Intra-industry foreign direct investment, uneven development and globalization:the legacy of Stephen Hymer

This paper revisits the issue of intra-industry foreign direct investment (FDI). This issue was considered in Stephen Hymer's early work, but was not subsequently developed, and was largely ignored in the literature for some time. Using the example of the UK, this paper traces the patterns of intra-industry FDI, both across countries and industries, for both the manufacturing and service sectors. Despite the undoubted increase in the integration of goods and factor markets since the time of Hymer's writing, the analysis presented here shows that the pattern has changed little in the last 40 years. The paper then goes on to discuss the motives for intra-industry FDI, relating it to technology flows and factor cost differentials. Finally, we present some analysis relating intra-industry FDI to uneven development, both between developed and developing countries, and between regions of a developed country. It is clear that intra-industry FDI is still very much a developed country phenomenon, as Hymer suggested, with both developing countries and poorer regions of developed countries unlikely to reap any of the benefits. In this context, one-way and two-way FDI must be seen as different phenomena within the debate on globalisation. © The Author 2005. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved.

The determinants of export performance:evidence for manufacturing plants in Ireland and Northern Ireland

The dramatic GDP and export growth of Ireland over the last decade forms a marked contrast with that of its nearest neighbour Northern Ireland. In Ireland, export volume growth averaged 15.5% p.a. from 1991 to 1999 compared with 6.3% from Northern Ireland. Using data on individual manufacturing plants this paper considers the determinants of export performance in the two areas. Larger, externally owned plants with higher skill levels are found to have the highest export propensities in both areas. Other influences (plant age, R&D, etc.) prove more strongly conditional on location, plant size, and ownership. Structural factors (e.g. ownership, industry) explain almost all of the difference in export propensity between larger plants in Northern Ireland and Ireland but only around one-third of that between smaller plants. Significant differences are also evident between plants in terms of their sources of new technology. For indigenously owned plants, inhouse R&D is important. For externally owned plants, R&D conducted elsewhere in the group - typically outside Ireland and Northern Ireland - proves more significant. This external dependency and lower than expected export propensity on the part of small plants in Northern Ireland represent significant policy challenges for the future.© 2006 Scottish Economic Society. Published by Blackwell Publishing Ltd.

Who gains from whom? Spillovers, competition and technology sourcing in the foreign-owned sector of UK manufacturing

There is a growing literature explaining foreign direct investment flows in terms of 'technology sourcing', whereby multinational firms invest in certain locations not to exploit their firm-specific assets in the host environment, but to access technology that is generated by host country firms. However, it is far from clear whether the literature has found significant evidence of such activity beyond a few isolated examples. This paper extends this work by allowing for the possibility of multinational enterprises (MNEs) sourcing technology not only from host country firms but also from each other within a host economy. The paper demonstrates that MNEs in the UK do indeed appropriate spillovers both from indigenous firms and from other foreign investors, but that there are also significant competition effects that act to reduce productivity in certain industries. The paper also explores which countries' affiliates gain most from technology sourcing in the UK, and which generate the greatest spillovers within the foreign-owned sector. © Scottish Economic Society 2005.

Economists' perceptions versus managers' decisions:an experiment in transaction cost analysis

Are the perceptions of professional economists on transaction costs consistent with make-or-buy decisions made within firms? The answer may have important implications for transaction cost research. Data on firms' outsourcing during the new product development process are taken from a largescale survey of UK, German and Irish manufacturing plants, and we test the consistency of these outsourcing decisions with the predictions derived from the transaction cost perceptions of a panel of economists. Little consistency is evident between actual outsourcing patterns and the predictions of the (Williamsonian) transactions cost model derived from the panel of economists. There is, however, evidence of a systematic pattern to the differences, suggesting that a competence or resource-based approach may be relevant to understanding firm outsourcing, and that firms are adopting a strategic approach to managing their external relationships. © Cambridge Political Economy Society 2005; all rights reserved.

Society

What is the nature of our current societies? Do we see a clash of civilizations, or the end of history? The advent of globalization, or the birth of the network society? Are we witnessing the emergence of a risk society, or the advent of the knowledge society? More fundamentally, is ‘society’ an ideological construct that should be abandoned? Coming into English from the Latin term ‘societas’ via Old French ‘société’, the etymology of ‘society,’ in the sense of a system adopted by a group of co-existing individuals for mutually beneficial purposes, can be traced back at least to the mid-sixteenth century. By the Age of Enlightenment, ‘society’ was increasingly used in intellectual discourse to characterize human relations, often in contrast to notions of ‘the state’. During the nineteenth century, the concept was subject to highly elaborate treatment in various intellectual fields, such as political economy, philosophy, and legal thought; and ‘society’ continues to be a central conceptual tool, not only for sociology, but also for many other social-science disciplines, such as anthropology, economics, political sciences, and law. The notion resonates beyond the social sciences into the humanities; it is a fundamental concept, like nature, the universe, or the economy. Moreover, ‘society’ remains a highly contested concept, as was demonstrated, for example, by the controversy surrounding the former British prime minister Margaret Thatcher’s pithy assertion of the neoliberal economic wisdom that ‘there is no such thing as society’ (Woman’s Own, 31 October 1987); and by the term’s rehabilitation at the turn of the twenty-first century, not least with the ascendancy of the notion of ‘civil society’. This four-volume collection, a new title in the Routledge Critical Concepts in Sociology series, brings together both canonical and the best cutting-edge research to document the intellectual origins and development of what remains a key framework within which contemporary work in the social sciences in general, and sociology in particular, proceeds. Edited by Reiner Grundmann and Nico Stehr, two leading scholars in the field, this Routledge Major Work makes available the most useful, important and representative treatments of the subject matter, and helps to make sense of the great variety of perspectives and approaches in which social scientists and other thinkers have understood, and continue to understand, society. Fully indexed and with a comprehensive introduction newly written by the editors, which places the collected material in its historical and intellectual context, Society is an essential reference work, destined to be valued by scholars and students as a vital research resource.

Governance in contemporary Germany:the semisovereign State revisited

Throughout the 1970s and 1980s, West Germany was considered to be one of the world’s most successful economic and political systems. In his seminal 1987 analysis of West Germany’s ‘semisovereign’ system of governance, Peter Katzenstein attributed this success to a combination of a fragmented polity, consensus politics and incremental policy changes. However, unification in 1990 has both changed Germany’s institutional configuration and created economic and social challenges on a huge scale. This volume therefore asks whether semisovereignty still exists in contemporary Germany and, crucially, whether it remains an asset in terms of addressing these challenges. By shadowing and building on the original study, an eminent team of British, German and American scholars analyses institutional changes and the resulting policy developments in key sectors, with Peter Katzenstein himself providing the conclusion. Together, the chapters provide a landmark assessment of the outcomes produced by one of the world’s most important countries. Contents: 1. Introduction: semisovereignty challenged Simon Green and William E. Paterson; 2. Institutional transfer: can semisovereignty be transferred? The political economy of Eastern Germany Wade Jacoby; 3. Political parties Thomas Saalfeld; 4. Federalism: the new territorialism Charlie Jeffery; 5. Shock-absorbers under stress. Parapublic institutions and the double challenges of German unification and European integration Andreas Busch; 6. Economic policy management: catastrophic equilibrium, tipping points and crisis interventions Kenneth Dyson; 7. Industrial relations: from state weakness as strength to state weakness as weakness. Welfare corporatism and the private use of the public interest Wolfgang Streeck; 8. Social policy: crisis and transformation Roland Czada; 9. Immigration and integration policy: between incrementalism and non-decisions Simon Green; 10. Environmental policy: the law of diminishing returns? Charles Lees; 11. Administrative reform Kluas H. Goetz; 12. European policy-making: between associated sovereignty and semisovereignty William E. Paterson; 13. Conclusion: semisovereignty in United Germany Peter J. Katzenstein.

Foreign direct investment and corruption

In the last few decades, the world has witnessed an enormous growth in the volume of foreign direct investment (FDI). The global stock of FDI reached US$ 7.5 trillion in 2003 and accounted for 11% of world Gross Domestic Product, up from 7% in 1990. The sales of multinational enterprises at around US$ 19 trillion were more than double the level of world exports. Substantial FDI inflows went into transition countries. Inflows into one of the region's largest recipient, the Russian Federation, almost doubled, enabling Russia to become one of the five top FDI destinations in 2005-2006. FDI inflows in Russia have increased almost threefold from 13.6% in 2003 to 35% in 2007. In 2003, these flows were twice greater than those into China; whilst in 2007 they were six times larger. Russia's FDI inflows were also about 2.5 times greater than those of Brazil. Efficient government institutions are argued by many economists to foster FDI and growth as a result. However, the magnitude of this effect has yet to be measured. This thesis takes a Political Economy approach to explore, empirically, the potential impact of malfunctioning governmental institutions, proxied by three indices of perceived corruption, on FDI stocks accumulation/distribution within Russia over the period of 2002-2004. Using a regional data-set it concentrates on three areas relating to FDI. Firstly, it considers the significance, the size and the sign of the impact of perceived corruption on accumulation of FDI stocks within Russia. Secondly, it quantifies the impact of perceived corruption on the volume of FDI stocks simultaneously estimating the impact of the investment in public capital such as telecommunications and transportation networks on FDI in the presence of corruption. In particular, it addresses the question whether more corrupt regions in Russia are also those that could have accumulated more of FDI stocks, and investigates whether those 'more corrupt' regions would have had lower level of public capital investment. Finally, it examines whether decentralisation increases or decreases corruption and whether a larger extent of decentralisation has a positive or negative impact on FDI (stocks). The results of three studies are as follows. Firstly, along with market potential, corruption is found to be one of the key factors in explaining FDI distribution within Russia between 2002 and 2004. Secondly, corruption on average is found to be related to FDI positively suggesting that it may act as speed money: to save their time foreign direct investors might be willing to bribe the regional authorities so to move in front of the bureaucratic lines. Thirdly, although when corruption is controlled for, the impact of the latter on unobservable FDI is found to be on average positive, no association between FDI and public investment is observed with the only exception of transportation infrastructure (i.e., railway). The results might suggest therefore that it is possible that not only regions with high levels of perceived corruption attract more FDI but also that expansions in public capital investments are not accompanied by an increase of the volume of FDI (stocks) in regions with high levels of corruption. This casts some doubt on the productivity of the investment in public capital in these regions as it might be that bureaucrats may prefer to use these infrastructural projects for rent extraction. Finally, we find decentralisation to have a significant and positive impact on both FDI stock accumulation and corruption, suggesting that local governments may spend more on public goods to make the area more attractive to foreign investors but at the same time they may be interested into extracting rents from foreign investors. These results support the idea that the regulation of FDI is associated with and facilitated by a larger public sector, which distorts competition and introduces opportunities for rent-seeking by particular economic and political factors.

Nations and organizations:a comparative study of English and Indian work-related attitudes and values in matched manufacturing firms

This thesis reports a cross-national study carried out in England and India in an attempt to clarify the association of certain cultural and non-cultural characteristics with people's work-related attitudes and values, and with the structure of their work organizations. Three perspectives are considered to be relevant to the objectives of the study. The contingency perspective suggests that a 'fit' between an organization's context and its structural arrangements will be fundamentally necessary for achieving success and survival. The political economy perspective argues for the determining role of the social and economic structures within which the organization operates. The culturalist perspective looks to cultural attitudes and values of organizational members for an explanation for their organization's structure. The empirical investigation was carried out in three stages in each of the two countries involved by means of surveys of cultural attitudes, work-related attitudes and organizational structures and systems. The cultural surveys suggested that Indian and English people were different from one another with regard to fear of, and respect and obedience to, their seniors, ability to cope with ambiguity, honesty, independence, expression of emotions, fatalism, reserve, and care for others; they were similar with regard to tolerance, friendliness, attitude to change, attitude to law, self-control and self-confidence, and attitude to social differentiation. The second stage of the study, involving the employees of fourteen organizations, found that the English ones perceived themselves to have more power at work, expressed more tolerance for ambiguity, and had different expectations from their job than did the Indian equivalents. The two samples were similar with respect to commitment to their company and trust in their colleagues. The findings also suggested that employees' occupations, education and age had some influences on their work-related attitudes. The final stage of the research was a study of structures, control systems, and reward and punishment policies of the same fourteen organizations which were matched almost completely on their contextual factors across the two countries. English and Indian organizations were found to be similar in terms of centralization, specialization, chief executive's span of control, height and management control strategies. English organizations, however, were far more formalized, spent more time on consultation and their managers delegated authority lower down the hierarchy than Indian organizations. The major finding of the study was the multiple association that cultural, national and contingency factors had with the structural characteristics of the organizations and with the work-related attitudes of their members. On the basis of this finding, a multi-perspective model for understanding organizational structures and systems is proposed in which the contributions made by contingency, political economy and cultural perspectives are recognized and incorporated.

Regionalism, globalisation and international order:Europe and Southeast Asia

New regionalism and globalization have been prominent themes in academic and political debates since the beginning of the 1990s. Despite the considerable amount of scholarly attention that the new regionalism has received in recent years, its full empirical and theoretical potential has yet to be fully investigated. This illuminating study provides an overview of new avenues in theorizing regionalism and proposes a consolidated framework for analysis and comparison. Offering a comparative historical perspective of European and Southeast Asian regionalism, it presents new and imaginative insights into the theory and practice of regionalism and the links between regional developments, globalization and international order. Contents: Introduction; Regionalism and integration theory the first wave: traditional approaches; New regionalism the second wave: towards a framework for comparative regionalism; Regionalism in the EU and ASEAN during the Cold War: the first wave; Second-wave regionalism: the post-Cold War period; Identifying regions: emerging regional identities in Europe and East Asia; Conclusion; Appendix; Bibliography; Index.

The British higher education funding debate: the perils of 'talking economics'

This article examines current debates surrounding British higher education funding from a political economy perspective, drawing on ‘positive’ and ‘institutionalist’ political economy. Adopting the lens of political economy enables a critical assessment of the use of terms drawn from economics by many higher education decision-makers. Current discussions embody particular assumptions about the nature of producers and consumers in higher education, the relationship between supply and demand, and the role of information in the higher education ‘market’. They also frequently fail to acknowledge the active rather than passive role of higher education institutions in shaping policy discussions surrounding higher education funding.

'Worlds of justification’ in the politics and practices of urban regeneration

A considerable body of research has developed on processes of neoliberal urban regeneration and gentrifi cation. On the one hand, there are many political economy accounts emphasising the role of economic capital in processes of urban change and gentrifi cation. On the other hand, there is a wealth of governmentality studies on the art of government that fail to explain how ungovernable subjects develop. Similarly, within gentrifi cation studies there are many accounts on the role of changing consumer lifestyles and defi ning gentrifi cation, but less concern with the governance processes between actors in urban regeneration and gentrifi cation. Yet such issues are of considerable importance given the role of the state in urban regeneration and dependence on private capital. This paper utilises the French Pragmatist approach of Boltanski and Thévenot to examine a case study state-led gentrifi cation project. Boltanski and Thévenot argue that social coordination occurs by way of actors working through broader value-laden ‘worlds of justifi cation’ that underpin processes of argumentation and coordination. The examined case study is a deprived area within an English city where a major state-led gentrification programme has been introduced. The rationale for the programme is based on the assumption that reducing deprivation relies upon substantially increasing the number of higher income earners. The paper concludes that market values have overridden broader civic values in the negotiation process, with this intensifying as the state internalised market crisis tendencies within the project. More broadly, there is a need for French Pragmatism to be more sensitive to the spatial processes of social coordination, which can be achieved through critical engagement with recent concepts of ‘assemblages’.

Did the World Bank drive tariff reforms in Eastern Africa?

This paper explores tariff reform in Ethiopia, Kenya, Tanzania and Uganda between the early 1990s and early 2000s. Tariffs were reformed in an across the board manner consistent with implementing World Bank programs: the average tariff was reduced and the dispersion of tariffs was compressed, with the highest tariffs being eliminated. There is limited evidence of political economy influences on the cross sector pattern of tariffs and reforms, except for a tendency to offer greater protection to larger manufacturing sectors in all countries except Uganda. The technocratic reforms have diluted relative protection and political economy influences in all the four countries.

Forecasting the UK/US exchange rate with divisia monetary models and neural networks

This paper compares the UK/US exchange rate forecasting performance of linear and nonlinear models based on monetary fundamentals, to a random walk (RW) model. Structural breaks are identified and taken into account. The exchange rate forecasting framework is also used for assessing the relative merits of the official Simple Sum and the weighted Divisia measures of money. Overall, there are four main findings. First, the majority of the models with fundamentals are able to beat the RW model in forecasting the UK/US exchange rate. Second, the most accurate forecasts of the UK/US exchange rate are obtained with a nonlinear model. Third, taking into account structural breaks reveals that the Divisia aggregate performs better than its Simple Sum counterpart. Finally, Divisia-based models provide more accurate forecasts than Simple Sum-based models provided they are constructed within a nonlinear framework.

The effect of corruption on FDI:a parametric and non-parametric analysis

This paper analyses the effect of corruption on Multinational Enterprises' (MNEs) incentives to undertake FDI in a particular country. We contribute to the existing literature by modelling the relationship between corruption and FDI using both parametric and non-parametric methods. We report that the impact of corruption on FDI stock is different for the different quantiles of the FDI stock distribution. This is a characteristic that could not be captured in previous studies which used only parametric methods. After controlling for the location selection process of MNEs and other host country characteristics, the result from both parametric and non-parametric analyses offer some support for the ‘helping-hand’ role of corruption.

Ethnic conflict and economic disparity:Serbians and Albanians in Kosovo

Using the Living Standards Measurement Study (LSMS) household survey from post-conflict Kosovo, we investigate the comparative economic well-being of Serbs and Albanians. An Oaxaca decomposition shows Serb households are both better endowed with income generating characteristics, such as education, and receive higher returns to these characteristics than Albanian households. Despite these advantages, Serb households have lower living standards, on average, than Albanian households. Most of the difference in living standards between Serb and Albanian households is due to unobserved non-economic factors. This result has serious implications for the political economy of policymaking in post-conflict Kosovo.