Browsing by Subject "F43"

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  • Fung, K.C.; Korhonen, Iikka; Li, Ke; Ng, Francis (2008)
    BOFIT Discussion Papers 9/2008
    Published in Journal of Economic Integration, September 2009, v. 24, iss. 3, pp. 476–504
    China has emerged as one of the world's leading recipients of foreign direct investment (FDI). Meanwhile, the successful transition experience of many Central and Eastern Euro-pean countries (CEECs) also enables them to attract an increasing share of global foreign investment, particularly from the European Union (EU). What is the relationship between inward FDI of China and the CEECs? We conceptualize the relationship according to three alternative paradigms: 1) China and the CEECs each exist in its own regional pro-duction network, with no linkage between FDI flows into China and into CEECs; 2) China and the CEECs together comprise a global production network, so that FDI into China is positively related to FDI into CEECs; and 3) FDI into China is a substitute for FDI into the CEECs, so that the correlation between them is negative. In this paper, we employ pan-el data to study this issue in detail. Specifically, we compare empirical estimates for 15 CEECs over the 15-year period 1990-2004 using four different econometric approaches: FGLS with Random effects, FGLS with fixed effects, EC2SLS and GMM. The result supports the conclusion that China's inward FDI does not crowd out CEECs' inward FDI. In fact, it shows that in some circumstances FDI flows in these two regions are moderately complementary. In addition, our analysis confirms the importance for FDI flows of recipient-country characteristics such as market size, degree of trade liberalization and labor quality, as well as a healthy global capital market. JEL classification numbers: F20, F21, F43 Keywords: Foreign Direct Investment (FDI), Regional Networks, Global Supply Chain, China's FDI, Central and Eastern European Countries' FDI
  • Mironov, V.V.; Petronevich, A.V. (2015)
    BOFIT Discussion Papers 3/2015
    Published in Resources Policy, Volume 46, Part 2, December 01, 2015, Pages 97-112
    ​This paper examines the problem of Dutch disease in Russia during the oil boom of the 2000s, from both the theoretical and empirical points of view. Our analysis is based on the classical model of Dutch disease by Corden and Neary (1982). We examine the relationship between changes in the real effective exchange rate of the ruble and the evolution of the Russian economic structure during the period 2002 – 2013. We empirically test the main effects of Dutch disease, controlling for specific features of the Russian economy, namely the large role of state-owned organizations. We estimate the resource movement and spending effects as determined by the theoretical model and find the presence of several signs of Dutch disease: the negative impact of the real effective exchange rate on growth in the manufacturing sector, the growth of total income of workers, and the positive link between the real effective exchange rate and returns on capital in all three sectors. Although also predicted by the model and clearly observable, the shift of labor from manufacturing to services cannot be explained by ruble appreciation alone. Publication keywords: Dutch disease, resource curse, real effective exchange rate, cointegration model, economic policy, Russia
  • Simola, Heli (2019)
    BOFIT Discussion Papers 17/2019
    The slowing in China’s massive economy has wide implications. China plays an essential role in international production chains, so disturbances can spill over to other economies in the global production network. We evaluate the international transmission and impact of various China-specific shocks with an input-output framework applied to the World Input-Output Database (WIOD). We consider shocks to Chinese final demand at the aggregate level, bilateral import tariffs between the US and China and sector-specific shocks to Chinese final demand and supply. Our results suggest that aggregate level shocks, as well as certain sector-specific shocks originating in China, may have large impacts elsewhere. Transmission of shocks through the global production network, however, is mitigated by the relatively low import-intensity of Chinese production.
  • Beckmann, Joscha; Comunale, Mariarosaria (2021)
    BOFIT Discussion Papers 11/2021
    This paper assesses the financial channel of exchange rate fluctuations for emerging countries and the link to the conventional trade channel. We analyze whether the effective exchange rate affects GDP growth, the domestic credit and the global liquidity measure as the credit in foreign currencies, and how global liquidity affects GDP growth. We make use of local projections in order to look at the shocks’ transmission covering 11 emerging market countries for the period 2000Q1–2016Q3. We find that foreign denominated credit plays an important macroeconomic role, operating through various transmission channels. The direction of effects depends on country characteristics and is also related to the policy stance among countries. We find that domestic appreciations increase demand regarding foreign credit, implying positive effects on investment and GDP growth. However, this is valid only in the short-run; in the medium-long run, an increase of credit denominated in foreign currency (for instance, due to apeiation) decreases GDP. The financial channel works mostly in the short run except for Brazil, Malaysia, and Mexico, where the trade channel always dominates. Possibly there is a substitution effect between domestic and foreign credit in the case of shocks in exchange rate.
  • Funke, Michael; Ruhwedel, Ralf (2003)
    BOFIT Discussion Papers 8/2003
    Published in Economics of Transition vol 13, no 1 (2005), pp. 25-50
    Utilising panel data for 14 East European transition economies, we find support for the hypothesis that a greater degree of export variety relative to the U.S. helps to explain relative per capita GDP levels.The empirical work relies upon some direct measures of product variety calculated from 5-digit OECD trade data.Although the issue is far from settled, the emerging view is that the index of relative export variety across countries correlates significantly with relative per capita income levels. Keywords: Product Variety, Transition Economies, Eastern Europe, Economic Growth, Panel Data JEL classification: C33, F43, O31, O33, O52.
  • Mao, Rui; Yao, Yang (2015)
    BOFIT Discussion Papers 23/2015
    Published in Journal of International Commerce, Economics and Policy, Volume 7, Issue 2, June 2016
    This paper empirically studies how a fixed exchange rate regime (FERR) may promote economic growth by undermining the Balassa-Samuelson effect. When total factor productivity (TFP) is faster in the industrial sector than in the non-tradable sectors, an FERR can suppress the Balassa-Samuelson effect if adjustment of domestic prices is subject to nominal rigidities. With WDI data on sectoral value-added and data from the PPP converter provided by the Penn World Table, we are able to estimate the home country’s industrial-service (quasi-) relative-relative TFP in comparison with the United States. Applying those esti-mates, our econometric exercises then provide robust results that an FERR dampens the Balassa-Samuelson effect and that the real undervaluation that ensues does indeed promote growth. We also explore the channels for undervaluation to promote growth. Lastly, we compare industrial countries and developing countries and find that an FERR has more significant impacts on developing countries than on industrial countries.
  • Hasan, Iftekhar; Khalil, Fahad; Sun, Xian (2017)
    Bank of Finland Research Discussion Papers 17/2017
    We investigate the impacts of improved intellectual property rights (IPR) protection on cross-border M&A performance. Using multiple measures of IPR protection and based on generalized difference-in-differences estimates, we find that countries with better IPR protection attract significantly more hi-tech cross-border M&A activity, particularly in developing economies. Moreover, acquirers pay higher premiums for companies in countries with better IPR protection, and there is a significantly higher acquirer announcement effect associated with these hi-tech transactions.
  • Hasan, Iftekhar; Khalil, Fahad; Sun, Xian (2017)
    Quarterly Journal of Finance 3
    BoF DP 17/2017
    We investigate the impacts of improved intellectual property rights (IPR) protection on cross-border M&A performance. Using multiple measures of IPR protection and based on generalized difference-in-differences estimates, we find that countries with better IPR protection attract significantly more hi-tech cross-border M&A activity, particularly in developing economies. Moreover, acquirers pay higher premiums for companies in countries with better IPR protection, and there is a significantly higher acquirer announcement effect associated with these hi-tech transactions.
  • Faryna, Oleksandr; Simola, Heli (2018)
    BOFIT Discussion Papers 17/2018
    Published in Economic Systems, Volume 45, Issue 2, June 2021, 100769
    This paper employs a Global Vector Auto Regressive (GVAR) model to study the evolution of the response of the Commonwealth of Independent States (CIS) to foreign output and oil price shocks. During a two-decade observation period, cross-country trade and financial linkages experience no-table changes. We find CIS countries highly sensitive to global and regional shocks, with that sensitivity increasing after the global financial crisis. CIS countries show strongest responses to output shocks originating in the US, Russia and within the region itself, but their sensitivity to euro area shocks also increases substantially. Despite growing trade relations with China, the responses of CIS countries to output shocks originating in China are still relatively moderate.
  • Faryna, Oleksandr; Simola, Heli (2021)
    Economic Systems 2 ; June
    Published in BOFIT DP 17/2018.
    This paper employs a Global Vector Auto Regressive (GVAR) model to study the evolution of the response of the Commonwealth of Independent States (CIS) to foreign output and oil price shocks. During an observation period of two decades, cross-country trade and financial linkages experience notable changes. We find CIS countries to be highly sensitive to global and regional shocks, with that sensitivity increasing after the global financial crisis. CIS countries show the strongest responses to output shocks originating in the US, Russia and within the region itself, but their sensitivity to euro area shocks also increases substantially. Despite growing trade relations with China, the responses of CIS countries to output shocks originating in China are still relatively moderate.