ISSN: 1813-0534






Volume 6 No.1 Jan 2010 Special Edition

Globalization and The Pattern of Multinationals’ Profitability

Wu Sizhong, Professor, School of Economics and Management, Tongji University,China
Yuanchi Chao, Ph.D., AAA Real Estate, New York, USA
Scott X Liu, Professor, School of Management, New York Institute of Technology, USA


The world continues to become increasingly global. How does globalization affect a
firm’s performance, industry structure, and the economic well-being of society in the longrun ? We suggest that the consequences of globalization can be fully explained an understanding of its cause. This paper developed the propositions based on analysis of knowledge product. The empirical results suggest that the globalization process enhancesmultinational profits, and this enhancement is more significant for firms in knowledge intensive industries, and it also finds that globalization drives multinationals apart, with their earnings discrepancy increasing along the process. Furthermore, the variation of earnings is even greater for firms in knowledge-intensive industries. Consequently, the study fully supports the theory of globalization presented.


System Dynamics Approach to the Analysis of Interaction of Foreign Direct Investment and Employment in Thailand

Massood Samii, Professor and Chairman, and Pard Teekasap, DBA Candidate
International Business Department, Southern New Hampshire University, USA


This study shows the effect of FDI on the wages and employment in Thailand. A system dynamics model is constructed to determine the interaction between the labor market and foreign direct investment in Thailand. The finding for Thailand shows that having a policy to stimulate FDI flow will achieve its objective in the short term but will lead to an opposite effect in the long term. A lower FDI flow in the long term is due to an increase in wages will eventually discourages the “cheap labor seeking” investment. The model predicts that effect of the FDI stimulus policy on unemployment in the short term is not significant but the unemployment ratio is higher than it would be without such a policy in the long term. However, having an FDI stimulus policy will result in having a higher average wages and salary in both the short-term and the long-term. This would be the main positive effect of such policy.

Trade, Foreign Direct Investment and Economic Growth in Selected South Asian Countries

Dharmendra Dhakal, Tennessee State University, USA
Gyan Pradhan, Eastern Kentucky University, USA
Kamal P. Upadhyaya, University of New Haven, USA


This paper examines the dynamic relationships between foreign direct investment (FDI),trade and economic growth in India, Pakistan and Sri Lanka with the help of a VAR model and data covering 1971-2006. Before estimating the model, the time series properties of the data are diagnosed. The estimated results indicate that in India, FDI tends to cause economic growth by improving trade but there is a weak direct relationship between FDI and GDP. In Pakistan, FDI appears to cause trade but trade is not a significant factor in economic growth.In Sri Lanka, very little effect of FDI and trade on GDP is detected.



Trade Barriers

Stephen W. Hartman, Professor, School of Management, New York Institute of Technology, USA


The world’s developed countries have had a primary role in structuring trade restrictions that have impacted the developing countries most directly and severely. As numerous trade associations have proliferated throughout the world liberalizing traditional trade restrictions,barriers to trade reflected in Non-tariff measures (NTMs) have become more important channels through which trade is blocked. As a nation’s GDP per capita increases, a steady diminution of the use of tariffs is replaced by NTMs. The majority of recently enacted trade restrictions as a result of the recession of 2007-9 have only had a marginal impact on trade.




Product Architecture, Cultural Endowment, and Organization of Division of Labor: A Study of The Formation Mechanism of International Trade Structure in Horizontal Specialization

Jie Zhang, Professor and Dean, and Hualin Pu, Associate Professor
College of Economics, Jinan University, Guangzhou, China
Krishnamur Chandrasekar, Professor, School of Management, New York Institute of Technology, USA



This paper expands the theory of division of labor by examining the issue of trade structure in international horizontal specialization, and it thus sheds light on the mechanism of product choice and supplements the endogenous theories of trade. By considering the effects of both product architecture and a producer’s cultural endowment on the organization of division of labor, the author has modeled a framework to account for the mechanism of product choice in the pattern of horizontal specialization. According to this framework, the optimal structure of the organization of division of labor is technically determined by product architecture, while its selection and evolution will be affected by producer’s cultural endowment. If the cultural endowment of a nation is fit for a given organizational structure of labor division, this nation will obtain competitive advantages in products fit for this structure of organization, and specialize in producing these goods. Compared with factor endowments, cultural endowment is more stable and unique and thus guarantees more sustainable competitive advantages. Furthermore, relativity of cultural endowment ensures that all nations at a close level of development acquire competitive advantages in industries fitting their national cultural endowments.

Key Words:Product Architecture;Cultural Endowment;Division of Labor

Price-Volume Relations in The ADR Markets

Demissew Diro Ejara, Department of Finance and Economics, University of New Haven,USA


This paper analyzes cross-border price-volume relations by using correlations and Granger-causality tests. Based on 54 UK FTSE100 firms with ADR trading in the US, the results support the view that large price changes are associated with high volume within each market as well as across markets. The results also show some evidences of unidirectional as well as bidirectional causalities across markets. However, the home market influences are stronger than the causation from the ADR market.


A Study of The Industrial and Trade Policies on Anti-dumping of Imports and Anti-subsidization of Exports in China’s Coated Paper Industry

Shen Yao, Ph.D. and Dean, and Wu Wei, School of Economics, Shanghai University,China
Benjamin Khoo, Ph.D., School of Management, New York Institute of Technology, USA


This paper analyzes the economic influence of industrial and trade policies on China’s coated paper industry to investigate the internal factors affecting anti-dumping of imports and anti-subsidization of exports. This study found that the policies, while adopting selective trade protective measures, should encourage foreign investment that will develop an industry.When the trade policy or industrial policy has achieved the expected result for a specific industry, it is important that adjustments be made to maintain a balance between industrial policy and trade policy, and to comply with WTO rules.

A Different Culture: Same Concerns — Chinese Managers and Motivation Theory

Irwin Gray, B.E.E, M.S., M.B.A., Ph.D., P.E. New York Institute of Technology, USA


This paper investigates the views held by new managers in China towards the
organizational behavior principles they were taught in an American MBA program. The biggest concern they expressed is how to motivate their work forces. Since these managers became knowledgeable about American oriented motivation theory through their studies, this paper explores how they are putting that theory to work.

Key Words:Organizational Behavior, China Culture Code, Motivation, Organizational Strategy, American Culture Code, Meaning of Work, Exotelic, Autotelic

An Analysis of Thailand’s Trade Determinants and Costs of
Protection Using the Gravity Model of Trade

Thanarerk Thanakijsombat, and Dinorah Frutos
Southern New Hampshire University, USA



This paper aims to investigate the trade pattern and the important factors affecting the trade flows between Thailand and its trading partners. The basic gravity model of trade is employed with three modifications. Using the pool regression technique, we examine trade flows between Thailand and 59 trading partners from 1995 to 2008, and compare the results from each model. In addition, estimates of the effect of protectionism on the volume of Thailand’s trade are calculated. The results indicate that the Fixed Effect model provides better estimates than the other two models examined. Also, based on this model it was determined that factors such as the GDP, population, the Trade Freedom Index, the distance and border sharing between the trading partners are important in determining the volume of Thailand’s trade.

Strategy for Improving Independent Innovation in China: Property Rights Transaction Market


Huang Zhigang, Dean and Professor, School of Management, Fuzhou University, China
Paul R. Kutasovic, Professor, School of Management, New York Institute of Technology,USA



The poor record of innovation in China has become a potential bottleneck constraining future economic development. The question is why China has failed to innovate given its immense human and financial resources. The problem for innovation in China is due to the lack of development in the property rights transaction market. As a result, growth of the technology sector has been restrained by a lack of funds. This study looks at the link between the property rights market and innovation. A strategy for developing the property rights market is proposed.


Economic Crisis, Home Country Effects of Outward Direct
Investment, and Internationalization of Chinese Native Enterprises: An Analysis Based on Theories and Evidences

Jiang Yumei, Dean and Professor, and Jiang Yapeng, Doctorate Candidate, Instructor,School of International Business, Southwestern University of Finance and Economics,China


This paper studies the home country effects of outward direct investments. The author
starts with the feeding-back mechanism and method, and thoroughly investigates and
empirical examines the effects of outward direct investments on the home country. The results support China’s long-term strategy of pursuing external growth. More specifically, the evident suggests that outward direct investments in China have the positive effects on the home economy. Consequently, in the period of financial crisis, China should give more recognition to the feeding-back effect of its direct investments overseas. The domestic enterprises should see it as a rare opportunity and more actively pursue direct investment overseas, using it as a means to develop an international market to acquire the advanced technology, and scarce and strategic resources, and maximize the regurgitative feeding effect on the home country and parent companies.

Key Words: financial crisis, outward direct investment, feeding back effect, internationalization of Chinese Local Enterprises

A Study on International Competitiveness, Entry Modes and Risk Avoidance of China’s State-Owned Natural Resource Exploitation Enterprises in Transnational Trade

Guangming Li, Economics College, Jinan University, Guangzhou, China
Tung-lung Steven Chang, Professor, Long Island University, USA


By going global, China’s state-owned natural resource exploitation enterprises have recently been able to explore and exploit foreign mineral resources. Equipped with ownership advantage, such state-owned enterprises are eager to go abroad through a thoughtful internationalization process by means of green field foreign direct investments (FDI), mergers and acquisitions (M&A) and strategic alliances. Given the dynamic competitive positions among rival state-owned enterprises, firms that can establish long-term strategic alliances with foreign partners have a better chance to cultivate technological capability and scale economies. Such partnerships may help China’s state-owned natural resource exploitation enterprises to reduce both political and financial risks while making outward FDI and to improve their production efficiency in local operations.

Research on The Credit Risk Measurement of China’s SMEs Based on the KMV Model

Tang Zhenpeng, and Liu Jun, School of Management, Fuzhou University, China


For measuring and tracking the recent credit risk status of SMEs in China, we select
listed SMEs as research objects to test the efficiency of the KMV model in measuring the credit risk of SMEs. We recommend the basic theory and calculating process of the KMV model, then put the KMV model into empirical analysis and calculate the accuracy of measuring and forecasting under certain conditions. By comparing the efficiency of the credit default discrimination among the KMV model, based on the distance to default, the logistic model with and without the distance-to-default DD, we find that the distance to default can improve the efficiency of the Logistic model to discriminate the default risk of SMEs, and the discrimination effect of the distance to default in the KMV model is obviously superior to that of other analyses.

Key Words: credit risk; KMV model; distance-to-default

The Linkage between Stock Prices and Exchange Rates in China:Based on VAR-GARCH Model

Wu Yan, School of Finance and Statistics, Jiangxi University of Finance and Economics,China
Jing Xie, Shanghai Fengwu Culture and Communications Co., China
Tao Jin, Guilin University of Electronic Science and Technology, China


The paper examines the linkage between stock prices and exchange rates based on VARGARCH model. The empirical results show that there are only unidirectional and slight price and volatility spillover effects from the stock index to the CNY exchange rate against the USD, EUR and JPY; it seems that there are no spillover effects in the opposite direction. So there is no close relationship between the stock market and the foreign exchange market, and in particular, domestic currency appreciation does not necessarily lead to improvements in the stock market. Moreover, there is no significant impact of the 2005 exchange rate reform on the above findings. Finally, the paper gives some explanations and a few suggestions.

Key words: stock prices, exchange rates, linkage, VAR-GARCH


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ISSN: 1813-0534