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on China |
| By: | Fung, K.C. (BOFIT); Korhonen, Iikka (BOFIT); Li, Ke (BOFIT); Ng, Francis (BOFIT) |
| Abstract: | China has emerged as one of the world's leading recipients of foreign direct investment (FDI). Meanwhile, the successful transition experience of many Central and Eastern European countries (CEECs) also enables them to attract an increasing share of global foreign investment, particularly from the European Union (EU). What is the relationship between inward FDI of China and the CEECs? We conceptualize the relationship according to three alternative paradigms: 1) China and the CEECs each exist in its own regional production network, with no linkage between FDI flows into China and into CEECs; 2) China and the CEECs together comprise a global production network, so that FDI into China is positively related to FDI into CEECs; and 3)FDI into China is a substitute for FDI into the CEECs, so that the correlation between them is negative. In this paper, we employ panel data to study this issue in detail. Specifically, we compare empirical estimates for 15 CEECs over the 15-year period 1990-2004 using four different econometric approaches: FGLS with Random effects, FGLS with fixed effects, EC2SLS and GMM. The result supports the conclusion that China's inward FDI does not crowd out CEECs' inward FDI. In fact, it shows that in some circumstances FDI flows in these two regions are moderately complementary. In addition, our analysis confirms the importance for FDI flows of recipient-country characteristics such as market size, degree of trade liberalization and labor quality, as well as a healthy global capital market. |
| Keywords: | foreign direct investment (FDI); regional networks; global supply chain; China’s FDI; Central and Eastern European Countries’ FDI |
| JEL: | F20 F21 F43 |
| Date: | 2008–06–17 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2008_009&r=cna |
| By: | Robert Koopman; Zhi Wang; Shang-Jin Wei |
| Abstract: | As China's export juggernaut employs many imported inputs, there are many policy questions for which it is crucial to know the extent of domestic and foreign value added in its exports. The best known approach - the concept of "vertical specialization" proposed by Hummels, Ishii and Yi (2001) - is not appropriate for countries that engage actively in tariff/tax-favored processing exports such as China, Mexico, and Vietnam. We develop a general formula for computing domestic and foreign contents when processing exports are pervasive. Because this new formula requires some input-output coefficients not typically available from a conventional input-output table, we propose a mathematical programming procedure to estimate these coefficients by combining information from detailed trade statistics with input-output tables. By our estimation, the share of foreign content in China's exports is at about 50%, almost twice the estimate given by the HIY formula. There are also interesting variations across sectors and firm ownership. Those sectors that are likely labeled as relatively sophisticated such as electronic devices have particularly high foreign content (about 80%). Foreign-invested firms also tend to have higher foreign content in their exports than do domestic firms. |
| JEL: | F1 O1 O53 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14109&r=cna |
| By: | Fidrmuc, Jarko (BOFIT); Korhonen, Iikka (BOFIT); Bátorová, Ivana (BOFIT) |
| Abstract: | We analyze the business cycles in China and in selected OECD countries between 1992 and 2006 using dynamic correlations. Nearly all OECD countries showpositive correlations of the very hort-run developments which may correspond to intensive supplier linkages. However, dynamic correlations at the business cycle frequencies are negative. Countries facing a comparably longer history of intensive trading links tend to show slightly higher correlations of business cycles with China. Even though trade and financial flows do not really increase correlations of business cycles between China and OECD countries, they lower the degree of business cycle synchronization within the OECD area. |
| Keywords: | business cycles; synchronization; trade; FDI; dynamic correlation |
| JEL: | E32 F15 F41 |
| Date: | 2008–06–17 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2008_007&r=cna |
| By: | Jie Zhu (School of Economics and Management, University of Aarhus, Denmark) |
| Abstract: | There exist dual-listed stocks which are issued by the same company in some stock markets. Although these stocks bare the same firm-specific risk and enjoy identical dividends and voting policies, they are priced differently. Some previous studies show this seeming deviation from the law of one price can be solved due to different ex- pected return and market price of risk for investors holding heterogeneous beliefs. This paper provides empirical evidence for that argument by testing the expected return and market price of risk between Chinese A and B shares listed in Shanghai and Shenzhen stock markets. Models with dynamic of Geometric Brownian Motion are adopted, multivariate GARCH models are also introduced to capture the feature of time-varying volatility in stock returns. The results suggest that the different pric- ing can be explained by the difference in expected returns between A and B shares in Chinese stock markets. However, the difference between market prices of risk is insignificant for both markets if GARCH models are adopted. |
| Keywords: | China stock market, market segmentation, expected return, market price of risk, GBM, GARCH |
| JEL: | C1 C32 G12 |
| Date: | 2008–03–05 |
| URL: | http://d.repec.org/n?u=RePEc:aah:create:2008-15&r=cna |
| By: | Bhaskar, Venkataraman |
| Abstract: | We consider a society where parents prefer boys to girls, but also value grandchildren. Parental sex selection results in a biased sex ratio that is socially inefficient, due to a congestion externality in the marriage market. Improvements in selection techniques aggravate the inefficiency. These results are robust to allowing prices in the marriage market, if the market is subject to frictions. We extend the model to consider gender preferences which depend upon family composition, allowing us to examine the possible sex ratio effects of China's one-child policy, and the implications of choice in societies where family balancing considerations are paramount. |
| Keywords: | congestion externality; gender bias; marriage market; sex ratio; sex selection |
| JEL: | J12 J13 J16 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6876&r=cna |