Impact of macroeconomic fundamentals on the performance of automotive industry in selected African, Middle Eastern and European Countries

This study investigates the impact of the economic fundamentals on the performance of the automotive industry in selected countries within Africa, Europe, and the Middle East. The selection of countries allows for a comparison of more mature markets (in Europe) as opposed to developing countries (in Africa and the Middle East). Literature suggests that there is a direct correlation between an adverse macroeconomic environment and poor automotive industrial performance. It is widely accepted that the automotive industry is one of the most important industries that drive the economy. The degree in which a country is able to enhance its own citizens’ quality of life is the fundamental metric to measure growth, of which ease of transportation is central. Using various econometric techniques, this study investigates the impact of economic variables (macroeconomic fundamentals) on the performance of automotive industries through vehicle sales and production, in selected countries that span both advanced fiscal and monetary systems as those in the European region, as opposed the more fledgling economies in Africa and the Middle East. The macroeconomic fundamentals that were considered relevant in this study include inflation, per capita economic growth, exchange rates, interest rate and unemployment. Human capital and skills development also play notable roles within this industry – as suggested in the review of literature. The empirical results from various statistical analyses suggest that the performance of automotive industry – either measured through production or sales volume, are characterised by regional specificity. That is, the factors that influence the performance of this industry varies widely across the sampled regions. For instance, the results suggest that income level, unemployment, exchange rates volatility and inflation play significant roles in influencing the performance of automotive industry in Africa region, while exchange rates and skills development are central to the performance of automotive industry performance in the Middle East. However, none of the macroeconomic variables deployed in this study is found to play any significant role in the performance of automotive industry in Europe region. In practice, the uniqueness of Europe region in both problem identification and solution-seeking distinguished the market’s advancement from the other two emerging regions. Based on the results, this study suggests that unemployment, exchange rates volatility and inflation should be curbed in Africa to improve the performance of the industry. The role of skills development is also documented, thereby requiring strategic government intervention. The need to grow the economy in a sustainable way is also identified as one of the influencing factors of the performance of automotive industry in Africa. In the Middle east however, the role of exchange rates volatility is prominent. It is therefore suggested that the exchange rates regime should be stabilised in order to grow the industry. The factors that influence the performance of automotive industry in Europe are unique and falls outside of the measurable indicators used in this study. This suggests that governments in the European countries should look beyond macroeconomic fundamentals to grow the industry.Business ManagementM.B.A

Short run macroeconomic factors affecting car sales in Proton / Zahariah Mohd Zain … [et al.]

Malaysia had committed to be an automotive-producing country through the establishment of Proton in the year 1983. Since then, Proton has been quite a significant contributor to the Malaysian economy. People are influenced to purchase cars due to a number of factors; and these factors are studied in this research. This paper aims to identify the relationship between the macroeconomic indicators and the sales volume of cars in Malaysia. In achieving the objective, the study used secondary data gathered from Internet search, journals, and government agencies, which were then analyzed using descriptive statistic, correlation analysis, and multiple regression statistic. The result of the study shows that inflation and unemployment contribute significantly to the volume of car sales for Proton. On the other hand, gross domestic product (GDP) and interest rate do not have significant impact on the sales volume. These findings will provide Proton with valuable insights about which factors are the most influential, so they could strategize accordingly

The Relationship Between Capital Structure And Concentrated Ownership (Agency-Related Problems)

Malaysia is known for its highly concentrated ownership structure. The highly concentrated ownership structure brings an advantage of having less asymmetric information but at the same time is said to be prone to agencyrelated problems such as risk shifting, empire building and shirking. Therefore, the study is undertaken to ascertain if the level of debt (capital structure level) of Malaysian companies are heavily influenced by the agencyrelated problems or create an efficient monitoring mechanism. Through previous studies from countries with similar ownership structure such as Indonesia (Taridi, 1999) and Thailand (Wiwattanakantang, 1999) show no monitoring mechanism and having monitoring mechanism respectively, Malaysia warrants a special investigation as her investor protection law is better than those of the two mentioned countries (La Porta, Lopez-de-Silanes, Shleifer and Vishny, 1998). This study addresses the relationship between capital structure and concentrated ownership (agency-related problems). Using panel data analysis methodolgy, 179 Malaysian listed Main Board firms covering a period of 11 years from 1993 to 2003 were examined. Managerial ownership did not have a significant relationship with debt ratio implying that debt is not used as a monitoring device and at the same time debt was not used to maintain control over their firm. Evidence from this study suggests that managerial ownership resulted in higher profitability and this rejects the presence of Type II agency problems (conflicts between owner-manager and minority shareholders). High ownership concentration was found to be an effective control device. The same goes for foreign ownership. There was no evidence of moral hazard problems in the form of asset tangibility in this study. This study did not find the presence of Type II agency conflicts via measures like profitabilty. Also, there was no evidence of wealth transfer (a form of Type II agency problems) through dividends

The Relationship Between Capital Structure And Concentrated Ownership (Agency-Related Problems)

Malaysia is known for its highly concentrated ownership structure. The highly concentrated ownership structure brings an advantage of having less asymmetric information but at the same time is said to be prone to agencyrelated problems such as risk shifting, empire building and shirking. Therefore, the study is undertaken to ascertain if the level of debt (capital structure level) of Malaysian companies are heavily influenced by the agencyrelated problems or create an efficient monitoring mechanism. Through previous studies from countries with similar ownership structure such as Indonesia (Taridi, 1999) and Thailand (Wiwattanakantang, 1999) show no monitoring mechanism and having monitoring mechanism respectively, Malaysia warrants a special investigation as her investor protection law is better than those of the two mentioned countries (La Porta, Lopez-de-Silanes, Shleifer and Vishny, 1998). This study addresses the relationship between capital structure and concentrated ownership (agency-related problems). Using panel data analysis methodolgy, 179 Malaysian listed Main Board firms covering a period of 11 years from 1993 to 2003 were examined. Managerial ownership did not have a significant relationship with debt ratio implying that debt is not used as a monitoring device and at the same time debt was not used to maintain control over their firm. Evidence from this study suggests that managerial ownership resulted in higher profitability and this rejects the presence of Type II agency problems (conflicts between owner-manager and minority shareholders). High ownership concentration was found to be an effective control device. The same goes for foreign ownership. There was no evidence of moral hazard problems in the form of asset tangibility in this study. This study did not find the presence of Type II agency conflicts via measures like profitabilty. Also, there was no evidence of wealth transfer (a form of Type II agency problems) through dividends

Indonesia, Malaysia and the East Asian Crisis

Diese Dissertation analysiert die Wirtschaftspolitiken welche von Indonesien und Malaysia während und kurz nach der Ostasienkrise 1997/98 angewandt wurden. Die Autorin gibt einen kurzen Überblick über die lange Wirtschaftswachstumsphase in Ostasien und den Faktoren welche zur Krise geführt haben. Weiters vergleicht die Dissertation detailliert die sogenannten „orthodoxen“ Wirtschaftspolitiken welche von Indonesien angewandt wurden mit den „unorthodoxen“ Wirtschaftspolitiken welche von Malaysia angewandt wurden unter Anwendung von qualitativen Analysen (zB Corporate Governance) und quantitativen Analysen (zB Indikatoranalyse, difference-in-difference Analyse, Ordered logistische Regression und Quantile Regression) auf makroökonomischer Ebene und auf Unternehmensebene. Das Ziel dieser Studie ist es zu zeigen, dass Staaten sowohl „orthodoxe“ als auch „unorthodoxe“ Politiken in Krisensituationen zur Verfügung haben. Weiters soll die Dissertation zeigen, dass die Auswahl der Wirtschaftspolitiken die Umstände, welche zu einer Krise führen und die möglichen positiven und negativen Folgen der verschiedenen Wirtschaftspolitikmöglichkeiten, betrachtet werden sollten. Dies wird anhand einer Analyse der angewandten Politiken während einer sog. „thrid-generation“ Krise des erfolgreichen Beispiels Malaysias und des weniger erfolgreichen Beispiels Indonesiens aufgezeigt.This dissertation analyses the policies adopted by Indonesia and Malaysia during and shortly after the East Asian Crisis in 1997/98. The authors give a short overview over the long period of growth in East Asia and the factors leading to the Crisis. Furthermore, the dissertation compares in detail the so-called ‚orthodox’ policies applied by Indonesia vs. the ‚unorthodox’ policies applied by Malaysia using qualtitative analyses e.g. corporate governance, and quantitative analyses e.g. indicator analysis, difference-in-difference analysis, ordered logistic regression and quantile regression of the macroeconomy and on a corporate level. The goal of this study is to show that countries have at disposal ‘orthodox’ as well as ‘unorthodox’ policies in a crisis situation. Furthermore, this dissertation should show that the selection of economic policies should consider the circumstances leading to a crisis and the possible threats and benefits of the various policy choices. This is done by analyzing the policies used during a third-generation crisis on the succesful example of Malaysia and the less successful example of Indonesia