Domestic Private Research Articles

Making of an innovative economy: a study of diversity of Chinese enterprise innovation

PurposeThis research examines the effects of firm ownership and size on innovation capability using data from the World Bank China Enterprise Survey (WBCES), which provides directly measurable innovation-related variables. Key consideration is given to the role and innovation capability of state-owned enterprises (SOEs) compared with domestic and foreign private enterprises in the Chinese economy.Design/methodology/approachIn its quest for technological self-reliance and a new developmental path, China is focusing on its enterprise innovation capability.FindingsThe findings suggest that SOEs and domestic private enterprises are similar in terms of innovation participation but differ in terms of innovation diversification, which implies ownership-specific innovative advantages. In general, the authors find that SOEs are more innovative with respect to processes innovation but less so with respect to product, management and promotion innovations. Foreign-owned enterprises are superior in all types of innovation except product innovation.Research limitations/implicationsThe authors also find that size is an important determinant of innovation capability, with the effect varying depending on location and industry. Moreover, the joint effect of firm ownership and size on innovation declines with increasing size. These findings provide new insights into the evaluation of China's major policies.Originality/valueThis research examines the effects of ownership and size on enterprise innovation capability, using the WBCES (2013) data, which include direct measurable innovation related variables.

Monetary Policy and Domestic Private Investment in Nigeria

This paper empirically examined the effect of monetary policy on domestic private investment in Nigeria from 1981 to 2018. In other to achieve our objectives, annual time series data of the dependent variable – domestic private investment (DPI) and independent variables – money supply (MS), government domestic debt (GDD), government domestic savings (GDS), interest rate (INT) and consumer price index (CPI) were collected from secondary sources like CBN Statistical Bulletin and WDI. Thereafter, the data were analyzed using descriptive statistics and the econometrics technique of Vector Error Correction Mechanism (ECM) method of analysis. The results of analysis indicated that a long run relationship exists among the variables. Furthermore, the paper revealed that money supply (MS), government domestic savings (GDS). interest rate (INT) and consumer price index (CPI) have a negative and insignificant effect on domestic private investment in the long run but interest rate is significant at 5%, while government domestic debt (GDD), has a positive and insignificant effect on domestic private investment (DPI) in the long run in Nigeria within the period. Based on the above findings, the paper recommends as follows: Expansionary monetary policy should be formulated that will reduce interest rate, encourage borrowings and savings. This will expand commercial banks and other credit granting financial institutions which will encourage real investment in the economy.

Impact of under-five mortality on economic growth and health-care expenditures in India

Introduction: Under-five mortalities are the significant vital indicators of the population health condition and the social development of the country. Child survival is measured by the under-five mortality rate (U5MR). It also reflects the social, economic, and environmental circumstances, as well as their health care. Our main objective is to determine the impact of the U5MR on economic growth changes and health-care expenditure and examine the sex difference trend of under-five mortalities. Materials and Methods: We have retrieved data from World Bank Indicators from 2005 to 2017, with under-five mortality as the independent variable and health expenditure as a dependent variable. We used correlation analysis to assess the impact of under-five mortalities on economic growth and health-care expenditure in Rstudio (open-source software). Results: The U5MR was higher in females than in males. The correlation of mortality rate, under-five (per 1000 live births) with current health expenditure per capita, domestic general government health expenditure per capita, and domestic private health expenditure per capita was found to be statistically significant (P < 0.05). Conclusion: Accordingly, political stability, effective social sector policies, and government interventions are essential for reducing under-five mortality. The human health force’s participation in macro and micro policy-making is also necessary, and other determinants of health-care expenses should be critically examined.

FDI and growth: Evidence from provinces and cities in South East region of Vietnam

The paper uses recent panel dataset of provinces and cities in South East region of Vietnam to investigate the effects of foreign direct investment (FDI), local governance quality, state investment rate, domestic private investment rate and trade openness on economic growth. Empirical results show that an increase in foreign direct investment share to GRDP and governance capacity and quality of provincial authorities in creating a favorable business environment will significantly impulse the growth of the local economy. The private investment is found to play an important role in the economic growth of South East provinces and cities, while the impact of public investment and trade openness on economic growth of the region is found to be insignificant over the period 2015 - 2019.

DOES DOMESTIC PRIVATE INVESTMENT INDUCE ENVIRONMENTAL DAMAGE IN TURKEY? EVIDENCE FROM FOURIER-BASED METHODS

Although many aspects of domestic private investment (DPRI) have been empirically studied in the literature, evidence regarding the effect of DPRI on environmental sustainability is rather nascent. This research attempts to fill this gap by investigating how DPRI in Turkey affected environmental degradation (namely ecological and carbon footprints) for the 1975-2017 period by employing Fourier-based approaches. The findings in this research indicate that employed variables (environmental degradation, income, energy use, and DPRI) have a long-run association in both proposed models. Furthermore, the dynamic relationship captured by the autoregressive distributed lag (ARDL) method shows that DPRI and primary energy use induce ecological and carbon footprints in the long-run, while income intensifies both environmental degradation indicators in the short-run. These results clearly indicate that DPRI threatens Turkey’s long-term environmental sustainability.

On the effects of trade on multidimensional deprivation: Evidence from Vietnam’s rice growing households

Welfare and poverty are multidimensional in nature. However, empirical research on the impacts of trade liberalisation on multidimensional welfare is rare. This paper provides one of the first empirical analyses of the impact of trade liberalisation on multidimensional deprivation of rice farmers utilising data from the six waves of the Vietnam Household Living Standard Surveys. Our empirical model captures the direct effects of incomes from farm and non-farm activities and indirect effects of employment, rice price levels, rice production and domestic trade. Results unveil several important new findings which have policy implications. A higher level of export openness is correlated with higher levels of income from farming and non-farm activities. Higher income levels appear to reduce multidimensional deprivation but working in export-oriented industries increases it. Farmers selling rice to domestic private traders generate higher income than those selling to government-owned trading companies. Regional farming productivity, the scale of rice production, crop diversification, and education help increase income and reduce deprivation.

Macroeconomic effects of government transfer payments: Evidence from Korea

Although government transfer payments (TPs) have recently become an important policy option to prevent severe recessions, the literature on the aggregate effects of TPs is sparse. To fill this gap, this study empirically examines the effects of government TPs on the aggregate economy. To this end, I estimate two leading time series models using Korean data: a local projection with an instrumental variable model and a proxy vector autoregressive model. Employing natural disasters as an instrumental variable to identify government TP shocks, the results reveal that an exogenous increase in TPs has large stimulus effects, including raising gross domestic product, private consumption, and investment. In particular, an increase in TPs boosts non-durable goods consumption, services consumption, and residential investment. Finally, the estimated peak output multipliers of TPs are greater than one, which implies that TPs can be an effective tool for overcoming recessions.

Thinking about developmental statehood, manufacturing and international capital: the case of Ethiopia

ABSTRACT The developmental state paradigm (DSP) has traversed global south contexts from Latin America to Asia with a revival in African contexts. However, there is limited understanding of how international political economy (IPE) dynamics influence the analysis offered by the DSP. This article addresses this gap by introducing an IPE-enhanced DSP that centres interactions between the state and international capital in the analysis of industrialisation in the Ethiopian leather subsector and the role of Chinese investment. Its key finding is that these complex interactions influence and disrupt the classical roles of domestic private capital and domestic industrial demand in socio-economic transformation.

Determinants of private domestic investment in Palestine: time series analysis

PurposeThis empirical paper aims to examine the impact of interest rate (IR) and political instability (POLINS) on Palestine's domestic private investment.Design/methodology/approachA set of econometric techniques of time series data are adopted to meet the study objectives. They include regression analysis, unit root tests, cointegration test, ARDL & Bound tests, VAR test and Granger causality test.FindingsThe study's primary results complement the neoclassical approach, which states that the IR is negatively associated with domestic private investment. The empirical results reveal that there is no long-run relationship. Also, there is no causality between domestic investment and lending rates. Accordingly, these findings alert policymakers to draw a series of steps to minimize the IR at a minimum to stimulate investment for improved economic growth and development.Practical implicationsThere is still no national currency in Palestine. The Palestinian Monetary Authority (PMA) is advised to set an appropriate ratio of the IR for the currencies-in-circulation in Palestine for boosting investment and economic development.Originality/valueThis paper provides new background information to both policymakers and researchers on the main determinants of investment in Palestine using econometric analysis. Accordingly, this critical issue is required to be examined in Palestine for stimulating investment.

Analysis of comparative and competitive advantages of organic rice in Beringin Subdistrict of Deli Serdang Regency

Beringin Subdistrict is a region in Deli Serdang Regency with increasing organic rice cultivation area, hence this location was purposively selected as research location. This aim of this study was to analyze the comparative and competitive advantages besides analyzing the impact of government policy on organic rice in Beringin Subdistrict. The data used included primary and secondary data which were analyzed using the method of Policy Analysis Matrix (PAM). Results of the method of Policy Analysis Matrix (PAM) showed that organic rice farming performed by farmers had both comparative and competitive advantages as reflected by the less than one value of Domestic Resource Cost Ratio (DRCR) and Private Cost Ratio (PCR). Overall, government policy to input and output was found to be effectively implemented since the value of Effective Protection Coefficient (EPC) of organic rice was greater than one.

Assessing the value of China's patented inventions

This study provides one of the first systematic and direct assessments of the value of China's inventions and examines the strategic factors influencing their value, using patents granted to firms by the China National Intellectual Property Administration (CNIPA). To do this, we first review the theoretical background of these factors and the inventor survey approach to estimating patent value. We then conduct the analysis using the large-scale, comprehensive annual Inventors Survey database (ISDB) collected by CNIPA, which consists of 12,869 firms linked to 30,693 patents granted between 2010 and 2012. We find that the median and average revenues from firms’ implementation of their patents are RMB 0.75 million and 8.04 million respectively. Furthermore, we find that patents involving higher R&D investments, invention patents, patents essential to standards and belonging to patent pools command a higher value. State-owned enterprises (SOEs) produce lower value patented inventions relative to domestic private firms and foreign firms. Larger firms and those with intellectual property departments and aggressive in patent litigation have higher value inventions. Our findings yield important theoretical, methodological and policy implications.

Are Banks in India Diversified Enough, Geographically, Across States and Economic Sectors?

This article, the first of its kind for the Indian economy, constructs lending environment portfolios of economic activities that banks in India have been faced with, for four Indian banking groups based on the extent of their operations in terms of their deposit shares in each state and the lending-portfolio mix of economic activities in those states. For empirical analysis, data on seven components of gross domestic product and state gross domestic product for 29 states from 1980–1981 to 2016–2017 were taken. The results reveal that the portfolio variances (risk) of the bank groups have declined in the last three decades. Compared to domestic private banks, the State Bank of India group and nationalised banks seem to have significantly reduced their environmental portfolio variability. Simulations to grasp the reasons for this geographic risk reduction show that structural economic reforms introduced in the early 1990s seem to have contributed more than changes in the banking structure in reducing the portfolio risk of banks.

Asymmetric political attention across foreign and domestic private equity real estate investors

ABSTRACT Private equity real estate (PERE) markets suffer from information inefficiency. In this study, we examine if Google Trends could help in partially mitigating the inefficiency issues. Using monthly PERE investment activities in India between 2005 and 2017, and controlling for macroeconomic variables, we show that relevant search trends are significantly associated with future investment activities. Compared to domestic investors, foreign investors are subject to information asymmetry and their investment activity is particularly sensitive to political search trends in the target country. We detect a mutually causal association between investment activity and political searches. Although significant, the effect of political Google Trends on investment activity is short-lived and fades within two months.

De-Risking the Hydrogen-CCS Value Chain Through Law

The integration of hydrogen (H2) and carbon capture and storage (CCS) technologies within common value chains can contribute to the effective decarbonization of the energy system and hard-toabate sectors where electrification may not be possible or cost-effective. The H2-CCS chain is taken as an example of strategic value chains in the process towards a low carbon and increasingly integrated energy system. The successful realization of H2-CCS integrated chains requires the mobilization of vast quantities of domestic and international private capital. This article looks at how legislation and contracts, separately and in combination, can be used to manage and mitigate risks and incentivise private sector investment along the H2-CCS value chain in Europe. First, it discusses the role of national governments and the EU in developing legislative measures such as climate change targets, market design, liability regimes and how those could remove some of the risks preventing private sector investments. Second, it considers how the design and standardization of contracts can mitigate risks faced by the private sector by allocating, transferring and sharing risks between private and public parties. The article concludes that the law has an important role in de-risking investments and that further policy steps are necessary to refine the legislative and contractual regimes needed for the successful deployment of such strategic value chains. CCS, climate change, hydrogen, de-risking, legislation, contract, risk mitigation, risk allocation, risk transfer, public-private partnerships.

Cloud Intelligent Parking Management System Based on Internet of Things Technology

In recent years, with the rapid development of the national economy, the penetration rate of domestic private cars has risen rapidly. There are too many cars with fewer parking spaces, so many people choose to park their cars on roads. It has caused traffic jams and brought security risks, finally it puts a huge pressure on vehicle management. It requires more parking lots and more effective and convenient parking management and operation methods to improve the service level of parking lots [6]. It is necessary to design an intelligent parking system based on the Internet of Things technology and cloud platform to achieve the highest utilization of space resources and the largest allocation rate of personnel deployment. The intelligent parking lot management system of the Internet of Things is designed and developed to meet the goals of enterprise informatization management and efficient operation and implementation. The web platform conducts the joint operation of users and administrators to realize online reservation, parking at any time, and online payment for car pickup at any time.

Accounting and tax accounting — tools for optimizing the financial condition of private medical centers

The article reflects the peculiarities of accounting and tax accounting in domestic private medical centers, presents an analysis of their financial situation (using the example of five medical organizations in Bryansk), proposes ways to improve the financial position of commercial medical centers using a competent organization of the accounting and tax system. Accountants of these economic entities should strive to maximize net profit, increase current assets and reduce short-term liabilities, since the main financial problems of private medical centers are often the insufficient level of financial stability and solvency.

Attracting Foreign Direct Investment and FDI’s Impact on Economic Development in Vietnam

Foreign direct investment (FDI) has played an important role in boosting Vietnam’s economic growth with great contributions in terms of several aspects. Vietnam has recently signed in various international agreements and treaties related to global integration opening hopeful opportunities to attract FDI into Vietnam in the next period of time. However, attracting FDI also has faced several threats from both inside and outside environment. The relationship between Foreign Direct Investment and economic development also has been increasingly paid attention by both developed and developing countries. FDI is not only an important source of capital, complements domestic private investment, but FDI projects also have created more new job opportunities.. This paper examines this issue by applying the bounds testing (ARDL) approach to cointegration for the period from 2010 to 2020 in Vietnam.

Institutional complexity, management practices, and firm productivity

• State-owned firms in China’s transition economy face greater institutional complexity. • China’s state-owned firms have developed structured management practices. • Management and productivity are positively related in China’s state-owned firms. • There is no relationship between management and productivity for private firms. • Institutional complexity may affect formalization of management practices. Formal structure is often considered important for the growth and survival of firms. Within the literature focused on the institutional antecedents of formalization, less attention has been paid to the drivers of formal management practices. To help fill this gap, we study how state and market institutional logics affect the adoption and utility of formal management practices in manufacturing firms. We theorize how institutional complexity, resulting from coexistent, conflicting state and market institutional logics, may exert differential pressure on state-owned and private firms’ decisions to adopt these practices, diverging from prior studies that focus primarily on the role of market logics in their adoption. We then test these propositions in a representative sample of 390 manufacturing firms in China with uniquely detailed data on structured management practices using regression analysis. Variation in ownership differentiates the relative influence of state and market institutional logics on firms in China’s transition economy. We find that measures of structured management practices are higher for state-owned firms, while scores are significantly lower for domestic private firms. We further show that, on average, a firm’s overall management practice score is positively and significantly related to total factor productivity (TFP) in state-owned firms, but the correlation is no different from zero in both domestic and foreign private firms. Our findings support a role for structured management practices as a response to institutional complexity, by enabling firms to satisfy multiple imperatives from distinct audiences.

Inbound M&As in India: Issues and Challenges

The economic reforms of 1991 drastically transformed India’s approach toward foreign direct investment (FDI). The focus has been on attracting increasingly large amounts of FDI. There were no regulations on mergers and acquisitions for two decades, and when they were finally introduced in 2011 under the Competition Act, 2002, they were rendered ineffective by setting high thresholds, providing exemptions, and by narrowly focusing on competition. As a result, major domestic companies as also emerging leaders were taken over. Many foreign companies gained strong hold in the economy without adding capacities. The domestic private corporate sector lagged far behind in various respects. Belying the expectations of the policy makers, it invested far too inadequately in research and development. This article argues that India should not continue its reliance on FDI to achieve the goal of creating an internationally competitive manufacturing sector. India should do more than establishing an FDI review mechanism. Cross-border acquisitions must be subjected to strict scrutiny by a specialized agency. Proactive and coordinated measures must be devised to encourage domestic enterprises. Special attention must be given to providing long-term risk capital.

Does value‐added tax reform boost firms’ domestic value added in exports? Evidence from China

AbstractWe explore the effect of value‐added tax (VAT) on domestic value added in exports where VAT is incorporated into a theoretical model to analyze its distortion on intra‐firm resource allocation. The VAT pilot reform in the three northeast provinces of China in 2004 provided a natural experiment which generated significant effective VAT rate differences due to deduction policies. We utilize the reform as an exogenous shock to identify its effect on the domestic value added ratio (DVAR) in exports at the firm level. Empirical results show that the reform has significantly increased the firms' DVAR by allowing more deduction of fixed asset purchases that lowers the effective VAT rates of the affected firms, which confirm the findings of our conceptual framework. This effect is greater for large and medium‐sized firms than for small and microscale firms. The VAT reform in 2004 has significant effect on the DVAR of state‐owned enterprises and domestic private firms, but not for foreign invested firms. The reform also has higher effect for firms from higher market concentration sectors.