This thesis consists of four individual essays and an introductory chapter. While independent from each other, these essays share some common properties. They are all empirical and focus on the interaction between inflows of foreign direct investment (FDI) and host country characteristics. The primary focus of the thesis lies in how inflows of FDI affect developing and transition economies. Macro-level data are used in all essays. The first essay analyses the FDI inflows that the transition economies of Eastern Europe have attracted and tries to find determinants of these inflows. The following two essays compare the effect of FDI between developing and developed economies. The second essay studies the relationship between corruption in the host country and the volume of FDI inflows. The third essay explores the effect of FDI inflows on host country economic growth. The fourth and final essay analyses the relationship between FDI and trade, focusing on the link between FDI flows and host country exports in eight East Asian economies.

Syftet med denna uppsats är att undersöka om det föreligger ett positivt samband mellan frihandel och ekonomisk tillväxt, dels i afrikanska länder, dels i länder tagna från hela världen. Vad jag genom min uppsats främst vill söka svar på är om en ökad grad av frihandel i Afrika bidrar till en högre ekonomisk tillväxt. Genom att även inkludera andra länder i min undersökning, försöker jag dessutom ta reda på om sambandet mellan frihandel och tillväxt ser annorlunda ut ur ett globalt perspektiv. Som metod använder jag mig i uppsatsen av en regressionsanalys. Som mått på frihandel använder jag mig av ett index utvecklat av den amerikanska organisationen Fraser Institute, kallat Freedom to Trade Index. Mina regressionsresultat visar på att Freedom to Trade Index ej har något statistiskt signifikant samband med den ekonomiska tillväxttakten i de afrikanska länder jag undersöker. I min ”världsundersökning” visar sig däremot indexet ha ett positivt samband med den ekonomiska tillväxttakten. Ur ett globalt perspektiv verkar således frihandel vara en faktor som påverkar den ekonomiska tillväxten positivt, däremot finns det inga tecken på att frihandel har samma effekt i afrikanska länder. Det verkar således finnas regionala faktorer inom den afrikanska kontinenten som gör att frihandel här inte påverkar den ekonomiska tillväxten.

This thesis analyses the effect of FDI induced technology transfer and spillover on economic growth in the CEE countries and the Baltic States. We develop a framework were FDI and R&D are seen as sources of technological progress (A). Transition economies, due to the need to catch up quickly with more advanced economies, rely on FDI as a major channel through which they can tap the needed technology. Whether or not technology spills over to the entire economy depends on the ability of the countries to diffuse the advanced technology transferred by FDI. We test using panel data analysis, if FDI alone can spur growth or whether the FDI induced technology spillover effect is enhanced by the level of R&D. Empirical evidence is found that FDI and R&D as an interaction term have helped the CEE countries and the Baltic States to accelerate growth by modernizing the economy through an upgrading process.

The aim of this thesis is to analyse sustainable development as a political challenge at the local level of governance. It explores how local organisation for sustainable development (LA21, a short form of local Agenda 21) is influenced by economic conditions in contemporary society, as well as the specific conditions in the local context. The empirical focus is activity relating to LA21 in four Swedish municipalities (Kungsör, Sala, Trollhättan and Örebro). In analysing the challenge of sustainable development, the economic development model of contemporary society is used as a theoretical starting-point. It is argued that the promotion of economic growth is crucial in determining the parameters of environmental policy; indeed, environmental policy can be described as a result of a dialectic contradiction between economic and ecological concerns. As theoretical tools, I define three perspectives on how to deal with ecological problems. Economism represents the ideological foundation of the present growth economy, and sees environmental problems as something secondary to the goal of creating economic growth. Ecomodemism represents an effort to implement sustainable development through reforming the growth economy. Social ecology promotes the substitution of the growth economy with another economic model in realising sustainable development. The analysis shows that LA21 has in a number of ways raised the profile of environmental concerns in the four municipalities examined. Their LA21 action programmes express a radical (social ecological) political agenda for sustainable development. The municipal strategies have also gradually widened their scope to, for example, include more complex and controversial issues. However, most of the participating actors consider LA21 as a reform strategy for sustainable development, rather than an ideological challenge to the present economic growth model. The political leaderships tend to be influenced by ecomodernist ideas, and usually also consider LA21 as an economic development project. When in conflict with environmental concerns, economic growth policies tend to be prioritised. Conflicts over growth-related projects also tend to reduce the legitimacy of LA21 among citizens. In the four studied municipalities, LA21 gradually reaches a critical point at which further deepening (corresponding to the goals of action programmes) is unlikely unless local actors change their perceptions of ecological problem-solving. / <p>ISBN 91-7305-041-5 (ogiltigt nummer) finns angiven i tryckt bok.</p> / digitalisering@umu

This doctoral thesis contains three essays on the economics of climate change and the electricity sector. The first essay deals with the subject of greenhouse gas (GHG) emissions and economic growth. The second essay addresses the issues of climate change policies, especially the role of the emergent innovative technologies, and the restructuring of the electricity sector. The third essay presents a model of transmission investments in electric power networks. Chapter One studies the impacts of climate change on economic growth in the world economies. The paper contains explicit formalization of the depletion process of exhaustible fossil fuels and the phase of technology substitution. The impacts of climate change on capital flows and welfare across countries are also investigated. The restructuring of the electricity sector is studied in Chapter Two. It also analyzes how climate change policies can benefit from emergent innovative technologies and how emergent innovative technologies can lower GHG emissions. It is shown that the price of electricity is strictly rising before emergent innovative firms with zero GHG emissions enter the market, but strictly declining as the entry begins. In Chapter Three, a model of electricity transmission investments from the perspective of the regulatory approach is formulated. The Mid-West region of Western Australia, a sub-system of the South West Interconnected System is considered. In contrast with most models in the literature that deal only with network deepening, this model deals with both network deepening and network widening. Moreover, unlike the conventional investment models which are static and deal only with the long run, this model is dynamic and focuses on the timing of the infrastructure investments. The paper is a study of an optimal transmission investment program which is part of the optimal investment program for an integrated model in which investments in transmission and investments in generation are made at the same time.

This dissertation evaluates the empirical relation between the value-added tax (VAT) and the level of aggregate consumption. Furthermore, it develops a theoretical framework and an empirical analysis to study the impact of the VAT, as a form of taxing consumption, on capital accumulation, productivity growth, and overall economic growth. While recent theoretical work shows that the VAT may boost capital accumulation and growth by encouraging more savings, we find that the net impact of consumption taxes on growth and its sources is theoretically ambiguous, and depends on the interaction between utility parameters, the interest rate, and the tax structure. Moreover, we develop a theoretical model to study the tax design problem in order to rationalize the observed variation in effective VAT rates over time in our sample. This framework considers both equity and efficiency as important factors determining optimal tax structure, and we identify conditions under which taxes could be evolving or constant over time. Empirically, we use a panel of 15 European Union countries and employ the recently developed GMM dynamic panel techniques. After controlling for the potential biases associated with persistence, endogeneity, simultaneity, measurement error, omitted variables, and unobserved country-specific effects, we find that (i) the VAT exerts a negative impact on the level of aggregate consumption, (ii) the VAT affects physical capital accumulation positively, which feeds through to overall GDP growth, and (iii) productivity growth seems to be a less relevant channel for the VAT to influence economic growth.

Knowledge creation processes and the innovation systems through which it is transferred for the benefit of society are the economic driver of industrial economies in the globalized era, yet developing countries seeking to move through the transition from developing to developed status are struggling . A variety of theories and a range of speculations have been offered as to why some nations are more innovative than others, however little of this literature examines the theoretical and practical applicability of innovation models based on industrial societies for developing nations. This thesis examines a selection of theoretical innovation system models, analyzes their roots and assesses their applicability to transition economies where various pieces of the system present structural differences relative to developed nations. This thesis uses Mexico as a case study.<p> In the fifteen years since the 1994-95 collapse of Mexicos financial sector and the resulting economic crisis, the Mexican economy has made impressive progress towards macro-economic consolidation and stability. The OECD (2004) observes that the inflation rate has fallen from around 50% during the economic collapse of 1995 to about 4% in 2006. GDP growth has averaged 3.2% in the period from 1994 to 2008 (compared to the OECD average of 2.7%). As a partner in the North American Free Trade Agreement, trade liberalization has allowed Mexico to consolidate its export base and to specialize in medium- and high-technology manufacturing. However, the industrial sector in Mexico still shows a slow pace in developing, adopting and investing in technology. The Mexican industrial sector is lead by multinational firms that have located in Mexico due to the cheap costs of labour, while most of the research and development performed by these firms takes place outside of Mexico. Mexicos policy for S&T seems to show a disconnect between the discourse and practice.<p> Indicators show that Mexico considerably lags in S&T development. S&T development has not contributed to facilitating the country's positioning as one of the top ten most competitive nations in the world. Rather, technology transfer outcomes in the country, relative to other transitional economies, manifest an increasing deceleration in Mexico's S&T competitiveness. This thesis contrasts the innovation system in which technology transfer processes navigate in Mexico to the leading literature on theoretical models of innovation. This process facilitates identifying crucial barriers and challenges of the Mexican system of innovation that need to be addressed in order to achieve a level of S&T development that would contribute to facilitating Mexico's transition to a developed economy.

The natural resource curse paradox has given rise to a wide range of explanations, which look at the economic, social and political characteristics of resource-rich countries. This paper focuses on the political economy of natural resources and finds that controlling for sociopolitical factors eliminates the natural resource curse. The analysis then turns to these sociopolitical factors and examines the significant, complex and varied effects of democratization on economic growth in general, as well as in resource-rich countries in particular. I conclude that the type of institutions needed for economic development in resource-rich countries are not specific to either democratic or autocratic systems, but are equally likely to be adopted by either regime, so that no one ideology is more suitable than the other. A corollary to this, however, is the case of weak democracies or low democratization levels. Such states are unable to adopt the necessary strategies and institutions and, thus, pose the greatest threat to economic growth in resource-rich countries. On the other hand, highly autocratic systems in resource-rich countries, such as those in Bahrain and UAE, or perfectly democratic systems, such as those in Norway and Iceland, utilize resources more efficiently for economic development.

This doctoral thesis contains three essays on the economics of climate change and the electricity sector. The first essay deals with the subject of greenhouse gas (GHG) emissions and economic growth. The second essay addresses the issues of climate change policies, especially the role of the emergent innovative technologies, and the restructuring of the electricity sector. The third essay presents a model of transmission investments in electric power networks. Chapter One studies the impacts of climate change on economic growth in the world economies. The paper contains explicit formalization of the depletion process of exhaustible fossil fuels and the phase of technology substitution. The impacts of climate change on capital flows and welfare across countries are also investigated. The restructuring of the electricity sector is studied in Chapter Two. It also analyzes how climate change policies can benefit from emergent innovative technologies and how emergent innovative technologies can lower GHG emissions. It is shown that the price of electricity is strictly rising before emergent innovative firms with zero GHG emissions enter the market, but strictly declining as the entry begins. In Chapter Three, a model of electricity transmission investments from the perspective of the regulatory approach is formulated. The Mid-West region of Western Australia, a sub-system of the South West Interconnected System is considered. In contrast with most models in the literature that deal only with network deepening, this model deals with both network deepening and network widening. Moreover, unlike the conventional investment models which are static and deal only with the long run, this model is dynamic and focuses on the timing of the infrastructure investments. The paper is a study of an optimal transmission investment program which is part of the optimal investment program for an integrated model in which investments in transmission and investments in generation are made at the same time.

Chile and Colombia are two prosperous economies among the main FDI recipients in Latin America. Both countries underwent structural reforms that favored the entrance of transnational corporations and liberalized the economies. Considering that FDI flows have been largely resource-seeking and market-seeking it seems that the main driver of FDI in these two countries, besides their resource endowment, is economic growth. The document explores the hypothesis of growth-driven FDI carrying out cointegration and Granger causality tests at aggregate and sector levels. After the introduction, Chapters 2 and 3 present the evolution of world FDI flows and a literature review. Chapters 4 and 5 discuss the policy framework in Latin America and the evolution of FDI in Chile and Colombia. Finally, Chapter 6 presents the estimations and Chapter 7 the conclusions. The findings of the analysis suggest a long-term relationship between FDI and growth and validate the hypothesis of growth-driven FDI at the macroeconomic level. However, at the sector level the existence of a long run cause-effect relationship cannot be established in most of the cases. Regarding the direction of Granger causality at this level results are heterogeneous across sectors. The main conclusion of the thesis is that economic growth does Granger cause FDI at the aggregate level, but at the sector level the causal linkage seems not to be direct. (author's abstract)