Posted on 15 April 2013. Tags: Euro, Externalities, FDI, OECD, Panel Data Econometrics
The role of FDI inflows and outflows to host countries and from the source countries emerged in the 1980s as the major vehicle technology transfer that accelerated the globalization or international integration of 25 leading OECD economies over a period of 25 years (1983-2007). Although neoclassical and endogenous growth theories provide unequivocal support for FDI flows because they generate positive externalities or spillover effects through channels of GDP growth, capital formation and R&D, the empirical evidence in support of these claims are mixed. The panel data econometrics performed using a new multiplicatively complete index of total factor productivity provide fresh insights on the cross-border FDI generated through technology transfer and other channels. The empirical findings for the OECD countries are markedly different from the spillover effects on developing countries that are plagued by technology absorptive capacity effects due to the operation of threshold effects of underdeveloped human capital resources. The empirics on cross-border FDI flows and the spillover effects that they generate in OECD countries will provide much needed information to design and implement policies to harness the net benefits from cross-border FDI flows and shed light on the design of policies to reconcile the conflicting policies of austerity and growth that are required to prevent the sovereign debt racked euro-zone countries from imploding the single currency union based on the euro.
Perspectives on Total Factor Productivity and Foreign Direct Investment in OECD Countries based on Panel Data Econometrics (707.4 KiB, 2,812 hits)
Posted in Economics, Volume III, Issue no. 2
Posted on 15 August 2011. Tags: Benefits, Cost, Euro, German Mark, Kosovo economy
Since January 1st 2002 in compliance to UNMIK (United Nations Mission Interim in Kosovo) regulation no.1999/4, EURO (‘’EUR’’) is adopted as legal currency in Kosovo and it became the de facto currency of the country. All client accounts held in Central Bank of Kosovo (CBK) and in other commercial banks were converted in EUR by un-converted exchange rate of DEM 1,95583 for a EUR. Consequently, in practice, since Euro has legal tender (which means that a payment in Euro cannot be refused) and since accounts are kept in this currency, almost all the transactions made in Kosovo are denominated and paid in Euro. Utilization of a sustainable currency was important in maintaining macroeconomic stability and played a key role in the reestablishment of people’s trust in the financial sector. On the other hand, CBK is not a money emission bank and in this way does not perform monetary and exchange policies. The currency regime that Kosovo has adopted might be very challenging given the absence of traditional monetary and exchange rate instruments. The key concern, therefore, remains on whether the right policies (such as fiscal and structural policies as well as those related to the financial sector) will support this regime. The objective of this paper is to present the costs and benefits brought to the Kosovo economy by the utilization of Euro as its main currency in circulation, and to what extent are the costs acceptable compared to the advantages that were brought by the introduction of Euro in the Kosovo economy.
How Acceptable are the Costs Compared to Benefits Brought by Euroisation of Kosovar Economy (832.9 KiB, 3,231 hits)
Posted in Economics, Issue no. 5
