FDI and Export Participation of Local Firms in Africa: The Case of the Kenyan Garment Industry

FDI in the garment sector has been the single case of large-scale manufacturing investment in African low-income countries since the 1990s. While FDI has triggered the development of local industries in many developing countries, it has not yet been realized in Africa. This paper describes the spillover process in the Kenyan garment industry and investigates the background of local firms' behavior through firm interviews and simulation of expected profits in export market. It shows that credit constraint, rather than absorptive capacity, is a primary source of inactive participation in export opportunity. Only firms which afford additional production facilities without sacrificing stable domestic supply may be motivated to start exporting. However, in comparison with successful Asian exporters, those firms were not as motivated as Asian firms due to the large gap in expected profits.

Interaction of powers in the Philippine presidential system

The executive - legislative relations in the Philippines have been described in two contrasting stories, namely the "strong president" story, and the "strong congress" story. This paper tries to consolidate the existing arguments and propose a new perspective focusing on the "compromise exchange" between the president and the congress across the different policy areas. It considers that the policy outcome is not brought by unilateral power of the president or the congress, but formed as the product of such an exchange. Interaction of powers and their complementary function are addressed. Furthermore, aside from the constitutional power, the weak party discipline is pointed out as a key factor in making the exchange possible.

The determinants of offshore production by Multinational Corporations (MNCs) : a comparison of Japanese and US MNCs

This study employs confidential affiliate-level panel data to improve measures of foreign affiliate activities of Japanese firms in manufacturing sectors. Combining existing data on U.S. MNCs with the Japanese data, we illustrate the pattern and determinant of their foreign affiliate sales by destination market across countries and industries for the period 1989-2005. Among our results, Japanese and U.S. MNCs are similar in the substantial growth of their foreign affiliate sales and the importance of sales to local markets. However, Japanese MNCs are distinctive from U.S. MNCs in that Japanese affiliate sales in Asia were prominently higher in host markets with lower educational attainment.

Is the Indonesian President strong or weak?

This paper analyzes the newly institutionalized political system in democratizing Indonesia, with particular reference to the presidential system. Consensus has not yet been reached among scholars on whether the Indonesian president is strong or weak. This paper tries to answer this question by analyzing the legislative and partisan powers of the Indonesian president. It must be acknowledged, however, that these two functions do not on their own explain the strengths and weaknesses of the president. This paper suggests that in order to fully understand the presidential system in Indonesia, we need to take into account not just the president's legislative and partisan powers, but also the legislative process and the characteristics of coalition government.

No insulation : politics and technocracy's troubled trajectory

Technocracy often holds out the promise of rational, disinterested decision-making. Yet states look to technocracy not just for expert inputs and calculated outcomes but to embed the exercise of power in many agendas, policies and programs. Thus, technocracy operates as an appendage of politically constructed structures and configurations of power, and highly placed technocrats cannot be 'mere' backroom experts who supply disinterested rational-technical solutions in economic planning, resource allocation and social distribution, which are inherently political. This paper traces the trajectories of technocracy in conditions of rapid social transformation, severe economic restructuring, or political crises - when the technocratic was unavoidably political.

Intra-regional trade between China, Japan, and Korea : before and after the financial crisis

East Asian economies have been heavily dependent on the U.S. and EU markets, especially for the export of final goods. Therefore, once the financial crisis hit Western economies hard, the East Asian economies lost their major markets.Their production networks then worked to the region's disadvantage and stifled industrial development.This reflects the vulnerability of the East Asian economies which have adopted an export-led growth strategy. Such vulnerability needs to be addressed to prevent future economic crises, as well as to sustain economic growth. This paper examines the trade structure of the three countries-China, Japan, and Korea-before and after the Lehman Shock, and discusses how the three countries should cooperate in addressing imbalances in the trade structure.

Social movements and the crisis of neoliberalism in Malaysia and Thailand

Of the Southeast Asian countries most badly affected by the 1997 financial crisis, Malaysia and Thailand remain the most unsettled by its political fallout. Their present political situations are not akin to 'politics as usual'. Instead, they capture the unpredicted outcomes of post-crisis struggles to reorganize structures of economic and political power. Comparing the situations in Malaysia and Thailand, this paper focuses on their differing state and civil society engagements with neoliberalism. It is suggested that the post-crisis contestations, sometimes tied to pre-crisis conflicts in political economy, left something of a stalemate: neither neoliberalism nor the social movements satisfactorily fulfilled their agendas in either country.

Critical connections : Islamic politics and political economy in Indonesia and Malaysia

This article explores Islamic politics in two Muslim-majority countries in Southeast Asia, Indonesia and Malaysia, by linking their trajectories, from late colonial emergence to recent upsurge, to broad concerns of political economy, including changing social bases, capitalist transformation, state policies, and economic crises. The Indonesian and Malaysian trajectories of Islamic politics are tracked in a comparative exercise that goes beyond the case studies to suggest that much of contemporary Islamic politics cannot be explained by reference to Islam alone, but to how Islamic identities and agendas are forged in contexts of modern and profane social contestation.

Effectiveness of the monetary policy framework in present-day India : have financial variables functioned as useful policy indicators

In April 1998, the RBI, the Indian central bank, formally announced a shift in its policy framework from monetary targeting to a multiple indicator approach, and since then, under this framework, the bank has considered a range of economic and financial variables as policy indicators for drawing policy perspectives. This paper aims to examine the effectiveness of this current policy framework in India by analyzing the causal relationships of each indicator variable on the objective variables. The results reveal that, except for bank credit, all indicator variables considered in this study have a causal relationship with at least either output or price level, suggesting that most preannounced economic and financial variables have served as useful policy indicators under the multiple indicator approach.

Transport costs, distance, and time : evidence from the Japanese Census of Logistics

Geographic distance is a standard proxy for transport costs under the simple assumption that freight fees increase monotonically over space. Using the Japanese Census of Logistics, this paper examines the extent to which transport distance and time affect freight costs across shipping modes, commodity groups, and prefecture pairs. The results show substantial heterogeneity in transport costs and time across shipping modes. Consistent with an iceberg formulation of transport costs, distance has a significantly positive effect on freight costs by air transportation. However, I find the puzzling results that business enterprises are likely to pay more for short-distance shipments by truck, ship, and railroad transportation. As a plausible explanation, I discuss aggregation bias arising from freight-specific premiums for timely, frequent, and small-batch shipments.

Political institutions and policy outcomes : effects of presidential vetoes on budget making

The article examines how the power distribution between the executive and the legislature under the Presidential system affects policy outcomes. We focus in particular on the presidential veto, both package and partial. Using a simple game theory model, we show that the presidential partial veto generally yields a result in favor of the President, but that such effects vary depending on the reversion points of the package veto and the Congress's possible use of sanctions against the President. The effects of the Presidential partial veto diminish if the reversion point meets certain conditions, or if the Congress has no power to impose sufficient sanctions on the President when the President revises the outcome ex-post. To clarify and explain the model, we present the case of budget making in the Philippines between 1994 and 2008. In the Philippines, the presidential partial veto has been bringing expenditure programs closer to the President's ideal point within what may be called the Congress's indifference curve. The Congress, however, has not always passed budget bills and from time to time has carried over the previous year's budget, in years when the budget deficit increased. This is the situation that the policy makers cannot retrieve from the reversion point.

Kenya's 2007 election crisis

On 27 December 2007, the Republic of Kenya held its tenth general election since independence. The ballot-related proceedings went as planned up to and including the vote count, providing grounds for optimism for a largely peaceful transfer of power. However, after the official declaration by the Electoral Commission of Kenya late in the afternoon of 30 December that the presidential election had been won by the incumbent, Mwai Kibaki (from Central Province and a Kikuyu), Kenya entered into a period of deep crisis. How might we best understand this great turbulence, which was unprecedented in post-independence Kenya? Perhaps the answer lies in the sudden defeat of the opposition's presidential candidate, Raila Odinga from Nyanza Province and a Luo, who had been widely expected to win. With the post-election upheaval as the context, and looking at the situation from the standpoint of political history, this paper will offer an analysis of trends in Kenya's politics since 2002.

Are trading partners complementary in international trade?

We use a unique dataset on trading transactions at the firm level to investigate a complementary effect in international transactions between sellers and buyers; trading transactions are more likely to be international when both sellers and buyers are large in size than when either sellers or buyers are large. Our econometric analysis provides evidence for the complementary effect between trading partners on the likelihood of international trade, which is most prominent for exports from North to South.

Location choice of multinational enterprises in China : comparison between Japan and Taiwan

This paper examines and compares the location choice of Japanese and Taiwanese MNEs in China. Furthermore, we investigate the relationship between location choice and firm characteristics, specifically firms' productivity. Due to Taiwan's linguistic and cultural advantages in China, it is expected that the location choice mechanics are different between Japanese and Taiwanese MNEs. As a result, our main findings are that, while the less productive Japanese firms prefer a location in an area with a larger agglomeration of Japanese affiliates or in an area closer to Japan, the more productive Taiwanese firms prefer a location in an area with a larger agglomeration of Taiwanese affiliates or in an area closer to Taiwan.

Globalization and productivity : a survey of firm-level analysis

Recent empirical studies which utilize plant- or establishment-level data to examine globalization's impact on productivity have discovered many causal mechanisms involved in globalization's impact on firms' productivity. Since these pathways have been broad, there have been few attempts to summarize the several and detailed mechanisms of self-selection and learning at the same time. This paper examines seven pathways so that the clear-cut consequences of the broad picture of globalization become visible. This strategy is useful for detecting missing links within and across the existing studies as well as for finding possible synergy effects among different mechanisms. Insightful policy implications may be derived from the comprehensive comparisons between the seven different pathways of globalization.