Pub Date : 2019-01-03DOI: 10.3868/S060-007-018-0027-9
Muhammad Zubair Mumtaz, Z. Smith
Over the last fifteen years, China rapidly expanded its outward foreign direct investment (OFDI) through remarkable economic growth and the i°go globali± policy. Chinese firms explored investment avenues especially in developing and emerging countries. As a result, China became the third largest contributor of OFDI. We examine the determinants of Chinese OFDI in 67 countries during the period lasting from 2006 to 2015 using the feasible generalized least square method. We find that the size of the economy, market opportunities, cost advantages due to low wage structure, ease of doing business, country risk, and geographical proximity are the prominent factors leading to changes in Chinese OFDI in developing and emerging economies. We find that Chinai¯s investments in different developing and emerging countries are driven by a different set of factors and the determinants of Chinese OFDI vary in low and high per capita income countries.
{"title":"The Determinants of Chinese Outward Foreign Direct Investment: A Closer Look","authors":"Muhammad Zubair Mumtaz, Z. Smith","doi":"10.3868/S060-007-018-0027-9","DOIUrl":"https://doi.org/10.3868/S060-007-018-0027-9","url":null,"abstract":"Over the last fifteen years, China rapidly expanded its outward foreign direct investment (OFDI) through remarkable economic growth and the i°go globali± policy. Chinese firms explored investment avenues especially in developing and emerging countries. As a result, China became the third largest contributor of OFDI. We examine the determinants of Chinese OFDI in 67 countries during the period lasting from 2006 to 2015 using the feasible generalized least square method. We find that the size of the economy, market opportunities, cost advantages due to low wage structure, ease of doing business, country risk, and geographical proximity are the prominent factors leading to changes in Chinese OFDI in developing and emerging economies. We find that Chinai¯s investments in different developing and emerging countries are driven by a different set of factors and the determinants of Chinese OFDI vary in low and high per capita income countries.","PeriodicalId":44830,"journal":{"name":"Frontiers of Economics in China","volume":"13 1","pages":"577-601"},"PeriodicalIF":0.8,"publicationDate":"2019-01-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45001473","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-01-03DOI: 10.3868/s060-007-018-0028-6
Fuxiang Wu, W. Duan
In this paper we design a compensation mechanism for the relocated households in the process of New-Type Urbanization in China. Based on the theories of dynamic rent spatial separation, bid-rent and non-renewable resource exploitation, we give a theretical look at how the current compensation mechanism shapes the welfare of relocated households. Firstly, land rent growth has a spatial difference and the growth rate of the marginal location rent is much higher than that of the mature site. Secondly, there is a demolition championship contest under the sole static money compensation, which can easily lead to land urbanization faster than population urbanization. Thirdly, in the long run the welfare loss of the household is mainly due to the absence of a dynamic compensation mechanism. Furthermore, we design a dynamic compensation mechanism based on the establishment of an asset securitization capital pool, which could be an alternative scheme in the process of New-Type Urbanization.
{"title":"Asset Securitization and Welfare Compensation for House Demolition on New-Type Urbanization in China","authors":"Fuxiang Wu, W. Duan","doi":"10.3868/s060-007-018-0028-6","DOIUrl":"https://doi.org/10.3868/s060-007-018-0028-6","url":null,"abstract":"In this paper we design a compensation mechanism for the relocated households in the process of New-Type Urbanization in China. Based on the theories of dynamic rent spatial separation, bid-rent and non-renewable resource exploitation, we give a theretical look at how the current compensation mechanism shapes the welfare of relocated households. Firstly, land rent growth has a spatial difference and the growth rate of the marginal location rent is much higher than that of the mature site. Secondly, there is a demolition championship contest under the sole static money compensation, which can easily lead to land urbanization faster than population urbanization. Thirdly, in the long run the welfare loss of the household is mainly due to the absence of a dynamic compensation mechanism. Furthermore, we design a dynamic compensation mechanism based on the establishment of an asset securitization capital pool, which could be an alternative scheme in the process of New-Type Urbanization.","PeriodicalId":44830,"journal":{"name":"Frontiers of Economics in China","volume":"13 1","pages":"602-634"},"PeriodicalIF":0.8,"publicationDate":"2019-01-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43899759","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-01-03DOI: 10.3868/S060-007-018-0030-7
Shangzhou Ji, George Wang
Sufficient evidence suggests that enterprises under strong government regulations suffer the economic effects of political connections, which not only leads to competitive disadvantages and loss of innovation, but also less willingness to take risks. This paper explores the relationship between political connections and corporate risk-taking behavior in corporate governance. Specifically, in 2008, the Chinese government announced new policies to regulate government officials concurrently holding the positions of independent directors in firms. We sample publicly listed firms in the Chinese A-share market over the period of 2005¨C2010 and investigate changes in risk-taking behavior due to the new policies. Our findings indicate that a reduction in politically connected independent directors may encourage risk-taking behavior subject to the factors of state ownership, industry regulations, local government control, and corporate characteristics.
{"title":"Political Connections, Government Regulations and Risk-Taking — Evidence From China","authors":"Shangzhou Ji, George Wang","doi":"10.3868/S060-007-018-0030-7","DOIUrl":"https://doi.org/10.3868/S060-007-018-0030-7","url":null,"abstract":"Sufficient evidence suggests that enterprises under strong government regulations suffer the economic effects of political connections, which not only leads to competitive disadvantages and loss of innovation, but also less willingness to take risks. This paper explores the relationship between political connections and corporate risk-taking behavior in corporate governance. Specifically, in 2008, the Chinese government announced new policies to regulate government officials concurrently holding the positions of independent directors in firms. We sample publicly listed firms in the Chinese A-share market over the period of 2005¨C2010 and investigate changes in risk-taking behavior due to the new policies. Our findings indicate that a reduction in politically connected independent directors may encourage risk-taking behavior subject to the factors of state ownership, industry regulations, local government control, and corporate characteristics.","PeriodicalId":44830,"journal":{"name":"Frontiers of Economics in China","volume":"13 1","pages":"655-684"},"PeriodicalIF":0.8,"publicationDate":"2019-01-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48118346","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-01-03DOI: 10.3868/S060-007-018-0026-2
Hongjie Wei, Yan Sun, M. Hu
Spatial autoregressive (SAR) models with varying coefficients are useful for capturing heterogeneous effects of the impacts of covariates as well as spatial interaction in empirical studies, and a wide range of popular models can be seen as its special cases, such as linear SAR models. In this study, we will propose a unified model selection method for the SAR model with varying coefficients to achieve two targets simultaneously: (1) variable selection (eliminate irrelevant covariates), and (2) identification of the covariates with constant effect among the relevant covariates. To do so, we follow the idea of group LASSO to incorporate two penalty functions to simultaneously do model selection and estimation. Monte Carlo experiments show that the proposed method performs well in finite samples. Finally, we illustrate the method with an application to the housing data of Chinese cities.
{"title":"Model Selection in Spatial Autoregressive Models with Varying Coefficients","authors":"Hongjie Wei, Yan Sun, M. Hu","doi":"10.3868/S060-007-018-0026-2","DOIUrl":"https://doi.org/10.3868/S060-007-018-0026-2","url":null,"abstract":"Spatial autoregressive (SAR) models with varying coefficients are useful for capturing heterogeneous effects of the impacts of covariates as well as spatial interaction in empirical studies, and a wide range of popular models can be seen as its special cases, such as linear SAR models. In this study, we will propose a unified model selection method for the SAR model with varying coefficients to achieve two targets simultaneously: (1) variable selection (eliminate irrelevant covariates), and (2) identification of the covariates with constant effect among the relevant covariates. To do so, we follow the idea of group LASSO to incorporate two penalty functions to simultaneously do model selection and estimation. Monte Carlo experiments show that the proposed method performs well in finite samples. Finally, we illustrate the method with an application to the housing data of Chinese cities.","PeriodicalId":44830,"journal":{"name":"Frontiers of Economics in China","volume":"13 1","pages":"559-576"},"PeriodicalIF":0.8,"publicationDate":"2019-01-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42567639","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-01-03DOI: 10.3868/S060-007-018-0025-5
J. Heckman, S. Feng
This paper discusses the benefits of investment in skills in China. We highlight the achievements China has made over time in human capital investments and the new challenges that have emerged as the country develops. To fuel Chinai¯s further economic growth and social developments, it is essential to take a more holistic view on skill investments. We suggest policies that promote both economic efficiency and social mobility.
{"title":"Chinas Investment in Skills","authors":"J. Heckman, S. Feng","doi":"10.3868/S060-007-018-0025-5","DOIUrl":"https://doi.org/10.3868/S060-007-018-0025-5","url":null,"abstract":"This paper discusses the benefits of investment in skills in China. We highlight the achievements China has made over time in human capital investments and the new challenges that have emerged as the country develops. To fuel Chinai¯s further economic growth and social developments, it is essential to take a more holistic view on skill investments. We suggest policies that promote both economic efficiency and social mobility.","PeriodicalId":44830,"journal":{"name":"Frontiers of Economics in China","volume":"13 1","pages":"531-558"},"PeriodicalIF":0.8,"publicationDate":"2019-01-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49171847","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-01-03DOI: 10.3868/S060-007-018-0031-4
Jian Li, Yao Lu
This paper relaxes two assumptions on the traditional augmented Solow model: strict concavity of production functions and dual capital goods. It generalizes traditional conclusions of the Solow model by demonstrating that neoclassical properties of a production function are sufficient for the existence and global stability of the steady state in the augmented Solow model with multiple capital goods. Moreover, we prove necessity of essentiality of inputs for a neoclassical production function and generalize the golden rule of capital accumulation.
{"title":"Existence and Stability of Steady State in an Augmented Solow Model with Multiple Capital Goods","authors":"Jian Li, Yao Lu","doi":"10.3868/S060-007-018-0031-4","DOIUrl":"https://doi.org/10.3868/S060-007-018-0031-4","url":null,"abstract":"This paper relaxes two assumptions on the traditional augmented Solow model: strict concavity of production functions and dual capital goods. It generalizes traditional conclusions of the Solow model by demonstrating that neoclassical properties of a production function are sufficient for the existence and global stability of the steady state in the augmented Solow model with multiple capital goods. Moreover, we prove necessity of essentiality of inputs for a neoclassical production function and generalize the golden rule of capital accumulation.","PeriodicalId":44830,"journal":{"name":"Frontiers of Economics in China","volume":"13 1","pages":"685-702"},"PeriodicalIF":0.8,"publicationDate":"2019-01-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42087443","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-01-03DOI: 10.3868/S060-007-018-0029-3
F. Fang, Xuesong Li, Yahong Zhou, Ximing Chen
This paper focuses on the willingness to pay for green housing in China. First, we introduce green building related labels in China and briefly discuss the consumersi¯ incentives to buy this kind of building. Second, with the available transaction data in Shanghai, a hedonic regression model is applied to investigate whether or not a price premium in the residential market exists. Furthermore, we use the nonparametric matching model under a treatment framework to see the robustness of our results. The empirical result shows there exists a significant price premium in China. However, the premium does not increase with quality certification tiers. That may imply that homebuyers in China are not sensitive to the differences among green buildings although they are willing to pay a higher price for this newly emerging energy-saving building. And we also give the explanation why this has happened.
{"title":"The Impact of Green Building Labels on the Price of Housing: Evidence from China","authors":"F. Fang, Xuesong Li, Yahong Zhou, Ximing Chen","doi":"10.3868/S060-007-018-0029-3","DOIUrl":"https://doi.org/10.3868/S060-007-018-0029-3","url":null,"abstract":"This paper focuses on the willingness to pay for green housing in China. First, we introduce green building related labels in China and briefly discuss the consumersi¯ incentives to buy this kind of building. Second, with the available transaction data in Shanghai, a hedonic regression model is applied to investigate whether or not a price premium in the residential market exists. Furthermore, we use the nonparametric matching model under a treatment framework to see the robustness of our results. The empirical result shows there exists a significant price premium in China. However, the premium does not increase with quality certification tiers. That may imply that homebuyers in China are not sensitive to the differences among green buildings although they are willing to pay a higher price for this newly emerging energy-saving building. And we also give the explanation why this has happened.","PeriodicalId":44830,"journal":{"name":"Frontiers of Economics in China","volume":"13 1","pages":"635-654"},"PeriodicalIF":0.8,"publicationDate":"2019-01-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43879877","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-09-30DOI: 10.3868/S060-007-018-0022-4
Liuyang Zhao, Yan Zhao
In this paper, we provide an empirical investigation of the purchasing power parity (PPP) hypothesis for China before July 1937. Using the monthly data from 1922 to 1937, we find clear and consistent evidence in favor of the purchasing power parity relationship. This naturally leads to the conclusion that the degree of Chinese market integration with the West was substantial before July 1937. These findings offer an empirical interpretation of the rise and fall of the Chinese price level during the Great Depression. It also has further implications of the impact of the American Silver Purchase Act of 1934 and the assessment of the 1935 currency reform on the Chinese economy.
{"title":"Purchasing Power Parity and Price Fluctuations in China before July 1937","authors":"Liuyang Zhao, Yan Zhao","doi":"10.3868/S060-007-018-0022-4","DOIUrl":"https://doi.org/10.3868/S060-007-018-0022-4","url":null,"abstract":"In this paper, we provide an empirical investigation of the purchasing power parity (PPP) hypothesis for China before July 1937. Using the monthly data from 1922 to 1937, we find clear and consistent evidence in favor of the purchasing power parity relationship. This naturally leads to the conclusion that the degree of Chinese market integration with the West was substantial before July 1937. These findings offer an empirical interpretation of the rise and fall of the Chinese price level during the Great Depression. It also has further implications of the impact of the American Silver Purchase Act of 1934 and the assessment of the 1935 currency reform on the Chinese economy.","PeriodicalId":44830,"journal":{"name":"Frontiers of Economics in China","volume":"13 1","pages":"458-483"},"PeriodicalIF":0.8,"publicationDate":"2018-09-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45837289","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-09-30DOI: 10.3868/S060-007-018-0017-2
Debin Ma, Cong Liu
{"title":"Money, Finance and Commerce in Chinese History: An Introduction with Reference to the Special Issue","authors":"Debin Ma, Cong Liu","doi":"10.3868/S060-007-018-0017-2","DOIUrl":"https://doi.org/10.3868/S060-007-018-0017-2","url":null,"abstract":"","PeriodicalId":44830,"journal":{"name":"Frontiers of Economics in China","volume":"13 1","pages":"313-321"},"PeriodicalIF":0.8,"publicationDate":"2018-09-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44753979","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-09-30DOI: 10.3868/s060-007-018-0019-6
Zhiwu Chen, K. Peng, W. Yuan
This paper studies the cross-regional variation of interest rates in China in the 1930s. Based on county-level data from the Buck (1941) rural surveys, we examine factors that may have influenced rural interest rates in pre-1949 China. Since the quality of institutions that define property rights and facilitate contract enforcement is important for such transactions as land tenancy arrangements, we treat land tenancy rate (or percentage of owner-farmers) as a proxy for institutional quality. Contrary to the popular belief among historians and economists that usury or high interest rates caused persistent poverty, we find that while the monopoly-exploitation hypothesis has little explanatory power, a regioni¯s institutional quality and income level are persistent and significant determinants of interest rates. Thus, poverty is a key driver of high rates of interest. Economic growth and the development of market institutions are crucial for lowering high interest rates and combating usury.
{"title":"Usury, Market Power and Poverty Traps: A Study of Rural Credit in 1930s’ China","authors":"Zhiwu Chen, K. Peng, W. Yuan","doi":"10.3868/s060-007-018-0019-6","DOIUrl":"https://doi.org/10.3868/s060-007-018-0019-6","url":null,"abstract":"This paper studies the cross-regional variation of interest rates in China in the 1930s. Based on county-level data from the Buck (1941) rural surveys, we examine factors that may have influenced rural interest rates in pre-1949 China. Since the quality of institutions that define property rights and facilitate contract enforcement is important for such transactions as land tenancy arrangements, we treat land tenancy rate (or percentage of owner-farmers) as a proxy for institutional quality. Contrary to the popular belief among historians and economists that usury or high interest rates caused persistent poverty, we find that while the monopoly-exploitation hypothesis has little explanatory power, a regioni¯s institutional quality and income level are persistent and significant determinants of interest rates. Thus, poverty is a key driver of high rates of interest. Economic growth and the development of market institutions are crucial for lowering high interest rates and combating usury.","PeriodicalId":44830,"journal":{"name":"Frontiers of Economics in China","volume":"13 1","pages":"369-396"},"PeriodicalIF":0.8,"publicationDate":"2018-09-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45146480","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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