Turkish Economic Review
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FDI in R&D in India: An Introspection
No full text Abstract. Of late, India has emerged as an attractive destination of foreign direct investment (FDI). Along with it, multinationals have been investing significantly in research and development in India. In this context, this paper makes an attempt to analyze salient features of FDI in R&D and makes an assessment of the gains from R&D initiatives of MNCs in India. To be specific, the paper attempts to demystify the FDI flows in R&D with a view to understand whether these types of flows would help in raising the innovation potential of India. We find that there has been a rise FDI in R&D in India. However, the rise has not been commensurate only with rise in Core R&D activities. Rather, more than 50% of the inflows in R&D by MNCs have come for non-core R&D activities. This will not help in promoting innovation culture in India and make India a global manufacturing hub.Keywords. FDI, R&D, Core R&D, India, Manufacture, Non-core R&D.JEL. E23, F23, L16
The 5th National Logistics and Supply Chain Conference
No full textAbstract. The 5thNational Logistics and Supply Chain Conference (ULTZK) held in Mersin Divan Hotel on the 26-28 May 2016. A number of academics, logistics service receiver company representatives (manufacturers, wholesalers, retailers, etc.), logistics service provider company representatives (transport, logistics, storage, etc.), non-governmental organization representatives, and the relevant public institution and organization representatives participated to the conducted panels and sessions. In those sessions Logistics General Issues; Supply Chain Management; Logistics Costs; Urban Logistics; Mathematical Modelling; Maritime Logistics and Port Management; Green Logistics; Hazardous Substances Logistics; Logistics and Foreign Trade; Logistics Facility Site Selection; Logistics Current Issues; Air Logistics; Vehicle Routing; Logistics and Administrative Logistics Issues; and Logistic Village issues were covered. In broad terms, the conference was highly informative and provided significant out comes to its participants.Keywords. Logistics, Logistics economy, Logistics management, Supply chain.JEL. M10, M11, M19
The Political Economy of Free Trade, WTO and the Developing Countries
No full textAbstract. This paper examines the existing literature on trade liberalisation and itseffect on the economies of developing countries. It will also briefly examine the theory of comparative advantage which is seen as justification for global trade liberalisation under the auspices of the World Trade Organisation. This process is also associated with greater openness, economic interdependence and deepening economic integration with the world economy. The study is important because once again the international institutions strongly advocate trade and financial liberalisation in developing countries. The proponents of trade liberalisation argue that multilateral trade negotiations would achieve these goals, and poor countries particularly would benefit from it. However, such policies may increase vulnerability and make developing countries further hostages of international finance capital. Adoption of open market policies in agriculture would also mean the abandoning of self-reliance and food sovereignty, which may have wider consequences in terms of food shortages, food prices and rural employment.Keywords. Trade liberalisation, Industrialisation, WTO, International financial institutions, Developing countries.JEL. F02, F.10, N00
A Note on Construction of a Composite Index by Optimization of Shapley Value Shares of the Constituent Variables
No full textAbstract. This paper proposes a method to construct composite index, which is a linear combination of several variables, by deriving weights on the criterion of Shapley value (from cooperative game theory) that a constituent variable has in making the composite index. In practice it is found oftentimes that the most common method of principal component analysis has a tendency to ignore (or poorly weigh) those constituent variables that do not have strong correlation with the sister variables. This elitist nature of PCA forces a compromise upon the analyst’s desire and need to incorporate those weakly correlated (but theoretically and practically important) variables into the composite index. In that case, one must construct a composite index that is more inclusive in nature. The Shapley value based composite index meets that requirement.Keywords. Shapley value, Composite index, Principal Component Analysis, Inclusive indices, Global optimization.JEL. C43, C63, C71
Relationship between Tax Regulations and Direct Foreign Capital: Case of Balkan Countries
No full textAbstract. Balkan countries draw attention of many countries and investors after eastern bloc countries spread to free market economy. Moreover, these countries need to attract foreign capital as a development instrumental in order to adapt to the market system. They, for the purpose of attracting foreign capital inflow to their own countries, utilize tax advantages with many other applications. In this study, the relationship between foreign capital and tax in 11 Balkan Countries is examined. Annual data for the period of 2006-2014 was used in this study. System GMM (Dynamic Panel Data) was preferred as a model in this study. According to the findings through the analyses, a negative relationship is observed between indirect taxes and foreign direct capital investments for the sample countries while a positive relationship is found between total tax obligations, obtained from profit based, and foreign direct capital investments.Keywords. FDI, Tax rates, Panel data.JEL. F21, H25, C23
A Literature Review of the Efficient Market Hypothesis
No full textAbstract. The efficient market hypothesis and behavioural finance theory have been the cornerstone of modern asset pricing for the past 50 odd years. Although both theories are fundamental in explaining modern asset pricing, they are opposing views. The efficient market hypothesis dictates that the price of any asset depends on the information, while the behavioural finance theory dictates that the price depends on the reaction of the market participants to the information. Therein lays the key to the argument influencing modern asset pricing, does price immediately reflect the information or market participants’ perception of the information. In this paper, we will critical evaluate the theory influencing the efficient market hypothesis. We will review the neoclassical economics underpinning the efficient market hypothesis and the recent empirical evidence. In concluding, we find that although the efficient market hypothesis has difficulties in testing and the empirical evidence is mixed. Yet it is useful as a benchmark for regulators and central bankers alike. However, market participants are homo sapiens and not homo economics; hence there is a requirement to understand their reaction. So in essence leading to a requirement to include the behavioural finance theory, if we are to understand asset pricing.Keywords. Efficient market hypothesis, Behavioural finance theory, Neoclassical economicsJEL. B13, G02, G03, G12, G14
Eight Strategies for Development in Comparison
No full textAbstract. The article provides a broad-based overview on competing development strategies and the economic performance of developing countries, mainly since the year 2000. Four traditional mainstream development strategies are discussed (Washington Consensus, neo-liberalism, “good governance” and MDGs) and three long-debated key strategic issues are reconsidered (inward or outward development with export-led growth, industrialisation or growth with predominant primary goods exports, foreign-aid-based development). A heterodox approach to development with a focus on macroeconomic policies and structural change is added and discussed in more detail. Implicitly, this lays the groundwork for a macroeconomic theory of development. The rough empirical comparison finds that countries and areas with strong emphasis on macroeconomic policies, mainly in Asia, have performed unambiguously better than the mainstream approaches since 1980. From successful Asian countries, it can be learnt that a long-run continuous growth and development performance with more resilience against adverse shocks is key. Almost all larger middle-income countries have embarked on industrialisation; strategies based upon primary commodities or high current account deficits are unlikely to be successful in the long run. A stronger role of a package of six macroeconomic policies is advised, particularly for the larger economies. Size matters in this respect. Smaller countries depend stronger on market niches and idiosyncratic strategies. The global economic order, due to liberalisation of trade and finance, including the prevailing global currency system, sets harsh constraints for policy space towards implementing national strategies. Keywords. Development, Macroeconomic policies, Developmental state, Economic growth, Good governance, International trade, Washington Consensus, Millennium development goals.JEL. E60, O40, O11, O20, O23, O57
Impact of Brand Dynamics on Insurance Premiums in Turkey
No full textAbstract. This paper examines influences of brand dynamics on insurance premium productions in Turkey using a dynamic GMM panel estimation technique sampling 31 insurance firms over 2005-2015. The results reveals that brands trust appears as a chief driving force behind premium production where its unit increase augments premium outputs by 5.32 million Turkish Liras (TL). Moreover, the brand value of firms also appears a statistically significant determinant of premium sales, but its size impact remains limited comparing to brand trust, i.e. a million TL increase in brand value generates only 0.02 million TL increase in sales. On the other hand, the study also documents a strong momentum driven from past years premium production with trade-off magnitude of 1 to 0.85. This might imply a higher loyalty-stickiness of customers in Turkey, as well as a self-feeding "bandwagon effect".Keywords. Brand Value; Intangible Assets; Panel GMM; Insurance Premiums.JEL. G12, G22, M30, L60
The Determinants of the Financing Decision: A panel Data Study of Listed Firm in Malaysian Stock Exchange (2005-2016)
No full textAbstract. The purpose of this study is to investigate the impactofsome determinants on financingdecision,which effect the firm’s market value,since the primary objective of the financial management in the firms is to maximize its value in the financial market. Thus, before making any financial decision, we should know its influence on the value of the firm.To achieve the purpose mentioned above, the Malaysian companies which are listed in Malaysia stock exchange were selected, over the period 2005-2016. In this study, the data was collected using Thomson Reuter’s financial DataStream, to retrieve global financial data. This data collected was sorted, cleaned and organized using stata.14. Through appropriate statistical tools, which included descriptive statistics and the regression model.Keywords. Corporate finance, Financing decision,Financial structure, Leverage, Firm’s market value.JEL. G32, G33
How Islamic is the Diminishing Musharkah Model used for Home Financing?
No full textAbstract. For financing consumer durables like houses, cars or computers, conventional banks use what are called the equated monthly installment (EMI) models. EMI is the fixed payment a borrower makes to a lender to pay off both interest and principal each month so that over a specified number of years, the loan amount is cleared in full. Islamic banks have followed the practice using EMI on diminishing musharakah partnership basis. The model is popularly known as the MMP, an abbreviation of its Arabic nomenclature. The defining character of this model is increasing amortization of capital through a customer buy back provision in the agreement. We have shown more than once that models of the sort invariably involve compounding of return on capital and pass the ownership of property to the client at a slower rate than the rate of capital amortization until the contract is concluded. This paper provides additional evidence and documentation to reiterate that the MMP exhibits the same characteristics and is not, therefore, Shari’ah compliant. We propose an alternative model free of the indicated blemishes, having additional advantages as well.Keywords. Islamic banks, Home financing; Constructive possession, Diminishing balance, Compounding process.JEL. G20, K40, K20