Financial Constraints and the Margins of FDI

Recent literature on multinational firms has stressed the importance of low productivity as a barrier to the cross-border expansion of firms. But firms may also need external finance to shoulder the costs of entering foreign markets. We develop a model of multinational firms facing real and financial barriers to foreign direct investment (FDI), and we analyze their im-pact on the FDI decision (the extensive margin) and foreign affiliate sales (the intensive margin). We provide empirical evidence based on a detailed dataset of German multinationals which contains information on parent-level and affiliate-level financial constraints as well as on the location the foreign affiliates. We find that financial factors constrain firms’ foreign investment decisions, an effect felt in particular by large firms. Financial constraints at the parent level matter for the extensive, but less so for the intensive margin. For the intensive margin, financial constraints at the affiliate level are relatively more important

Exports Versus FDI Revisited: Does Finance Matter?

This paper explores the impact of financial constraints on the internationalization strategies of firms. It contributes to the literature by focusing on three aspects: First, the paper studies the impact of financial constraints on exporting relative to FDI. Consistent with theory, the empirical results confirm that the impact of financial constraints is stronger for FDI than for exporting. Second, the paper analyzes the extensive and the intensive margins and finds that financial frictions matter for both. Third, the paper explores the impact on manufacturing as compared to service industries and shows that firms in service industries are affected more than firms in manufacturing. The paper also identifies a threshold effect: Financial constraints do not matter for small firms whose productivity seems to be too low to consider international expansions

Financial constraints and the margins of FDI

Recent literature on multinational firms has stressed the importance of low productivity as a barrier to the cross-border expansion of firms. But firms may also need external finance to shoulder the costs of entering foreign markets. We develop a model of multinational firms facing real and financial barriers to foreign direct investment (FDI), and we analyze their impact on the FDI decision (the extensive margin) and foreign affiliate sales (the intensive margin). We provide empirical evidence based on a detailed dataset of German multinationals which contains information on parent-level and affiliate-level financial constraints as well as about the location the foreign affiliates. We find that financial factors constrain firms’ foreign investment decisions, an effect felt in particular by large firms. Financial constraints at the parent level matter for the extensive, but less so for the intensive margin. For the intensive margin, financial constraints at the affiliate level are relatively more important. --Multinational firms,heterogeneity,productivity,financial constraints

Exports versus FDI revisited: does finance matter?

The crisis on international financial markets that started in 2007 has shown the potential links between the financial sector and the real economy. Exports and foreign direct investment (FDI) have declined, presumably not only because of a lack of demand, but also because of restricted access of firms to external finance. In this paper, we explore the impact of access to external finance on firms' choices to export or to engage in FDI. We simultaneously model a firm's decision to engage in FDI and in exports, and we assess the importance of financial factors for this choice (the extensive margin) as well as for the volume of activities (the intensive margin). We find that financial frictions matter, in particular for the decision to engage internationally. --Multinational firms,exports versus FDI,financial constraints,heterogeneity,productivity

Core pinning by intragranular nanoprecipitates in polycrystalline MgCNi_3

The nanostructure and magnetic properties of polycrystalline MgCNi_3 were studied by x-ray diffraction, electron microscopy, and vibrating sample magnetometry. While the bulk flux-pinning force curve F_p(H) indicates the expected grain-boundary pinning mechanism just below T_c = 7.2 K, a systematic change to pinning by a nanometer-scale distribution of core pinning sites is indicated by a shift of F_p(H) with decreasing temperature. The lack of scaling of F_p(H) suggests the presence of 10 to 20% of nonsuperconducting regions inside the grains, which are smaller than the diameter of fluxon cores 2xi at high temperature and become effective with decreasing temperature when xi(T) approaches the nanostructural scale. Transmission electron microscopy revealed cubic and graphite nanoprecipitates with 2 to 5 nm size, consistent with the above hypothesis since xi(0) = 6 nm. High critical current densities, more than 10^6 A/cm^2 at 1 T and 4.2 K, were obtained for grain colonies separated by carbon. Dirty-limit behavior seen in previous studies may be tied to electron scattering by the precipitates, indicating the possibility that strong core pinning might be combined with a technologically useful upper critical field if versions of MgCNi_3 with higher T_c can be found.Comment: 5 pages, 6 figures, submitted to PR

Climate negotiators’ and scientists’ assessments of the climate negotiations

Climate negotiation outcomes are difficult to evaluate objectively because there are no clear reference scenarios. Subjective assessments from those directly involved in the negotiations are particularly important, as this may influence strategy and future negotiation participation. Here we analyze the perceived success of the climate negotiations in a sample of more than 600 experts involved in international climate policy. Respondents were pessimistic when asked for specific assessments of the current approach centered on voluntary pledges, but were more optimistic when asked for general assessments of the outcomes and usefulness of the climate negotiations. Individuals who are more involved in the negotiation process tended to be more optimistic, especially in terms of general assessments. Our results indicate that two reinforcing effects are at work: a high degree of involvement changes individuals’ perceptions and more optimistic individuals are more inclined to remain involved in the negotiations

Matching schemes and public goods : a review

Matching schemes, where a party matches the contribution of others, reduce the effective price of a good and aim to foster its demand. We review the empirical literature on the effectiveness of these schemes in the context of public goods, especially in the field of charitable giving. As different measures of effectiveness are used, we classify results according to (i) the level of public good provision, (ii) the amount of individuals' contributions, (iii) the likelihood to give and (iv) the contribution conditional on contributing a positive amount. Generalizing results is challenging, since context specific factors matter. Predominantly, a match is found to create a significant increase in public good provision without crowding out individuals' contributions, while the effect on the likelihood of giving and contribution condition on contributing a positive amount is nonnegative. The discussion reveals several avenues for future research, as putting stronger emphasizes on long term effects, public good competition or heterogeneity in responses

Protective behaviour of citizens to transport accidents involving hazardous materials: A discrete choice experiment applied to populated areas nearby waterways

Background To improve the information for and preparation of citizens at risk to hazardous material transport accidents, a first important step is to determine how different characteristics of hazardous material transport accidents will influence citizens' protective behaviour. However, quantitative studies investigating citizens' protective behaviour in case of hazardous material transport accidents are scarce. Methods A discrete choice experiment was conducted among subjects (19-64 years) living in the direct vicinity of a large waterway. Scenarios were described by three transport accident characteristics: odour perception, smoke/vapour perception, and the proportion of people in the environment that were leaving at their own discretion. Subjects were asked to consider each scenario as realistic and to choose the alternative that was most appealing to them: staying, seekin