Bridging the gap? Corruption, knowledge and foreign ownership

We argue that in addition to host corruption per se, as accounted for by the existing literature, an explanation of inter-country variation in FDI needs to account for the distance between the host and home corruption, which we call relative corruption. We use a large matched home-host firm-level panel data-set for 1998-2006 from CEE transition countries. Year-specific selectivity corrected estimates suggest that, ceteris paribus, higher relative ‘grand’ corruption lowers foreign ownership as the returns to investment tends to be lower in more corrupt environment. However, after controlling for the selectivity bias, knowledge-intensive parent firms are found to hold controlling ownership, as the difficulty of successful joint venture looms large in more corrupt environment. Results are robust to alternative specifications.

Exchange rate exposure : do size and foreign operations matter?

Purpose – The purpose of this paper is to examine the effect of firm size and foreign operations on the exchange rate exposure of UK non-financial companies from January 1981 to December 2001. Design/methodology/approach – The impact of the unexpected changes in exchange rates on firms’ stock returns is examined. In addition, the movements in bilateral, equally weighted (EQW) and trade-weighted and exchange rate indices are considered. The sample is classified according to firm size and the extent of firms’ foreign operations. In addition, structural changes on the relationship between exchange rate changes and individual firms’ stock returns are examined over three sub-periods: before joining the exchange rate mechanism (pre-ERM), during joining the ERM (in-ERM), and after departure from the ERM (post-ERM). Findings – The findings indicate that a higher percentage of UK firms are exposed to contemporaneous exchange rate changes than those reported in previous studies. UK firms’ stock returns are more affected by changes in the EQW, and US$ European currency unit exchange rate, and respond less significantly to the basket of 20 countries’ currencies relative to the UK pound exchange rate. It is found that exchange rate exposure has a more significant impact on stock returns of the large firms compared with the small and medium-sized companies. The evidence is consistent across all specifications using different exchange rate. The results provide evidence that the proportion of significant foreign exchange rate exposure is higher for firms which generate a higher percentage of revenues from abroad. The sensitivities of firms’ stock returns to exchange rate fluctuations are most evident in the pre-ERM and post-ERM periods. Practical implications – This study provides important implications for public policymakers, financial managers and investors on how common stock returns of various sectors react to exchange rate fluctuations. Originality/value – The empirical evidence supports the view that UK firms’ stock returns are affected by foreign exchange rate exposure.

Industrial performance, agglomeration, and foreign manufacturing investment in the UK

This paper examines the relationship between the comparative advantage of UK industries, and new inward investment into these industries. The paper demonstrates that the extent of foreign manufacturing investment in an industry, and the spatial agglomeration of that industry, are significant determinants of industry comparative advantage, thus providing evidence of agglomeration benefits to both domestic and foreign firms. The paper then shows that industry comparative advantage itself, toegther with a series of industry specific characteristics, are important determinants of new foreigh manufacturing investment, thus providing evidence of the dynamic benefits of foreign direct investment in the UK economy.

The causal relationship between information and communication technology and foreign direct investment

This paper investigates the simultaneous causal relationship between investments in information and communication technology (ICT) and flows of foreign direct investment (FDI), with reference to its implications on economic growth. For the empirical analysis we use data from 23 major countries with heterogeneous economic development for the period 1976-99. Our causality test results suggest that there is a causal relationship from ICT to FDI in developed countries, which means that a higher level of ICT investment leads to an increase inflow of FDI. ICT may contribute to economic growth indirectly by attracting more FDI. Contrarily, we could not find significant causality from ICT to FDI in developing countries. Instead, we have partial evidence of opposite causality relationship: the inflow of FDI causes further increases in ICT investment and production capacity. © United Nations University 2006.

Employment effects of privatisation and foreign acquisition of Chinese state-owned enterprises

This paper investigates the effects of domestic privatisation or foreign acquisition of Chinese State Owned Enterprises (SOEs) on employment growth, using firm level data for China and a combination of propensity score matching and difference-in-differences in order to identify the causal effect. Our results suggest that, controlling for output growth there is some evidence that domestic privatisation leads to contemporaneous reductions in employment growth compared to firms that did not undergo an ownership change. By contrast, there is some evidence that foreign acquisitions show higher employment growth in the post acquisition period than non-acquired SOEs.

Indigenous and foreign innovation efforts and drivers of technological upgrading:evidence from China

This paper explores the role of indigenous and foreign innovation efforts in technological upgrading in developing countries, taking into account sectoral specificities in technical change. Using a Chinese firm-level panel dataset covering 2001–05, the paper decomposes productivity growth into technical change and efficiency improvement and examines the impact of indigenous and foreign innovation efforts on these changes. Indigenous firms are found to be the leading force on the technological frontier in the low- and medium-technology industries, while foreign-invested firms enjoy a clear lead in the high-technology sector. Collective indigenous R&D activities at the industry level are found to be the major driver of technology upgrading of indigenous firms that push out the technology frontier. While foreign investment appears to contribute to static industry capabilities, R&D activities of foreign-invested firms have exerted a significant negative effect on the technical change of local firms over the sample period.

Indigenous and foreign innovation efforts and drivers of technological upgrading:evidence from China

This paper explores the drivers of technology upgrading in emerging economies using a recent Chinese firm-level panel dataset over the 2001-2005 period. It extends the Directed Technical Change theory by considering differences in technology intensities across industries within a country; examines the drivers of technical change, efficiency improvement and TFP growth in Chinese manufacturing firms; and explores the roles of indigenous innovations and foreign technology. It finds that FDI contributes to static industry capabilities by advanced technologies embedded in imported machineries, but not to dynamic technological capabilities of indigenous firms in developing countries. Collective indigenous R&D activities at industry level are the major driver of technology upgrading of indigenous firms that push up the technology frontier. Policy implications are discussed.

ICT diffusion and foreign direct investment:a comparative study between Asia-Pacific and the Middle Eastern economies

This chapter investigates the impact of inward and outward FDI on ICT diffusion in the Asia-Pacific and Middle East regions for the period 1996-2008. The results indicate that while inward FDI has generally had a positive and significant impact on ICT diffusion in Asia-Pacific economies, its impact on the Middle Eastern countries has been detrimental. In contrast, the results of this study also show that outward FDI has had, in general, the inverse effect, it has been in general positive and significant for the Middle East countries but insignificant for Asia-Pacific economies.

Exchange rate exposure:do size and foreign operations matter?

Purpose – The purpose of this paper is to examine the effect of firm size and foreign operations on the exchange rate exposure of UK non-financial companies from January 1981 to December 2001. Design/methodology/approach – The impact of the unexpected changes in exchange rates on firms’ stock returns is examined. In addition, the movements in bilateral, equally weighted (EQW) and trade-weighted and exchange rate indices are considered. The sample is classified according to firm size and the extent of firms’ foreign operations. In addition, structural changes on the relationship between exchange rate changes and individual firms’ stock returns are examined over three sub-periods: before joining the exchange rate mechanism (pre-ERM), during joining the ERM (in-ERM), and after departure from the ERM (post-ERM). Findings – The findings indicate that a higher percentage of UK firms are exposed to contemporaneous exchange rate changes than those reported in previous studies. UK firms’ stock returns are more affected by changes in the EQW, and US$ European currency unit exchange rate, and respond less significantly to the basket of 20 countries’ currencies relative to the UK pound exchange rate. It is found that exchange rate exposure has a more significant impact on stock returns of the large firms compared with the small and medium-sized companies. The evidence is consistent across all specifications using different exchange rate. The results provide evidence that the proportion of significant foreign exchange rate exposure is higher for firms which generate a higher percentage of revenues from abroad. The sensitivities of firms’ stock returns to exchange rate fluctuations are most evident in the pre-ERM and post-ERM periods. Practical implications – This study provides important implications for public policymakers, financial managers and investors on how common stock returns of various sectors react to exchange rate fluctuations. Originality/value – The empirical evidence supports the view that UK firms’ stock returns are affected by foreign exchange rate exposure.

Transition and foreign aid policies in the Visegrád countries:a path dependant approach

The paper argues that the current emerging international development policies of the Visegrád (V4) countries are heavily influenced by the certain aspects of the Communist past and the transition process. Due to these influences, the V4 countries have difficulties in adapting the foreign aid practices of Western donors and this leads to the emergence of a unique Central and Eastern European development cooperation model. As an analytical background, the paper builds on the path dependency theory of transition. A certain degree of path dependence is clearly visible in V4 foreign aid policies, and the paper analyses some aspects of this phenomenon: how these new emerging foreign aid donors select their partner countries, how much they spend on aid, how they formulate their aid delivery policies and institutions and what role the non-state actors play. The main conclusions of the paper are that the legacies of the Communist past have a clear influence and the V4 countries still have a long way to go in adapting their aid policies to international requirements.

Making Sense of Home and Homeland: Former-Soviet Greeks' Motivations and Strategies for a Transnational Migrant Circuit

Focusing on former-Soviet Greeks' experiences of cross-border movement to Greece, this paper sheds light on the impact of this migration on the social identities of Russian Greeks as a transnational community. It draws on informants’ narratives and ethnographic observations recorded among Greek migrants in their home communities in southern Russia, and shows how their motivation, in their transnational movement, is determined by the ‘push-and-pull’ forces of socio-economic and political transformations in post-Soviet space. In these conditions, Greek identity becomes a resource which facilitates the organisation of transnational migration. The cultural, social and economic differences between the former-Soviet Greek migrants and the native-born population of Greece result in the emergence of a Pontic-Greek cultural identity which emphasises migrants’ connections with the former USSR. The difficulties of economic and cultural adaptation for migrants to Greece are examined in relation to the Russian Greeks' economic strategies within their home communities and their perception of the ‘homeland’ as a constantly contested and relocated social construct.

Contesting human rights through institutional reform:a case study of the reform of the UK Equality and Human Rights Commission

This article presents a case study of the recent reform of the United Kingdom Equalities and Human Rights Commission, to address a critical gap in the literature on national human rights institutions (NHRIs) concerning the power of governments to exert control over these institutions through reform processes. Through this analysis, the article demonstrates, first, that NHRIs are affected by contextual factors not only related to the popularity of the human rights agenda but also to wider policy agendas which impact on their status and functions; and second, that attempts by government to exert more administrative control can be significantly problematic for the operational independence of NHRIs.

Irrelevant or transformative power? The OECD DAC and foreign aid policies in Central and Eastern Europe

The paper examines the impact of the OECD’s Development Assistance Committee (DAC) on the emerging foreign aid policies of the Central and Eastern European (CEEs) countries. The Czech Republic, Poland, Slovakia and Slovenia joined the DAC in 2013, and the committee has aimed to socialise them into the norms of the international development system. Generally, however, there is little evidence of impact due to the soft nature of the DAC’s policy recommendations, and the fact that the committee, reacting to the challenges to its legitimacy from non-Western donors, has become much less demanding towards potential members than in the past. The paper, however, argues that one must examine the processes of how the norm and policy recommendations of the DAC are mediated domestically. The case of the Czechepublic’s reforms in its foreign aid policy between 2007 and 2010 shows that domestic actors can use the OECD strategically to build support for their own cause and thus achieve seemingly difficult policy reform.