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Economies, Volume 5, Issue 4 (December 2017)

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Open AccessArticle The Effects of Real Exchange Rates and Income on International Tourism Demand for the USA from Some European Union Countries
Received: 27 October 2017 / Revised: 30 November 2017 / Accepted: 1 December 2017 / Published: 18 December 2017
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Abstract
This paper investigates the effects of real exchange rates and income on inbound tourism demand (tourist arrivals) from Germany, France, the UK, the Netherlands, Italy, Spain, and Sweden to the USA over the period 1996Q3–2015Q1. To achieve this aim, the Harmonized Index of
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This paper investigates the effects of real exchange rates and income on inbound tourism demand (tourist arrivals) from Germany, France, the UK, the Netherlands, Italy, Spain, and Sweden to the USA over the period 1996Q3–2015Q1. To achieve this aim, the Harmonized Index of Consumer Prices (HICP) for Restaurants and Hotels was used for the first time—instead of using the general Consumer Price Index (CPI)—to transform the nominal exchange rate into the real exchange rate as an independent variable in tourism demand analysis models. Panel co-integration analysis under the cross-sectional dependence (CD) test and common correlated effects (CCE) approach was applied. Empirical results show that tourists visiting the USA are more sensitive to changes in the real exchange rate than changes in GDP. While French tourists respond highly to the GDP, British tourists respond highly to the real exchange rate. It should also be noted that the UK, having the highest responsiveness to the real exchange rate, is a country outside the Eurozone and also intends to leave the European Union. Full article
(This article belongs to the Special Issue Tourism Economics)
Open AccessArticle Determinants of Related and Unrelated Export Diversification
Received: 14 July 2017 / Revised: 1 December 2017 / Accepted: 8 December 2017 / Published: 13 December 2017
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Abstract
This paper contributes to the literature on determinants of the export diversification by introducing related variety (RV) and unrelated variety (UV) in the analysis in addition to the traditional entropy based measure at three-digit Standard International Trade Classification (SITC) level, overall variety (OV).
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This paper contributes to the literature on determinants of the export diversification by introducing related variety (RV) and unrelated variety (UV) in the analysis in addition to the traditional entropy based measure at three-digit Standard International Trade Classification (SITC) level, overall variety (OV). RV measures variety in cognitively related industries, while UV measures variety in industries that are unrelated to each other. Studies on RV and UV have shown that the dynamics of their relationship with economic growth and innovation may differ and one would expect that the determinants of RV and UV may also be different. Therefore, using data on manufacturing sector exports for 130 countries from 1996 to 2011, this paper identifies the determinants of export diversification with primary focus on foreign direct investment as an external source of knowledge and a stimulus to entrepreneurship and human capital as a measure of productive capabilities. Considering the concern of endogeneity bias, estimations of the econometric models were performed using generalized method of moments. Findings show that some of the determinants of diversification affect RV, UV and OV differently. For instance, foreign direct investment (FDI) negatively affects RV while it has no significant relationship with OV and UV. Moreover, interaction of human capital with FDI appears to be positive and significant for UV and RV while interaction of human capital with trade openness is significant and positive for RV only, showing the importance of knowledge through external sources in the process of related diversification. Full article
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Open AccessArticle The Consequences of Corruption on Inflation in Developing Countries: Evidence from Panel Cointegration and Causality Tests
Received: 6 October 2017 / Revised: 20 November 2017 / Accepted: 30 November 2017 / Published: 11 December 2017
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Abstract
Up until the 1980s, studies on corruption were dominated by disciplines of public administration and sociology. In the following years, however, economists have also provided a good amount of research on this issue. According to Transparency International Agency, corruption, which has a negative
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Up until the 1980s, studies on corruption were dominated by disciplines of public administration and sociology. In the following years, however, economists have also provided a good amount of research on this issue. According to Transparency International Agency, corruption, which has a negative impact on most macroeconomic indicators, is “the abuse of entrusted power for private gain”. Even though the disruption of corruption causing weak growth and investment rates has long been examined, there is little evidence regarding its impact on inflation. In this study, the nexus between corruption and inflation was investigated for 20 countries over the period 1995–2015. Estimation results indicated that high corruption increased inflation rates, and that there was a unidirectional causal relationship from corruption to inflation for ten countries in the sample. Full article
Open AccessArticle Do Technological Innovations Affect Unemployment? Some Empirical Evidence from European Countries
Received: 16 October 2017 / Revised: 25 November 2017 / Accepted: 28 November 2017 / Published: 7 December 2017
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Abstract
This paper analyses theoretical and empirical scientific literature about the impact of technological innovations on unemployment, considering the former as a key driver of long-term productivity and economic growth. Using panel data from 25 European countries for the period of 2000–2012, we aim
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This paper analyses theoretical and empirical scientific literature about the impact of technological innovations on unemployment, considering the former as a key driver of long-term productivity and economic growth. Using panel data from 25 European countries for the period of 2000–2012, we aim to examine whether technological innovations affect unemployment. We used triadic patent families per million inhabitants as our main proxy for technological innovations, as well as other unemployment controls, in our model, which were estimated using System Generalized Method of Moments (SGMM). Finding no significant relationship between technological innovations and unemployment in our base estimation, we re-estimated it testing the impact with a time lag as well as using alternative proxies for technological innovations. Overall, the research estimations do not suggest that technological innovations have an effect on unemployment. Full article
(This article belongs to the Special Issue Innovation and Economic Development)
Open AccessArticle An Inverse Problem Study: Credit Risk Ratings as a Determinant of Corporate Governance and Capital Structure in Emerging Markets: Evidence from Chinese Listed Companies
Received: 2 May 2017 / Revised: 5 September 2017 / Accepted: 19 October 2017 / Published: 29 November 2017
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Abstract
Credit risk rating is shown to be a relevant determinant in order to estimate good corporate governance and to self-optimize capital structure. The conclusion is argued from a study on a selected (and justified) sample of (182) companies listed on the Shanghai Stock
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Credit risk rating is shown to be a relevant determinant in order to estimate good corporate governance and to self-optimize capital structure. The conclusion is argued from a study on a selected (and justified) sample of (182) companies listed on the Shanghai Stock Exchange (SHSE) and the Shenzhen Stock Exchange (SZSE) and which use the same Shanghai Brilliance Credit Rating & Investors Service Company (SBCR) assessment criteria, for their credit ratings, from 2010 to 2015. Practically, 3 debt ratios are examined in terms of 11 characteristic variables. Moreover, any relationship between credit rating and corporate governance can be thought to be an interesting finding. The relationship we find between credit rating and leverage is not as evident as that found by other researchers for different countries; it is significantly positively related to the outside director, firm size, tangible assets and firm age, and CEO and chairman office plurality. However, leverage is found to be negatively correlated with board size, profitability, growth opportunity, and non-debt tax shield. Credit rating is positively associated with leverage, but in a less significant way. CEO-Board chairship duality is insignificantly related to leverage. The non-debt tax shield is significantly correlated with leverage. The correlation coefficient between CEO duality and auditor is positive but weakly significant, but seems not consistent with expectations. Finally, profitability cause could be regarded as an interesting finding. Indeed, there is an inverse correlation between profitability and total debt (Notice that the result supports the pecking order theory). In conclusion, it appears that credit rating has less effect on the so listed large Chinese companies than in other countries. Nevertheless, the perspective of assessing credit risk rating by relevant agencies is indubitably a recommended time dependent leverage determinant. Full article
Open AccessArticle Analysis of Variance of the Effects of a Project’s Location on Key Issues and Challenges in Post-Disaster Reconstruction Projects
Received: 2 October 2017 / Revised: 1 November 2017 / Accepted: 6 November 2017 / Published: 27 November 2017
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Abstract
After a disaster, the reconstruction phase is driven by immediate challenges. One of the main challenges in the post-disaster period is the way that reconstruction projects are implemented. Reconstruction cannot move forward until some complex issues are settled. The purposes of this research
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After a disaster, the reconstruction phase is driven by immediate challenges. One of the main challenges in the post-disaster period is the way that reconstruction projects are implemented. Reconstruction cannot move forward until some complex issues are settled. The purposes of this research are to highlight the issues and challenges in post-disaster reconstruction (PDR) projects and to determine the significant differences between the issues and challenges in different locations where PDR projects are carried out. The researchers collected data within international non-governmental organisations (INGOs) on their experience of working with PDR projects. The findings of this research provide the foundation on which to build strategies for avoiding project failures; this may be useful for PDR project practitioners in the future. Full article
(This article belongs to the Special Issue Natural Hazards and Economic Development)
Open AccessArticle Effects of Cost Factors on National Manufacturing Based on Global Perspectives
Received: 11 September 2017 / Revised: 24 October 2017 / Accepted: 9 November 2017 / Published: 20 November 2017
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Abstract
Currently, the real economy is the important basis for the development of a country, especially after the global financial crisis in 2008. Given that the manufacturing industry is the main part of the national real economy, many developed and developing countries have paid
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Currently, the real economy is the important basis for the development of a country, especially after the global financial crisis in 2008. Given that the manufacturing industry is the main part of the national real economy, many developed and developing countries have paid considerable attention to its significance. This study focused on cost factors given that they influence national manufacturing development. Initially, this study proposed two elements, namely, manufacturing development scale and manufacturing development level, to evaluate national manufacturing development from two aspects: quantity and quality. Subsequently, we extracted a series of cost factors on the bass of the theoretical framework and literature, including labor costs, financing costs, tax and rental costs, energy and raw materials, foreign trade exports and business environments. On the basis of the data of 13 main manufacturing countries around the world from 2000 to 2015, we tested the influence degree of each cost element index on the scale and level of national manufacturing industry development through a two-way fixed effects model and incorporated it with the development of China’s manufacturing industry as a case study. Finally, we deduced the future development trend of the manufacturing industry by specifically analyzing the cost factors affecting the development of this industry and provided policy suggestions. The main innovation and contribution of this study including: to comprehensively evaluate the national manufacturing development from two aspects, namely, “quantity” and “quality”; to identify the impact of national cost of the six elements; to demonstrate and determine the extent of its impact on the development trend of manufacturing sector and carry out pre-judgment through empirical research on each indicator; to provide policy recommendations targeted for each of the indicators. Full article
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Open AccessArticle An Investigation of (Non-) Inclusive Growth in Nigeria’s Sub-Nationals: Evidence from Elasticity Approach
Received: 28 August 2017 / Revised: 5 October 2017 / Accepted: 24 October 2017 / Published: 20 November 2017
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Abstract
This paper aims to estimate and rank the performance of sub-nationals in terms of their quality of growth using an index of inequality elasticity of poverty. The study puts forward a scenario matrix to hypothesize the four qualities of growth according to its
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This paper aims to estimate and rank the performance of sub-nationals in terms of their quality of growth using an index of inequality elasticity of poverty. The study puts forward a scenario matrix to hypothesize the four qualities of growth according to its interactions with inequality and poverty. This model is useful for developing countries that lack GDP data at the sub-national level, provided growth (at the national level) has been positive for the period under review. The study found that for Nigeria’s sub-nationals, the null hypothesis of non-inclusive growth was rejected for the different poverty measures. Full article
Open AccessArticle Is There a Limit to Growth? Comparing the Environmental Cost of an Airport’s Operations with Its Economic Benefit
Received: 25 July 2017 / Revised: 3 November 2017 / Accepted: 6 November 2017 / Published: 14 November 2017
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Abstract
With the growing global awareness of the requirement for sustainable development, economic development is no longer the sole objective of business activities. The need to find a balance between environmental impacts and economic benefits is especially the case for airport operations in or
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With the growing global awareness of the requirement for sustainable development, economic development is no longer the sole objective of business activities. The need to find a balance between environmental impacts and economic benefits is especially the case for airport operations in or around cities. This study measured the environmental costs and economic benefits and of an airport for a period of 10 years, using Taipei Songshan Airport for the empirical analysis, to examine whether the environmental costs could outweigh the economic benefits. Of all the environmental negative side effects, aircraft engine emissions and noise nuisance are considered the main sources of environmental impacts. The dose-response method and the hedonic price method, respectively, were used for estimating the social costs of these. Income generation from both direct and secondary employment is measured as economic benefits by applying the Garin-Lowry model, originally developed in 1966, for estimation of the employment multiplier. The results show that, in general, the operation of Taipei Songshan Airport brought more economic benefits than environmental costs. The sensitivity analysis of emissions and noise social cost parameters shows that the environmental costs might have exceeded the economic benefits in 2008 and 2009 in certain high emissions and noise social cost cases. Full article
(This article belongs to the Special Issue Pollution and Economic Development)
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Open AccessArticle Analysis of Supply and Demand to Enhance Educational Tourism Experience in the Smart Park of Yogyakarta, Indonesia
Received: 19 May 2017 / Revised: 20 October 2017 / Accepted: 30 October 2017 / Published: 13 November 2017
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Abstract
The Smart Park (also known as Taman Pintar) is a major educational tourist destination in Yogyakarta, which offers a variety of attractions that are very interesting for tourists. The main purpose of tourists visiting Smart Park is to obtain an educational tourism experience.
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The Smart Park (also known as Taman Pintar) is a major educational tourist destination in Yogyakarta, which offers a variety of attractions that are very interesting for tourists. The main purpose of tourists visiting Smart Park is to obtain an educational tourism experience. This subjective experience raises specific challenges for Smart Park as it works towards being a competitive destination. The purpose of this study is to analyze the aspects of the educational tourism experience that are affected by tourism demand and supply. Data were collected from surveys that were sent to 150 respondents and were analyzed using path analysis. The results show that tourism demand and supply contributed to the variation of tourism activities by 45.1%, while the remaining was explained by other variables, such as national budget, local budget, ticket sale, and cooperation with some stakeholders. Tourism supply had a higher effect than tourism demand. Tourism demand did not particularly affect tourism experience. However, the results of the path analysis indicate that tourism supply had direct and indirect effects on tourism experience through the variation of tourism activities, with the indirect effect being the most predominant. In the management of Smart Park, there is still a gap between tourism demand and supply, so the tourism experience has not been maximized to its full potential. Full article
(This article belongs to the Special Issue Tourism Economics)
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Open AccessArticle Urban Climate Vulnerability in Cambodia: A Case Study in Koh Kong Province
Received: 4 March 2017 / Revised: 17 October 2017 / Accepted: 19 October 2017 / Published: 7 November 2017
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Abstract
This study investigates an urban climate vulnerability in Cambodia by constructing an index to compare three different communes, Smach Meanchey, Daun Tong, and Steong Veng, located in the Khemarak Phoumin district, Koh Kong province. It is found that Daun Tong commune is the
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This study investigates an urban climate vulnerability in Cambodia by constructing an index to compare three different communes, Smach Meanchey, Daun Tong, and Steong Veng, located in the Khemarak Phoumin district, Koh Kong province. It is found that Daun Tong commune is the most vulnerable location among the three communes, followed by Steong Veng. Besides, vulnerability as Expected Poverty (VEP) is used to measure the vulnerability to poverty, that is, the probability of a household income to fall below the poverty line, as it captures the impact of shocks can be conducted in the cross-sectional study. It applies two poverty thresholds: the national poverty line after taking into account the inflation rate and the international poverty line defined by the World Bank, to look into its sensitivity. By using the national poverty line, the study reveals that more than one-fourth of households are vulnerable to poverty, while the international poverty threshold shows that approximately one-third of households are in peril. With low levels of income inequality, households are not highly sensitive to poverty; however, both poverty thresholds point out that the current urban poor households are more vulnerable than non-poor families. Full article
(This article belongs to the Special Issue Natural Hazards and Economic Development)
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Open AccessArticle Analyzing the Tourism–Energy–Growth Nexus for the Top 10 Most-Visited Countries
Received: 6 September 2017 / Revised: 15 October 2017 / Accepted: 18 October 2017 / Published: 30 October 2017
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Abstract
By using the Emirmahmutoglu–Kose bootstrap Granger non-causality method, this study explores the directions of causality among tourist arrivals, tourism receipts, energy consumption and economic growth for the top 10 most-visited countries (France, the USA, Spain, China, Italy, Turkey, Germany, the United Kingdom, Russia,
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By using the Emirmahmutoglu–Kose bootstrap Granger non-causality method, this study explores the directions of causality among tourist arrivals, tourism receipts, energy consumption and economic growth for the top 10 most-visited countries (France, the USA, Spain, China, Italy, Turkey, Germany, the United Kingdom, Russia, and Mexico) in the world. This study finds a variety of causal directions between the pair of analyzed variables for each country and the panel. Since cross-sectional dependence exists across the top countries for the analyzed variables, the bootstrap Granger causality test that accounts for the mentioned issue in the estimation process presumably produces reliable and accurate outputs. Further results and policy implications are discussed in this empirical study. Full article
(This article belongs to the Special Issue Tourism Economics)
Open AccessArticle Does Foreign Direct Investment Harm the Environment in Developing Countries? Dynamic Panel Analysis of Latin American Countries
Received: 12 September 2017 / Revised: 14 October 2017 / Accepted: 16 October 2017 / Published: 23 October 2017
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Abstract
This article sets out to study the FDI–environment nexus within a dynamic panel data framework. To that end, the pooled mean group (PMG) method of Pesaran et al. (1999) is used to assess the impact of FDI on CO2 emissions, controlling for
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This article sets out to study the FDI–environment nexus within a dynamic panel data framework. To that end, the pooled mean group (PMG) method of Pesaran et al. (1999) is used to assess the impact of FDI on CO2 emissions, controlling for income and energy consumption, using a panel of 17 Latin American countries. Our results using the full sample show that FDI increases CO2 emissions, confirming the pollution haven hypothesis. But when splitting the data into different income groups, FDI inflows only in high-income countries increase CO2 emissions. In addition, CO2 emissions with growth tend to increase monotonically within the full sample and middle-income countries. Finally, energy consumption is found to increase CO2 emissions in all cases: the full sample, high-, middle- and low-income countries. Full article
(This article belongs to the Special Issue FDI and Development: Emerging Issues)
Open AccessFeature PaperArticle Stochastic Dominance and Omega Ratio: Measures to Examine Market Efficiency, Arbitrage Opportunity, and Anomaly
Received: 23 August 2017 / Revised: 29 September 2017 / Accepted: 2 October 2017 / Published: 19 October 2017
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Abstract
Both stochastic dominance and Omegaratio can be used to examine whether the market is efficient, whether there is any arbitrage opportunity in the market and whether there is any anomaly in the market. In this paper, we first study the relationship between stochastic
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Both stochastic dominance and Omegaratio can be used to examine whether the market is efficient, whether there is any arbitrage opportunity in the market and whether there is any anomaly in the market. In this paper, we first study the relationship between stochastic dominance and the Omega ratio. We find that second-order stochastic dominance (SD) and/or second-order risk-seeking SD (RSD) alone for any two prospects is not sufficient to imply Omega ratio dominance insofar that the Omega ratio of one asset is always greater than that of the other one. We extend the theory of risk measures by proving that the preference of second-order SD implies the preference of the corresponding Omega ratios only when the return threshold is less than the mean of the higher return asset. On the other hand, the preference of the second-order RSD implies the preference of the corresponding Omega ratios only when the return threshold is larger than the mean of the smaller return asset. Nonetheless, first-order SD does imply Omega ratio dominance. Thereafter, we apply the theory developed in this paper to examine the relationship between property size and property investment in the Hong Kong real estate market. We conclude that the Hong Kong real estate market is not efficient and there are expected arbitrage opportunities and anomalies in the Hong Kong real estate market. Our findings are useful for investors and policy makers in real estate. Full article
(This article belongs to the Special Issue Efficiency and Anomalies in Stock Markets)
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Open AccessArticle Fiscal Deficit and Its Impact on Economic Growth: Evidence from Bangladesh
Received: 17 May 2017 / Revised: 17 August 2017 / Accepted: 14 September 2017 / Published: 2 October 2017
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Abstract
The findings from the VECM for BBS data reveal that there is a positive and significant relationship between FD and GDPGR, supporting the Keynesian theory, while findings from the VECM for World Bank data indicate that the impact of Fiscal Deficit (FD) on
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The findings from the VECM for BBS data reveal that there is a positive and significant relationship between FD and GDPGR, supporting the Keynesian theory, while findings from the VECM for World Bank data indicate that the impact of Fiscal Deficit (FD) on GDPGR is mild but negative and significant at the 5% level. This contradicts the Keynesian theory, but is in accord with Neo-classical theory which asserts that fiscal deficits lead to a drop in the GDP. Nevertheless, the government must strive to keep deficit under control, not to hamper growth, and expenditure ought to be set so as to avoid massive deficits leading to debt financing and the crowding-out effect of private investment. If deficits become unsustainable, it can lead to higher interest payments, and the government may well default. Although in the economic literature, there is no definitive conclusion as to whether fiscal deficit helps or hinders economic growth for any country, many argue that fiscal deficit leads to economic growth of a country, which cannot be achieved only through domestic savings, not enough for investment. It can be assumed safely that to some extent fiscal deficit is good for economic growth if the borrowed money is spent on beneficial projects, provided the return from such investments exceeds the funding cost. For future research work, it will be interesting to examine the relationships between government spending, economic growth and long-term interest rate for Bangladesh. Full article
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Open AccessArticle Labor Costs and Foreign Direct Investment: A Panel VAR Approach
Received: 22 May 2017 / Revised: 2 August 2017 / Accepted: 8 September 2017 / Published: 26 September 2017
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Abstract
This paper examines the endogenous interaction between labor costs and Foreign Direct Investment (FDI) in the OECD countries via the Panel VAR approach under system GMM estimates for the period 1995–2009. The available data allows identifying the relevance of the components of labor
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This paper examines the endogenous interaction between labor costs and Foreign Direct Investment (FDI) in the OECD countries via the Panel VAR approach under system GMM estimates for the period 1995–2009. The available data allows identifying the relevance of the components of labor costs, and allows a detailed analysis across different sectors. Empirical findings have revealed that sectoral composition of FDI and the decomposition of labor costs play a significant role in investigating the dynamic association between labor costs and FDI. Further, results suggest that labor market policies should focus on productivity-enhancing tools in addition to price hindering tools. Full article
(This article belongs to the Special Issue FDI and Development: Emerging Issues)
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