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The purpose of this paper is to investigate the impact of foreign capital shifts on economic activities and asset prices in South Korea.

The authors in this paper apply the Bayesian threshold vector autoregressive (TVAR) model to estimate the regimes of large and low inflows of foreign capital. Then, structural impulse-response analysis is used to check whether the responses of the variables differ across the estimated regimes. The model is estimated using quarterly data of foreign capital inflows, gross domestic product (GDP), consumer price index, credit to the private non-financial sector, real effective exchange rate (REER), stock returns and house prices.

The main findings suggest that large inflows of gross foreign capital, foreign direct investments (FDI) and foreign portfolio investments (FPI) are ineffective to boost economic growth, but large inflows of other foreign investments (OFIs) significantly contribute to GDP. The decreases in the foreign capital inflows are associated with larger depreciation of REER. The large inflows of gross foreign capital, FDI and OFIs are associated with further expansion of credit supply to private non-financial sectors.

The policy implications of foreign capital inflows are of particular importance to all the emerging markets alike. However, the empirical analysis is limited to the case of South Korea due to various reasons. The experience with international capital inflows among emerging markets is heterogeneous. Therefore, it would be better to take each case of emerging market individually. In addition, TVAR analysis requires a long data sample, which unfortunately is not available for most of the emerging markets.

The foreign capital inflows are shown to be procyclical and notoriously volatile in many studies. Nevertheless, this topic has commonly been studied using linear VAR models, which do not properly deal with the cyclical characteristics of foreign capital inflows. This study attempts to resolve these methodological limitations by examining a non-linear VAR model that is capable of capturing the structural breaks associated with the cyclical behaviors of foreign capital inflows.

We compare environmental impacts associated with incoming foreign direct investment versus domestic capital in China. We use aggregate data on Chinese provinces’ economic and pollution indicators to explore the effects of the financial origin of fixed capital. Our simultaneous models consider three prime channels through which these effects work: economic scale, sectoral composition, and pollution intensity. Results show that emissions associated with foreign financed capital are lower than with domestically financed capital for some but not all of the considered types of pollution.

This paper investigates the impact of foreign aid on foreign investment when foreign aid is used to finance a public consumption good. By formulating and analyzing a three-good general equilibrium model, we show that such foreign aid could crowd out foreign investment, given a factor intensity condition.

The purpose of this paper is to study the impact of large inflow of foreign workers on the Singapore manufacturing productivity using a panel data at the disaggregated industry level from 1998 to 2008. The results indicate that foreign workers do make productive contribution to manufacturing productivity, but it is much lower as compared to local workers. However, the author observe the declining capital-labour ratio with the increase in the flow of foreign workers. This is expected to have direct impact on the competitiveness of the manufacturing in the export market. Since new technologies are embodied in new capital investment, the declining capital-labour ratio indicates that workers might be producing output with less technology-intensive capital. Conversely, local workers are more productive with high capital investment, indicating that local workers are more skilled and hence there is more complementarity between capital investments and local human capital.

The author implement a panel estimation of disaggregated industry level data of Singapore manufacturing from 1998 to 2008. The author use GMM estimation to control for any endogeneity issues in the estimation.

The results indicate that foreign workers do make productive contribution to manufacturing productivity; but it is much lower as compared to local workers. However; the author observe the declining capital-labour ratio with the increase in the flow of foreign workers.

The data for foreign workers at the disaggregated level is not publically available and this is given for this research purpose. The data for foreign workers is limited as it does not have by educational levels.

This is the first paper to study impact of foreign workers on manufacturing sector at a disaggregated panel data. There are important policy implications for managing foreign workers and achieving sustainable growth for the Singapore economy.

The welfare and social impacts of foreign workers on the Singapore economy is discussed. There is also the issue of policy calibration to balance the flow of foreign workers in the Singapore economy.

This is the first paper to study impact of foreign workers on manufacturing sector at a disaggregated panel data.

Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination of some legal aspects concerning MNEs, cyberspace and e‐commerce as the means of expression of the digital economy. The whole effort of the author is focused on the examination of various aspects of MNEs and their impact upon globalisation and vice versa and how and if we are moving towards a global digital economy.

The purpose of this paper is to investigate the effects of different kinds of merger and acquisitions (M&As) on domestic industries’ productivity in the form of technological change (TC) and efficiency change (EC) in the Brazilian extracting and processing industries.

Panel data analysis is employed to test the impact of different kinds of M&As spillovers on each component of productivity growth. The database contains data collected from 2007 to 2011 referring to the Brazilian industries. The estimation procedure involves two stages. The first stage decomposes TFP growth into EC and TC using a input-based Malmquist Productivity Index. In the second step, EC and TC indexes are used interchangeably as a dependent variable in panel data regressions on the M&As-spillover variables.

The results indicate a positive relationship between TC and M&As made by Brazilian majority capital acquiring foreign-held capital from a company established abroad, which is consistent with reverse spillover theory. They also suggest an inverse relationship between TC and M&A operations made by companies with foreign majority capital acquiring both Brazilian-held capital and foreign-held capital from a company established in Brazil. Only the sectors that are capable of increasing their productivity via TC are able to benefit from technology transfer.

This study is limited by the extent of data aggregation applied, which did not identify M&A transaction effects at the firm level. The available data do not allow isolating the effects of M&A processes on industry performance, given the co-occurrence of several factors that affect the performance of the industry. The study results imply that public managers must remain cognizant of the critical need to preserve and maximize competition between foreign and domestic firms while promoting a competitive environment that encourages the development of domestic technological capacities and skilled human capital.

M&A processes raise important issues with respect to organizational decisions and industrial policy. Studies of M&A transactions may be of fundamental importance to the expansion of healthy companies as they evolve through successive stages of growth and development. Liberalizing regulations to promote M&A transactions, and corporate market control is only justified if it promotes social welfare and economic development. Understanding the complexity and dynamics of this phenomenon and appreciating the heterogeneity of possible outcomes can lead to more relevant discussion regarding their contributions.

Results found in this study indicate the need for greater efforts to understand how M&A operations, especially those associated to foreign-held capital, interact with local owned enterprises in developing economies and what benefits can be achieved through public policy. M&A operations need to be well evaluated by considering the kinds and intensities of externalities they might generate, whether and how local firms can potentially internalize those gains, building up absorptive capacities in order to achieve productivity spillover gains.

This study not only offers a more accurate understanding of the diverse nature and effects of M&A operations, but also stimulates a more relevant public policy discussion related to both foreign direct investment and OFDI incentives in Brazil. The growing economic importance of the activities of developing emerging countries’ multinational enterprises is making governments more inclined to re-evaluate their political strategies. Indeed, governments are beginning to recognize that markets need to be created, monitored and nurtured.

Liability of foreignness (LOF) has been one of the central constructs in the field of international business and management. Over the past two decades, a significant body of theoretical and empirical research has accumulated, theorizing on the sources of these LOFs, investigating their magnitude, and prescribing approaches to mitigate these disadvantages. However, much of this research is almost exclusively related to firms expanding their products, services, and operations to other countries as part of their global expansion. The difficulties firms face in foreign product markets is just one dimension of the costs they can face in their attempts to secure resources abroad.

We expand the domain of the LOF construct to include liabilities faced by firms accessing foreign capital markets in light of the increasing integration of capital markets. We identify four sources of LOF in capital markets: regulatory costs, information costs, unfamiliarity costs, and costs arising out of cultural differences. Based on an extensive review of “home bias” in equity markets, we propose four strategies to erase the legitimacy deficits that firms encounter in foreign capital markets: bonding, signaling, adoption of business practices isomorphic with the host country, and certifications and endorsements by third parties. We also offer suggestions for operationalizing and measuring LOF in capital markets as well as several directions for advancing further research on LOF in the context of capital markets.

This chapter investigates a shock transmission path between a home country (a country where globalized banks’ headquarters are located) and a host country (Indonesia as the emerging market) through the lending channel of global banks’ local branches (i.e., the internal transfer channel). Using novel data of monthly individual foreign bank’s balance sheet in Indonesia, the author finds the evidence that shocks to a parent bank and a home economy are transmitted to a host economy through the foreign banks’ internal capital market. With the Indonesia banks’ capital injections and their difficulty in financing dollar funds without risk premiums since the 1998s crisis, the foreign banks’ dollar lending in Indonesia is a good showcase of internal capital markets. A change in a home stock market index and industrial production appears to have a negative effect on growth rates in foreign currency loans of foreign banks in the host market. On the other hand, high growth rates in the parent bank’s stock price in the home market lead to an increase in foreign banks’ US dollar lending in the host country. This effect does not appear in local currency lending because limited hedging instruments against foreign exchange risk results in immobility of bank capital in the local currency.