The Davidson Institute encourages researchers to share their findings in the areas of emerging markets through the William Davidson Institute Working Paper Series. This is the only working paper series in North America to focus exclusively on business, economic and policy issues in emerging markets. The Davidson Institute Working Paper Series are top ranked worldwide in terms of downloads.
Recent Working Papers
Regional Determinants of FDI Distribution in Poland
Agnieszka Chidlow; Stephen Young
WP No. 943
(December, 2008)
Abstract: In this paper we examine the location determinants of the inflow of Foreign Direct Investment (FDI) into Poland, at a regional level. Using survey data from an online questionnaire in February 2005 and a multinomial logit model incorporating the investor’s specific characteristics, we show that knowledge-seeking factors alongside market and agglomeration factors, act as the main drivers for the inflow of FDI to the Mazowieckie region (including Warsaw), while efficiency and geographical factors encourage FDI to the other areas of Poland. Some implications are drawn for FDI attraction policy in Poland.
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Jel Codes: F23, L20, R10
Keywords: location choice, transition economies, foreign direct investment
Structural Reform and Firm Exports
Alvaro Cuervo-Cazurra; Luis Alfonso Dau
WP No. 942
(November, 2008)
Abstract: We analyze the impact of structural reform on firm exports. We argue that structural reform generates new opportunities and reduces transaction costs, inducing firms to improve
their efficiency and competitiveness to international levels and, therefore, helps them to export. However, we propose that not all companies benefit equally, because firms differ in how
structural reform affects their competitiveness. Thus, we argue that subsidiaries of foreign firms are the main beneficiaries of structural reform, followed by domestic private firms, and finally by domestic state-owned firms. We test these arguments on a sample of the largest companies in Latin America for the
period 1990-2005. We find that structural reform induces firms in general to export. Furthermore, it has the highest positive impact on the exports of subsidiaries of foreign firms,
followed by domestic private firms. Surprisingly, we find that structural reform has a negative impact on the exports of domestic state-owned firms. The paper contributes to a better understanding of how changes in institutions affect firm behavior by explaining the mechanisms that link structural reform to firm exports and how these vary across firms. Moreover, it counters the arguments of numerous detractors of globalization who claim that foreign firms are the sole beneficiaries of structural reform by indicating that not only foreign but also domestic private firms benefit from structural reform. The paper also highlights the need to discuss who benefits from structural reform rather than whether structural reform is beneficial or detrimental.
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Jel Codes: F23, L20, P16
Keywords: Structural reform, firm exports, subsidiaries of foreign firms, domestic private firms, domestic
state-owned firms, developing countries, Latin America
JEL classification: F23, L20, P16
EXPLORING THE RELATIONSHIP BETWEEN MILITARY SPENDING & HUMAN RIGHTS PERFORMANCE IN SOUTH ASIA
Krishna Chaitanya Vadlamannati; KK Shakya L Pathmalal
WP No. 941
(November, 2008)
Abstract: The relationship between military spending and human rights is one of the most prominent issues in political economy. Yet, the linkage between the two is empirically underdeveloped. Seeking to fulfill this existing gap in the literature, we examine the effects of militarization on human rights performance in six South Asian economies for the period 1980 – 2006. Our findings demonstrate that an increase in military spending significantly reduces human rights. Acceleration of military spending is also associated with decline in human rights performance. By gauging the effect of military spending on human rights conditions during war and peace years, we found that irrespective of war or peace years, any increase in military spending is detrimental to human rights conditions. Further, we find that the negative impact of military spending on human rights is conditioned by increase in their neighbors’ spending...
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Jel Codes: H56, O53, P48
Keywords: Military spending; Human rights; South Asia.
STRUCTURAL REFORM AND FIRM PROFITABILITY IN DEVELOPING COUNTRIES
Alvaro Cuervo-Cazurra; Luis Alfonso Dau
WP No. 940
(November, 2008)
Abstract: We extend agency theory to propose that structural reform positively impacts firm profitability in developing countries because the improvements in external monitoring that accompany structural reform decrease the agency costs faced by firms. However, we also argue that not all firms benefit equally from structural reform because their agency problems are impacted differently. Hence, we propose that structural reform results in higher improvements in profitability for domestic state-owned and domestic private firms than it does for subsidiaries of foreign firms. Results of the analyses of the largest 500 firms in Latin America support the arguments, suggesting that, contrary to the views of many critics of globalization, domestic firms are the main beneficiaries of structural reform in developing countries.
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Jel Codes: F23, G34, L33, M21
Keywords: agency theory, structural reform, firm profitability, state-owned firms, private firms, subsidiaries of foreign firms, developing countries, globalization
DOES TIMING OF ELECTIONS INSTIGATE RIOTS? A SUBNATIONAL STUDY OF 16 INDIAN STATES, 1958 – 2004
Krishna Chaitanya Vadlamannati
WP No. 939
(November, 2008)
Abstract: We investigate whether timing of the elections leads to riots or not within India. In other words, does timing of elections instigate riots? The theoretical underpinning is that an incumbent government and opposition parties exercises control over their agents to instigate communal mob violence and riots during the election years. The motto behind instigating riots is that it leads to polarization of voters and thus benefits the respective constituents (incumbent government & opposition parties). Using time series cross-sectional data for 16 major Indian states for the period 1958 – 2004, we find that scheduled elections are associated with increase in riots. Also intensity of riots, proxied by rate of growth rate of riots increases in scheduled election years. We also find that riots and intensity of riots are responsive to the propinquity to an election year. Meaning, as incumbent government nears the elections, riots and intensity of riots keeps increasing, while this is exactly opposite during the early years of incumbent government in office. These results suggest that elections generate “riots cycle” in regionally, ethnically, culturally and socially diverse country like India.
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Jel Codes: D72
Keywords: Riots; election cycles; India