Does it matter where you come from? vertical spillovers from foreign direct investment and the nationality of investors

The authors use a firm-level panel data set from Romania to examine whether the nationality of foreign investors affects the degree of vertical spillovers from foreign direct investment. Investors'country of origin may matter for spillovers to domestic producers in upstream sectors (supplying intermediate inputs) in two ways. First, the share of intermediate inputs sourced by multinationals from a host country is likely to increase with the distance between the host and the source economy. Second, the sourcing pattern is likely to be affected by preferential trade agreements that cover some but not other source economies. In this case, the Association Agreement signed between Romania and the European Union (EU) implies that inputs sourced from the EU are subject to a lower tariff than inputs sourced from America or Asia. Moreover, while for European investors intermediate inputs sourced from home country suppliers comply with the rules of origin and thus can be exported to the EU on preferential terms, this would not be the case for home country suppliers of American or Asian multinationals. Therefore, one would expect that American and Asian investors source more from Romania than EU investors and thus present greater potential for vertical spillovers. The empirical analysis produces evidence in support of the authors'hypothesis. They find a positive association between the presence of American and Asian companies in downstream sectors and the productivity of Romanian firms in the supplying industries. Further, the productivity of Romanian firms in the supplying sectors is negatively correlated with operations of European investors in downstream sectors. The differences between the effects associated with investors of different origin are statistically significant.Economic Theory&Research,Environmental Economics&Policies,International Terrorism&Counterterrorism,Labor Policies,Small and Medium Size Enterprises,Environmental Economics&Policies,International Terrorism&Counterterrorism,Economic Theory&Research,Microfinance,Private Participation in Infrastructure

MFN status and the choice of tariff regime

The gradualist approach to trade liberalization views the uniform tariffs implied by MFN status as an important step on the path to free trade. We investigate whether a regime of uniform tariffs will be preferable to discriminatory tariffs when countries engage in non-cooperative interaction in multilateral trade. The analysis includes product differentiation and asymmetric costs. We show that with the cost asymmetry the countries will disagree on the choice of tariff regime. When the choice of import tariffs and export subsidies is made sequentially the uniform tariff regime may not be sustainable, because of an incentive to deviate to a discriminatory regime. Hence, an international body is needed to ensure compliance with tariff agreement

A newly developed integrative bio-inspired artificial intelligence model for wind speed prediction

Accurate wind speed (WS) modelling is crucial for optimal utilization of wind energy. NumericalWeather Prediction (NWP) techniques, generally used for WS modelling are not only less cost-effective but also poor in predicting in shorter time horizon. Novel WS prediction models based on the multivariate empirical mode decomposition (MEMD), random forest (RF) and Kernel Ridge Regression (KRR) were constructed in this paper better accuracy in WS prediction. Particle swarm optimization algorithm (PSO) was employed to optimize the parameters of the hybridized MEMD model with RF (MEMD-PSO-RF) and KRR (MEMD-PSO-KRR) models. Obtained results were compared to those of the standalone RF and KRR models. The proposed methodology is applied for monthly WS prediction at meteorological stations of Iraq, Baghdad (Station1) and Mosul (Station2) for the period 1977-2013. Results showed higher accuracy of MEMD-PSO-RF model in predicting WS at both stations with a correlation coefficient (r) of 0.972 and r D 0.971 during testing phase at Station1 and Station2, respectively. The MEMD-PSO-KRR was found as the second most accurate model followed by Standalone RF and KRR, but all showed a competitive performance to the MEMD-PSO-RF model. The outcomes of this work indicated that the MEMD-PSO-RF model has a remarkable performance in predicting WS and can be considered for practical applications

Modes of Foreign Entry under Asymmetric Information about Potential Technology Spillovers

This paper studies the effect of technology spillovers on the entry decision of a multinational enterprise into a foreign market. Two alternative entry modes for a foreign direct investment are considered: Greenfield investment versus acquisition. We find that with quantity competition a spillover makes acquisitions less attractive, while with price competition acquisitions become more attractive. Asymmetric information about potential spillovers always reduces the number of acquisitions independently of whether the host country or the entrant has private information. Interestingly, we find that asymmetric information always hurts the entrant, while it sometimes is in favor of the host country

Strategies of Foreign Direct Investment in the Presence of Technological Spillovers

Dawid H, Zou B. Strategies of Foreign Direct Investment in the Presence of Technological Spillovers. Working Papers in Economics and Management. Vol 12-2013. Bielefeld: Bielefeld University, Department of Business Administration and Economics; 2013.In this paper we present a differential game model of two firms with different technologies producing the same good and selling in the same world market. The firm equipped with advanced technology is deciding whether to outsource parts of its production to the home country of its competitor, where wages and the level of technology are lower. Outsourcing reduces production costs but is associated with spillovers to the foreign competitor. The degree to which the foreign competitor can absorb these spillovers depends on its absorptive effort. Using numerical methods the properties of a Markov Perfect Equilibrium of this game are characterized and the implications of the variation of different key parameters are examined