Showing papers on "Negative relationship published in 1993"

The Impact of Size on Internationalization

Abstract: For most countries, prosperity depends on international trade. For example, in 1990, Canadian firms exported $146 billion ($ Canadian) in goods and services, or roughly 22 percent of Canada's gross domestic product (Statistics Canada 1991). However, as recent reports have noted, maintaining a country's standard of living requires that the domestic companies capture a larger share of international markets (Royal Bank of Canada 1991, Porter 1991). Much of this growth in exports is expected to come from small and medium-sized firms (Beamish and Munro 1987, Hardy 1986). Given the ascribed importance of these firms, the question arises as to whether they are capable of rising to the challenge? This article addresses this issue by asking two questions: Is there a relationship between size and internationalization? Is size a barrier to international activity? The first question seeks to evaluate the extent to which size has limited firms' international involvement while the second attempts to identify which firms are, in theory, capable of engaging in international activities. These two questions are examined in the context of three dimensions of internationalization: propensity to export; international sales intensity (international sales/total sales), and the countries served. LITERATURE REVIEW Most research on international business has started with the premise that small and medium-sized companies suffer from size disadvantages (Becker and Porter 1983, Levitt 1983, Mugler and Miesenbock 1986) that prevent or limit their ability to compete internationally. As a result, many studies on internationalization focus only on large businesses. However, some studies have incorporated a firm size variable within their investigation of internationalization. This section examines some of the literature surrounding the issue of internationalization and the small and medium-sized business in terms of international sales intensity and export markets. Exporters Versus Non-exporters In the study of the international sales orientation of firms, two distinct research streams have emerged. The first focuses on comparing the characteristics of exporters and non-exporters to see what differentiates the two. The second focuses on explaining what differentiates successful exporters (sometimes termed aggressive or committed exporters) from those firms who obtain a smaller percentage of their revenue from international sources, sometimes referred to as passive or experimental exporters (Cavusgil 1976, 1984). The size of the firm has been used as a discriminator within both research areas. Most studies have found that the larger the business, the more likely it is to export its products (Christensen, Rocha, and Gertner 1987; Abdel-Malek 1978; Tookey 1964; Kaynak and Kothari 1984; Lall and Kumar 1981). However, other studies have found that small and medium-sized firms can be involved in exporting (Cavusgil 1976, Edmunds and Khoury 1986, Malzehzadeh and Nahavandi 1985) and that size may not affect a firm's interest in exporting (Ali and Swiercz 1991). In distinguishing between exporters and non-exporters vis-a-vis the size of the firm, Cavusgil (1976) concluded that size was only a significant factor where the firm was very small; however, beyond some point exporting was not correlated with size. Taken collectively, these studies imply that very small firms are not likely to engage in export activity but--beyond the very small classification--size may not be an important factor. Export Intensity On the issue of size and export intensity, most studies have found that intensity (international sales/total sales) is positively correlated with firms size (Czinkota and Johnston 1983, O'Rourke 1985, Tookey 1964). However, some studies have found either no relationship or a negative relationship, with small firms having a greater level of international intensity than large firms (Bilkey 1978, Balcome 1986, Holden 1986). Balcome's study addressed this size issue, finding no discernible relationship between size and export orientation. …

Fertility and Employment

Abstract: This paper reviews the empirical evidence on the relationship between fertility and women's employment. In modern, industrialized societies there is generally a negative relationship between the two, but the causal direction is far from clear. No doubt, fertility exerts a negative influence on work-force participation, in the sense that a new-born baby has a dramatic and immediately inhibiting effect on work- force participation for the woman who has just become a mother. This effect tends, however, to be temporary and decreases as the child gets older. On the other hand, the effect of employment on fertility is a much more debated issue, and the author questions whether the presumed negative relationship really holds in most of contemporary Western Europe. The incompatibility of employment and motherhood would seem to have become seriously weakened in recent decades, through the growth of part-time work and the increasing availability of institutionalized child care. From a feminist perspective, it may be argued that the incompatibility of work and motherhood is mainly a consequence of existing gender structures in society and the ensuing power relations within marriage. Countries with modified gender structures would therefore seem to stand a better chance of achieving a birth rate near replacement level.

Employment and output effects of government spending: is government size important?

Abstract: I. INTRODUCTION In 1981 Barro proposed that temporary changes in government spending affect output more than permanent changes of the same size. He argued, this is because temporary changes have no wealth effects, and so have a larger impact on aggregate demand.(1) However, more recent research has shown that in a life-cycle model with an endogenous labor-leisure choice Barro's argument is reversed: permanent changes in government spending have a greater impact on employment and output than transitory changes of the same size, precisely because permanent changes are associated with wealth effects that influence the optimal supply of labor.(2) The first objective in this paper is to examine possible differences in the effects of permanent and transitory changes in government spending. Government spending is decomposed for a number of countries into permanent and transitory components and their relative impacts on employment and output are examined. My second objective is to investigate the relationship between public sector spending and economic growth and the relationship of economic growth to government size. Despite the importance of the subject, this is an area where no consensus exists as yet. For example, Landau |1983~ concluded that "growth of government hurts growth," whereas Kormendi and Meguire |1985~ found "no evidence that growth in the ratio of government consumption to output adversely affects economic growth," and Ram |1986~ reported that "government size has a positive effect on economic performance and growth."(3) Recently the above issue has become even more important because of the role played in some of the "new" growth theory models by externalities associated with the public sector. Barro |1990~ provides an example of such a model where government sector productivity and the size of government are important determinants of a country's growth rate. In the present paper, I isolate the "productivity effect" of government spending and then test its relationship to government size. The empirical results suggest that permanent changes in government consumption generally have greater effects on output and employment than do transitory changes of the same size. This result, robust across all the different specifications examined, implies the existence of a negative wealth effect associated with permanent increases in government spending. It also reduces the potency of government spending as a stabilization tool. In addition, the empirical findings also support a negative relationship between the output effects of government spending and government size, even though the statistical significance of this relationship is sensitive to the choice of econometric methodology. Using Barro's |1990~ theoretical conclusions, the estimated equations imply that the optimal government size for the representative country is approximately 20 percent of GDP. The rest of the paper is organized as follows. Section II presents the theoretical framework, and section III describes the econometric methodology. Section IV reports the empirical results. Finally, section V outlines the paper's main theoretical and policy implications. II. THEORETICAL FRAMEWORK Following Barro |1981~ and Aschauer |1989~, assume that government services are productive and let the aggregate production function take the Cobb-Douglas form: (1) |y.sub.t~ = |a.sub.n~|n.sub.t~ + |a.sub.k~|k.sub.t~ + |a.sub.g~|g.sub.t~ + |u.sub.t~ with |u.sub.t~ = |Phi~ + |u.sub.t-1~ + |v.sub.t~, and where y is output, n is labor, k is the capital stock, g is government consumption (all variables in logarithms), and |Phi~ is the rate of technological progress. Government consumption enters as an input because it includes spending on the legal system, regulation, fire and police protection, correction, and national defense. To the extent that it allows for a more efficient allocation of property rights, g should have a positive marginal product. …

What do governments buy? The composition of public spending and economic performance

Abstract: The authors develop a simple analytical framework that shows how the composition of public spending affects economic growth. Distinguishing between productive and unproductive government spending (that which complements private sector productivity and that which does not), they show that increasing the share of productive spending leads to a higher steady-state economic growth rate. They use data from 69 developing countries over 20 years to determine which components of public spending are productive. They find that an increase in the share of current spending has positive and statistically significant effects on growth. Otherwise, the news is mainly negative. The relationship between the capital component of public spending and per capita growth is negative. The same is true of the share of spending on transport and communications. The shares spent on health and education have no significant impact, although parts of those shares - the parts spent on preventative care and"other education"- do. The results raise the question whether public spending actually leads to a flow of public goods and services.

The economic impact of military expenditures

Abstract: The author addresses three questions about military spending in developing countries: What are the levels of (and trends in) military spending as a percentage of gross national product? What impact does peacetime military spending have on growth, government spending on social welfare and infrastructure, and other key economic variables? What major factors influence the level of military spending? The author finds that military spending as a share of GNP generally fell in the 1980s, even in the Middle East and North Africa. The mean level of military expenditure as a share of GNP (MES) was 3.9 percent, well below the peak of 5.3 percent in 1976. In 1989, MES averaged only 2.7 percent in Latin America and 2.0 percent in sub-Saharan Africa - the two regions with the most severe economic problems. He finds no evidence of a negative relationship between military spending as a share of GNP and the peacetime growth rate of developing countries - except where military spending is high. He finds that higher shares of MES are not associated with lower shares of government spending on education, health, and infrastructure. As MES increases, government spending as a share of GNP increases, which allows the level of spending on health, education, and infrastructure to be maintained. The author finds some evidence that increased military spending in the developing countries has a weak negative impact on investment and the balance of trade. He finds no evidence of a statistically significant relationship between military spending and inflation. The most important determinant of peacetime military spending is the spending level of neighboring countries - in other words, the potential external threat. Regional conciliation and disarmament may be an important step toward reduced military spending.

Warranty, quality and price in the US automobile market

Abstract: The observed negative relationship between quality and warranty in the US auto market is analysed using a cost-based approach developed by Cooper and Ross. The theory of warranty and quality choice by producers and consumers is extended by endogenizing the joint price, quality and warranty decision. Differences in producer costs and consumer preferences are found to explain the inverse relationship, which suggests that American manufacturers should adjust their pricing, warranty and quality strategy when entering foreign markets.

The Effect of Equity Barriers on Foreign Investment in Developing Countries

Abstract: This paper investigates stock performance in emerging markets in relation to their accessibility by foreign investors (as measured by the investability index of the IFC). Using the Stehle (1977) model, we reject for most markets integration and fail to reject for all segmentation. We find that there is a positive relationship between a stock's P/E-ratio and its investability index for most emerging markets, suggesting that barriers to access by foreigners have a negative impact. For four markets, this result is robust to the inclusion of the world beta and the degree of international spanning of the domestic market. A significant negative relationship between the investability index and stock return is only found for Jordan. This is likely because the effects of changes in the degree of access over time confound the cross-sectional relationship between return and investability indexes.

Foreign participation and technical efficiency in Indian industry

Abstract: An attempt is made to ascertain the relationship between various forms of foreign participation (FP), and the technical efficiency of the firms in Indian industry. The exercise covers 164 large manufacturing companies distributed evenly across four industry groups. A distinction between four different forms of FP has been made. The firm level analysis clearly brings out the positive and significant influence of foreign equity participation on technical efficiency. The impact of the other forms of FP, varies from industry to industry. Greater technical efficiency, however, does not imply greater volume of exports, as a corollary. Technical efficiency has no relationship with exports in three industry groups and a significant negative relationship in one industry group.

The Relationship between Television Viewing Preferences and Interest in Science among 11‐15 Tear‐olds

Abstract: This study explores the relationship between television viewing preferences and interest in science among a sample of 5432 pupils between the ages of 11 and 15 years. After controlling for age, sex and social class differences, the data demonstrate a negative relationship between attitude towards science and watching soap operas, a positive relationship with current awareness programmes and no relationship with either sport or light entertainment programmes.

Is there a Socioeconomic Dimension to Household Extension in Latin America

Abstract: The aim of this paper is to investigate whether and how urban/rural residence or in urban areas husbands occupation is related to household extension in six Latin American countries (Colombia Costa Rica the Dominican Republic Mexico Panama and Peru)....This paper addresses the strategy of adding an extended family member to the household which could mean pooling earnings and/or enlarging the households work force....This paper provides an overview asking: 1) Are lower status residents of urban areas more likely to live in extended households than their rural counterparts and 2) Is there a generally negative relationship between socio-economic status and extension among urban households? (EXCERPT)

The Effect of Equity Barriers on Foreign Investment in Developing Countries

Abstract: This paper investigates stock performance in emerging markets in relation to their accessibility by foreign investors (as measured by the investability index of the IFC). Using the Stehle (1977) model, we reject for most markets integration and fail to reject for all segmentation. We find that there is a positive relationship between a stock's P/E-ratio and its investability index for most emerging markets, suggesting that barriers to access by foreigners have a negative impact. For four markets, this result is robust to the inclusion of the world beta and the degree of international spanning of the domestic market. A significant negative relationship between the investability index and stock return is only found for Jordan. This is likely because the effects of changes in the degree of access over time confound the cross-sectional relationship between return and investability indexes.

Exchange rates and foreign direct investment: a note

Abstract: In "Exchange Rates and Direct Investment: An Imperfect Capital Markets Approach," Kenneth Froot and Jeremy Stein [1991] develop a new finance-based theory to answer an old question--the relationship, if any, between the flow of foreign direct investment and the exchange rate. Their theory, based on the possibility that a foreign firm's borrowing opportunities for financing a U.S. acquisition may be a function of its net worth in dollars, implies a negative relationship between a dollar appreciation and direct investment inflows into the United States. Empirically, the authors find statistically significant evidence of the implied negative relationship for quarterly and annual time series regressions, over the period 1973-88. ; The major purpose of this note is to show that this empirical support for the theory is weak. The authors' regressions show evidence of serious instability, and the significant negative relationship between direct investment inflows and the value of the dollar disappears for important subperiods of the 1973-88 period and for the sample period extended through 1991.

Productivity and trade unions in British manufacturing industry 1973-85

Abstract: This paper uses panel data on British manufacturing industries between 1973 and 1985 to examine the relationship between productivity and labour organisation. It is shown that the precise relationship between unions and productivity levels is difficult to pin down. There is some evidence of a negative relationship further as does controlling for endogeneity. We also find some evidence that industrial concentration is associated with higher levels of measured productivity.