An advance in information and communication technology (ICT) is one of the most important forces in reshaping the world economy. So far, research on the role of ICT development in the financial globalization process is very limited. This dissertation is composed of three essays, which aim to fill part of this gap. The first essay explores transmission mechanism between Internet development and foreign direct investment (FDI) in developing economies. The second further investigates why developing economies cannot fully benefit from Internet development and provides policy recommendations. The third studies the relationship among financial integration, ICT and macroeconomic volatility in ten Asian economies. / The first essay examines three potential channels: inventory costs, market entry costs and payment of bribes, through which the Internet attracts FDI. It develops a model to explain the role of the Internet in determining inward FDI, and then empirically tests the hypotheses. The empirical findings show that the Internet development in developing economies attracts multinationals, since it reduces their costs of holding inventories and market entry costs. The Internet is found to reduce corruption, but evidence for their combined effects on FDI is mixed. In addition, this study performs Granger causality test and finds a causal relationship from the Internet to inward FDI stocks, rather than vice versa. / The second essay examines how the Internet---a communication network---which is characterized by the presence of positive and negative externalities affects the locational choice of FDI. A two-stage model is developed: at the first stage, multinational corporations do not cooperate and determine the degree of investment in Internet technologies, whereas, at the second stage, these firms engage in a Cournot quantity competition for a homogenous product. This model predicts that positive Internet externalities stimulate FDI while negative Internet externalities discourage FDI. These hypotheses are tested by the panel data estimation and the system general method of moments (GMM) estimator. The empirical findings provide strong evidence that the presence of negative Internet spillovers in developing countries discourages inward FDI, and the presence of positive Internet externalities in developed economies attracts more FDI. / The third essay looks at ten Asian economies committed to ICT development and financial integration, and presents evidence on whether or not they have experienced greater output fluctuations from 1980 to 2003. A two-country dynamic general equilibrium model is used and ICT is assumed to increase the volume and speed of capital flows. This study's model predicts that economies with a high ICT development or/and a high degree of financial integration exhibit greater output fluctuations in the face of monetary policy shocks, but lower output fluctuations in the face of fiscal policy shocks. The empirical findings estimated by using the panel vector autoregression approach support these predictions.
| Identifer | oai:union.ndltd.org:LACETR/oai:collectionscanada.gc.ca:QMM.100639 |
| Date | January 2006 |
| Creators | Ko, Kwan Wai. |
| Publisher | McGill University |
| Source Sets | Library and Archives Canada ETDs Repository / Centre d'archives des thèses électroniques de Bibliothèque et Archives Canada |
| Language | English |
| Detected Language | English |
| Type | Electronic Thesis or Dissertation |
| Format | application/pdf |
| Coverage | Doctor of Philosophy (Department of Economics.) |
| Rights | © Kwan Wai Ko, 2006 |
| Relation | alephsysno: 002479263, proquestno: AAINR25187, Theses scanned by UMI/ProQuest. |
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