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This study focuses on the impact of foreign direct investment (FDI) on local firms in host economies. We examine both backward and forward linkages and their effects on domestic firms. Data collection was undertaken over a three-year period whereby qualitative in-depth interviews were carried out with senior managers in UK headquarters, subsidiaries and ‘linked’ local firms in order to facilitate a multi-perspective approach to examining this topic. Results indicate that linkages do exist, contrary to earlier belief. The main factors which facilitate linkage formation were found to be subsidiary-related variables, mainly the mode of entry into the local market, subsidiary autonomy, level of embeddedness and subsidiary role. It was also found that government regulation and policy had some impact on the formation of linkages. Over time the impact on local firms was found to be positive with increased employment, productivity and significant upgrading of skills and competencies. The key contribution of this chapter is to extend the literature on linkages to consider services while developing a conceptual framework in this area. Overall, our study confirms the importance of the subsidiary in linkage formation and also shows how the externalities occurring from linkage formation in the service sector may benefit local firms and subsequently aid local economic development as a whole.

We have used the Michigan computable general equilibrium (CGE) model of World Production and Trade to calculate the aggregate welfare and sectoral employment effects of the menu of U.S.–Japan trade policies. The menu of policies encompasses the various preferential U.S. and Japan bilateral and regional free trade agreements (FTAs) negotiated and in process, unilateral removal of existing trade barriers by the two countries, and global (multilateral) free trade. The U.S. preferential agreements include the FTAs approved by the U.S. Congress with Chile and Singapore in 2003, those signed with Central America, Australia, and Morocco and awaiting Congressional approval in 2004, and prospective FTAs with the Southern African Customs Union (SACU), Thailand, and the Free Trade Area of the Americas (FTAA). The Japanese preferential agreements include the bilateral FTA with Singapore signed in 2002 and prospective FTAs with Chile, Indonesia, Korea, Malaysia, Mexico, Philippines, and Thailand. The welfare impacts of the FTAs on the United States and Japan are shown to be rather small in absolute and relative terms. The sectoral employment effects are also generally small in the United States and Japan, but vary across the individual sectors depending on the patterns of the bilateral liberalization. The welfare effects on the FTA partner countries are mostly positive though generally small, but there are some indications of potentially disruptive employment shifts in some partner countries. There are indications of trade diversion and detrimental welfare effects on nonmember countries for some of the FTAs analyzed. Data limitations precluded analysis of the welfare effects of the different FTA rules of origin and other discriminatory arrangements.

In comparison with the welfare gains from the U.S. and Japan bilateral FTAs, the gains from both unilateral trade liberalization by the United States, Japan, and the FTA partners and global (multilateral) free trade are shown to be rather substantial and more uniformly positive for all countries in the global trading system. The U.S. and Japan FTAs are based on “hub” and “spoke” arrangements. We show that the spokes emanate out in different and often overlapping directions, suggesting that the complex of bilateral FTAs may create distortions of the global trading system.

In this chapter, we document the growing importance of FDI from BRIC countries in relation to FDI from both developed and developing countries and investigate the types of firms that are responsible for BRIC FDI.

We follow a two-step empirical approach. First, we provide macro evidence on FDI from BRIC countries. We use UNCTAD data to highlight the patterns of FDI flows and stocks. Second, we provide firm-level evidence on FDI. Using ORBIS data, we elaborate a rich taxonomy of FDI that accounts for the decision to invest abroad and for the location, ownership, and number of foreign subsidiaries. Thus, we characterize BRIC multinationals’ involvement in FDI and examine the relationship between FDI and performance at the firm level.

We unveil new facts about BRIC multinationals. BRIC multinationals are in the minority in their home countries, but they outperform domestic enterprises. Within the group of BRIC investors, those firms that invest in developing countries, that operate in joint ventures, or that have more than five foreign subsidiaries are in the minority, but they outperform those firms that select other FDI strategies.

Our estimates document a positive and robust correlation between FDI and performance; however, the cross-sectional nature of our data does not permit a proper causality analysis.

Our work contributes to the International Economics literature on internationalization and firm performance as well as to the International Business literature on FDI from emerging economies. With respect to the former, we innovate by studying the relation between FDI strategies and firm performance. In relation to the latter, we innovate by introducing firm-level data and a cross-country approach that lets us illustrate the roles and features of FDI from BRIC countries.

Purpose – Bicycle riding provides a sustainable and affordable solution to many of the significant problems associated with motorised transport and physical inactivity. The provision of infrastructure plays an important role in encouraging people to begin and subsequently continue to ride bicycles and to do so safely.

Methodology – This chapter describes different types of on- and off-road infrastructure and reviews studies of their effects on rider numbers and safety. In addition, it looks at the roles that end-of-trip facilities and bikeshare programs can play in contributing to bicycle use and general transport sustainability.

Findings – Infrastructure characteristics can influence both perceived and objective levels of safety. It is important to identify and avoid treatments that increase perceived safety but are actually less safe. The type of infrastructure needed or desired differs between current and potential riders and according to trip purpose. Well-designed marked bicycle lanes on roads can reduce crash rates. Safety at intersections can be improved by: advanced green lights for cyclists, short cuts for right-hand turns, brightly coloured bicycle paths and advanced waiting positions for cyclists. Off-road facilities are generally safer, but intersections with roads must be carefully treated. Shared paths and footpaths are risky for older pedestrians (and older cyclists).

Implications – In many countries the provision of more infrastructure that increases the perceived safety of riding is needed to encourage cycling, particularly transport cycling and cycling by women.

Computable general equilibrium, or CGE, is a well-established numerical simulation technique for evaluating the economy-wide effects of changes in an economic system. It has become very widely used throughout the economics discipline, but is perhaps employed most frequently in the analysis of changes in international trade policy, where changes in tariffs and other taxes are often large and almost always involve multiple sectors and/or regions simultaneously. CGE methods, while certainly not without their limitations, have proved very effective at tracking the myriad of feedback and flow-through effects associated with new regional trading agreements and multilateral trade reforms, and have provided a consistent mechanism of analyzing the effects of changes in trade policy and related areas on a diverse range of economic outcomes.

To provide an overview of the Japanese publishing industry and to compare it with the publishing industry in the United Kingdom to see whether similarities and differences are industry- or culture-specific.

The paper provides detailed descriptions of the activities of the three main players in the Japanese publishing industry (publishers/editors; distributors; and booksellers). This tripartite structure of the industry encourages divide-and-rule mechanisms also found in the Japanese advertising industry. At the same time, a comparison with the UK publishing industry reveals certain structural differences between it and the Japanese publishing industry.

Three developments that have affected trade relations in the UK publishing industry (retail chains, literary agents, and mergers and acquisitions) do not have such great impact in Japan. In Japan, wholesale distributors are extremely powerful – something not noted, but possibly overlooked, by Thompson for the UK publishing industry. Comparative material between Japan and the United Kingdom, as well as across industries within Japan, suggest certain cultural influences prevail in the organization of Japanese publishing.

The Japanese publishing industry appears to operate under certain cultural constraints that inhibit cross-cultural comparison, while enabling cross-industry comparison within Japan. Why this is so needs further research. Can the parallels between advertising and publishing industries be extended to other forms of cultural production in Japan? In particular, the way in which money is circulated within an industry has an influential effect upon its structure.

A useful source of information for practitioners and academics interested in the functioning of a non-Western publishing industry. The paper also provides food for thought for those interested in trying to better the organization of publishing in Japan and/or the United Kingdom.

A hitherto undocumented comparative study in English of the Japanese publishing industry.

Purpose – This chapter examines the extent to which public support for internationalization can be considered as a determinant of foreign direct investment (FDI).

Design/methodology/approach – The chapter examines the traditional determinants of FDI and the capability-building argument; and augments this by testing a set of public support measures as complement of the firm's internal needs, using a probit model.

Findings – The chapter shows that a special theory is clearly required to explain the particular circumstances of the use of public support for internationalization activities. However, the received theory relying on capability-building argument performs well.

Practical implications – The importance of specific characteristics related to competencies and the use of certain types of public support that improve competencies lead us to consider that public support matters for capability-building. Despite this issue, the analysis of the FDI determinants can be explained by standard theory. However, the impact of public policies on FDI suggests new models capable of capturing the behaviour of foreign direct investors in presence of public incentives.

Originality/value – This research provides useful information to understand the role of intrinsic characteristics of the firms and how they bridge their internal gaps with external support in carrying out demanding activities. External support provides a good test of the general theory of FDI, and a special theory nested within this gives a great deal of insight into current issues of FDI in the link between the home-country government and the firm's needs. This study goes beyond the traditional analysis of the effects of public support on exports. It uses a uniquely rich data set to evaluate the importance of public support as FDI determinant.

This paper examines the role of firm capabilities, psychic distance and choice of country risk variables in the entry mode decision between developed and emerging countries. The conceptual model extends previous studies built on gravity models by considering the potential effect of colonial ties on the entry mode. The empirical test applies an ordered logit model on a survey sample of 462 Portuguese firms. A subsample of 143 firms with internationalisation in the former Portuguese colonies was rerun to be compared with the total sample results. The findings suggest that firm capabilities maintain their importance in the presence of colonial ties, whereas psychic distance and perceived risk seem to be distorted or absent from the decision process of the market entry.