Patterns of Foreign Direct Investment in Mongolia, 1990-2003: A Research Note

This paper delineates the pattern and structure of foreign direct investment (FDI) in a land-locked transition economy, Mongolia, situated strategically between Russia and China. The assessment is based on publications of major international financial institutions, official statistical publications of the Mongolian Government, and a unique dataset of 1,035 FDI firms based on a database compiled by the Mongolian office of the World Bank. A structured analysis of the dataset and government statistical publications makes it possible to ascertain patterns with respect to FDI country origin, sectoral composition, mode of entry, firm capitalization, composition of foreign and local partners, entry date, and location of the investment (core versus periphery). Journal of Economic Literature, Classification Numbers: E60, F21, P33. 5 figures, 3 tables, 34 references.     

产业联系与外资溢出效应-对浙江省制造业的实证研究

本文探讨水平联系、前向联系和后向联系对外商直接投资溢出效应的影响。利用浙江省制造业数据,通过实证分析发现,浙江省制造业外资总体上具有水平负向溢出效应,同时通过后向联系产生正向溢出效应。水平负向溢出效应主要是外资企业带来的激烈竞争所导致的,产业后向联系产生的正向溢出效应主要通过外资企业的本地采购发生。浙江省内资制造业企业并没有从购买外资企业中间投入品而显著提升效率。     

Does Spatial Clustering of Foreign Direct Investment Foster Global Production Networks? The Case of Qingdao,China

This article examines how spatial clustering of foreign direct investment (FDI) can foster a global production network (GPN). The cluster concept, in general, stressed inter-firm relations between local and regional firms while neglecting global–local linkages in the spatial context. In contrast, GPN focuses on the advantages of international production organization and governance structure but underestimates regional or localized channels of production arrangement. By integrating the conceptual framework of spatial clustering of FDI and GPN, this paper provides empirical evidence of various channels to knowledge and innovation transfer between domestic firms and foreign-invested enterprises. This paper demonstrates that the different types of linkages formation are key determinant factors for establishing cluster through contributing to local economic development.     

Unfolding the relationship between resilient firms and the region

ABSTRACT

This research explores organizational resilience in four manufacturing firms in four different regions of Norway. While regional resilience has gained attention in research, there have been few studies with a micro-level focus, investigating firms and their distinctive features of resilience. We chose a qualitative multiple-case study approach and employed a critical incident technique to study resilience in selected firms that had experienced external shocks and shifts in regard to changing markets, globalization and advances in technology. Each, however, had managed to continually develop resilience capacity over time. Our framework considered three dimensions of organizational resilience: the cognitive, the behavioural and the contextual. We address how resilience is sustained over time, the evolutionary nature of organizational resilience in firms and how resilient firms relate to the region. We found that all three dimensions of resilience capacity were evident in each firm, but appeared as a complex and unique blend. Furthermore, each dimension was supported by regional ties and affiliations. The findings suggest that organizational resilience is a dynamic capability conditioned by firm–region interactions, which are cultural, social and economic. Regional resilience is built through the contribution of the firm to the economic and social systems of the region.     

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.     

Staying Power: What Influences Micro-firm Survival in Tourism?

Abstract

The purpose of this paper is to investigate how previous experience and location of entrepreneurs influence the survival of new tourism firms. The paper departs from recent evolutionary economic geography advancements, highlighting the importance of routines and skills as well as location-specific knowledge for firm success. While having been well-researched for manufacturing industries characterized by high entry barriers, little knowledge is currently available on the factors influencing survival rates in service sectors with low entry barriers. A quantitative approach applies hazard models to investigate the survival rates over a seven-year period of a total of 133 new micro-tourism firms started between 1999 and 2001 in the four northernmost counties of Sweden. The geo-referenced micro-database ASTRID links information on firm features (e.g. firm births and deaths, spatial coordinates and industry codes) to characteristics of entrepreneurs (e.g. age, education, previous experience). The main finding is that entrepreneurs with previous work experience in related sectors are more likely to survive and, in this case, entrepreneurs without local experience tend to be less successful. We find no evidence that new firms operating in regions specialized in tourism have a survival advantage. Our analysis also indicates that surviving firms improve performance over time. The paper thus contributes new knowledge on the determinants of micro-firm survival in tourism.     

Regional technological change and path dependency in the Danish food processing industry

Evolutionary theories of technological change arguably exert the greatest impact on our understanding of technological change. According to evolutionary economic theory the process of technological change is driven by the continual creation of technological variety through innovation and innovative firm entry and the destruction of variety through the processes of imitation (diffusion), selection and plant exit. This joint process of variety creation and destruction translates micro-economic diversity into technological progress. A third principle of evolutionary economic theory is the principle of heredity, the communication of information and knowledge over time. The dependence of technology on past and existing knowledge tends to move firms, regions and countries along relatively well-defined technological trajectories. In this paper technology is measured as a pair of capital and labour input coefficients. Empirical analysis of the Danish food processing industry reveals that technology varies markedly across regions and that differences in regional technological performance persist over time. Multivariate analysis of variance confirms that spatial variation in techniques of production is significant. This study underpins the evolutionary theory of technological change confirming that in the Danish food processing industry, regions move along relatively well-defined technological trajectories.     

CONSIDERING THE SOURCE: DOES THE COUNTRY OF ORIGIN OF FDI MATTER TO ECONOMIC GROWTH?*

ABSTRACT It has long been surmised that firms controlled by different countries may have unequal effects on the host economies in which they locate. By looking at the seven major source countries of foreign direct investment (FDI) in the United States, we provide empirical evidence that the state growth effects of FDI differ by source country. We attribute these differential growth effects to the relative differences in factor endowments between the source country and the state. The implication of this result is that technology transfer, believed to be the engine of economic growth, becomes more costly the more dissimilar the endowments.     

Asian Transnational Enterprises and Technology Transfer in Thailand

Like many of its neighbours, Thailand is increasingly interested in upgrading the technological capability of its indigenous firms through the inward investment (foreign direct investment, FDI) of transnational enterprises (TNEs). Its science and technology policies, however, remain fragmented, and they compete with regional distribution priorities. This paper examines the nature of technology transfer between Asian TNEs (Japan and the newly industrializing economies (NIEs), that is, the NIEs of Hong Kong, Singapore, South Korea and Taiwan) and Thai firms based on the responses of some 145 firms from a 2005 survey. It finds only modest levels of technological transfer in production and process technologies. Asian TNEs evaluate factor cost advantages and government incentives favourably. Logistic regressions, however, indicate that government incentives are negatively related to technology process modification between NIE subsidiaries and Thai customers. But, the technical training of Thai workers significantly increases the likelihood of Asian subsidiaries undertaking process technology transfers. Among NIE firms, the ability to import foreign skilled labour further increases the likelihood of such technological activities. Finally, forward linkages among the NIEs are positively associated with firm location in the urban agglomerations of Bangkok and Chon Buri, and, among smaller firms. Our study suggests that prevailing FDI policies have little influence on technology transfer, while technology policies that favour large TNEs work against smaller NIEs that are engaged in modest technology transfer.     

Comparing Outsourcing Patterns in Domestic and FDI Manufacturing Plants: Empirical Evidence from Spain

To fully understand the local linkages of Foreign Direct Investment (FDI) plants, we argue it would be useful to analyze the outsourcing patterns of such plants in comparison to domestic plants. Consequently, we examined 1031 industrial plants, both domestic and foreign, located in Spain. The FDI plants show patterns similar to those of domestic plants with regard to the level of outsourcing, the incidence of outsourced production on the companies’ total sales and the economic content of outsourcing relationships. Further, our results show that levels of embeddedness in the local and regional economy of FDI plants are not significantly different from domestic plants. However, FDI plants are highly concentrated spatially in the largest industrial agglomerations. For such plants, Barcelona not only seems a preferred site for location but also for contracting manufacturing tasks.     

Region‐specific determinants of the foreign direct investment in China

This study revisits region‐specific determinants of foreign direct investment (FDI) in Eastern, Central, and Western China using econometric and spatial analyses. It uses a data set covering 31 Chinese provinces and autonomous regions spanning the period 2005–15, together with panel data regression. Our statistical results show that in Eastern China, FDI is significantly associated with bilateral trade, orientation towards the service industry, industrialisation level, and availability of strategic assets in the region. In Central China, FDI is mainly pulled by availability of the domestic market and strategic assets in the region. In Western China, FDI inflows are mainly determined by natural resource endowment, industrialisation level, and regional innovation and production effectiveness in information and communication technology industries. Our analysis also reveals the impact of FDI in China's regional development and its capacity to hollow out the three Chinese macro‐regions. Our findings for China lead us to suggest that those governments seeking to attract FDI should not solely rely on it to facilitate local economic development and should make use of local circumstances in combination with FDI to boost their economies.     

How green is the valley? Foreign direct investment in two Norwegian industrial towns

Since the early 1900s, foreign direct investments (FDIs) have greatly affected Norwegian society, especially peripheral communities. This article analyses how transnational corporations (TNCs) use territory down to the local level, and how this complex relationship between firms and spaces is shaped by attributes related to the TNC and the characteristics of the local economy. An extensive literature discusses different types of effects and spillovers, such as vertical supply linkages and spin-offs, but theoretical explanations of outcomes are more difficult. The literature links positive as well as negative outcomes to local conditions and to the investment motives of the entity making the FDI, but says little about how these vary with types of business, communities and national economies, and how these interactions generate different outcomes. We conclude that FDIs have different abilities to transform an area. We argue that FDI can trigger path-dependent dependency when it is dominated by economic capital and path-dependent development when it consists of a balance of economic capital, social networks and knowledge. This variation in the effects of FDI is illustrated by an empirical analysis of two industrial towns in Western Norway, one with natural resources and the other with intangible technology resources.     

Foreign-owned Firms' Campaign Contributions in the United States: An Exploratory Study

This study extends previous empirical work on corporate political activity by examining which foreign-owned firms provide campaign contributions to United States legislators. While numerous studies have examined which domestic firms make campaign contributions, little is known about the propensity of foreign-owned firms to make contributions. Using logit and Tobit analyses, the findings suggest that firm size, legislative issues, foreign ownership, and cultural characteristics are important determinants of a foreign-owned firm's political strategy. The findings also suggest that there are strong parallels between the political strategies of foreign-owned firms and domestic firms.     

Persistence of innovative activities in times of crisis: the case of the Basque Country

By drawing on a large sample of Spanish manufacturing and service sector firms, the changes in firms’ innovation expenditures that have taken place since the onset of the 2008 economic crisis are analysed, as is the relationship between such changes and the location of the company. Special focus is placed on firms in the Basque Country. Compared to other Spanish regions, the Basque Country differs in terms of its fiscal status, its earlier experience of crises, its innovation performance and its greater focus on innovation-related policies. Our results show that the impact of the crisis on firms’ innovation expenditures in the Basque Country has indeed differed from that in comparable Spanish regions. Even after controlling for sectoral differences and for detailed characteristics at the firm level, firms with R&D employment in the Basque Country showed a significantly lower probability of abandoning innovation activities and even a somewhat higher probability of increasing their innovation efforts. This regional effect is especially significant for small and medium-sized enterprises.     

Trading Spaces: Imagining and Positioning the 'New' South Africa within the Regional and Global Economies

The end of apartheid has precipitated rapid rethinking of South Africa's position in relation to the rest of Africa and the global arena. Whereas a substantial literature already exists on the country's evolving post-apartheid foreign policy, this article offers one of the first critical analyses of its emerging external economic relations. Although clearly the economic giant of the Southern African Development Community, South Africa does not perform as well on all economic and social indicators as many people, especially South Africans, believe. South African businesses' perception of, and experiences in, the rest of Africa are assessed in relation to emerging patterns of trade and investment there. Selected advertisements and associated imagery deployed by firms in support of their strategies are analysed in the context of domestic transformation and the opening of new horizons abroad. South African foreign direct invest-ment (FDI) is increasingly diversified, both sectorally and geographically, although large firms dominate the profile. South African-based transnational corporations are also becoming increasingly influential global players. FDI and development aid inflows to South Africa, and in relation to the rest of Africa, are analysed and their implications explored. Far Eastern investment rose fast as part of a growing global inflow until 1997/8; more recent figures are disappointing. This reflects political and security concerns, as well as vulnerability to rapid flow reversal in the increasingly important portfolio investment market.     

Developing cross-industry innovation capability: regional drivers and indicators within firms

ABSTRACT

The role of firms in the process of regional renewal and path development is a somewhat neglected area in the existing literature. With few exceptions, the literature is mainly concerned with aggregated development paths. To cover this gap, the current study turns its attention to cross-industry innovation capability (CIIC) building in firms and discusses how conditions for innovation and learning in a region drive this process. We introduce a new concept of CIIC – that is, the firm’s ability to transform knowledge and ideas from different industries into new products, processes and systems and/or its ability to adapt existing products, processes and systems to new industries – and identify its drivers and indicators. The discussion is supported by empirical studies of firms in three Norwegian case regions that undergo the restructuring process due to the recent severe decrease in oil prices. Our empirical data demonstrate that organizationally thick and diversified regions are more favourable for firms’ abilities to develop CIIC and cross-industry innovation activity. As a result, we emphasize that future regional policies should have a stronger focus on the linkages between internal firm characteristics and regional innovation systems to contribute to the firms’ absorptive capacity for developing cross-industry innovation.     

GROWTH,FOREIGN DIRECT INVESTMENT,AND THE ENVIRONMENT: EVIDENCE FROM CHINESE CITIES

ABSTRACT In this paper, we investigate the relationship between economic growth and industrial pollution emissions in China using data for 112 major cities between 2001 and 2004. Using disaggregated data, we separate foreign direct investment inflows from Hong Kong, Macao, and Taiwan from those of other foreign economies. We examine two industrial water pollution indicators (wastewater and petroleum‐like matter) and four industrial air pollution indicators (waste gas, sulfur dioxide, soot, and dust). Our results suggest that most air and water emissions rise with increases in economic growth at current income levels. The share of output of domestic‐ and foreign‐owned firms increases several pollutants in a statistically significant manner while output of firms from Hong Kong, Macao, and Taiwan either reduces pollution or is statistically insignificant.     

Foreign direct investment and renewal of industries: framing the reciprocity between materiality and discourse

ABSTRACT

Informed by the evolutionary literature on economic geography, this paper develops a conceptual framework for analysing the complexity between foreign direct investment (FDI) and renewal of industries. Present contributions tend to explain the impact of FDI on regional industry evolution as a static, output-oriented phenomenon, that is, informed by an instrumental rationale in which the dynamism of FDI and regional industry development is linked to polarization of stagnation/decline vs. growth/development. Opposing this, we argue for an epistemological shift in approach to the reciprocity between FDI and renewal of industries as dynamism between material outcomes and discursive processes. To accomplish this, we build on key concepts and understandings from evolutionary economic geography; review the regional effects of FDI literature and build a framework sensitive to contextual dimensions of FDI. We focus on multinational companies’ practices and material outcomes in terms of regional spillovers and the discursive processes in terms of FDI narratives. This framework is exemplified by data from the salmon farming industry and the subsea industry in Hordaland and the oil and gas industry and the mining industry in Finnmark.     

Explanations of firm survival in renewable energy in the United States: a study of ethanol refineries

ABSTRACT

Firm survival is key in understanding the evolution of industries and the larger economy. Although exit and entry are common occurrences during an industry’s life cycle, it is not always easy to predict who will survive. Literature suggests a range of factors, both internal and external to the firm, and corresponding measures as determinants of survival or exit. However, these measures do not directly explain firm-level strategies such as internal adjustments to external conditions. In this paper, we use the U.S. biofuel industry to examine firm survival. As a resource-based industry focused on process innovation, biofuel production attracted farmer-entrepreneurs and related-industry investors after policies mandates and subsidies generated a dedicated market for the fuel. Despite support, not all firms survived a period of industrial sorting that followed the 2007–2008 recession. This study shows that local connections/embeddedness, knowledge base and knowledge sharing, and entrepreneurial efforts were critical for firm survival in addition to age, capacity, ownership, and location.     

China and Japan in Myanmar: Aid,Natural Resources and Influence

Abstract

This article highlights the parallels between Japan’s leveraging of foreign aid to secure access to strategic natural resources in the post-World War II period, and China’s similar use of foreign aid since the early 1990s. It then shows how both countries have applied similar strategies in their aid programs in Myanmar, and points out how dramatic shifts in Myanmar’s domestic politics have shaped their opportunities for economic engagement. China seized upon Myanmar’s political transition in 1988 to expand its aid program, while Japan has responded to Myanmar’s reform measures since 2010 by resuming its aid efforts. The article concludes by considering the potential for China–Japan cooperation through their aid programs in Myanmar.