GW-CIBER Projects


Projects by Focal Areas:
Trade, Investment, and Labor Policy
Firm-State-Society Relations
Property Rights and Global Innovation
Natural Resource Scarcity, Security, and Sustainability
Economic, Financial, and Political Crisis
Diaspora Investment and Entrepreneurship
International Business & Economic Development Research
     sponsored by rkl3d llc


Projects by Year:
     2013-2014
     2011-2012
     2010-2011
     2009-2010
     2008-2009
     2007-2008
     2006-2007


Projects by Researcher:


A - D
E - H
I  - M
N - R
S - V
W - Z



Projects by Researcher



Senay Agca

Associate Professor, Department of Finance, GWSB

Do Financial Development and Strong Institutions Reduce Corporate Level Financial Constraints
Brief Description:
This research project addresses important issues that are relevant for cross-discipline studies of corporate finance and international business. More specifically, the project investigates whether firms in countries with strong institutions, better governance, and improved financial sector (factors that reduce capital market imperfections) raise external funds easier and depend less on internal funds. Additionally, the PI examines whether the above-mentioned factors really matter in each country, and, if there are deviations in the countries, what the possible reasons for this are.

Working Paper:
Senay Agca, Gianni De Nicolo and Enrica Detragiache: Credit Market Reforms and Corporate Debt Policy: International Evidence
Abstract: We study how the deregulation of the domestic banking sector affects corporate debt policy. If deregulation lowers the cost of credit and increasing its availability, as intended, firms should use more debt in their capital structure following deregulation. We test this hypothesis with a large panel of publicly traded non-financial firms using a new index that carefully tracks policies to deregulate domestic credit markets. After controlling for other factors, we find that reforms seem to be associated with a reduction, rather than an increase, in corporate debt in emerging market firms. This negative effect is attenuated in countries with better institutions, and it disappears in advanced countries. Furthermore, we do not find evidence of a differential effect of reforms on financially constrained firms, financially dependent firms and firms with no access to global markets.

Financial Deregulation and Private Sector Borrowing
Brief Description:

This project will examine the impact of financial deregulation policies on the costs of corporate borrowing by utilizing international panel data on corporate loan issuances. If financial deregulation policies reach their aim, corporations should be able to borrow more and at better terms. The results of this project will provide a better understanding on whether these policies achieve their objective in improving the funding resources for corporations by increasing its availability or by reducing its cost.

Deborah Avant

Associate Professor, Department of Political Science, CCAS

The Security Behavior of International Business and NGOs
Brief Description:

This project examines how non-state actors, such as businesses and NGOs, respond to new security threats, and how these actors' risk-management activities impact the surrounding communities and the relationships between their home and host government and societies. The study's main contribution is twofold in that it (i) analyses both corporate and NGO behavior, and (ii) relies on a variety of not usually combined sources of information on comparative security behavior. The final outcome of the research provides both theoretical and practical benefits and encompasses (i) a conceptual paper that develops a framework of analysis for non-state actors and security planning, (ii) a database of corporate and NGO response to security, conflict, and crisis management issues over times and territory, and (iii) a book, series of articles, and policy papers utilizing the database to answer theoretical and policy questions.

Publications:
Deborah Avant. Organizational Security in Areas of Weak Governance.
Abstract:
Transnational non-state actors, both corporations and non-profit groups, increasingly confront security challenges in unstable territories around the world. Existing work on how these actors behave in conflict zones demonstrates that their responses have significant political effects, but does not provide a framework for understanding of their role as security actors. We outline a new research agenda that examines the security strategies of transnational non-state actors and their consequences for violence and governance. We outline the array of options transnational organizations choose from and then a set of questions that need to be answered in order to understand why they make different choices, and the ways in which their choices impact their organization’s effectiveness as well as violence and governance in unstable territories.

Meghana Ayyagari

Associate Professor, Department of International Business, GWSB

Indigenous Firm Response to FDI Investment: A Dyadic Analysis
Brief Description:

Despite extensive research, the direction and magnitude of spillovers from foreign direct investment (FDI) to local firms in developing countries remain unclear. This project takes a different methodological approach focusing on multinational enterprises’ (MNEs) characteristics that contribute to differential spillovers in India. The PI uses a unique database that tracks the capital investments of MNEs and local firms in India; since the country is vast, it offers the opportunity to study the role of FDI across different institutional environments. A greater understanding of the impact of FDI can assist U.S. trade negotiators in making the case for liberalization, and help MNE managers predict the probable response of local policy makers and the strategic response of local competitors to their investment. In addition, identifying how governance-related factors influence MNE investment and local firm response will help contrast U.S. governance models with non-market based models in other countries.

Role of Institutions and the Business Environment in Determining Industry Life Cycles
Brief Description:

Using new panel data on 30 industries across 100 countries, this study examines the impact of institutions on industry life cycles. The PI discusses factors such as industry and country characteristics, as well as the interaction between the two, to analyze the changes in number of producers within an industry and thus predict its life-cycle stage. Additionally, the impact of stock market liberalizations on industry life cycles is analyzed, and a new algorithm is also used in order to identify and map out structural breaks in both industry life cycles and in growth rates of countries. The research consists of three components - research, dissemination, and teaching.

Publications:
Meghana Ayyagari, A. Demirguc-Kunt, and V. Maksimovic. What determines protection of Property Rights? An Analysis of Direct and Indirect Effects
Abstract: Using cross-country data, this paper evaluates historical determinants of protection of property rights. We examine four historical theories that focus on conceptually distinct causal variables believed to shape institutions: legal origin, endowments, ethnic diversity and religion. There is only one realization of the data with relatively few observations, which have by now been well explored in the literature. Given the correlations between the explanatory variables, it is difficult to fashion empirical tests which are consistent in their treatment of the competing theories and to know which regressions to take seriously, giving rise to competing interpretations in the literature. We use Directed Acyclic Graph (DAG) methodology to identify which historical factors are direct determinants of property rights protection and which are not, and subject the outcomes to a battery of robustness tests. The empirical results support ethnic fractionalization as a robust determinant of property rights protection. Despite the attention it has received in the literature, the impact of legal origin on protection of property rights appears fragile and dependent on the inclusion of transition economies in the sample.

Meghana Ayyagari, A. Demirguc-Kunt, and V. Maksimovic. Firm Innovation in Emerging Markets
Abstract: In this paper we investigate the determinants of firm innovation in over 19,000 firms across 47 developing economies. We define the innovation process broadly, to include not only core innovation such as the introduction of new products and new technologies, but also other types of activities that promote knowledge transfers and adapt production processes. We find that more innovative firms are large exporting firms characterized by private ownership, highly educated managers with mid-level managerial experience, and access to external finance. By contrast, firms that innovate less are typically state owned firms without foreign competitors. Identity of the controlling shareholder seems to be particularly important for core innovation - private firms whose controlling shareholder is a financial institution are the least innovative. While the use of external finance is associated with greater innovation by all private firms, it does not make state owned firms more innovative. Financing from foreign banks is associated with higher levels of innovation compared to financing from domestic banks.

Publications:
Meghana Ayyagari and Renáta Kosová.
Does FDI Facilitate Domestic Entrepreneurship? Evidence from the Czech Republic
Abstract:
This paper analyzes the impact of FDI on domestic firm entry and firm size distributions in 245 industries in the Czech Republic during 1994 to 2000. We find that larger foreign presence stimulates the entry of domestic firms within the same industry indicating the existence of positive horizontal spillovers from FDI. We also find evidence of significant vertical entry spillovers – FDI in downstream (upstream) industries initiates entry in upstream (downstream) sectors via the presence of backward (forward) linkages. Our results also show that entry spillovers through vertical linkages are stronger than horizontal spillovers. However, these entry spillovers vary substantially across industries: while service industries benefit from both horizontal and vertical spillovers, manufacturing industries do not experience significant positive entry spillovers of any kind. In addition, while vertical spillovers prevail among competitive industries, horizontal spillovers dominate in less competitive industries. We also find that country of origin of FDI matters - horizontal spillovers are driven by FDI from the EU countries. The right skewness of the firm size distributions in industries without FDI further emphasizes an important role of FDI presence for overall industry dynamics.

Joel Blit

Assistant Professor, Department of Economics, CCAS

Do Stronger Intellectual Property Rights Induce More Innovation? Evidence That the Intellectual Property Rights Regime of Trade Partners Impacts Domestic Firm Innovation.
Brief Description:

Intellectual Property Rights (IPR) are among the key state institutions that frame the innovative activities of firms and this project seeks to understand its evolving role in a context of increasing globalization. While most studies have found a positive correlation between IPR and firm R&D in panel data (at least for developed countries), it is not clear that one can attribute a causal relationship. The correlation may arise because as firms increase their R&D they begin lobbying the government for increased IPR so as to better protect their investment. My project assesses whether the relationship is causal by examining whether the R&D expenditures of export-oriented sectors respond to changes in the IPR regimes of its export markets. In addition, the project will compare the relative impact of home and export market IPR on the R&D of home firms.

Hein Bogaard

Assistant Professor, Department of International Business

Syndicated Lending to Emerging Markets: Foreign Banks and Local Subsidiaries
Brief Description:

Banks from advanced economies finance a substantial amount of investment in emerging markets, both in the form of "direct" cross-border lending and "indirectly" through subsidiaries in host countries. In this research project, we ask how country and borrower characteristics affect the choice between direct and indirect lending by studying the market for syndicated loans. We distinguish between institutional and economic factors affecting this choice. We also investigate how financial crises in the home country of the lenders or in the host country where the borrower is located affect the choice between direct and indirect lending. Our research has implications for the availability of finance for investment and growth in emerging markets and provides insight in the transmission of financial crises between countries.

Alasdair Bowie

Associate Professor, Department of Political Science, CCAS

How Does Democratization Affect Governance in Developing Countries?
Brief Description:

This project is aimed at better understanding the ramifications for business of the rapidly changing institutional landscape of government in countries where administrative and fiscal authority has been passed to sub-national governments whose leaders are now democratically elected. By comparing local level impacts of governance reform in Vietnam and Indonesia, this project can inform U.S. democratization initiatives that strengthen those political institutions which achieve political stability and representation. It will have implications for the design of U.S. development assistance programs and will enhance risk assessment of U.S. firms engaged in trade and/or investment in developing countries.

Jennifer Brinkerhoff

Associate Professor, Trachtenberg School of Public Policy and Public Administration

Public-Private Partnerships: Addressing Global Challenges and Opportunities
Brief Description:

This project builds on the conceptual and empirical knowledge of public-private partnerships (PPPs) in the international arena. Although PPPs have traditionally been used for service delivery and infrastructure, they have the potential to contribute to providing global public goods, establishing new global governance architecture, coping with the unprecedented movement of people and information, and mitigating intra-state conflict and its security implications. Therefore, a better understanding of the range and potential of PPPs can: clarify the role of the private sector’s contribution; inform U.S. businesses’ competitiveness strategies in terms of new markets, new partners, new marketing opportunities, and risk management; and help guide government policymaking to better support initiatives that capitalize on the strengths of the private sector.

Elizabeth Chacko

Associate Professor, Columbian College of Arts & Sciences, Department of Geography, CCAS

Transnational Washington: Immigrant Entrepreneurship and Development Linkages in a Global City
Brief Description:

The study examines business strategies and trade linkages of Ethiopian, Bolivian and Indian immigrant entrepreneurs in the Washington metropolitan area with their respective countries, and sheds light on how they use their social networks and cultural connections to start new business ventures, build business relationships, and gain market share. Through a web survey of immigrant entrepreneurs from the above country groups, the project documents the entrepreneurial histories and strategies of the members, identifying obstacles as well as opportunities for business growth and development. This project also enhances our understanding of how immigrants’ investments in their home countries are linked to U.S. enterprises and the extent to which such connections have contributed to the firms’ success.

Maggie Xiaoyang Chen

Assistant Professor, Department of Economics, CCAS

Agglomeration of Vertically Linked Multinational Firms
Brief Description:

Multinational corporations (MNCs), despite their usually different headquarter origins, often cluster in host countries. The goal of this project is to examine the interdependence of location choices by vertically linked multinational firms. The project uses a unique multinational subsidiary dataset and estimates how a multinational firm's location decision in a foreign country depends on the location choices of its upstream and downstream companies and how the interdependence varies with the extent of input-output linkage, firm productivity and market structure.

The Subsidiary Network of Multinational Firms
Brief Description:

Existing theoretical studies have predicted that a multinational firm's location choices are interdependent across countries. However, little has been done to test the hypothesis at individual subsidiary level. This project seeks to use a detailed French multinational subsidiary dataset and estimate how a firm's decision to invest in a foreign country is not only conditional on the characteristics of that country but also the firm's existing subsidiary network. Preliminary results suggest there is evidence of both horizontal and vertical interdependence in multinationals' location decisions. While multinational firms have little incentive to duplicate their production in countries with low bilateral trade costs, they are motivated to build a vertical subsidiary network in these countries - especially when the countries have complementary comparative advantages.

Surviving the Global Financial Crisis: Firm Ownership, Organization and Establishment Performance
Brief Description:

This project examines the differential response of establishments during the global financial crisis. Using a new dataset that reports activities of over 12 million establishments around the world, the project investigates the role of firm ownership and organization in determining establishment performance during the crisis. The existing literature has so far shown an ambiguous relationship between foreign investment and economic growth at both the macro and the micro levels. The project disentangles the ambiguity by exploring three potential channels through which firm ownership and organization can affect establishment performance: (i) production linkage, (ii) financial linkage, and (iii) firm network. Preliminary evidence suggests that establishments with different ownership and organization structures exhibited sharply different responses. Multinational owned establishments performed, on average, better than their local counterparts, but the role of multinational owners hip can vary significantly with production and financial linkages and the size of firm organization network.

Economic Determinants of the Preferential Trade Agreement Network
Brief Description:

Preferential Trade Agreements (PTAs) have become an increasingly favored approach for countries who are seeking free trade. However, although economists have extensively studied the effect of these agreements, little attention has been devoted to analyzing their determinants. This project aims to identify the economic and strategic factors that play a significant role in countries' decision to form a PTA and their choice of preferential trading partners. Research for the project includes inquiry into current PTAs that have been adopted by nearly all WTO member nations.


Publications:
Maggie Xiaoyang Chen. Third-Country Effects in the Formation of Free Trade Agreements
Abstract: The proliferation of regional economic integration has resulted in a complex and continually expanding network of free trade agreements (FTAs). In explaining the formation of these agreements, the literature has generally focused on the effect of country-pair characteristics and ignored the role of existing FTA network. In this paper we investigate, both theoretically and empirically, how third countries affect nations' incentives to form new FTAs in various types of network. Compared to an empty network where there is no FTA between countries, having an exclusive FTA with a third country raises a country's incentives to form new FTAs but weakens the incentives of others to reciprocate. A new FTA will therefore only be jointly supported when the country with exclusive FTA partners has a sufficiently large market size and high marginal cost of production. In a hub-and-spoke network, however, where two countries are mutually linked to a third country, the existence of the mutual FTA partner raises both nations' incentives to form an agreement leading to an unambiguous increase in the probability of jointly supported FTAs.

The Bloom of Regionalism: Implications for U.S. Multinational Firms
Brief Description:

The main objective of this project is to investigate and quantify the impact of regional trade agreements (RTAs) on U.S. multinational firms and Foreign Direct Investment (FDI). The PI examines the complexity of regionalism and the opportunities and challenges that it presents to U.S. Multinational Enterprises (MNE) as they consider optimal geographical locations in order to maximize the gains from regional economic integration. The project aims at generating publishable research papers, policy briefings, and a series of presentations and seminars, as well as serving as a foundation for International Trade course development.


Publications:
Maggie Xiaoyang Chen.
Regional Economic Integration and Geographic Concentration of U.S. Multinational Firms
Abstract: A volume of theoretical studies emphasizes that regional economic integration, by improving intra-bloc market accessibility, prompts multinationals to restructure their activities geographically within the bloc and improve the economies of scale. However, little has been done to test this prediction. This paper thus examines theoretically and empirically the divergent impact of economic integration on U.S. multinational firms affiliate sales across host countries. It is found that economic integration does lead to an increase in multinationals' activities especially in countries that are integrated with a large size of markets, because the benefit of a lower trade cost is exclusive to insidefirms. However, this effect is significantly asymmetric both across and within the integrated regions, as multinationals are now motivated to serve the less attractive production locations via exports. In particular, countries with a comparative advantage gain multinationals at the expense of others, including their Preferential Trade Agreement (PTA) partners. Accounting for the potential issues of omitted variables and the endogeneity of PTA does not lead to any significant change in the results.

Wenjie Chen & Joel Blit

Assistant Professor, Department of International Business, GWSB;
Assistant Professor, Department of Economics, CCAS

External Knowledge Sourcing Through Domestic and Foreign Acquisitions; Impact of M&As on Target, Acquirer, and Third-Party Innovation
Brief Description:

Firms are increasingly seeking sources of innovation abroad and a primary method through which they do so is foreign mergers and acquisitions (M&As). This project examines how M&As affect innovation in the acquirer and target firm, and knowledge flows between: a. acquirer and target, b. acquirer and third-party firms in the location of the target, and c. target and third-party firms in the home country of the acquirer. We will also examine how the characteristics and national origin of the acquirer affects these outcomes. In particular, we make the distinction between acquirer country origin and acquirer type, i.e. a publicly listed firm, a private firm or a government owned entity. As a result, this study will examine the effects of state owned enterprises as vehicles to access foreign knowledge and develop national innovative capability.

Wenjie Chen

Assistant Professor, Department of International Business, GWSB

Cross-border Mergers and Acquisitions in Time of Crises: New Evidence from Latin America
Brief Description:

This project aims to understand the impacts of mergers and acquisitions (M&As) during crisis periods. Combining M&A information and firm level data in seven Latin American countries that underwent financial crises between 1990-2008, this study evaluates the performance of firms that are bought during the crisis periods. The research explores the following questions: (i) what firms are being acquired during periods of crises; (ii) what happens to the firm after the acquisition; and (iii) what the welfare implications of these cross-border M&A transactions are.

Protiti Dastidar

Assistant Professor, Department of International Business, GWSB

Cross-border Mergers: The Role of International Competitiveness
Brief Description:

This project consists of two research papers addressing the following questions: (i) the impact of the institutional framework on cross-border acquisitions; and (ii) the cyclical patterns in and causes of cross-border acquisition activity. The PI investigates the characteristics that distinguish cross-border acquisitions from U.S. domestic ones, and examines how the macro-economic environment and market trends drive managers to take decisions that impact the international competitiveness of firms. Both research studies develop an interdisciplinary approach that draws from the international business, finance, and economics fields to develop testable hypotheses.

Publications:
Alexander Sleptsov and Protiti Dastidar. Riding the Waves: Cross-border Acquisitions as a Quest for new Capabilities

Abstract: We argue that the cross-border acquisition activity is characterized by a cyclical pattern similar to the domestic merger waves. We consider several factors that can influence the cross-border merger waves, including the changes in the firms’ resource requirements following economic or regulatory shocks. The results of the tests on a large-scale archival dataset suggest that the motivations for cross-border and domestic waves may be different. In the cross-border waves, many acquirers are motivated by the search for new capabilities abroad; in the domestic waves, more acquirers are motivated by the desire to redeploy their existing capabilities.


Anju Seth and Protiti Dastidar. Motives for Domestic and Cross-border Acquisitions: A Comparative Analysis

Abstract: Studies examining value creation in cross-border acquisitions are few, and there are none that compare value creation of domestic vs. cross-border acquisitions. Institutional differences (at both the firm and industry level) may, in addition to economic factors, cause systematic differences in the value created by cross border vs. domestic acquisitions, thus affecting a firm's international competitiveness. We seek to investigate the characteristic features that distinguish cross-border acquisitions from U.S. domestic acquisitions and how total gains are shared between the target and the acquirer. Our empirical results indicate that acquisitions are primarily driven by synergy motives though managerialism and hubris also coexist in the sample. Acquisitions by US acquirers of domestic as well as international targets are characterized by hubris rather than managerialism in our sample of negative total gains, while acquisitions by foreign acquirers of US targets are characterized by managerialism. We show that institutional characteristics matter and that target gains are lower for US acquirers of foreign targets in bank or group oriented countries, which is consistent with the evidence on lower valuations with lower protection of minority shareholder rights in these countries. For the foreign acquirer-US target sub-sample the institutional structure of the foreign acquirer's home country appears to have no impact on target gains.


Shahe Emran

Assistant Professor, Department of Economics, CCAS

Trade Openness, Property Rights and Private Investment
Brief Description:

This project seeks to understand the link between trade-growth and institutions-growth by looking at the effects of trade openness and quality of property rights institutions on private investment across a sample of developed and developing countries. According to the PI, this is an important analysis since capital accumulation is found to be the most robust determinant of growth, and trade liberalization that is conditioned by higher quality institutions (especially such as those that protect property rights) encourages private investment and entrepreneurship. The project involves econometric analysis using cross panel data for the period 1960-2003 to investigate the above conjectures and interactions.


Publications:
Shahe Emran, M. and Stiglitz, Joseph E., “Financial Liberalization, Financial Restraint, and Entrepreneurial Development.”
Abstract: This paper argues that there is a fundamental conflict between financial liberalization and private sector led development strategy in developing countries. Using a simple model of occupational choice with moral hazard, it shows that under financial liberalization banks may (i) fail to finance new entrepreneurs because of poaching externality, and (ii) systematically favor projects with front-loaded returns at the expense of projects with strong learning effects. We identify two types of policies that are helpful in escaping from a ‘no entrepreneurial experimentation equilibrium’: intersectoral and intertemporal policies. Among intersectoral policies, a deposit rate ceiling, or a tax on the deposits coupled with a ‘contingent subsidy’ to the new industrial financing (but not interest rate subsidy) may be helpful for entrepreneurial discovery. The intersectoral policies are, however, not effective in weeding out short-termism in project choice. Among intertemporal policies, a dual track policy where competition is preserved in the lending to competing activities (agriculture) but limited duration monopoly is awarded to industrial lending is shown to be effective for both the discovery of new industrial entrepreneurs and tackling short-termism in project choices.

Henry Farrell

Associate Professor, Department of International Affairs

Domestic Institutions and State-Private Actor Relations in Electronic Information Governance
Brief Description:
This project seeks to understand how states' domestic institutions shape new forms of global governance. The specific objectives of the study are: (i) to map the relationship between domestic institutions, private actors, and global governance arrangements in key fields of e-commerce and information policy; and (ii) using cases from the field of e-commerce, to examine the circumstances under which states can or cannot use these domestic institutions to press private actors into service as proxy regulators, and thus to shape effective international regulatory outcomes.


Publications:
Henry Farrell
. "Making International Markets: Domestic Institutions in International Political Economy" Review of International Political Economy. Forthcoming 2010.

This article will be the lead article of a special issue on the topic of new forms of business and market regulation.

Tenagne Haile-Mariam

Assistant Professor, School of Medicine and Health Services

Enduring Industries-Foster Economics Development by Safeguarding Human Capital
Brief Description:

This project, undertaken in the form of a conference, addresses the problem of brain drain of health care professionals coming from emerging and developing countries, and the impact that this loss of human capital has on the economic development of these nations. Focusing on Ethiopia, the venue examines strategies developed by businesses that have successfully recruited and retained local talent, and seeks ways to apply these strategies to the healthcare sector. Invited business leaders and healthcare policy makers collaborate on building healthcare models that can sustain economic growth. Healthcare models created by other countries are analyzed for possible application to Ethiopia.

Llewelyn Hughes

Assistant Professor, Department of Political Science, CCAS

The Political Economy of Oil in Japan, France, and the United States
Brief Description:

The project examines variation in government intervention in the international oil market by major oil-importing states. Policies designed to enhance national control over the petroleum supply chain were restructured the 1980s in the three countries examined in the study, giving the state a less significant role in shaping trade in crude oil and petroleum products. This process was reversed in some countries, but not others, under conditions of high prices in the 2000s. I argue these changes reflect the interests of two sets of political actors: governmental actors (bureaucratic and political) with responsibility for oil policy, and firms engaged in the oil sector. Further, these actors focus on political, organizational and commercial goals, rather than national security, when crafting oil policies. Changes in oil policies over time reflected the effect of shifts in oil prices on the policy preferences of state actors and firms as they pursue their political, organizational and commercial goals

Srividya Jandhyala

Assistant Professor, Department of International Business, GWSB

Looking Beyond Home and Host Countries: International Institutions and Foreign Investment
Brief Description:

Although the impact of home and host country property rights institutions on Multinational Enterprises' (MNE) investment strategies has received significant attention in the literature, domestic institutions tend to be relatively stable with small changes over time in their composition, strength, and effectiveness. On the other hand, international institutional systems, such as Bilateral Investment Treaties (BITs), providing extensive rights and protection to foreign investors have proliferated rapidly during the last few decades. This project examines the impact of Bilateral Investment Treaties on investors' willingness to pay for foreign petroleum assets. The results are expected to inform managers about the security and valuation of their foreign assets as well as policy makers about the effectiveness of BITs in conferring incentives to foreign investors.

Commitment of Multinational Corporations to Global Initiatives: The Role of Domestic Labor Institutions
Brief Description:

This project will address the question: When do Multinational Corporations (MNCs) join global initiatives? Global initiatives are voluntary programs that guide and constrain the activities of firms, rather than governments, by specifying standards that sometimes exceed government regulations. Existing literature examining the MNCs choice to join a particular initiative and the timing of that decision is limited to the firm's social characteristics, generally in case studies or small samples. Unlike prior research, this project proposes an empirical examination of a large sample of MNCs focusing on the institutional element; specifically the strength of the labor laws and regulations in a firm's home country and other countries that it has operations in. The PI will examine a firm's membership in the UN Global Compact, the world's largest sustainability initiative that stipulates compliance with human rights and labor policies in order to understand the interaction between domestic laws and global initiatives.


Yujin Jeong

Doctoral Student, Department of International Business, GWSB

National Institutions and Firm Characteristics as Determinants of Corruption: Evidence from the U.N. Oil-for-Food Program
Brief Description:

Corruption is a major concern in international business, affecting international trade, foreign direct investment, and economic growth. Research on corruption is limited, however, as illicit activity by its very nature is hard to observe. The project examines the determinants of corrupt behavior in international business using an unusual, detailed bribe payment data from a forensic investigation into the UN Oil-for-Food Program (OFFP). The OFFP, as a natural laboratory, enables us to address the question of whether country institutions, firm characteristics, or both matter for corruption in international business.

Jai Kwan Jung

Assistant Professor, Department of Political Science, CCAS

How do Political Institutions Affect Post-Conflict Reconstruction
Brief Description:

In the aftermath of civil wars, the most important task is to maintain the fragile peace. Managing post-war hostilities and reducing the risk of a return to conflict are, in turn, essential for successful reconstruction of war-torn economies, because political stability is necessary for attracting investment from multinational corporations and foreign capital. Economic development is, in turn, considered the prerequisite for democracy building. This supposedly reciprocal relationship of peace, development, and democracy promotion in post-conflict societies raises the core questions of this project: under what conditions can the promotion of sustainable peace and development be mutually reinforcing?; what political institutions are more conducive than others to contributing to the “democratic reconstruction” of civil-war-torn countries?; what role do various international actors play in shaping the long-term prospects for building democratic governance in post-civil war countries? The PI is collecting a large-N dataset to conduct quantitative analyses that investigate how different types of political institutions and varying degrees of international commitment affect the pace and outcome of post-conflict reconstruction.

Graciela Kaminsky

Professor, Department of Economics, CCAS

Two Hundred Years of Financial Integration: Growth, Crises, and Financial Contagion
Brief Description:

The last three decades have been witness to a dramatic process of globalization. This process of integration was warmly welcomed around the world since it was believed that financial integration allows capital to travel to its most attractive destination. But the boom in international capital flows of the 1990s ended with currency crises around the world. Again in the mid-2000s, international capital flows sharply increased, with the United States and Great Britain becoming the most important beneficiaries of this surge. This boom also ended with a collapse and worldwide crisis beginning in 2007 and we are now in the midst of a sovereign crisis in Europe. What went wrong? What should policy makers do? This project constructs a new database on international capital flows since the beginning of the 19th century to compare the boom-bust cycles during the heydays of financial integration before 1931 and the crises that followed them with those of the last three decades to understand the differences between crises that start in the financial centers (such as crises of 1929 and 2007) and those that start in the periphery (such as the Baring crisis of 1890 and Mexico crisis of 1994) as well as to assess the various channels of financial contagion and the policies should be implemented to reduce the spillovers of the crises.

Renata Kosova

Assistant Professor, School of Business, Department of International Business

Does FDI Facilitate Domestic Entrepreneurship? Evidence from the Czech Republic
Brief Description:

The project investigates the impact of foreign direct investment (FDI) on domestic firm formation and entrepreneurship in transition economies. More specifically, the study examines: (i) if FDI generates positive spillovers that stimulate domestic firms' entry or if it creates barriers to entry; (ii) the nature of the possible spillovers (intra-industry vs. inter-industry); (iii) if the extent of these spillovers vary across countries; and (iv) if the presence of FDI affect the firm size distribution of domestic firms. The focus of the project is on the Czech Republic and encompasses data for an 8-year period and for 245 industries.

Publications:
Meghana Ayyagari and Renáta Kosová.
Does FDI Facilitate Domestic Entrepreneurship? Evidence from the Czech Republic
Abstract:
This paper analyzes the impact of FDI on domestic firm entry and firm size distributions in 245 industries in the Czech Republic during 1994 to 2000. We find that larger foreign presence stimulates the entry of domestic firms within the same industry indicating the existence of positive horizontal spillovers from FDI. We also find evidence of significant vertical entry spillovers – FDI in downstream (upstream) industries initiates entry in upstream (downstream) sectors via the presence of backward (forward) linkages. Our results also show that entry spillovers through vertical linkages are stronger than horizontal spillovers. However, these entry spillovers vary substantially across industries: while service industries benefit from both horizontal and vertical spillovers, manufacturing industries do not experience significant positive entry spillovers of any kind. In addition, while vertical spillovers prevail among competitive industries, horizontal spillovers dominate in less competitive industries. We also find that country of origin of FDI matters - horizontal spillovers are driven by FDI from the EU countries. The right skewness of the firm size distributions in industries without FDI further emphasizes an important role of FDI presence for overall industry dynamics.

Young Hoon Kwak

Associate Professor, Department of Decision Sciences, GWSB

How do European International Contractors Adapt to the Changing Project Environments?
Brief Description:

The aim of this research is to better understand how European international contractors sustain their competitive advantages despite multiple challenges in both domestic and global market. This study explores a theoretical framework to examine international general contractor's strategies by looking into market environments, firm resources, and firm capabilities. In addition, actual cases of successful global strategy formulation and implementation of European international contractors that adapt to the new environment are examined, analyzed, and discussed. This study provides insights to the engineering and construction industry to consider diverse strategies including foreign direct investment and cross-border mergers and acquisition in the ever-changing global project environments.

Jocelyn Leitzinger

Doctoral Student, Department of International Business, GWSB

The Determinants of Technological Change Towards Renewable Energies in the Electricity Industry: Perspectives from the Global Wind Energy Sector
Brief Description:

This project aims to identify why countries vary in their adoption rates of renewable energy technologies. Focusing on the wind energy sector within the electricity industry, this project examines cross-country differences in renewable energy technology adoption rates over the past 30 years. The study presents the hypotheses that (i) a nation's institutions moderate the ability of its national and regional policies to increase levels of renewable energy technology adoption in the wind energy sector; and (ii) a nation’s adoption activity is influenced by economic factors such as prices and the available supply of traditional energy sources. Furthermore, the study considers the effect of institutional factors such as path dependency in the electricity industry, knowledge ties between industry and research institutions, and policy risk, and how they may impede or enhance the effectiveness of policy instruments.

Stephen Lubkemann

Assistant Professor, Department of Anthropology, CCAS

Diasporas and Institution-Building in War-torn Societies: International Collaboration in Assessing the Methodological State of the Art
Brief Description:

This project aims at convening a symposium of 15-20 leading researchers in order to share key methodological insights about displacement diaspora research. This group will: 1) be inter-disciplinary; and 2) have established records of fieldwork in/with displacement diasporas. In partnership with Oxford University and Tufts University, this conference will: 1) produce a landmark methodological volume to be published as a book or as a special peer-review journal edition; 2) consolidate GWU’s emerging international profile in contemporary diaspora research; 3) develop GWU’s working relationship with three key international centers in this field (COMPAS-Oxford, Danish Institute for International Studies, Tufts); 4) take steps to create an international network of diaspora research centers based on research collaboration and annual workshops; 5) enhance GWU’s standing with major donors interested in supporting “diasporas in war-torn societies” research; and 6) establish a stronger US institutional presence in an important domain of development and international security policy research.

Suzanne Kathleen McCoskey

Assistant Professor, Department of Economics, CCAS

Surviving (Even Thriving?) Under Excessive Volatility: A Case Study of the Firestone Plantation Company in Liberia from 1980 to 2007
Brief Description:

This research aims at determining how the Firestone Plantation Company in Liberia was able to survive in the presence of an extreme combination of domestic shocks and near chaos in the country during the years of 1980-2007. Thus, this study promotes the understanding of U.S. foreign direct investment (FDI) in developing countries, particularly in the presence of conflict. Further identifying reasons for Firestone’s survival could allow for competitive lessons learned for other U.S. companies interested in FDI in Africa. An additional hypothesis of the research is that the ability for Firestone to thrive, not only survive, in the future will depend on the institutional capacity of Liberia and its ability to work with the company to strengthen its bond with the people and future of the nation.

Michael Moore

Professor, Department of Economics, CCAS

Facing a Post-Multilateral Trade World: The Future of the WTO
Brief Description:

This project will consider the impact of the changing trade policy world on the World Trade Organization and what might me done to manage these changes, with a special focus on the U.S. and EU responses. Research will examine the following issues: what are the forces that are undercutting the WTO’s position as the principal anchor in the international trading system?; what are the implications for the WTO if it does not change its structure to deal with an alternative and emerging trade system?; can the U.S. and EU find a common approach to help guide a reformed international trade architecture and what features would it have?; and what are the implications of those changes for U.S. trade policy and U.S. businesses? The research will include interviews with U.S. trade policymakers in Washington, DC, EU trade policy officials in Brussels and WTO officials in Geneva.

Tjai M. Nielsen

Assistant Professor, Department of Management, GWSB
Associate Professor, Department of International Business, GWSB

Motivating Diaspora Homeland Investment
Brief Description:

This research project examines the role of diasporas in homeland Foreign Direct Investment (FDI) by: (i) identifying diaspora-oriented trade and investment promotion programs and services offered by homeland governments; and (2) exploring diaspora-related psychological motivations for homeland investment interest and action. Some of the specific questions addressed here concern the extent to which diasporas are viewed as important in their country's economic development, and how cultural similarities and business environment knowledge affect diaspora investment interest.

Publications:
Tjai Nielsen and Liesl Riddle. Bridging Cultural Distance: A Multi-level Model of Diaspora Homeland Investment

Abstract: Little is known about why diaspora members invest in their homelands or why investment intensity varies among diaspora communities. Employing an interdisciplinary approach, we generate a multi-level, conceptual model of diaspora homeland investment. Our model examines the effects of inter-diaspora cultural differences, support from diaspora organizations, and three types of investment expectations-financial, social, and emotional-to better understand this phenomenon.

Tjai Nielsen and Liesl Riddle. (In Press) "Partnering to Beckon Them Home: Public-Sector Innovation for Diaspora Homeland Investment Promotion" Public Administration and Development Journal.
Abstract :This paper examines a little-studied component of public administration existing in most countries around the world and particularly important for developing countries: national investment promotion agencies (IPAs). Diasporas are an increasingly important and relatively untapped resource for development and many homeland governments view diaspora foreign investment as key to their economic development. In addition to being generally under-resourced, many IPAs struggle to identify ways to effectively target, cultivate, and facilitate diaspora homeland investment (DHI). To accomplish these goals, these public-sector entities are beginning to identify and leverage key partnerships in the NGO sector. This paper describes the services IPAs offer and enumerates the challenges they face associated with DHI. Drawing on three illustrations of IPA-NGO partnerships, the paper develops preliminary tools for identifying and designing partnerships for the purpose of promoting DHI based on their scope, function, and degree of formality.


Diaspora Homeland Investment
Brief Description:

This project seeks to contribute to the literature on the role of diasporas in homeland foreign direct investment by: (i) empirically testing a multi-level model of diaspora homeland investment; (ii) exploring the process of interested diaspora homeland investors becoming actual investors; (iii) investigating how diaspora business incubators might play a vital role in encouraging diaspora homeland investment; and (iv) bringing together leading scholars to discuss the relationship between participation in transnational cultures and managerial attitudes, values, and performance.

Publications:
Nielsen, Tjai M. and Riddle, Liesl
, Why Diasporas Invest in the Homeland: A Conceptual Model of Motivation
Abstract: Little is known about why diaspora members invest in their homelands or why investment intensity varies among diaspora communities. Employing an interdisciplinary approach, we generate a multi-level, conceptual model of diaspora homeland investment. Our model examines the effects of inter-diaspora cultural differences, support from diaspora organizations, and three types of investment expectations—financial, social, and emotional—to better understand this phenomenon.

Diaspora Investment Motivation in Post-Conflict Economies
Brief Description:

Diaspora investment can be a critical source of foreign investment for countries experiencing post-conflict economic recovery. Gillespie, Riddle, Sayre, and Sturges (1999) argued that diaspora homeland investment is particularly useful for countries that are deemed less attractive by non-diaspora investors because of weak structural characteristics, inadequate infrastructure, and/or small domestic market size. In fact, politically and economically risky states are seeking creative ways of promoting diaspora homeland investment (Riddle, Brinkerhoff, & Nielsen, 2007). While diasporas constitute an important subset of global foreign investment, we know relatively little about what motivates individuals in the diaspora to invest in their home countries. As part of the GW Diaspora Capital Investment Project (GW-DCIP), our team will survey U.S. Afghans, Lebanese, and Liberians and conduct in-depth interviews with leaders of major diaspora organizations associated with each community. This approach will enable us to empirically examine: (1) the specific investment-facilitation roles that diaspora organizations play and their degree of efficacy; (2) the ways in which diaspora organizations impact these individual-investment motivations; and (3) the individual investment motivations among three different post-conflict diasporas.

Tjai M. Nielsen & Leisl Riddle

Assistant Professor, Department of Management, GWSB
Associate Professor, Department of International Business, GWSB

The Complex Dynamics of Diaspora Investment Motivation: A Comparative Analysis
Brief Description:

This project plans to study the mobilized diaspora communities of Ethiopia and Nigeria in the northeastern part of the US. Through interviews and surveys of diaspora organizations and key stakeholders within the Ethiopian and Nigerian embassies, will enable examination of: which diaspora organizations are most involved in promoting diaspora investment, specific investment-facilitation roles played by these organizations and degree of perceived efficacy, levels of interest of diasporans in various types of investment, level of actual investment activity and the financial, social and emotional motivations potentially driving diaspora investment. Field experiences and lessons learned during this research will be incorporated into MGT 358, Research Methods and Design, and interview data and survey findings will be used to enhance an existing teaching module on diaspora investment used in IBUS 269/190, Managing in Developing Countries.

Joseph Pelzman

Professor, Department of Economics, CCAS

Intra-Arab, Arab MENA-US and Arab MENA-EU Trade: Is It Too Little, Too Late? The Competitive Consequences of Arab Non-Oil Participation in the Global Economy to the US
Brief Description:

This study discusses the issues of international trade and regional integration for the Arab states of Middle East and North Africa (MENA). More specifically, the PI investigates the reasons behind the insignificant share of intra-Arab, MENA-US, and MENA-EU trade, and seeks to provide an answer to the following question: compared with a sample of other countries, with the same endowment and income, do Arab countries trade less with the EU, U.S., and intra-regionally with each other? In order to assess the competitiveness impact of the volume of intra-Arab and inter-regional trade on the U.S., one needs to make a judgment on the ‘normal or ‘expected’ level of trade in the absence of policy-related trade barriers. The project employs a basic gravity model as a method to measure this ‘expected’ level of intra- and inter-regional trade for the Arab MENA region.

Anupama Phene

Associate Professor, Department of International Business, GWSB

Capitalizing on Spillovers: The Cease of Immigration Indian Inventors
Brief Description:

Research points to a growing immigrant contribution to U.S. technological development particularly by Indian scientists with concentrations in high technology industries like computers and pharmaceuticals. This study tracks the development and innovation patterns of the immigrant inventor community and the process of their integration into the mainstream technological community in the U.S. The PI explores the effects of knowledge spillovers from four social networks based on geography, profession, organization and ethnicity on the quality of innovation that an immigrant, Indian inventor can produce. The PI further evaluates how immigrant inventors can overcome the lack of legitimacy in a foreign context by utilizing the mechanism of knowledge spillovers to improve the quality of their innovation.

Innovation and the Organization of R&D Activities in the Multinational Firm
Brief Description:

Research on multinational firm (MNC) innovation has examined the global dispersion of the firm's R&D network. However an area that has been largely overlooked in this research is how MNCs organize their global R&D networks and the consequent implications for firm innovation. Teece (1996) posits that firm organization is an important determinant of innovation and the links between firm structure and innovation process are poorly understood. We propose that in order to understand multinational firm innovation, it is critical to look beyond the existing emphasis of international dispersion of activity and evaluate how global R&D networks are organized. As the resource based view suggests it is not merely the possession of resources but the organization and management of these resources that determine firm capability and therefore competitive advantage. Our research question in this study is, "How does the organization of the MNCs global R&D network influence its innovation?". We evaluate the organization of the MNCs global R&D network by examining a) the national factors that determine configuration of the network and b) organizational factors that influence co-ordination within the network. We suggest that while configuration of the R&D network is important, effective co-ordination moderates the relationship between configuration and innovation, often compensating for the effects of a less optimal structure or strengthening the effects of an appropriate configuration.

Marie Price

Associate Professor, Department of Geography, CCAS

Transnational Washington: Leveraging Diasporic Entrepreneurship in a Global City
Brief Description:

This project seeks to contribute to the literature on the role of diasporas in homeland foreign direct investment by: (i) empirically testing a multi-level model of diaspora homeland investment; (ii) exploring the process of interested diaspora homeland investors becoming actual investors; (iii) investigating how diaspora business incubators might play a vital role in encouraging diaspora homeland investment; and (iv) bringing together leading scholars to discuss the relationship between participation in transnational cultures and managerial attitudes, values, and performance.

Marie Price, Elizabeth Chacko, & Robert Albro

Professor, Department of Geography, CCAS
Associate Professor, Department of Geography, CCAS
Associate Professonal Lecture, Department of Anthropology, CCAS

Transnational Washington: Diasporic Institutions
Brief Description:

The research project traces the transnational linkages and institutions that tie Washington, D.C. to numerous sending communities and their impacts on development. The project’s focus is on seven of the largest country-of-origin diaspora groups in the region (Afghans, Bolivians, Ethiopians, Indians, Koreans, Salvadorans, and Vietnamese), and it elaborates on the diversity of transnational actors which have converged upon a relatively new urban immigrant destination. The study’s objective is to demonstrate the complementary and competing strategies of diverse immigrant streams and organizations while providing the unifying context of one urban space – Greater Washington. Another potential of the project is to theoretically advance our understanding of how immigrant transnational networks in global cities create new institutions that promote development.

Anna Rakhman

Doctoral Student, Department of Economics, CCAS

Timing Matters: Market Structure, Export Composition, and Growth
Brief Description:

This research project expands on the existing literature in international trade which examines the relationships between the composition of a country's export basket and its economic growth. In particular, this study analyzes how the relationship between specific exports and per capita GDP growth changes over time based on the extent of other countries' exports of competing goods.

Brett Rayner

Doctoral Student, Department of Economics, CCAS

Remittances and the Real Exchange Rate
Brief Description:

The goal of this study is to determine the effects that remittances may have on the equilibrium real exchange rate and therefore the competitiveness of the export sector in the receiving country. The PI investigates the extent to which the marginal propensity to consume non-tradables is different from that of tradables in remittance receiving households. The relevant question is how expenditures stemming from remittance receipts affect the relative demand and therefore relative price of non-tradables. There exists a lack of study in this area due to the fact that there is a conventional wisdom which suggests that households or individuals will spend their income without regard to the source of that income. However, the PI contends that, compared to other income, remittances are used in different way by the receiving households. This study uses household-level micro data in order to determine how remittances are used.

Liesl Riddle

Associate Professor, Department of International Business, GWSB

African Diaspora Marketplace Longitudinal Study
Brief Description:

Most research on diaspora investment is based on singular case studies and cross-sectional surveys. What is lacking is a multi-method, empirical examination of the diaspora investment process through time so that diaspora investors' investigation, business launch, and early start-up experiences can be better understood. The proposed three-year longitudinal study of the participants in the African Diaspora Marketplace will illuminate the unique challenges and opportunities faced by diaspora entrepreneurs in the early phases of their business development. The study will consist of quantitative tracking surveys as well as qualitative in-depth case studies of a subsample of participants. It will explore if and the degree to which investor motivations (pecuniary and non-pecuniary) change as the investor becomes more involved in business activity in the country of origin. It will investigate whether and to what extent investor perceptions of business environment obstacles change as the investor gains greater hands-on experience in the country-of-origin economy. It also will examine how investors utilize their social networks to gain access to the financial, human, and social capital needed to launch their investments.

Publications:
African Diaspora Marketplace: Investment Interest Survey Report
African Diaspora Marketplace: Investment Interest Survey Factsheet

Jorge Rivera

Associate Professor, Department of Strategic Management and Public Policy, GWSB

Legal Origins, Democracy, and Environmental Technology Innovation: A Cross-Country Examination
Brief Description:

Environmental technology innovation has long been characterized as offering the best prospect for responding to environmental needs with minimal impact on business. Yet despite this potential "win-win" for businesses, the production of this innovation is far from even across countries. In order to shed light on the drivers of ET innovation, researchers have examined a variety of policy instruments. However, evidence regarding the effectiveness of specific policy instruments in stimulating ET innovation has been inconclusive. In this study, we propose that missing from this emerging body of literature has been sufficient attention to the broad legal and political institutional contexts from which ET innovation may also emanate. Specifically, we argue that the legal origins of a country affect its orientation toward ET innovation activity. Further, we argue that the level of democracy should positively moderate these relationships. Thus, in this study we propose to examine the following research question: how does national institutional environment (i.e. legal, political) influence the development of ET innovations? To test our proposed relationships, we plan to use panel logit and negative binomial regression techniques and draw wind-energy patent data from The National Bureau of Economic Research's (NBER) database of all patents granted in the United States between 1976-06.

Voluntary Environmental Regulation in Central America: Assessment of Costa Rica's Blue Flag Certification Program
Brief Description:

The broad objective of this project is to evaluate the performance of Costa Rica’s voluntary Blue Flag certification program, focusing on beach communities. More specifically, we seek to address two questions:

i. What factors drive participation of beach communities in the Blue Flag program?
ii. Has the program had a significant impact?

The Blue Flag Program is an international initiative that has been implemented in about 40 countries across the world. Originally created in France in 1987, it has independently certified the environmental quality or more 3000 tourist destinations. The program requires businesses operating in a specific tourist destination to apply jointly to receive certification. Since most, if not all, other voluntary regulatory programs require individual firm participation, the requirement for joint application and certification offers a rare opportunity to study voluntary business collective action to promote positive environmental externalities. In Costa Rica, the Blue Flag program was launched in 1996 and it includes more that 100 tourist destination communities that have received different levels of certification. We will focus on beaches communities. A total of 58 Costa Rican beaches have been certified.

Business Responses to the Protective Public Policy Process
Brief Description:

Building on a previously-funded GW-CIBER project, this study explores the business responses to the enactment and implementation of public policies requiring enhanced social labor standards, worker health and safety, consumer protection, and environmental protection. The current study aims at developing a more robust theoretical model of the protective policy process-business response relationship.

Publications:

Voluntary Environmental Programs: A Policy Perspective
Edited by Peter deLeon and Jorge E. Rivera

Protecting the environment is often not the primary objective of businesses. As the world has become more environmentally aware, the necessity of environmental regulations becomes apparent. Voluntary Environmental Programs: A Policy Perspective examines different approaches to environmental protection in business. Environmental improvements on the part of industry often result from government regulations that command certain action on the part of industry and then control how well they perform. An alternative approach is Voluntary Environmental Agreements (VEA), where firms voluntarily commit to make certain environmental improvements individually, as part of an industry association, or under the guidance of a government entity. For example, many new initiatives targeted towards climate change originate from companies that voluntarily commit to reduce their carbon output or "footprint." Voluntary Environmental Programs (VEP) provides an overview of current research on VEPs, looking at issues such as what motivates firms to participate, how a VEP structure affects a company's efficiency and credibility with stakeholders, and who monitors compliance of participants. This current work examines how a firm's environmental performance over time compares with VEP commitments. This book also discusses the particular considerations for VEPs in developing countries, where information flows and regulatory oversight capacities differ from the U.S. This book has been published by Lexington Books, click here for further information.

The Public Policy Process and Business Political Strategies in Developing Nations
Brief Description:

This project investigates business political strategies addressing governmental demands for increased corporate social/environmental responsibility in developing countries. The PI develops a framework which explains the underlying institutional logic determining business political strategies adopted during the different stages of the public policy process in developing countries. Additionally, several cases are identified and documented that illustrate how business political resistance to environmental/social responsibility and regulatory demands varies depending on the stage of the policy process and country contextual characteristics.

Publications:
Jorge Rivera and Kalim Shah.
Export processing zones and corporate environmental performance in emerging economies: The case of the oil, gas, and chemical sectors of Trinidad and Tobago
Abstract:
Export processing zones (EPZs) are increasingly being established to promote economic growth in developing countries. However, they remain controversial and are often criticized for being associated with a "race to the bottom" characterized by the easing of labor and environmental standards. This paper investigates whether the decision to locate facilities inside these zones is associated with higher corporate environmental performance. Findings indicate that facilities operating in Trinidad and Tobago's EPZs are more likely to show higher corporate environmental performance than those outside. Additionally, firms in state-managed zones appear to show higher corporate environmental performance than those located in privately managed zones. Enhanced institutional pressures from regulators, local communities, and fellow tenant firms may explain these
differences. These results suggest that environmental policy makers and environmentalists can take advantage of already established EPZs to promote enclave enhanced institutional pressures associated with superior corporate environmental performance.
* See Also: Results Table Erratum

Jorge Rivera, Jennifer Oetzel, Peter deLeon, and Mark Starik. Business responses to environmental and social protection policies: toward a framework for analysis
Abstract:
This conceptual paper seeks to advance neo-institutional work that has traditionally portrayed environmental and social protection policies as constraints followed by businesses. Drawing from the policy sciences literature, we propose that in the United States, businesses tend to show increasing resistance as the protective policy process moves from initiation to selection and growing cooperation thereafter. Most importantly, we also contribute to the neo-institutional theory literature by positing that this inverted U-shaped policy process business response relationship proposed for the U.S. context may be moderated by variations in the level of democracy, system of interest representation, regulatory approach, and national income.

Holger Schmidt

Assistant Professor, Department of Political Science, CCAS
&Transnational Terrorism: An Empirical Investigation

Globalization & Transnational Terrorism: An Empirical Investigation
Brief Description:

This project examines the links between economic globalization and countries’ vulnerability to transnational terrorism. Many analysts and policymakers assert that the current surge of transnational terrorist activity is at least partly rooted in a backlash against economic globalization. While this argument is not entirely implausible, the evidence used to support it is anecdotal. The goal of the present study is to move this debate onto more solid empirical ground by conducting a quantitative analysis of the link between economic openness and the level of terrorist activity experienced by countries. In addition, the project also aims to examine whether U.S. businesses abroad are at particular risk when operating in societies that are underdeveloped yet highly exposed to economic globalization, or whether moves toward greater economic openness help reduce the likelihood that U.S. firms and personnel become the targets of transnational terrorist activity.

Susan Sell

Professor, Department of Political Science, CCAS

The Politics of International Investment and Intellectual Property Rights
Brief Description:

This project proposes to design a graduate course for the ESIA International Trade and Investment Program that addresses and analyzes the politics of investment and intellectual property. The course will provide students with an understanding of the firm-state-society relations that animate this complex and dynamic policy area. The course will be team-taught with Jacques Gorlin, an economics PhD who was a leading adviser to the Fortune 500 business firms (including Microsoft, IBM, Monsanto, and Merck) that succeeded in developing the WTO Agreement on Trade-related Intellectual Property Rights (TRIPs). The course will exist as a three or four week course in May 2012. The first two or three weeks would consist of intensive seminars in which students would learn about the issues, read primary and secondary source material, and hear from DC-based industry, government, and NGO representatives active in this policy area. After providing students with sufficient background about the issues, the controversies, the core actors, the interests, and the relevant institutions, we would bring the students to Geneva for a week of briefings and lectures by international organization representatives (e.g., from WIPO and WTO), developing country think tanks (Third World Network, the South Centre, and International Center for Trade and Sustainable Development), Geneva-based industry associations (e.g., International Federation for Pharmaceutical Manufacturers Association), and IP-Watch.

Tara Sinclair

Assistant Professor, Department of Economics, CCAS

Permanent and Transitory Macroeconomic Relationships between the US and Developing Countries
Brief Description:

This project explores the relationships between macroeconomic variables over time for the U.S. and China. The research uses a recently developed statistical model and a new macroeconomic dataset for China. The new statistical model allows to distinguish cross-country correlations driven by the relationships between permanent innovations, caused by real shocks such as changes in technology and institutions, from those between transitory or cyclical movements, caused by changes in aggregate demand in the two countries. The new dataset addresses some of the concerns about the quality of Chinese macroeconomic data.

Working Paper:
Tara Sinclair and Yueqing Jai. Permanent and Transitory Macroeconomic Relationships between the US and China
Abstract: The relationships between the economic fluctuations of the US and China, the largest developed and developing countries respectively, are very important not only to both countries but also to the world economy. This paper applies a two-country correlated unobserved components model to explore the relationships between the real output fluctuations for the US and China over the period 1978q1-2008q4. The model allows us to distinguish cross-country correlations driven by permanent movements, caused by real shocks such as changes in technology and institutions, from those due to transitory movements. We find that the two countries share approximately half of their permanent and transitory shocks. With information from the real output of China, the magnitude of estimated transitory components fluctuations of the US real GDP is larger, while the transitory component of China’s real GDP does not change much with the addition of US information.


Characteristics and Implications of Chinese Macroeconomic Data Revisions
Brief Description:

Firms depend on macroeconomic data as key inputs to their production and pricing decisions. Generally data released by official government agencies are considered trustworthy and valuable for business decisions, but the quality of data released by the China's statistical authorities has regularly been questioned by both the media and researchers. One aspect of the data quality that has yet to be fully studied is the pattern of the revisions to the data made by the Chinese government. Two different types of data revisions are made: regular revisions as delayed data arrive and more substantial benchmark revisions which have occurred following the two economic censuses. Open research questions include: Are the revisions more commonly made in one direction or another resulting in a bias in the revisions on average? Is there a pattern in the revisions over time, such as is a positive revision more likely to be followed by another positive revision, or are there certain times when larger revisions are likely to occur? The proposed study will substantially improve our understanding of the properties of Chinese statistical data releases.

Stephen Smith

Professor, Department of Economics, CCAS

The Role of Targeted Promotion of FDI in Industrialization Strategy: An Analysis of Institutions Promoting or Curtailing FDI into Developing Countries in Light of Recent Research
Brief Description:

This project examines incentives designed to promote (or sometimes channel or curtail) Foreign Direct Investment (FDI) into developing countries by multilateral, bilateral, and domestic developing country agencies. The project focuses on theory and (conjecture) practice of targeted promotion of particular types of FDI as part of an industrialization strategy (and more broadly of national economic development policies). In particular, the study will examine the relationship between strategic export promotion and strategic FDI promotion. Related economic development policy issues to be considered in the context of FDI promotion are human capital policy and infrastructure planning.

Organizational Challenges for Businesses, PVOs and Developing Country Partners: Strategy of Bottom-Up Market Development, Scope of International Enterprises, and the Case of BRAC
Brief Description:

This project presents an in-depth analysis of the management and influence of BRAC, the world’s largest NGO and developing-country-based non-profit multinational enterprise. Strategies for escaping poverty traps and helping the ultrapoor reach the first step of the economic ladder are researched, and comparative case studies, as well as econometric research on household impacts with different program combinations, are examined. Uganda and Bangladesh are the two focal countries of this study.

Publications:
M. Shahe Emran, Virginia Robano, and Stephen Smith. Assessing the Frontiers of Ultra-Poverty Reduction: Evidence from CFPR/TUP, an Innovative program in Bangladesh
Abstract:
This paper uses household panel data to provide evidence on the effects of a pioneering anti-poverty program of BRAC in Bangladesh (called Challenging the Frontiers of Poverty Reduction/Targeting the Ultrapoor, or CFPR/TUP) that attempts to target the poorest of the poor. We focus on the effects of program participation on a set of household outcomes including food security, income, and asset accumulation. To construct appropriate treatment-control groups, we partition the sample using type 1 and type 2 assignment errors according to BRAC's criteria for inclusion into and exclusion from the TUP program. We use a wide set of econometric approaches including the difference-in-difference matching estimator to identify and estimate the average treatment effect. To capture the potential heterogeneity of the treatment effect, we use a quantile difference in difference approach. The evidence shows that program participation had a significant positive effect on income, and food security of the ultra poor, but there is weak or no evidence in favor of a program impact on health related outcomes and ownership of homestead land. The quantile difference-in difference results show that the lowest two deciles get much less benefit from program participation compared with the two highest deciles among the ultrapoor.

Stephen Smith and Sumit Joshi. Endogenous Formation of Coops and Cooperative Leagues
Abstract: The labor-managed Mondragon cooperatives in the Basque country, and La Lega coops concentrated in North Central Italy, are grouped into leagues that enable them to reap economies of scale in key services such as R&D, marketing and finance. These leagues are relatively rare and there are fewer than a dozen of them globally. We develop a game-theoretic model of league formation to capture some of the strategic incentives behind the formation of labor-managed cooperatives (coops) and their agglomeration into a league.We then compare these incentives with those of conventional profit-maximizing firms to organize into a league. The main result of this paper shows that a divergence in these incentives stemming from their organizational differences may lead to the formation of a league of firms but not one of coops. This turns out to be true even though the coop has lower costs of production and the existence of a coop league would have been socially efficient. Anticipating the non-existence of a coop league then creates a disincentive for individual agents to form coops in the first place. This explains the relative rarity of coops, competing individually or as a part of a league, with conventional firms in imperfect markets.

Jeremey Streatfeild

Doctoral Student, Department of Political Science, CCAS

The Business Climate in Sierra Leone for US Companies: Consequences of US and Chinese Economic Policy on African Institutional Development
Brief Description:

This research project investigates how U.S. trade and investment policies affect development of institutions in Sierra Leone to provide a more transparent and predictable climate for US businesses and whether this process is undermined or aided by China’s growing economic role in the country. From an academic standpoint, Sierra Leone provides a test case of whether political and economic institutions can arise “bottom-up” through economic development, as the Chinese model appears to suggest, or whether economic development must be coordinated with political development in order to provide a longer term stable business climate for US interests, as the U.S. model and the literature suggest.

Emmanuel Teitelbaum

Assistant Professor, Department of Political Science, CCAS

How Do Labor Standards Affect Trade and Investment in Developing Countries
Brief Description:

In recent years, social scientists have become increasingly interested in how government respect for worker rights affects trade and investment in low- and middle-income countries. According to the general discussion in the econometric literature, higher labor standards result in increased labor costs. If the principle comparative advantage of developing countries lies in their low labor costs, and higher labor standards result in higher level of unionization and therefore higher wages, more respect for worker rights should cut against export performance and foreign direct investment (FDI). However, the literature examining how worker rights affect investment has been characterized by contradictory findings. A fundamental reason for this may be that the mechanisms through which labor standards affect trade and investment have not been fully explored. Therefore, the PI takes up on investigating one such underdeveloped mechanism of this relationship, and this mechanism refers to the argument that higher labor standards facilitate trade and investment by enhancing social stability and promoting human capital.

Working Paper:
Emmanuel Tietelbaum.
Measuring Trade Union Rights Through Violations Recorded in Textual Sources: An Assessment
Abstract: The author uses Item Response Theory to evaluate the increasingly prominent method of measuring labor rights developed by Kucera (2007). The analysis shows that most of the component items in the Kucera index relate to the same latent variable, which can be construed as ‘the propensity to violate labor rights.’ At the same time, individual country scores highlight the method’s inability to distinguish between countries known to have excellent respect for worker rights and extremely repressive countries. The final section tests the robustness of Kucera’s finding that there is no relationship between observed labor rights violations and foreign direct investment.

The Implications of Union Political Ties for Economic Development
Brief Description:

This project examines the economic effects of union political ties in developing countries by testing the hypothesis that major political parties restrain and institutionalize protest. For this purpose, the PI compiles three original cross-national datasets, which help (i) determine how the political structure of the labor movement affects worker protest, (ii) the ability of the working-class to influence legislative outcomes, and (iii) the impact of labor protest and working-class political mobilization on economic performance.

Publications:
Emmanuel Tietelbaum. Globalization, Regime Type and Labor Protest in Developing Countries
Abstract: How can states best manage the social dislocations associated with rapid economic development and greater exposure to market forces? In this paper, we explore the relationship between foreign direct investment (FDI), regime type and strikes in low-and middle-income countries. We argue that FDI produces social tensions and a higher demand for labor that can result in higher levels of industrial conflict. However, the effect of FDI is moderated by regime type. While democracies tend to have higher levels of protest overall, they are better able to cope with the strains arising from FDI because conflict can be channeled through state institutions or union-party ties. More institutionalized authoritarian regimes or hybrid regimes also perform better than other kinds of authoritarian regimes. We test the argument using a new dataset of labor protest in low- and middle-income countries for the period 1980-2005.

Robert Weiner

Professor, Department of International Business, GWSB

Transparency in Foreign Direct Investment: Theory and Evidence from Petroleum-Reserve Acquisitions
Brief Description:

Transparency in multinational enterprises (MNEs) is widely viewed by policy makers as necessary for alleviating the challenges of poor governance, weak institutions, and corruption common in developing countries. These problems are acute in oil-rich countries, a phenomenon known as the "resource curse." Recent rulemaking under the Dodd-Frank Wall Street Reform and Consumer Protection Act in the United States, and similar laws around the world, seeks to mandate project-level disclosures by extractive industry firms listed on stock exchanges. These measures have proven highly contentious among MNEs, who contend that mandating disclosure of proprietary information increases their risks abroad, especially when competing against foreign state-owned enterprises (SOEs). Yet, scholarly work on MNE transparency is limited. Theory does not yield consistent predictions, and little empirical work has examined transparency in foreign direct investment, focusing instead on cross-country comparisons of domestic firms. To address these gaps, this project seeks to extend the literature in two ways. First, we will explicitly examine MNE transparency with respect to foreign investments, which we term investment transparency. Second, we expand beyond prior work that focuses solely on publicly traded companies to understand how SOEs differ from traditional MNEs in regards to transparency decisions. The implications of this project should be of interest to US policy makers, and MNE managers competing against increasingly-internationalized SOEs.

FDI & Energy Security. Do Managers Carry the Flag?
Brief Description:

The resurgence of the state in the global economy has led researchers to refocus on the effects of government actions. This paper investigates whether the return of state capitalism is taking place through multinational enterprises (MNEs), private as well as state-owned. In particular, we examine whether MNE managers act in the interest of their home-country policies in foreign direct investment (FDI) decisions, termed carrying the flag. While widely discussed in the press, state capitalism presents stiff research challenges - state objectives are typically hard to characterize at best, unclear or conflicting at worst. How can we determine if MNE managers are carrying the flag in the absence of clear home-country policy goals? We meet this challenge by examining an arena wherein the governments of some countries have a clearly stated goal - energy security, specifically access to oil.

Resource Nationalism Meets the Market: Competition between Private and State-Owned Enterprise in Oil
Brief Description:

This project examines the impact of resource nationalism in oil industry (where state-owned enterprises remain dominant) on the competitiveness of multinational enterprises (MNEs). More specifically, it investigates if the state role in the industry provides an unfair competitive advantage to national oil companies (NOCs) over MNEs. The assessment of NOC-MNE competition involves the identification of the market with (i) relevance to resource nationalism; (ii) head-to-head competition between the two groups; (iii) many transactions (to permit statistical analysis); and (iv) detailed information about each transaction and its counterparties, including their ownership.

Energy Security in a Market Era
Brief Description:

This project investigates the role of institutions in responding to oil shocks, as well as host-government/petroleum-MNE relationships. The PI analyzes the reasons behind the dramatic price spikes and the likely effects on oil exporters and importers, as well as on the international petroleum industry. The project has two components: (i) a workshop, aimed at policymakers, researchers, development practitioners, institutional investors, and industry people, to evaluate the state of knowledge in the area and discuss future directions; and (ii) research into political-risk aspects of energy security.

Publications:
Reid Click and Robert Weiner. Does the Shadow of Risk Fall on Asset Prices?

Abstract: In the oil sector, emerging economies appear to be moving in the opposite direction from that assumed in the conventional wisdom on their integration into the world economy - as oil prices have soared, institutions such as regulatory stability, and contract sanctity and enforcement appear to be in decline, while political risk appears to be increasing. Does institutional deterioration harm the value of the very natural resources on which these countries depend? This paper investigates the effect of political risk on the value of real assets - here petroleum (crude oil and natural gas) reserves - associated with the country in which the reserves are located. We utilize a global transactions database of 1,655 mergers and acquisitions in which petroleum reserves were traded during the period 2000-2006. To capture the riskiness of the location, we consider the political risk rating calculated by International Country Risk Guide (ICRG) and the country risk rating published in Institutional Investor. Controlling for factors that affect reserve value, we demonstrate the value-destruction of political risk, and estimate the asset discount for 37 countries. Furthermore, contrary to the assumption in the scholarly literature, we show that the discount depends on market conditions - the higher the expected future market prices of oil and gas, the larger is the discount, regardless of a country's riskiness. Our findings suggest that treating political risk and market risk separately is likely to yield inaccurate estimates of asset value. The results are salient for evaluating investment opportunities in industries where political risk depends on world markets.