What Drives FDI in Central-eastern Europe? Evidence from the IWH-FDI-Micro Database
Andrea Gauselmann, Mark Knell, Johannes Stephan
Post-Communist Economies,
No. 3,
2011
Abstract
The focus of this paper is on the match between strategic motives of foreign investments into Central-Eastern Europe and locational advantages offered by these countries. Our analysis makes use of the IWH-FDI-Micro Database, a unique dataset that contains information from 2009 about the determinants of locational factors, technological activity of the subsidiaries, and the potentials for knowledge spillovers in the Czech Republic, Hungary, Poland, Romania, and Slovakia. The analysis suggests that investors in these countries are mainly interested in low (unit) labour costs coupled with a well-trained and educated workforce and an expanding market with the high growth rates in the purchasing power of potential buyers. It also suggests that the financial crisis reduced the attractiveness of the region as a source for localised knowledge and technology. There appears to be a match between investors’ expectations and the quantitative supply of unqualified labour, not however for the supply of medium qualified workers. But the analysis suggests that it is not technology-seeking investments that are particularly content with the capabilities of their host economies in terms of technological cooperation. Finally, technological cooperation within the local host economy is assessed more favourably with domestic firms than with local scientific institutions – an important message for domestic economic policy.
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Ageing and Labour Markets: An Analysis on the effect of worker’s age on productivity, innovation and mobility
Lutz Schneider
Technische Universität Dresden. Dissertation,
2011
Abstract
The present study analyses the labour market effect of workers’ ageing. Explicitly, the impact of age on productivity and wages, on innovation as well as on mobility is explored empirically. The econometric analyses are based on firm and employment data from the Institute for Employment Research (IAB) and, thus, refer to the labour market of Germany. Regarding the productivity and wage effects of age the econometric results confirm a positive correlation between firm productivity and the share of middle-aged employees (41-50 years old) within the manufacturing sector. Hence, the results provide evidence of an inverted u-shaped age-productivity profile in this sector also found for other countries. Furthermore, age-wage and age-productivity profiles seem to follow unequal patterns. Compared to the group of the 15-30 and the 51 and above years old workers the group of middle-aged employees earn less than a productivity based wage scheme would require. In terms of age effects on innovativeness the micro-econometric analysis again reveals an inverted u-shaped profile. Workers aged around 40 years seem to act as key driver for innovation activities within firms. An additional finding concerns the impact of age diversity on innovation. The expected positive effect of a heterogeneous age structure is not confirmed by the data. With respect to labour market mobility results are in favour of a negative correlation between age and job mobility either in terms of changing professions or firms. The estimation of a multi equation model verifies that expected wages of older workers do not or only marginally increase due to job mobility, so, financial incentives to change jobs are very low. Yet, even after controlling the absent wage incentive older employees still remain more immobile than younger workers. Altogether, these results should not only be of academic interest but also informative for actors on the firm and the governmental level. Both sides are asked to cope with the challenges of demographic change. Only by maintaining productivity and innovativeness until old ages the necessary resources can be generated to preserve an economy’s prosperity even if the share of non-active population is increasing by demographic developments. Secondly, enhancing productivity is essential to ensure employability of older persons and to sustain the size of workforce even in the circumstances of an ageing economy.
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Macroeconomic Challenges in the Euro Area and the Acceding Countries
Katja Drechsel
Dissertation, Online-Publikation,
2010
Abstract
The conduct of effective economic policy faces a multiplicity of macroeconomic challenges, which requires a wide scope of theoretical and empirical analyses. With a focus on the European Union, this doctoral dissertation consists of two parts which make empirical and methodological contributions to the literature on forecasting real economic activity and on the analysis of business cycles in a boom-bust framework in the light of the EMU enlargement. In the first part, we tackle the problem of publication lags and analyse the role of the information flow in computing short-term forecasts up to one quarter ahead for the euro area GDP and its main components. A huge dataset of monthly indicators is used to estimate simple bridge equations. The individual forecasts are then pooled, using different weighting schemes. To take into consideration the release calendar of each indicator, six forecasts are compiled successively during the quarter. We find that the sequencing of information determines the weight allocated to each block of indicators, especially when the first month of hard data becomes available. This conclusion extends the findings of the recent literature. Moreover, when combining forecasts, two weighting schemes are found to outperform the equal weighting scheme in almost all cases. In the second part, we focus on the potential accession of the new EU Member States in Central and Eastern Europe to the euro area. In contrast to the discussion of Optimum Currency Areas, we follow a non-standard approach for the discussion on abandonment of national currencies the boom-bust theory. We analyse whether evidence for boom-bust cycles is given and draw conclusions whether these countries should join the EMU in the near future. Using a broad range of data sets and empirical methods we document credit market imperfections, comprising asymmetric financing opportunities across sectors, excess foreign currency liabilities and contract enforceability problems both at macro and micro level. Furthermore, we depart from the standard analysis of comovements of business cycles among countries and rather consider long-run and short-run comovements across sectors. While the results differ across countries, we find evidence for credit market imperfections in Central and Eastern Europe and different sectoral reactions to shocks. This gives favour for the assessment of the potential euro accession using this supplementary, non-standard approach.
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Corporate Governance in the Multinational Enterprise: A Financial Contracting Perspective
Diemo Dietrich, Björn Jindra
International Business Review,
2010
Abstract
The aim of this paper is to bring economics-based finance research more into the focus of international business theory. On the basis of an analytical model that introduces financial constraints into incomplete contracting in an international vertical trade relationship, we propose an integrated framework that facilitates the study of the interdependencies between internalisation decisions, firm-internal allocations of control rights, and the debt capacity of firms. We argue that the financial constraint of an MNE and/or its supplier should be considered as an important determinant of internal governance structures, complementary to, and interacting with, institutional factors and proprietary knowledge.
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The Impact of Bank and Non-bank Financial Institutions on Local Economic Growth in China
Xiaoqiang Cheng, Hans Degryse
Journal of Financial Services Research,
No. 2,
2010
Abstract
This paper provides evidence on the relationship between finance and growth in a fast growing country, such as China. Employing data of 27 Chinese provinces over the period 1995–2003, we study whether the financial development of two different types of financial institutions — banks and non-banks — have a (significantly different) impact on local economic growth. Our findings indicate that banking development shows a statistically significant and economically more pronounced impact on local economic growth.
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Does Local Technology Matter for Foreign Investors in Central and Eastern Europe? Evidence from the IWH FDI Micro Database
Jutta Günther, Björn Jindra, Johannes Stephan
Journal of East-West Business,
No. 3,
2009
Abstract
This article analyzes investment motives, scope, and intensity of R&D and innovation, in foreign affiliates and the extent and determinants of linkages to the host country’s scientific institutions. The analysis uses the IWH FDI micro database 2007 that offers evidence for 809 foreign affiliates in Central and East Europe. Foreign direct investment into the region seems to be still dominated by market- and efficiency-seeking motives. Tapping into localized knowledge, skills, and technology seems to be of secondary importance. Yet, the majority of foreign affiliates actively engage in R&D and innovation, although fewer foreign firms build technological linkages with local scientific institutions.
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Badr-El-Din A. Ibrahim:"Poverty Alleviation via Islamic Banking Finance to Micro-Enterprises in Sudan: Some lessons for poor countries
Tobias Knedlik, K. (eds.) Wohlmuth
Sudan Economic Research Group Discussion Papers, No. 35,
2003
Abstract
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Finanzierung kommunaler Aufgaben: Ökonomische Prinzipien, moderne Herausforderungen und institutionelle Gestaltungsmöglichkeiten
Martin T. W. Rosenfeld
Position Liberal, Bd. 88,
2009
Abstract
The publication is based on the economic principles for an efficient local public revenue system. The main part of the publication is examining the question how different categories of revenues (taxes, user fees, grants-in-aid) and different arrangements of these revenues are able to meet with these principles. In addition, it is asked for the implications of recent developments (demographic change; increasing importance of the competitiveness of cities) for the choice between different categories of revenues. Finally, it is discussed how it could be possible in countries like Germany – where the existing local public revenue system is quite far away from what is regarded as efficient – to come to an institutional change in the direction of a better way of financing the local level.
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Regional Growth and Finance in Europe: Is there a Quality Effect of Bank Efficiency?
Iftekhar Hasan, Michael Koetter, Michael Wedow
Journal of Banking and Finance,
No. 8,
2009
Abstract
In this study, we test whether regional growth in 11 European countries depends on financial development and suggest the use of cost- and profit-efficiency estimates as quality measures of financial institutions. Contrary to the usual quantitative proxies of financial development, the quality of financial institutions is measured in this study as the relative ability of banks to intermediate funds. An improvement in bank efficiency spurs five times more regional growth then an identical increase in credit does. More credit provided by efficient banks exerts an independent growth effect in addition to direct quantity and quality channel effects.
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The New EU Members on the Verge of Disaster: What to Do?
Hubert Gabrisch
Wirtschaft im Wandel,
No. 3,
2009
Abstract
The long lasting, but externally financed boom in the new EU countries has collapsed under the impacts of the global financial crisis. The countries’ fiscal and monetary authorizes do not seem to be able to effectively resist – a deep crisis is under way. The situation is particularly dramatic in the Baltic countries, where the hands of the monetary authority are institutionally tied, and an expansionary fiscal policy would trigger off speculative attacks on the exchange rate. Neither the maintaining of the currency board arrangement nor an ‘emergency access’ to the Euro zone would help. The other non-Euro members of the Union still aim to adopt the Euro in the next future and, thus, are reluctant to give up the Maastricht criteria. The Euro countries Slovakia and Slovenia might face a major deterioration of their credit rating if governments would attempt to increase fiscal deficits. All in all, two problems are to be solved: first, the external provision of liquidity to their economies and, second, an approach that anchors policies in the countries against economic nationalism, which is a beggar-thy-neighbor policy. We propose a combination of a reformed exchange rate mechanism with a stability and solidarity fund for all countries. The former would help to avoid too strong depreciations and the latter would provide liquidity to stabilize the exchange rate and the entire economy.
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