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This Special Issue brings together 13 papers that examine a variety of central topics in the field of international economics and finance. These papers were presented at the 23rd Conference on International Economics held in Málaga (Spain) on 16th–17th June 2022. The conference was organised by the Spanish Association of International Economics and Finance (AEEFI) and the University of Málaga. The selected papers make up an interesting and revealing set of information to study the new challenges of the international economics and finance in a context especially marked by the aftermath of the 2008 financial crisis, the climate change, the challenge posed by the COVID‐19 crisis and the instability unleashed after the invasion of Ukraine in 2022. From different perspectives, the papers analyse how events that have particularly affected the evolution of the world economy have substantially altered the rules of international trade, foreign direct investment, as well as monetary, fiscal or sectoral policy. The conference included two keynote lectures by Per Krusell (Institute for International Economic Studies, Stockholm University) and Fabio Canova (Norwegian Business School and Budapest School for Central Banking Studies), as well as 97 selected contributions. [ABSTRACT FROM AUTHOR]

This paper investigates Samuelson's [Samuelson, P. A. 'Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Supporting Globalization.' Journal of Economic Perspectives, 18(3), 2004, 135-46] argument that technical progress of the trade partner may hurt the home country. We illustrate this prospect in a simple Ricardian model for situations with outward knowledge spillovers. Within this framework Samuelson's Act II effects may occur. Based on industry level panel data for 17 OECD countries for the period 1973-2000 we show econometrically that the outflow of domestic knowledge via exports or foreign direct investment (FDI) to the rest of the world may have a negative impact on industry output in the home country. This is particularly so when exporting to technologically less advanced countries and, more specifically, China. ( JEL F10, F11, F14, O30) [ABSTRACT FROM AUTHOR]

The papers in this symposium were initially presented at the Global Political Economy Network conference at Loughborough University in London in April 2019. It is also possible that female-led firms may find it harder to implement innovations learned by exporting: this seems to be particularly a problem facing larger female-led firms. Rather than treating institutions as exogenous and policy as endogenous, these authors investigate the effect upon institutions of a policy choice to adopt inflation targeting. [Extracted from the article]

As the second-largest and a fast-growing economy, China has played important roles in promoting globalization and impacting the environment. They explore the effect of China's Central Inspection of Environmental Protection (CIEP), a campaign-style governance approach, on China's legislation process related to the conservation of nature. The second paper by Chen et al. (2021) empirically examines how European Union-China (EU-China) trade affects intra-EU trade. [Extracted from the article]

This paper investigates tax‐related determinants of indirect foreign direct investment (FDI). In particular, it studies the effects of bilateral effective average tax rates, the strength of anti‐tax avoidance rules in host countries and tax haven status of home countries on the volume of indirect FDI host countries receive. The paper uses the fourth edition of the OECD Benchmark Definition of Foreign Direct Investment (BMD4) database, which distinguishes between ultimate and immediate FDI. Methodologically, the paper relies on the standard gravity equation for FDI and applies the Poisson pseudo‐maximum likelihood estimation model. The paper shows that ultimate FDI is not influenced by tax‐related factors but only real economic determinants, whereas tax rates affect immediate FDI. This finding suggests that previous research may have overestimated the tax elasticity of FDI, and taxes do not have an impact on location decisions of FDI, but rather the route of investing—direct or indirect. The paper defines indirect FDI as the difference between ultimate and immediate FDI and finds that high bilateral effective average tax rates encourage indirect FDI. The finding is robust under different specifications. [ABSTRACT FROM AUTHOR]

The Chinese capital market has attracted increasing academic attention due to its rising global influence, ongoing regulatory reforms, and distinct institutional background. In this paper, we review scholarly accounting and finance research pertaining to the Chinese capital market in Mainland China published in Tier 1 and Asia‐Pacific regional journals during the 1999–2018 period. Our review is based along four dimensions: top‐cited articles, main research fields, frequently contributing authors, and emerging research trends. We find that the increasing presence of China in global capital markets, along with its ongoing economic reforms, provides academics with opportunities to investigate distinct institutional environments and utilize natural experiments. This has led to the formulation of novel accounting and finance research questions, greatly advancing our understanding of accounting and finance research. [ABSTRACT FROM AUTHOR]

It is rather unusual to find all the papers presented in one of these sessions adhering so closely to the session title. I am taking note of this point to emphasize the unusual commonality of the two papers. Namely, both papers use the two parameter CAPM as their basic framework, and both papers investigate (or better, reinvestigate) classic, fundamental corporate finance issues. These are not trivial or second order issues undertaken in the two papers--capital budgeting, capital structure and dividend policy have always been at the core of corporation finance. But there is even a third similarity between these two papers; and that is, they both use numerical examples and solutions to illustrate some very difficult conceptual and analytical problems and to draw general conclusions. In many of the topics or cases studied in the two papers, analytical solutions were extremely complex or impossible, so that the usefulness of numerical examples was clearly demonstrated. [ABSTRACT FROM AUTHOR]

This paper deals with what is referred to in the literature as the ‘Inflation Targeting Lite’ (ITL) countries. These are a category of emerging countries, whose main characteristics are that they are least developed and small economies that pursue IT. They use inflation targeting to define their monetary policy framework, but for a number of reasons they are not in a position to put top priority to IT in relation to other objectives. This paper deals with a set of ITL countries for which consistent data could be gathered, and for which a date for setting inflation targeting could be discerned. The object of the paper is to study the impact of IT on actual inflation and inflation expectations. We utilise intervention analysis to time series on inflation for a number of ITL countries, which have actually implemented IT. In doing so our main concern is to assess whether, due to the IT intervention, there has been a significant change in the trend corresponding to these series and the extent to which inflation rates have actually been ‘locked-in’ at low levels after the implementation of IT. Two major results emerge. The first is that ITL countries have been successful in ‘locking-in’ inflation rates. The second is that non-IT countries have also been successful in terms of the ‘lock-in’ effect. Our overall conclusion, then, is that other factors in addition to IT underpin the apparent success of the control of inflation. [ABSTRACT FROM AUTHOR]

This paper tests the significance of FDI as a way to alleviate credit constraints. Incoming foreign investment provides additional sources of capital. Specifically in the Chinese case, enterprises may look for foreign investors, being constrained in their activity due to distortions in the state-dominated system. First, the Chinese financial system allocates resources to the least efficient firms – state-owned enterprises – while denying the same resources to Chinese private enterprises, forcing them to look for a foreign investor. Second, the inefficient system of state investment planning leads to mismanagement of public enterprises, increasing ‘insolvency-induced FDI’. We propose to analyse determinants of FDI in Chinese provinces to test the above hypotheses. We control for traditional determinants of FDI such as market access, labour costs, productivity, infrastructure, reform advances and banking sector size in order to assess the impact of inter-provincial heterogeneity in terms of the access that private enterprises have to credit and the distortive management in state-owned firms. [ABSTRACT FROM AUTHOR]

The paper empirically investigates the short and long‐run causal relationship between foreign direct investments, credit to the private sector, trade openness, gross national expenditure and economic growth in Namibia. In doing this, the paper employs multivariate Granger‐causality within an Auto‐regression distributed lag‐bounds approach to co‐integration and unrestricted error correction model. The paper finds a strong bi‐directional causal relationship between FDI inflow and economic growth both in the short and the long run. Suggesting that FDI inflow spurs economic growth and economic growth promotes FDI inflow and also, FDI inflow, credit to the private international trade and national expenditure spur economic growth both in the short and the long runs in Namibia. The policy implication therefore is to provide incentives for private sector innovation and production away from the export and import sector. [ABSTRACT FROM AUTHOR]

This paper examines the impact of green finance and carbon emission performance, as well as the mechanisms, using data from 30 Chinese provinces for the time frame of 2008–2018. The findings show that (1) the level of green finance development significantly enhances carbon emission performance, where industrial structure, foreign direct investment, and population density are all important control variables affecting carbon emission performance. (2) Energy consumption structure, green industry, and green patented technology are all mediating variables for the level of green finance development to enhance carbon emission performance. Meanwhile, the effects of green finance development on carbon emission performance are nonlinear under varying economic growth, industrial structure, and urbanization levels. (3) After addressing the spatial autocorrelation of carbon emission performance, the level of green finance development still significantly enhances carbon emission performance. (4) The level of green finance development in China's eastern provinces, pilot provinces of carbon emission trading, and provinces with abundant coal resources can more significantly enhance carbon emission performance. On this basis, this paper makes specific suggestions for green finance to enhance carbon emission performance. [ABSTRACT FROM AUTHOR]

A plethora of empirical work has aimed to investigate the determinants of the shadow economy over the last few years. The impacts of government spending on the shadow economy have been explored. However, the effect of a moderating factor that affects this nexus has been largely ignored in the existing literature. Hence, the purpose of this paper is to explore the moderating role of government effectiveness on public spending on the education–shadow economy nexus, in eight Southeast Asian countries from 2001 to 2017. This paper uses the dynamic ordinary least squares (DOLS), fully modified ordinary least squares (FMOLS), and the panel causality approach to analyze the data. Empirical findings from this paper indicate that public spending on education and government effectiveness negatively impacts the size of the shadow economy. Interestingly, government effectiveness serves as a critical catalyst in shaping the effect of government spending on education. We also observed that economic growth and foreign direct investment have significant negative effects, while unemployment and inflation have significant positive effects on the shadow economy. Additionally, the causality results confirmed the presence of bidirectional causality in public spending education, government effectiveness, economic growth, foreign direct investment, and unemployment in the shadow economy. This study recommends that governments and policymakers pursue policies and programs that invest more in education and enhance government effectiveness. [ABSTRACT FROM AUTHOR]

What determines the net foreign asset position of the residents of a particular country is an important question in international economics. Rene Stulz's paper seeks to answer it in a framework where two countries differ in their technology and asset preferences, but where they produce the same good. In the Ricardo example, Portugal and England trade in wine (or cloth) alone. This eliminates the role of the relative price of national outputs, the exchange rate and thus allows for the existence of an international riskless asset. It also severely reduces the international flavor of the model and is not convincingly justified. Note that complexity is hardly a reason since the author and others have successfully constructed related models with more than one good. Several other simplifications, convincingly justified in the paper, need no further elaboration. [ABSTRACT FROM AUTHOR]

Foreign Direct Investment (FDI) and the resulting spillover effects can be important for a country's development and economic growth. Using panel data from 2004 to 2019 in the Czech Republic's manufacturing industry, this paper finds the following. First, FDI firms generate positive horizontal labour effects and backward labour linkage on domestic firms. However, other hypothesized effects of FDI firms, such as horizontal and backward competition and the forward linkage of FDI, were not significant. Second, FDI firms at the mature and shakeout stage generate more spillover than those at the introduction and growth stage. There is no spillover impact on domestic firms by FDI firms at the decline stage. This is the first paper to examine the role of firm life cycle on the spillover effects of FDI. [ABSTRACT FROM AUTHOR]

The infrastructure sector is one of the major pillars for economic growth and development of a country. The responsibility to develop this crucial sector is shifting away from the public to the private sector. After the economic liberalization in 1991, India opened the infrastructure sector, among many others, to private domestic and foreign investment. The shortage of electricity, the poor state of roads, and limited telecom access necessitated a stream of persistent reforms, which were expected to play a significant role in the infrastructure sector's growth. Although some subsectors witnessed success, others continued to face hurdles. The paper highlights the role of infrastructure in socio‐economic development through global literature. It also presents a story of infrastructure development in India since the inception of economic liberalization. It highlights various challenges that discourage private sector investments, thus providing a rationale for policy initiatives by the government. The paper also presents critical issues highlighted by multiple government committees over nearly three decades and identifies residual issues that merit attention. The outcomes of the paper are relevant in the context of developing and emerging economies. [ABSTRACT FROM AUTHOR]

The Sustainable Development Report (SDR) provides comprehensive global rankings based on countries' performance and efforts toward the 17 Sustainable Development Goals (SDGs). However, the spillover effects reflecting how one country's actions influence others remain underexplored, especially regarding their interplay with SDGs performance. This paper delves into the cross‐border adverse impacts on the environment and society arising from these spillovers, examining their correlation with SDGs rankings within the context of the North‐South divide and foreign direct investment (FDI). The analysis reveals a pronounced association between higher SDGs scores and amplified negative spillover effects. While this trend is predominant among advanced Northern countries, certain developing Southern nations also exhibit similar tendencies, potentially obstructing the SDGs of more vulnerable states. This paper argues that many countries achieve their SDGs by exploiting the ecological and social resources of others, suggesting a deviation from genuine sustainability and the core ethos of the 2030 Agenda: "Leave No One Behind." To provide a clearer perspective on countries' developmental trajectories, this paper proposes conceptual metrics and utilizes data visualization to re‐assess sustainability progression over time. It also introduces four developmental tendencies: exploitative, degraded, waning, and sustainable development. The findings emphasize that countries aiming to transition from exploitative or degraded development to sustainability must address consumerism, prioritize SDG 12 (Responsible Consumption and Production), and counteract the degradation of SDG 13 (Climate Action). Crucially, a competitive mindset and a lack of international collaboration will hinder SDGs, underscoring the pressing need for collective action on environmental and social justice and equity. [ABSTRACT FROM AUTHOR]

This paper presents a simple model of net foreign investment. It is shown that an increase in the expected return of investments in the foreign technology decreases net foreign investment in the domestic country, whereas an increase in the variance of the return of investments in the foreign technology increases net foreign investment in the domestic country. An increase in foreign wealth accompanied by an equivalent decrease in domestic wealth is shown to increase net foreign investment in the domestic country. Finally, it is shown that an increase in the risk tolerance coefficient of the domestic investor has, to a first approximation, no effect on net foreign investment in the domestic country. A closed-form solution is given for the case in which all investors have a logarithmic utility function and is used to derive the dynamics of net foreign investment. One direction in which the present model could be extended consists in taking into account the fact that it is harder for domestic investors to enforce property rights abroad than at home. If property rights cannot be enforced abroad by domestic investors and at home by foreign investors, net foreign investment is always equal to zero, even though gross foreign investment differs from zero. Whereas the differential cost of enforcing property rights at home and abroad for domestic investors creates incentives for foreign investors to take actions which reduce the value of the net investment abroad by domestic investors, domestic investors can impose substantial penalties on foreign investors if they engage in confiscatory actions. The suggested extension of the analysis involves the development of a concept of equilibrium that accounts for the dependence of the actions of domestic investors on what they believe foreign investors will do. [ABSTRACT FROM AUTHOR]

Whether regional integration can promote the urban agglomeration to attract foreign direct investment and expand the opening‐up is a question worthy of in‐depth discussion. This paper constructs a quasi‐natural experiment from the perspective of regional integration expansion in the Yangtze River Delta, using the panel data of 208 cities in China from 2005 to 2017. The main purposes are to examine and analyze the common trends and regional differences regarding the influences of regional integration on FDI in entire cities, incumbent cities, and new cities. Next, the internal mechanisms of expansion on FDI are explored. The results show that the regional integration exerted a significant positive effect on the FDI of the entire Yangtze River Delta. For different regions, the effect of regional integration on FDI in the incumbent cities was higher than that in the new cities. In terms of mechanisms, regional integration could affect FDI through industrial division mechanism and market unification mechanism, yet the role of economic connection mechanism exhibited regional differences. The conclusions of this paper bear important enlightenment for promoting the construction of regional integration in China and the high‐quality growth of FDI in the Yangtze River Delta. [ABSTRACT FROM AUTHOR]

This paper analyses what factors best explain foreign capital inflows into Hungary and China during the period 1978–92. The size of the host country markets is found to play a positive role, while the cost of capital variables and political instability are negatively correlated with investment inflows. It supports the hypothesis that low-cost labour and currency depreciation are important factors in explaining how much foreign capital inflows into a particular country. There is little evidence to support classical hypotheses concerning tariff barriers and imports variables. The OECD growth rates show significant positive correlation with foreign direct investment in Hungary. © 1997 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

One of the most heavily employed tools to define countries' policies are the attractiveness indexes. The main purpose of our paper is to formally verify the capacity of an attractiveness index to describe the phenomenon of Foreign Direct Investment (FDI). Severe weaknesses were detected through the use of a framework (principal components analysis and Cronbach's alpha reliability) to analyse indexes, regarding the theoretical background and the adequate selection of indicators, especially the ones from the bottom. Additionally, the study demonstrated that the analyzed FDI attractiveness index built to formally aggregate the factors that impacts foreign direct investment can hardly be applied to emerging economies. [ABSTRACT FROM AUTHOR]

An essential yet challenging decision that emerging market multinational enterprises (EMNEs) must make when setting up a subsidiary abroad is whether to do it in developed or emerging market economies. The extant literature has rarely probed what influences the location choice of EMNEs' outward investments. This paper aims to address this gap and hypothesizes that large shareholdings by promoters or foreign institutional investors negate agency problems (due to managerial risk aversion) and enhance the propensity to pursue risky but value‐accrediting upmarket strategies. Furthermore, this paper argues that these beneficial effects of large owners are significantly weaker for group‐affiliated firms compared to their standalone counterparts. We test our proposed hypotheses using a proprietary, longitudinal dataset during 2007–2013 for 213 Indian multinational firms and find support for our arguments. [ABSTRACT FROM AUTHOR]

This paper investigates the capital goods imports of Sub‐Saharan African (SSA) countries from 2002 to 2017. The composition of capital goods imports has become less diverse over time in more than half of the countries studied. Colonial ties no longer determine the sourcing of capital goods as China is now the top source. Trade gravity regressions using the Poisson pseudo‐maximum‐likelihood estimator show that bilateral exports of non‐primary products by SSA countries and their low‐income peers are associated with increased net stock of imported general‐purpose capital goods. Additionally, there is evidence that the net stock of some types of imported equipment and machinery is associated with increased non‐primary exports of items utilising these capital goods with elasticity estimates ranging from 0.10 to 1.10. Thus, there is some form of economic restructuring in the region gleaned from increased exports of non‐primary products brought about by capital stock augmentation through imports. [ABSTRACT FROM AUTHOR]

This paper examines the impact of the bilateral investment treaties (BITs) on a large dataset of service trade using recently developed Poisson pseudo‐maximum likelihood (PPML) estimator regression models with multiple high‐dimensional fixed effects to estimate the structural gravity equations. The model in this paper theoretically demonstrates that BITs reduce service trade from foreign direct investment (FDI) source countries by decreasing the additional variable costs of operating a foreign affiliate. This paper also empirically confirms that BITs decrease service exports from developed to developing economies through analysing a comprehensive WTO‐OECD Balanced Trade in Services Data from 1995 to 2006. [ABSTRACT FROM AUTHOR]

This paper highlights the role of intangible assets in a property rights model of firm organization with sequential production. Empirical evidence based on foreign direct investment and transaction‐level trade data of Slovenian firms reveals that the strength of intellectual property rights (IPR) protection in the supplier's location affects firms' organizational choices whenever supplier investments are sequential complements. In this case, when a firm must transmit know‐how to each supplier, and more knowledge is accrued as production moves downstream, better IPR institutions lead to lower incidence of vertical integration over outsourcing, principally at more downstream stages. On the other hand, the organizational choice is far less responsive to IPR protection for sequential substitutes. Moreover, we show that improving IPR and contracting institutions (e.g. rule of law) may have the opposite effect on firm boundaries. Our findings conform with a property rights model in which the quality of the IPR regime governs knowledge transmission along the supply chain, ultimately driving firm organization through the suppliers' incentive structure. This paper is part of the Economica 100 Series. Economica, the LSE "house journal" is now 100 years old. To commemorate this achievement, we are publishing 100 papers by former students, as well as current and former faculty. Gianmarco Ottaviano was a Prof. within the Dept. of Economics, LSE from 2011–2018. [ABSTRACT FROM AUTHOR]

Using a novel dataset on foreign direct investment (FDI), this paper analyzes the correlates of planned FDI in the food and beverages sector in 49 African countries over the period 2003–2017. It applies the random effects model and augments the standard specification of FDI determinants with a set of factors related to the agricultural sector performance, hypothesized to be essential from the perspective of supply chain linkages and access to raw materials. The results indicate that well‐performing and well‐capitalized agricultural sector of the host country is a key factor associated with the choice of investment location by foreign investors, especially those from the Global North. Capital investment in agriculture, as proxied by agricultural gross fixed capital formation and net capital stock, is particularly important. Public investment in agriculture, in the form of government expenditure and official development assistance, is also associated with higher FDI. These factors, however, are not significant in case of the least developed countries where only market potential appears to matter for foreign investors. The results suggest that complementarities may exist between different types of investments and that policy‐makers willing to attract food and beverages FDI should prioritize agricultural sector development. [EconLit Citations: E22, E24, F21, F23, Q00, Q13, Q18]. Practitioner points: Planned FDI in the food and beverages sector in Africa are driven by the potential that a domestic emerging consumer class represents and investors choose large and fast‐growing markets.Well‐performing and well‐capitalized agricultural sector of the host country appears to be a key factor associated with the choice of investment location by foreign investors, especially those from the Global North. Capital investment in agriculture, as proxied by agricultural gross fixed capital formation and net capital stock, is particularly important.The results suggest that complementarities may exist between different types of investments and that policy‐makers willing to attract food and beverages FDI should prioritize agricultural sector development.In the least developed countries in Africa, only the market potential, as reflected by both the market size and its dynamics, is associated with higher FDI, while the evidence is missing for the agricultural sector performance indicators. [ABSTRACT FROM AUTHOR]

Tracking farmland purchases is central to interpreting transnational finance's growing power in agrarian restructuring. Australia's public Register of foreign land ownership reveals little about agrarian change, however. In presenting the first comprehensive mapping of farmland purchases made between 2008 and 2020, this paper examines the ways that financial investments are altering farm ownership patterns in Australia. First, we show that most foreign owned land has been purchased by only 10 pastoral companies, which are implicated in speculative development activities. Second, foreign investment in cropping and horticulture is more significant than it appears in the Register, with investments in agricultural infrastructure increasingly driving land use change. Third, we illustrate the deepening entrenchment of institutional finance. By engaging with the findings from our dataset as well as with the politics of data that have shaped the availability of information, the paper progresses understandings of the financialization of farmland in both its material and ideational aspects. [ABSTRACT FROM AUTHOR]

This research paper seeks to explain why investment‐recipient countries, like Australia and Canada, reject certain investments in strategic industries and shield some domestic business from foreign acquisitions. Existing studies suggest that the decision to restrict FDI is driven by national security concerns, which are often conceptualized as a catch‐all concept. This paper develops a novel theoretical construct – 'FDI acceptability threshold' (a maximum point of political tolerance for any given foreign investment) – to provide a more nuanced understanding of government decisions to reject FDI. This theoretical construct is based on four factors – nature of the domestic firm/industry, nature of the acquirer, external opposition, and domestic backlash. Drawing on two cases of Chinese SOEs' investment in the energy sector in Australia and Canada, this paper demonstrates that investment‐recipient countries are more likely to protect a domestic business where foreign ownership threatens domestic industry by exceeding FDI acceptability thresholds. Given that these thresholds are often not directly identified in the host country's policies, this paper proposes that host countries should clarify these conditions to ensure that they continue to attract FDI. The theory of 'FDI acceptability thresholds', developed in this paper, can be used to explain which companies or industries may be eligible for protection from the home government. In broader terms, these thresholds explain the theoretical link between national security concerns and FDI protectionism. [ABSTRACT FROM AUTHOR]

By taking an objective and scientific bibliometric analysis approach, this paper presents the first review of the extant knowledge base on tax havens. This analysis has guided us in developing an overarching theoretical framework that examines the determinants of the use of tax havens by multinational enterprises (MNEs). Based on our systematic review and theoretical framework, we were able to develop and introduce a new concept, called accountability‐avoiding FDI (foreign direct investment), which is distinct from the standard FDI motives identified in the international business (IB) literature. Our review also makes a contribution by explaining how various definitions, measurements, methodologies and categorizations of tax havens can lead to differing and mixed results. Given that the tax haven literature is of a cross‐disciplinary nature, we specifically make a case for how the IB community can make a stronger contribution to our understanding of tax haven activity and its ramifications. We conclude the paper with suggestions for the future research that IB and management scholars could pursue in order to contribute unique insights to the area of MNE strategy and the implications of tax haven investments for countries, various industries and the MNEs themselves. [ABSTRACT FROM AUTHOR]

This paper constructs a general equilibrium model in a world with two‐symmetric countries. It explains welfare gains from international trade and horizontal Foreign Direct Investment (FDI) in the economy with firm heterogeneity and variable markups stemming from oligopolistic competition. My model shows that the pro‐competitive effects of trade and horizontal FDI happen because trade openness induces an increase in product market competition that reduces markups and toughens selection, increasing aggregate productivity. The most significant contribution of the paper is that multinational firms, via horizontal FDI, produce the most significant welfare gains through the toughest selection and lowest markups. [ABSTRACT FROM AUTHOR]

This paper selects 141 countries from 2009 to 2020 to investigate the impact of genetic distance on bilateral foreign direct investment (FDI). Through theoretical and empirical analysis, we get the following conclusions. First, genetic distance has a significant negative impact on bilateral FDI by increasing transaction costs. This conclusion still holds after several robust checks. Second, genetic distance has different effects on bilateral FDI for different countries: (1) If at least one of the two countries is a low‐income country, genetic distance will have a significant negative impact on their FDI, but no significant impact on both high‐income countries; (2) if at least one of the two countries is not a member of the Belt and Road Initiative, genetic distance will have a significant negative impact, but no significant impact on both member countries; and (3) genetic distance has a significant negative impact only when both countries are World Trade Organization members. Third, further analysis shows that a smaller genetic distance has no significant effect on bilateral FDI, and only when the genetic distance is larger than the average would a significant negative impact exists. This paper provides policy recommendations for promoting bilateral investment. [ABSTRACT FROM AUTHOR]

This paper assesses the impact of constitutional changes on foreign direct investment (FDI) in 49 African countries during the period 1980–2020. The paper uses a dummy variable related to the year of the constitutional change and the number of changes during the study period to capture the frequency of constitutional changes. The results reveal that an increase in the frequency of constitutional changes negatively affects FDI. The negative relationship between constitutional change and FDI is consistent across different measures of constitutional change and FDI and is robust to alternative empirical approaches. These results suggest that frequent constitutional changes may create uncertainty and instability in the investment climate, which may discourage foreign investors from investing in these African countries. The study provides evidence for policymakers that a stable constitutional framework may attract FDI in African countries. [ABSTRACT FROM AUTHOR]

As there are many studies on the predictors of corporate social responsibility (CSR) reporting, the influences of foreign direct investments (FDIs) knowledge spillovers (KSs) on CSR reporting in developing countries remain unclear. This paper introduces the passive‐learning KSs concept to explain whether, why, and how domestic firms learn CSR knowledge from their foreign counterparts. First, we investigate the relationship between foreign ownership and the quality of CSR reporting (CSRQ). Second, we test the moderating effect of three types of direct institutional pressures: the green development policy, the mandatory CSR reporting requirement, and CSR regulations issued by the State‐owned Assets Supervision and Administration Commission. Third, we examine the moderating effect of board interlocks to explore the indirect impacts of institutional pressures. We run regressions on a sample of Chinese A‐share listed companies and the hypotheses are generally supported. This paper contributes to the literature on CSR reporting and FDIs KSs by adopting the passive‐learning KSs theory to explain CSR KSs in developing countries. [ABSTRACT FROM AUTHOR]

Copyright of Canadian Journal of Economics is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The purpose of this paper is to analyse the efficiency of the use of foreign exchange reserves (FER) by 21 nations over 5 years across the globe. The study follows an analytical research design to analyse the efficiency levels in the use of foreign exchange reserves using stochastic frontier analysis (SFA). Three models under SFA, that is, Cobb–Douglas production frontier for panel data with half‐normal distributions, translog production frontier with panel data assuming truncated normal distributions and total technical efficiency effects model with panel data, have been used to study efficiency levels. The research uses the nominal value of exports and foreign direct investment as inputs and foreign exchange reserves as output. The results indicate that out of 21 nations, developing countries are found to be more efficient in comparison to developed countries in the use of FER. [ABSTRACT FROM AUTHOR]

Copyright of Papers in Regional Science is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This paper investigates the relationship between labor quality and inward foreign direct investment (FDI) distribution in China using a large sample of Chinese cross-sectional, firm-level data, with comprehensive information about labor quality. The paper finds that labor quality measured by education level plays an important role in deciding the distribution of inward FDI, but labor quality measured by working certificates loses its significance using non-parametric matching techniques and the instrumental variables and generalized method of moments technique. The author also finds that labor quality has a more significant impact on other foreign investments than Hong Kong-invested, Macau-invested and Taiwan-invested firms. The impacts of labor quality on inward FDI are found to be strongly uneven across industries and provinces. Therefore, China should pay more attention to the education of employees in all foreign-invested firms, and invest more in education to improve labor quality, which will help China to attract more FDI, especially technology-intensive FDI. [ABSTRACT FROM AUTHOR]

Regional trade policy uncertainty is an important factor affecting enterprises' outward foreign direct investment (OFDI). This paper uses the China−ASEAN Free Trade Area as the research object. The research uses the "China Industrial Firm Database" from 2001 to 2013 and the "List of Chinese Overseas Investment Enterprises (Institutions)" to match micro‐enterprise data. Using the difference‐in‐difference (DID) approach to construct quasi‐natural experiments, we study the impact of the reduction in regional trade policy uncertainty on Chinese enterprises' OFID. The results show that the free trade agreement strategy implemented by China has reduced the regional trade policy uncertainty, which has had a significant positive impact on Chinese enterprises' OFDI. The establishment of the China−ASEAN Free Trade Area has significantly increased Chinese enterprises' OFID in ASEAN countries. The study further finds that enterprises of different ownership types, in different regions and of different factor intensities display heterogeneous effects in this process. The empirical results of the paper provide new ideas for promoting OFDI from the standpoint of reducing regional trade policy uncertainty, and also provide a new perspective for explaining the increase in foreign investment in China in recent years. [ABSTRACT FROM AUTHOR]

This Policy Arena examines some of the development challenges faced by SIDS. It brings together a collection of papers arising from the United Nations University World Institute for Development Economics Research (UNU-WIDER) project [Fragility and Development]. These investigations were presented at the UNU-WIDER project meeting held in Lautaka, Fiji in December 2006. The Policy Arena contains four studies that look, respectively, at various aspects of trade, foreign direct investment, aid and remittances, and migration, focusing on countries in the Pacific and the Caribbean. This introduction briefly describes the papers and distills some key messages for development policy. Copyright © 2008 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

An economic growth target is a declaration by policy authorities of commitment to that target and the corresponding allocation of resources. The constraints created by economic growth target are an important economic management method in China, which has helped China's economy to achieve remarkable achievements. However, it has also brought about serious environmental problems, threatening China's sustainable development. Using the data about economic growth targets in the work reports of 30 Chinese provincial governments from 2006 to 2017, this paper constructs several spatial measurement methods, such as the spatial Durbin model, to examine the constraints created by economic growth target's impacts on air pollution. The main conclusions are as follows. First, a significant "U‐shaped" relationship exists between the constraints created by economic growth targets and air pollution. Second, the spatial Durbin model analysis revealed that PM2.5 across China's provinces display significant positive spatial spillover effects and spatial agglomeration characteristics. Third, the direct, indirect, and total effects of constraints created by economic growth targets on air pollution are all statistically significant and depict a "U shape." Finally, the constraints created by economic growth targets have an apparent threshold effect on air pollution, and the inhibiting effects increase with human capital and industrial restructuring. However, with the increase in foreign direct investments, constraints created by economic growth targets may increase air pollution. The conclusions of this paper are of great significance for improving the management of local government economic growth targets and sustainable development. [ABSTRACT FROM AUTHOR]

This paper aims to empirically shed light on the pertinence of enhancing trade and foreign capital flows with relevance to stimulating greater use of renewable energy resources across selected South Asian economies namely Bangladesh, India, Pakistan and Sri Lanka. The economic transition from the use of non‐renewable energy tothe renewable alternatives is an interesting genre of research keeping the partial attainment of the United Nations' 2030 Sustainable Development Goals agenda into consideration. Against this milieu, trade and financial liberalization policies are anticipated to play a pivotal role in facilitating the renewable energy transition phenomenon across South Asia. The overall results from the econometric analyses imply that higher degrees of trade openness and greater foreign currency inflows can invariably play critically important roles in amplifying the shares of renewables in the total energy consumption levels across this region. Thus, these findings impose key policy implications for attainment of energy sustainability across South Asia. [ABSTRACT FROM AUTHOR]

The paper investigates the interrelationship between the exports (EXP) and foreign direct investment (FDI) inflows with reference to the Indian pharmaceutical industry. It employs the hierarchical Bayesian vector autoregression (BVAR) framework, which is known to generate accurate out‐of‐sample predictions by selecting appropriate amount of shrinkage and tighter priors. It also performs well in terms of accuracy of the impulse response functions in identified VARs. A unidirectional positive impact from FDI to EXP has been found from the impulse responses drawn from the BVAR model. This result is most likely because most of the Indian pharma multinational corporations (MNCs) infuse their foreign investments to boost EXP from India. [ABSTRACT FROM AUTHOR]

The geographical indication (GI) scheme of the European Union guarantees visibility and protection to high‐quality agri‐food products associated with a demarcated region of origin. This paper estimates the impact of the scheme in attracting agri‐food foreign direct investment (FDI) in European NUTS3 regions, using a novel dataset and a generalized propensity score matching approach. Areas endorsed with GIs attract more FDI in agri‐food‐related activities than their non‐GI counterparts. Positive effects, estimated for FDI inflows, related job creation and inter‐sectoral spillovers on local employment, involves territories with lower institutional quality. [ABSTRACT FROM AUTHOR]

This paper investigates the economic and institutional determinants of Taiwan's outward direct investment in six Southeast Asian countries from 1998 to 2017, applying the panel ARDL--Pooled Mean Group estimation. We specially examine the effects of institutional quality with five dimensions inclusively, using the Worldwide Governance Indicators. The results show the locational economic factors are the primary determinants in the long run. The tight and historic trading relation with Southeast Asia has a long-run positive effect. On the contrary, the institutional quality of the host countries has strong positive effects in both the long run and short run. Further, the paper displays the dynamics of this investment in the last 20 years. These results are important for Taiwan and Southeast Asia policy-makers in setting up the short-run and long-run policies to sustain their diversified economic growth. [ABSTRACT FROM AUTHOR]

Using a panel cointegration method incorporating structural breaks and cross‐sectional dependence, this paper explores the long‐run equilibrium relationship between innovation and foreign direct investment (FDI) in 30 OECD countries. The results from the panel stationary test show that FDI and innovation variables follow a stationary process with several structural breaks over the period 1999–2018. The results also suggest an equilibrium relationship with structural breaks between FDI and innovation in OECD countries. The panel dynamic OLS model with breaks further reveals that FDI is positively associated with innovation performance and vice versa in OECD countries. Therefore, this paper sheds light on the relationship between FDI and innovation in OECD countries. [ABSTRACT FROM AUTHOR]

Does outward foreign direct investment (OFDI) help stabilize employment in the home country? This paper studies the relationship between the volatility of employment growth and the OFDI of a firm using matched data of Chinese firms from 2000 to 2019. The empirical analysis shows that employment in OFDI firms is less volatile than that in non‐OFDI firms. For firms in the eastern coastal areas of China, OFDI has a more obvious effect in restraining employment volatility. OFDI is also conducive to reducing employment volatility for firms that conduct OFDI in Asian, European, and American countries. Firms in the service sector conducting OFDI see a greater reduction in employment volatility. In addition, OFDI affects employment volatility mainly through the channels of technological innovation and production transfers. This study recommends that the government enact reforms in the domestic market to encourage more firms in China to invest. [ABSTRACT FROM AUTHOR]

This paper explores the link between innovation, migration and Foreign Direct Investment (FDI) empirically within a theoretically consistent framework. It analyses how migrant inventors enhance multinational firms' adaptive innovation performance and ultimately foster FDI towards the migrant's country of origin. Foreign migrant inventors (migrants who filed a patent in their host country) possess a unique mix of technical knowledge and cultural background that contribute to adapting Research and Development (R&D) activities for foreign markets. Therefore, FDI increases in country‐pair‐sectors with specific endogenous investment in quality, which depends on the migrants in the R&D sector. We constructed a novel panel country‐sector data set including FDI, patents and migrant inventors and applied a two‐stage structural gravity estimation procedure using migrant inventors as a valid instrument for patents. The results show sizable effects on the extensive and intensive margins of greenfield FDI. [ABSTRACT FROM AUTHOR]

This paper dealt with the regulatory and policy variables influencing Foreign Direct Investment (FDI) in South Africa. Since the advent of democracy 26 years ago, South Africa had its own share of benefits from democratic rule. This was the period of great success, and three free and fair elections were held without violence and intimidation. The South African government started using the "inflation targeting monetary policy framework" to have an environment where inflation will stabilise. Although in literature it is stated that many governments have adopted this policy in order to lure investors in through their attractive risk‐free returns in their investment portfolios. The paper used unobtrusive techniques to analyse secondary data. The South African investment climate remains faced with challenges, which curtail the full attainment of conditions conducive for quality FDI. When regulations are made less cumbersome, it becomes simpler for investment to flow into the country, and international and local entrepreneurs prosper as the ease of doing business improves. South Africa does not have a complex regulatory framework, but its challenges stem from a lack of regulatory transparency, which impeded investment. TISA the agency, which DTI created to reduce obstacles encountered in FDI offers foreign investors clarification on the regulatory and legal environment. Many countries have also cancelled their BITs with South Africa, including Ecuador, Bolivia, and Venezuela. South Africa's business environment and its investment climate are largely dependent on the events that occur in the political arena and the economic environment. [ABSTRACT FROM AUTHOR]

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Building a green and healthy economic system and achieving high‐quality economic growth have long been the development goals pursued by the Chinese government. Under the local government competition system, coordinating the relationship between economic growth and ecological sustainability is a decisive factor for China's high‐quality development. As a former state planned economy, China inherited a legacy of setting economic growth targets at various levels of government. This paper analyzes the relationship between economic growth targets and ecological efficiency by using panel data models and spatial econometric techniques. Moreover, the mediating effect model and dynamic threshold effect model are used to study their influence mechanism and the possible nonlinear relationship. The results indicate that there is an inverted U‐shaped relationship between economic growth targets and ecological efficiency. Optimizing industrial structure and R&D investment can improve regional ecological efficiency. The economic growth targets in neighboring regions have a "U"‐shaped relationship with local ecological efficiency. The mechanism test results suggest that economic growth targets affect ecological efficiency by influencing financial development, foreign direct investment, infrastructure investment, environmental regulation, and technological innovation. The impact of economic growth targets on ecological efficiency shows a significant threshold effect when economic growth targets, industrial structure, R&D levels, financial development, foreign direct investment, infrastructure investment, and environmental regulation are at different threshold values. Therefore, to promote regional healthy competition and ecological efficiency, the government should formulate scientific and reasonable economic growth goals and improve the official evaluation system. [ABSTRACT FROM AUTHOR]

In this paper, we empirically re‐assess the question which theoretical motives and empirical models are most suitable to explain global patterns of foreign direct investment (FDI). Compared with previous studies, we use bilateral FDI positions with a much more comprehensive coverage of emerging and developing economies, the IMF's Coordinated Direct Investment Statistics. We apply cross‐validation to assess the performance of the gravity model and the knowledge capital (KK) model and add cultural, institutional and financial factors, as suggested by different theories on FDI determinants. We find the gravity model to achieve the best theory‐consistent out‐of‐sample prediction, particularly when parameter heterogeneity of South and North FDI is allowed for. Controlling for surrounding market potential is important to recover the horizontal effect of the gravity model. Our finding that the gravity model for FDI performs well but requires some degree of parameter heterogeneity and the inclusion of surrounding market potential provides a clear baseline for future empirical studies of FDI determinants. Inclusion of institutional, cultural or financial factors seems less relevant and does not improve the model performance distinctly, although results for those variables are mostly in line with theoretical predictions. [ABSTRACT FROM AUTHOR]