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.     

Spatial Income Inequality in India, 1993–2011: A Decomposition Analysis

This paper builds upon the renowned media reports-based “Economic policy uncertainty” (EPU) index and analyzes its Granger-causal interrelationships with consumer confidence and aggregate economic activity. Employing a heterogeneous panel Granger causality test on data from 13 world countries, the authors find that: (1) the analyzed countries are quite heterogeneous in terms of the found causality patterns; (2) the EPU index does not Granger-cause the overall economic activity in the vast majority of the analyzed economies; (3) consumer confidence is confirmed as a significant predictor of aggregate output in all countries; (4) news media uncertainty and consumer confidence largely represent two distinct psychological transmission channels. The evidence presented in this paper suggests that consumer confidence (i.e. first moment, expectation) is considerably more important for the aggregate economic activity than economic uncertainty (i.e. second moment, variance). Two robustness checks are provided (an alternative lag structure of the Granger causality test, and the usage of monthly (industrial production) instead of quarterly (GDP) economic activity data). The obtained inferences are quite robust to both model alternations. Additionally, the leading characteristics of EPU index are found to be less pronounced than those of GARCH uncertainty and forecast disagreement.     

Three Steps Strategy to Search for Optimum Classification Trees

This article presents a new strategy to construct classification trees. According to the proposed scheme, we focused on keeping the record of sequences of each constructed classification tree; both in terms of splitting predictors and their splitting values in an array. So overall we have as many arrays as we have drawn samples. At this stage, a three steps strategy is introduced, which is used to search for the optimum classification tree. The proposed strategy provides comparable or improved results in terms of generalized error rates than tree and rpart (packages available for classification purposes in the R) using four of the well-known evaluation functions, that is, the Gini, the Entropy, the Twoing, and the Exponent-based function to split nodes for many real-life datasets.     

Measures of radial asymmetry for bivariate random vectors

This article considers the problem of measuring radial asymmetry of a bivariate vector of continuous random variables whose components are symmetric about the center of symmetry. We introduce a set of axioms for measures of radial asymmetry, define new measures satisfying the axiomatic, study some properties, and present corresponding results for sample statistics. Several examples illustrate our results.     

Internationalization Orientation in SMEs: The Mediating Role of Technological Innovation

This study examines the relationship between internationalization orientation and international performance of small and medium-sized enterprises (SMEs), and the mediating effect of technological innovation. Prior research suggests that internationalization is a prominent strategic choice for SMEs growth and profitability. However, there is still no explicit agreement on how internationalization affects international performance. Similarly, the role of innovation on performance has long been emphasized, but the implications of technological innovation on international performance are still eluding us. Our investigation of 116 SMEs in the United Kingdom reveals that internationalization orientation has a significant effect on their international performance, with SMEs adopting simultaneously an inward and outward international orientation achieving superior results. We further demonstrate that there is an inverted U-shaped relationship between technological innovation and international firm performance among SMEs. Meanwhile, we find that technological innovation positively mediates the effect of internationalization orientation on international firm performance, particularly for the SMEs exhibiting moderate levels of technological innovation activities. The findings of this study suggest that managers can improve international performance by combining inward and outward internationalization orientation with technological innovation activities in their strategic decisions.