Foreign Direct Investment,Services Trade Negotiations and Development: The Case of Tourism in the Caribbean

This article examines whether and how developing countries can use services trade negotiations to increase the amount of inward FDI conducive to development. It reviews how services trade rules can affect inward FDI, and employs panel data analysis with innovative use of instrumental variables in the tourism sectors of 9 Caribbean countries during 1997–2003. It argues that Caribbean countries may want to signal openness to inward FDI in GATS, while maintaining a degree of flexibility in the use of policy measures; in the current negotiations with the EU on Economic Partnership Agreements, the focus could be on emphasising the development dimension.     

Decisive FDI obstacles as an explanatory reason for limited FDI inflows in an EMU member state: The case of Greece

A questionnaire survey covering MNCs that had invested in Greece during the period 1995–2003 is carried out in order to determine the barriers of inward FDI in Greece through a phase of increased expectations on foreign investment from hosting the 2004 Olympiad. The underlying assumption made is that the views of the local managers reflect the views of the mother company when deciding to invest. Although the findings represent the time that the investment took place, the influence of the conditions shaping the economic environment at the time the survey was carried out is also discussed. The findings indicate that the primary barriers to foreign investors are bureaucracy, taxation, corruption, and the labor market structure and support those of previous quantitative studies, leading to the conclusion that there is no progress made regarding these factors, in order to enhance FDI attractiveness. It becomes crucial for Greece to modernize and upgrade state mechanisms, through a more effective organization and administrative policies.     

Fashions, habits and changing preferences: Simulation of psychological factors affecting market dynamics

Markets can show different types of dynamics, from quiet markets dominated by one or few products, to markets with constant penetration of new and reintroduced products. This paper explores the dynamics of markets from a psychological perspective using a multi-agent simulation model. The behavioural rules of the artificial consumers, the consumats, are based on a conceptual meta-theory from psychology. The artificial consumers have to choose each period between similar products. Products remain in the market as long as they maintain a minimum level of market share, else they will be replaced by a new product. Assuming a population of consumats with different preferences, and social networks, the model simulates adoption of new products for alternative assumptions on behavioural rules. Furthermore, the consequences of changing preferences and the size of social networks are explored. Results show that the behavioural rules that dominate the artificial consumer's decision making determine the resulting market dynamics, such as fashions, lock-in and unstable renewal. Results also show the importance of psychological variables like social networks, preferences and the need for identity to explain the dynamics of markets.     

Detecting self-organised behavioural patterns in workplace settings: Towards a lay epistemic theory

Abstract

Several theorists have called for people who work in organisations to become more proficient at discerning the subtle, self-organised patterns that emerge in their organisations. Such theorists argue that the capacity to detect such patterns can enable managers to understand what drives organisational behaviour, and what stands in the way of organisational transformation. This paper presents findings of a study on how some organisational practitioners detect and understand self-organised behavioural patterns that emerge in the workplace. It seeks, therefore, to integrate processes used by successful practitioners with a theoretical foundation grounded in systems and organisational research.     

Gender Differences in Perceived Disciplinary Fairness

This exploratory study coded and analysed 120 behaviours on videotaped data of 111 male and 30 female managers engaged in disciplinary discussions with one of their unionized employees. Four categories of behaviour were coded: non‐verbal communication, speech characteristics, leadership and interactional justice. A factor analysis of the results generated 14 factors, ten of which were correlated with experts’ ratings of disciplinary fairness. Female managers exhibited significantly higher levels of seven of the ten behavioural factors. Female managers also made more supportive interruptions than male managers and took more time for the disciplinary discussion, both of which were positively correlated with disciplinary fairness. The results suggest that leadership and communication styles commonly found in females may lead them to be better equipped than male managers to manage employee discipline situations.     

The output decision of the firm — A behavioural algorithm

The neoclassical or traditional analysis of the firm's output decision is based on assumptions about human behaviour which are far removed from the findings of contemporary psychological research. Despite this the resulting deductive model enjoys pervasive influence. While many economic commentators agree that the behavioural theory of the firm has much analytical merit it is probably fair to say that the behavioural approach to the analysis of the industry is not as popular as it might be if it had produced a generic formal model of the firm's output decision. In this note I present my attempts to construct the basic elements of a deductive model of the firm's output decision based upon behavioural axioms as a step towards redressing this imbalance of theory. The behavioural algorithm I present is intended to parallel the simplicity of the marginal rules adopted by the mythical neoclassical firm.     

“Revenge” and “Rescue”: Workplace Deviance in the Taxicab Industry*

This study explores taxicab drivers’ acts of “revenge” and “rescue,” some of which are expressive acts, while others are more instrumental. This article builds on earlier theories of workplace deviance, demonstrating how deviance can serve different purposes and expanding the concept of “deviance admiration” ( Heckert and Heckert 2004 ). It examines deviance in a circumstance—the taxicab industry—which introduces a tension between mandated conformity and necessary deviance: employees must conform to the employers’ rules and yet, to accomplish their jobs well, they need to abandon those rules occasionally. In addition to its theoretical contributions, this work has important practical applications for managers.     

Foreign direct investment in the former communist world: A key vehicle for technological upgrading?

Foreign direct investment (FDI) is a crucially important, though not unique, vehicle for technology transfer in the context of transition. Analysis of actual patterns of FDI does, however, reveal a serious danger—that FDI may be asset absorbing (shallow integration) rather than asset creating (deep integration), i.e. may simply exploit existing factor endowments, including technological capabilities, rather than upgrading them. While abuse of market power does occur with FDI, it should not be seen as a critical problem as long as genuine asset creation is going on. At present there is a serious mismatch between the S&T systems of the transition countries and the needs of foreign firms carrying out FDI. It would be unrealistic to expect FDI to drive the process of resolution if these mismatch.     

Globale ökonomische Eliten? Eine Globalisierungsthese auf dem Prüfstand der Empirie

Does globalization lead to global markets for managers and international careers? The hypothesis of the globalization literature, that a transnational management is emerging out of a global “war of talents” is examinded by using data on the migration of managers from the U.S., East Asia and Germany. The data show, that no significant brain drain between these countries is taking place and “brain circulation” of insiders with short-term stays abroad is the dominant career pattern. The less likely the exchange of an installed CEO, the more career systems are used for status achievement by Clans and the stronger the influence of informal cultural rules, the higher is the rate of insiders. Thus, between the U.S., Germany and East Asia no significant global markets for managers are evolving.     

Functional Families: Functional Teams

This article highlights the negative effects on professionals who regularly work with very abusive families and seeks to identify what protective factors in the work team and its management mitigate these effects. I compare the behavioural consequences of living in a dysfunctional family with the consequences of working in a dysfunctional team. My hope is to identify practical, realistic things that can be done, especially by team managers, to protect staff from the all too familiar emotional costs of such work.     

Institutional Determinants of Collaboration: An Empirical Study of County Open-Space Protection

Collaboration is an increasingly important topic in the publicadministration and management literatures. A preponderance ofstudies focuses on how managers can build trust between thegovernment and collaborative partners by means of behavioralattributes and managerial skill. In this article, the authorsuggests that stable institutions and local government structurefacilitate collaboration by allowing public managers to morecredibly commit in a policy arena. Using county data on open-spacepolicy, the author finds empirical support for the propositionthat county form of government, along with rules governing debtaccumulation and administrative commitment, increases the breadthof county collaboration in open-space protection.     

Views from the Frontline

Abstract

Through in-depth interviews, Kentucky welfare case managers compare their experiences working under Temporary Assistance to Needy Families (TANF) with their experiences working under Aid to Families with Dependent Children (AFDC). Interviewees unanimously agreed that TANF is more ambiguous, complex, and stressful than AFDC, both for clients and managers. Although case managers embrace the self-sufficiency goals of TANF, the strict work requirements, overwhelming paperwork and limited education and training opportunities create conflicting goals and barriers that frustrate case managers, leading to suggestions of a return to some rules of AFDC while retaining the TANF goal of independence from the welfare system.     

Policy Reform and Foreign Direct Investment in Africa: Absolute Progress but Relative Decline

Despite improvements in the policy environment, sub‐Saharan Africa's share of foreign direct investment (FDI) in developing countries continues to decline. This article provides an explanation for the deterioration in SSA's FDI global position. It argues that, although SSA has reformed its institutions, improved its infrastructure and liberalised its FDI regulatory framework, the degree of reform has been mediocre compared with the reform implemented in other developing countries. As a consequence, relative to other regions, SSA has become less attractive for FDI. An important implication of these results is that in a competitive global economy, it is not enough just to improve one's policy environment: improvements need to be made both in absolute and relative terms.     

Impact of Political Risk and Uncertainty on FDI in South Asia

This study examines the potential effect of political risk and macroeconomic policy uncertainty on FDI in South Asia. To highlight the affect of political risk and macro policy uncertainty on FDI, we setup a theoretical framework based on oligopolistic and imperfect competition environment in host country. Autoregressive distributed lags (ARDL) is used to examine the impact of political risk and macro economic policy uncertainty index on FDI inflows. Macroeconomic policy uncertainty and political risk indices are constructed for this purpose. The long run results show negative affect of political risk and macroeconomic policy uncertainty indices on FDI inflows. Trade openness shows positive effect on FDI inflows only in short run while in long run it has negative impact on due lack of creditability regarding consistent trade liberalization policy and high trade cost. Furthermore, the market size significantly affects the inflow of FDI both in long run and short run which shows that FDI inflows in South Asia are mainly depend on market size. South Asian economies need to focus on political and macroeconomic factors along with FDI incentives policies to attract more FDI.     

Main Determinants of Foreign Direct Investment in the Southeast European Countries

The growth of foreign direct investments (FDI) in the world has been significant in recent years. Between 1990 and 2000 worldwide FDI inflows increased more than five times, and since 2000 they have declined. During the period of FDI expansion, growth was especially strong from 1997 onward. However, most of the FDI transactions were between the developed countries. The distribution of FDI is unequal and less-developing countries face difficulties in attracting FDI. Despite the fact that FDI is increasingly important to developing countries, over the past few years the share of the developing countries in worldwide FDI inflows has been declining. The paper analyses geographical and sector distribution of FDI in the Southeast European countries (SEEC) and compares its amount with that in Central East European countries. According to economic theory, FDI towards developing countries flows for labor-intensive and low-technology production, while towards developed states, it flows for high-technology production. Identification of determining factors of FDI is a complex problem which depends on several characteristics specific for each country, sectors, and companies. All those factors could be grouped in three broad categories: economic policy of host country, economic performance, and attractiveness of national economy. On the desegregated level, FDI depends on size and growth potential of a national economy, natural resources endowments and quality of workforce, openness to international trade and access to international markets, and quality of physical, financial, and technological infrastructure. An important question is how SEEC can attract more foreign investment. To find the answer, this paper uses data on FDI inflows to SEEC to determine the main host country determinants of FDI and provides regression-based estimation of determinants of FDI. Using a sample of SEEC and panel data techniques, the determinants of FDI in this part of Europe are investigated. The paper researches the relationship between FDI, GDP, GDP per capita, number of inhabitants, trade openness, inflation, external debt, and information and communication technology sectors. For SEEC, FDI inflows are largely dependent on the completion of the privatization process and in this paper we include the level of private sector and privatization as explanatory variables. Our findings suggest that certain variables such as privatization and trade regime, as well as the density of infrastructure, appear to be robust under different specifications. A positive significance of the agglomeration factor is also observed, confirming the relevant theoretical propositions. However, certain differential variables, such as the privatization, could not be fully captured due to the statistical homogeneity of the sample.     

The Importance of Foreign Capital for the Economic Stability of Serbia

For Serbia diminishing of current account deficit is a prerequisite for the regular repayment of external debt. It is necessary to attract a bigger amount of foreign direct investment when the process of privatization is finished. Motivation for investing in Serbia has to be intensified by the creation of attractive and stimulating environments. Until now, FDI was mostly directed to purchase of Serbian companies. Economic and institutional factors should be directed to create a framework, which is important for FDI inflow. Every measure contributing to reduce dollarization and strengthen the local currency is a step in the right direction. The success in attracting foreign investments will depend primarily on objective factors, such as the size of national markets, the availability of appropriate inputs, infrastructure and manpower skills.     

Liberalization, FDI, and Growth in Developing Countries: A Panel Cointegration Approach

Using a panel cointegration framework, the article explores the two-way link between FDI and growth for a panel of 23 developing countries. In addition, it investigates the impact of liberalization on the dynamics of the FDI and GDP relationship. A long-run cointegrating relationship is found between FDI and GDP after allowing for heterogeneous country effects. The cointegrating vectors reveal a bidirectional causality between GDP and FDI for more open economies. For relatively closed economies, long-run causality appears unidirectional and runs from GDP to FDI, implying that growth and FDI are not mutually reinforcing under restrictive trade and investment regimes.     

What Causes the Regional Disparity of FDI in Russia? A Spatial Analysis

We analyse the determinants of the regional disparity of FDI inflows to Russia. The spatial distribution of FDI is attributed to regional and/or trans-regional factors. Region specific characteristics such as wage, education level, transportation as well as gross regional product, which accounts for market size, in host and alternative regions are considered to analyze the spatial interaction between regions employing spatial econometrics. We find that shocks to FDI levels in proximate regions have no effect on FDI inflows to hosts. However, FDI in a region depends on spatial market size and endowment of natural resources in alternative host regions.     

Bilateral Investment Treaties and Foreign Direct Investment: Evidence of Asymmetric Effects on Vertical and Horizontal Investments

Bilateral investment treaties (BITs) are legal instruments used by developing and transition countries to provide investor protection and, by extension, promote higher levels of inward foreign direct investment (FDI). While the link between BITs and FDI has been extensively studied, little is known about the impact of the treaties on different forms of investment. Motivated by this observation, we examine the effects of BITs on vertical and horizontal FDI. We find that BITs are more positively related to vertical than to horizontal FDI. We also find that BITs tend to act as stronger substitutes for better institutions in the case of vertical relative to horizontal investments. The findings inform BIT strategies that are compatible with development objectives in developing and transition countries.     

CLIMBING TO THE TOP? FOREIGN DIRECT INVESTMENT AND PROPERTY RIGHTS

This article operates at the interface of the literature on the impact of foreign direct investment (FDI) on host countries and the literature on the determinants of institutional quality. We argue that FDI contributes to economic development by improving institutional quality in the host country. This proposition is tested within a large panel data set of 70 developing countries for the period 1981–2005. We show that FDI inflows have a positive and highly significant impact on property rights. Results are very robust and not affected by model specification, different control variables, or estimation technique. To our knowledge this is the first article to empirically test the FDI—property rights linkage. (JEL F23, O43, P48)