Ching-Mu Chen, Shin-Kun Peng (p), Wen-Jen Tsay

This study quanties the uneven welfare gains from trade between firm owners and workers in a multi-country model of monopolistic competition under a demand system of constant elasticity of substitution (CES). An agent decides to start up her own firm or to be employed as a worker according to her level of innate capability, which determines the productivity of her potential launched firm. Although keeping this model isomorphic to Melitz's (2003) heterogeneous firm model in terms of the aggregate welfare gains from trade, we are able to to examine the welfare gains for
firm owners and workers, respectively. Theoretically, we find that countries with lower domestic expenditure shares display higher disparities in welfare gains from
trade between firm owners and workers. Taking the model to data, we illustrate the application of the methodology by calculating the respective average welfare gains (compared to autarky) of firm owners and of workers for 14 countries, including G7, BRIC, Korea, Singapore, and Taiwan. Among them, Singapore has relatively lower domestic expenditure shares and shows dramatically large disparity in welfare gains between these two occupations. Taking the year of 2006 as an example, the gap in welfare gains in Singapore reaches to 445:03%, while the same measure in the United States is only 9:95%.

Zoltan Gal (p)

The research investigates the long-term problems of capital accumulation in the context of centre and periphery and dependency models, and introduces the systemic features of the integration of transition countries. Post-socialist transformation emphasized by the DME model, is characterized by high dependency on foreign direct investment channeled by foreign MNCs into Central and Eastern Europe. The main aim of the research is to analyze the impact of FDI on growth, gross fixed capital accumulation, wealth creation on both macro-level and subnational level in CEE. Since the outbreak of the crisis, not only FDI inflows decreased but also the role of foreign capital in promoting economic growth have been revised. The research relies on the analysis of a panel dataset containing time series data for the period 1990-2013 on Visegrad 4 countries. OLS regression were used to statistically verify our presumptions. GDP growth rate, GFC, GNI per capita, export and import, employment and savings rate are selected as dependent variables; FDI inflows/stocks, banking/portfolio investments used as independent variables, and control (financial, technology and infrastructure development) and institutional variables are also selected. Dickey–Fuller test is required to insure the stationarity of FDI variables, differentiation and deferring effects. Concerning sub-national level, data are collected from FDI Regio and fDiMarket database. Our preliminary results do not find strong correlation between GFCF and FDI. Domestic savings and higher incomes are the most important factors not only of domestic investments but also of convergence to the advanced regions. Concerning the causality the paper would like to test (Granger) whether FDI generate higher growth and development or vice versa. Concerning the growth and development effects of foreign investment-led versus domestic savings-led growth models the latter had stronger impact not only on growth but on catching-up as well. We argue that positive impact of FDI on regional performance to a large extent depends on the degree of embeddedness of MNCs in the regional economy and the socio-economic conditions of the given region.

This research also examines the territorial impact of FDI on the overall economic growth as well as on the geographical distribution of economic activities across regions. It compares the regions with deeper integration into global economic networks through FDI and and examines regional disparities generated by spatially selective FDI and those CEE territories that are the most attractive for international firms.

The research also contributes to policy debates in terms of FDI dependent development of CEE.

Jacob Jordaan (p)

Contemporary research on productivity spillovers from Foreign Direct Investment (FDI) places a strong emphasis on identifying the effects of characteristics of both foreign- and domestic firms on these spillovers. In comparison, the effects of geography of FDI spillovers receive only scant attention. This is striking, given the fact that externalities from agglomeration and FDI share several common underlying channels, suggesting the likely presence of substantial synergies between spatially-confined spillovers and regional FDI participation. In this paper, we address this gap in the literature by examining in detail the geographical dimensions of FDI spillovers in Indonesia. Whereas previous research based on data for the 1990s suggests that FDI spillovers are prevalent in this host economy, preliminary findings from more recent data are much less conclusive, underlining the importance of identifying spatial characteristics that foster productivity effects from FDI. Using firm level data for the period 2000-2007, we focus our analysis on the following geographical dimensions. First, by estimating for the presence of FDI spillovers at different geographical scales, we assess the relative importance of spatial proximity for both intra- and inter-industry spillovers. Second, we test for the presence and nature of possible synergies between agglomeration economies and regional FDI participation. To do so, we estimate the effects of a range of interactions between regional FDI and regional characteristics that are linked to spatially-confined productivity effects. Third, we also examine whether regional heterogeneity plays a role in the materialisation of intra- and inter-industry productivity spillovers from regional FDI. The findings from our analysis generate important policy implications for the design and implementation of policies promoting FDI spillovers and regional development.