This thesis studies the efficient organisation of economic institutions. In the first chapter we analyse how foreign direct investment projects can generate spillovers through backward linkages. An investment project can generate such spillovers if local competitors in the project's own industry can benefit from the upstream efficiency improvements that were induced by the entry of the foreign firm. The existence of the spillover effect depends crucially on the supplier arrangement that is chosen by the foreign firm. The foreign firm could avoid the spillover effect by producing the input itself or by contracting with only a small number of local suppliers. We use an incomplete contract framework to study the conditions under which the foreign firm optimally chooses a supplier arrangement that generates spillovers to the local industry. In the second chapter we study an incomplete contract model in which a buyer and a seller first agree on an efficient ownership structure and then bargain over the price of an input. We allow for asymmetric information at the ex post bargaining stage. The ownership structure that the agents agree on ex ante determines the payoff that each of them can realise before reaching agreement ex post. We show that an ownership structure that lowers the parties' joint pre-agreement payoffs accelerates ex post decision making but also makes delay in decision making more costly. We derive the ownership distribution that minimises the ex post bargaining inefficiencies. In the third chapter we compare the efficiency of private and public provision of contract enforcement services. We show that self-interested agents with coercive power may have an incentive to use this power to enforce contracts between third parties. However, such agents also engage in extortion. We analyse how social welfare depends on the number of self-interested agents with coercive power and whether such agents face democratic elections.

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The economy of Saudi Arabia is rich in oil. It is the world’s leading oil exporter and a prominent member of the Organization of Petroleum Exporting Countries (OPEC), and a country which embraces Foreign Direct Investment (FDI). FDI is core to increasing the capital and the economic wealth of a country. It is a platform for innovative technologies, advanced management practices, investment, and for the development of an unrestricted market for generating goods and services. Host nations struggle to attract FDI because of the difficulty in recognising FDI drivers that shape FDI inflows. This study identifies significant drivers that influence financial services. These are market drivers, economic drivers, infrastructure drivers and political drivers. Noticeably, previous studies have failed to discuss the complexity of these drivers’ effectiveness in terms of a particular business and a particular country. The objective of this study, therefore, is to analyse the effect of different FDI drivers on FDI inflows with regard to Saudi financial services. This study finds that market drivers are the most effective FDI drivers in terms of Saudi financial services, followed by economic and political drivers. This study supports the findings of previous studies that suggest that infrastructure drivers are not effective in terms of FDI inflows with regard to Saudi financial services.

This thesis examines Canadian FDI (foreign direct investment) in China from 1978 to 2006 in the context of globalization and with a focus on the challenges faced by Canadian firms when doing business in China. Building on John Dunning's 'eclectic model' of FDI and Kobrin’s ‘bargaining’ approach, this study explores the relative importance of home country (Canadian) and host country (Chinese) factors in explaining outcomes for Canadian firms in China in the mining, manufacturing and service sectors. Using interview data collected from Canadian high-level management personnel working in these sectors during 2005 the study argues that it has been largely the host country factors that have been at work in causing difficulties for Canadian companies in China. These include issues such as Chinese government regulations and institutions, cultural differences between Canada and China, as well as market and business environment impediments in China. On the other hand, home country factors, particularly the small size of Canadian firms in China, have also played an important part in affecting the operations of Canadian firms there. The empirical analysis of the mining, manufacturing and service sectors revealed that Canadian firms in China are not a homogenous group and their experience and challenges can only be understood in the context of the particular sector that they are engaged in. In particular, Canadian firms in the mining sector have been more subject to pressures from the Chinese state, while firms in the manufacturing sector have been subject more to factors surrounding the Chinese market and business environment. Firms in the service sector have fallen in between, and have been subject to both factors such as state regulation and local market and business conditions. The survey analysis of some Canadian successful firms in China also suggests that the fate of Canadian firms does not hinge solely on cultural dynamics associated with either home or host country or regulatory issues, but also on the very real efforts that individual companies make to understand local conditions, and to become accustomed and to prosper in China. / Arts, Faculty of / Geography, Department of / Graduate

Magíster en Estrategia Internacional y Política Comercial / This report explores the question: Why do foreign oil companies continue operate in exploration and production activities in Bolivia’s hydrocarbon industry after its 2006 nationalization? The history of Bolivia’s hydrocarbon industry is filled with cycles of nationalization and privatization. Each cycle has produced dramatic changes in Bolivia’s petroleum fiscal regime. Bolivia’s 2006 nationalization of its hydrocarbon industry has given Bolivia an international reputation as a high risk country to investment in. However, foreign direct investment is still occurring since the 2006 nationalization. The most interesting aspect of this continued foreign direct investment is that, the majority of it is from existing foreign companies that were there before the 2006 nationalization. This report exposes the underlying reasons as to why foreign companies continue to operate in Bolivia’s hydrocarbon sector despite its most recent nationalization in 2006. A historical analysis will be conducted on Bolivia’s hydrocarbon industry; more specifically, the time period between 1990 until 2009 will be the main focus of this report. The legal changes in Bolivia’s hydrocarbon industry since the 1990s will be evaluated in order to understand Bolivia’s strategy of nationalization in 2006. Throughout the history of Bolivia’s petroleum fiscal regime, there has been a fluctuation of contractual agreements in use with foreign oil companies. After 2006, Bolivia’s contractual agreements finally began to benefit the state by allowing it to receive its fair share of wealth from its hydrocarbon resources. Additionally, Bolivia’s “nationalization” did not involve expropriation; instead it consisted of the enforcement of renegotiations of contractual agreements between the Bolivian State and foreign oil companies. The renegotiations are instrumental in explaining why foreign companies continue to operate in Bolivia’s hydrocarbon industry after its nationalization in 2006. This report will focus on examining Bolivia’s contractual agreements from 1990 until 2009 in order understand why foreign oil companies continue to operate in Bolivia’s hydrocarbon industry in spite of its 2006 nationalization. Bolivia’s main source of revenue comes from foreign companies’ exploitation and exploration of its hydrocarbon resources, yet Bolivia has always lost its fair share of wealth from its natural resources due to unfavorable contractual agreements with foreign oil companies. 3 Universidad de Chile Before the 2006 Nationalization, Bolivia had continuously given foreign investors the majority of revenue from its hydrocarbon resources in an effort to attract and keep foreign investors in its hydrocarbon industry. In the 1990s, Bolivia wanted to increase its levels of foreign direct investment in order to import new technologies as well as to improve the expertise in exploration, extraction, transport and production activities within its hydrocarbon industry. Bolivia’s main goal behind seeking FDI was to develop its hydrocarbon sector in order to increase its national wealth from its natural resources. In addition, Bolivia’s hydrocarbon sector was extremely undeveloped. The Bolivian State was ill equipped and had inefficient state assets to develop its hydrocarbon industry. Bolivia’s petroleum fiscal regime in the 1990s was designed to favor foreign investors in order to attract and maintain foreign investment within its hydrocarbon industry. However, this caused Bolivia to lose significant control over its hydrocarbon industry as well as the wealth from its hydrocarbon resources. As a result, it became necessary for Bolivia in 2006 to renegotiate their contracts with foreign energy companies in order for Bolivia to obtain its fair share of revenue from its hydrocarbon resources. Since 2005, the government has sought to increase its share of total hydrocarbon revenues. In May 2005, the former president, Carlos Mesa introduced a new Hydrocarbon Law No. 3058 which created a direct tax, the IDH (Direct Tax on Hydrocarbons), which required companies to pay 32% of production value to the state, in addition to an 18% royalty rate that was already required. However, this law was not yet implemented until Evo Morales became the president of Bolivia in 2006. Shortly after Evo Morales became president of Bolivia, he implemented the 2006 Nationalization Decree which mandated the Hydrocarbon Law No. 3058. This law required renegotiation of contractual agreements with all foreign oil companies operating in Bolivia. The Law No. 3058 made the Bolivian State owner of all hydrocarbon resources and private companies were permitted to only keep 18 percent of production value. This law also nationalized refineries and hydrocarbon distribution companies in order to ensure the presence of Bolivia’s national oil company YPFB (Yacimientos Petrolíferos Fiscales Bolivianos) in every stage of the value chain. These actions, together with the rising international hydrocarbon prices have increased the Bolivian state’s hydrocarbon revenues. 4 Universidad de Chile The information obtained from the research in this report, will explain why foreign companies continue to operate in exploration and production activities in Bolivia’s hydrocarbon industry since its 2006 nationalization. Bolivia’s strategy behind its nationalization and its current use of contractual agreements will provide the main arguments as to why foreign companies continue to operate in Bolivia in spite of its hydrocarbon nationalization in 2006.

Master of Agribusiness / Department of Agricultural Economics / Allen M. Featherstone / Understanding determinants of Foreign Direct Investment (FDI) and Agricultural Foreign Direct Investment (AGFDI) is vital to policy makers in developing countries. FDI is a source of capital for the host country that does not affect its debt balance. Even so, technological spillover, better infrastructure as well as an increase in value added and market access have been the source of motivation to increase efforts to attract FDI. As for AGFDI, ongoing uncertainty with the financial markets created a shift in private investment towards tangible assets, which favors AGFDI to developing countries. Nevertheless, investment in agriculture suffers from low commodity prices and increasing productivity loss that discourage FDI and AGFDI. Therefore, it is crucial for policy makers to understand the determinants of AGFDI to create an attractive environment for potential investors. We use country level panel data to estimate the impacts of country-level economic and social variables on FDI and AGFDI. The data consist of 22 developing countries. A subsample of 13 Latin American countries is also studied. Country and year fixed effects are used to isolate the impacts of the explanatory variables on FDI and AGFDI. The explanatory variables wer constructed to avoid contemporaneous endogeneity. FDI determinants are consistent with previous studies and confirm traditional variables such as economy size, infrastructure and trade openness encourage FDI. A new variable that measures energy imports as a share of total energy use was negative for both main samples of FDI. The results of the Latin American panel for AGFDI, were mostly consistent with FDI determinants. Infrastructure, energy imports and economy size, as well as forestland share and agricultural value-add were statistically significant for the amount of investment inflow and total flow respectively. Further analysis with larger samples is necessary to confirm findings. Also, social and environmental impacts of AGFDI should be included in future studies.

Foreign direct investment (FDI) has since Dunning in the academic literature, by international organisations and countries been viewed as an important precursor to determine the level of economic growth. FDI is suggested to have a positive effect on long-run economic growth in the host country. Previous studies show evidence that the positive effect of FDI on economic growth should not be taken for granted. The extent to which FDI promotes economic growth is largely based on complementary factors which include among others human capital, education, infrastructure, health, population and a technology gap. This essay investigates and estimates the effect of FDI and human capital on economic growth in 28 OECD countries over the period of 1996 to 2010. Three regression were conducted. Our results show over the period studied a positive effect of FDI on economic growth, the result are not statistically significant in all regressions. Population is significant in all regressions but has a mixed effect on economic growth. Human capital proxied as secondary education attainment shows a mixed effect on economic growth and is not significant in all regressions. For the remaining independent variables (see table 7), the results show that Life expectancy and Government expenditure have a significant effect on economic growth. However, Trade is not statistically significant in the regressions.

Thesis (Ph.D. (Tourism))--North-West University, Potchefstroom Campus, 2009.

Chinese economic growth has astounded the world of late, with China officially becoming the world’s second largest economy in August 2010. China has also been following a more outward-orientated economic stance over the past two decades and has actively been engaged in trade, aid and investment in the world economy. As China emerges as a new global economic powerhouse, analysts strive to understand the impact that the rise of China will have on the rest of the world. The possible economic impact of China on Africa is one of the most debated and often contentious aspects of studies regarding China. Sino-African relations, though certainly not a new phenomenon, have seen a significant impetus since 2000. A popular explanation for China’s recent engagement of Africa seems to be that China is hungry for resources needed to fuel its economic growth. This conception has led to much criticism of China’s increasing involvement in Africa, causing concern that China’s interest in Africa will entrench corruption and deepen the so-called resource curse experienced in many resource abundant African countries. China’s official policy on Africa, as embodied in its White Paper on Africa, which was released in 2006, and also in FOCAC (Forum on China-Africa Cooperation) refutes the notion of a neo-colonialist relationship with Africa. China’s official stance on Sino-African relations, as based on these documents, declares the need for a relationship based on mutual benefit and respect for sovereignty. Sino-African relations encompass many modes of economic interaction, including investment, trade and aid. This study focuses on Chinese Foreign Direct Investment (FDI) to Africa, and the possible impact thereof on Africa. It is an important issue since Africa is still the poorest continent in the world and needs to manage its resources carefully in order to enhance growth on the continent. FDI has also frequently been identified as a possible catalyst for growth in Africa. This study investigates the potential impact of Chinese FDI in Africa by means of a literature study which focuses on the theoretical relationship between FDI and economic growth in developing countries, and in Africa specifically. A survey of the literature on the relationship between FDI and economic growth published between 1998 and early 2010 shows that studies on this topic are varied and inconclusive. Though there is no proof of a positive, uni-directional relationship between FDI and economic growth, it is generally accepted that FDI can enhance economic growth in a host economy, given certain basic levels of educational attainment and institutional quality. Following the literature study, the state of global FDI is investigated, focusing on the volumes of nominal FDI flows that have been received by developed and developing countries between 1990 and 2008. As expected, developed countries dominated FDI inflows during this period. Africa, as a developing region, lagged behind most other developing regions in terms of FDI inflows during this period, though the continent has seen an exponential increase in nominal FDI receipts since 2000. Looking at developing regions, developing Asia received the largest volume of FDI inflows during the period 1990 to 2008, while Developing Oceania received the smallest inflows. A basic profile of Chinese investment in Africa is also provided, illustrating clearly that Chinese investment in Africa has been rising steadily since 2000 and 2006 in particular. The profile provides background information on the specific African countries, sub regions and economic growth performers that have received Chinese FDI during the period covered. Chinese investment in Africa is widespread, with 45 of the 53 African nations receiving FDI from China between 2003 and 2008. In contrast with more traditional investors, who focus mostly on North Africa, Chinese FDI to Africa during the period under revision was concentrated mostly in Southern Africa. Surprisingly, Chinese FDI was also aimed at the more diversified countries that had achieved sustainable economic growth rates in the preceding decade. The analysis of Chinese FDI also shows that Chinese firms follow an unconventional way of doing business, often undertaking the building of infrastructure in return for access to various natural resources, such as oil and other minerals. Using data obtained from the 2008 Statistical Bulletin of China’s Outward Foreign Direct Investment, issued by the Chinese Ministry of Commerce, a basic cross-section panel model is estimated. The model investigates the determinants of Chinese FDI to Africa and finds that China’s motivations for investing in Africa are more diverse than initially suspected. Though oil is an important factor in attracting Chinese FDI, agricultural land and market size are also found to be significant factors which determine Chinese FDI flows to Africa. This study concludes that Chinese FDI in Africa between 2003 and 2008 does not follow the conventional, preconceived notion of Sino-African relations. Though resources are important considerations for Chinese investors in Africa, resource security is not the only motive for Chinese FDI in Africa. Africa could potentially benefit from increased Chinese FDI, though the challenge lies in strategically managing these investments in order to ensure that Africa reaps the highest possible growth and development spillover benefits. / Thesis (M.Com. (Economics))--North-West University, Potchefstroom Campus, 2011.

Thesis (Ph.D. (Tourism))--North-West University, Potchefstroom Campus, 2009.