Natural-resource or Market-seeking FDI in Russia? An Empirical Study of Locational Factors Affecting the Regional Distribution of FDI Entries
K. Gonchar, Philipp Marek
IWH Discussion Papers,
Nr. 3,
2013
Abstract
This paper conducts an empirical study of the factors that affect the spatial distribution of foreign direct investment (FDI) across regions in Russia; in particular, this paper is concerned with those regions that are endowed with natural resources and market-related benefits. Our analysis employs data on Russian firms with a foreign investor during the 2000-2009 period and linked regional statistics in the conditional logit model. The main findings are threefold. First, we conclude that one theory alone is not able to explain the geographical pattern of foreign investments in Russia. A combination of determinants is at work; market-related factors and the availability of natural resources are important factors in attracting FDI. The relative importance of natural resources seems to grow over time, despite shocks associated with events such as the Yukos trial. Second, existing agglomeration economies encourage foreign investors by means of forces generated simultaneously by sector-specific and inter-sectoral externalities. Third, the findings imply that service-oriented FDI co-locates with extraction industries in resource-endowed regions. The results are robust when Moscow is excluded and for subsamples including only Greenfield investments or both Greenfield investments and mergers and acquisitions (M&A).
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The Synchronization of Wage Dynamics across EMU Members: A Test of the Endogeneity Hypothesis
Herbert S. Buscher, Hubert Gabrisch
Empirica,
Nr. 3,
2012
Abstract
We test the hypothesis of an endogenous currency area for the labor market of the Euro area: has the introduction of a common currency caused wage dynamics to become more synchronized and to be able to cushion for asymmetric shocks? Trade intensity, sector specialization and financial integration are tested for being the driving forces for the endogenous synchronization of wage dynamics. We use regression techniques with instrument variables, and find evidence of persistent asymmetries in nominal wage formation, despite a single currency and monetary policy. We explain the result with more specialization following financial integration, and with still existing differences in wage formation and labor market institutions. We conclude that the euro zone is not endogenous with respect to wage formation. Rather, there are incentives for beggar-thy-neighbor policies in the Euro area.
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Path Dependence and QWERTY's Lock-in: Toward a Veblenian Interpretation
John B. Hall, Iciar Dominguez Lacasa, Jutta Günther
Journal of Economic Issues,
Nr. 2,
2011
Abstract
In “Clio and the Economics of QWERTY,“ Paul David challenges an overarching, mainstream assumption that market forces should indeed lead toward efficient and optimal outcomes that include technology selection. David seeks to explain the endurance of technologies that his use of historiography judges inefficient and suboptimal. We challenge David's research, arguing that failure to consider the original institutional economics (OIE) tradition limits his grasp of complex processes to reduced notions of “path dependence“ based upon a “lock-in.“ This inquiry offers an alternative account of QWERTY and technology selection based upon Veblenian thinking, further supported by Paul Dale Bush's emphasis upon the ceremonial.
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Where enterprises lead, people follow? Links between migration and FDI in Germany
Claudia M. Buch, J. Kleinert, Farid Toubal
European Economic Review,
Nr. 8,
2006
Abstract
Standard neoclassical models of economic integration are based on the assumptions that capital and labor are substitutes and that the geography of factor market integration does not matter. Yet, these two assumptions are violated if agglomeration forces among factors from specific source countries are at work. Agglomeration implies that factors behave as complements and that the country of origin matters. This paper analyzes agglomeration between capital and labor empirically. We use state-level German data to answer the question whether and how migration and foreign direct investment (FDI) are linked. Stocks of inward FDI and of immigrants have similar determinants, and the geography of factor market integration matters. There are higher stocks of inward FDI in German states hosting a large foreign population from the same country of origin. This agglomeration effect is confined to higher-income source countries.
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Determinants and Effects of Foreign Direct Investment: Evidence from German Firm-Level Data
Claudia M. Buch, J. Kleinert, A. Lipponer
Economic Policy,
Nr. 41,
2005
Abstract
Foreign direct investment is an essential aspect of ‘globalization’ yet its empirical determinants are not well understood. What we do know is based either on poor data for a wide range of nations, or good data for the US and Swedish cases. In this paper, we provide evidence on the determinants of the activities of German multinational firms by using a newly available firm-level data set from the Deutsche Bundesbank. The specific goal of this paper is to demonstrate the relative role of country-level and firm-level determinants of foreign direct investment. We focus on three main questions: First, what are the main driving forces of German firms’ multinational activities? Second, is there evidence that sector-level and firm-level factors shape internationalization patterns? Third, is there evidence of agglomeration effects in the foreign activities of German firms? We find that the market access motive for internationalization dominates. Firms move abroad mainly to gain better access to large foreign markets. Cost-saving motives, however, are important for some manufacturing sectors. Our results strongly suggest that firm-level heterogeneity has an important influence on internationalization patterns – as stressed by recent models of international trade. We also find positive agglomeration effects for the activities of German firms that stem from the number of other German firms that are active on a given foreign market. In terms of lessons for economic policy, our results show that lowering barriers to the integration of markets and encouraging the formation of human capital can promote the activities of multinational firms. However, our results related to the heterogeneity of firms and agglomeration tendencies show that it might be difficult to fine-tune policies directed at the exploitation of synergies and at the creation of clusters of foreign firms.
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Competition Policy in Central Eastern Europe in the Light of EU Accession
Jens Hölscher
Journal of Common Market Studies,
Nr. 2,
2004
Abstract
This study reviews the progress made in EU accession candidates on competition policy. The analysis shows that institution-building and legislation are well under way and that anti-trust practice is not too lax. Due to the diversity among the accession countries under review, the study finds that the strictly rule-based frame work of the EU might not be the most favourable solution for some candidates: firstly, the small and open economies of most candidates make it particularly difficult to define the ‘relevant market’ in competition cases. Secondly, the traditionally intense vertical integration of production in accession states calls for a reassessment of ‘vertical restraints’. The policy implications of this study suggest that the EU competition task force should take a proactive, case-by-case approach vis-à-vis its new members.
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Competition Policy in Central East Europe in light of EU Accession
Johannes Stephan
Journal of Common Market Studies,
2004
Abstract
This study reviews the progress made in EU accession candidates on competition policy. The analysis shows that institution-building and legislation are well under way and that anti-trust practice is not too lax. Due to the diversity among the accession countries under review, the study finds that the strictly rule-based frame work of the EU might not be the most favourable solution for some candidates: firstly, the small and open economies of most candidates make it particularly difficult to define the ‘relevant market’ in competition cases. Secondly, the traditionally intense vertical integration of production in accession states calls for a reassessment of ‘vertical restraints’. The policy implications of this study suggest that the EU competition task force should take a proactive, case-by-case approach vis-à-vis its new members.
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