Handling the transfer of power: a note on the 1964 origins of the Douglas‐Home rules

Opposition is rarely a good preparation for government. The only post‐war government to enter office confident, well‐acquainted with the Civil Service and with a fund of administrative experience to draw on was the Attlee administration formed in 1945. The longer a party spends in opposition the more these assets disappear. Labour, by the end of the long period of Conservative rule in 1951–64, was largely unfamiliar with the burdens of office. This formed the background to the formulation of the Douglas‐Home rules, whereby informal contact is permitted between the Civil Service and the Opposition in advance of a general election. Since 1964 this arrangement has gradually become more extensive (especially after Neil Kinnock complained that the period for contact was too brief during the run‐up to the 1992 election) and more formalised. In late 1993 John Major agreed that contacts could be made from early 1996 in advance of the next election, rather than only during the last six months of a parliament, as had by then become the convention.’ The object of this short paper is, however, to explain how these rules originated.

Home bias persistence in foreign direct investments

The purpose of this paper is to analyse the issues related to home bias and foreign direct investments (FDIs). We study the role of physical, cultural, and institutional distances from home on FDI decisions taken by corporations to assess whether the globalization of the past two decades has reduced their influence. Using the ‘home bias’ framework from the finance literature and the gravity model from the economics literature, we utilize a large sample of both developed and emerging markets, using FDI flows of 6263 unique bilateral country pairs over a 30-year period. We find strong empirical evidence of persistent home bias in FDI outflows, and we show that not only physical distance but also cultural and institutional similarities between host and source countries remain a decisive factor in foreign corporate investment decisions. We also show that such home bias is persistent over time and is observed around the world.