Can British multinational enterprises finance economic development in South East Asia?

Purpose – The purpose of this paper is to shed new light on the debate about the role of foreign direct investment (FDI) and public policy in fostering economic development. Specifically, can the capital inflow of multinational enterprises (MNEs) and the ability of the subsidiaries to raise funds locally help promote development? This paper addresses this issue by examining the capital structure and financing sources of foreign subsidiaries of MNEs. Design/methodology/approach – This paper integrates the capital structure theories in finance with internalization theory in international business. It uses an original primary dataset collected by a survey of 101 foreign subsidiaries of British MNEs in six emerging economies in the ASEAN region. Findings – There are three significant findings. First, these subsidiaries rely heavily on internal funds generated within the MNEs and less on external debts raised in the host countries. Second, the foreign subsidiary's capital structure is influenced by the home country of origin of the parent firm and the parent firm's financing sources. Third, these subsidiaries have used the financial resources to develop business networks with local small and medium enterprises (SMEs) which contribute to economic development of the host countries. Originality/value – This paper examines the internal capital market within the MNE. It provides theoretical and empirical support for the capital structure theory of the hierarchy financing approach and also for internalization theory by addressing FDI inflows by MNEs and the raising of funds locally. These findings have important implications for public policy, namely the facilitation of MNE entry to encourage economic development.

A new understanding of El Niño's impact over East Asia: dominance of the ENSO combination mode

Previous studies have shown that the Indo-Pacific atmospheric response to ENSO comprises two dominant modes of variability: a meridionally quasi-symmetric response (independent from the annual cycle) and an anti-symmetric response (arising from the nonlinear atmospheric interaction between ENSO variability and the annual cycle), referred to as the combination mode (C-Mode). This study demonstrates that the direct El Niño signal over the tropics is confined to the equatorial region and has no significant impact on the atmospheric response over East Asia. The El Niño-associated equatorial anomalies can be expanded towards off-equatorial regions by the C-Mode through ENSO’s interaction with the annual cycle. The C-Mode is the prime driver for the development of an anomalous low-level anticyclone over the western North Pacific (WNP) during the El Niño decay phase, which usually transports more moisture to East Asia and thereby causes more precipitation over southern China. We use an Atmospheric General Circulation Model that well reproduces the WNP anticyclonic anomalies when both El Niño sea surface temperature (SST) anomalies as well as the SST annual cycle are prescribed as boundary conditions. However, no significant WNP anticyclonic circulation anomaly appears during the El Niño decay phase when excluding the SST annual cycle. Our analyses of observational data and model experiments suggest that the annual cycle plays a key role in the East Asian climate anomalies associated with El Niño through their nonlinear atmospheric interaction. Hence, a realistic simulation of the annual cycle is crucial in order to correctly capture the ENSO-associated climate anomalies over East Asia.

The ship as symbol in the prehistory of Scandinavia and south-east Asia

The ship is the dominant element in the visual culture of the South Scandinavian Bronze Age, appearing in several different media, including rock carvings, decorated metalwork and above-ground monuments. Discussion has divided between those scholars who interpret this imagery in terms of long-distance exchange networks and those who emphasize its more local significance, including its deployment in mortuary ritual. A strikingly similar system is identified in Southeast Asia and part of Melanesia and can be interpreted through archaeological and ethnographic sources, but in this case there is no need to distinguish between 'practical' and 'symbolic' interpretations of the depictions of ships. This paper summarizes the evidence from this region and suggests that it can offer a fruitful source of comparison for archaeologists working in northern Europe.

Facilities management in South East Asia

The purpose of this paper is to provide an insight into the growth stage of facilities management (FM) in the South East Asia region. A questionnaire study of local and international firms operating in South East Asia was used. South East Asia needs to open up to change, particularly with respect to parity in issues of global competition in FM standards. This study is based on a limited sample size using a self-reporting methodology. Further research is needed to further investigate the findings. This paper addresses a unique insight into the contrasting approach to FM in the South East Asia region.

The regional strategies of British multinational subsidiaries in South East Asia

We compare the strategies of manufacturing and service multinational enterprise (MNE) subsidiaries in South East Asia to investigate whether they follow global versus regional strategy. We examine foreign direct investment (FDI) motives, types of FDI, product and service offerings, and sales strategies of these two groups. Using a unique primary data set of 101 British MNE subsidiaries in six South East Asian countries over the five-year period (2003–2007), we find that manufacturing and service subsidiaries pursue regional strategies. Both groups have a strong regional focus in their sales. We explore the possible reasons for the relative lack of global strategy of these subsidiaries.

Palaeovegetation (Communications arising): diversity of temperate plants in east Asia

The exceptionally broad species diversity of vascular plant genera in east Asian temperate forests, compared with their sister taxa in North America, has been attributed to the greater climatic diversity of east Asia, combined with opportunities for allopatric speciation afforded by repeated fragmentation and coalescence of populations through Late Cenozoic ice-age cycles1. According to Qian and Ricklefs1, these opportunities occurred in east Asia because temperate forests extended across the continental shelf to link populations in China, Korea and Japan during glacial periods, whereas higher sea levels during interglacial periods isolated these regions and warmer temperatures restricted temperate taxa to disjunct refuges. However, palaeovegetation data from east Asia2, 3, 4, 5, 6 show that temperate forests were considerably less extensive than today during the Last Glacial Maximum, calling into question the coalescence of tree populations required by the hypothesis of Qian and Ricklefs1.

Multinational subsidiary sales and performance in South East Asia

We extend the theory of the multinational enterprise (MNE) by exploring the concept of subsidiary-specific advantages (SSAs) as a driver for subsidiary performance. We investigate the relationship of host country-specific advantages (host CSAs) in the form of market attractiveness, SSAs and subsidiary sales as they affect subsidiary performance. From an original primary dataset of 101 British multinational (MNE) subsidiaries in six South East Asian countries, our analysis reveals three significant findings. First, host market attractiveness has a statistically positive impact on the performance of subsidiaries. Second, the three traditional SSAs of general management, marketing capabilities and invested capital enhance subsidiary performance. Third, we examine geographic direction and types of customers for subsidiary sales by following international accounting standards. We find that these subsidiaries generate on average 95 percent of total sales from the Asia Pacific region and 91 percent of total sales from external customers. Our findings have important research and managerial implications.

Real estate and social inequality in Latin America: approaches in Argentina, Brazil, Chile and Colombia

Latin America is known as the most unequal region in the world, where extreme displays of wealth and exposure to scarcity lay bare in the urban landscape. Inequality is not just a social issue; it has considerable impact on economic development. This is because social inequality generates instability and conflict, which can create unsettling conditions for investment. At the macro level, social inequality can also present barriers to economic development, as most government policies and resources tend to be directed in solving social conflict rather than to promote and generate growth. This is one of the reasons usually cited in explaining the development gap between Latin America and other emerging economies, take East Asia for example - they have similar policies to those applied recently in Latin America, but are achieving better growth. The other reason cited is institutional; this includes governance as well as property rights and enforcement of contracts. The latter is the focus of this chapter.

Predictability of the western North Pacific summer climate demonstrated by the coupled models of ENSEMBLES

The Asian monsoon system, including the western North Pacific (WNP), East Asian, and Indian monsoons, dominates the climate of the Asia-Indian Ocean-Pacific region, and plays a significant role in the global hydrological and energy cycles. The prediction of monsoons and associated climate features is a major challenge in seasonal time scale climate forecast. In this study, a comprehensive assessment of the interannual predictability of the WNP summer climate has been performed using the 1-month lead retrospective forecasts (hindcasts) of five state-of-the-art coupled models from ENSEMBLES for the period of 1960–2005. Spatial distribution of the temporal correlation coefficients shows that the interannual variation of precipitation is well predicted around the Maritime Continent and east of the Philippines. The high skills for the lower-tropospheric circulation and sea surface temperature (SST) spread over almost the whole WNP. These results indicate that the models in general successfully predict the interannual variation of the WNP summer climate. Two typical indices, the WNP summer precipitation index and the WNP lower-tropospheric circulation index (WNPMI), have been used to quantify the forecast skill. The correlation coefficient between five models’ multi-model ensemble (MME) mean prediction and observations for the WNP summer precipitation index reaches 0.66 during 1979–2005 while it is 0.68 for the WNPMI during 1960–2005. The WNPMI-regressed anomalies of lower-tropospheric winds, SSTs and precipitation are similar between observations and MME. Further analysis suggests that prediction reliability of the WNP summer climate mainly arises from the atmosphere–ocean interaction over the tropical Indian and the tropical Pacific Ocean, implying that continuing improvement in the representation of the air–sea interaction over these regions in CGCMs is a key for long-lead seasonal forecast over the WNP and East Asia. On the other hand, the prediction of the WNP summer climate anomalies exhibits a remarkable spread resulted from uncertainty in initial conditions. The summer anomalies related to the prediction spread, including the lower-tropospheric circulation, SST and precipitation anomalies, show a Pacific-Japan or East Asia-Pacific pattern in the meridional direction over the WNP. Our further investigations suggest that the WNPMI prediction spread arises mainly from the internal dynamics in air–sea interaction over the WNP and Indian Ocean, since the local relationships among the anomalous SST, circulation, and precipitation associated with the spread are similar to those associated with the interannual variation of the WNPMI in both observations and MME. However, the magnitudes of these anomalies related to the spread are weaker, ranging from one third to a half of those anomalies associated with the interannual variation of the WNPMI in MME over the tropical Indian Ocean and subtropical WNP. These results further support that the improvement in the representation of the air–sea interaction over the tropical Indian Ocean and subtropical WNP in CGCMs is a key for reducing the prediction spread and for improving the long-lead seasonal forecast over the WNP and East Asia.

Commodity currency: an alternative route to currency union

Proposals have been made for a common currency for East Asia, but the countries preparing to participate need to be in a state of economic convergence. We show that at least six countries of East Asia already satisfy this condition. There also needs to be a mechanism by which the new currency relates to other reserve currencies. We demonstrate that a numéraire could be defined solely from the actual worldwide consumption of food and energy per capita, linked to fiat currencies via world market prices. We show that real resource prices are stable in real terms, and likely to remain so. Furthermore, the link from energy prices to food commodity prices is permanent, arising from energy inputs in agriculture, food processing and distribu-tion. Calibration of currency value using a yardstick such as our SI numéraire offers an unbiased measure of the con-sistently stable cost of subsistence in the face of volatile currency exchange rates. This has the advantage that the par-ticipating countries need only agree to currency governance based on a common standards institution, a much less on-erous form of agreement than would be required in the creation of a common central bank.

The effect of regional changes in anthropogenic aerosols on rainfall of the East Asian summer monsoon

The response of East Asian Summer Monsoon (EASM) precipitation to long term changes in regional anthropogenic aerosols (sulphate and black carbon) is explored in an atmospheric general circulation model, the atmospheric component of the UK High-Resolution Global Environment Model v1.2 (HiGAM). Separately, sulphur dioxide (SO2) and black carbon (BC) emissions in 1950 and 2000 over East Asia are used to drive model simulations, while emissions are kept constant at year 2000 level outside this region. The response of the EASM is examined by comparing simulations driven by aerosol emissions representative of 1950 and 2000. The aerosol radiative effects are also determined using an off-line radiative transfer model. During June, July and August, the EASM was not significantly changed as either SO2 or BC emissions increased from 1950 to 2000 levels. However, in September, precipitation is significantly decreased by 26.4% for sulphate aerosol and 14.6% for black carbon when emissions are at the 2000 level. Over 80% of the decrease is attributed to changes in convective precipitation. The cooler land surface temperature over China in September (0.8 °C for sulphate and 0.5 °C for black carbon) due to increased aerosols reduces the surface thermal contrast that supports the EASM circulation. However, mechanisms causing the surface temperature decrease in September are different between sulphate and BC experiments. In the sulphate experiment, the sulphate direct and the 1st indirect radiative effects contribute to the surface cooling. In the BC experiment, the BC direct effect is the main driver of the surface cooling, however, a decrease in low cloud cover due to the increased heating by BC absorption partially counteracts the direct effect. This results in a weaker land surface temperature response to BC changes than to sulphate changes. The resulting precipitation response is also weaker, and the responses of the monsoon circulation are different for sulphate and black carbon experiments. This study demonstrates a mechanism that links regional aerosol emission changes to the precipitation changes of the EASM, and it could be applied to help understand the future changes in EASM precipitation in CMIP5 simulations.