Foreign investment and licensing checklist for U.S. firms.

Mode of access: Internet.

Non-traditional investment of pension funds : a brief overview of the antitrust question /

"December 1980."

The impact of foreign direct investment on UK manufacturing: is there a profit squeeze in domestic firms?

This paper examines the extent to which foreign direct investment (FDI) in selected UK manufacturing sectors has an impact on reported profits in domestic firms. Foreign manufacturing firms are characterized by relatively high labour productivity and low wage shares. Entry by foreign firms not only impacts on domestic market shares, but also on domestic cost conditions. As a result, profitability in the indigenous sector may be reduced. There are a number of policy implications of this analysis which are explored.

The finance of biotechnology:investment in new biotechnology firms by British venture capitalists-attitudes to, and evaluation of, business proposals

A notable feature of the recent commercialisation of biotechnology has been the success of 200 or so new firms, established in America since 1976, in exploiting specialised market niches. A key factor in their formation has been the ready availability of venture capital funding. These firms have been instrumental in establishing America's lead in exploiting biotechnology. It is this example which Britain has attempted to emulate as part of its strategy for developing its own biotechnology capabilities. This thesis investigated some aspects of the relationship between biotechnology and venture capital, concentrating on the determinants of the venture capitalist's investment decision. Following an extensive literature survey, two hypothetical business proposals were used to find what venture capitalists themselves consider to be the key elements of this decision. It was found that venture capitalists invest in people, not products, and businesses, not industries. It was concluded that venture capital-backed small firms should, therefore, be seen as an adjunct to the development of biotechnology in Britain, rather than as a substitute for a co-ordinated, co-operative strategy involving Government, the financial institutions, industry and academia. This is chiefly because the small size of the UK's domestic market means that many potentially important innovations in biotechnology may continue to be lost, since the short term identification of market opportunities for biotechnology products will dictate that they are insupportable in Britain alone. In addition, the data analysis highlighted some interesting methodological issues concerning the investigation of investment decision making. These related especially to shortcomings in the use of scoresheets and questionnaires in research in this area. The conclusion here was that future research should concentrate on the reasons why an individual reaches an investment decision. It is argued that only in this way can the nature of the evaluation procedures employed by venture capitalists be properly understood.

Financial liberalization and dynamics of firm-level financing and investment decisions in the Southeast Asian countries

This thesis examines the dynamics of firm-level financing and investment decisions for six Southeast Asian countries. The study provides empirical evidence on the impacts of changes in the firm-level financing decisions during the period of financial liberalization by considering the debt and equity financing decisions of a set of non-financial firms. The empirical results show that firms in Indonesia, Pakistan, and South Korea have relatively faster speed of adjustment than other Southeast Asian countries to attain optimal debt and equity ratios in response to banking sector and stock market liberalization. In addition, contrary to widely held belief that firms adjust their financial ratios to industry levels, the results indicate that industry factors do not significantly impact on the speed of capital structure adjustments. This study also shows that non-linear estimation methods are more appropriate than linear estimation methods for capturing changes in capital structure. The empirical results also show that international stock market integration of these countries has significantly reduced the equity risk premium as well as the firm-level cost of equity capital. Thus stock market liberalization is associated with a decrease in the cost of equity capital of the firms. Developments in the securities markets infrastructure have also reduced the cost of equity capital. However, with increased integration there is the possibility of capital outflows from the emerging markets, which might reverse the pattern of decrease in cost of capital in these markets.

Multinational firms, productivity and employment

Over the last three decades foreign direct investment (FDI) has become the most visible driver of globalisation. It has grown faster than world output and international trade and now reports world annual flows exceeding 1,000 billion US dollars. In this period, Germany has undergone significant changes in order to play an important role in the globalisation process. Apart from being a member state of the European Union (EU) whose key feature is the free flow of trade, investment and labour, the re-unification of East and West Germany in 1990 has been a significant development. This in effect has meant that East Germany as well as other Eastern European nations opened up to foreign investment for the first time. In this period, Germany has attracted in excess of 10 per cent of inward FDI into the EU and invested around 15 per cent of all FDI in the EU. This thesis explores empirically the potential impact of FDI on firms operating in and investing from Germany over a ten year period. Using panel data at the firm-level it concentrates on three areas relating to FDI. Firstly, it considers whether foreign-owned firms are more productive than German multinational firms and German non-multinational firms. Secondly, the thesis considers the impact of German investments abroad on domestic productivity. Finally, employment effects emanating from outward high-tech FDI are estimated for the leading OECD (Organisation of Economic Co-operation and Development) countries, namely Germany, Belgium, France, the Netherlands, Sweden, the United Kingdom and Japan. The findings of the first analysis indicate that while foreign-owned firms are generally more productive than German non-multinationals, there is no clear cut difference between foreign-owned firms and German multinationals. These differences would not have been uncovered, had the analysis compared foreign firms with all domestic firms. Equally, location within Germany is also important, as this productivity gap is more pronounced for firms which are located in the Eastern states. The findings of the second analysis suggest that engaging in outward FDI has an overall positive effect on the parent firm's productivity at home. Finally, results of the third analysis show that an expansion of high-tech offshoring activities by OECD multinationals (MNEs) is not associated with any reduction in employment at home.

A comparative evaluation of the impact of UK Trade & Investment's R&D programme and other UKTI support that impacts R&D

The evaluation study used econometric techniques and evidence on both users and non-users of UKTI trade services to investigate the impact of UKTI support on business investment in Research and Development (R&D). It found evidence that trade support generates additional R&D of around £65k per firm, with key UKTI services such as the Tradeshow Access Programme, Export Marketing Research Scheme, Website business opportunities alerts, and Passport to Export scheme tending to generate the strongest R&D impact. The research also confirmed that innovative and growing firms were most likely to show positive R&D impact and there was clear evidence of UKTI service complementarity, with the R&D impact stronger for multiple service use.

Investment efficiency among a cross-section of UK firms:implications for the debate on financing constraints

In this paper, we address this policy issue using a stylised methodology that relies on estimates of the cash flow sensitivity of firms’ investment, as well as a relatively new methodology that enables us to generate a (0, 1) bounded measure of investment efficiency of firms, i.e., the efficiency with which firms can convert their sales into investment, after controlling for unobserved year- and industry-specific effects. Higher investment efficiency is associated with lower financing constraint. Our results indicate that there is considerable heterogeneity in investment efficiency across firms, during a given year; the range being 0.57-0.82. However, the average investment efficiency measure is similar across years, regions and NACE 2-digit industries. We also do not find discernible patterns in the relationship between investment efficiency and firm size, both before and during the financial crisis. The results suggest that while some firms are clearly less efficient at translating their performance into investment, broad policies targeting firms of a certain size, or those within a particular industry or region, may not successfully address the problem of financing constraint in the United Kingdom. The targeting of firms with financing constraints may have to be considerably more refined, and look at not easily observable factors such as credit history/events and organisational capacity of the firms.

Ownership structure and investment finance in transition economies:a survey of evidence from large firms in Hungary and Poland

Using survey data on 157 large private Hungarian and Polish companies this paper investigates links between ownership structures and CEOs’ expectations with regard to sources of finance for investment. The Bayesian estimation is used to deal with the small sample restrictions, while classical methods provide robustness checks. We found a hump-shaped relationship between ownership concentration and expectations of relying on public equity. The latter is most likely for firms where the largest investor owns between 25 percent and 49 percent of shares, just below the legal control threshold. More profitable firms rely on retained earnings for their investment finance, consistent with the ‘pecking order’ theory of financing. Finally, firms for which the largest shareholder is a domestic institutional investor are more likely to borrow from domestic banks.

Organised for inward investment? Development agencies, local government, and firms in the inward investment process

Inward investment promotion and aftercare remain central aspects of local economic development for English Regional Development Agencies, Scottish and Welsh development bodies, and local authorities in Britain. In many cases, partnership and consultation mechanisms have become integral to attracting inward investment and providing aftercare. Inward investment is thus an important area in which to explore interinstitutional relations between agents operating along diverse spatial boundaries and with different responsibilities. In this paper we analyse the local and regional institutional structures and relations characterising the inward investment process in Britain using new survey data from local authorities, regional bodies, and inward investors. We find that promotional activities have clearly defined structures which are chiefly led by the regional level. Aftercare is characterised by more collaborative arrangements involving both regional bodies and local government. However, many bodies are little used, with competition and tension between partners remaining frequent within English regions, regardless of recent institutional changes designed to reduce such problems. In Scotland and Wales, however, their national institutions are not only widely used, but they create high levels of satisfaction from firms. Hence, England has yet to respond to the effective challenges of Scotland and Wales. The analysis also highlights the limited importance of all national, regional, and local public institutions in attracting inward investors and their subsequent aftercare. The critical inputs to business decisions appear to be driven chiefly by more general supply-side conditions (for example, general skills versus local public packages) and the general attractions of a particular location.

Estimating direct and indirect effects of foreign direct investment on firm productivity in the presence of interactions between firms

We implement a method to estimate the direct effects of foreign-ownership on foreign firms' productivity and the indirect effects (or spillovers) from the presence of foreign-owned firms on other foreign and domestic firms' productivity in a unifying framework, taking interactions between firms into account. To do so, we relax a fundamental assumption made in empirical studies examining a direct causal effect of foreign ownership on firm productivity, namely that of no interactions between firms. Based on our approach, we are able to combine direct and indirect effects of foreign ownership and calculate the total effect of foreign firms on local productivity. Our results show that all these effects vary with the level of foreign presence within a cluster, an important finding for the academic literature and policy debate on the benefits of attracting foreign owned firms.