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.     

Capital flows and financial stability: the mexican experience

This paper argues that capital inflows that are not well absorbed by the private sector will cause financial instability under a fixed exchange rate regime. Whether capital inflows, particularly portfolio inflows, are good or bad as perceived by the recipient emerging market depends on how they are allocated and used. They can, if absorbed properly, contribute to a reduction in the cost of capital and to domestic capital formation and economic growth. On the other hand, they can also flood the domestic market, build up official reserves, and appreciate the real exchange rate. Moreover, they are very sensitive to political and economic shocks. Empirical analysis of Mexico's recent experience reveals that the capital influx into Mexico in the past decade did not contribute much to capital formation and economic growth. Instead, they were to a large degree absorbed by official reserves and imports for consumption. Capital inflows were a major factor in Mexico's real exchange rate appreciation. Capital flows in Mexico are found to be adversely affected by U.S. interest rates.     

Monetary and Exchange Rate Policy in Colombia: Effects on the Real Exchange Rate in the 1990s

This article examines the causes and effects of the real exchange rate appreciation in Colombia during the 1990s. The substantial appreciation of the real exchange rate during the 1990s was an important factor contributing to the economic crisis of 1998-2000. While a number of Colombian economists have argued that the real appreciation was an equilibrating response to real shocks, such as rising fiscal deficits, petroleum discoveries, and increased productivity, this paper argues that nominal variables (including the nominal exchange rate, monetary policy and capital flows) also played an important role. These transitory shocks caused the real exchange rate to overshoot its long-run equilibrium, contributing to the recent economic crisis and the necessity for the large nominal depreciation of the peso in 1998-99.     

Aid,the Real Exchange Rate and Why Policy Matters: The Cases of Morocco and Tunisia

Abstract

Every form of foreign-exchange inflow, including aid, can potentially cause real-exchange rate appreciation, with adverse consequences for the production of tradables (‘Dutch Disease’). Whether it does so depends on the policy response to the inflow. This paper investigates the issue for Morocco and Tunisia, over 1980–2009. We find that aid led to a real appreciation in Morocco, but had no effect on Tunisia’s real exchange rate. This confirms the importance of the macroeconomic framework in which aid is provided, and the key role for infrastructure and other supply-side improvements in determining the final real-economy impact of aid and other inflows.     

Outward Foreign Direct Investment,Exporting and Firm-Level Performance in Sub-Saharan Africa

Abstract

We consider the relationship between how a firm serves foreign markets and performance, using survey data on manufacturing and services firms for African countries. Results for manufacturing industries indicate a clear productivity ordering with firms undertaking outward Foreign Direct Investment (FDI) performing best, followed by exporters and domestically oriented firms. Results for services firms are more nuanced, indicating that while exporters and firms undertaking outward FDI are more productive than domestically oriented firms, there is no significant difference in productivity between these two types of firms (some evidence suggests that the productivity of exporters is larger than that for firms undertaking outward FDI).     

Currency movements and international border crossings

It is well known that merchandise trade flows respond to exchange rate policy changes over time. This topic, known in the economics literature as the J-curve effect, has been the subject of numerous studies. Exchange rate policies also impact commuter traffic between international metropolitan areas, but there has been much less attention devoted to understanding the effects of currency valuation shifts on border crossings between nations such as the United States and Mexico. While there has been some research conducted with respect to employment impacts on annual crossing volumes, the analysis has been limited to static models. The research at hand attempts to partially fill this gap in the existing literature by examining the response in international commuter flows to exchange rate valuation shifts. In order to gain better appreciation of the temporal aspects of border crossing reactions to policy changes of this nature, all of the analysis is conducted within a dynamic framework.     

Utilizing FDI to Stay Ahead: The Case of Singapore

A country of 5 million people in 710?km², Singapore has built itself into an integral part of global markets with living standards that are among the highest in the world. The purpose of this article is to apply a capabilities-based approach to understand how a small, resource-scarce country dependent on global markets has done so well. The core of Singapore??s success has been the continuous updating and expanding of domestic social capabilities to meet the needs of foreign companies. Government policies were hypersensitive to providing conditions for foreign firms to be successful. Foreign firms investing in Singapore by now have helped close the income gap with advanced economies and are on the way to closing the innovation gap. Singapore demonstrates that with deliberate attention to building skills, institutions and infrastructure, it is possible for a small country to upgrade skills and to move up the production-value chain with primary reliance on foreign direct investment (FDI). Cultivation of private Singaporean firms has been secondary but may be the next step needed to sustain progress, both to respond to increased competition from China and others, and to build a knowledge-based economy.     

Unanticipated capital flows and the Mexican economy: An empirical investigation

This research explores the differential impact of unanticipated and anticipated foreign capital flows on Mexico's economy for the period 1965–85. If unanticipated flows cause appreciation of the real exchange rate and do not affect domestic expenditure, one can assume that the country's foreign exchange constraint is not binding. Based on empirical evidence, this hypothesis can be rejected. The implication is that Mexico's problems probably do not stem from overborrowing. Anticipated capital flows do affect private spending, but a negative coefficient suggests that the private sector has borne the brunt of post‐crisis adjustment. The results show that the Mexican government has dominated the expenditure of foreign loans throughout the period.     

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.     

Cao Yu’s Peking Man and Literary Evocations of the Family in Republican China

Abstract

Shanghai in the late nineteenth and early twentieth centuries was home to communities and musicians from all parts of the world. Among the over 20,000 Russians living there, a significant population of musicians contributed to the musical life of the city, particularly the Conservatory of Music founded in November 1927. This article reveals an overlooked phase of musical exchange between China and the West by 1) tracing the context and early development of the Conservatory; 2) identifying and discussing the activities of the Russian pedagogues (including Boris Zakharov, Vladimir Shushlin, and Sergei Aksakov amongst others) and their more notable Chinese students’ (including Li Delun, Ding Shande, Wu Leyi, and Yi Kaiji amongst others) reaction to them; 3) assessing the role that Russians played in the affairs of the Conservatory; and 4) demonstrating how Russian pedagogues influenced the development of Western classical music in China through their students’ notable achievements.     

American depositary receipts (ADRs) from Latin-America: an opportunity for American investors

American Depositary Receipts (ADRs), based on stocks of firms registered in Latin-America, are rapidly gaining popularity among investors in the U.S. ADRs serve a dual purpose. First, they enable Latin firms to raise capital in the US without having to meet cumbersome security listing requirements. Second, they enable US investors to benefit from possible high returns in Latin-American securities without the inconvenience of having to deal with foreign currencies or the inconvenience of buying and selling in foreign stock markets. In academic literature, there has never been a thorough examination of the nature of ADRs issued by Latin-American firms. This study presents an overview of the patterns and trends of ADR utilization within the Latin-American region: by country; by industry; by security exchange; and, by “sponsorship”, the role played by the issuing company.     

Exchange Rate Pass-through to Import Prices,and Monetary Policy in South Africa

Abstract

Understanding how import prices adjust to exchange rates helps anticipate inflation effects and monetary policy responses. This article examines exchange rate pass-through to the monthly import price index in South Africa during 1980–2009. Short-horizon pass-through estimates are calculated using both single equation equilibrium correction models and systems (Johansen) models, controlling for both domestic and foreign costs. Average pass-through is incomplete at about 50 per cent within a year and 30 per cent in six months, and in the long-run, from the Johansen analysis including feedback effects, is about 55 per cent. There is evidence of slower pass-through under inflation targeting; pass-through is found to decline with recent exchange rate volatility and there is evidence for asymmetry, with greater pass-through occurring for small appreciations.     

Technology Acquisition and Innovation in the Developing World: Wind Turbine Development in China and India

Although China and India rely on coal to fuel most of their electricity generation, both countries are also home to burgeoning wind power industries. India currently leads the developing world in manufacturing utility-scale wind turbines, and China is close behind. This study examines the technology development strategies that have been pursued by the companies Suzlon and Goldwind, India and China’s leading wind turbine manufacturers. While the institutional and other barriers present in large, developing countries such as China and India certainly challenge any simplistic notions of energy leapfrogging, an examination of wind turbine development in these countries has shown that substantial technical advances are possible in a relatively short time. While both Suzlon and Goldwind pursued similar licensing arrangements to acquire basic technical knowledge, Goldwind’s technology development model lacks Suzlon’s network of strategically positioned global subsidiaries that contribute to its base of industry knowledge and technical capacity. This examination of how two leading developing-country firms have acquired and assimilated advanced technologies provides crucial insights into facilitating international technology transfers, which will be an important component of any technological leapfrogging strategy to achieve lower greenhouse gas emissions in the developing world.     

The economic impact of a foreign debt bail‐out for private firms in Ecuador

In this article the effect of Ecuador's general foreign debt conversion programme on private firms' financial position is analysed. The programme, called the Sucretización, was similar to programmes implemented by many heavily indebted countries after the debt crisis began. I concentrate on the Sucretización's implicit transfer from the government to firms, arguing that it was large, but unnecessary. Very few firms would have gone bankrupt because of their devaluation‐induced foreign exchange losses. What is more, I find no evidence that firms receiving these transfers used them to strengthen their balance sheets.     

Real and nominal determinants of real exchange rates in Latin America: Short-run dynamics and long-run equilibrium

This article analyses the factors that determine the long-run real exchange rate in Argentina, Colombia and Mexico, distinguishing between real and nominal determinants. Cointegration analysis is utilised to establish that the real exchange rate has an equilibrium relationship with real variables (the terms of trade, capital flows, productivity, and government share of GDP) which excludes nominal variables (nominal exchange rate, money) and central bank intervention. Variance decompositions reveal that among the real variables that determine the real exchange rate, the terms of trade and productivity explain much of the variation in the real exchange rates. When nominal variables are included in the model, the nominal exchange rate accounts for most of the variation in the real exchange rates of all three countries. The impulse response functions are broadly consistent with theoretical predictions and shocks to the nominal variables have only transitory effects on the real exchange rate.     

Minority entrepreneurs and firm performance in sub‐Saharan Africa

This study focuses on the role of entrepreneurs in the private sector in sub‐Saharan Africa. Using data from the Regional Program on Enterprise Development (RPED) and controlling for various factors, our analysis compares growth rates of indigenously owned African firms with firms owned by entrepreneurs of Asian or European descent, in Kenya, Zambia, Zimbabwe, and Tanzania. We find that after controlling for firm size and age, various entrepreneurial characteristics, and sector and country differences, minority (or non‐indigenous) entrepreneur firms start out larger and grow significantly faster than indigenously‐owned African firms. Our results are consistent with theories that argue that informational and financial networks created by minority entrepreneurs provide access to credit, information, and technology for members of these networks. We also find that within indigenously‐owned African firms, entrepreneurs with secondary and/or university education realise a higher rate of growth; access to education presumably enables indigenous African entrepreneurs to develop managerial skills that serve as a substitute for the informational and financial networks created by minority entrepreneurs.     

Modern dependency: A “crucial case” study of Brazilian government policy in the minicomputer industry

Conclusion Brazil’s minicomputer industry has become dependent on government import policy, government financing and domestic private business. The growth in the domestic component of this industry between 1974 and 1981 suggests that incremental government policies (short of a transformation to socialism) can alter Brazil’s level of dependency on MNCs, concerning at least one industry–the minicomputer industry. Therefore, the Brazilian minicomputer model advances the dependency question from “what is dependency and why does it exist?” to “how can one improve its position in a dependency situation?” Relative success in the minicomputer industry cannot be construed as victory over Brazil’s dependency on MNCs, which may alter its economic and political relationship with other countries. Instead, it illustrates a viable model for improving a developing country’s dependency situation. This infant industry strategy is given more credence due to the rekindling of protectionism by all nations. A definitive evaluation of Brazil’s minicomputer policies cannot be rendered until this industry has progressed in its growth cycle. As indicated earlier, signs of both success and failure are evident. In addition, several events may restrict growth in Brazilian minicomputer firms: (1) restriction of funds due to the enormous foreign debt, (2) corrupt or inappropriate management, (3) unsuccessful transfer of technology, or (4) intrusion of smaller and less expensive microcomputers into uses now served by minicomputers. Thus, how effectively Brazil can get out of its overall dependency trap will depend not only on how well it can apply the minicomputer industry model to other industries, of course, given that the model does succeed in the long–run. But it will also depend on how well Brazil can deal with the problems listed above. 0259 0255 V 2     

China–CEE Trade,Investment and Politics

Abstract

The growing and intensifying cooperation between China and 16 Central and Eastern European (CEE) countries has generated extensive criticism by and concerns among EU institutions and Western European member states of the Union. According to diplomatic presumptions, China aims to gain political leverage in exchange for economic benefits in the EU through its CEE members. The following article attempts to evaluate the correlation between the quality of bilateral political relations and economic relations of China and CEE countries in order to draw conclusions on the importance or, on the contrary, the irrelevance of Chinese activity in the region.     

The Influence of Emotional Labor and Emotional Intelligence on Job Performance: Does Ownership Type Matter? A Comparison of Public and Private Organizations in China

ABSTRACT

Given the limited knowledge about the effect of contextual factors of organizational ownership types on emotional labor, this research addresses two main questions: (1) whether emotional labor varies among organizations with different ownership types; and (2) whether emotional labor and emotional intelligence relate to job performance in different ways in public and private organizations. This paper examines the research questions with 306 self-report questionnaires from the public sector, domestic privately-owned enterprises and foreign-invested firms in China. Significant differences were found in the emotional labor reported in public and private organizations. Overall, emotional labor was found to have a significant effect on in-role performance, and emotional intelligence moderated the link between emotional labor and job performance in public organizations, but not in private organizations.     

Examining the EU-China Relationship in the Aftermath of the Economic Crisis

ABSTRACT

This article examines how, if at all, the changed economic order in the aftermath of the economic crisis in 2008 has shaped the relationship between the EU and China. Theoretically, two prevalent opposing narratives in the public discourse are presented and linked to two crude versions of mercantilism and economic liberalism in the scholarly literature. The mercantilist line of reasoning posits that China will gain more political weight with its increasing economic strength. The economic liberal line of reasoning suggests that China’s economic weight does not translate into political power. These two opposing theoretical claims are examined by process tracing two most likely cases. This article concludes that despite its increased economic strength, China has enjoyed limited success in persuading the EU and its member states to change their position(s) on policy areas involving strategic interests.