"First Mover" Investment Advantages in Sub-Saharan Africa: Why Northern Multinationals Should React (Quickly) to Their Southern Counterparts

Direktinvestition; Multinationales Unternehmen; Standortfaktor; Afrika südlich der Sahara

Reducing structural dominance and entry barriers in Russian industry

Many industrial firms in Russia have undergone changes in ownership, but relatively few have been competitively restructured. Using survey and other data, the author suggests that much of Russian industry is immune from robust competition because of heavy vertical integration, geographic segmentation, and the concentration of buyers and sellers, in selected markets. Moreover, regulatory constraints protect incumbent firms from competition with new entrants, both domestic and foreign. The author sketches a reform agenda for Russia's post-privatization program, which emphasizes the restructuring of anti-competitive structures and the reduction of barriers to entry. The author's proposed reform agenda calls broadly for strengthening Russia's nascent rules-based framework for competition policy to reduce discretion, increase transparency, and improve accountability.Markets and Market Access,Environmental Economics&Policies,Economic Theory&Research,Banks&Banking Reform,Small and Medium Size Enterprises,Environmental Economics&Policies,Economic Theory&Research,Private Participation in Infrastructure,Small Scale Enterprise,Microfinance

The distribution of foreign direct investment in China

Foreign direct investment (FDI) has played a major role in China's push toward a market-oriented economy. Recent inflows account for 40 percent of combined flows of FDI to all developing countries, making China the biggest developing country FDI recipient. This record is impressive, but certain problems must be overcome if FDI is to continue to help sustain the country's record growth rate and further its economic development. For one thing, FDI in China is highly concentrated geographically, and its sector distribution is highly uneven. The authors empirically analyze the geographic determinants of FDI in China. They find that FDI's geographical distribution in China is determined mostly by GNP, infrastructure development, level of general education, and coastal location. Althoughthe sectoral distribution of FDI is coming into line with the rest of the world, in the past, FDI has been biased toward speculative types of investment, especially in the real estate sector.International Terrorism&Counterterrorism,Environmental Economics&Policies,Banks&Banking Reform,Foreign Direct Investment,Economic Theory&Research

Seeds of corruption - Do market institutions matter?

Ten years into the transition, corruption is so pervasive that it could jeopardize the best-intentioned reform efforts. The authors present an analytical framework for examining the role market institutions play in rent-seeking and illicit behavior. Using recently available data on the incidence of corruption, and on institutional development, they provide preliminary evidence on the link between the development of market institutions, and incentives for corruption. Virtually all of the indicators they examine appear to be important, but three are statistically significant: 1) the intensity of barriers to the entry of new business. 2) The effectiveness of the legal system. 3) The efficacy and competitiveness of services provided by infrastructure monopolies. The main lesson emerging from their analysis: a well established system of market institutions - clear and transparent rules, fully functioning checks and balances (including strong enforcement mechanisms), and a robust competitive environment - reduces opportunities for rent-seeking and hence incentives for corruption. Both the design, and effective implementation of such measures are important if a market system is to be effective. It is not enough, for example, to enact first-rate laws if they are not enforced. The local political economy greatly affects whether a given policy reform will curtail corruption. Especially important are the following factors in the political economy: a) the credibility of the government's commitment to carrying out announced reforms. B) The degree to which government officials are captured by the entities they regulate or oversee. C) the stability of the government itself. D) The political power of entrenched vested interests. Economists in the field of industrial organization, antitrust, and regulation have long recognized these factors as potent determinants of opportunistic behavior, corruption, and"capture"of government officials. Only now are they becoming conventional wisdom among specialists in economies in transition.Decentralization,International Terrorism&Counterterrorism,Economic Theory&Research,Environmental Economics&Policies,Legal Products,Governance Indicators,Legal Products,National Governance,Economic Theory&Research,Environmental Economics&Policies

Is Russia restructuring ? new evidence on job creation and destruction

The authors explorethe labor dynamics of Russian enterprise restructuring, empirically assessing how patterns of job creation and destruction are related to various aspects of enterprise restructuring across firms in different sectors and regions, and to different forms, sizes, vintages, and performance characteristics of ownership. Evidence from case studies - based on more than 50 site visits in 2000 - suggests that jobs have been destroyed, but only to a limited degree in some sectors and regions, largely because of institutional and incentive constraints and a still-widespread"socialist"corporate culture. Jobs have been created - particularly in sectors where devaluation had the most pronounced effect on important substitution and export promotion - but only slowly, mostly for lack of skilled workers and because regional mobility is limited. Labor turnover appears higher within regions than across regions. Newly available data for 1996 - 99 (provided by Goskomstat) for about 128,000 enterprises in 24 industrial sectors in Russia's 89 regions indicates that the typical firm has experienced only modest downsizing - about 12 percent - in number of employees. Smaller firms have entered, and larger, mature businesses have exited some sectors. Except for a lull in 1998, the rate of job creation has steadily increased and the rate of job destruction has declined, dropping substantially in 1998 - 99."Voluntary"worker separations remain the main - and growing - form of layoff, and the proportion of layoffs through redundancies is shrinking (now about 4 percent of total separations). Firm size and net employment growth are not statistically related, but form of ownership seems to matter. Firm size is also statistically correlated (positively) with profitability, but restructuring through changes in net employment growth appears not to be. It seems Russian restructuring needs to become more efficient.Labor Management and Relations,Labor Policies,Environmental Economics&Policies,Banks&Banking Reform,Municipal Financial Management,Labor Standards,Environmental Economics&Policies,Labor Management and Relations,Banks&Banking Reform,Municipal Financial Management

The backstory of China and India's growing investment and trade with Africa:Separating the wheat from the chaff

Common misconceptions about China's and India's increasing FDI in Africa have arisen because of a lack of systematic evidence-based analysis. Empirically-derived data, including on comparator countries, need to be rigorously analysed within an objective and coherent framework so that policy conclusions can be drawn which will benefit the many stakeholders involved

Improving Russia's policy on foreign direct investment

Foreign direct investment brings host countries capital, productive facilities, and technology transfers as well as employment, new job skills, and management expertise. It is important to the Russian Federation, where incentives for competition are limited and incentives to becoming efficient are blunted by interregional barriers to trade, weak creditor rights, and administrative barriers to new entrants. The authors ague that the old policy paradigm of foreign direct investment (established before World War II and prevalent in the 1950s and 1960s) still governs Russia. In this paradigm there are only two reasons for foreign direct investment: access to inputs for production and access to markets for outputs. Such kinds of foreign direct investment, although beneficial, are often based on generating exports that exploit cheap labor or natural resources, or are aimed at penetrating protected local markets, not necessarily at world standards for price and quality. They contend that Russia should phase out high tariffs and non-tariff protection for the domestic market, most tax preferences for foreign investors (which don't increase foreign direct investment but do reduce fiscal revenues), and many restrictions on foreign investment. They recommend that Russia switch to a modern approach to foreign direct investment by: 1) Amending the newly enacted foreign direct investment law so that it will grant non-discriminatory"national treatment"to foreign investors for both right of establishment, and post-establishment operations, abolish conditions (such as local content restrictions) inconsistent with the World Trade Organization agreement on trade-related investment measures (TRIMs), and make investor-state dispute resolution mechanisms more efficient (giving foreign investors the chance to seek neutral binding international arbitration, for example). 2) Strengthening enforcement of property rights. 3) Simplifying registration procedures for foreign investors, to make them transparent and rules-based. 4) Extending guarantee schemes covering basic non-commercial risks.Environmental Economics&Policies,Labor Policies,International Terrorism&Counterterrorism,Economic Theory&Research,Payment Systems&Infrastructure,Environmental Economics&Policies,Foreign Direct Investment,Economic Theory&Research,National Governance,International Terrorism&Counterterrorism

Entering the Union : European accession and capacity-building priorities

The authors examine the impact of trade facilitation on bilateral trade flows. They examine trade facilitation and capacity-building priorities in 12 countries in the Europe and Central Asia region-eight of the current members of the European Union: Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia,and Slovenia, and three candidate members: Bulgaria, Romania, and Turkey. The results suggest that behind-the-border factors play an important role in determining bilateral trade flows (controlling for the effects of tariffs, development levels, distance, and regional characteristics of exporters and importers, among other factors). The development of new data sets to expand work related to trade facilitation, including strengthening the empirical work explored here, is a key priority without which intelligent policy and priorities cannot be made. The authors'analysis is based on data from the World Economic Forum, Global Competitiveness Report 2001-2002, World Competitiveness Yearbook 2000, and Kaufmann, Kraay, and Zoido-Lobaton (2002). The results indicate that more gains in exports than in imports are expected should the values of three out of the four indicators (port efficiency, regulatory regimes, and information technology infrastructure) of the new and candidate member countries improve halfway to the EU15 average. These countries would expect large trade gains as well as improvements in trade balances as their integration into the EU continues. For example, the greatest absolute trade gains-$49 billion and$62 billion respectively-could be expected if their port efficiency and information technology infrastructure reach half the average level of the EU, and 70 percent of trade gains are associated with export expansion.Economic Theory&Research,Trade and Regional Integration,Trade Policy,Transport and Trade Logistics,Common Carriers Industry

Trials and Tribulations of Third World Petroleum Development: Lessons and Advice for Prospective Producers

Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/73469/1/j.1477-8947.1987.tb00313.x.pd

How Natural Is Monopoly? The Case of Bypass in Natural Gas Distribution Markets

Public utility markets in the United States are commonly subject to both price and entry regulation. However, as dissatisfaction with much of the nation\u27s regulatory system has mounted within the last decade, the wisdom of protecting utilities from competitors has come increasingly under attack. Numerous court cases and administrative rulings by regulatory agencies, as well as developments in the economics literature. have pointed to the benefits of allowing existing buyers of a utility\u27s services to bypass the utility and transact for the services with either incumbent firms or new entrants. The issue of entry deregulation has been at the heart of debates over regulatory reform in such industries as telecommunications, cable and satellite television transmission, the postal service, and electricity generation