Article

 

The FDI and trade relationship revisited under structural change: Evidence from a sector-based analysis in Central and Eastern European countries (p.11-40)

by

Constantina Kottaridi, Department of Economics, University of Piraeus

Fragkiskos Filippaios, Kent Business School, University of Kent

Keywords : Central & Eastern European Countries (CEEC), Investment Development Path (IDP), Inward Foreign Direct Investment (FDI), Imports.

JEL classification : F210, F230, F290, M110, O520

Abstract

This study revisits the long standing argument on the Foreign Direct Investment (FDI) and Trade relationship in an effort to shed some new light on the issue as well as investors’ behavior. This is achieved within the context of structural changes as proposed by the Investment Development Path (IDP) paradigm. In addition, it does so in a sector-based framework where more accurate results may be obtained and safer implications may be outlaid. We use an expanded dataset of Central and Eastern European countries, from the early stages of transition in 1992 to 2006 covering a variety of location factors. Results pinpoint to a differential relationship between FDI and imports among the sectors, indicating a complementary one for manufacturing (secondary) and services (tertiary) and a substitution one for agriculture (primary). In the case of FDI we find strong locational characteristics such as the large market size, the gradual improvement of the macro-environment and finally the quality of labour force as centripetal forces, well documented along the structural changes framework of the IPD we employ here.

 

 

Testing the concentration-performance relationship in the Tunisian banking sector (p.41-62)

by

Abdelaziz Hakimi, FSJEG Jendouba

Helmi Hamdi, CERGAM, Aix-Marseille University

Mouldi Djelassi, ESSEC Tunis and LEO- Orléans

Keywords : Concentration, Performance, Liberalization, Tunisians banks, Panel data.

JEL classification : G21, G34, L10, L11, C51

Abstract

The aim of this paper is to investigate whether concentration affects profitability of the Tunisian banking sector for the period 1980-2009. Our sample is made up of 9 banks and our empirical analysis is based on panel data analysis. In this paper, profitability is measured by the conventional return on equities (ROE) and return on assets (ROA). In the robustness checks we add net interest margin (NIM) as a third indicator of profitability. The main results of the paper reveal that concentration has positive impacts on Tunisian banking profitability. More, the adoption of the various industrial strategies by Tunisian banks was advantageous for the banking sector and for the economy as a whole.

 

 

Sovereign debt during the crisis: Comparative analysis between Eastern and Southern European countries (p.63-81)

by

Nikolay Nenovsky, CRIISEA, University of Picardie Jules Verne

Tsvetelina Marinova, New Bulgarian University

Keywords : Budget deficit, Sovereign debt, Financial crisis, New EU member states, Eurozone.

JEL classification : H62, H63, G01

Abstract

This study investigates budgetary positions and trends in sovereign debt levels in two groups of EU Member States during the global financial and economic crisis. We argue that current fiscal positions and trends in sovereign debt in the Baltic states and Bulgaria are above all due to the implemented exchange rate mechanism whereas in the southern European countries and Ireland it is the institutional framework of the eurozone that plays a key role for national budgetary policies and respectively debt trends. The existence of an insurance or guarantee fund in the eurozone makes the key difference between its hardly pegged exchange rates and Currency board and has led to the loosening of fiscal discipline especially in the South Europe.

 

 

Is Tunisia’s external debt sustainable? A cointegration-based analysis  (p.83-104)

by

Abdelaziz Essayem, ISCAE, University of Manouba

Keywords : Foreign debt, Debt sustainability, Budget deficit.

JEL classification : H63, G18

Abstract

The contribution of borrowed capital could have dramatic consequences if the increase in foreign debt is not used to make profitable investments. Thus, monitoring the external debt of low-income countries and emerging economies is required. Monitoring tools based on different approaches in terms of empirical testing are therefore useful for studying the dynamics of debt and assessing its sustainability. We propose to study the dynamics of the Tunisian foreign debt during the period 1983-2010. Two theoretical approaches for assessing debt sustainability are used as they best suit the empirical quality of our study. The results obtained reveal a contrasted situation. We propose to apply two assessment approaches to the sustainability of Tunisia’s external debt. Surprisingly, while the so-called accounting approach suggests that debt is not sustainable, the two versions of the actuarial approach confirm the opposite. We assume that Tunisia’s foreign debt remains sustainable.

 

 

The pillars of corruption control worldwide: Differences between rich and poor countries (p.105-126)

by

Kostas Rontos, University of the Aegean

Ioannis Vavouras, Panteion University of Social and Political Sciences, and Hellenic Open University

Keywords : Corruption, Government effectiveness, Economic development, Political system.

JEL classification : D72, D73, H11, O11, O57

Abstract

Corruption is a multidimensional phenomenon associated with several causes and effects. It critically undermines the economic and social development of nations. The scope of this paper is to examine the basic pillars of corruption control worldwide. More specifically, our analysis focuses on the study of the effects that the level of economic development, as we approach it by the gross national income per capita in purchasing power parities or current international dollars, the political system, as we approach it by the “freedom rating”, an index comprising both political rights and civil liberties, and the level of government effectiveness, as we approach it by the “government effectiveness indicator” and the non-income level of human development, as we approach it by the non-income “human development index”, exert on the perceived level of corruption. By investigating 178 countries all over the world using 2010 data we find that government effectiveness is the most critical factor determining the scale of corruption worldwide. Therefore, the single most important means to reduce corruption is to improve government effectiveness. Moreover, our analysis also reveals that the level of economic development is an important factor negatively correlated with the level of corruption only in relatively high economic development countries, while in the case of relatively low economic development countries the political system seems to be another important factor determining the level of corruption.