Pub Date : 2023-09-01DOI: 10.1353/jda.2023.a908662
Udimal Thomas, Zwane Talent, Biyase Mduduzi, Eita Hinaunye
ABSTRACT: There are contradicting views regarding the casual nexus between a country's military spending and its nation's income inequality. Military spending is a critical component of government budget and can simply crowd out transfer payments, needed to improve income inequality. However, these payments can also stimulate a demand that can enhance the income prospects of the low-income earners. So, the association between military spending and income inequality is a vital question. The aim of this study is to examine the relationship between military spending and income inequality for BRICS countries (Brazil, Russia, India, China and South Africa). We used panel data extracted from different sources such as World Bank's World Development Indicators and Penn World Tables. This is the first study that disaggregate the data and compute the results for the full sample (all BRICS countries taken together) and for sub-samples for countries with military expenditure of about 2% of GDP (India, china and Russia) and countries with military expenditure of less than 1% of GDP (that is, South Africa and Brazil). Thus, to unravel the influence of military spending on income inequality, pool mean group (PMG) or panel autoregressive distributed lag (PARDL) approach was applied for the period from 1990–2017 for BRICS nations. Overall, the empirical result for the pooled sample established an inverse relationship between military expenditure and income inequality. A percentage change in military expenditure result in income inequality reduction within the BRICS community. The estimated coefficient of GDP per capita, show that a percentage increase in GDP per capita in the long run will lead to about -0.209756 reduction in the level of income inequality and statistically significant at 1% level. When data was disaggregated to reflect the BRICS countries whose military expenditure was about 2% of the national budget (i.e. Russia, China and India), the study found that military expenditure had a negative influence on income inequality in the long run equation. Based on the outcome of this empirical work, we recommend for policy makers should focus more on the policies which can improve economic activities within the BRICS nations and ultimately reduce income inequality.
{"title":"The Nexus Between Military Spending and Income Inequality in Brics Nations","authors":"Udimal Thomas, Zwane Talent, Biyase Mduduzi, Eita Hinaunye","doi":"10.1353/jda.2023.a908662","DOIUrl":"https://doi.org/10.1353/jda.2023.a908662","url":null,"abstract":"ABSTRACT: There are contradicting views regarding the casual nexus between a country's military spending and its nation's income inequality. Military spending is a critical component of government budget and can simply crowd out transfer payments, needed to improve income inequality. However, these payments can also stimulate a demand that can enhance the income prospects of the low-income earners. So, the association between military spending and income inequality is a vital question. The aim of this study is to examine the relationship between military spending and income inequality for BRICS countries (Brazil, Russia, India, China and South Africa). We used panel data extracted from different sources such as World Bank's World Development Indicators and Penn World Tables. This is the first study that disaggregate the data and compute the results for the full sample (all BRICS countries taken together) and for sub-samples for countries with military expenditure of about 2% of GDP (India, china and Russia) and countries with military expenditure of less than 1% of GDP (that is, South Africa and Brazil). Thus, to unravel the influence of military spending on income inequality, pool mean group (PMG) or panel autoregressive distributed lag (PARDL) approach was applied for the period from 1990–2017 for BRICS nations. Overall, the empirical result for the pooled sample established an inverse relationship between military expenditure and income inequality. A percentage change in military expenditure result in income inequality reduction within the BRICS community. The estimated coefficient of GDP per capita, show that a percentage increase in GDP per capita in the long run will lead to about -0.209756 reduction in the level of income inequality and statistically significant at 1% level. When data was disaggregated to reflect the BRICS countries whose military expenditure was about 2% of the national budget (i.e. Russia, China and India), the study found that military expenditure had a negative influence on income inequality in the long run equation. Based on the outcome of this empirical work, we recommend for policy makers should focus more on the policies which can improve economic activities within the BRICS nations and ultimately reduce income inequality.","PeriodicalId":84983,"journal":{"name":"Journal Of Developing Areas","volume":"374 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135641146","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-06-01DOI: 10.1353/jda.2023.a907736
Shahidul Islam, Subhadip Ghosh, Youke Wang
ABSTRACT: The rapid economic progress of Bangladesh is associated with a swiftly rising demand and energy consumption. Future economic growth will undoubtedly require a proportionate increase in energy availability within affordable prices. Bangladesh is inherently energy-scarce and heavily dependent on imported energy, primarily fossil fuels. Several approaches and strategies were attempted over time to mitigate the energy shortage. Some of them were reasonably successful, while others failed. In this study, we first examine the historical developments of the energy sector in Bangladesh since its independence and then use three approaches – triple exponential smoothing, vector autoregression, and the Cochrane-Orcutt AR(1) process to forecast the energy demand. Data for this study were taken from various sources, including British Petroleum, International Gas Union, International Energy Agency, Bangladesh Bureau of Statistics, World Bank, Petrobangla, and Energy Information Agency of the United States. As expected, each model predicts an exponential growth of energy demand in Bangladesh. We then explored the possibilities of mitigating such projected energy demand. Various studies show that Bangladesh has some potential for producing energy from renewable sources, i.e., solar, hydro, wind, wave, and others. However, such possibilities are limited, and many are still in their infancy. Although an increase in renewable energy is desirable from an environmental perspective, it alone will not meet Bangladesh's growing energy demand. At least in the short term, Bangladesh must rely on imported fossil energy. Among the fossil energy sources, LNG is by far the cleanest. With the development of technology, liquefaction, transportation, and regasification, LNG production, transportation, and use are becoming less expensive. Progressively more natural gas-producing countries are joining LNG production and export, contributing to the market's competitiveness. Though historically tied to the oil market, LNG markets are becoming more and more independent because of the increasing number of participants from both the demand and supply sides. Given that both its global price and negative impact on the environment are relatively lower than other fossil fuels, imported LNG should be the fuel of choice for Bangladesh. Government policies should focus on both importing LNG and expanding renewable energy resources.
{"title":"Energy Demand and the Potential Role of Imported Liquefied Natural Gas (LNG) in Bangladesh","authors":"Shahidul Islam, Subhadip Ghosh, Youke Wang","doi":"10.1353/jda.2023.a907736","DOIUrl":"https://doi.org/10.1353/jda.2023.a907736","url":null,"abstract":"ABSTRACT: The rapid economic progress of Bangladesh is associated with a swiftly rising demand and energy consumption. Future economic growth will undoubtedly require a proportionate increase in energy availability within affordable prices. Bangladesh is inherently energy-scarce and heavily dependent on imported energy, primarily fossil fuels. Several approaches and strategies were attempted over time to mitigate the energy shortage. Some of them were reasonably successful, while others failed. In this study, we first examine the historical developments of the energy sector in Bangladesh since its independence and then use three approaches – triple exponential smoothing, vector autoregression, and the Cochrane-Orcutt AR(1) process to forecast the energy demand. Data for this study were taken from various sources, including British Petroleum, International Gas Union, International Energy Agency, Bangladesh Bureau of Statistics, World Bank, Petrobangla, and Energy Information Agency of the United States. As expected, each model predicts an exponential growth of energy demand in Bangladesh. We then explored the possibilities of mitigating such projected energy demand. Various studies show that Bangladesh has some potential for producing energy from renewable sources, i.e., solar, hydro, wind, wave, and others. However, such possibilities are limited, and many are still in their infancy. Although an increase in renewable energy is desirable from an environmental perspective, it alone will not meet Bangladesh's growing energy demand. At least in the short term, Bangladesh must rely on imported fossil energy. Among the fossil energy sources, LNG is by far the cleanest. With the development of technology, liquefaction, transportation, and regasification, LNG production, transportation, and use are becoming less expensive. Progressively more natural gas-producing countries are joining LNG production and export, contributing to the market's competitiveness. Though historically tied to the oil market, LNG markets are becoming more and more independent because of the increasing number of participants from both the demand and supply sides. Given that both its global price and negative impact on the environment are relatively lower than other fossil fuels, imported LNG should be the fuel of choice for Bangladesh. Government policies should focus on both importing LNG and expanding renewable energy resources.","PeriodicalId":84983,"journal":{"name":"Journal Of Developing Areas","volume":"85 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135143153","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-06-01DOI: 10.1353/jda.2023.a907739
Wycliff Mariga Ombuki, Bethuel Kinyanjui Kinuthia, Daniel Okado Abala
ABSTRACT: This paper investigates export spillovers from foreign direct investment on the exporting activities of domestic manufacturing firms in Kenya. Specifically, the paper aims at identifying the transmission channels through which foreign direct investment affects the export propensity and export intensity decisions of domestically-owned firms. The study also examines the importance of firm-level heterogeneity on the occurrence and behavior of spillover channels. The study uses a panel data set for manufacturing firms in Kenya, obtained from the World Bank Enterprise Surveys, conducted in three waves covering the period 2007–2018. Employing the Double-Hurdle model approach, and using the maximum likelihood estimation technique, we empirically demonstrate the relevance and significance of distinguishing three channels for intra-industry (horizontal) spillovers – demonstration effects, information effects and competition effects channels and one channel for vertical spillovers, that is, backward linkage channel. Findings of this study shows that domestically-owned firms in Kenya experience significant positive export spillovers on their export participation decisions through the demonstration effects channel and significant negative spillovers via the competition effects channel. The findings also show significant positive export spillover effects on the export intensity decisions of domestically-owned firms via information and competition effects channels and significant negative export spillover effects via the backward linkages channel. The results further provide evidence that firms belonging to industries with low technological levels were unable to absorb spillover benefits from foreign presence via the demonstration effects channel. The results also indicate that small and medium firms were unable to reap export spillovers benefits via information effects and backward linkage channels. The findings have important policy implications for managers of firms and policymakers in Kenya and other developing countries. To enhance export-related spillover benefits, domestic firms need to enhance their absorptive capacities by upgrading their technical capacities and improving quality standards. Governments should facilitate the exchange of information on investor needs, their capacities and skills requirements, thus bridging information gaps between domestic suppliers and foreign investors in addition to supporting domestic market linkages.
{"title":"Export Spillovers from Foreign Direct Investment in Kenya's Manufacturing Sector: A Double Hurdle Approach","authors":"Wycliff Mariga Ombuki, Bethuel Kinyanjui Kinuthia, Daniel Okado Abala","doi":"10.1353/jda.2023.a907739","DOIUrl":"https://doi.org/10.1353/jda.2023.a907739","url":null,"abstract":"ABSTRACT: This paper investigates export spillovers from foreign direct investment on the exporting activities of domestic manufacturing firms in Kenya. Specifically, the paper aims at identifying the transmission channels through which foreign direct investment affects the export propensity and export intensity decisions of domestically-owned firms. The study also examines the importance of firm-level heterogeneity on the occurrence and behavior of spillover channels. The study uses a panel data set for manufacturing firms in Kenya, obtained from the World Bank Enterprise Surveys, conducted in three waves covering the period 2007–2018. Employing the Double-Hurdle model approach, and using the maximum likelihood estimation technique, we empirically demonstrate the relevance and significance of distinguishing three channels for intra-industry (horizontal) spillovers – demonstration effects, information effects and competition effects channels and one channel for vertical spillovers, that is, backward linkage channel. Findings of this study shows that domestically-owned firms in Kenya experience significant positive export spillovers on their export participation decisions through the demonstration effects channel and significant negative spillovers via the competition effects channel. The findings also show significant positive export spillover effects on the export intensity decisions of domestically-owned firms via information and competition effects channels and significant negative export spillover effects via the backward linkages channel. The results further provide evidence that firms belonging to industries with low technological levels were unable to absorb spillover benefits from foreign presence via the demonstration effects channel. The results also indicate that small and medium firms were unable to reap export spillovers benefits via information effects and backward linkage channels. The findings have important policy implications for managers of firms and policymakers in Kenya and other developing countries. To enhance export-related spillover benefits, domestic firms need to enhance their absorptive capacities by upgrading their technical capacities and improving quality standards. Governments should facilitate the exchange of information on investor needs, their capacities and skills requirements, thus bridging information gaps between domestic suppliers and foreign investors in addition to supporting domestic market linkages.","PeriodicalId":84983,"journal":{"name":"Journal Of Developing Areas","volume":"68 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135145254","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-06-01DOI: 10.1353/jda.2023.a907734
Anthony Orji, Jonathan E. Ogbuabor, Onyinye I. Anthony-Orji, Ebelechukwu G. Monye
ABSTRACT: The world has gone through various economic crises in the past century, and their effects have had varying implications on the economies of countries all over the world. In a bid to help stabilise economies all over the world, various measures have been put in place. Some of these measures include regulations and policies by the Bretton Woods institutions (World Bank and International Monetary Fund) and their agencies. The idea behind these measures is to ensure sustainable growth and development among member states and other countries of the world. Some of these policies include the privatization and liberalization policies of the Bretton Woods institutions as well as other policies bordering on such economic and social benefits for people all over the world. The Nigerian economy in our contemporary time can be described as passing through a rather 'volatile' phase with respect to interest rate, financial development and foreign capital inflow. Thus, this study investigated the impact of interest rate spread and financial development on foreign capital inflow in Nigeria. Several studies have been carried out using different methodologies, such as; co-integration equation, multivariate vector auto regressive (VAR) model and vector error correction technique. Each methodology used was in line with the objective of the research in question. However, to achieve its objective, this paper adopted the Classical Linear Regression Model. The results of the study showed that financial development has a positive impact on foreign capital inflow, while interest rate spread on the other hand, was also found to have a positive impact on foreign capital inflow. Other control variables such as market capitalization and treasury bills rate were also found to positively affect foreign capital inflow, while the all share index had a negative impact on foreign capital inflow. Some economists have opined that the Nigerian economy is currently going through a phase of recession. In order for large scale investments to be made within the country, there is a need for foreign participants to be attracted to the Nigerian economy and pull their resources, both financial and non-financial into the country (but, not without regulation). However, for these investors to have confidence to make investments in the Nigerian economy, there has to be a high degree of economic stability in the country. This can be supported by enacting and implementing policies that can enhance the quality of interest rates spread and financial development within the country. The policy implication here involves enhancing financial development through sound policies and adopting competitive interest rates, could increase the rate of foreign inflow into the economy. In view of this, it is also recommended that government policies should target interest rate competitiveness, financial and economic development as well as sustainability.
{"title":"Anaysis of Interest Rate Spread, Financial Development and Foreign Capital Inflow Nexus in Nigeria","authors":"Anthony Orji, Jonathan E. Ogbuabor, Onyinye I. Anthony-Orji, Ebelechukwu G. Monye","doi":"10.1353/jda.2023.a907734","DOIUrl":"https://doi.org/10.1353/jda.2023.a907734","url":null,"abstract":"ABSTRACT: The world has gone through various economic crises in the past century, and their effects have had varying implications on the economies of countries all over the world. In a bid to help stabilise economies all over the world, various measures have been put in place. Some of these measures include regulations and policies by the Bretton Woods institutions (World Bank and International Monetary Fund) and their agencies. The idea behind these measures is to ensure sustainable growth and development among member states and other countries of the world. Some of these policies include the privatization and liberalization policies of the Bretton Woods institutions as well as other policies bordering on such economic and social benefits for people all over the world. The Nigerian economy in our contemporary time can be described as passing through a rather 'volatile' phase with respect to interest rate, financial development and foreign capital inflow. Thus, this study investigated the impact of interest rate spread and financial development on foreign capital inflow in Nigeria. Several studies have been carried out using different methodologies, such as; co-integration equation, multivariate vector auto regressive (VAR) model and vector error correction technique. Each methodology used was in line with the objective of the research in question. However, to achieve its objective, this paper adopted the Classical Linear Regression Model. The results of the study showed that financial development has a positive impact on foreign capital inflow, while interest rate spread on the other hand, was also found to have a positive impact on foreign capital inflow. Other control variables such as market capitalization and treasury bills rate were also found to positively affect foreign capital inflow, while the all share index had a negative impact on foreign capital inflow. Some economists have opined that the Nigerian economy is currently going through a phase of recession. In order for large scale investments to be made within the country, there is a need for foreign participants to be attracted to the Nigerian economy and pull their resources, both financial and non-financial into the country (but, not without regulation). However, for these investors to have confidence to make investments in the Nigerian economy, there has to be a high degree of economic stability in the country. This can be supported by enacting and implementing policies that can enhance the quality of interest rates spread and financial development within the country. The policy implication here involves enhancing financial development through sound policies and adopting competitive interest rates, could increase the rate of foreign inflow into the economy. In view of this, it is also recommended that government policies should target interest rate competitiveness, financial and economic development as well as sustainability.","PeriodicalId":84983,"journal":{"name":"Journal Of Developing Areas","volume":"37 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135144584","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-06-01DOI: 10.1353/jda.2023.a907741
Joseph Onuche Enemona, Olatunji Abdul Shobande
ABSTRACT: African countries suffer from the negative effects of climate change more severely compared to other continents, despite contributing only a small fraction of the global carbon emissions. This is attributed to at least three factors. First, Africa relies heavily on solid fuel energy sources to meet its socioeconomic needs. The use of solid fuels is associated with heavy pollution, which exposes the population to significant health risks. Second, environmental policy is less successful on the continent owing to the uncertainty caused by a lack of understanding of the scope of the environmental problem. Third, the African continent has become heedless about the consequences of climate change in its ambition for further growth to catch up with the rest of the world. In this study, we examined the roles of energy consumption and governance in explaining the carbon Kuznets curve hypothesis in African countries from 1995 to 2019. The empirical evidence provided is based on second-generation time-series analysis that accounts for cross-sectional dependency among the assessed factors. Specifically, the Westerlund cointegration approach, Cross-sectional Autoregressive Distributed Lag (CS-ARDL) simulation, Augmented Mean Group (AMG) method, and Dumitrescu and Hurlin heterogeneous panel causality tests were implemented. Together, these results confirm the validity of the CKC hypothesis for Africa. The mechanisms through which economic growth affects carbon emissions have been identified as energy consumption and governance. While it is possible to achieve a significant reduction in carbon emissions in Africa using environmental policy, there is a need to sacrifice growth to achieve desirable environmental quality. Governance arrangements need to be transparent and accountability regarding carbon regulations needs to be taken seriously. Promoting sustainable growth across Africa is important because it holds the key to accelerating global action. We recommend effective regulatory compliance monitoring and enforcement while reducing carbon emissions and advancing sustainable development through energy transitions.
{"title":"The Carbon Kuznets Curve in Africa: Do Energy Consumption and Governance Really Matter?","authors":"Joseph Onuche Enemona, Olatunji Abdul Shobande","doi":"10.1353/jda.2023.a907741","DOIUrl":"https://doi.org/10.1353/jda.2023.a907741","url":null,"abstract":"ABSTRACT: African countries suffer from the negative effects of climate change more severely compared to other continents, despite contributing only a small fraction of the global carbon emissions. This is attributed to at least three factors. First, Africa relies heavily on solid fuel energy sources to meet its socioeconomic needs. The use of solid fuels is associated with heavy pollution, which exposes the population to significant health risks. Second, environmental policy is less successful on the continent owing to the uncertainty caused by a lack of understanding of the scope of the environmental problem. Third, the African continent has become heedless about the consequences of climate change in its ambition for further growth to catch up with the rest of the world. In this study, we examined the roles of energy consumption and governance in explaining the carbon Kuznets curve hypothesis in African countries from 1995 to 2019. The empirical evidence provided is based on second-generation time-series analysis that accounts for cross-sectional dependency among the assessed factors. Specifically, the Westerlund cointegration approach, Cross-sectional Autoregressive Distributed Lag (CS-ARDL) simulation, Augmented Mean Group (AMG) method, and Dumitrescu and Hurlin heterogeneous panel causality tests were implemented. Together, these results confirm the validity of the CKC hypothesis for Africa. The mechanisms through which economic growth affects carbon emissions have been identified as energy consumption and governance. While it is possible to achieve a significant reduction in carbon emissions in Africa using environmental policy, there is a need to sacrifice growth to achieve desirable environmental quality. Governance arrangements need to be transparent and accountability regarding carbon regulations needs to be taken seriously. Promoting sustainable growth across Africa is important because it holds the key to accelerating global action. We recommend effective regulatory compliance monitoring and enforcement while reducing carbon emissions and advancing sustainable development through energy transitions.","PeriodicalId":84983,"journal":{"name":"Journal Of Developing Areas","volume":"253 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135145116","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-06-01DOI: 10.1353/jda.2023.a907747
Khaled Shukran, Mohammad Nazri, Norizah Binti Mustamil
ABSTRACT: This study examines the factors contributing to developing subsidiary knowledge in Malaysian foreign subsidiaries. Prior research on subsidiaries in multinational corporations has either concentrated on transferring knowledge from headquarters to subsidiaries or vice versa, ignoring the factors associated with subsidiary knowledge development through embedded relationship factors. Although embedded relations are essential for developing knowledge, the direction is most important for developing subsidiary knowledge. The significance of subsidiary knowledge development, subsidiary autonomy, and external and internal embeddedness has been poorly illuminated by prior research. This is because the perception of knowledge development is emphasized from the headquarters' perspective, while the subsidiary functions as a passive recipient. Using the resource-based and network theories, we argue that subsidiary development depends on the subsidiary's autonomy practice and the level of engagement or network relations between external and internal network partners. Our research shows that subsidiary autonomy and external embeddedness are the most significant predictors of subsidiary knowledge development. Internal embeddedness in subsidiary knowledge development is inconsistent with the theoretical assumptions for subsidiary autonomy and external embeddedness. In regression analysis, the survey results of 170 foreign-owned subsidiaries in Malaysia validate our hypotheses. According to the results of this study, subsidiary autonomy and external and internal embeddedness are the most significant predictors of subsidiary knowledge development. This study's findings have implications for subsidiary administrators in developing nations and multinational corporations. While subsidiaries are developing their knowledge, multinationals need to consider how much autonomy to offer them in this process. When subsidiaries are able to make independent decisions, embedded relationships will increase, and knowledge will be more likely to develop. This specific knowledge eventually contributes to the knowledge base of the MNE.
{"title":"Role of Subsidiary Autonomy and Embeddedness in Subsidiary Knowledge Development: Emerging Economy Perspective","authors":"Khaled Shukran, Mohammad Nazri, Norizah Binti Mustamil","doi":"10.1353/jda.2023.a907747","DOIUrl":"https://doi.org/10.1353/jda.2023.a907747","url":null,"abstract":"ABSTRACT: This study examines the factors contributing to developing subsidiary knowledge in Malaysian foreign subsidiaries. Prior research on subsidiaries in multinational corporations has either concentrated on transferring knowledge from headquarters to subsidiaries or vice versa, ignoring the factors associated with subsidiary knowledge development through embedded relationship factors. Although embedded relations are essential for developing knowledge, the direction is most important for developing subsidiary knowledge. The significance of subsidiary knowledge development, subsidiary autonomy, and external and internal embeddedness has been poorly illuminated by prior research. This is because the perception of knowledge development is emphasized from the headquarters' perspective, while the subsidiary functions as a passive recipient. Using the resource-based and network theories, we argue that subsidiary development depends on the subsidiary's autonomy practice and the level of engagement or network relations between external and internal network partners. Our research shows that subsidiary autonomy and external embeddedness are the most significant predictors of subsidiary knowledge development. Internal embeddedness in subsidiary knowledge development is inconsistent with the theoretical assumptions for subsidiary autonomy and external embeddedness. In regression analysis, the survey results of 170 foreign-owned subsidiaries in Malaysia validate our hypotheses. According to the results of this study, subsidiary autonomy and external and internal embeddedness are the most significant predictors of subsidiary knowledge development. This study's findings have implications for subsidiary administrators in developing nations and multinational corporations. While subsidiaries are developing their knowledge, multinationals need to consider how much autonomy to offer them in this process. When subsidiaries are able to make independent decisions, embedded relationships will increase, and knowledge will be more likely to develop. This specific knowledge eventually contributes to the knowledge base of the MNE.","PeriodicalId":84983,"journal":{"name":"Journal Of Developing Areas","volume":"24 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135145248","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-06-01DOI: 10.1353/jda.2023.a907732
Srishti Gupta
ABSTRACT: Subcontracting occurs when a producer outsources a part of its production. We study the effect of subcontracting from a firm with buyer power on the profits of subcontracted upstream firms, and how profits vary on the basis of location of firm and owner's gender. Subcontracting is the treatment in our study and the dependent variable is the ratio of Gross Value Added to Sales adjusted or unadjusted for wages. The decision of a firm to subcontract or not is endogenous, so we cannot use OLS regression. Since we cannot have information on a firm being treated and non-treated at the same time, we use the Average Treatment Effect on Treated (ATET) model with Nearest Neighborhood Matching (NNM) approach, in which each treated firm is matched to an untreated firm which is its nearest neighbor on other parameters, to see the effect of treatment on outcome variable on the treated group had they been not treated. We find the existence of a subcontracting premium where being in a subcontracting relationship is beneficial for the informal sector firm, though the magnitude of this premium is small, and female-headed firms gain less from subcontracting. Subcontracted male-owned firms earn a higher premium but also pay more wages out of their total revenue to labor as compared to female-owned firms, perhaps because the latter are more likely to be Own Account Manufacturing Enterprises (OAME) which do not employ hired workers. Our results show that buyer power of the subcontracting firms is offset by the benefits they provide to the subcontracted firms, possibly in the form of assured demand and payments. Thus, policies favoring the informal sector firms need to incorporate the benefits of subcontracting by exploring alternative modes of distribution with lower distribution margins, such as cooperative societies or online platforms for example Amul, MEESHO. Policies should also focus on reducing the profit margin differential between male and female owned firms by formulating a proper channel using mass media to communicate credit information and updates.
{"title":"Effects of Subcontracting on Firms in India's Informal Manufacturing Sector: An Empirical Investigation","authors":"Srishti Gupta","doi":"10.1353/jda.2023.a907732","DOIUrl":"https://doi.org/10.1353/jda.2023.a907732","url":null,"abstract":"ABSTRACT: Subcontracting occurs when a producer outsources a part of its production. We study the effect of subcontracting from a firm with buyer power on the profits of subcontracted upstream firms, and how profits vary on the basis of location of firm and owner's gender. Subcontracting is the treatment in our study and the dependent variable is the ratio of Gross Value Added to Sales adjusted or unadjusted for wages. The decision of a firm to subcontract or not is endogenous, so we cannot use OLS regression. Since we cannot have information on a firm being treated and non-treated at the same time, we use the Average Treatment Effect on Treated (ATET) model with Nearest Neighborhood Matching (NNM) approach, in which each treated firm is matched to an untreated firm which is its nearest neighbor on other parameters, to see the effect of treatment on outcome variable on the treated group had they been not treated. We find the existence of a subcontracting premium where being in a subcontracting relationship is beneficial for the informal sector firm, though the magnitude of this premium is small, and female-headed firms gain less from subcontracting. Subcontracted male-owned firms earn a higher premium but also pay more wages out of their total revenue to labor as compared to female-owned firms, perhaps because the latter are more likely to be Own Account Manufacturing Enterprises (OAME) which do not employ hired workers. Our results show that buyer power of the subcontracting firms is offset by the benefits they provide to the subcontracted firms, possibly in the form of assured demand and payments. Thus, policies favoring the informal sector firms need to incorporate the benefits of subcontracting by exploring alternative modes of distribution with lower distribution margins, such as cooperative societies or online platforms for example Amul, MEESHO. Policies should also focus on reducing the profit margin differential between male and female owned firms by formulating a proper channel using mass media to communicate credit information and updates.","PeriodicalId":84983,"journal":{"name":"Journal Of Developing Areas","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135144583","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-06-01DOI: 10.1353/jda.2023.a907746
Kul Prasad Kapri, Shankar Ghimire, Rajendra Dulal
ABSTRACT: The debate between private and public education is a widely discussed issue in personal and policy forums globally. In Nepal, private schools have grown significantly due to the perceived advantages associated with them. This paper tests if there are significant differences in labor-market outcomes for individuals educated in private schools compared to those educated in public schools. Research Methodology and Data: We employ nationally representative household survey data from the Nepal Living Standards Survey (NLSS III), conducted by the Central Bureau of Statistics (CBS) Nepal in 2010/11, utilizing the Living Standards Measurement Survey (LMSS) methodology developed by the World Bank. We apply the Blinder-Oaxaca decomposition method to examine the relationship between educational attainment and four distinct measures of labor-market outcomes: labor force participation, employment status, job security, and wage income. Initially, we estimate these outcomes separately for individuals in private education and those in public education. Subsequently, we calculate and analyze whether the disparities in estimated values can be attributed to differences in education. Our findings reveal significant labor-market disparities between individuals participating in private education and those in public education. Those with private education display lower rates of labor force participation and reduced employment rates, suggesting fewer working hours. However, those employed within this group enjoy more secure salaried positions. Furthermore, private education is linked to higher wage incomes, primarily attributable to longer educational periods. The Blinder-Oaxaca decomposition demonstrates that most of these disparities are associated with variations in educational backgrounds. Consequently, the results highlight the role of segregated education in contributing to labor-market inequality, emphasizing the impact of private schools in exacerbating economic disparities in Nepal. The findings underscore the significance of educational attainment in ameliorating disparities between individuals educated in public and private schools. To address these issues, policymakers should concentrate on strategies aimed at increasing the duration of education for public school students, such as providing free, quality higher education. By narrowing the educational gap between private and public institutions, the nation can work towards diminishing wage and job security disparities, fostering a more equitable society. These findings also have relevance for countries grappling with similar socio-economic challenges, initiating essential policy discussions.
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Pub Date : 2023-06-01DOI: 10.1353/jda.2023.a907749
Dimitrios D. Thomakos, Marilou Ioakimidis, Konstantinos Eleftheriou
ABSTRACT: Medical tourism is considered nowadays as a multi-billion industry which can promote a country's economic growth. Therefore, forecasting the scheduled tourism demand for medical services is of great importance for policy makers. Doing so, however, is not an easy task due to the following reasons: Data on medical tourism are (i) not easily accessible; (ii) not typically distinguished from tourists' non-scheduled (unintentional) use of a country's medical services; and (iii) usually not publicly available for long time periods. In this paper, we present a novel way to forecast tourism demand (intentional and unintentional) foro medical services —a rough but informative proxy of medical tourism— using limited data. To perform the analysis, we use data on the percentage of hospital discharges of non-residents for 17 European countries over the period 2008-2019 retrieved from Eurostat. Our methodological approach is based on a forecasting technique recently developed by Kyriazi, Thomakos and Guerard ; the adaptive learning forecasting. According to this method, MSE (Mean Squared Error)-performance enhancements can be achieved using any forecast as input —as long as that input is not a 'perfect' forecast— by learning from past forecast errors. Within this context, even the most basic forecast, the no-change or naïve forecast, can be used as input to the adaptive learning procedure. Kyriazi, Thomakos and Guerard approach is very well suited to our research question because (i) the no-change forecast is a natural candidate in a short time series where models cannot be estimated with sufficient accuracy, (ii) the no-change forecast is obviously far from being the 'perfect' forecast, and (iii) the adaptive learning process can be initialized by the no-change forecast and then learn by its own past forecast errors. Our results show that adaptive learning forecasting leads to performance enhancements that range from the 5% to more than 20% relative to the no-change benchmark. This finding indicates the efficiency of the adaptive learning method in forecasting medical tourism demand; an important subcategory of tourism demand for which data are not easily accessible and freely available historical data are existing for short time periods.
{"title":"Forecasting Tourism Demand for Medical Services","authors":"Dimitrios D. Thomakos, Marilou Ioakimidis, Konstantinos Eleftheriou","doi":"10.1353/jda.2023.a907749","DOIUrl":"https://doi.org/10.1353/jda.2023.a907749","url":null,"abstract":"ABSTRACT: Medical tourism is considered nowadays as a multi-billion industry which can promote a country's economic growth. Therefore, forecasting the scheduled tourism demand for medical services is of great importance for policy makers. Doing so, however, is not an easy task due to the following reasons: Data on medical tourism are (i) not easily accessible; (ii) not typically distinguished from tourists' non-scheduled (unintentional) use of a country's medical services; and (iii) usually not publicly available for long time periods. In this paper, we present a novel way to forecast tourism demand (intentional and unintentional) foro medical services —a rough but informative proxy of medical tourism— using limited data. To perform the analysis, we use data on the percentage of hospital discharges of non-residents for 17 European countries over the period 2008-2019 retrieved from Eurostat. Our methodological approach is based on a forecasting technique recently developed by Kyriazi, Thomakos and Guerard ; the adaptive learning forecasting. According to this method, MSE (Mean Squared Error)-performance enhancements can be achieved using any forecast as input —as long as that input is not a 'perfect' forecast— by learning from past forecast errors. Within this context, even the most basic forecast, the no-change or naïve forecast, can be used as input to the adaptive learning procedure. Kyriazi, Thomakos and Guerard approach is very well suited to our research question because (i) the no-change forecast is a natural candidate in a short time series where models cannot be estimated with sufficient accuracy, (ii) the no-change forecast is obviously far from being the 'perfect' forecast, and (iii) the adaptive learning process can be initialized by the no-change forecast and then learn by its own past forecast errors. Our results show that adaptive learning forecasting leads to performance enhancements that range from the 5% to more than 20% relative to the no-change benchmark. This finding indicates the efficiency of the adaptive learning method in forecasting medical tourism demand; an important subcategory of tourism demand for which data are not easily accessible and freely available historical data are existing for short time periods.","PeriodicalId":84983,"journal":{"name":"Journal Of Developing Areas","volume":"253 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135144588","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-06-01DOI: 10.1353/jda.2023.a907733
Xolisa Mtiki
ABSTRACT: The objective of the study is to predict corporate bankruptcy on the JSE-AltX (Alternative Stock Exchange) listed firms by employing Discriminant Analysis (MDA). Since its inception, the JSE-AltX has listed more than 100 firms and majority of them have migrated to the JSE main board. Motivated by the increasing number of delisted firms both pre and post their migration from JSE-AltX to the JSE main board, this study seeks to investigate the financial distress in the JSE-AltX listed firms. This study use a quantitative method to predict bankruptcy for a sample of 20 JSE-AltX listed firms that belongs to a wide range of industries, over the period from 1 January 2004 until 31 December 2015. Based on the previous literature it is evident that financial ratios play a significant role in the prediction of financial distress. Employing the same set of financial ratios (extracted from annual reports mainly the audited consolidated balance sheets and income statements) that are used in bankruptcy prediction as independent variables, the empirical results show that MDA has a statistically significant power in predicting default risk on the JSE-AltX listed firms. The findings show that the discrimination function is significant at the 5% level of significance. The MDA results reveal that, 7 out of the 20 sample firms are prone to bankruptcy, while the rest are not. Furthermore, the model classifies net profit margin (short-term profitability), current ratio (liquidity) and return on capital invested as the most important financial ratios in distinguishing the successful firms from unsuccessful firms post migration from the JSE-AltX to the JSE main board. Generally, this study results have policy implications which regulatory authorities, investors, employees and lenders will find interesting. Firstly, regulatory authorities can find this research useful as it provides effective review of the firm's financial distress conditions and subsequently signals default risk to various stakeholders. Secondly, this research will not only assist in identify potential default risks, but it will also enable different stakeholders to formulate mechanisms or relevant policies and procedures that will allow them to detect and prevent financial distress.
{"title":"Predicting Corporate Bankruptcy in JSE-AltX Listed Firms","authors":"Xolisa Mtiki","doi":"10.1353/jda.2023.a907733","DOIUrl":"https://doi.org/10.1353/jda.2023.a907733","url":null,"abstract":"ABSTRACT: The objective of the study is to predict corporate bankruptcy on the JSE-AltX (Alternative Stock Exchange) listed firms by employing Discriminant Analysis (MDA). Since its inception, the JSE-AltX has listed more than 100 firms and majority of them have migrated to the JSE main board. Motivated by the increasing number of delisted firms both pre and post their migration from JSE-AltX to the JSE main board, this study seeks to investigate the financial distress in the JSE-AltX listed firms. This study use a quantitative method to predict bankruptcy for a sample of 20 JSE-AltX listed firms that belongs to a wide range of industries, over the period from 1 January 2004 until 31 December 2015. Based on the previous literature it is evident that financial ratios play a significant role in the prediction of financial distress. Employing the same set of financial ratios (extracted from annual reports mainly the audited consolidated balance sheets and income statements) that are used in bankruptcy prediction as independent variables, the empirical results show that MDA has a statistically significant power in predicting default risk on the JSE-AltX listed firms. The findings show that the discrimination function is significant at the 5% level of significance. The MDA results reveal that, 7 out of the 20 sample firms are prone to bankruptcy, while the rest are not. Furthermore, the model classifies net profit margin (short-term profitability), current ratio (liquidity) and return on capital invested as the most important financial ratios in distinguishing the successful firms from unsuccessful firms post migration from the JSE-AltX to the JSE main board. Generally, this study results have policy implications which regulatory authorities, investors, employees and lenders will find interesting. Firstly, regulatory authorities can find this research useful as it provides effective review of the firm's financial distress conditions and subsequently signals default risk to various stakeholders. Secondly, this research will not only assist in identify potential default risks, but it will also enable different stakeholders to formulate mechanisms or relevant policies and procedures that will allow them to detect and prevent financial distress.","PeriodicalId":84983,"journal":{"name":"Journal Of Developing Areas","volume":"19 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135144590","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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