Does Direct Foreign Investment Affect Domestic Firms' Credit Constraints?

Firms in developing countries cite credit constraints as one of their primary obstacles to investment. Direct foreign investment, by bringing in scarce capital, may ease domestic firms' credit constraints. Alternatively, if foreign firms borrow heavily from domestic banks, they may exacerbate domestic firms' credit constraints by crowding them out of domestic capital markets. One plausible mechanism by which this may happen is indirect. Foreign firms may be more experienced and have better financial ratios and thus, be a safer bet for lending institutions. Using firm-level data from the Ivory Coast for the period 1974-1987 we test the following hypotheses: (1) domestic firms are more credit constrained than foreign firms and (2) borrowing by foreign firms exacerbates the credit constraints of domestic firms. Results suggest that domestic firms are significantly more credit constrained that foreign firms and that borrowing by foreign firms aggravates domestic firms' credit constraints. By splitting the sample into state-owned (SOE) and privately owned domestic enterprises we are able to show that SOEs are less financially constrained than other domestic enterprises, consistent with the notion of a 'soft budget constraint'. Borrowing by foreign firms affects only privately owned enterprises. Finally, we explore possible explanations for the crowding out effect.

Outsourcing Jobs? Multinationals and US Employment

Critics of globalization claim that US manufacturing firms are being driven to shift employment abroad by the prospects of cheaper labor. Others argue that the availability of low-wage labor has allowed US based firms to survive and even prosper. Yet evidence for either hypothesis, beyond anecdotes, is slim. Using firm-level data collected by the US Bureau of Economic Analysis (BEA), we estimate the impact on US manufacturing employment of changes in foreign affiliate wages, controlling for changing demand conditions and technological change. We find that the evidence supports both perspectives on globalization. For firms most likely to perform the same tasks in foreign affiliates and at home ("horizontal" foreign investment), foreign and domestic employees appear to be substitutes. For these firms, lower wages in affiliate locations are associated with lower employment in the US. However, for firms which do significantly different tasks at home and abroad ("vertical" foreign investment), foreign and domestic employment are complements. For vertical foreign investment, lower wages abroad are associated with higher US manufacturing employment. These offsetting effects may be combined to show that offshoring is associated with a quantitatively small decline in manufacturing employment. Other factors, such as declining prices for consumer goods, import competition, and falling prices for investment goods (which substitute for labor) play a more important role.

Models for the Effects of G-seat Cuing on Roll-axis Tracking Performance

Including whole-body motion in a flight simulator improves performance for a variety of tasks requiring a pilot to compensate for the effects of unexpected disturbances. A possible mechanism for this improvement is that whole-body motion provides high derivative vehicle state information whic allows the pilot to generate more lead in responding to the external disturbances. During development of motion simulating algorithms for an advanced g-cuing system it was discovered that an algorithm based on aircraft roll acceleration producted little or no performance improvement. On the other hand, algorithms based on roll position or roll velocity produced performance equivalent to whole-body motion. The analysis and modeling conducted at both the sensory system and manual control performance levels to explain the above results are described

Relationship between emergency presentation, systemic inflammatory response, and cancer-specific survival in patients undergoing potentially curative surgery for colon cancer

Background Emergency presentation is recognized to be associated with poorer cancer-specific survival following curative resection for colorectal cancer. The present study examined the hypothesis that an enhanced systemic inflammatory response, prior to surgery, might explain the impact of emergency presentation on survival. Methods In all, 188 patients undergoing potentially curative resection for colorectal cancer were studied. Of these, 55 (29%) presented as emergencies. The systemic inflammatory response was assessed using the Glasgow Prognostic Score (mGPS), which is the combination of an elevated C-reactive protein (>10 mg/L) and hypoalbuminemia (<35 g/L). Results In the emergency group, tumor stage was greater (P < 0.01), more patients received adjuvant therapy (P < 0.01) more patients had an elevated mGPS (P < 0.01), and more patients died of their disease (P < 0.05). The minimum follow-up was 12 months; the median follow-up of the survivors was 48 months. Emergency presentation was associated with poorer 3-year cancer-specific survival in those patients aged 65 to 74 years (P < 0.01), in both males and females (P < 0.05), in the deprived (P < 0.01), in patients with tumor-node-metastasis (TNM) stage II disease (P < 0.01), in those who received no adjuvant therapy (P < 0.01), and in the mGPS 0 and 1 groups (P < 0.05) groups. On multivariate survival analysis of patients undergoing potentially curative surgery for TNM stage II colon cancer, emergency presentation (P < 0.05) and mGPS (P < 0.05) were independently associated with cancer-specific survival. Conclusions These results suggest that emergency presentation and the presence of systemic inflammatory response prior to surgery are linked and account for poorer cancer-specific survival in patients undergoing potentially curative surgery for colon cancer. Both emergency presentation and an elevated mGPS should be taken into account when assessing the likely outcome of these patients

Global capital flows and financing constraints

Firms often cite financing constraints as one of their primary obstacles to investment. Global capital flows, by bringing in scarce capital, may ease the financing constraints of host country firms. But if incoming foreign investors borrow heavily from domestic banks, foreign direct investment may exacerbate financing constraints by crowding host country firms out of domestic capital markets. Combining a unique cross-country firm-level panel with time-series data on restrictions on international transactions and capital flows, Harrison, Love, and McMillan find that different measures of global flows are associated with a reduction in firm-level financing constraints. First, the authors show that one type of capital inflow-foreign direct investment-is associated with a reduction in financing constraints. Second, they test whether restrictions on international transactions affects the financing constraints of firms. The results suggest that only one type of restriction-those on capital account transactions-negatively affects firms'financing constraints. The authors also show that multinational firms are not financially constrained and do not appear to be sensitive to the level of foreign directinvestment. This implies that foreign direct investment eases financing constraints for non-multinational firms. Finally, the authors show that (1) foreign direct investment only eases financing constraints in the non-G7 countries, and (2) other kinds of flows, such as portfolio investment, have no impact on financing constraints.International Terrorism&Counterterrorism,Payment Systems&Infrastructure,Financial Intermediation,Economic Theory&Research,Fiscal&Monetary Policy,Economic Theory&Research,International Terrorism&Counterterrorism,Financial Intermediation,Environmental Economics&Policies,Banks&Banking Reform

Global Capital Flows and Financing Constraints

Firms often cite financing constraints as one of their primary obstacles to investment. Global capital flows, by bringing in scarce capital, may ease host-country firms' financing constraints. However, if incoming foreign investors borrow heavily from domestic basnks, direct foreign investment (DFI) may exacerbate financing constraints by crowding host country firms out of domestic capital markets. Combininb a unique cross-country firm-level panel with time-series data on restrictions on international transactions and capital flows, we find that different measures of global flows are associated with a reduction in firm-level financing constraints. First, we show that one type of capital inflow--DFI--is associated with a reduction in financing constraints. Second, we test whether restrictions on international transactions affect firms' financing constraints. Our results suggest that only one type of restriction--those on capital account transactions--negatively affect firms' financing constraints. We also show that multinational firms are not financially constrained and do not appear to be sensitive to the level of DFI. This implies that DFI eases financing constraints for non-multinational firms. Finally, we show that DFI only eases financing constraints in the non-G7 countries.

Disability in young people and adults after head injury: 12-14 year follow up of a prospective cohort

Background: There is a need to establish how long term outcome evolves after head injury (HI) and factors related to this, to inform opportunities for intervention. Objective: To determine late outcome in adults 12-14 years after hospital admission for HI and to examine relationships between injury, early and late factors and disability. Methods: A prospective cohort with HI, whose outcome was reported previously at 1 and 5-7 years after injury were followed up after 12-14 years. Participants were assessed using structured and validated measures of disability (Glasgow Outcome Scale-Extended), psychological well-being, alcohol use and health status. Results: Of 219 survivors followed-up at 5-7 years, 34 (15.5%) had died by 12-14 years. Disability remained common in survivors at 12-14 years (51%), as found at one and 5-7 years (53%). For those disabled at 1 year, outcome was dismal, with 80% dead or disabled at 12-14 years. Older age at injury, a premorbid history of brain illness or physical disability and post-injury low self-esteem and stress were associated with disability at 12-14 years. Disability changed between 5-7 and 12-14 years in 55% of survivors, improving in 23%. Late changes in disability between 5-7 and 12-14 years were associated with self-perceptions of locus of control as being 'powerful others' at 5-7 years. Conclusions: Disability is common 12-14 years after hospital admission with a head injury. For some there is a dynamic process of change in disability over time that is associated with self-perceptions of control that could be a target for intervention based research

Kinematical fingerprints of star cluster early dynamical evolution

We study the effects of the external tidal field on the violent relaxation phase of star clusters dynamical evolution, with particular attention to the kinematical properties of the equilibrium configurations emerging at the end of this phase.We show that star clusters undergoing the process of violent relaxation in the tidal field of their host galaxy can acquire significant internal differential rotation and are characterized by a distinctive radial variation of the velocity anisotropy. These kinematical properties are the result of the symmetry breaking introduced by the external tidal field in the collapse phase and of the action of the Coriolis force on the orbit of the stars. The resulting equilibrium configurations are characterized by differential rotation, with a peak located between one and two half-mass radii. As for the anisotropy, similar to clusters evolving in isolation, the systems explored in this Letter are characterized by an inner isotropic core, followed by a region of increasing radial anisotropy. However for systems evolving in an external tidal field the degree of radial anisotropy reaches a maximum in the cluster intermediate regions and then progressively decreases, with the cluster outermost regions being characterized by isotropy or a mild tangential anisotropy. Young or old but less-relaxed dynamically young star clusters may keep memory of these kinematical fingerprints of their early dynamical evolution.Comment: 5 pages 4 figures. Accepted for publication in MNRAS Letter