Emerging Market Countries Research Articles

The Valuation Channel of Corporate Social Responsibility in Emerging Markets: Evidence from the Cost of Equity

I examine the effects of ESG policies on the cost of equity for emerging markets controlling for Political Risk and data reliability. I find that firms in emerging market countries with relatively high political risk do not benefit from social and governance ESG activities as they lead to a higher cost of equity. This is presumably due to potential or actual political conflicts with the host government. On the other hand, environmental activities do lower the cost of equity as the measured environmental activities are internal to the firms. For emerging market firms in countries with low political risk, all ESG activities are associated with a lower cost of equity.

Productivity convergence in international trade: The role of industrial-based policies

The Prebisch-Singer hypothesis implies divergence in the terms of trade between developing and developed countries but does not eliminate the possibility of convergence if productivity in developing countries’ exports sufficiently improves. This study constructs a new and unique export sophistication dataset for the productivity of high-technology export products to examine convergence behavior of developed and emerging market countries. Relative and weak σ-convergence tests reveal overall productivity divergence in international trade. However, there are convergence clubs whereby income, R&D expenditures, foreign direct investment, and educational expenditures yield similar effects on the convergence club formation in both developed and emerging market countries.

Does green credit help reduce smog pollution? Empirical evidence from China.

As a resource production factor in environmental governance activities, can green credit help reduce smog pollution? Based on China's provincial panel data from 2006 to 2019, this paper empirically tests the impact of green credit on smog pollution by using an OLS regression model and a spatial Durbin model. The results show that green credit helps to reduce smog pollution overall; Industrial structure upgrading and green technology innovation are two critical paths for green credit to reduce smog pollution. The analysis of period heterogeneity finds that the descending effect of green credit on smog pollution becomes more significant after the transformation of China's economic development stage. The regional heterogeneity analysis finds that the descending effect of green credit on smog pollution is more significant in non-low-carbon pilot provinces and regions with lower economic development levels. In addition, green credit not only helps to reduce local smog pollution but also has a spatial spillover effect of "benefiting thy neighbors" on smog pollution in geographically neighboring areas. This study provides important inspiration for the government to further promote the innovation of green financial instruments and promote the improvement of environmental governance performance, provides decision-making references for different regions to implement differentiated green credit strategies to improve ambient air quality, and provides an experience reference for the development of green finance and environmental governance in emerging market countries.

Determining factors of foreign direct investment in Emerging Market Asia: A panel data analysis (2005-2020)

Foreign Direct Investment (FDI) is recognized as a major force that integrates developing countries into the world economy and is expected to be a key factor in driving sustainable and balanced economic growth. Emerging Market Asia countries are the host countries that receive the highest inflows of Foreign Direct Investment (FDI) compared to other emerging market countries. Even in crisis conditions, emerging market countries, especially the Asian region, are still the destination for investment because of their resilience to crisis shocks. In analyzing the determinants of Foreign Direct Investment (FDI), the variables used are Market Size, Trade Openness, Interest Rates, Control of Corruption, Education Levels and Telecommunication Infrastructure. The analytical method used is the Fixed Effect Model (FEM) Data Panel. The results of the study show that market size, corruption control and telecommunications infrastructure have a positive and significant effect on foreign direct investment inflows. The Education Level variable was found to have a negative effect on FDI inflows. While the variables of Trade Openness and Interest Rates have no significant effect. The implications of this research are that host country governments need to create an investment-friendly environment with transparent bureaucratic conditions to increase the trust of foreign investors. Additionally, governments also need to provide facilities that can support the private sector in creating productive investments, such as by improving GDP performance and enhancing infrastructure quality.

Analysis of Monetary Policy Intervention and Macroeconomic Variable Shocks Against Capital Inflow in 4 Emerging Countries ASEAN

This study aims to analyze the effect of macroeconomic variable shocks which include economic growth, real effective exchange rate, and world oil prices as a proxy for world price stability and monetary policy intervention through controlling the money supply against capital inflow in four ASEAN emerging market countries. This study uses a panel error correction model approach to fully utilize secondary data from 2000 to 2022 in Indonesia, Malaysia, the Philippines, and Thailand. The data is collected from the World Bank and Fred Economic Data. The results of this study indicate that monetary policy intervention through money supply control significantly influences capital inflows to ASEAN emerging market countries in the long run. Then, economic growth significantly affects capital inflows in ASEAN emerging market countries in the long run. Changes in oil prices and the real effective exchange rate do not significantly affect capital inflows in the long run. Economic growth significantly affects capital inflows in the short term. Meanwhile, monetary policy intervention, the real effective exchange rate, and the oil price did not significantly affect capital inflows in the short term in ASEAN emerging market countries. The results of this study show interesting findings because world oil prices, as the main indicator of changes in business and trade around the world, empirically show no significant effect on changes in capital inflows in emerging market countries. Meanwhile, monetary policy intervention effectively adjusts the balance of capital inflows in the long run. So it can be concluded that monetary policy in emerging market countries effectively controls long-term balance.

Labor market distortions in major emerging-market economies: Some CGE estimates

Purpose ― In the present study, the effects of labor market distortions on economic structure and efficiency are estimated for seven emerging-market countries: Brazil, China, Indonesia, India, Mexico, Russia, and Turkey. Methods ― The estimates are based on a computable equilibrium (CGE) model that allows simulation of the inter-industry links of 56 industries plus a sector representing the rest of the world from data collected in the World Input-Output Database (Release 2016) for the period 2000-2014. Findings ― The results show that wage differentials appear to be distortionary, especially in the cases of countries with high wage-income inequality. Moreover, it seems that labor market distortions in emerging-market countries are subject to the rural-urban dichotomy and urban labor-market imperfections. Finally, the results show that the removal of wage differentials affects the terms of trade, which are improved in most but not all cases.Implication ― The conclusions of the present study have policy implications. In countries where the rural-urban dichotomy is the main distortion in labor markets, increasing urbanization can stimulate efficiency; when this is not the case, further reform of urban labor markets is needed. However, it cannot be ruled out in advance that a policy aimed at enhancing labor mobility may have a negative impact on the terms of trade. Originality ― The estimation method used in the present study presents certain advances over others found in the literature, as it becomes possible to estimate the effects of labor-market distortions while considering the interdependencies between different sectors, as well as to plausibly estimate the effects on trade. The present study also uses a large quantity of data, which is expected to add robustness to the study’s conclusion.

China stock market liberalization and company ESG performance: The mediating effect of investor attention

As China has begun to promote a high level of opening up of its stock market, ESG indicators have gradually become one of the important decision-making tools for overseas investors to invest in China's stock market. Using the data of Chinese listed companies from 2011 to 2022, this paper examines the impact of stock market opening on the ESG of listed companies and the mediating role of investor attention in this process by using the Difference-in-Differences (DID) and mediating effect models. Research shows that the opening of the stock market improves the ESG performance of listed companies by attracting more investor attention. Investor focus, investor sentiment, and investor interaction all constitute the intermediary channels through which the stock market opening affects ESG. The above mediating effect is established in most industries and is stronger in state-owned enterprises. This mediating effect plays the largest role in improving corporate governance, followed by social and environmental responsibility. The opening of China's stock market provides a model for emerging market countries to improve their ESG performance. Based on the research conclusions, we propose suggestions for addressing the mediating effect of investor attention, expanding the opening of the stock market to provide sufficient channels for investors to fully participate in market transactions, and differentiated ESG information disclosure.

Co-movement Analysis of Foreign Exchange Reserve Volatility in BRICS Countries

Foreign exchange reserves are an important component of a country's official reserve assets and an important indicator of a country's international liquidity. As representatives of emerging market countries and developing countries, the volatility of the foreign exchange reserves of the BRICS countries is crucial to the world. Studying whether there is volatility of foreign exchange reserves among the five countries is conducive to adjusting the direction of foreign exchange reserve management within the country, better exploring ways to promote the development of the foreign exchange reserve market, and is also of great significance to the future economic cooperation among the five countries. This study uses the correlation coefficient method, Granger causality test and cluster analysis to prove that there is indeed co-movement in the volatility of foreign exchange reserves among the BRICS countries.

Does the setting of local government economic growth targets promote or hinder urban carbon emission performance? Evidence from China.

Growth target management drives China's economic expansion, leading to potential carbon emission externalities. This study examines the impact of economic growth target setting on carbon emission performance in 257 Chinese localities from 2004 to 2020. Using cluster standard error regression, 2SLS instrumental variable regression, and the spatial Durbin model, the results show that moderate growth targets improve urban carbon emission performance. Conversely, aggressive targets do not enhance regional carbon emission performance. Moderate growth targets foster innovation in green technology, while aggressive ones encourage investment in fixed assets and new city growth, impeding performance. Cities in the eastern and western regions, with larger populations and less reliance on natural resources, benefit more from effective economic development targets. The establishment of local targets negatively affects neighboring regions' carbon emissions performance, particularly at a spatial scale of 100 to 200km. This paper contributes to understanding the environmental consequences of growth target setting and offers insights for balancing economic growth with carbon emission governance in emerging market countries.

Knowledge sourcing and national technological development: The weak internationalization of R&D in South Korea

South Korea has developed strong technological capabilities in firms based in the home country rather than through the R&D activities of subsidiaries in foreign countries. Investigating knowledge sourcing patterns in Korean firms offers new insights into cross-border knowledge sourcing in international businesses. Hence, this study investigates how firms in a home country with weak internationalization of R&D source international knowledge. Specifically, using patent data from the United States Patent and Trademark Office (USPTO), this study employs a probit model to examine the impact of Korea’s comparative technological development on the knowledge-sourcing behavior of its firms. The results show that Korea's comparative technological development influences firms' international knowledge sourcing, their technological diversity, and cross-country geography. Our findings have practical applications in developing public policies for emerging market countries to enhance their domestic capacity for international knowledge sourcing and keep up with the advanced technologies available in selected locations worldwide.

Does government investment push up manufacturing labor costs? Evidence from China

China’s labor costs have risen rapidly compared with other emerging market countries in recent years. Government investment is an essential factor pushing labor costs, a unique and exciting phenomenon in China. This paper explains why labor costs in China’s industrial manufacturing industry have rapidly increased from the local government investment perspective. First, the government’s preference for investment in infrastructure construction creates labor demand and drives up labor costs. Second, the improvement of infrastructure lowers the transaction costs of the enterprise sector, thus expanding the scale of production and triggering a rise in labor costs. The empirical results show that for every 1% increase in government investment, the unit labor cost increases by 0.0013 units, and the nominal labor cost increases by 1.443 units. A series of robustness tests support the results. China should rationally control the scale of government investment so that labor costs are in a moderate growth range and then promote the sustainable development of enterprises.

PENGARUH KINERJA KEUANGAN TERHADAP STRUKTUR MODAL

Capital structure is an important aspect of the development of a company; insufficient capital makes it difficult for the company to develop business activities. Capital structure is also closely related to various aspects, such as investors. This condition makes the capital structure position an important part of the company's ability to carry out company activities. The capital structure that becomes the focus of managers and investors in various previous studies is caused by various factors, such as profitability, corporate tax, and corporate liquidity. The purpose of this study is to examine the effect of financial performance on capital structure. This research uses a quantitative approach that focuses on INAF companies during 2010–2020. The data analysis method used in this research is an analysis by comparing emerging market countries with developed market countries. The result shows that the lower the profitability, the higher the capital structure, which indicates that the company increases the capital structure when the profitability decreases. Corporate tax in this study indicates that with a higher corporate tax, the capital structure also increases. This indicates that a high tax encourages the company to increase its capital structure. Liquidity in the research shows no influence, so liquid and not-liquid companies are not factors that cause changes in capital structure.

The Emerging Stock Markets and Their Asymmetric Response to Infectious Disease Equity Market Volatility (ID-EMV) Index

The infectious disease equity market volatility (ID-EMV) index, projected by Baker et al. (Baker, SR, N Bloom, SJ Davis, KJ Kost, MC Sammon and T Viratyosin (2020). The unprecedented stock market impact of COVID-19. Review of Asset Pricing Studies, 10(4), 742–758), relates infectious disease to equity market variability during the COVID-19 disease. The ID-EVM index examines the asymmetric influence on the stock market returns of seven developing countries: Mexico, Turkey, Brazil, China, Mexico, India and Indonesia. The investigation applies various statistical estimations, for instance, unit root, quantile cointegration and quantile-on-quantile regression (QQR) approaches. The relation between the stock returns of seven emerging economies and infectious disease EMV index is revealed by the quantile cointegration approach. Additionally, the QQR procedure shows that amid bullish market situation, stock returns are positively influenced by the infectious disease index. While, amid the bearish market situations, stock returns are negatively influenced by infectious disease index, the findings of this research have important policy implications. A piece of valuable information on the nexus between the variability in the equity market and the infectious disease index is provided by this investigation during the COVID-19 pandemic. Policymakers and investors can benefit from this newly introduced ID-EMV index to understand the influence on emerging market countries of this infectious disease.

In Search of a New Model of Political Governance in Southeast Asia; Democracy's Decline, Populism's Rise, and Globalization's Retreat

This article examines the challenges facing democracy in Southeast Asia, including the decline of the liberal democratic model, the rise of populism, and the retreat of globalization. It identifies five key trends that have led to the deterioration of the democratic ethos in the region and highlight the emergence of strong populist leaders who promise change through radical reforms. The article argues that it is necessary to explore the emergence of new political governance models that are uniquely Asian and lie outside the perceived colonial shadows of North America and Western Europe. This study focuses on four emerging market countries in Southeast Asia. It uses qualitative research methods to examine how these countries are coping with the decline of liberal democratic principles and institutions in the region. The study aims to provide an overview of the possible outcomes of new political governance models as the area moves forward. The review highlights that while the decline of liberal democratic principles and institutions in Southeast Asia has hurt social and economic progress in the region, emerging market countries in the region have taken steps to address the decline by strengthening democratic institutions, increasing investment and trade, and strengthening vital economic sectors such as tourism and information technology. In addition, the review also discusses the potential for a new political governance model to emerge that is distinctly Asian and in keeping with the culture and history of each country in the region.
 Keywords: globalization, political governance model, democratic decline, representative democracy. How

An integration of PSO-ANN and ANFIS hybrid models to predict surface quality, cost, and energy (QCE) during milling of alloy 2017A

An alarming pace of increase in worldwide energy consumption is being caused by population expansion and economic development, particularly in emerging market countries. Due to their efficiency and reproducibility in accomplishing high-precision machining, CNC machine tools are widely employed in most metal machining processes. The use of simple machining features to search for the assignment of cutting parameters and the machining process on the output variables is limited since a part, in reality, can contain complex interacting features. Therefore, this study focuses on pocket/groove features by integrating grey relational analysis (GRA) and hybrid PSO-ANN and ANFIS algorithms to optimize and predict surface quality, cost and energy consumption (QCE). Taking into account the population size of the swarm (pop) and the number of neurons (n) in the hidden layer, a parametric study was carried out to find the best prediction using the hybrid algorithm PSO-ANN. This study reported the highest trained correlation values (R2) for all output variables (greater than 0.97%). The study shows that the assignment of machining strategies and sequences on energy consumption can reach 99.25% between the minimum and maximum values. The mean square error (MSE) data demonstrates that the PSO-ANN model is effective. Indeed, an MSE improvement of 99.84%, 99.87%, and 97.62% has been demonstrated in terms of Etot, Ctot, and Ra, respectively, of the PSO-ANN model compared to ANFIS. This study reveals the potential of the PSO-ANN hybrid for multi-criteria prediction (quality, cost, and energy: QCE) by comparing it with the ANFIS model.

ESG Score and Firm Performance: Study of Environmentally Sensitive Companies in Emerging Market Countries

This study investigated the effect of ESG Score on firm performance (operational, financial, and market) in environmentally sensitive industries. This study analyzed the effect of ESG score to firm performance before and during the Covid-19 pandemic crisis in emerging market countries to see from different perspectives to complement the gaps in existing research. To test the hypotheses, researcher used regression with panel data using the Thomson Reuters Refinitiv Eikon™ database to analyzed data from 704 environmentally sensitive listed companies selected from 16 emerging market countries between 2016 and 2021. The findings obtained from the empirical results showed that there was no significant relationship between ESG Score and operational performance (ROA), financial performance (ROE) and market performance (TQ) of companies before the Covid-19 pandemic crisis. Another finding was that there was no significant relationship between ESG Score and ROA, ROE and TQ during the pandemic crisis. This study highlights whether the Covid-19 pandemic contributes to the relationship between ESG Score and firm performance, especially for environmentally sensitive industries in emerging market countries.

Can ESG ratings mitigate managerial myopia? Evidence from Chinese listed companies

Managerial myopia has an important impact on the future development of companies and the legitimate rights of stakeholders; however, the impact of ESG ratings on managerial myopia is unclear. Based on the ESG rating data of Chinese listed companies from 2009 to 2021, we constructed indicators of managerial myopia through text analysis and found that ESG ratings can significantly inhibit managerial myopia. The results of the mechanism tests show that ESG ratings inhibit managerial myopia by alleviating financing constraints, improving accounting information quality, and enhancing analysts' attention. The results of heterogeneity tests show that a higher degree of market competition indicates a more significant inhibitory effect of ESG ratings on managerial myopia. The economic consequences test revealed that ESG ratings can improve company performance by inhibiting managerial myopia. These conclusions provide important empirical evidence and suggestions for emerging market countries to use ESG ratings effectively to inhibit managerial myopia.

Döviz kuru oynaklığının ithalat üzerindeki etkisi: Yükselen piyasalardan kanıtlar

This study investigates the co-integration relationships among the import, exchange rate volatility, income, and real exchange rate for the emerging market economies during 2000 - 2020. Apart from the previous studies, we consider the cross-section dependency in emerging markets. For the co - integration analysis, Westerlund and Edgerton (2007) co-integration test was used to obtain effective results by allowing autocorrelation and varying variance in the co - integration equation. The findings of this study show that there is a co -integration relationship between the variables. The impact of volatility, income, and real exchange rate on imports are estimated using common correlated effects (CCE). The findings of the panel indicate that long-run imports are significantly impacted negatively whenever there is volatility in emerging markets. It is seen that tastes and preferences are directed towards imported goods, and an increase in income leads to an increase in imports. At the same time findings contradict theoretical projection and shows that an increase in the value of the currency exchange rate has a positive influence on the quantity of goods imported. This could be due to the fact that exports revenue in emerging market countries depend on imports.

How corporate rent-seeking affects outward FDI——Empirical evidence based on A-share listed manufacturing companies

This study examines the theoretical mechanism of corporate rent-seeking's influence on enterprises' Outward Foreign Direct Investment (OFDI) behavior and empirically tests its impact on OFDI. The results show that corporate rent-seeking increases OFDI significantly. This conclusion is still valid after employing a series of robust analyses. The channel mechanics test finds that corporate rent-seeking reduces enterprise profitability and thereby induces OFDI. Heterogeneity tests find that these effects exist mainly among private enterprise and enterprise without political connection. Our findings enrich the literature on the determinants of OFDI and complement the research on the motivation of internationalization in emerging market countries.

Financial Market Sustainability in a Dual-Track System: Venture Capital and Startups’ Speed of Passing

The government’s intervention under the approval system seriously affects the healthy and sustainable development of the financial market. An IPO is an important way for a venture capitalist (VC) to gain income, which impacts the efficiency of resource allocation in the capital market. From the perspective of resource allocation efficiency, this paper compares the influence of venture capital on the IPO process of startup enterprises under registration and approval systems. The findings are as follows: (1) after the trial registration system, the speed of passing and listing of VC-owned startup enterprises can be significantly accelerated. (2) Venture capitalists can accelerate the startup enterprises’ speed of passing by sending directors to startup enterprises and improving the level of risk disclosure, which is only significant under the registration and issuance system. (3) Further research shows that VC-supported startups perform better after listing. (4) VCs can help startup enterprises to choose hot season listing, which has a good timing effect. The conclusion of this text study is still robust after using propensity score matching (PSM) and Heckman to eliminate endogeneity. The conclusion of this study provides a theoretical basis and empirical support for emerging market countries to promote market-oriented reform.