Multinationals as Stabilisers? Economic Crisis,Access to Finance,and Employment Growth

This article examines the comparative response of multinationals and domestic firms to an economic crisis, using the empirical setting of a well defined case of economic slowdown in Chile. We find that employment in manufacturing plants has been drastically reduced during the economic crisis. Our findings reveal that multinationals are more likely to exit contributing to the employment contraction during the crisis, but surviving foreign firms experience lower employment reductions than domestic enterprises. These results are not fully consistent with the idea that multinationals are less affected by an economic crisis and that they may act as stabilisers.     

Transition to a market economy and sustained growth. Implications for the post-Washington consensus

Transition to a market economy is a lengthy process comprised of various spheres of economic activities. The belief that a market economy can be introduced by “shock therapy” is wrong, and in several cases has caused more problems than it has solved. Since a market economy requires adequate institutional structures, transition can be executed only in a gradual manner. Despite the fact that so-called Washington consensus, i.e. a set of policies aiming to shift from stabilization to growth, was developed without concern for post-socialist transformation, these ideas have significantly influenced the path of thought and action in Eastern Europe and the former Soviet Union. After a decade of transition and lasting depression, a new, post-Washington consensus is developing. Major policy conclusions suggest that the core of emerging consensus, also based on the lessons from transitions, is institutional building. Only with strong institutions can liberalization and privatization put emerging post-socialist markets on the path of sustainable growth. Yet, to accomplish such a task the policy reforms must also take into consideration the need for equitable growth and the new role of the state. The latter must not retire from economic activities, but ought to change its role to support the reforms and integration of the post-socialist countries into the world economy in the era of globalization, of which the post-communist transition is an important part.     

Unequal Laws and the Disempowerment of Women in the Labour Market: Evidence from Firm-Level Data

Institutions are defined as the set of rules that govern human interactions. When these rules are discriminatory, they may disempower segments of a population in the economic spheres of activity. In this study, we explore whether laws that discriminate against women influence their engagement in the economy. We adopt a holistic approach where we explore an overall measure of unequal laws also known as legal gender disparities and relate it to several labour market outcomes for women. Using data for over 59,000 firms across 94 economies, we find that unequal laws not only discourage women’s participation in the private sector workforce, but also their likelihood to become top managers and owners of firms. Suggestive evidence indicates that access to finance, property ownership, business registration, and labour market constraints are pathways by which legal gender disparities disempower women in the private sector.     

The Location of Overseas Research and Development and Intellectual Property Protection

Do multinationals distinguish between locations on the basis of the local intellectual property laws, in conducting their overseas research and development? We seek to address this question using data on US multinationals spanning the period 1977–2004. Particular care is taken to capture the host location enforcement environment of intellectual property protection. For our sample and time frame, we find that stronger intellectual property protection is not important in determining overseas research and development by these multinationals. The results are robust to disaggregation of the protection measure into its component indices, as well as to disaggregation of overseas research and development by industry. Instead, host country market size and human capital resources are found to be consistently important in explaining the location of overseas research and development.     

Africa's prospects and South Africa's leadership potential in the emerging markets century

This article examines Africa's role in an evolving international system where powerful emerging markets, such as bric, together with established powers are shaping economic trajectories. The specific focus is on South Africa as an aspiring leader on the African continent, and on its potential for becoming an emerging market shaping the global order together with bric and the West. It is unclear whether a changing global economy in which the postcolonial world plays a greater role will result in improved developmental prospects for Africans as African countries gradually reorient themselves from the West to the South, or whether relations with emerging markets will resemble neo-colonial ties with the West. South Africa's structural weakness, stemming from serious domestic problems of a social, political and economic nature, threatens to undermine its standing in Africa and its emerging market status.     

Economic liberalisation for high-tech industry development? Lessons from China's response in developing the ICT manufacturing sector compared with the strategies of Korea and Taiwan

Abstract

This paper argues that China's response to economic liberalisation, which artificially focuses on promoting particular sizes of firms, cannot improve technological capabilities in the ICT manufacturing industry. Not only have historical and economic conditions created difficulties in adopting Korean and Taiwanese style policies, but also competitive ICT firms in the global economy are increasingly moving from manufacturing to innovation activities against a backdrop of increasing economic liberalisation. Given the WTO and ITA agreements, the main path which Korea and Taiwan employed is now unavailable. The government therefore should leave the size of firms to market forces.     

Transforming into Fashion Firms or Multi-Country Suppliers? Accounting for Varied Firm Trajectories in the Deindustrialising Korean Apparel Industry

This paper compares across two groups of Korean garment firms’ varied development and patterns of integration into the global economy in the deindustrialising Korean apparel industry. Although each group, both with histories as export suppliers, developed into fashion lead-firms or multi-country suppliers, current literature on firm upgrading provides little help in explaining the varied post-industrial trajectories of these firms. This paper bridges global value chains/global production networks (GVC/GPN) literature with institutionalist literature to highlight the importance of differential market embeddedness and organising logics in patterning how firms respond to changing global conditions.     

Globalizing Corporate Environmentalism? Convergence and Heterogeneity in Indian Industry

What explains the recent emergence of corporate environmentalism in developing countries? Why have certain firms surpassed others in greening their activities? This article situates the uneven dynamics of corporate greening within a theoretical framework of convergence, firm specificity, and heterogeneity. Through a comparative analysis of firms in three sectors—automobiles, steel, and power—of the Indian economy during the past two decades, I show that corporate greening is rooted in processes of growing international political engagement, market integration, and transnational social communication. Together, these processes have unleashed various economic and sociological convergence dynamics, which have led firms in India to adopt more environmentally sound innovations and performances increasingly similar to those found in many developed countries. Yet firms’ connectedness to external pressures fostering “upward” convergence varies, as do their internal capabilities to respond to them. Heterogeneity in these internal and external variables, and the firm-specific strategies linking them, accounts for much of the unevenness in patterns of corporate environmentalism observed in India.     

Foreign ownership and export performance in the large corporate sector of India

This paper examines the impact of foreign ownership on export performance by the largest corporate firms in India, to analyse whether the ‘monopolistic advantages’ of multinationals survive in its highly restrictive and regulated environment. After controlling for industrial characteristics and export incentives, foreign ownership has a positive impact on export performance. The statistical significance of the result is not very strong, but the finding counters earlier works based on simple comparisons of exports at the firm level. The analysis also sheds light on other influences of policy significance on export performance.     

Multinational Enterprises and Technological Effort by Local Firms: A Case Study of the Malaysian Electronics and Electrical Industry

It is often assumed that foreign MNEs are the driving force behind technological development in developing economies but it has become evident in recent years that the actions of MNEs in isolation from the domestic economy will not significantly improve the stock of technology in an economy. This study, therefore, examines the determinants of local firms' decisions to undertake technological effort, not only in isolation, but also in the context of linkages between domestic firms and MNEs. There is evidence that linkages between MNEs and local firms are important in explaining technological effort by local firms but direct technological assistance from MNEs does not seem to play a major role in fostering increased technological effort by local firms.     

EU fta Negotiations with sadc and Mercosur: integration into the world economy or market access for EU firms?

The EU claims that its free trade agreements with regional organisations of developing countries can promote the respective regions' integration into the world economy. Taking as case studies EU negotiations with the Southern African Development Community and Mercosur, the paper argues that the EU and its partners have different conceptions of integration into the world economy. For the EU the latter simply means multilateral trade liberalisation under the wto, while, for its partners, it involves increasing industrial production and exports of manufactured products. If the latter notion is accepted, an fta with the EU should increase European foreign direct investment into the region or at least increase their trade surpluses, thus increasing the resources available for support of local firms. The paper argues that an fta with the EU will not be likely to produce these results; thus the fta will simply be an instrument to promote market access for EU firms.     

Operational codes,institutional learning and the optimistic model of post-Communist social change: Conceptual criticism and empirical challenges from a Romanian case study

This paper discusses the conceptual model behind the widespread belief that in post Communist societies, once the democratic and market institutions are introduced, the emerging values and beliefs engendered by those very institutions will create the conditions for the consolidation and reproduction of democracy and market economy. The model is subjected to a double assessment: a critical theoretical review followed by an empirical test conducted through a case study. Both raise questions regarding the realism of the model and show that the direct relationship between institutional structures, institutional learning and the emerging values and beliefs (defined in this study as ‘operational codes’), a key relationship on which the model is based, is difficult to establish and substantiate. The paper concludes by pointing out the necessity to further elaborate the initial model in order to accommodate problems such as the emergence of institutional rigidities and learning blockages, and the emergence of dysfunctional values (values and beliefs that do not support and reproduce but undermine the institutional structures that shaped them initially), and to incorporate a theory of institutional change in which the evolution and change of beliefs, ideas and values play a much more preeminent place.     

The continuing Kurdish problem in Turkey after O¨calan's capture

This article sets out to critically explore an important dimension of the International Monetary Fund's (IMF) recent bid for economic stability, namely the transparency requirements vis-à-vis emerging market economies. The article argues that this requirement symbolises an attempt to bolster ideological obligation to neoliberalism while progressing towards a certain form of legal obligation between states. This claim is developed by first identifying three facets that have undermined the economic stability of the global system: (1) the emergence of 'competition states'; (2) a non-hegemonic political economy; and (3) the reperipheralisation (or re-marginalisation) processes in the global South. After establishing this larger analytical backdrop, the article goes on to evaluate the Fund's transparency requirements as an attempt to preserve the status quo in the global political economy.     

The study of post-communist Slovenian firms and their internationalization

Understanding the evolution and growing importance of firms in post-communist countries is a critical new research direction for the study of communist and post-communist economies. In light of this, the primary purpose of this study is to identify the conditions necessary for the internationalization of enterprises from post-communist Slovenia, based on the responses of 298 firms currently engaged in the export of Slovenian products. The study supports the idea that many of the conditions necessary for international expansion of the firms are also applicable to firms from the post-communist economy, that is Slovenia. Environmental factors, including economic stability and cultural similarity, firm size and experience, stable markets, management strategies and other country-specific factors, were found to have significant influences on the participation of post-communist firms in the global economy. Environmental factors, including economic stability and cultural similarity, were found to be the most important in the factor analysis. Firm size and experience also exerted an influence on the internationalization of post-communist Slovenian firms. However, stable markets were found to be more important than firm size or management strategies at this point in time. Slovenia’s small size, its former command economy, and other country-specific factors, were also found to have significant influences for the firms involved in this study.     

CONTRACTORS' EXPERIENCE OF COMPULSORY COMPETITIVE TENDERING: A CASE STUDY OF CONTRACT CLEANERS IN THE NHS

Compulsory competitive tendering (CCT) has been an important instrument of Conservative government economic policy since 1979. Its effectiveness in generating cost-effective services depends on competition to supply the service in question.
The NHS domestic market is large and, prior to the introduction of CCT, promised to be profitable for contractors. Many contract cleaners with office cleaning experience entered. In the event the costs of entry were heavy, and the profit margins of established firms were reduced. When contracts have been awarded to firms, they tended to be to those with a track record. Many firms therefore withdrew; and the few that remained have profit margins in the NHS little different from those found elsewhere. Of more than by firms with a serious interest in entry, probably no more than a handful can have come out of the experience in net profit in the first seven years.
The experience of CCT in the market for NHS domestic services has shown that a degree of competition in the market can be achieved, arguably because of the presence of direct service organizations. Competition for this market, on the other hand, can be limited by the high costs of entry.     

Firm size and export behaviour: An Indian case study

In the context of Indian industry, this article argues that in the presence of capital market imperfections and sub‐optimal contractual arrangements, small firms face higher transaction or selling costs in the domestic market. One of the strategic responses by small firms towards overcoming the mobility barriers imposed by high transaction costs in the domestic market is to break into the competitive world market. Small firms that could realise a critical level of production efficiency and possible information externalities that arise through inter‐firm linkages might be the ones that could succeed in exports. The empirical observations derived from the analysis of firm level survey data provide reasonable support to the main arguments.     

The Political Economy of Tanzania: Decline and Recovery,Edited by Michael Lofchie,Philadelphia: University of Pennsylvania Press, 2014, pp. 265, £39, ISBN 9780812245905

Each reform implies social and economic changes. After experiencing war and reunification, today Vietnam is implementing a comprehensive and deep process of renovation (doi moi), but a revolution needs the support of the population to be successful. This article investigates whether the Vietnamese are supportive of some of the main features of a market economy. In particular the preferences for competition, ownership of firms (either private or public) and income inequality as an incentive to productivity are studied here. The data allow us to conclude that the doi moi is not at risk, but the population tend to contrast income inequality.     

How Responsive are Chinese Exports to Exchange Rate Changes? Evidence from Firm-level Data

This article examines the impact of exchange rate changes on Chinese firms’ decisions on export market entry and export share. Using a large dataset for Chinese firms in 2000–2006, we find that changes in exchange rate levels play a significant role on both export extensive and intensive margins of Chinese firms. Compared to studies using macro data, our firm-level analysis allows us to control for firm and industry heterogeneity. Firm size and location matter. We do not find a difference between foreign and domestic firms in responding to exchange rate changes. Industry heterogeneity is also found to be important.     

Market structure and performance of US multinationals in Brazil and Mexico

This paper presents the results of a regression analysis of the market structure determinants of profitability among the Brazilian and Mexican manufacturing affiliates of US multinational corporations. The study employs data on 206 firms derived from a special survey specifically designed to obtain detailed information on their market structure environments and performance characteristics. Our estimates confirm that seller concentration, product differentiation, and relative market share are three sources of market power of these firms. Despite the many economic and noneconomic differences between Brazil and Mexico, there are no systematic differences between the two in their underlying structure‐performance relationships.     

New Paths: Globalization in Historical Perspective

This essay argues that the historical–structural framework of analysis is still useful to describe the transformations generated by globalization in the underdeveloped countries, provided that it is employed with the subtlety needed to avoid reductionism. Globalization, in the same way as dependency, is nothing more than an unfolding of the capitalist system in today's historical conditions. The structural starting point conditions—but does not determine—the shape taken by economic and political processes. Political strategies for integrating into the global economy have a certain margin of autonomy. Still, the range of feasible strategies depends on factors that differ from country to country, such as the local capacity of income accumulation, the presence of foreign direct investment, the mix between nationally controlled production and production controlled by multinationals, the participation of the public sector in production, the capacity of the leadership, the prevailing ideologies, and so forth. In other words, there are alternative paths.