The Impact of FDI on International Portfolio Investments

Some empirical research has argued that part of the reason for the observed "home bias" is that investors are able to indirectly achieve internationally diversified portfolios via domestically listed multinational firms. Another branch of this research attributes the "home bias" and country allocations to more deeply rooted informational causes. Using a four-year annual panel of Finnish international portfolios and Foreign Direct Investments in twenty-five countries, I provide evidence consistent with an information asymmetry explanation

EU Accession and FDI inflows : The cases of the Czech Republic and Slovakia

Central and East European countries have faced a difficult process of transition since the dissolution of the Soviet bloc. Ten transition countries (Hungary, Poland, teh Czech Republic, Slovakia, Slovenia, Lithuania, Latvia, Estonia, Bulgaria and Romania have chosen to join the EU and have moulded their transition reforms to ensure the compliance of their legal and institutional framework with EU requirements. The high levels of FDI attracted by the candidate countries for EU membership had been attributed to rapid transition of the countries aiming to join the European Union and the fact that favourable evaluations by EU authorities of the progress made by the candidates had a large impact on improving investor confidence. The aim of this paper is to investigate the reform strategies of the Czech Republic and Slovakia undertaken when the countries were preparing for EU membership and the dynamics of FDI inflows into these economies. Subsequently a comparative analysis of FDI stocks in these countries is conducted. We find that both countries faced similar economic challenges in implementing structural and institutional reforms. In accordance with EU requirements the Czech Republic and Slovakia have perfected their legal and institutional framework, increased the authority of regulatory and supervisory bodies and focused on implementation of new or amended legislation. During the period of the analysis (1998 - 2007) the Czech Republic and Slovakia have attracted increasing amounts of FDI. Comparative analysis in terms of important determinants of FDI reveals further similar features: macroeconomic stability; an open and liberalised market; low labour costs compared to EU-15 and a similar breakdown of FDI inflows by investor country. Consequently, the fact that the Czech Republic received much larger volumes of net FDI inflows could be attributed to the difference in market size between the two states. This conclusion is consistent with previous empirical studies that list market size among the main determinants of FDI. However, when we look at FDI as a percentage of GDP the evidence is more mixed. In 2004 - 2007, Slovakia has surpassed the Czech Republic twice. Whether this tendency will persist remains to be seen. The analysis in this paper based on empirical data. However, the choice of the method, namely case studies and comparative analysis, means that the conclusions of this study are theoretical and remain to be further tested in quantitative models.

Growth and Convergence: The case of China

Growth and Convergence: The Case of China Since the initiation of economic reforms in 1978, China has become one of the world’s fast-growing economies. The rapid growth, however, has not been shared equally across the different regions in China. The prominent feature of substantial differences in incomes and growth rates across the different Chinese regions has attracted the attention of many researchers. This book focuses on issues related to economic growth and convergence across the Chinese regions over the past three decades. The book has eight chapters. Apart from an introduction chapter and a concluding chapter, all the other chapters each deal with some certain aspects of the central issue of regional growth and convergence across China over the past three decades. The whole book is organized as follows. Chapter 1 provides an introduction to the basic issues involved in this book. Chapter 2 tests economic growth and convergence across 31 Chinese provinces during 1981-2005, based on the theoretical framework of the Solow growth model. Chapter 3 investigates the relationship between openness to foreign economic activities, such as foreign trade and foreign direct investment, and the regional economic growth in the case of China during 1981-2005. Chapter 4, based on data of 31 Chinese provinces over the period 1980-2004, presents new evidence on the effects of structural shocks and structural transformation on growth and convergence among the Chinese regions. Chapter 5, by building up an empirical model that takes account of different potential effects of foreign direct investment, focuses on the impacts of foreign direct investment on China’s regional economic performance and growth. Chapter 6 reconsiders the growth and convergence problem of the Chinese regions in an alternative theoretical framework with endogenous saving behavior and capital mobility across regions. Chapter 7, by building up a theoretical model concerning comparative advantage and transaction efficiency, focuses on one of the potential mechanisms through which China achieves its fast economic growth over the past few decades. Chapter 8 concludes the book by summarizing the results from the previous chapters and suggesting directions for further studies.

Essays on the Determinants of International Portfolio Investments

Investors significantly overweight domestic assets in their portfolios. This behavior which is commonly called “home bias” contradicts the prescriptions of portfolio theory. This thesis explores potential reasons for the “home bias” by examining the characteristics of the investing and the target countries and features of the interaction between them. A common theme of the four essays is a focus on the importance of information about foreign markets in explaining the share of these markets in investors’ portfolios. The results indicate that the size of the equity ownership in another country strongly relates to the distance to the financial capital of that country, and to trade in goods with and direct investments (FDI) to that country. The first essay empirically investigates the relationship between trade in real goods and portfolio investments. Overall, the evidence indicates a substantial role for trade in reducing the information cost relating to portfolio investments. The second essay examines the implications of the launch of the European Monetary Union (EMU) on international portfolio investments. The evidence on the allocation of Finnish international portfolio investments is more consistent with an information-based than a diversification motive explanation. The third essay employs new data for a large number of countries and further explores the role of trade on international portfolio investments. The results indicate that trade provides important information especially on firms in countries in which the corporate governance structure and the information environment of firms generate less reliable information. The fourth essay examines the relationship between direct investments (FDI) and portfolio investments. In contrast to the predications of portfolio theory, it provides evidence that FDI is a complement rather than a substitute for portfolio investments.

Development of foreign direct investment in Finland

During 1990 to 2009, Foreign Direct Investment (FDI henceforth) in Finland has fluctuated greatly. This paper focused on analyzing the overall development and basic characteristics of Foreign Direct Investment in Finland, covering the period from 1990 to present. By comparing FDI in Finland with FDI in other countries, the picture of Finland’s FDI position in the world market is clearer. A lot of statistical data, tables and figures are used to describe the trend of Foreign Direct Investment in Finland. All the data used in this study were obtained from Statistics Finland, UNCTAD, OECD, World Bank and International Labor Office, Investment map website and etc. It is also found that there is a big, long-lasting and increasing imbalance of the inward FDI and outward FDI in Finland, the performance of outward FDI is stronger than the inward FDI in Finland. Finland’s position of FDI in the world is rather modest. And based on existing theories, I tried to analyze the factors that might determine the size of the inflows of FDI in Finland. The econometric model of my thesis is based on time series data ranging from 1990 to 2007. A Log linear regression model is adopted to analyze the impact of each variable. The regression results showed that Labor Cost and Investment in Education have a negative influence on the FDI inflows into Finland. Too high labor cost is the main impediment of FDI in Finland, explaining the relative small size of FDI inflows into Finland. GDP and Economy openness have a significant positive impact on the inflows of FDI into Finland; other variables do not emerge as significant factor in affecting the size of FDI inflows in Finland as expected. Meanwhile, the impacts of the most recent financial and economic crisis on FDI in the world and in Finland are discussed as well. FDI inflows worldwide and in Finland have suffered from a big setback from the 2008 global crisis. The economic crisis has undoubtedly significant negative influence on the FDI flows in the world and in Finland. Nevertheless, apart from the negative impact, the crisis itself also brings in chances for policymakers to implement more efficient policies in order to create a pro-business and pro-investment climate for the recovery of FDI inflows. . The correspondent policies and measures aiming to accelerate the recovery of the falling FDI were discussed correspondently.

Kymmenen teollisesti merkittävän puulajin kuoriuutteiden mahdollisuudet tuholaistorjunnassa

Metsäteollisuudesta kertyy vuosittain suuria määriä ylijäämämateriaalia, kuten puun kuorta ja oksia.Ylimääräinen aines käytetään pääasiassa energiantuotantoon, mutta uusia soveltamismahdollisuuksia kaivataan. Kuoren on havaittu olevan potentiaalinen lähde monille bioaktiivisille yhdisteille, joille olisi käyttöä esimerkiksi lääke- ja kemianteollisuudessa sekä maa-, metsä- ja puutarhatuotannon tuholaistorjunnassa. Tutkimus on osa Euroopan Unionin rahoittamaa ForestSpeCs-projektia, jonka tarkoituksena on selvittää metsäteollisuuden ylijäämämateriaalien vaihtoehtoisia käyttötapoja. Valittujen kymmenen teollisesti merkittävän pohjoisen puulajin (Abies nephrolepis, Betula pendula, Larix decidua, L. gmelinii, L. sibirica, Picea abies, P. ajanensis, P. pumila, Pinus sylvestris, Populus tremula) kuoresta uutettujen aineiden soveltuvuutta syönninestoaineeksi testattiin kaaliperhosen (Pieris brassicae L.) ja krysanteemiyökkösen (Spodoptera littoralis Boisduval) toukilla sekä osittain sinappikuoriaisella (Phaedon cochloreae Fabricius) ja idänlehtikuoriaisella (Agelastica alni L.). Uutteet valmistettiin yhteistyössä projektin ryhmien avulla tai itsenäisesti erilaisin menetelmin. Testaukset tehtiin laboratorio-oloissa käyttäen lehtikiekkojen valintabiotestiä sekä karkeilla uutteilla että niistä erotelluilla yksittäisillä yhdisteillä. Tehdyistä mittauksista laskettiin syönninestoindeksit (FDI). Tulosten perusteella lähes kaikki testatut uutteet vaikuttivat ainakin jossain määrin kohdehyönteisen syöntikäyttäytymiseen. Hieman yli puolet kaaliperhosella testatuista 46 uutteesta aiheuttivat yli 50 % syönnineston eli kaaliperhonen suosi kontrollilehtiä uutteella käsiteltyjä todennäköisemmin. Krysanteemiyökkösellä yli 50 %:n syönnineston aiheuttivat vain seitsemän testatuista 56 uutteesta. Lisäksi kolme uutetta lisäsi käsiteltyjen kiekkojen syöntiä merkittävästi. Idänlehtikuoriaistoukat ja -aikuiset karttoivat erityisesti abietiinihapolla käsiteltyjä lehtiä. Sinappikuoriaisella testatut uutteet toimivat myös lupaavasti. Testattujen puulajien kuoresta on mahdollista uuttaa biologisesti aktiivisia yhdisteitä, mutta tuholaistorjunnan kannalta oikeiden pitoisuuksien ja tehokkaiden uuttomenetelmien löytäminen vaatii jatkotutkimuksia. Kuoren sisältämien yhdisteiden laatu ja määrä vaihtelevat monien tekijöiden, kuten ympäristön ja genetiikan vaikutuksesta. Hyönteisten sietokyky vaihtelee myös paljon lajeittain ja yksilöidenkin välillä on eroja. Uutteista valmistettavia torjunta-aineita olisi kuitenkin mahdollista sisällyttää esimerkiksi integroituun torjuntaan muiden menetelmien rinnalle tulevaisuudessa.