Coercive Assets? Foreign Direct Investment and the Use of Economic Sanctions

How does foreign direct investment (FDI) affect the use of economic coercion? This article argues that while FDI matters, the effect depends on the entry mode of the FDI. The economic interdependence created by FDI does not have a monotonic effect on economic statecraft because the relative costs incurred by economic disruption differ depending on the forms of foreign investment. In particular, the FDI that creates wholly-owned subsidiaries (for example, cross-border mergers and aquisitions) imposes greater costs to the sender's firms than cross-border joint ventures with local partners, while FDI through joint ventures incurs greater costs for the host than the home country and its firms. By utilizing US sanction episodes from the Threat and Imposition of Economic Sanctions (TIES) dataset, the empirical analysis supports the argument. The results show that economic sanctions are less likely to occur as the share of FDI through cross-border mergers and acquisitions increases.     

Conditional on Conditionality: IMF Program Design and Foreign Direct Investment

The article explores how International Monetary Fund (IMF) program design influences foreign direct investment inflows. The author argues that stricter IMF conditionality signals a program-participating government's commitment to economic reforms, as it incurs larger ex ante political cost and risks greater ex post political cost. Thus, the catalytic effect of an IMF program is conditional on conditionality: programs with stricter conditions catalyze more foreign direct investment than those with less stringent conditions. Empirical analysis of the IMF conditionality dataset supports the argument and shows that after accounting for IMF program participation, the more structural conditions included in an IMF program, the more foreign direct investment flows into the country.     

Retrospection and Perspective of Foreign Investment Legislation in China (1979–2009)

Thirty years have passed for foreign investment legislation in China since the promulgation of the first foreign investment law in 1979. The remarkable achievements in the past 30 years under the China’s reform and open policy have benefited from introduction of foreign investment to a large extent as the result of foreign investment legislation and its changes. This paper starts with a retrospection of foreign investment legislation in China since 1979, followed by a discussion on the features and motives of changes in such legislation, and makes conclusions on the experience and lessons from the legislation, which will be conducive to further improvement of foreign investment legislation in China.     

The ASEAN-China Investment Agreement: A regionalization of China��s BITs

This paper analyzes the provisions of the Agreement on Investment of the Framework Agreement on Comprehensive Economic Cooperation between China and the Association of Southeast Asian Nations (the “ASEAN”), especially those on the scope of application, national treatment, Most Favored Nation (MFN) treatment, expropriation, and investor-state dispute resolution. The paper then compares the new agreement with other international investment agreements concluded by China or ASEAN. In comparison with existing Bilateral Investment Treaties (BITs) between China and individual ASEAN member states, there are significant changes in the Investment Agreement which provides a higher standard of investment protection. Such an investment protection is common in the new generation of Chinese BITs, which were signed by China since 2000. However, unlike some other investment agreements in free trade arrangements, the Investment Agreement rarely touches upon the investment liberalization, although the Framework Agreement of ASEAN-China FTA provides for creating a liberal investment regime. This paper concludes that negotiating an investment agreement in China’s Free Trade Agreements (FTAs) is regarded as an opportunity to update its old BITs, but China is not yet prepared to undertake investment liberalization in its FTAs. The ASEAN-China Investment Agreement is, rather, an extension of China’s BITs at the regional level, which is a demonstration of China’s growing influence at this level.     

Somaliland: An African Struggle for Nationhood and International Recognition

This paper investigates the benefits of Chinese companies to the Ugandan economy using data gathered during fieldwork in Kampala. Potential contributions to the Ugandan economy are analysed through a number of economic and managerial factors, and their determinants. This paper shows that potential benefits vary on the basis of sector, investment size and ECCO registration. The potential harm caused by one sector in particular is indicated. The paper presents recommendations regarding how potential benefits can be maximised and harm reduced. Given the increased presence of Chinese enterprises in Africa, these findings are relevant to African policymakers and academics.     

国际投资仲裁中最惠国条款的适用和管辖权的新发展

国际投资仲裁中某一投资条约规定的最惠国条款能否延伸适用于其他投资条约规定的仲裁程序是近年来的一个热门话题,仲裁裁决的实践给出了两种完全不同的答案,并且依据《维也纳条约法公约》对有关条款进行解释几乎是所有仲裁庭必做的工作.但是近两年的裁决似乎有一种将最惠国条款扩大适用于仲裁程序的趋势,尽管不同仲裁庭甚至同一仲裁庭的不同仲裁员对于同一问题可能会有不同的观点.我国签订的投资条约应当明确最惠国条款和仲裁程序的适用范围,以及规定条约不溯及既往原则等.     

Chinese and Japanese investment in Southeast and South Asia: case studies of the electronics and automobile industries

Abstract

This article uses extensive fieldwork data to focus on the question of how Chinese and Japanese companies are competing in neighboring countries of Asia, and what economic forces will shape their future growth in the region. It begins by briefly discussing the history of Chinese and Japanese investment in the South and Southeast Asian regions. It traces the development of Japanese overseas investment policies, as well as China's more recent ‘Going Out’ government program to encourage overseas flows of capital. It then builds on prior political economy work as it uses case study focuses, with primary data based on the author's fieldwork research in several nations of Southeast Asia and in India, of the two key sectors of automobiles and electronics. It compares and contrasts the investment strategies of companies from each country, as well as the successes and failures of investments in the industries. It finds that Japanese companies’ advantages lie in industries utilizing advanced technology and management skills. Though the Japanese continue to lead in many areas, including automobiles, they have begun to face competition and potentially reduced profits in vital manufacturing areas. Meanwhile, Chinese overseas companies have made significant advances in the consumer electronics sector, using low prices and good quality, though overseas automobile investments have gained little traction. The article concludes that, if the Chinese can improve their product quality, capitalize on improving managerial skills and a deeper level of experience in the region, and establish brands they can sell with reliable distribution networks, Japanese companies could face losses to their Asian neighbor in these important parts of the continent they have dominated for decades.     

DISCUSSION - Agricultural Policy Reform and Rural Livelihoods in Central Mexico

This contribution examines the impact of profound changes to agricultural policy implemented since 1988 on the livelihoods of Mexico's rural population. Detailed studies in four villages show that rural incomes are very unevenly distributed within communities leaving half of households in poverty. During the last decade key factors affecting village economies have been international and national, rather than specific changes to farm policy. Most changes have been to the detriment of the communities studied, but peasant households have adapted and survived, at a price. If the worst fears about the consequences of economic liberalisation have not been realised, neither have the hopes. Depressed markets for basic goods and services have limited the growth of the rural economy. Private investment and provision of services have not been stimulated.     

Post-socialist China: Labour relations in Korean-managed factories

Abstract

How are labour relations practiced in Korean-managed factories in China? It is often said that labour relations in Korean transnational factories are abusive, even despotic. In this article, I argue that the disciplinary nature of labour relations in Korean factories in China is more complex and so multi-dimensional that they cannot be characterised as a simple economic matter of labour exploitation. These relations entail hierarchical segregation, normalising workers' behaviour through fines and salary reductions, personal degradation and dissimilar cultural practices.     

Innovation and growth in traditional agriculture of the lower Volta,Ghana

This article addresses the important question of whether foreign direct investment enhances economic growth and labour productivity in Mexico, both from a theoretical and empirical perspective. After briefly reviewing the Mexican experience with net FDI inflows during the 1990s, the article presents a simple endogenous growth model which explicitly incorporates any positive (negative) externalities generated by additions to the foreign capital stock. Using cointegration analysis, the article estimates a dynamic labour productivity function for the 1960-95 period that includes the impact of the growth rate in the stocks of both private and foreign capital (as opposed to the flows) and the economically active population (EAP) (rather than the rate of population growth). The error correction model (ECM) estimates suggest that increases in both private ad (lagged) foreign investment spending, as well as the rate of growth in exports, have a positive and economically significant effect on the rate of labour productivity growth. In addition, the results show that increases in the EAP have a negative and statistically significant effect on the rate of labour productivity growth, while changes in the government consumption variable have a negative but marginally significant impact. The error correction terms of the estimated models are negative and statistically significant, thus suggesting that deviations of actual labour productivity growth from its long-run value are corrected in subsequent periods. Finally the article generates historical simulations from the estimated ECM's and offers some policy recommendations to enhance the positive externalities associated with FDI inflows.