EU membership of the WTO: international trade disputes and judicial protection of individuals by EU Courts

The European Union (EU) is embedded in a pluralistic legal context because of the EU and its Member States’ treaty memberships and domestic laws. Where EU conduct has implications for both the EU’s international trade relations and the legal position of individual traders, it possibly affects EU and its Member States’ obligations under the law of the World Trade Organization (WTO law) as well as the Union’s own multi-layered constitutional legal order. The present paper analyses the way in which the European Court of Justice (ECJ) accommodates WTO and EU law in the context of international trade disputes triggered by the EU. Given the ECJ’s denial of direct effect of WTO law in principle, the paper focuses on the protection of rights and remedies conferred by EU law. It assesses the implications of the WTO Dispute Settlement Understanding (DSU) – which tolerates the acceptance of retaliatory measures constraining traders’ activities in sectors different from those subject to the original trade dispute (Bananas and Hormones cases) – for the protection of ‘retaliation victims’. The paper concludes that governmental discretion conferred by WTO law has not affected the applicability of EU constitutional law but possibly shapes the actual scope of EU rights and remedies where such discretion is exercised in the EU’s general interest.

Analysis of the seasonal cycle within the first international urban land-surface model comparison

A number of urban land-surface models have been developed in recent years to satisfy the growing requirements for urban weather and climate interactions and prediction. These models vary considerably in their complexity and the processes that they represent. Although the models have been evaluated, the observational datasets have typically been of short duration and so are not suitable to assess the performance over the seasonal cycle. The First International Urban Land-Surface Model comparison used an observational dataset that spanned a period greater than a year, which enables an analysis over the seasonal cycle, whilst the variety of models that took part in the comparison allows the analysis to include a full range of model complexity. The results show that, in general, urban models do capture the seasonal cycle for each of the surface fluxes, but have larger errors in the summer months than in the winter. The net all-wave radiation has the smallest errors at all times of the year but with a negative bias. The latent heat flux and the net storage heat flux are also underestimated, whereas the sensible heat flux generally has a positive bias throughout the seasonal cycle. A representation of vegetation is a necessary, but not sufficient, condition for modelling the latent heat flux and associated sensible heat flux at all times of the year. Models that include a temporal variation in anthropogenic heat flux show some increased skill in the sensible heat flux at night during the winter, although their daytime values are consistently overestimated at all times of the year. Models that use the net all-wave radiation to determine the net storage heat flux have the best agreement with observed values of this flux during the daytime in summer, but perform worse during the winter months. The latter could result from a bias of summer periods in the observational datasets used to derive the relations with net all-wave radiation. Apart from these models, all of the other model categories considered in the analysis result in a mean net storage heat flux that is close to zero throughout the seasonal cycle, which is not seen in the observations. Models with a simple treatment of the physical processes generally perform at least as well as models with greater complexity.

Game-theoretic aspects of international mergers: Theory and case studies

This paper studies the exclusion of potential competition as a motivating factor for international mergers. We propose a simple game-theoretic framework in order to discuss the conditions under which mergers that prevent reciprocal domestic competition will occur. Our analysis highlights the shortcomings of antitrust policies based on pre-merger/post-merger concentration comparisons. A review of several recent European cases suggests that actual merger policy often fails to consider potential competition.

Islamic mutual funds' financial performance and international investment style: evidence from 20 countries

We pursue the first large-scale investigation of a strongly growing mutual fund type: Islamic funds. Based on an unexplored, survivorship bias-adjusted data set, we analyse the financial performance and investment style of 265 Islamic equity funds from 20 countries. As Islamic funds often have diverse investment regions, we develop a (conditional) three-level Carhart model to simultaneously control for exposure to different national, regional and global equity markets and investment styles. Consistent with recent evidence for conventional funds, we find Islamic funds to display superior learning in more developed Islamic financial markets. While Islamic funds from these markets are competitive to international equity benchmarks, funds from especially Western nations with less Islamic assets tend to significantly underperform. Islamic funds’ investment style is somewhat tilted towards growth stocks. Funds from predominantly Muslim economies also show a clear small cap preference. These results are consistent over time and robust to time varying market exposures and capital market restrictions.

International terrorism, domestic political instability, and the escalation effect

What are the main causes of international terrorism? Despite the meticulous examination of various candidate explanations, existing estimates still diverge in sign, size, and significance. This article puts forward a novel explanation and supporting evidence. We argue that domestic political instability provides the learning environment needed to successfully execute international terror attacks. Using a yearly panel of 123 countries over 1973–2003, we find that the occurrence of civil wars increases fatalities and the number of international terrorist acts by 45%. These results hold for alternative indicators of political instability, estimators, subsamples, subperiods, and accounting for competing explanations.

Shaken, not stirred: the impact of disasters on international trade

This paper examines the impact of major disasters on import and export flows using a gravity model (170 countries, 1962–2004). As a conservative estimate, an additional disaster reduces imports on average by 0.2% and exports by 0.1%. Despite the apparent persistence of bilateral trade volumes, we find that the driving forces determining the impact of disastrous events are the level of democracy and the geographical size of the affected country. The less democratic and the smaller a country the greater is its loss due to a catastrophe. In autocracies, exports and imports are significantly reduced. Had Togo been struck by a major disaster in 2000, it would have lost 6.2% of its imports and 3.7% of its exports. While democratic countries' exports suffer identical decreases, imports increase.

Coase and international business: the origin and development of internalisation theory

The internalisation theory of the multinational enterprise is a significant intellectual legacy of Ronald Coase. US direct investment in Europe became highly political in the 1960s, and neoclassical trade theory had no explanation. A theory of the multi-plant enterprise was required, and internalisation theory filled this gap. Using Coasian economics to explain the ownership of production plants, and the geography of trade to explain their location, internalisation theory offered a comprehensive account of MNEs and their role in the international economy. This paper outlines the development of the theory, explains the Coasian contribution, and examines in detail the early work of Hymer, McManus and Buckley and Casson. It then reviews the current state of internalisation theory and suggests some future developments.

Making internalization theory good for practice: the essence of Alan Rugman’s contributions to international business

This perspectives paper and its associated commentaries examine Alan Rugman's conceptual contribution to international business scholarship. Most significantly, we highlight Rugman's version of internalization theory as an approach that integrates transaction cost economics and ‘classical’ internalization theory with elements from the resource-based view, such that it is especially relevant to strategic management. In reviewing his oeuvre, we also offer observations on his ideas for ‘new internalization theory’. We classify his other novel insights into four categories: Network Multinationals; National competitiveness; Development and public policy; and Emerging Economy MNEs. This special section offers multiple views on how his work informed the larger academic debate and considers how these ideas might evolve in the longer term.

Understanding complexities in international accounting standard setting: agenda entry and the case of IFRS for SMEs

Earlier accounting works have shown that an understanding of agenda entry is critical to better understanding the accounting standards setting process. Consider Walker and Robinson (1993; 1994) and Ryan (1998); and more generally agenda entrance as theorized in Kingdon (2011). In 2003, the IASB placed on its agenda a project to promulgate a standard for small and medium-sized entities (SMEs). This provides our focus. It seemed to be a departure from the IASB’s constitutional focus on capital market participants. Kingdon’s three-streams model of agenda entry helps to identify some of the complexities related to politics and decision making messiness that resulted in a standard setting project for simplified IFRS, misleadingly titled IFRS for SMEs. Complexities relate to the broader international regulatory context, including the boundaries of the IASB’s standard-setting jurisdiction, the role of board members in changing those boundaries, and such sensitivities over the language that the IASB could not agree on a suitably descriptive title. The paper shows similarities with earlier agenda entrance studies by Walker and Robinson (1994) and Ryan (1998). By drawing on interviewees’ recollections and other material it especially reinforces the part played by the nuanced complexities that influence what emerges as an international accounting standard.

Balkanisation of banking damages international trade and UK GDP

Balkanisation is a way to describe the breakdown of cross-border banking, as nervous lenders retreat in particular from the more troubled parts of the Eurozone or at least try to isolate operations within national boundaries. It is increasing at the Bank level, however the senior policy makers consider this a negative trend – Mario Draghi, president of the European Central Bank, has talked of the need to “repair this financial fragmentation” and Mark Carney, head of global regulatory body the Financial Stability Board, [and now Governor of the Bank of England] has warned that deglobalising finance will hurt growth and jobs by “reducing financial capacity and systemic resilience”. In this article I would like to examine the impact of banking balkanisation on international trade and provide some initial thoughts about remedies for excessive risk in a banking non-balkanising world.

The effects of corporate and country sustainability characteristics on the cost of debt: an international investigation

We investigate the relationship between corporate and country sustainability on the cost of bank loans. We look into 470 loan agreements signed between 2005 and 2012 with borrowers based in 28 different countries across the world and operating in all major industries. Our principal findings reveal that country sustainability, relating to both social and environmental frameworks, has a statistically and economically impactful effect on direct financing of economic activity. An increase of one unit in a country's sustainability score is associated with an average decrease in the cost of debt by 64 basis points. Our international analysis shows that the environmental dimension of a country's institutional framework is approximately twice as impactful as the social dimension, when it comes to determining the cost of corporate loans. On the other hand, we find no conclusive evidence that firm-level sustainability influences the interest rates charged to borrowing firms by banks. Our main findings survive a battery of robustness tests and additional analyses concerning subsamples, alternative sustainability metrics and the effects of financial crisis.