Industrial Diversification Research Articles

The political economy of reforms and the present Chinese transition

ABSTRACT The main aim of this paper is to demonstrate, through a review of China’s economic reforms, that the emergence of a large private sector and the increased sophistication and diversification of industry has required the continual reorganization of activities between the state and private sectors of the economy. We argue in this paper that the state began to play a major role in important industries and in big finance, as well as in the coordination and socialization of investment, such as economic policy (monetary and fiscal), foreign trade and, especially, the launch of new and higher forms of economic planning.

Production and Postharvest Evaluation of Selected Exotic Specialty Annual Cut Flower Species in Punjab, Pakistan

Favorable agro-climatic conditions and comparatively cheaper and readily available human resources offer a promising business opportunity to cut flower production in Pakistan. Presently, growers are limited to traditional cut flower crops such as rose (Rosa hybrids), gladiolus (Gladiolus hybrids), marigold (Tagetes erecta), and tuberose (Polianthes tuberosa) because of unavailability of improved new species and cultivars. To diversify cut flower production in Pakistan, a study was conducted to evaluate the production and postharvest performance of different cultivars of delphinium (Delphinium hybrids), snapdragon (Antirrhinum majus), and stock (Matthiola incana) in Faisalabad, Punjab, Pakistan. ‘Guardian White’ delphinium had the shortest time to harvest first marketable stems (160 days) with comparatively shorter stems (87.7 cm). Whereas ‘Aurora White’ and ‘Aurora Blue’ were high-temperature tolerant and produced attractive racemes with longer stems; 112.0 and 99.7 cm, respectively. All cultivars lasted about 7 days in distilled water (DW). ‘Cheerful White’ stock had the shortest cropping time and produced highest quality double flowers with longest stems (51.8 cm) compared with other cultivars tested. Vase solution of 4% sucrose supplemented with 100 mg·L−1 silver nitrate (AgNO3) extended the vase life of ‘Cheerful White’ stock up to 11.8 days compared with 8.2 days in DW. Pulsing with 10% sucrose supplemented with 100 mg·L−1 AgNO3 extended the longevity of ‘Lucinda Dark Rose Double’ stock (10.2 days) similar to vase solution of 4% sucrose plus 100 mg·L−1 AgNO3; however, ‘Lucinda Dark Rose Double’ stock produced shorter stems than ‘Cheerful White’. ‘Appleblossom’ snapdragon produced >10 marketable stems per plant with highest quality attractive flowers, and stout stems, which lasted 10.8 days in 4% sucrose vase solution supplemented with 100 mg·L−1 AgNO3. Among tested species/cultivars, all exotic species/cultivars produced uniform high quality stems resulting in higher productivity as compared with local cultivars and were favorably appraised by flower growers/retailers and are best suited for diversification of local cut flower industry.

Real exchange rate (RER) as a policy tool for industrial diversification and growth in Africa

ABSTRACTAppropriate exchange rate (ER) policies in some Asian and Latin American countries have led to improvement in industrial diversification and growth. The growth ‘miracle’ of the Asian countries centres on the effective use of ER and trade policies, specifically the adoption of depreciation of real exchange rate (RER). However, the case of Africa is different, as the continent is yet to adopt an appropriate ER policy that enhances industrial diversification and growth. Examining the effectiveness of the RER as a policy tool for industrial diversification and growth in 36 African countries, this study applied a dynamic generalised method of moments (GMM) estimation technique to determine how changes in RER affects the growth composition of the three main productive sectors – primary, secondary, and tertiary and their response rates. Our findings suggest that the primary sector leads to appreciation of the RER, while the secondary and tertiary lead to depreciation of the RER. This result has serious policy implication for the Africa continent that has relied so much on the production of primary commodities. Rather than pursue the policy of ER depreciation which affects the primary and secondary sectors, policy shift in favour of the tertiary sector should be highly encouraged.

Does corporate diversification reduce value in high technology firms?

We find that firm value is reduced via industrial diversification and this reduction in value depends upon a firm’s technology intensity. We consider that asymmetric information problems are more severe in technology intensive industries and find that high tech industry firms present distinctly larger value reduction when compared to low tech industry firms. The negative valuation effect is greater for firms that have a relatively larger amount of intangible assets and greater R&D capital. We determine that our findings are robust to different estimation methods and alternative excess value measures.

集聚经济、相关性多样化与城市经济增长——基于279个地级及以上城市面板数据的实证分析

文章基于演化经济地理学理论,运用熵指数探讨了城市产业多样化和专业化对城市经济的影响,并根据2003-2010年中国279个地级及以上城市的产业统计数据实证研究了集聚经济、城市产业相关性多样化和无关性多样化对城市经济增长的影响。研究结果表明:(1)整体而言,城市产业集聚的多样化和专业化都能促进城市经济增长,但是多样化的作用显著大于专业化的作用;(2)并非所有的多样化都能显著促进地区经济增长,以知识溢出为主要影响机制的相关性多样化能显著促进经济增长,而以组合效应为主的无关性多样化不能或尚未促进经济增长。这表明我国城市经济发展受益于具有相关性或互补性的多样化部门和专业化部门所带来的知识溢出。文章验证了我国城市经济中既相关联又具差异化的知识溢出对城市经济增长的重要作用。

Механизмы диверсификации в лесном комплексе

In the article substantiates that development of forest complex of the Russian economy is not possible without the implementation of structural reforms and emphasis on diversification of forestry as an important industry segment. Reasons for diversification of forest complex are shown, including: disparities in development of technological chain - forestry-logging-woodworking; technological, territorial and economic fragmentation of forest, harvesting and processing enterprises and industries; infrastructural and economic barriers; low level of Research and Advanced Development and industrial innovation at all stages of technologically related industries. It is proved that diversification of forestry should be carried out at the level of the most significant sub-systems: reforestation and afforestation in order to transfer to the technologies allowing reducing the period of growing of wood and target assortments. Diversification of forestry is possible during the transition from forest crops to plantation afforestation through the establishment of industrial forest plantations on the lands of forest fund. To reduce the risk component in the diversification of forest production, creation of industrial forest plantations must be carried out not far from industrial consumers of wood, which will ensure the economic feasibility of growing, harvesting and delivery of wood raw material. The proposed mechanism of diversification in combination with biotechnology will provide increasing demand for timber, with significant reduction of the environmental load on natural forest stands, allowing you to preserve natural ecosystems for purposes of recreation. Introduction of biotechnology in forestry will reduce the gap in development segments of the forest complex and increase wood supply for diversified industries. Diversification of forestry and development of industrial plantation afforestation is constrained by legal framework and absence of measures of financial support of enterprises of forest complex.

COMPARATIVE ADVANTAGE OF PAKISTAN IN SELECTED MANUFACTURING INDUSTRIES: THE RCA APPROACH

The trade balance of Pakistan has witnessed considerable distortion in recent decades due to globalization induced increase in international competition. The success of a nation in this highly competitive global market is dependent on comparative advancement in production specialization in diversified industries. The imports of durable and non-durable consumer goods account for a large part of imports which can be avoided by developing these industries. This study investigates international competitiveness of Pakistan with respect to the world in 11 industries of manufacturing sector that have weak domestic industrial base and large domestic consumption/demand, i.e. pharmaceutical products; fertilizers; essential oils, perfumes and cosmetics; soaps and lubricants; plastics and articles thereof; leather articles; paper and paper products; wood and articles of wood; ceramics; glass and glassware; and toys and sports good, using RCA index on 2 digit HS-level data. The result revealed that among the selected manufacturing industries, Pakistan has a higher comparative advantage only in leather articles, toys, and sports goods, whereas, other industries are showing higher competitive disadvantage. The overall international competitiveness of selected industries is also depicting a deteriorating trend which requires that the production problems and international trade issues required for diversifying the production base in the country need to be addressed.

DEPENDENCE OF ENDOCRINOLOGICAL MORBIDITY OF ADULT POPULATION ON THE USE OF CHEMICALS IN AGRICULTURE AND AIR POLLUTION

Data analysis 2000–2014 established correlations of endocrinological morbidity of adult population with the parameters of resource-saving technologies of tillage, the use of pesticides, anthropogenic load on atmospheric air in the region with developed diversified industry and growing (r = 0,57÷1,0). The frequency of new cases of endocrine diseases direct highly significant contribution was made by the volume of emissions of carbon monoxide and hydrocarbons in the incidence – the area treated with pesticides.

Magnegas - An Alternative Technology for Clean Energy

In the process of Hydraulic fracturing millions of gallons of water, sand and chemicals are pumped underground to break apart the rock to release the gas. In Hydraulic fracturing certain fluids and materials are used to create small fractures in order to stimulate production from new and existing oil and gas wells. This creates paths that increase the rate at which fluids can be produced from the reservoir formations, in some cases by many hundreds of percent. Although it helped in triggering this year almost 42% of decline in crude prices, on the other hand the completion of drilling process leaves behind pits with waste of the overall process. As the sludge or waste of the process is water based liquid with chemicals and hydrocarbon oil remains of the mineral stock, it is a potentially hazardous material for environment. In this view the Plasma Arc Flow Technique to convert this liquid waste into useful MAGNEGAS TM (MG) proposed by Professor Ruggero Maria Santilli is much beneficial in reducing the oil waste as well as in minimizing the environmental problems. In the present paper, origin of the concept of a new Magnecular Fuel via Hadronic Chemistry, its composition, technique, characterization and its applications in the diversified Industries are discussed.

The Impact of Industrial Diversification on Employment Growth in the 50 U.S. States: 2000-2013

Economic developers express concern for both employment growth and employment stability. This study asks whether there is a trade-off between the quantity and reliability of jobs. Does industrial diversification, presumed to lead to more reliable jobs, have an impact (perhaps negative) on overall job growth? Using data from the 50 U.S. states from 2000 to 2013, this study explores the relationships between employment growth and industrial diversification measured in four ways. The results are mixed, suggesting that overreliance on employment in stable industries might retard employment growth but that overreliance on employment in volatile industries does not have a clear positive or negative impact on employment growth.

米国からの報告:航空宇宙産業からソフトウェア産業へ : 現代シアトルの産業多様化と労働市場の変容(大会報告・共通論題:高度経済成長の終焉をどう捉えるか-製造業,内需,地域社会)

米国からの報告:航空宇宙産業からソフトウェア産業へ : 現代シアトルの産業多様化と労働市場の変容(大会報告・共通論題:高度経済成長の終焉をどう捉えるか-製造業,内需,地域社会)

Does institutional ownership matter for international stock return comovement?

We study the link between international stock return comovements and institutional investment. We test whether the rise of institutional ownership has increased cross-country correlations and decreased cross-industry correlations. Using stock-level institutional holdings across 45 countries during the 2001–2010 period, we find that industry and global factors are relatively more important the country factors in explaining stock return variation among stocks with higher institutional ownership. Industry diversification strategies are more beneficial than country diversification strategies for stocks with high institutional ownership. We show that cross-border portfolio investment is a powerful force of international capital market integration and convergence of asset prices.

International Acquisition and CEO Compensation (WITHDRAWN)

Agency theory suggests that a primary motivation for acquisitions is empire-building, implying that post-acquisition CEO compensation should be higher. Stewardship theory suggests that CEOs manage corporate resources for the long-term interest of the firm, and acquisitions should not necessarily increase CEO compensation. We examine these conflicting views and report that CEO compensation increases following both domestic and international acquisitions of US firms, consistent with the agency theory. However, the expectation that international acquisitions lead to higher CEO compensation than domestic acquisitions due to greater complexity was not borne out. Moreover, both domestic and international acquisitions lead to more incentive-based compensation. Unrelated acquisitions are associated with higher CEO compensation than related acquisitions due to the cost of industry diversification.

Prudent Management of Oil Revenues: Impacts of Government Capital Expenditures in Azerbaijan

Azerbaijan is an oil rich country facing three severe problems at the same time: economic volatility, the need to promote industrial diversification and the recent sharp fall in oil prices which many expect to continue. It is thus a highly appropriate time to conduct a study for this resource-rich country that would relate its insufficient and ineffective industrial diversification to the effectiveness of its efforts to overcome these problems, including the encouragement of FDI, the creation of its State Oil Fund and the establishment of a fiscal rule. To this end, in this study we pull together empirical evidence concerning the allocation of oil windfall gains, the quality of the country’s budgetary institutions and its State Oil Fund and their effects on Azerbaijan’s budgetary outcomes. But, more uniquely, we develop and apply some models to capture the long terms effects of oil prices and fiscal management on industrial diversification, where we find the efforts to date to have fallen far short of what is needed. Our analysis leads us to suggestions for much needed improvements in policy.

Diversification strategy, efficiency, and firm performance: Insight from emerging market

We investigate further the inconsistencies of the diversification-performance link by introducing efficiency as moderating factor. A data of 319 firms was used to conduct a panel data analysis excluding the financial sector industries and the results show three important findings. First, industrial diversification shows a significant contribution in performance improvement while international diversification shows no effect on performance. Yet, international-conglomerate shows a significant negative relationship with performance. Meanwhile, the efficiency results are contrary to our conjecture. We find that efficiency is a factor to enhance performance, but it is not the moderating variable on the diversification-performance link. This implies that the efficiency of the firm has no connection with the link between diversification and performance.

Smart Specialization Strategy and its Operationalization in the Regional Policy: Case Finland

In the European Union, smart specialization is an important concept in regional policy. Its primary aim is to achieve inclusive and sustainable economic growth. There is a lack of convenient region specific measures to operationalize smart specialization startegies (S3). The purpose of the paper is to find “indices of smart specialization” on a regional level. We propose indices that are based on (1) the rate of industrial diversification, (2) revealed comparative advantage and (3) regions’ overall relative specialization. In the empirical part, we analyze smart specialization in Finland using structural data provided by Statistics Finland for seventy sub-regions (LAU1) and 24 sub-industries in manufacturing. These industries are the most important for exports, productivity, and regional economic performance for a small country. The following indices are used in empirical evaluations: Herfindahl-Hirschman Index (HHI) for regional diversity, Balassa-Hoover Index (BHI) for revealed comparative advantage, and Region’s Relative Specialization Index (RRSI) for aggregate regional specialization differences. The concept of smart specialization is related to these measures. Index analyses reveal that many growing sub-regions have similar comparative advantages. This means inter-regional synergy, and it enables opportunities for strategic cooperation between regions. To develop smart specialization strategies for Europe’s regions, we need these kinds of empirical knowledge-based management tools and planning approaches.

English

This study investigates the impact of corporate diversification on the value of firms listed at the Nairobi Securities Exchange (NSE). Panel regression techniques were used as the estimation methods. The overall findings of the study where somewhat mixed. The study finds that industrial diversification reduces firm value, but geographical diversification does not have a significant impact on firm value. When examining each industry individually, the study established that industrial diversification enhanced firm value in the agricultural industry but did not significantly influence firm value in the other industries.   Key words: Industrial diversification, geographical diversification, firm value, ownership structure, frontier markets.

Moderating role of productivity on diversified conglomerates and performance: the case of Malaysia

PurposeThe purpose of this paper is to investigate the previous mixed findings in the relationship between diversification and firm performance. Using international and industrial conglomerates, the paper introduces productivity as a moderating variable to ascertain whether the mixed views in the diversification-performance nexus is due to variations in productivity. The findings in both proxies of performance (q and return on asset (ROA)) show that productivity is not a significant moderator in the diversification-performance link, except that under industrial conglomerates productivity enhances ROAs significantly. Meanwhile, the results show that diversification either has no significant value on firm performance or relates negatively with performance – a contrasting result to the hypothesis of this study.Design/methodology/approachThis study adopts diversification measurement, categorisation approach and the methodology used in the work of Fauver et al. (2004) and the subsequent modification by Lee et al. (2012). This study, however, investigates the moderating effect of productivity on diversified firms and not ownership as shown in the previous studies. Performance is measured by two proxies to show robustness of the study. ROA is an accounting tool and Tobin’s q reflects a market-based performance of the firm.FindingsThe results show that productivity has no moderating impact on a market-based performance of a diversified firm. Regarding ROA, results show a split in finding by showing that productivity has no significant impact on international diversification; however, for industrial diversification, results show significant impact.Originality/valueThe paper adds to knowledge of finance by ruling out the view that the inconsistencies in the diversification and performance nexus in emerging economies could be due to vagaries in productivity. It is confirmed that productivity technically does not strengthen the link between diversification and performance: suggesting that factors other than productivity could establish a maximal impact on that link to minimise the inconsistencies in the findings on diversification-performance link.

Does Institutional Ownership Matter for International Stock Return Comovement?

We study the link between international stock return comovements and institutional investment. We test the hypothesis that the rise of institutional investors as shareholders of corporations worldwide has increased cross-country correlations and decreased cross-industry correlations. Using stock-level institutional holdings across 45 countries during the period 2001-2010, we find that industry and global factors are relatively more important than country factors in explaining stock return variation among stocks with higher institutional ownership. Industry diversification strategies offer more benefits than country diversification benefits for stocks with high institutional ownership. Our findings show that cross-border portfolio investment is a powerful force of international capital markets integration and convergence of asset prices across countries.

Industrial agglomeration externalities, city size, and regional economic development: Empirical research based on dynamic panel data of 283 cities and GMM method

Local governments have long been ardently pursuing the industrial specialization effect (MAR externalities) and industrial diversification effect (Jacobs externalities). Such a pursuit has resulted in severe distortion of resource allocation and negative effect on sustainability of local economic development. Regarding the effect from both MAR and Jacobs externalities on local economic development existing literature records notable disputes. Therefore, for local economic development, one important issue is which externality (MAR or Jacobs) can better bring the effect into play. By studying a panel data of 283 Chinese cities from 2003 to 2012 and applying dynamic plane data GMM method, this paper conducted a regression analysis of the relationship among industrial agglomeration externalities, city size, and regional economic development. The result indicates that with regard to the whole nation, MAR externalities are conducive to regional economy development whereas Jacobs externalities will, to an extent, restrain regional economic development. As regards eastern, middle, and western regions, MAR externalities are conducive only to the economic development of the eastern region; their effects on middle and western regions are insignificant. Moreover, the interaction item between MAR externalities and city size has a significant negative synergistic effect on national economic development and a certain acceleration effect on eastern region as well as a strong negative synergistic effect on the middle region and an insignificant effect on the western region. The interaction item between Jacobs externalities and city size has a positive synergistic effect on only the middle region and has an insignificant synergistic effect on both eastern and western regions. Capital stock and labor input have significant accelerating effects on GDP growth per capita of Chinese cities, whereas material capital and labor input remain primary driving forces for Chinese local economic development. Furthermore, human capital contributes to accelerating urban economic development, whereas government intervention restrains urban economic development.