Do Institutions Matter for Foreign Direct Investment?

In this paper the role of institutions in determining foreign direct investment (FDI) is investigated using a large panel of 107 countries during 1981 and 2005. We find that institutions are a robust predictor of FDI and that the most significant institutional aspects are linked to propriety rights, the rule of law and expropriation risk. Using a novel data set, we also study the impact of institutions on FDI at the sectoral level. We find that institutions do not have a significant impact on FDI in the primary sector but that institutional quality matters for FDI in manufacturing and particularly in services. We also provide policy implications for institutional reform.Foreign direct investment, institutions, sectoral FDI

Feasibility study on utilization of palm fibre waste into fired clay brick

Malaysia is the second largest of palm oil producer after Indonesia, which contribute to 50 % of palm oil production. With this demand, the increasing of palm oil plantation over the years has led to the large production of agricultural waste, for example palm fibre waste. This study investigates different percentages of palm fibre (0 %, 1 %, 5 % and 10 %) to be incorporated into fired clay brick. Manufactured bricks were fired at 1 °C/min heating rate up to 1050 °C. The effects of manufacture bricks on the physical and mechanical properties of manufactured brick were also determined. All brick samples were tested due to the physical and mechanical properties which include dry density, firing shrinkage, initial rate of suction (IRS), water absorption, porosity and compressive strength. Findings show that increasing palm fibre waste affected the properties of brick, which decreased their density, besides increased firing shrinkage, IRS, water absorption, porosity and compressive strength. However, all the manufactured brick still followed the requirement

Governance changes in strategic alliances: Antecedents of contractual renegotiations

This study provides an empirical investigation of the incidence and antecedents of contractual renegotiations in strategic alliances. We bring together initial conditions based on transaction cost theory and ex post contingencies highlighted by recent conceptual and qualitative research on the evolution of collaborative agreements. The results indicate that firms tend to change the governance of alliances when a misalignment exists between the chosen structure and features of the transaction. Further, we find that asset specificity affects alliance design as well as post-formation governance decisions. Contractual alterations are more likely in the presence of strategic change and when firms employ less extensive ex post deterrents in their alliances. We find no evidence that cross-border ventures are any more or less likely to experience contractual renegotiations than domestic alliances.Strategic alliances; renegotiation

Exports and FDI motivations: empirical evidence from US foreign subsidiaries

The expected indirect benefits Foreign Direct Investments (FDI) are supposed to bring into the host countries are drawn mainly from studies at the microeconomic level. Empirical analyses examine whether FDI may be the source of productivity spillover effect on local firms and a new emerging literature analyses the effect with regard to the their export performance. However, conclusive results have not been reached so far. Two main shortcomings affect this literature: firstly, it is difficult to generalize results valid across countries; secondly, the role played by FDI motivations is largely disregarded. For these reasons, the aim of the paper is that of testing the effects of US FDI on export intensity at the sectoral level in 16 OECD countries over the period 1990-2001. Through these data, we are able to disentangle asset seeking and asset exploiting motivations and especially we are able to distinguish the channels through which the effect is going to occur. The findings show that taking into consideration the different motivations for which Multinational Enterprises (MNEs) invest abroad is relevant. The asset exploiting motivations, and in particular market seeking FDI, are those that affect export intensity to a greater extent.

The effect of business regulations on nascent and young business entrepreneurship

In this paper we examine the relationship, across 39 countries, between regulation and entrepreneurship using a new two-equation model. We find the minimum capital requirement required to start a business lowers entrepreneurship rates across countries, as do labour market regulations. However the administrative considerations of starting a business�- such as the time, the cost, or the number of procedures required�- are unrelated to the formation rate of either nascent or young businesses. Given the explicit link made by Djankov et al. (2002) between the speed and ease with which businesses may be established in a country and its economic performance�- �and the enthusiasm with which this link has been grasped by European Union policy makers�- our findings imply this link needs reconsidering.

The Effect of Business Regulations on Nascent and Young Business Entrepreneurship

We examine the relationship, across 39 countries, between regulation and entrepreneurship using a new two-equation model. We find the minimum capital requirement required to start a business lowers entrepreneurship rates across countries, as do labour market regulations. However the administrative considerations of starting a business – such as the time, the cost, or the number of procedures required – are unrelated to the formation rate of either nascent or young businesses. Given the explicit link made by Djankov et al. (2002) between the speed and ease with which businesses may be established in a country and its economic performance – and the enthusiasm with which this link has been grasped by European Union policy makers – our findings imply this link needs reconsidering.Global Entrepreneurship Monitor;Nascent Entrepreneurship;Business Regulations;World Bank Doing Business;Young Businesses