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5421. Foreign Ownership, R, and Technology Sourcing

Author:
Leo A. Grünfeld
Publication Date:
12-2000
Content Type:
Working Paper
Institution:
Norwegian Institute of International Affairs
Abstract:
This paper explores the relationship between domestic R and the inflow of foreign capital through foreign direct investment and foreign ownership. The idea that firms invest in a foreign country in order to more easily absorb the knowledge and technology of foreign firms is tested empirically using a unique firm level data set covering foreign ownership and R for all Norwegian firms over the period 1990 to 1996. The study gives no clear evidence supporting the existence of such a motive behind foreign ownership. On the other hand, the econometric study indicates that foreign investors may try to exploit their technological advantages in the Norwegian market. The results also show that the degree of foreign ownership is more volatile when firms are highly R intensive. We hypothesize that this is due to the fact that large R investments often result in large losses as well as gains to the firms.
Topic:
Foreign Policy, Economics, International Trade and Finance, and Science and Technology

5422. CIAO: Ghana — Vulnerable Economy

Author:
Caspar Fithin
Publication Date:
11-2000
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
Government spending is increasing in the run-up to general elections next month and attempts to liberalise the cocoa trade appear half-hearted. The effectiveness of liberal economic reforms will be constrained as long as Ghana remains vulnerable to fluctuations in the prices of a narrow range of exports. Moreover, anti-corruption measures will lose their bite if they are seen to be directed in part against the government's opponents.
Topic:
Economics, Government, Politics, and Reform
Political Geography:
Africa and Ghana

5423. CIAO: China — Market Manipulation

Author:
Caspar Fithin
Publication Date:
11-2000
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
A leaked Shanghai Stock Exchange report has detailed the extent of trading irregularities within China's domestic equity markets. In the primary market, a series of companies have falsified records on profits, assets and even entire businesses in order to publicly issue and list shares. In the secondary markets, insider trading, the spreading of false information, coordinated stock purchases, price ramping and sales of stocks by large institutional investors are common practice. The extent of trading irregularities reflects the government's preference for market growth over regulatory standardisation. This approach is undermining the CSRC's credibility. Unless regulatory practices are tightened, institutional investors will not have the maturing effect on markets and stabilising impact on prices the government seeks.
Topic:
Economics, Government, and Markets
Political Geography:
China

5424. CIAO: Canada — Pre-Election Budget

Author:
Caspar Fithin
Publication Date:
10-2000
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
Finance Minister Paul Martin announced new tax reductions in his annual economic statement this week. The mini-budget is part of the Liberal government's preparations for a general election that is expected to be called later this week. In order to secure another majority in the House of Commons, the federal Liberals will need to maintain their popularity in Ontario and increase their support in Atlantic Canada. If the Liberals fail to regain their majority, they will probably rely on the support of New Democratic legislators. If this happens, the new government would place less emphasis on tax cuts and debt reduction, and more stress on spending, than would otherwise have been the case.
Topic:
Economics, Government, and Politics
Political Geography:
Canada

5425. Iran — Investor Inhibitions

Author:
Caspar Fithin
Publication Date:
10-2000
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
This week, the Majlis approved a government bill authorising immediate use of the 2000-01 budget surplus. The windfall surplus, largely the result of increased oil revenues, should amount to 6-10 billion dollars by the end of the fiscal year in March. It will certainly transform Iran's external finances, but its impact on the domestic economy will be less immediate, and it will do little to ease investor concerns. Khatami's efforts to attract greater foreign investment depend on reform of the judiciary and other key changes to the regulatory climate. In the meantime, continuing political turmoil will deter all but those investors prepared to take a long-term view of Iran's economic potential.
Topic:
Economics, Government, International Trade and Finance, and Politics
Political Geography:
Iran and Middle East

5426. Mexico — Overheating Arguments

Author:
Caspar Fithin
Publication Date:
10-2000
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
The recommendation reflects a conflict between the bank and the finance ministry over whether or not the economy is overheating. Increasingly, the conflict is being fought in public circles after months of low-key clashes. The uncharacteristic rift between the monetary and fiscal authorities is likely to widen over the final two months of the Zedillo administration, as signs of overheating continue to accumulate. While pressure for a substantial fiscal adjustment is likely to be irresistible when Fox takes over on December 1, concerns are growing regarding his capacity to execute such a policy.
Topic:
Economics, Government, Political Economy, and Politics
Political Geography:
North America and Mexico

5427. Nigeria — Rapacious Corruption

Author:
Caspar Fithin
Publication Date:
09-2000
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
Corruption deters foreign lending and investment. Except in the oil and gas sector, Nigeria's economic advantages are not sufficiently countervailing. The national reputation for corruption encourages further abuse since no one's reputation suffers through acting dishonesty. Despite reforming efforts, grand corruption is likely to persist because of the continuing large flows through official hands of unearned income from natural resources.
Topic:
Economics, Government, and International Trade and Finance
Political Geography:
Africa and Nigeria

5428. South Africa — Mbeki Leadership

Author:
Caspar Fithin
Publication Date:
09-2000
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
Although the transition from Nelson Mandela's to Thabo Mbeki's presidency has been marked by continued political stability and conservative economic management, Mbeki's political judgement is increasingly being questioned in several key policy areas. Unless Mbeki succeeds in allaying concerns about his leadership, the stability of South Africa's present political arrangements will be undermined.
Topic:
Economics, Government, and Politics
Political Geography:
Africa and South Africa

5429. International — Capital Flight

Author:
Caspar Fithin
Publication Date:
09-2000
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
Not all capital outflows from developing countries should be characterised as capital flight; some are simply the analogues of outward FDI and portfolio diversification in the more advanced economies. Nonetheless, a substantial proportion is classic flight capital, linked to tax evasion or criminal activity, and transferred abroad via misinvoicing and complex financial transactions. Capital flight leads to a significant loss of investment in the most affluent developing countries, and a crippling one in the poorest. However, staunching the flow is likely to prove extremely difficult. It will require greater economic stability and institutional certainty in the source countries, and more rigorous tax enforcement and cooperation in the destination states.
Topic:
Economics, Emerging Markets, Government, International Trade and Finance, and Third World

5430. International -- World Economic Propects

Publication Date:
07-2000
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
Official attention has shifted from the need to avert recession towards the problems of managing growth. There is some evidence that higher interest rates have begun to slow the expansion to a more sustainable pace in the Anglo-Saxon economies, but it remains unclear whether the principal central banks have done enough to bring demand growth back into line with sustainable increases in supply. The markets expect any further tightening to be limited, but the current position of the monetary authorities should probably be characterised as a pause in the tightening cycle, rather than the peak.
Topic:
Economics and Markets