Host Country Policies Research Articles

Reforming labour immigration policies of host countries to stamp out labour trafficking in the ASEAN region

Human trafficking, including labour trafficking cripples the ASEAN labour hosting countries specially Malaysia and Thailand. Although labour trafficking within ASEAN nations prevails due to the existence of several root causes, this article accentuates, economic inequality between ASEAN nations, covert nature of trafficking regime, overlapping nature of human smuggling and human trafficking, migration policies of host countries are the primary root causes for labour trafficking. Practically, the efforts of ASEAN, including its own convention against trafficking in persons, bi-lateral agreements between its member states, as well as enactments of anti-trafficking laws by individual ASEAN member states have failed to stamp out human trafficking or labour trafficking completely within the region. This article emphasises the urgency of reforming labour immigration policies of ASEAN labour hosting countries to root out labour trafficking and proposes a model policy reform in labour immigration, employment, labour market research, labour regulation and surveillance of employers and employees.

Mental Disorders in Refugees: A Systematic Review and Meta-Analysis

Background: The number of refugees is highest since the second world war and on the rise. Many refugees suffer from mental disorders, but exact and up-to-date prevalence estimates and sources of heterogeneity herein (e.g., host continent, length of residency) are not available. Methods: We undertook a systematic review with meta-analyses to summarize the literature on the prevalence of mood, anxiety, and post-traumatic stress disorder (PTSD) in general refugee populations. We also investigated moderators of prevalence rates. The study protocol was pre-registered at PROSPERO (ID CRD42018100539). Findings: Systematic searches (final search date August the 3th 2019) yielded 66 eligible publications that reported 150 prevalence estimates (total N = 14,882). Prevalences for diagnosed and self-reported current anxiety were 13 and 42% (95% Confidence Interval [CI] = 8-52%) (P difference < .05), 30% and 40% (95% CI = 23-48%) for diagnosed and self-reported depression, and 29% and 37% (95% CI = 22-45%) for diagnosed and self-reported PTSD. These estimates are substantially higher relative to those reported in non-refugee populations over the globe and to that of populations living in conflict/war settings, both for adult and child/adolescent refugees. Estimates were similar over different home and resettlement areas and independent of length of residence. Interpretation: Our data indicate a huge and persisting disease burden in refugees around the globe due to poor mental health. Knowing this is relevant for the development of public health policies of host countries. Scalable interventions, tailored for refugees, should become more readily available. Funding Statement: This project was funded through continued support by Leiden University. Declaration of Interests: The authors declare no competing interests. Ethics Approval Statement: The study protocol was pre-registered at PROSPERO (ID CRD42018100539).

Reforming labour immigration policies of host countries to stamp out labour trafficking in the ASEAN region

Reforming labour immigration policies of host countries to stamp out labour trafficking in the ASEAN region

Selective immigration policies as screening devices and the immigrant–native educational achievement gap

ABSTRACTThe literature on the immigrant–native educational achievement gap is suggestive of a better performance of immigrant students in countries practising selective immigration policies. However, the origin of such differences has not been investigated. I considered both important observed characteristics as well as the role of unobservables in the formation of immigrant–native achievement differences in 4 selective immigration countries. I found that, if the comparison is between selective immigration countries as a group and other European/Organisation for Economic Co-operation and Development (OECD) countries, immigrant students in selective immigration countries perform better. However, the results are heterogeneous and different conclusions apply to each of the 4 countries. The findings are discussed in the context of successful immigration policies as screening devices, which induce a self-selection of immigrants with transferable and adaptive skills. Potentially important are also institutional differences with respect to how inclusionary and conducive to the integration of immigrants into the host country policies are.

Thanks but no thanks: State-owned multinationals from emerging markets and host-country policies

I study the impact of the internationalization of state-owned companies from emerging markets on host-country government policy. Whereas the literature commonly recommends that host-country governments design policies to attract foreign direct investment, governments instead question or block investments by state-owned firms from emerging markets. I address this conflict between theory and practice by separating the causes of this behavior into six types depending on the characteristics of the firm (i.e., state ownership and emerging market origin) and the logic (i.e., economics, politics, and psychology). I suggest the development of ex-ante rule-based policies that provide clarity, address concerns, and support the benefits of inward investments, while limiting state capture by domestic interests. Thus, I explain how economic concerns over national security sectors and strategic technologies can be dealt with via exclusion, the political worries over opacity and weak governance can be addressed through monitoring, and the psychological anxieties of unfriendly governments and loss of relative status can be ameliorated using controls.

Technology Policy, R&amp;D Investment Decisions, and MNC Subsidiary Innovation Performance

Host country policies shape the incentives and opportunities of MNC subsidiaries to innovate. While strategy and international business literature has broadly acknowledged government action as an i...

Economic Policy, Political Constraints, and Foreign Direct Investment in Developing Countries

ABSTRACTAs foreign direct investment (FDI) has become increasingly important in the world economy, a large body of literature has emerged regarding the determinants of FDI flows. Some scholars argue that democracy attracts FDI through the mechanism of political constraints, which reduce the risk of negative policy changes. However, the value of policy stability should be conditional on the attractiveness of contemporary FDI-relevant policies. I therefore propose a theoretically more comprehensive argument: political constraints are attractive to investors when the host country policy environment is FDI-friendly, because these political constraints reduce the probability of negative policy changes in the future. When the policy environment is hostile to FDI, on the other hand, political constraints will have little positive effect, and, to the extent they indicate that FDI-relevant policies are unlikely to improve, may even deter FDI. This argument helps explain why the positive relationship between democracy and FDI seems to emerge after a global shift toward FDI-friendly polices. I find robust empirical support for the argument in tests covering more than 100 developing countries from 1970 to 2014, indicating significant effects using a variety of policy and political constraint measures.

Foreign Direct Investment With Host Country Market Structures and Policy Implications

In this paper, we consider models that describe foreign firms’ and host countries’ decisions on foreign direct investment (FDI) when host country product markets are characterized by certain types of market structures. We show that, under certain conditions, the host country and foreign parent firm (FP) are both better off in equilibrium if FP chooses to form a joint venture (JV) with a domestic partner in the host country, with some form of technology transfer, rather than have FP’s exclusive reliance on exporting to the host country. These results provide justification to China’s and some other host countries’ FDI policies in recent years. Our results also justify host countries with small open economies to resort to the introduction of new foreign competitors when they face their domestic markets suffering from monopolists’ abuse of market power. Canada, for example, is known to use inward FDI with limited foreign ownership as government policy tools for dealing with abusive domestic monopolists. Our welfare implications may be useful for evaluating such FDI-driven competition and other public policy issues. We also present an empirical example using data from Japan to test some of our empirical implications.

The Immigrant-Native Educational Achievement Gap in Countries with Selective Immigration Policies

The literature on the immigrant-native educational achievement gap is suggestive of a better performance of immigrant students in countries practicing selective immigration policies. However, the origin of such differences remains unexplained. I use PISA data and an investigative method which considers both important observed characteristics and the role of unobservables in explaining immigrant-native achievement differences in four selective immigration countries. I find that 1st generation immigrant students generally perform as well as native students after accounting for unobservables. In two countries – Australia and Singapore – 2nd generation immigrant students exhibit a consistent performance advantage even after considering unobservables. In explaining the findings, one needs to look at successful immigration policies as screening devices which induce self-selection of immigrants with transferable and adaptive skills. Finally, institutional differences with respect to how inclusionary and conducive to integration of immigrants into the host country policies are, should also be part of the explanation.

Host country R&D determinants of MNE entry strategy: A study of ownership in the automobile industry

We investigate how host country R&D influences ownership decisions made by technology-intensive multinational enterprises (MNEs) as they internationalize. We draw from institutional and resource based theories, as well as literature on agglomeration and clusters, and construct a unique dataset of 1324 foreign investments recorded by German automobile manufacturers between 2005 and 2012 for our empirical tests. We find that in host countries that are cluster-abundant there will be a greater likelihood that technology-intensive MNEs will adopt joint ventures over wholly-owned subsidiaries, and will more likely use a lower equity stake in any joint venture. We find partial support for the influence of other aspects of host country R&D, including innovation output and inward technology FDI. Various robustness tests and insights from selected cases provide further support. Importantly, findings demonstrate the importance of multi-dimensional characteristics of host country R&D over and above those such as market size, political stability and cultural distance that are more commonly utilized and discussed in the entry strategy literature. The findings have implications for host country policy as well as strategy-makers in MNEs seeking to compete on the basis of globalized R&D.

Optimal Education Policy and Human Capital Accumulation in the Context of Brain Drain

This paper revisits the question of how brain drain affects the optimal education policy of a developing economy. Our framework of analysis highlights the complementarity between public spending on education and students' efforts to acquire human capital in response to career opportunities at home and abroad. Given this complementarity, we find that brain drain has conflicting effects on the optimal provision of public education. A positive response is called for when the international earning differential with destination countries is large, and when the emigration rate is relatively low. In contrast with the findings in the existing literature, our numerical experiments show that these required conditions are in fact present in a large number of developing countries; they are equivalent to those under which an increase in emigration induces a net brain gain. As a further contribution, we study the interaction between the optimal immigration policy of the host country and education policy of the source country in a game-theoretic framework.

Duopolistic Competition and Optimal Switching Time From Export to FDI in Uncertainty

This paper aimed to extend previous real option models to features of multinational firms’ activities such as market competition and trade barriers. Few researchers have studied multinationals’ optimal switching time from export to FDI using real options, and those who have done so have ignored trade policies and strategic interactions between firms. Yet, the presence of local competitors and trade costs influences the option value of waiting. We find that FDI in host countries with uncertain demand, strong competition and few barriers to trade will likely to be delayed with respect to immediate investment. In terms of policy implications, we find that the trade and competition policies of host countries have lower deterrent effects on FDI when uncertainty is reduced.

Acquisition or direct entry, technology transfer, and FDI policy liberalization

This paper considers a number of symmetric multinational firms entering into a host country either directly or by acquiring local companies. The foreign multinationals strategically interact in both technology transfer and in the product market stage. Taking multinational firm competition into account implies that acquisition will more likely become the preferred mode of entry into the host country. This provides a possible rationale for the surge in the share of FDI taking place through mergers and acquisitions even in developing countries. Furthermore, we find that the level of the cost of technology transfer provides a possible rationale for the often observed pattern of investment liberalization. As the cost of technology transfer decreases, foreign multinational companies are first allowed to compete with local firms and in case of even lower cost of technology transfer, foreign ownership restrictions are also removed. Hence, we show that investment liberalization should go in tandem with host country policies that lower the cost of technology transfer.

Perceptions of China’s outward foreign direct investment in European critical infrastructure and strategic industries

This study analyses impacts of China’s outward foreign direct investment on host country policies and on the bilateral relationship with China by unravelling European and Chinese perceptions. We compare how China’s takeover of German robotics manufacturer KUKA AG and the investment into nuclear power project Hinkley Point C in the UK were perceived amongst European societal, economic and political stakeholders. Based on media articles, companies’ statements, political statements and interviews in China and the UK, we argue that China’s investments in Europe lead to threat perceptions amongst host country stakeholders and fuel debates on whether and how to regulate deals that could harm security and technology interests. While rising threat perceptions have already altered FDI policies in the UK, the German case inherits the potential to alter economic policies.

Outward foreign direct investment from South Africa’s energy sector and the transfer of environmentally sound technologies to Uganda’s energy sector

Following the end of apartheid in 1994, outward foreign direct investment (OFDI) from South Africa has been on the increase. However, the content of South African OFDI has remained an understudied topic. This article explores whether intra-regional flows of FDI from emerging African countries carry environmentally sound technologies (ESTs) to developing African countries. It examines whether and how OFDI from South Africa’s energy sector transfers ESTs to Uganda through a firm-specific case study of Eskom Enterprises and its subsidiary, Eskom Uganda Ltd. It employs secondary data from literature sources and primary data from interviews.The research results indicate that OFDI can be a carrier of ESTs from emerging African countries to developing African countries. The case study demonstrates that OFDI from South Africa’s energy sector has transferred ESTs to Uganda’s energy sector. Explicit firm-specific policies and host-country environmental policies have promoted international standards certification and transfer of ESTs. Therefore, countries and transnational corporations (TNCs) can direct OFDI flows from emerging African countries to the transfer of ESTs, thereby helping to mitigate climate change effects and promote sustainable development. It is recommended that future studies be undertaken to focus on the transmission of ESTs by African TNCs targeting other sectors and countries.

Economics and Politics of International Investment Agreements

This paper investigates the design and implications of international investment agreements. These are ubiquitous, potent and heavily criticized state-to-state treaties that protect foreign investment against host country policies. We show that optimal agreements cause national but not global underregulation (regulatory chill). The incentives to form agreements and their distributional consequences depend on countries' unilateral commitment possibilities and the direction of investment flows. The benefits from agreements between developed countries accrue to foreign investors at the expense of the rest of society, but this is not the case for agreements between developed and developing countries.

On MNC-Host Government Relations: How Finnish Firms Respond to National and Regional Policies in ASEAN

Combining literature from international political economy, international business, and institutional approaches to business studies, this article discusses foreign firms' relationship with the public sector in Southeast Asia. It focuses on the perceptions of the firms on host country policies toward foreign direct investments (FDI) and the impact of global financial crises and regional economic integration on the firms' strategies. The multinational company (MNC)-host government relationship is seen as a cooperative and continual bargaining within a specific institutional framework. Based on interviews with managers of subsidiaries originating from Finland, it is found that the regulatory environment of Association of Southeast Asian Nations (ASEAN) countries varies from easy to difficult with regard to policies, bureaucracy and protectionism. These pose institutional constraints for the firms, with additional economic constraints caused by global financial crises. Contrary to expectations, the ASEAN free trade agreement does not figure in the firms' investment strategies. This is explained by three findings: most of the firms serve the domestic host country market; the firms operate global rather than ASEAN-wide regional production chains; the firms represent industries that are not typical in Southeast Asian regional production networks.

Large scale land acquisitions and REDD+: a synthesis of conflicts and opportunities

Large scale land acquisitions (LSLA), and Reducing Emissions from Deforestation and forest Degradation (REDD+) are both land based phenomena which when occurring in the same area, can compete with each other for land. A quantitative analysis of country characteristics revealed that land available for agriculture, accessibility, and political stability are key explanatory factors for a country being targeted for LSLA. Surprisingly LSLA occur in countries with lower accessibility. Countries with good land availability, poor accessibility and political stability may become future targets if they do not already have LSLA. Countries which high levels of agriculture-driven deforestation and LSLA, should develop interventions which reduce forest loss driven either directly or indirectly by LSLA as part of their REDD+ strategies. Both host country and investor-side policies have been identified which could be used more widely to reduce conflicts between LSLA and REDD+. Findings from this research highlight the need for and can inform the development of national and international policies on land acquisitions including green acquisitions such as REDD+. Land management must be considered with all its objectives—including food security, biodiversity conservation, and climate change mitigation—in a coherent strategy which engages relevant stakeholders. This is not currently occurring and might be a key ingredient to achieve the targets under the Sustainable Development Goals 2 and 15 and 16 (related to food security and sustainable agriculture and the protection of forests) among others.

A Model of Smuggling and Trafficking of Illegal Immigrants with a Host Country Policy

AbstractThis paper deals with illegal immigration via two distinct activities—smuggling and trafficking of workers. A destination–source model determines economic pay‐offs and a standard labor market policy works as a deterrent. Tax paid by legal unskilled workers at the destination is determined endogenously and it finances inland monitoring against illegal immigration, holding the border patrol at a given level. The tax also finances unemployment benefit to legal workers at the destination. The number of immigrant smugglers and traffickers is also determined endogenously along with employer penalty and market wage for illegal immigrants. Higher unemployment benefits may reduce illegal wages, raise traffickers’ rent and reduce flow of illegal immigrants from the source countries.

Multinational Investors as Export Superstars: How Emerging-Market Governments Can Reshape Comparative Advantage

This paper investigates three cases — Malaysia, Costa Rica, and Morocco — in which host authorities were successful in using foreign direct investment to change the export profile of the domestic economy. Each case highlights the importance of first-mover firms, and clusters of follower firms, in oligopolistic industries, whose emergence changes the revealed comparative advantage of the domestic economy. The results from these three cases are shown to be consistent with a broader body of econometric analysis. An important implication is that small emerging markets may be better equipped to transform their production structure and stimulate exports with foreign direct investment than by promoting broad domestic entrepreneurship. Our results show that host-country policy changes can have very large effects if they alter the entry of multinationals or the behavior of large firms.