Foreign Direct Investment, Aggregate Demand Conditions and Exchange Rate Nexus: A Panel Data Analysis of BRICS Economies

In this study, we attempt to provide underlying theoretical and empirical explanations for exchange rate appreciation due to foreign capital influx and aggregate demand conditions in the BRICS economies. The empirical analysis is based on a panel dataset of BRICS countries over the time period 1992–2013 to substantiate our theoretical findings. For panel co-integration, Pedroni and Johansen-Fisher panel co-integration tests are conducted to compare co-integration among panel countries. We also analyze the results from Dumitrescu-Hurlin panel causality test among variables and use Granger Causality to test for the causal patterns in each of the individual countries. Our findings showed that the exchange rate volatility is directly affected by the flows of FDI, GDP per capita, Capital formulation and House hold consumption. The results have profound implications in terms of exchange rate stability in the BRICS countries and associated risks

Effects of Trade Cost on the Textile and Apparel Market: Evidence from Asian Countries

Global textile and apparel industry has since the 1950s been subjected to various forms of trade policy measures. Well noted among these are tariffs and non-tariff barriers (NTB)/policy indicators. Understanding the dynamics in such relevant policy indicators and the implications they yield for trade is a vital step toward informing relevant policy formulation and agribusiness investment decisions. With the textile and apparel industry being the primary grounds on which development in most Asian countries is founded, we for the first time in literature assess effects of various trade cost indicators on global textile and apparel imports from 37 Asian countries using a ‘cost-incorporated’ gravity model for the period 1988–2004. Estimates from this study affirm theory-based associations between trade, distance, cultural linkage, tariffs, and non-tariffs barriers. We however discovered quite interesting associations regarding effects of tariff increments and existence of NTB. Although both are primarily imposed/instilled to restrict trade flow, effect of tariff increments was consistently negative across all models, but that for NTB was consistently positive, although significant only in the case of apparel imports. Plausible reasons behind the implications for tariffs and NTB are elaborated on in this article. A keen discovery from this study, however, is that imports of apparels are more responsive than textile imports to dynamics in various trade-related cost, geographic and economic indicators

Internalisation Theory and outward direct investment by emerging market multinationals

The rise of multinational enterprises from emerging countries (EMNEs) poses an important test for theories of the multinational enterprise such as internalisation theory. It has been contended that new phenomena need new theory. This paper proposes that internalisation theory is appropriate to analyse EMNEs. This paper examines four approaches to EMNEs—international investment strategies, domestic market imperfections, international corporate networks and domestic institutions—and three case studies—Chinese outward FDI, Indian foreign acquisitions and investment in tax havens—to show the enduring relevance and predictive power of internalisation theory. This analysis encompasses many other approaches as special cases of internalisation theory. The use of internalisation theory to analyse EMNEs is to be commended, not only because of its theoretical inclusivity, but also because it has the ability to connect and to explain seemingly desperate phenomena

Neural responses to others’ pain vary with psychopathic traits in healthy adult males

Disrupted empathic processing is a core feature of psychopathy. Neuroimaging data have suggested that individuals with high levels of psychopathic traits show atypical responses to others' pain in a network of brain regions typically recruited during empathic processing (anterior insula, inferior frontal gyrus, and mid- and anterior cingulate cortex). Here, we investigated whether neural responses to others' pain vary with psychopathic traits within the general population in a similar manner to that found in individuals at the extreme end of the continuum. As predicted, variation in psychopathic traits was associated with variation in neural responses to others' pain in the network of brain regions typically engaged during empathic processing. Consistent with previous research, our findings indicated the presence of suppressor effects in the association of levels of the affective-interpersonal and lifestyle-antisocial dimensions of psychopathy with neural responses to others' pain. That is, after controlling for the influence of the other dimension, higher affective-interpersonal psychopathic traits were associated with reduced neural responses to others' pain, whilst higher lifestyle-antisocial psychopathic traits were associated with increased neural responses to others' pain. Our findings provide further evidence that atypical function in this network might represent neural markers of disrupted emotional and empathic processing; that the two dimensions of psychopathy might tap into distinct underlying vulnerabilities; and, most importantly, that the relationships observed at the extreme end of the psychopathy spectrum apply to the nonclinical distribution of these traits, providing further evidence for continuities in the mechanisms underlying psychopathic traits across the general population

The Impact of Exchange Rate on FDI and the Interdependence of FDI Over Time

The paper examines the impact of exchange rates on foreign direct investment (FDI) inflows into the United States in the context of a model that allows for the interdependence of FDI over time. Interdependence is modeled as a two-state Markov process where the two states can be interpreted as either a favorable or an unfavorable environment for FDI in an industry. Unbalanced industry-level panel data from the US wholesale trade sector are used in the analysis and yield two main results. First, the paper finds evidence that FDI is interdependent over time. Second, under a favorable FDI environment, the exchange rate has a positive and significant effect on the average rate of FDI inflows

Vertical Specialization, Tariff Shirking and Trade

The core idea behind the paper is that trade policy matters for the organization of global value chains, a notion largely neglected by economists but which has important implications for our understanding of trade and the international transmission of trade policy shocks. We develop a theoretical model in which a firm's ability to spatially separate manufacturing from headquarter services gives them the flexibility to circumvent economy-specific tariff changes by switching their assembly location abroad. We show that tariff shirking increases the elasticity of bilateral trade to economy-specific tariff hikes due to an extra extensive margin effect. Furthermore, we show that tariff shirking affects the vulnerability of headquarter services and manufacturing to trade policy shocks in opposite ways. While tariff shirking dampens the vulnerability of headquarter services to trade policy shocks, it amplifies the vulnerability of manufacturing to trade policy shocks. Using firm-level and province-level export data from the People's Republic of China, we provide evidence in line with the theoretical model

Crime, Institutions and Sector-Specific FDI in Latin America

In this article, we explore how crime and institutions affect the flow of capital in the form of foreign direct investment (FDI) to Latin American and Caribbean countries in the primary, secondary and tertiary sectors during the 1996-2010 period. We use three different variables related to violent crime: homicides, crime victimization, and an index of organized crime. We find that there is a correlation between the institutional and crime variables, where the significance of institutional variables tends to disappear when the crime variables are added to the model. We find that higher crime victimization and organized crime are associated with lower FDI in the tertiary sector. We do not find that crime affects FDI inflows to Latin America in the primary and secondary sector