Using NATO and SIPRI databases we construct a system of behavioural equations for both countries. We estimate the system using GMM to assess the extent to which the development of a domestic defence industrial base (DIB) will contribute to the growth of the economy, the reduction of unemployment via the spin-offs and the import substitution of defence equipment. Findings: The results indicate that unlike the positive impact of the Turkish defence industry on economic growth, the cost imposed on the Greek economy due to the negligible contribution of its defence industry is hard to bear in view of the recent geopolitical developments in the Aegean and the Eastern Mediterranean. Practical Implications: Promoting a sound defence industrial base contributes to growth. If the industrial base is considerably defence-oriented, contributes to self-sufficiency, immediate response in cases of emergency and less dependence on foreign suppliers. Originality/Value: Unless Greece proceeds to an import-substitution policy regarding defence procurement, the increased requirements in view of the recent geopolitical developments will impose a prohibitive cost on the economy.
During the last three decades there has been an impressive increase in global FDI (Foreign Direct Investment) flows. Almost half of the flows towards developed countries have been directed towards EU-15 countries. Since the empirical investigation has confirmed the positive impact of these inflows on growth and development, economic research has recently focused on the factors that make a country an attractive FDI location.Among the most significant FDI determinants have been market size, market potential, labor costs, agglomeration effects, openness of the economy, macroeconomic stability, quality of infrastructure, human capital and quality of domestic institutions. EU structural funds (SF) have been used to create growth and improve the quality of infrastructure, human capital and domestic institutions of the receiving countries, thus, making them a more attractive FDI destination.The purpose of this research is to investigate the extent to which SF achieved the above targets and have contributed to an increase in FDI inflows for the receiving countries. Using panel data that covers seven five-year periods from 1970 to 2005 for 13 of the EU-15 (Luxemburg and Germany were excluded for data reasons), we tested the statistical significance of market size and potential, agglomeration effects, unit labor costs, openness of the economy, macroeconomic stability, real effective exchange rate, human capital, institutional quality, corruption, and structural funds.Utilizing a variety of econometric techniques appropriate for panel data (fixed and random effects, OLS and GMM estimators), we find results that are robust to these alternative specifications and consistent with previous studies. Market size, growth, unit labor cost, agglomeration effects, macroeconomic stability, and the quality of institutions appear to be important determinants of FDI inflows. Furthermore, for countries with high quality institutions the EU SF have a positive impact on FDI, while for countries with low quality institutions the impact can be negative. Int Adv Econ Res (2009) 15:488-489
Using NATO and SIPRI databases we construct a system of behavioural equations for both countries. We estimate the system using GMM to assess the extent to which the development of a domestic defence industrial base (DIB) will contribute to the growth of the economy, the reduction of unemployment via the spin-offs and the import substitution of defence equipment. Findings: The results indicate that unlike the positive impact of the Turkish defence industry on economic growth, the cost imposed on the Greek economy due to the negligible contribution of its defence industry is hard to bear in view of the recent geopolitical developments in the Aegean and the Eastern Mediterranean. Practical Implications: Promoting a sound defence industrial base contributes to growth. If the industrial base is considerably defence-oriented, contributes to self-sufficiency, immediate response in cases of emergency and less dependence on foreign suppliers. Originality/Value: Unless Greece proceeds to an import-substitution policy regarding defence procurement, the increased requirements in view of the recent geopolitical developments will impose a prohibitive cost on the economy.
Rowthorn (Unemployment, Wage Bargaining, and the Capital-Labor Substitution, Cambridge Journal of Economics, 1999, pp. 413-25) has shown that if the elasticity of substitution between labor and capital is less than unity, there must be a negative relationship between capital stock and the unemployment rate, contrary to the conclusions of a typical NAIRU model. This research empirically investigates the two main implications of Rowthorn's analysis: that unemployment and capital stock are cointegrated, and that there is a negative relationship between them. This paper formulates and estimates a NAIRU model for a number of industrialized countries using a cointegration, vector error correction (VEC) approach. The empirical analysis clearly and unambigiously suggests that capital stock and the unemployment rate are cointegrated, and that an increase in capital stock reduces the unemployment rate. Using GMM, this paper also formulates and estimates the demand for labor equation in order to obtain direct estimates of the elasticity of substitution. As expected, the data show that the elasticity is well below unity. (JEL C10, E00) Market Potential of the Firm EVGENY V. POPOV Russian Academy of Sciences, Urals--RussiaThis paper aims to develop an integrated model of market activity of the firm on the basis of the application of an advanced economic toolkit. Input data were used to carry out the research using modern developments in management, marketing, and other applied economic disciplines. Managers of 50 firms of the Ural region of Russia were interrogated and the data were collected to develop a formalized structure of the market potential of the firm. The market potential of the firm is a collection of possibilities in the implemention of market activities. With the help of a functional structure toolkit of market potential, it is possible to formulate a model to quantitatively estimate the market potential in each sphere of actitvity of the firm. The calculation of current levels of usage of market potential involves rating the levels of implementation of activity in each functional area. Consequentl}; current levels of implementation of activity below strategic levels gives a basis for implementation of the strategy through the usage of a toolkit of market potential to arrive at a strategic level. (JEL D21) 337
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