Benhua Yang

Autocracy, Democracy, and FDI Inflows to the Developing Countries

Abstract This paper investigates the relationship between political regimes and Foreign Direct Investment (FDI) inflows to the developing countries for a sample of 134 countries over the 1983–2002 period. Using two categorical measures of regime type and three different measures of FDI, this study finds that, regardless of the measures of regime type, democracies are not significantly associated with either FDI in level or FDI as a ratio to GDP; democracy is positively related to a higher level of per capita FDI, but this result is not robust to alternative measures of political regime. Taken as a whole, there is no evidence of a systematic relationship between democracy and FDI inflows. This result suggests that being a democracy does not help attract higher levels of FDI.

FDI and growth: a varying relationship across regions and over time

This article investigates the relationship between foreign direct investment (FDI) inflows and economic growth for a panel of 110 countries over the period 1973 to 2002. The results show that the growth effect of FDI varies by region and over time.

Resource booms and economic development: the time series dynamics for 17 oil-rich countries

This article examines the time series properties of oil prices and economic development for 17 oil-rich developing countries. Cointegration and error-correction estimation results indicate that in the majority of cases oil booms are followed by increases in both GDP per capita and investment.

Resource curse: the role of institutions versus policies

Recent work suggests that countries with good institutions can escape the resource curse. This article shows that in the developing countries where the curse is of primary concern, institutional quality does not seem to have much influence; instead, it appears that it is a countrys policies which play a significant role in neutralizing the negative impact of resource abundance.

The Differential Growth Effect of FDI across US Regions

In this paper we examine and assess the differential impact of FDI on growth in eight US regions, as defined by the Bureau of Economic Analysis (BEA). The results show that the manufacturing FDI–growth relationship tends to vary across regions. In particular, while the New England, Mideast, Great Lakes, Rocky Mountains and Far West regions experienced a positive growth effect of manufacturing FDI over the sample period 1977–2001, other regions showed little evidence of such a relationship. Using disaggregated data across manufacturing sectors, we also find that there are great regional variations concerning the FDI–growth nexus, and only the Great Lakes and Far West regions experienced a beneficial impact of FDI on growth in all five manufacturing sectors examined.

An empirical refinement of the relationship between growth and volatility

The link between business cycle volatility and the long-run growth rate has received increasing attention in the literature over the last ten years. Yet neither is there a theoretical consensus nor consistent empirical evidence that would lead us to believe the relationship is positive, negative or nonexistent either within broadly defined regions or over time. This study investigates a possible cause for this phenomenon. What we find is that out of 14 popularly defined sub regions, only 7 can be constrained over time within the respective sub region, while only two broadly-defined regional classifications are justified. We did find that the grouping of OECD countries is statistically valid, but only if the relationship is allowed to vary over time. We suggest a refinement of the current empirical work that takes into account both more narrowly defined regional and time parametric heterogeneity.

Ethnic Solidarity for Economic Survival: Korean Greengrocers in New York City

de Tocqueville, A. (1969 [1835]) Democracy in America, New York: Doubleday Anchor. Gellner, E. (1994) Conditions of Liberty: Civil Society and Its Rivals, New York: Penguin Press. Meltzer, A.H. and Richard, S.F. (1981) ‘‘A Rational Theory of the Size of Government,’’ Journal of Political Economy 89(5): 914–927. Olson, M. (1965) The Logic of Collective Action, Cambridge, MA: Harvard University Press. Olson, M. (1982) The Rise and Decline of Nations, New Haven, CT: Yale University Press. Putnam, R. (1993) Making Democracy Work, Princeton, NJ: Princeton University Press. Schumpeter, J.A. (1942) Capitalism, Socialism, and Democracy, New York: Harper Colophon.

Intangible Capital: Its Contribution to Economic Growth, Well-being and Rationality

This book consists of a number of articles that have been published elsewhere and have been put together under the umbrella of ‘‘intangible capital.’’ It first introduces the concept of intangible capital which ‘‘refers to the many things that are in humans or in their relationships, things that enable people to perform well in their work situations, and thus be productive and successful. It also refers to things that enable people to be rational and experience wellbeing’’ (p. 4). The components of intangible capital include standard human capital (i.e. education and training), non-cognitive human capital (e.g. persistence, patience, and motivation), personal capital (e.g. emotional intelligence, relationship management), social capital (e.g. trust), organizational capital, moral capital (e.g. virtuous behavior), ethnic capital, cultural capital, customer capital, and more. Although such a comprehensive concept of intangible capital helps broaden one’s perspective, it also risks losing focus as well as depth in studying the issues raised in the book. After introducing the broad concept of intangible capital, the book first considers its contribution to economic growth in Chapter 3, ‘‘The contribution of intangible capital to economic growth: an overview.’’ The existing theoretical work on the productivity effect of human capital, social capital, and organizational capital is examined, the relevant empirical findings are reviewed, and it is reported that social capital has a highly significant effect on economic growth. Other than pointing out the data problem, it does not give the reader any warning in drawing inferences. The issue of causality is not mentioned, but it is obvious that while social capital may contribute to growth, growth can also lead to improvement in social capital formation. Furthermore, there is the possibility of omitted variable bias: both social capital and economic growth could be driven by a third variable such as history, institutions, and geography. Such problems are well-known in crosscountry growth regressions, yet the book seems not to be concerned and concludes that ‘‘this chapter presents arguments and evidence that intangible capital (and all its components) is extremely important to understanding economic growth’’ (p. 45). This conclusion is also unwarranted since not all of the components are carefully examined on their effect on growth. It is said that ‘‘as yet, no researchers have investigated empirically the effect of noncognitive human capital (including personal capital) on economic growth in a way similar to the research on social capital summarized above’’ (p. 43), that is, cross-country growth regression. Well, work by Jones and Olken REVIEW OF SOCIAL ECONOMY