Russian Fiscal Federalism under Stress: Federal Support of Regions during the Global Financial Crisis

A former high-ranking Russian Ministry of Finance official examines the consequences of financial support extended to regions by the Russian Federation government during the global financial crisis in 2008-2010, for the purpose of exploring its potential impact on the regions' financial health in 2011-2012. The paper is structured around an analysis of the three major dimensions of that support: (1) legal and administrative actions undertaken at the federal level to reduce financial pressure on the regions; (2) increased issuance of intergovernmental fiscal grants in 2009; and (3) loans granted to the regions from the federal budget. The author argues that the financial crisis has provided a "stress test" that is useful in assessing the efficiency and flexibility of the Russian system of fiscal federalism.     

The Location Choice of Foreign Direct Investment Within Turkey: An Empirical Analysis

This paper investigates the location choice of foreign direct investment (FDI) in Turkey over the period 1996–2003. Using FDI data at the provincial level and negative binomial model, the empirical evidence confirms that agglomeration economies and information costs are the most important determinants of FDI location in Turkey. Specifically, both foreign and domestic agglomerations and in particular urbanization economies strongly affect the location decision of foreign investors. The results also suggest that foreign investors are attracted to provinces with fast growing market, more educated labour force, high density of road network, greater public investment, milder climate, larger area and better quality of life. On the other hand, the empirical findings show that wage, productivity, labour availability, unionization, sea and air transportation, free zones and instability have no significant impacts on the location decision.     

Bank Depositor Behavior in Russia in the Aftermath of Financial Crisis

An international team of economists examines the factors influencing the behavior of Russian depositors in the immediate aftermath of that country's 1998 financial crisis, drawing upon two largely unutilized data sources—data from the Russian state savings bank Sberbank and a November 1998 household survey. After first reviewing the evolution of the household deposit market during the 1990s, they explore regional variations in net withdrawals from Sberbank branches during the period August-October 1998 as well as identify characteristics of individual/household depositors making (or attempting to make) such withdrawals. More severe runs on Sberbank outlets are found to be associated with more affluent and entrepreneurial regions, regions of more youthful and less educated population closer to Moscow, and areas with greater media freedom. Subsequent public opinion survey analysis of the socioeconomic correlates of runs on all Russian banks during the 1998 crisis reveals some interesting differences (in the effects of education in particular) on the propensity to successfully withdraw deposits.     

Mapping cultural policy in Portugal: From incentives to crisis

Abstract

Taking into account the course of cultural policy in democratic Portugal, and against the backdrop of the international crisis of 2008 and the sovereign debt crisis of 2011, this article seeks to interpret recent changes in the cultural sector in Portugal. Using both qualitative and quantitative methods it focuses on three main aspects: institutionalisation of democratic cultural policy; government funding; cultural organizations and facilities. The 2008 crisis put an end to a period in which investment tended to grow. We place Portugal in the broader European context, concluding that the Portuguese cultural scene may once again diverge from that of other European countries.     

Promoting Investment in Russia's Regions

The paper, based on extensive field interviews in 2009, examines regional investment policies in Russia, focusing on the Novgorod and Kaluga regions. The author, a Finland-based geographer specializing in Russia's economy, argues that some Russian regions (including the ones not well endowed with natural resources) can succeed in promoting investments despite the generally unfavorable economic environment. He also questions the ability of so-called regional "growth machines" to be sustained over the long term, by contrasting the cases of Novgorod and Kaluga, whereby Novgorod represents a region transformed from a leader in promoting investment into a corrupted autarchic regime. Kaluga, on the other hand, is presented as a successful region on the basis of an innovative but somewhat risky investment promotion strategy.     

Agglomeration economies and the location of foreign direct investment: A meta‐analysis

This paper undertakes a meta‐analysis of the effect of agglomeration economies on foreign direct investment (FDI) location. It finds strong differences in these economies arising from both measurement and study‐specific characteristics. Economies generated from domestic rather than foreign activity have the strongest effects on FDI, with the latter only significant if related to the home country of the investor. Support is also found for studies that identify different sources of agglomeration economies, although this is largely underexplored in the empirical literature. The average agglomeration economies estimate is not influenced by publication bias and indicates genuine effects for agglomeration economies on FDI location choice.     

Foreign direct investment and international trade: evidence from the US and Japan

This paper examines the question of whether foreign direct investment(FDI) creates or replaces international trade. Theoretical andempirical studies in the past have shown that FDI tends to replacetrade, but more recent evidence suggests the opposite, thatis, FDI creates and complements trade. We analyse the outwardinvestment of Japan and the United States to 29 and 32 countriesrespectively for the period 1996 to 1999. Our analysis indicatesthat trade creating effect dominates on the whole, and thatthis effect also varies significantly across countries.     

From Pristina to Tskhinvali: the legacy of Operation Allied Force in Russia's relations with the West

This article reviews the main developments in the Kosovo crisis in the context of relations between Russia and NATO/the West. For Moscow, Operation Allied Force constituted a flagrant breach of international law, a threat to post-Cold War European security governance and a challenge to Russia's status in the international order. Official Russian interpretations, heavily influenced by domestic politics, reflect a perception among Russia's political elite that, rather than upholding liberal democratic values, NATO's intervention constituted a selective defence of the interests of the leading western powers.
Such views have influenced Moscow's position on the thorny question of Kosovo's independence and Russia's more assertive foreign and security policy in the recent period, not least in the conflict over South Ossetia in August 2008. Ultimately, Operation Allied Force resulted in the Russian governing elite reassessing its views on statehood, the international order and the norms underpinning international society.     

ASSESSING THE REGIONAL IMPACT OF GRANTS ON FDI LOCATION: EVIDENCE FROM U.K. REGIONAL POLICY, 1985–2005

ABSTRACT The paper implements a methodology for assessing the regional impact of investment grants on foreign direct investment (FDI) location, taking data for U.K. regional policy over the period 1985–2005. Using a Generalized Methods of Moments estimator it finds that each £25 million of grant changes the regional location of about six inward FDI projects. On average, projects have 150 jobs and each job diverted costs £27,500 (1995 prices). It also finds that the size of the area designated for grants has a positive location effect. The effect is small in relation to the overall scale of FDI, which may explain the weak grant effect found in recent plant‐based location studies.     

Exchange Rate Policy and the Central and East European Financial Crisis

A prominent specialist on economic developments in the former Soviet Union and Central and Eastern European (CEE) countries examines the ways in which the global financial crisis of 2008-2010 has impacted the economies of the 10 new eastern member states of the European Union (CEE-10). The author assesses the multiple preconditions of the crisis (e.g., excessive current account deficits, large foreign debt, inadequate currency reserves, immense credit expansion, rising inflation and real estate prices) as well as the rapid financial adjustments that had to be undertaken to overcome it (e.g., current account rebalancing, reducing budget deficits, pension and fiscal reform). He devotes considerable attention to the key issue of how the differences in exchange rate policies in these countries affected their abilities to respond to the crisis and outlines measures that should be implemented to enhance the crisis management capability of non-eurozone states relying on currency boards or floating exchange rates.     

中国外商投资区位选择的时空格局与影响因素

以中国274个地市为样本,引入空间分析和计量模型等方法,分析外资分布特点及影响因素,结果表明：①中国目前尚不存在大规模外资"逃离"现象,外资利用总量在波动中上升,结构趋于优化。②空间上由集聚集中趋向分散均衡,呈"北进西移"态势,东部高度集中,中西部发展较快。外资高值集聚区逐渐向北推进,低值区向西南收缩;③劳动力成本、市场规模、专业化经济、FDI累积、市场化水平和开放度均对外资有正向作用。其中,传统因素对外资的吸引作用正逐渐下降,FDI累积的作用上升明显,集聚对外资分布作用显著。从不同区域看,集聚经济和FDI累积效应等新经济地理因素在东部外资区位选择中受到更多的关注,而劳动力成本、基础设施、开放水平等传统因素在中西部吸引外资中作用更大。④中国应遵循因地制宜、因时制宜的原则制定差异化的外资政策。     

Migration and the location of MNE activities: Evidence from Italian provinces

We investigate the migration-inward foreign direct investment (FDI) nexus in narrow geographies. A novel two-stage empirical strategy allows us to investigate the role of migration as a determinant of multinational enterprises (MNEs) location choices and unpick heterogeneity in foreign investors' preferences towards the presence of migrants in the host location. This allows us to shed light on the relative importance of the underlying mechanisms linking migration and inward FDI. Relying on 1113 greenfield investments by 895 MNEs in Italian NUTS3 regions over 2003–2015, we find that immigrants from the country of origin of the investor exert a positive but highly heterogeneous effect on MNE location choices. Investors are more sensitive to the presence of migrants from their country of origin when they lack experience in the destination country (first-time investors) and when their investments concern market-access or business-services (downstream) activities. This is consistent with the view that migrants act as information brokers that bridge the fixed costs of international business activities.     

Documenting the indignation: Responses to the 2008 financial crisis in contemporary Spanish cinema

ABSTRACT

The aim of this article is to analyze two Spanish documentary films that reflect on the 2008 financial crisis in Spain, Mercado de futuros (Mercedes Álvarez, 2011) and No estamos solos (Pere Joan Ventura, 2015). These movies could be marked as political for their choice of a collective protagonist and for dealing with the issues of inequality with the purpose of appealing to mobilization and resistance to the neoliberal Western agenda that have provoked social cutbacks after the 2008 crisis. Mercedes Álvarez and Pere Joan Ventura follow the tradition of political documentaries traced by filmmakers such as Dziga Vertov, Joris Ivens, Pere Portabella, and Basilio Martín Patino and open the debate on how people can contribute to searching for renewal policies in times of crisis.     

WHAT ATTRACTS FOREIGN MULTINATIONAL CORPORATIONS? EVIDENCE FROM BRANCH PLANT LOCATION IN THE UNITED STATES

ABSTRACT. The location decisions of foreign multinational corporations (FMNCs) are analyzed using a conditional logit model with states as the choice set. We consider the establishment of new manufacturing plants and separately analyze the site selection of all MNCs, Japanese MNCs, and European MNCs. The results indicate that access to markets, labor market conditions, state promotional efforts to attract foreign investment, and state and local personal taxes are significant fadors in the location decision. The decision determinants for Japanese and European MNCs are found to be different.     

The role of path-dependence in the resilience of EU regions

The paper studies the role of path-dependence in the resilience of EU regions. Particularly, employing a nonparametric analysis, the paper demonstrates that historical adjustments of EU regions materialized by productivity improvements, primarily in the manufacturing sector and incidentally in the sectors of construction, financial and non-market services, during the period 1995–2008 secured high(er) levels of regional resilience during the economic crisis period 2008–2013. Such a finding provides implications not only for theory but also for policy. Policies aiming at boosting regional productivity and competitiveness, which through a positive regional performance of high growth rates is concealed, a well-structured and robust production restructuring, might affect regional resilience in a way that shields regional economies not only from current imbalances but also from any future downturns.     

外资金融机构在中国的区位分布研究

随着我国金融业开放领域和地域的逐步扩大,在中国的外资金融机构数量迅速增加,但地域分布很不平衡。章从地区和城市这两个层次分析了其分布的总体特征,并认为影响外资金融机构区位分布的主要因素是市场规模、政策导向、人力资源、信息流通、历史传统和地缘经济等。今后,随着我国对外开放的深入和西部大开发战略的实施,外资金融机构将逐步向内地推进,中西部地区的外资金融机构数会不断增加,但现有的总体分布格局在短期内不会改变,外资金融机构仍然会向几个主要的金融中心集聚。     

Agglomeration,foreign firms and firm exit in regions under transition: the increasing importance of related variety in Hungary

ABSTRACT

Related variety of economic activities is widely recognized to induce regional development; however, it is not clear how this mechanism takes place in regions that go through major structural and institutional transformation. Furthermore, foreign direct investment (FDI) is typically a major source of structural change in these areas; and we still need a better understanding on how foreign-owned (foreign) firms affect the dynamics of domestic-owned (domestic) companies. For these reasons we analyse firm-level exit in Hungarian city regions between 1996 and 2011, over the late post-socialist transition in manufacturing industries, focusing on the difference between foreign and domestic firms. Introducing ownership into the related variety calculation, we estimate the probability of firm exit with the region-level related variety calculated separately for foreign and domestic firms. Our results suggest that related variety of foreign firms decreases the probability of domestic firm exit earlier during the economic transition compared to the related variety of domestic firms. This finding supports the idea that FDI plays a formative role in regions under transition, and shows that domestic firms benefit from being in agglomerations where foreign firms are technologically related to each other.     

The wider effects of inward foreign direct investment in manufacturing on UK industry

This paper examines the wider effects of inward foreign directinvestment (FDI) to the UK on improving the practices and competitivenessof domestic industry. Surveyed domestic suppliers, competitors,and customers to foreign investors reported extensive positiveimpacts on their practices, focused particularly on reductionsin X-inefficiencies, and on their competitiveness, althoughin the case of competitors benefits had to be balanced againstadverse effects. Knowledge transfers through personal contactsand the demonstration effect, were important to the transmissionof impacts, but a number of other channels were also important,including additional supplier sales, improved customer inputs,and the competitive spur. Regional policymakers should takethese wider benefits into account in the design of policiesfor attracting and embedding foreign investment. However, whilstthere was no evidence that foreign firms in assisted regionshad fewer benefits than those in core regions, there was a lotof leakage outside of the areas attracting foreign firms, suggestingthat policies to promote spillovers should not be developedentirely in a local or regional framework.     

Bank Liquidity Creation in Russia

Two EU-based senior economists analyze the contribution of bank liquidity creation to the Russian economy, as well as changes in creation of liquidity occurring during the global financial crisis. Applying the methodology of Berger and Bouwman's (2009) study of U.S. banking to a rich panel dataset for Russian banks for the period 1999-2009, the authors compute three alternative measures of bank liquidity creation. They find evidence of increased creation of liquidity in real terms over the period and also determine that state-controlled (versus private) banks and Russia's largest banks (versus intermediate-size and small banks) contributed most to liquidity creation (lower in Russia than in the U.S.). Their findings suggest that consolidation of the Russian banking sector may prove more instrumental in increasing liquidity creation than privatization per se.