We investigate the factors attracting FDI into highly diversified Russian regions during the phase of transition, and verify the impact of transition experience on the current FDI inflow. Using cross-sectional and panel data, we demonstrate that the highly inhomogeneous investment pattern is explained, in addition to classical demand factors, by specific economic and socio-institutional regional characteristics. Russia appears as an idiosyncratic country where foreign investors seek a stable social and institutional context. Using recent FDI data we show that transition experiences influence current FDI inflow, particularly when the strength of the institutional environment and availability of infrastructures are taken into account.
This paper, in contrast to much of the existing literature, which focuses on the impact of Information and Communication Technologies (ICT) on labour productivity, assesses the relationship between ICTs investments and Technical Efficiency (TE) using a stochastic frontier approach. We use a large panel dataset of Italian manufacturing firms over the period [1995][1996][1997][1998][1999][2000][2001][2002][2003][2004][2005][2006] and confirm prior findings of the existing literature on ICT and productivity. In addition, we test on which extend the ICT investments influence the distance of the firm from the production frontier; that is, how ICT's adoption influences the closing of the firm efficiency gap. We also test how long the effects of ICT investments on technical efficiency last. We find that ICT returns on TE are influenced by some firm's characteristics, most of them idiosyncratic, such as management practices, labour organization, research and development.Keywords: ICT; stochastic frontier; technical efficiency; manufacturing firms JEL: D24, L25, L63, O33 1 IntroductionAfter a long debate on the returns of investment in information and communication technology (ICT) there is now general agreement that ICT positively contributes to economic growth both at micro and macroeconomic levels. This debate has been largely based on the productivity paradox, which started soon after Robert Solow's (1987) statement: "You can see the computer age everywhere but in the productivity statistics".The related empirical literature studies both the relationship between ICT investments and labour productivity and ICT investments and total factor productivity (TFP). Few attempts have been made to also study the relationship between ICT investments and technical efficiency (TE) at firm level. The importance of this relationship arises from the fact that the productivity growth is mainly the result of technical and efficiency changes. Hence, it is important to verify the effect that ICTs have both on productivity and TE.In this paper the Cobb-Douglas and Translog production functions are used to explore ICT investments impact on firm distance from the 'best practice technique'. We utilize the stochastic frontier model introduced by Battese and Coelli (1995). This methodology has the benefit that it uses a one-stage procedure to estimates both productivity and (in)efficiency. The paper adds to the existing literature in four ways. Firstly, ICT capital and high-skilled workers are considered as inputs in the firm's production function. Secondly, ICT investments are considered as a factor able to directly influence TE. Thirdly, we investigate the length of the positive impact of ICT on firm efficiency. Finally, we postulate that ICT effects on firm efficiency depend on some complementary idiosyncratic factors (such as management practices, research and development investments and other firm' characteristics) that are able to boost ICT returns.The analysis is conducted using a balanced and an unbalanced panel data of Itali...
Background: The links between pollution, institutions, and economic growth may be not so univocal as argued in the literature, as these factors may influence each other since some reverse causality may exist between them. The understanding of this relationship is important for identifying appropriate policies for sustainable development. Methods: We investigate the long-run relationship between pollution, institutions, and economic growth, considering as variables carbon dioxide emissions, rule of law, and income. The model offers an analysis of causality direction using a panel-VAR approach for the period 1996-2010 for 33 high-income countries that include advanced, emerging, and former-transition economies.Results: The results demonstrate a positive reverse causality relationship between the rule of law and income, indicating that higher income implies stronger rule of law and vice versa. The rule of law is found to have a negative relationship with pollution, confirming that the enforcement of rules is "a conditio sine qua non" to control emissions. No causality relationship is found for pollution and income that can be due to the different stages of economic development of emerging, former-transition, and developed economies, implying heterogeneity in their environmental protection policies. Conclusions: We argue that the rule of law matters both for economic growth and environment, working as a go-between and creating a win-win situation, where stronger institutions increase the levels of income and vice versa. In order to enhance sustainable development, a policy maker should allocate additional resources for both monitoring the application of the rule of law and its enforcement.
Abstract:The aim of this work is to provide new evidence on the factors that determine the fl ow of FDI among transition countries. The analysis takes into consideration the period of most intense transition and post-transition (1994)(1995)(1996)(1997)(1998)(1999)(2000)(2001)(2002) of 26 former socialist countries. The empirical estimates enable us to draw two main conclusions: fi rst classical locational FDI factors maintain their role in the context of transition countries, and, second, that FDI are infl uenced by specifi c market and institutional factors. Among market variables, relatively higher labour costs surprisingly do not constitute an obstacle for foreign investment. We fi nd that variables refl ecting market stabilising institutions play a more important role than those representing market creating institutions. Although, there is a certain tolerance of foreign investors towards weak institutional environment, we demonstrate that, to attract FDI, countries should reinforce their macroeconomic stability by focusing on market stabilising institutions.
In response to recently growing literature investigating the relationship between environment and institutions, this study investigates how rule of law influences the level of income at the turning point of the Environmental Kuznets Curve (EKC). Using an alternative specification of EKC that avoids nonlinear transformation of potentially nonstationary regressors, investigated by Bradford et al. (2005) and Leitão (2010), we find the evidence for the EKC in European countries for carbon emissions. Our results find a negative relationship between pollution and rule of law, demonstrating that when rule of law is strong, the turning point of the EKC occurs at a lower level of income per capita, thus, decreasing emissions. In terms of policy implication, our study suggests that institutional reinforcement should deserve close attention in designing and enforcing policies that limit environmental degradation.
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