risk management responses

resisting the protectionist temptation industry and the making of trade policy in france and the united states during the 1970s why were advanced industrial states able to keep their economies relatively open to foreign trade in the 1970s and the early 1980s despite declining u s hegemony and increasing economic difficulties this article argues that an international level change affected domestic trade politics and contributed to the maintenance of a liberal trading system examining the united states and france the argument proceeds in two steps showing first how domestic trade politics were changed and second how this change affected the policy process initially i argue that aspects of the increased international economic interdependence of the postwar period altered domestic trade politics by creating new anti protectionist preferences among certain firms firms with extensive international ties through exports multinational production and global intra firm trade have come to oppose protectionism since it is very costly for them evidence for these new preferences was apparent among both american and french industries despite different contexts firms in the two countries reacted similarly to the growth of interdependence next i ask whether firms preferences affected trade policy outcomes and show how these preferences were integrated into the policy process in both countries trade policy structures in neither country prevented firms preferences from affecting the policies adopted even in france a so called strong state firms preferences were a key influence on policy in the trade policy area then the french and american states did not appear to differ greatly in their susceptibility to industry influence even though their policy processes were different

relationship between agricultural growth and farm imports in ldcs a sims causality test based on 35 countries abstract previous empirical studies on the relationship between agricultural growth and farm imports in the ldcs suffer from serious methodological defects which to some extent may invalidate their results and interpretations this study used sims causality test to examine interactions between agricultural output and agricultural imports for 35 ldcs individually it was found that there was no causality from agricultural output to agricultural imports for a majority of countries under study for countries where agricultural growth did have a causal effect on agricultural imports the effect was positive in some countries and negative in others

assistance to expand agricultural production abstract bilateral and multilateral development assistance agencies have devoted major resources to programs to support more rapid growth of agricultural production in developing countries in this paper i review the effectiveness of assistance activities in land and water development agricultural research and extension the reform of land tenure arrangement and the development of agricultural credit institutions investments in several of these activities particularly land and water resource development and agricultural research have had relatively high rate of return yet in almost all areas there has been a continuous cycling of program priorities and thrusts there has been a persistent failure to learn from failure or from success in the future more attention needs to be given to the generation of socialscience knowledge for the design and reform of the institutional infrastructure needed to sustain agricultural development

the conditions for harmony between third world agricultural development and u s farm exports during the 1960s and 1970s the growth and welfare of u s agriculture has become increasingly dependent on rapidly expanding foreign demand the origin of import demand for food and feed grains has been significantly relocated away from the more developed countries and toward the centrally planned economies the oil exporting and newly industrialized countries nics and the less developed countries ldcs between 1961 63 and 1981 83 63 of the growth in net imports of food grains originated in the developing countries dcs of which 41 was in the ldcs shane for feed grains 49 of the growth in net imports originated in the dcs of which 35 was in the nics

diversification strategy and choice of country diversifying acquisitions abroad by u s multinationals 1978 1980 what explains the multinational conglomerate diversified across both product and geographic boundaries from a sample of diversifying foreign acquisitions by u s firms we conclude that the choice between related and unrelated acquisitions bears little relation to the acquire s base activity in the u s but it is somewhat affected by transaction costs and the firm s previous experience in the host country the motive of risk spreading encourages unrelated overseas acquisitions

farm development in poor countries the disputed consequences for u s farm trade a growing body of evidence suggests that farm development in poor countries is not necessarily menacing to u s farm trade to the contrary by helping to stimulate broadbased income growth in poor countries which is often followed by dietary enrichment and food import expansion farm development in poor countries can actually be beneficial to u s farm trade here we shall review some of the evidence which agricultural economists have recently put forward to support this paradoxical argument and we shall ask why this evidence has not yet been persuasive to the u s farm community in poor countries where incomes are low where diets are not yet rich and where a majority of citizens often depend upon farming for income and employment rapid agricultural development can stimulate the broad based income growth and eventually the industrial development usually necessary to turn loose pent up demands for dietary enrichment the paradoxical result can be that local food consumption may grow even more rapidly than local food production and the net farm imports of agriculturally successful developing countries can then actually increase to the presumed benefit of u s farmers a significant body of evidence has recently been assembled to document this paradoxical claim in 1979 bachman and paulino examined the trade consequences of rapid food production growth in sixteen developing countries and found that while the proportion of domestic food consumption satisfied by imports generally fell in these countries net imports of staple foods nonetheless increased annual net staple food imports in these agriculturally successful poor countries actually rose in volume by 133 between 1961 65 and 1974 76 bachman and paulino p 14 a similar pattern of rapid food import growth has more recently been documented by lee and shane in two developing countries malaysia and brazil often cited as threats to u s farm trade both of these coun

probing theoretically into central and eastern europe transactions resources and institutions since the 1990s central and eastern europe cee has provided unique societal quasi experiments which represent opportunities to test the applicability of existing theories in international business and management studies and to develop new ones specifically three lines of theorising have been advanced 1 organisational economics theories 2 resource based theories and 3 institutional theories for each of these theories we discuss how they contribute to the understanding of key issues such as entry strategies of foreign investors restructuring strategies of local incumbents and entry and growth strategies of entrepreneurs on this basis we assess how cee research has influenced the overall trajectories of theory development cee research has in particular highlighted the importance of contextual influences such as institutions thus scholars have aimed at incorporating institutions into theories such as organisational economics theories and resource based theories and advancing an institution based view of business strategy as a complementary perspective we outline how future research in cee and other emerging economies may advance this research agenda further

large scale privatization in transition economies to explain the slow progress of mass privatization programs in eastern europe the authors present a model based on a positive spillover between aggregate privatization and the individual expected return to privatization derived from a potential populist backlash if costly reforms do not bring forth sufficient aggregate privatization the model allows for the simultaneous existence of a pessimistic zero privatization trap and an optimistic full privatization equilibrium defined by a critical mass of expected privatization while both privatization subsidies and minimum income guarantees can by themselves secure coordination on the optimistic equilibrium the financing constraint may offset the direct effect copyright 1993 by american economic association

privatization market liberalization and learning in transition economies privatization and market liberalization are widely considered to be complementary reforms in transition economies this article challenges this view and the closely related big bang approach when pursued too vigorously privatization may impede the transition process following liberalization our result is based on an explicit model of market learning compared to a mature market a market in transition is characterized by greater uncertainty regarding market conditions including equilibrium prices and quanti ties economic actors must learn about these conditions through their participation in the market process less than full privatization is optimal if the costs of learning are sufficiently important

cointegration market integration and market efficiency abstract this paper uses a standard dynamic general equilibrium asset pricing model to study the relationship among the concepts of efficient markets integrated markets and cointegrated prices within this setting we show that these concepts are independent of one another and any zero one two or three of these characteristics can emerge in equilibrium depending upon taste endowment and technology parameters in particular the results of tests of cointegration among asset prices have no implications about market efficiency or market integration without additional restrictions on the economy or economies

privatization technology choice and aggregate outcomes abstract we analyze the macroeconomic consequences of privatization policies in transition economies due to the particular market structure in those economies strategic completnentarities in restructuring of privatized firms occur giving rise to multiple macroeconomic equilibria restructuring and the resulting macroeconomic outcomes crucially depend on how property rights are distributed and which method of privatization is chesen firm sales to single or core investors may easily lead to bad equilibria without restructuring if employees are given profit claims this is so even if the workers give up parts of their wages as a compensation for stocks wage equity swaps contrary to conventional wisdom mass privatization can have favourable influence on micro economic efficiency and may therefore lead to a good aggregate outcome as an additional feature favouring mass privatization we argue that a big bang approach to privatization might lead to a favourable equilibrium

u s stock returns and oil prices the tale from daily data and the 2008 2009 financial crisis abstract using daily data from january 1999 to december 2011 we examine u s stock returns s p 500 dow jones nasdaq and russell 2000 based on a wide range of information including equity vix volatility inflation expectations interest rates gold prices and the usd euro exchange rate the focus is on oil price returns which have been previously found to exert mostly negative effects on u s stock returns identifying the crisis of 2008 2009 as a significant period of economic contraction and subsequent recovery we check the stability of the stock oil relationship by garch and mgarch dcc models prior to the financial crisis stock returns are slightly negatively affected by oil prices and by the usd euro for the subsample of mid 2009 onwards however stock returns are positively affected by oil prices and a weaker usd euro as with inflation expectations we interpret these findings as u s stocks responding positively to expectations of recovery worldwide our proposed explanation is due to the changing correlation between stock markets and oil either by standard garch models or by mgarch dcc models allowing the implied correlation to vary over time

dynamic correlation analysis of financial contagion evidence from asian markets we apply a dynamic conditional correlation model to nine asian daily stock return data series from 1990 to 2003 the empirical evidence confirms a contagion effect by analyzing the correlation coefficient series we identify two phases of the asian crisis the first shows an increase in correlation contagion the second shows a continued high correlation herding statistical analysis of the correlation coefficients also finds a shift in variance during the crisis period casting doubt on the benefit of international portfolio diversification evidence shows that international sovereign credit rating agencies play a significant role in shaping the structure of dynamic correlations in the asian markets

autoregressive modelling and money income causality detection abstract a step wise procedure based on granger s concept of causality and abaike s final prediction error criterion is suggested as a practical means to identify the order of lags of each variable in a multivariate autoregressive process the model seems useful because it can serve as a reduced form formulation to avoid imposing often spurious or false restrictions of the model it also provides a reasonably powerful test of causality the idea is applied to u s postwar money and income data it is found that between m1 and gnp a bivariate feedback model fits the data best between m2 and gnp a one way causal model from money to income performs better diagnostic checks applied to our model seem to indicate the adequacy of our approach

neither miti nor america the political economy of capital liberalization in japan compared with japan no other industrialized country has so adamantly denied foreign investors direct access to its domestic markets japan continued to deny such market access until domestic constituencies finally championed foreign demands and successfully pressured a reluctant state for concessions the initiative for these concessions came neither from japan s principal government negotiators in the ministry of international trade and industry miti nor from public policymakers in america rather it came from american and other multinational corporations mncs seeking to exploit imperfect markets for the technology and related assets which they alone controlled and which a few japanese oligopolists demanded these local oligopolists served as manipulative intermediaries between mncs and the nationstate and in that position determined both the timing and the substance of their country s long march toward capital liberalization between the legislation of capital controls in 1950 and the de jure elimination of those controls in 1980 what began as an extension of limited concessions to individual mncs eventually aided by small regulatory loopholes gradually encompassed all foreigners supplying broad product groups during the intervening thirty years the mncs examined in this article including coca cola ibm texas instruments and the big three u s automakers finally gained limited access to the japanese market for them the formal liberalizations of the late 1960s and early 1970s proved significant but not always decisive as japanese oligopolists moved both to replace public regulations with private restrictions and to mesh their ongoing political influence domestically with their emerging economic power internationally thus de facto liberalization proceeded slowly and unevenly at least through 1980 and foreign direct investment in japan continued to languish what capital liberalization did occur had little to do with the pressures exerted on miti and the japanese state by the u s government and the international organizations that america then controlled rather american diplomacy proved successful in forcing concessions from japan only when it was backed up both by the economic power of american mncs and by the active support of japanese business

ownership concentration in privatized firms the role of disclosure standards auditor choice and auditing infrastructure we rely on a unique data set to estimate the impact of disclosure standards and auditor related characteristics on ownership concentration in 190 privatized firms from 31 countries accounting transparency can help alleviate the agency conflict between minority investors and controlling shareholders which is evident in the extent of ownership concentration since the expropriation of corporate resources by insiders hinges on these private benefits remaining hidden after controlling for other country level and firm level determinants we find weak no evidence that extensive disclosure standards auditor choice reduce ownership concentration in contrast we provide strong robust evidence that ownership concentration is lower in countries with securities laws that specify a lower burden of proof in civil and criminal litigation against auditors consistent with ball s 2001 predictions collectively our research implies that minority investors worldwide value legal institutions that discipline auditors in the event of financial reporting failure over both the presence of a big five auditor and better disclosure standards

privatization under political interference evidence from eastern germany abstract can privatization authority be successfully delegated to a privatization agency to address this question we examine the liquidation policy of the german privatization agency the theoretical part develops a dynamic model of optimal liquidation under incomplete political insulation of the privatization agency we explore how external political interference affects its liquidation policy and derive testable implications for the distribution of liquidation decisions and privatization prices the empirical part uses micro data on 1804 privatization contracts and 1097 liquidation decisions to verify the model predictions the data confirm the view that political liquidation constraints are an important determinant of privatization outcomes

international acquisition accounting method and corporate multinationalism evidence from foreign acquisitions this paper examines the effect of different international accounting and tax treatments for goodwill on targets shareholders wealth the evidence shows that foreign companies that write off goodwill against a reserve account transfer more wealth to the target shareholders than those that amortize goodwill against income further analysis reveals that foreign acquires that deduct goodwill for tax purposes transfer more wealth to the target stockholders at the acquisition announcement than other acquires such wealth transfers are precipitated by the competition for corporate control thus the more advantageous international accounting and tax treatments for goodwill may leave u s bidders at a disadvantage as they compete with foreign acquirers for corporate control furthermore contrary to the multinational network hypothesis the study shows that for the firms in the sample the acquirers with previous experience in the u s market transfer more wealth to target shareholders than those entering the u s market for the first time on the other hand the results for the relationship between industrial relatedness of merger partners and abnormal returns to target shareholders is mixed

home country political risk and foreign direct investment in the united states this study investigates the proposition that home country political risk factors influence outward foreign direct investment investment data from the u s department of commerce is used to model investment activity in the united states from various industrialized source countries foreign direct investment is regressed on home country domestic and international economic and political risk measures for the western industrial countries results indicate that investment activity from the ics in the u s is dependent on home country economic and political conditions

trade reform aggregate investment and capital flight on credibility and the value of information abstract in this paper we demonstrate that uncertainty about future policy reversals coupled with irreversible investment confers an option value to foreign exchange and may lead to capital flight and a fall in aggregate investment after a trade reform the analysis focuses on the value of information and the credibility of the policy reform the conclusion points to a potential role for international institutions to prevent such problems

bargaining power of multinationals and host governments one of the outcomes of negotiation between multinationals and host governments in developing countries the extent of foreign ownership of subsidiaries is influenced by the bargaining power of the two parties foreign ownership measured in various ways appears to be affected by the level of technology of the multinational the degree to which a multinational attempts to differentiate its products the extent to which a subsidiary s output is exported to other parts of the multinational the diversity of products offered by the multinational and the extent of competition by other multinationals the relationship between some of these variables and ownership is not a simple one one variable that others have mentioned as probably affecting bargaining power size of the investment in question appears not to play a significant role in government policies toward ownership but many large projects tend to be located in countries that have lenient ownership policies

effects of increasing agricultural productivity in a multisectoral model for the philippines bautista r m 1986 effects of increasing agricultural productivity in a mul tisectoral model for the philippines agric econ 1 67 85 this paper investigates empirically the economy wide effects of agricultural productivity increases in the philippines reporting the results of a quantitative analysis based on a general equilibrium framework a multisectoral price endog enous model of the philippine economy is employed emphasizing not only agri culture but also other production sectors with which it closely interacts as well as the distinction between rural and urban households in their income genera tion and consumption patterns among other findings the differential effects on the real income of rural households vis a vis urban households arising from increased productivity in the various components of the agricultural production sector are striking the resulting improvements in the trade balance and national income among other macroeconomic variables are also relatively significant moreover there are significant differences in the economy wide effects among the four sectors of food and agriculture distinguished in the study particularly interesting is the highly favorable impact of rising productivity in the food pro cessing sector on agricultural crop production and rural income a linkage effect that has not received much attention in the development literature

transactions cost economics and the multinational enterprise an assessment abstract this paper applies transactions cost principles to the multinational enterprise in order to ascertain its distinctive properties as a mode of economic organization the analysis helps identify just when and where contractual alternatives to the multinational firm are likely to be viable this turns out to depend upon the nature of the technology the regime of appropriability within which the firm operates and the characteristics of the markets in question transactions cost analysis is also extended to the multinational enterprise host country relationship implications for management and public policy are derived

causality between export growth and industrial development empirial evidence from the nics abstract this paper investigates the causal relationship between export growth and industrial development in eight newly industrializing countries nics results of sims causality test show that for most of the nics there is a strong bidirectional causality between the growth of exports and industrial development these findings support the export led growth strategy in that expansion in exports not only promote the growth of national income but also lead to structural transformation of the developing countries

distributional constraints on the speed of privatization abstract this paper argues that adverse distributional effects may prevent speedy privatization in former command economies an imbalanced structure of the work force combined with a politically motivated subsistence consumption constraint may necessitate gradual privatization this possibility is illustrated by a numerical example and a model of gradual privatization is suggested

domestic institutions and the credibility of international commitment japan and the united states the domestic politics of great powers significantly influence the fate of such multilateral regimes at the general agreement on tariffs and trade and the north atlantic treaty organization unless great powers can make credible commitments to support those regimes few countries will offer more than token support domestic political constraints may bind national leaders to good faith adherence to multilateral regimes even if international circumstances do not compel adherence domestic politics also influence the ability of other countries to monitor national adherence to agreements case studies of u s and japanese responses to multilateral regimes show how the nature of the national electoral system the division of powers in the government and the transparency of the national political system influence credibility and lead to special features of multilateral economic and security regimes

virtual integration of financial markets a dynamic correlation analysis of the creation of the latin american integrated market this article investigates the role of virtual integration of financial markets on stock market return co movements in may of 2011 the chilean colombian and peruvian stock markets virtually integrated their stock exchanges and central securities depositories to form the latin american integrated market mila we utilize the dynamic conditional correlation model proposed by engle 2002 to identify a statistically significant positive correlation between these markets moreover we find strong evidence that the creation of the mila increased the levels of dynamic correlation between stock returns a higher correlation was also found during the dot com bubble and the 2007 financial crises our results imply a decline in gains from international diversification by holding portfolios consisting of diverse stocks of these countries

global market integration an alternative measure and its application global markets seem to be increasingly integrated but there is no well accepted measure of integration we show that the correlation across markets is a poor measure perfectly integrated markets can exhibit weak correlation we derive a new integration measure based on the explanatory power of a multi factor model and use it empirically to investigate recent trends in global integration for most countries there has been a marked increase in measured integration over the past three decades but this is not indicated by correlations among country indexes

aid food policy reform and u s agricultural interests in the third world global food economy one component of this new agricultural nationalism is a growing disenchantment with american aid to agriculture in the third world the new york times on 4 june 1987 for example featured the story world bank loans stir ire of u s farm groups in which a halfdozen leading agricultural organizations argued against aid and stimulating competition against american farmers this paper assesses the aid to agriculture question from a food policy perspective it seeks to answer two broad questions is food policy reform and agricultural growth in the third world in the interest of u s agriculture if so is aid and the conditions attached to it an effective means for achieving this reform these are immense topics and the rather bold series of propositions presented here provide only partial answers four clarifying comments seem necessary before proceeding with the analysis first the focus of this paper is on food policy and its reform such a concept is not necessarily synonymous with simply increasing agricultural output although reform typically leads to additional production food policy is instead a broader view that embraces consumption marketing and trade as well as production timmer falcon and pearson some types of policy reform might significantly improve consumption but leave agricultural production unaffected or even lowered for example many developing countries now have domestic prices higher than those in comparable world markets if reform means using world or border prices as the pricing norm an imposition of that norm would increase consumption but negatively affect farmer incentives and hence reduce the production of certain commodities

greenfield vs acquisition the strategy of japanese investors in the united states multinational firms can enter a foreign market by taking over existing local firms acquisitions or by setting up new ventures greenfield investments surprisingly there has been limited empirical work on this topic this paper examines the determinants of this choice by looking at japanese entries into the united states by focusing on firms of one country entering a single market we are able to separate the impact of a firm s strategy from that of the characteristics of the target industry or country this paper tests simultaneously a number of competing hypotheses the results suggest that acquisitions are used by japanese investors with weak competitive advantages while investors with strong advantages find that greenfield investments are a more efficient way to transfer these advantages to the u s acquisitions are also chosen to enter industries with either very high or very low growth rates when entry is at a scale that is large relative to the parent and when entry is into a different industry the japanese investor s previous experience of the u s market its financial situation and its status as a follower in an oligopolistic industry have no statistically significant impact on the entry mode neither do u s stock market conditions

firm ownership preferences and host government restrictions an integrated approach two approaches may explain how multinational enterprises mnes select ownership structures for subsidiaries the first argues that mnes prefer structures that minimize that transaction costs of doing business abroad the second argues that ownership structures are determined by negotiations with host governments whose outcomes depend on the bargaining power of the firm this paper presents a framework integrating these two approaches and uses statistical methods to separate their effects empirically

characteristics of privatization evidence from developed less developed and former communist countries a privatization wave has swept the world starting in the u k in the early 1980s and then progressing to other developed and less developed nations this study examines how the country characteristics for the formerly state owned enterprises relate to the nature of the privatization deal and the strategy of the acquiring firm in particular this paper examines how country characteristics affect government privatization policies and in turn firm strategy results indicate that there are differences with respect to the characteristics of privatization and government policies that translate into differences in firm strategy in former communist less developed and developed countries

the state as strategist in international business research no matter what strategy managers choose cross national differences in states strategic capabilities and objectives affect multinational corporations capabilities to manage interdependent operations in this paper we develop four attribute dimensions along which states strategic economic capabilities vary we then apply these dimensions to show how they contribute to familiar international business models of managerial process mnc strategy and organizational structure and country competitiveness

economic growth export and external debt causality the case of african countries empirical investigation of the export driven economic growth hypothesis has provided mixed results in a bivariate causality framework the problem with such bivariate causality analysis is that there can be an omitted variable which could adversely affect the results this paper looks at the trivariate causality analysis of african countries by introducing external deby servicing as a third variable in the export economic growth analysis the results indicate that there is a feedback or bidirectional causality between external debt servicing economic growth and exports evidence of the 1983 90 subperiod is consistent with the argument that the structural adjustment programmes which were designed to remove economic distortions promote exports and encourage external debt management increased growth in the countries involved

malaysia genesis of a privatization transaction abstract this essay traces the evolution of the malaysian government s decision to undertake a major privatization initiative a specific transaction the port kelang container terminal is described and assessed as in several other developing countries that are undergoing a similar transformation privatization was part of a broader public policy response to poor public enterprise performance mounting domestic and external debt levels unsustainable public sector deficits and political change the container terminal privatization illustrates the difficulties inherent in implementation such as a shortfall of skilled government personnel legal obstacles protracted negotiations with employees and differences about the acceptable terms and conditions of sale

exports and japanese economic development abstract the granger causality test used in this paper indicates that japanese growth in the prewar period was caused by the growth of the labor force and improvements in agricultural productivity in the postwar period growth in exports labor force and agricultural productivity caused output growth

global corporations and local politics income redistribution vs fdi subsidies abstract income inequality has been used empirically to explain the mixed performance of developing countries in attracting fdi this paper sets up a theoretical model that links the skewness of the income distribution to a host government s willingness to subsidize fdi large skewness makes government subsidies less likely because the median income person prefers redistribution little skewness however does not guarantee fdi in addition host governments may switch from positive to no subsidies if a shift in economic variables changes how the policymaker trades off the fdi benefits and income redistribution thereby offering an alternative to the conventional hold up story

balancing private and state ownership in emerging markets telecommunications infrastructure country industry and firm influences bargaining between host states and investors over the terms of investment in sensitive sectors of the economy generates political and economic tensions in this study we investigate the factors that contribute to the outcomes of those negotiations as measured by the private vs state owned share of newly consummated telecommunications infrastructure projects we find that private ownership is positively associated with overall economic development and investment liberalization in the host country and with greenfield vs divestiture and joint venture vs wholly owned projects private ownership is negatively associated with existing telecommunications infrastructure higher levels of state ownership of foreign investing firms and the technological sophistication of the projects our analysis also shows a curvilinear inverted u shaped relationship between investment policy hazards and private ownership this finding supports the insight from transaction cost economics that potential gains from internalization are greatest at intermediate levels of uncertainty

the demise of expropriation as an instrument of ldc policy 1980 1992 this paper reports data collected on expropriation activity by developing countries from 1980 1992 extending previous work by kobrin 1984 kobrin s assumption that expropriation activity would continue to decrease over time and his reasons for this assumption are supported the paper introduces recent phenomena which further indicate that expropriation is unlikely to resurface in the near future as a source of multinational corporation developing country contention many developing countries now protect foreign direct investors from expropriation the broad scale movement in developing countries to privatize state owned enterprises also indicates that governments will not be eager to replace private sector activity with state ownership

capital repartriation and the waiting game abstract a stylized fact on post stabilization economies is that getting the fundamentals right even though necessary is not sufficient to ensure a prompt and costless resumption of growth uncertainty whether stabilization can in fact be sustained confers an option value to postponing investment in domestic real assets

why are developing countries privatization this article tests alternative hypotheses about why developing countries are pursuing privatization a policy that gained considerable popularity in the 1980s univariate and multivariate analysis indicate that privatization was more likely to be pursued by countries with high budget deficits high foreign debt and high dependence on international agencies like the world bank and the imf in regions such as latin america and asia the trend was also more likely in countries a that seemed to have overused state enterprises in the past and b those in which the private sector had grown faster than average and was thus more ready to assume tasks once assigned to state enterprises in africa however the policy may have been imposed by external agencies on countries that were not necessarily ripe for privatization for multinational firms the international opportunities created by privatization are likely to be greater in the 1990s than in the 1980s

performance evaluation of state owned enterprises in theory and practice this study explores the goal orientation of state owned enterprises soes with a view to develop a behavioral theory of soes it is set in india where as in many other countries the government expects soes to promote the public interest rather than maximize profits the research design consisted in searching for patterns in the subjective evaluations of a set of indian soes by critical environmental actors senior bureaucrats and influential journalists the study attempted to get at each respondent s espoused theory for performance evaluation as well as his or her theory in use and compared both with official goals as well as the prescriptions of welfare economists five models of performance evaluation varying in criteria and weighting schemes were considered the results showed with surprising consistency that commercial profitability was the most important criterion that explained bureaucrats subjective evaluations lack of comprehensive information seemed to accentuate their reliance on profitability but not by very much for a minority of bureaucrats type 1 the more important explanation seemed to be their incorrect belief that soes could be judged like private firms official policy notwithstanding for the majority type 2 who espoused views consistent with official policy the explanation seemed to be conceptual confusion or double standards both types also behaved as if they would like soes to maximize profitability rather than just break even or earn a reasonable return some of these findings were true for responding journalists as well given these results managers of indian soes can be expected to seek profits not only to reduce financial dependence on government but also to gain a measure of external legitimacy recognizing the importance of profitability as a criterion in use they can be expected to propose strategies that would increase their firm s profitability and resist those that would reduce it regardless of official goals where managers are free to act independently profitability may prevail as the dominant decision criterion but where they are not the outcome may depend on more complex factors more generally the profit motive in soes may be as strong or stronger than it appeared to be in india in countries with a less sophisticated administrative systems or personnel b an official ideology more to the right than in socialist india and c a higher proportion of mixed enterprises the paper concludes with the implications of these findings for the design of performance evaluation systems at the government soe interface