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1 – 10 of 37The purpose of this paper is to explore to what extent the economic interdependence can affect the likelihood of conflict between States. Specially, over the past few decades…
Abstract
Purpose
The purpose of this paper is to explore to what extent the economic interdependence can affect the likelihood of conflict between States. Specially, over the past few decades, there has been a huge interest in the relationship between economic interdependence and political conflict. Liberals argue that economic interdependence lowers the possibility of war by increasing the weight of trading over the alternative of aggression; interdependent states would rather trade than invade; realists dismiss the liberal argument, arguing that high interdependence increases rather than decreases the probability of war. In anarchy, states must constantly worry about their security.
Design/methodology/approach
This paper highlights the content and level of economic interdependence between China and the USA since the beginning of China’s economic reform in 1979 and examines the impact of economic interdependence between them on their relationship toward Taiwan since 1995 and the probability of conflict.
Findings
Economic interdependence is proved to significantly decrease the onset of conflict between the two parties. This can be shown by comparing the number of armed conflicts during the pre-interdependence period to the number of armed conflicts after the economic interdependence there was an overage of 0.79 militarized interstate disputes (MIDs)/year, compared to 0.26 MIDs/year following China’s economic reforms; also, the length of the hostilities was longer during the pre-interdependence period (with an average of 11.13 months versus 5.33 months).
Originality/Value
This means that economic interdependence does not completely prevent the outbreak of international conflicts, but it also plays a major role in influencing the conflict in terms of the conflict’s intensity, the use of armed force and the number of conflicts that occur between the economic interdependence states.
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Loan Quynh Thi Nguyen and Rizwan Ahmed
This study investigates the impact of global economic sanctions on foreign direct investment (FDI).
Abstract
Purpose
This study investigates the impact of global economic sanctions on foreign direct investment (FDI).
Design/methodology/approach
Data were gathered from several sources, including the United Nations Conference on Trade and Development, the Global Sanction and the World Bank database, to build a dataset that consists of 172 countries during the period 2003–2019. The panel ordinary least square with a fixed-effects estimator was exploited to achieve the research objective.
Findings
The research findings reveal that sanction exerts a detrimental effect on the total inflows of FDI and its components. Regarding different types of sanctions, while military and trade sanctions have little or even no impact on greenfield investment, they have more adverse and sizable effects on cross-border mergers and acquisitions (M&As). The authors further show that sanctions exert devastating influences through the infrastructure and economic development channels.
Practical implication
Overall, this study implies that a closer look at particular types of FDI is required when implementing policies as different types of FDI may be affected differently by changes in the economy, such as economic sanctions.
Originality/value
This paper is the first empirical study that critically investigates the impact of sanctions on the total inward FDI flows and its two components: greenfield investment and cross-border M&As. It then explores how the sanction–FDI nexus varies depending on several country-level economic factors to understand better how sanctions and different types of sanctions are related to international trade and relations.
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Abubakar Musah, Peter Kwasi Kodjie and Munkaila Abdulai
This paper examines the short- and long-run effects of foreign direct investment (FDI) on tax revenue in Ghana.
Abstract
Purpose
This paper examines the short- and long-run effects of foreign direct investment (FDI) on tax revenue in Ghana.
Design/methodology/approach
The paper adopts the autoregressive distributed lag approach to estimate FDI’s long-run and short-run effects on tax revenue. The study uses time-series data from 1983 to 2019 for Ghana, mainly obtained from The Bank of Ghana, the World Bank and the IMF.
Findings
The results show that, in the short-run, FDI has no significant effect on direct tax revenue and total tax revenue but significantly hurts indirect tax revenue. In the long run, however, the results show that FDI has significant positive effects on indirect tax revenue and total tax revenue but no significant effect on direct tax revenue.
Originality/value
Empirical studies often fail to analyse the short-run and long-run effects of FDI on tax revenue. This study contributes to the mixed literature by analysing the short-run and long-run effects of FDI on tax revenue in an emerging market context. Additionally, this study employs three tax revenue measures in analysing the nexus.
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Muhammad Iftikhar Ul Husnain, Arjunan Subramanian and Azad Haider
The empirical literature on climate change and agriculture does not adequately address the issue of potential endogeneity between climatic variables and agriculture, which makes…
Abstract
Purpose
The empirical literature on climate change and agriculture does not adequately address the issue of potential endogeneity between climatic variables and agriculture, which makes their estimates unreliable. This paper aims to investigate the relationships between climate change and agriculture and test the potential reverse causality and endogeneity of climatic variables to agriculture.
Design/methodology/approach
This study introduces a geographical instrument, longitude and latitude, for temperature to assess the impact of climate change on agriculture by estimating regression using IV-two-stage least squares method over annual panel data for 60 countries for the period of 1999-2011. The identification and F-statistic tests are used to choose and exclude the instrument. The inclusion of some control variables is supposed to reduce the omitted variable bias.
Findings
The study finds a negative relationship between temperature and agriculture. Surprisingly, the magnitude of the coefficient on temperature is mild, at least 20 per cent, as compared to previous studies, which may be because of the use of the instrumental variable (IV), which is also supported by an alternative robust measure when estimated across different regions.
Practical implications
The study provides strong implications for policymakers to confront climate change, which is an impending danger to agriculture. In designing effective policies and strategies, policymakers should focus not only on crop production but also on other agricultural activities such as livestock production and fisheries, in addition to national and international socio-economic and geopolitical dynamics.
Originality/value
This paper contributes to the growing literature in at least four aspects. First, empirical settings introduce an innovative geographical instrument, Second, it includes a wider set of control variables in the analysis. Third, it extends previous studies by involving agriculture value addition. Finally, the effects of temperature and precipitation on a single aggregate measure, agriculture value addition, are separately investigated.
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Abstract
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Based on the hypothesis of the environmental Kuznets curve (EKC), the purpose of this study is to investigate the relationship between environmental pollutants (as measured by CO2…
Abstract
Purpose
Based on the hypothesis of the environmental Kuznets curve (EKC), the purpose of this study is to investigate the relationship between environmental pollutants (as measured by CO2 emissions) and GDP for India, over the period 1980–2012. The presence of an inverted “U” shape relationship is examined while controlling for factors such as the degree of trade openness, foreign direct investment, oil prices, the legal system and industrialization.
Design/methodology/approach
To verify whether the EKC follows a linear, quadratic or polynomial form, autoregressive distributed lag (ARDL) bounds testing approach for cointegration with structural breaks is adopted. The annual time series data for carbon emissions (CO2), economic growth (GDP), industrial development (industrialization), foreign direct investment and trade openness have been obtained from World Development Indicators online database. Crude oil price (international price index) for the period is collected from the International Monetary Fund. Data for total petroleum consumption are collected from the US Energy Information Agency. Data for economic freedom variables are from the Fraser Institute's Economic Freedom Index's online database.
Findings
The findings support the existence of inverted U-shaped EKC in the short-run, but not in the long-run. A linear monotonic relationship has also been estimated in select model specifications. Additionally, trade openness has been estimated to reduce emissions in models, which incorporate FDI. Else, where significant, its impact on carbon emissions is adverse. A rise in fuel price leads to reduction in carbon emissions across model specifications. Further, the lower size of government degrades the environment both in the long-run and short-run.
Practical implications
Given the existence of the pollution haven hypothesis, wherein more trade and foreign direct investments cause environmental degradation, the paper proposes formulation of appropriate regulatory mechanisms that are environmentally friendly. Additionally, India's new economic policies, favoring liberalization, privatization and globalization, reinforces the need to strengthen environmental regulations.
Originality/value
Incorporation of economic freedom as measured by the “Size of Government” in the EKC model is unique. “Size of Government” deserves a special mention. The rationale for including this explanatory variable is to understand whether countries with lower government size are more polluting. After all, theory does suggest that goods and services, which have higher social cost vis-à-vis private cost, shall be overproduced in economies that adopt more market-friendly policies, necessitating government intervention. In the study, size of government is measured as per the definition and methodology adopted by Fraser Institute's Economic Freedom of the World Index.
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Beatriz Cuadrado-Ballesteros and Marco Bisogno
This study investigates the transparency of budgets by examining its relationship with financial sustainability, which is a central area of research in the public-sector context.
Abstract
Purpose
This study investigates the transparency of budgets by examining its relationship with financial sustainability, which is a central area of research in the public-sector context.
Design/methodology/approach
Referring to the public value framework, a large sample of 110 countries has been investigated, implementing econometric models where the dependent variable is the Open Budget Index (OBI), published by the International Budget Partnership (IBP), and the test variables are different indicators of financial sustainability.
Findings
The results that emerge from the analysis suggest that budget transparency could be positively associated with the financial sustainability of governments, beyond the traditional aims of enhancing citizens' trust and participation.
Originality/value
This research offers important insights for policy areas, suggesting that improving budget transparency could be beneficial for public administrations because of the positive association with financial sustainability.
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