The role of home and host country characteristics in FDI: firm-level evidence from Japan, Korea and Taiwan

There is a large and growing empirical literature that investigates the determinants of outward foreign direct investment (FDI). This literature examines primarily the effect of host country characteristics on FDI even though home country characteristics also influence the decision of firms to invest abroad. In this paper, we examine the role of both host and home country characteristics in FDI. To do so, we constructed a firm-level database of outward FDI from Japan, Korea, and Taiwan. Our empirical analysis yields two main findings. First, host countries with better environment for FDI, in terms of larger market size, smaller fixed entry costs, and lower wages, attract more foreign investors. Second, firms from home countries with higher wages are more likely to invest abroad. An interesting and significant policy implication of our empirical evidence is that policymakers seeking to promote FDI inflows should prioritize countries with higher wages.

The role of Preferential Trade Agreements (PTAs) in facilitating global production networks

This paper examines the effects of preferential trade agreements (PTAs) in facilitating international trade flows connecting production networks. We consider over 250 PTAs with trade flows distinguished into parts and components and final goods for the period 1979-2008. The gravity equation estimates suggest that the concurrent year effects of PTA formation on trade in parts and components are unseen, whereas PTAs have positive and pervasive effects on both types of trade flows 6 and 9 years after the PTA formation.

Unlocking the Potential of Zambian Micro, Small and Medium Enterprises "Learning from the international best practices - the Southeast Asian Experience"

This paper examines the SMEs performance in Zambia and attempts to identify some practical lessons that Zambia can learn from Southeast Asian countries (with reference to Malaysia) in order to facilitate industrial development through unlocking the potential of its SMEs sector. Malaysia and Zambia were at the same level of economic development as evidenced by similar per capita incomes but Zambia has remained behind economically and its manufacturing sector has stagnated as if both countries did not have similar initial endowments. It therefore, becomes imperative that Zambia learns from such countries on how they managed to take-off economically with a focus on SME development. Training (education), research & development, market availability and technological advancement through establishment of industrial linkages coupled with cluster formation were some of the outstanding strategies identified that Zambia could use as a “key” to unlock its SMEs’ potential as it strives to meet the UN MDGs in particular halving its poverty levels by 2015 and also realizing its vision of becoming a middle income earner by 2030.