Openness and economic growth

The themes of this thesis are that international trade and foreign direct investment (FDI) are closely related and that they have varying impacts on economic growth in countries at different stages of development. The thesis consists of three empirical studies. The first one examines the causal relationship between FDI and trade in China. The empirical study is based on a panel of bilateral data for China and 19 home countries/regions over the period 1984-98. The specific feature of the study is that econometric techniques designed specially for panel data are applied to test for unit roots and causality. The results indicate a virtuous procedure of development for China. The growth of China’s imports causes growth in inward FDI from a home country/region, which in turn causes the growth of exports from China to the home country/region. The growth of exports causes the growth of imports. This virtuous procedure is the result of China’s policy of opening to the outside world. China has been encouraging export-oriented FDI and reducing trade barriers. Such policy instruments should be further encouraged in order to enhance economic growth. In the second study, an extended gravity model is constructed to identify the main causes of recent trade growth in OECD countries. The specific features include (a) the explicit introduction of R&D and FDI as two important explanatory variables into an augmented gravity equation; (b) the adoption of a panel data approach, and (c) the careful treatment of endogeneity. The main findings are that the levels and similarities of market size, domestic R&D stock and inward FDI stock are positively related to the volume of bilateral trade, while the geographical distance, exchange rate and relative factor endowments, has a negative impact. These findings lend support to new trade, FDI and economic growth theories. The third study evaluates the impact of openness on growth in different country groups. This research distinguishes itself from many existing studies in three aspects: first, both trade and FDI are included in the measurement of openness. Second, countries are divided' into three groups according to their development stages to compare the roles of FDI and trade in different groups. Third, the possible problems of endogeneity and multicollinearity of FDI and trade are carefully dealt with in a panel data setting. The main findings are that FDI and trade are both beneficial to a country's development. However, trade has positive effects on growth in all country groups but FDI has positive effects on growth only in the country groups which have had moderate development. The findings suggest FDI and trade may affect growth under different conditions.

Empirical analysis of human capital development and economic growth in Europe

Recent discussion of the knowledge-based economy draws increasingly attention to the role that the creation and management of knowledge plays in economic development. Development of human capital, the principal mechanism for knowledge creation and management, becomes a central issue for policy-makers and practitioners at the regional, as well as national, level. Facing competition both within and across nations, regional policy-makers view human capital development as a key to strengthening the positions of their economies in the global market. Against this background, the aim of this study is to go some way towards answering the question of whether, and how, investment in education and vocational training at regional level provides these territorial units with comparative advantages. The study reviews literature in economics and economic geography on economic growth (Chapter 2). In growth model literature, human capital has gained increased recognition as a key production factor along with physical capital and labour. Although leaving technical progress as an exogenous factor, neoclassical Solow-Swan models have improved their estimates through the inclusion of human capital. In contrast, endogenous growth models place investment in research at centre stage in accounting for technical progress. As a result, they often focus upon research workers, who embody high-order human capital, as a key variable in their framework. An issue of discussion is how human capital facilitates economic growth: is it the level of its stock or its accumulation that influences the rate of growth? In addition, these economic models are criticised in economic geography literature for their failure to consider spatial aspects of economic development, and particularly for their lack of attention to tacit knowledge and urban environments that facilitate the exchange of such knowledge. Our empirical analysis of European regions (Chapter 3) shows that investment by individuals in human capital formation has distinct patterns. Those regions with a higher level of investment in tertiary education tend to have a larger concentration of information and communication technology (ICT) sectors (including provision of ICT services and manufacture of ICT devices and equipment) and research functions. Not surprisingly, regions with major metropolitan areas where higher education institutions are located show a high enrolment rate for tertiary education, suggesting a possible link to the demand from high-order corporate functions located there. Furthermore, the rate of human capital development (at the level of vocational type of upper secondary education) appears to have significant association with the level of entrepreneurship in emerging industries such as ICT-related services and ICT manufacturing, whereas such association is not found with traditional manufacturing industries. In general, a high level of investment by individuals in tertiary education is found in those regions that accommodate high-tech industries and high-order corporate functions such as research and development (R&D). These functions are supported through the urban infrastructure and public science base, facilitating exchange of tacit knowledge. They also enjoy a low unemployment rate. However, the existing stock of human and physical capital in those regions with a high level of urban infrastructure does not lead to a high rate of economic growth. Our empirical analysis demonstrates that the rate of economic growth is determined by the accumulation of human and physical capital, not by level of their existing stocks. We found no significant effects of scale that would favour those regions with a larger stock of human capital. The primary policy implication of our study is that, in order to facilitate economic growth, education and training need to supply human capital at a faster pace than simply replenishing it as it disappears from the labour market. Given the significant impact of high-order human capital (such as business R&D staff in our case study) as well as the increasingly fast pace of technological change that makes human capital obsolete, a concerted effort needs to be made to facilitate its continuous development.

Personal uses and perceived social and economic effects of advertising in Bulgaria and Romania

Purpose - The objective of this paper is to uncover the underlying dimensions of, and examine the similarities and differences in, personal uses of advertising, perceived socio-economic effects of advertising, and consumer beliefs and attitudes toward advertising in Bulgaria and Romania. Moreover, it aims to identify the relative importance of the predictors of attitudes toward advertising in the two countries. Design/methodology/approach - The paper draws upon findings of previous research and theoretical developments by Bauer and Greyser, Sandage and Leckenby, and Pollay and Mittal. The study uses a stratified random sample of 947 face-to-face interviews with adult respondents from major urban areas in Bulgaria (507) and Romania (440). Variables are measured on multi-item scales as a typical application of the reflective indicator model. Findings - Results show that there are significant differences between Romanian and Bulgarian respondents in terms of their attitudes toward advertising. Romanians are more positive about advertising as an institution than the instruments of advertising. Romanians seem to accept the role of advertising in a free market economy, but have less confidence in advertising claims and techniques. Bulgarian respondents seem more sceptical toward advertising in general and are less enthusiastic about embracing the role of advertising as an institution. Moreover, Bulgarians are highly negative towards the instruments advertising uses to convey its messages to consumers. Research limitations/implications - The research findings reflect the views of urban dwellers and may not be generalisable to the wider population of the two countries. Interviewer bias was reduced by eliminating verbal or non-verbal cues to the respondents, and by the use of stratified random sampling. Practical implications - The paper suggests that the regulatory role of codes of advertising practice and industry regulating bodies should be enhanced, and their ability to protect consumers enforced. Marketing campaigns should be more inclusive to involve diverse social groups and reflect generally-accepted social norms. Originality/value - This study reveals that, while general attitudes toward advertising may be similar, attitudes toward the institution and instruments of advertising may differ even in countries with geographic proximity and low cultural distance. © Emerald Group Publishing Limited.

Does ICT promote democracy and economic freedom in Middle East?

This study investigates the impact of information and communication technology (ICT) expansion on economic and social freedom in the Middle East (Bahrain, Iran, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syria and United Arab Emirates) for the period of 1996 to 2005. This study is unique as it analyzes the effect of institutional resistance (governments’ restrictions) on ICT development, economic freedom and democracy. The results show that institutional resistance poses a significant negative effect on ICT development and democracy. Results also show that ICT expansion in Middle East has not only been effective in bridging the Digital Divide, but that it had a positive impact on promoting civil liberties and economic freedom in a region that is vulnerable to political, social, and global conflicts.

Military spending and economic growth in South Africa

This paper undertakes an empirical analysis of the economic effects of military spending on the South African economy. It estimates a neo-classical model common in the literature at the level of the macroeconomy and at the level of the manufacturing sector. An attempt is made to improve upon the model by allowing the data to determine the dynamic structure of the model through an ARDL procedure. No significant impact of military spending is found in aggregate, but there is a significant negative impact for the manufacturing sector. This suggests that the cuts in domestic military procurement that have occurred since 1989 could lead to improved economic performance in South Africa through their impact on the manufacturing sector.

Regional benchmarking in a global context:knowledge, competitiveness, and economic development

Benchmarking exercises have become increasingly popular within the sphere of regional policy making. However, most exercises are restricted to comparing regions within a particular continental bloc or nation.This article introduces the World Knowledge Competitiveness Index (WKCI), which is one of the very few benchmarking exercises established to compare regions across continents.The article discusses the formulation of the WKCI and analyzes the results of the most recent editions.The results suggest that there are significant variations in the knowledge-based regional economic development models at work across the globe. Further analysis also indicates that Silicon Valley, as the highest ranked WKCI region, holds a unique economic position among the globe’s leading regions. However, significant changes in the sources of regional competitiveness are evolving as a result of the emergence of new regional hot spots in Asia. It is concluded that benchmarking is imperative to the learning process of regional policy making.

Cooperative firms in global markets:incidence, viability and economic performance

A number of competing views are swirling around the literature concerning the impact of globalization on the ability of cooperatives to survive. This 10th volume of the Advances in the Economic Analysis of Participatory & Labor-Managed Firms series wants to understand some of these elements in the evolution of cooperatives in a world where globalization seems to be the driving force behind innovative forms of organization. In keeping with the main focus of the economics literature, the volume is focused on worker and producer cooperatives. This issue contains eleven papers and is organized into three parts: the first part collects empirical studies on producers cooperatives in Israel, Italy, Spain and Canada. The second part focuses on theoretical advances in the literature on cooperatives with the objective of understanding the conditions that explain co-ops longevity. Finally the third part documents the expansion into the global markets of the Mondragón Cooperative Corporation.

Technical and economic simulation of biomass pyrolysis processes for fuels and electricity

There is considerable concern over the increased effect of fossil fuel usage on the environment and this concern has resulted in an effort to find alternative, environmentally friendly energy sources. Biomass is an available alternative resource which may be converted by flash pyrolysis to produce a crude liquid product that can be used directly to substitute for conventional fossil fuels or upgraded to a higher quality fuel. Both the crude and upgraded products may be utilised for power generation. A computer program, BLUNT, has been developed to model the flash pyrolysis of biomass with subsequent upgrading, refining or power production. The program assesses and compares the economic and technical opportunities for biomass thermochemical conversion on the same basis. BLUNT works by building up a selected processing route from a number of process steps through which the material passes sequentially. Each process step has a step model that calculates the mass and energy balances, the utilities usage and the capital cost for that step of the process. The results of the step models are combined to determine the performance of the whole conversion route. Sample results from the modelling are presented in this thesis. Due to the large number of possible combinations of feeds, conversion processes, products and sensitivity analyses a complete set of results is impractical to present in a single publication. Variation of the production costs for the available products have been illustrated based on the cost of a wood feedstock. The effect of selected macroeconomic factors on the production costs of bio-diesel and gasoline are also given.

Foreign direct investment and economic development:an interactive relationship

With the increasing importance of Foreign Direct Investment (FDI), there have been substantial studies on this issue, both empirically and theoretically. However, most existing studies focus on either the impacts of FDI presence or the determinants of FDI inflows, ignoring the fact that inward FDI and economic development may simultaneously affect each other. This thesis sets out to examine the interactive effects between FDI and economic development. The whole thesis is composed of five chapters. Chapter One is an overall introduction to the thesis. Chapter Two presents a theoretical study and chapter Two and Three provide two empirical studies. Chapter Five concludes. Chapter Two presents a theoretical two-sector model that features the importance of human capital in attracting foreign investment. This model theoretically explains why FDI is more likely to occur among countries that are similar in terms of human capital and technology. On the other hand, MNCs must train local employees to work with firm-specific technology and hence improve the technological skills of local workers. In Chapter Two, an empirical model is constructed to detect whether the productivities of foreign and local firms impact each other. The model is tested on China’s data at the industry level. The results indicate that productivity growth of local and foreign firms are jointly determined. Evidence also suggests that the extent to which spillovers occur varies with difference technology levels of local firms. Chapter Four investigates the relationship between FDI and economic grown based on a panel of data for 84 countries over the period 1970-1999. Both equations of FDI inflow and GDP growth are examined. The results indicate that FDI not only directly promotes economic growth by itself, but also indirectly does so via its interaction terms. There is a strong positive interaction effect of FDI with human capital and a strong negative interaction effect of FDI with technology gap on economic growth in developing countries.

Primary production, financial constraints and economic instability:Zambia since independence.

A systematic analysis is presented of the economic consequences of the abnormally high concentration of Zambia's exports on a commodity whose price is exceptionally unstable. Zambian macro-economic variables in the post-independence years are extensively documented, showing acute instability and decline, particularly after the energy price revolution and the collapse of copper prices. The relevance of stabilization policies designed to correct short-term disequilibrium is questioned. It is, therefore, a pathological case study of externally induced economic instability, complementing other studies in this area which use cross-country analysis of a few selected variables. After a survey of theory and issues pertaining to development, finance and stabilization, the emergence of domestic and foreign financial constraints on the Zambian economy is described. The world copper industry is surveyed and an examination of commodity and world trade prices concludes that copper showed the highest degree of price instability. Specific aspects of Zambia's economy identified for detailed analysis include: its unprofitable mining industry, external payments disequilibrium, a constrained government budget, potentially inflationary monetary growth, and external indebtedness. International comparisons are used extensively, but major copper exporters are subjected to closer scrutiny. An appraisal of policy options concludes the study.

An evaluation of motivations for studying pharmacy, career commitment and future career plans

It has been predicted that there will be a full time pharmacist workforce shortage of over 15,000 by 2013. It is therefore necessary to recruit more students of a suitable calibre to undergraduate pharmacy degree courses. This study was designed to investigate the motivations of pre-university and MPharm students for studying pharmacy. A series of focus groups was conducted with Year 12 students and a national survey of Year 13, 1st year MPharm and 4th year MPharm students was undertaken. The study found that amongst Year 12 students, pharmacy is perceived as a background profession and was also perceived as being of a lower status than medicine and dentistry. It was concluded that there was a need for greater promotion of pharmacy as a career amongst pre-university students, including the provision of structured work experience placements. Analysis of UCAS applicant data for pharmacy shows that the applicant pool is buoyant and that the majority of applicants are female. Female respondents to the surveys were significantly more likely than males to wish to work part time if they had a family. This could lead to further shortages in the full time workforce. The largest ethnic group of applicants to pharmacy degree courses were Asian. Business ownership and self-employment were motivations for entering the procession of pharmacy and career aims for significantly more Asian than White respondents. Ownership of independent pharmacies is declining and this could be a barrier to future recruitment to pharmacy degree courses. A high degree of interest in locum working may present a problem for continuity in commissioned services within community pharmacy practice. Further work is needed to examine the motivations for working as a locum pharmacist.

Technical and economic study of plantain food products

Plantain (Banana-Musa AAB) is a widely growing but commercially underexploited tropical fruit. This study demonstrates the processing of plantain to flour and extends its use and convenience as a constituent of bread, cake and biscuit. Plantain was peeled, dried and milled to produce flour. Proximate analysis was carried out on the flour to determine the food composition. Drying at temperatures below 70ºC produced light coloured plantain flour. Experiments were carried out to determine the mechanism of drying, the heat and mass transfer coefficients, effect of air velocity, temperature and cube size on the rate of drying of plantain cubes. The drying was diffusion controlled. Pilot scale drying of plantain cubes in a cabinet dryer showed no significant increase of drying rate above 70ºC. In the temperature range found most suitable for plantain drying (ie 60 to 70ºC) the total drying time was adequately predicted using a modified equation based on Fick's Law provided the cube temperature was taken to be about 5ºC below the actual drying air temperature. Studies of baking properties of plantain flour revealed that plantain flour can be substituted for strong wheat flour up to 15% for bread making and up to 50% for madeira cake. A shortcake biscuit was produced using 100% plantain flour and test-marketed. Detailed economic studies showed that the production of plantain fruit and its processing into flour would be economically viable in Nigeria when the flour is sold at the wholesale price of NO.65 per kilogram provided a minimum sale of 25% plantain suckers. There is need for government subsidy if plantain flour is to compete with imported wheat flour. The broader economic benefits accruing from the processing of plantain fruit into flour and its use in bakery products include employment opportunity, savings in foreign exchange and stimulus to home agriculture.

How habits, social ties, and economic switching barriers affect customer loyalty in contractual service settings

While existing literature acknowledges positive effects of satisfaction and economic switching barriers for building customer loyalty, studies analyzing interactions of these antecedents reveal mixed findings. Prior research does not consider, as antecedents of switching barriers, either habits or social ties that result from shared service-usage within a family or community. This paper contributes to the literature, first, by replicating the effects of satisfaction, economic switching barriers, and their interaction with customer loyalty and word-of-mouth of subscribers to a contractual service. Second, the study empirically tests the role of social ties as a social switching barrier. Third, the study introduces and tests the effects of habits as a precursor of economic and social switching barriers. Results reveal significant positive effects of satisfaction, economic switching barriers, and social ties on customer loyalty and word-of-mouth. Additionally, economic switching barriers and social ties interact significantly with satisfaction and habits act as a precursor of economic switching barriers and social ties.