Dasgupta: Home Country Effect of FDI Outflows from the BRIC Countries – Study of Domestic Investment

ABSTRACT:

The recent phenomenon of rising outward foreign direct investment (OFDI) flows has raised serious policy concerns about its effects on the domestic investment and capital formation in the source countries. Does OFDI stimulate domestic investment or does it crowd it out? The concern arises because OFDI activities could shift not only some of the production activities from home to foreign destinations but also could possibly threaten the availability of scarce financial resources at home by allocating resources abroad. All this have the potential to reduce domestic investment, thus lowering the long run economic growth and employment of the home economies. The central goal of this paper is to empirically explore the evidence of the macroeconomic relationship between OFDI and levels of domestic capital formation in the BRIC economies. Our study reveals that OFDI has both short run and long run positive causality with domestic investment and thus figures out to be a significant factor affecting domestic investment in the BRIC nations. It becomes imperative, therefore, that the BRIC countries make special effort to promote their OFDI through the designing of appropriate OFDI policies that would help stimulate their domestic investment and economic growth now and in the future.

 

Available for download here.

Advertisements

Çelik, Demirtaş & Isaksson: Corporate Bonds, Bondholders and Corporate Governance

ABSTRACT:

Worldwide, primary corporate bond markets have become an increasingly important source of financing for non-financial companies. This trend is coupled with a relative decrease in traditional bank lending to non-financial companies and low levels of bond interest rates. Just as shareholders, bondholders can play an important role in corporate governance. They can use both exit and voice. This report provides a comprehensive global overview of all corporate bond issues since 2000 and experiences of governance engagement by bondholders. The report builds on issue level data for more than 100,000 individual bond issues in 108 jurisdictions between 2000 and 2013. Data is provided with respect to the type of issues and numerous bond characteristics, such as country of origin, investment grade, maturity, covenants and conditions for redemption. The report also analyses trends in secondary bond markets, including market liquidity, the role of market makers and the relatively slow introduction of electronic trading systems. In order to analyse trends over time with respect to governance, we provide detailed time series data on the use and relative importance of 15 different categories of covenants. By constructing an overall “covenant protection index” we suggest that bond investors in their search for yield have overall traded governance rights for higher expected returns. This shift also seems to be associated with higher risk-taking. We also conclude that the degree of governance engagement primarily is linked to the business model of the bond investor. We end the report with a discussion about the scope for institutional changes that may build a larger community of truly informed and motivated bond investors.

 

Available for download here.

Avalos & Lombardi: The biofuel connection – impact of US regulation on oil and food prices

ABSTRACT:

Biofuel policies are frequently mentioned in the policy and academic debates because of their potential impact on food prices. In 2005, the United States authorities passed legislation under which corn-based ethanol became in practice the only available gasoline additive. Some studies have then argued that ethanol and biodiesel subsidies in advanced economies may have strengthened the link between the prices of oil and those of some food commodities. This paper tests whether the response of food commodity prices to global demand shocks and to oil-specific demand shocks has changed following the introduction of this legislation. Our results show that corn prices exhibit a stronger response to global demand shocks after 2006. Some short-lived but statistically significant response to oil-specific demand shocks is also documented. Close substitutes of corn in the feedstock business (eg soybeans and wheat) exhibit comparable but more muted responses, while other food commodities unaffected by biofuel policies do not change their behaviour. We also report some evidence that global liquidity is a factor driving global demand shocks, and through that channel may have affected food commodity prices.

 

Available for download here.

Cao, Humphrey-Jenner & Suchard: Government ownership and venture performance – Evidence from China

ABSTRACT:

We study the government’s role in VC market in China. The impact of government depends on whether the fund is wholly or partially government-owned at central or provincial level. Partially government-owned VCs improve venture success, e.g., the likelihood of exit via an IPO and the likelihood of exit in mainland China. Investment from provincial government-owned VCs is associated greater exit-success, with such advantage diminishing with more funds. Government-owned funds exhibit worse performance at the fund-level. Our findings suggest that government VCs may benefit through political connections may help VCs, but that excessive government control leads to inefficiencies.

 

Available for download here.

Pharoah & Walker: The Values of Corporate Giving

ABSTRACT:

People and governments are increasingly looking to the corporate sector to go well beyond the profits bottom line. Companies are expected to make both business and wider social impact, and, if they choose to get involved, can make a huge difference to local and global communities. Leading companies increasingly regard the dimensions of responsible business in a holistic and integrated way across their whole corporate value chain and external environment. In a speech to Business in the Community in February 2012, Prime Minister David Cameron claimed that ‘Business is the most powerful force for social progress the world has ever known’. In terms of means and power he is correct. Today some of the larger multinationals have a balance sheet larger than the economy of some countries. It has been claimed that 25 US ‘mega corporations’ have revenues which surpass the Gross Domestic Product of entire countries, not always small countries. (Trivett, 2011) However, there is also a growing school of thought which claims that the balance of power will increasingly be influenced by companies’ multiple stakeholders beyond the company boundaries, in individual consumers, communities and wider society. With growing global concern about the wealth gap and the challenges of the environment, we increasingly need to understand what motivates companies to engage in corporate community investment (CCI) or social responsibility, and develop responsible business, and what influences their involvement. Are they experienced as a net cost or benefit to the company? Are they driven by altruism or self-interest? Is there anything special about companies which get involved in them? Are there crucial success factors for prompting companies to give? Is our understanding of social responsibility changing, and are common values across businesses and communities an increasingly important influence? For the voluntary and community sector, key issues are how companies get information, how they identify their roles in investing in healthy voluntary organisations and communities and what are the key trends in corporate giving? This report aims to provide an up-to-date picture of corporate giving in the UK. It is in two parts. The first provides a brief overview of the main themes and findings of existing research on factors related to corporate giving and social and business responsibility, and explores the idea of value through some corporate examples. The second part provides an update of key statistics on company giving.

Sengupta, Mukherjee & Gupta: Financing for Infrastructure Investment in G-20 Countries

ABSTRACT:

This study looks into various sources of financing infrastructure and the demands for infrastructure investments and highlights the mismatch between demand and supply of funds for infrastructure financing in India. In order to address this mismatch, and given the constraints of traditional sources of infrastructure finance in India, this paper suggests credit enhancement scheme (CES) as an alternative framework for mobilizing long-term infrastructure finance. It suggests for scaling up CES as one of the options for leveraging global finance for long-term investment in infrastructure projects. The suggested scheme of credit enhancement could be scaled up at the G-20 level for mobilizing finance from sources which were earlier shying away from investing in infrastructure projects (e.g., pension and insurance fund). This study also suggests a possible structure for operationalizing this scheme at the G-20 level. The proposed scheme is not specific to G-20 countries, but could be used by other countries (including developing countries which have low sovereign ratings) to leverage long term finance for infrastructure sector.

 

Available for download here.

Costa & Hoyer: Why Invest in Urban Landscapes? Impacts of European Research on Paradigm Shift in Urban Planning

ABSTRACT:

In recent years, the European Union encouraged plenty of research on the development of innovative solutions, strategies, and networks to develop sustainable cities. In this paper, we present and discuss the outcomes and perspectives of four European projects (URGE, GreenKeys, SWITCH, and CyberParks) and their contributions to bridge the gap between knowledge, policymaking, and citizens. While URGE, GreenKeys, and SWITCH are already completed, CyberParks is in its initial steps. The projects URGE and GreenKeys focus on green landscapes. In URGE, a set of criteria was created to assess urban green spaces, and thus increase their potential for improving the quality of life in cities. GreenKeys addressed the creation and adoption of green space strategies as a shared vision towards more inclusive urban spaces. SWITCH focused on blue landscapes, it aimed to advance and adopt integrated urban water management by connecting urban water and urban green issues. Finally, CyberParks is focusing on urban landscapes in a digital era. It aims to foster greater knowledge about the relationship between new information, communication technologies, and public spaces. Having projects with different time lag allows us to better understand the impacts on urban planning practices resulting from these projects, and show the needs for ongoing research agendas.

 

Available for download here.

Fitzpatrick & Monahan: Who’s Afraid of Good Governance? State Fiscal Crises, Public Pension Underfunding, and the Resistance to Governance Reform

ABSTRACT:

Much attention has been paid to the significant underfunding of many state and local employee pension plans, as well as to efforts by states and cities to alleviate that underfunding by modifying the benefits provided to workers. Yet relatively little attention has been paid to the systemic causes of such financial distress—such as chronic underfunding that shifts financial burdens to future taxpayers, and governance rules that may reduce the likelihood that a plan’s trustees will make optimal investment decisions. This Article presents the results of a qualitative study of the funding and governance provisions of twelve public pension plans that are a mix of state and local plans of various funding levels. We find that none of the plans in our study satisfy the best practices that expert panels have established, and that the strength of a plan’s governance provisions does not appear correlated with a plan’s financial health. Our most important finding is that, regardless of the content of a plan’s governance provisions, such provisions are almost never effectively enforced. This lack of enforcement, we theorize, has a significant, detrimental impact on plan funding and governance. If neither plan participants nor state taxpayers are able to effectively monitor and challenge a state’s inadequate funding or improper investment decisions, public plans are very likely to remain underfunded. This Article concludes by offering several possible reform options to address the monitoring and enforcement problems made clear by our study: automatic benefit reductions, automatic tax increases, a low-risk investment requirement, and market monitoring through the use of modified pension obligation bonds.

 

Available for download here.

Butts: Geopolitics of Resource Scarcity

From the Introduction:

Geopolitics refers to the relationship of geographical settings to political processes. The diversity and scale of the geography are important variables in the exercise of political power. Resources vary markedly in occurrence, giving rise to global patterns of trade and creating vulnerability to supply cutoff. National leaders should be aware of the occurrence of strategically important resources within their borders, understand which of these are critically important to sustain human and state security, and develop policies to achieve sufficiency from domestic or international sources. This paper addresses resource geopolitics, offers some examples, and provides concepts for reducing import vulnerability in an era of rising resource-focused policies by Russia and China.

 

Available for download here.

Tyfield, Ely, Urban, Geall, Zuev & Urry: Low-Carbon Innovation in China – Prospects, Politics and Practices

ABSTRACT:

China’s potential transition to a low-carbon, climate resilient or ‘post-carbon’ society is a key concern for the world. There is an urgent need for better understanding of these processes, posing major challenges for social science given the complex, systemic and emergent nature of the multiple changes involved in possible transitions. This report outlines the background to a project assessing the status of, and opportunities for, low-carbon transitions in China by going beyond existing technology-focused approaches to innovation. This involves a re-insertion and reconceptualization of power within the processes of low-carbon transitions across socio-technical systems, and with greater attention paid to everyday social practices of both ‘users’ and producers.

 

Available for download here.