Lopez-de-Silanes, Florencio, Rafael LaPorta, Andrei Shleifer, and Simon Johnson. 2000. Tunnelling.Abstract
Tunnelling is defined as the transfer of assets and profits out of firms for the benefit of their controlling shareholders. We describe the various forms that tunnelling can take, and examine under what circumstances it is legal. We discuss two important legal principles — the duty of care and the duty of loyalty — which courts use to analyze cases involving tunnelling. Several important legal cases from France, Belgium, and Italy illustrate how and why the law accommodates tunnelling in civil law countries, and why certain kinds of tunnelling are less likely to pass legal scrutiny in common law countries.
American Economic Review, 90, 126-130Per capita income in many sub–Saharan African countries, such as Chad and Niger, is less than 1/30th of that of the United States. Most economists and social scientists suspect that this is in part due to institutional failures that stop these societies from adopting the best technologies. A particularly interesting historical example comes from the diffusion of railways in the 19th century. While railways are regarded as a key technology driving the Industrial Revolution, there were large lags in their diffusion. For example, in 1850 the United States had 14,518 km of track, Britain 9,797 km, and Germany 5,856 km; in the Russian and Hapsburg empires there were just 501 km and 1,357 km, respectively (all date from Brian R. Mitchell ). Why do societies, as in this example, fail to adopt the best available technologies?
In the Internet age, access has become a key issue for regulation and antitrust. Many Internet libertarians count on low costs of entry and a robust competitive environment, but many segments of the new Internet-based economy, driven by the perceived requirement to show worldwide presence to reach scale economies, might develop towards structures controlled by highly dominant enterprises.Against this background, this paper reviews, from a European Union perspective, three issues which in the view of the author are fundamental to driving theory and practice with regard to access to telecommunications and the Internet in the European Union: it reviews the current EU framework of access and interconnection to the basic layer of Internet access, the telecommunications network; it then takes a closer look at the recent changes of the system, even if the current reform process has not yet concluded; and it discusses access and control of the Internet and the concept of "top-level Internet connectivity" which has lately become central in this context.Behind the global effects of "top-level-connectivity" looms a fundamental challenge for global antitrust governance. Given the lack of efficient multilateral structures to deal with this challenge, the major regions are struggling to deal with this new phenomenon in existing frameworks– unilaterally within their local markets, as well as through bilateral cooperation in global markets.In conclusion, the paper assesses the critical role now played by bilateral international antitrust cooperation–global governance by default.
What is the economic significance of "grey market" payments to physicians in Hungary? Let us look at the question first from the angle of theconsumer of medical provisions, the "buyer" in this unusual market transaction.
The study finds that positive and statistically significant abnormal returns occur around the announcement date of foreign direct investments. The finding suggests that security prices in the Korean stock market do reflect firm-specific information, and that FDI by Korean MNCs are, on average, value increasing investment decisions. The finding is consistent with the studies of Doukas and Travlos (1988) and Fatemi (1984) which found similar results for U.S. MNCs. Interestingly, however, the speed of price adjustment is not instantaneous as has been observed in event studies of the U.S. market. The price adjustment to firm–specific information is slower, and the magnitude of abnormal returns is greater, for the firms that are subject to investor herding behavior.
Kim, Wi Saeng. "Does FDI Increase Firm Value in Emerging Markets?" Working Paper 00–03, Weatherhead Center for International Affairs, Harvard University, 2000.Download PDF
Although international institutions are a ubiquitous feature of international life, little is know about their trajectories of change. This paper attempts to address this lacuna by examining processes of change in international institutions, in particular the subset of international institutions known as inter–governmental organizations. The purpose of this paper is not to develop a general theory of change in international institutions but rather to develop limited generalizations about causal mechanisms and their consequences. It first examines the rationale and purposes of international organizations – before we can ask how and why particular types of organizations change, we need to understand why they exist in the first place. It then examines the trajectories of change in international organizations by posing three, interrelated, questions. One, what factors drive (or hinder) change in international institutions and organizations and what are the principal instruments and mechanisms that leverage change? Two, what factors explain variations in the pace and direction of change? And three, what are the consequences of change both for the institutions themselves and for their members? Finally the paper outlines a research agenda to develop a broad theoretical framework for understanding causal mechanisms of change in international organizations.
Kapur, Devesh. "Processes of Change in International Organizations." Working Paper 00–02, Weatherhead Center for International Affairs, Harvard University, 2000.Download PDF
This paper analyzes the problems of multilateral conflict regulation in violent ethnic conflicts using the war in Kosovo as a case study. The NATO intervention in the Kosovo conflict culminated in the air campaign "Operation Allied Force" against Yugoslavia (Serbia and Monte–negro) from March 24 through June 10, 1999.
Giersch, Carsten. "Multilateral Conflict Regulation (MCR): The Case of Kosovo." Working Paper 00–04, Weatherhead Center for International Affairs, Harvard University, 2000.Download PDF
I will examine relevant aspects of the activities of Poland both leading up to and since its accession into the NATO Alliance. As Poland is generally credited with being the catalyst that precipitated the dissolution of the Soviet Union, its activities are particularly germane. Not only was it the most aggressive in its pursuit of unfettered sovereignty, it represents other important factors that illustrate challenges and opportunities for any alliance.
The purpose of this paper is to look into and understand a variety of factors, particularly the relationship between the United States and China, and how it affects the rallying of forces and the shaping of a new balance of power in the Asia–Pacific. Based on this, an attempt is made here to arrive at a critical evaluation of ASEAN?s current posture, the problems that may arise, and the policy options taken by ASEAN that can contribute to the strengthening of its role and position.
China in 1978 embarked on a major economic transformation, seeking to alter the stance of the previous 30 years and engage economically with the rest of the world in several dimensions—trade, foreign direct investment by private firms, external borrowing by government from both private and public sources, education. Each of these represented a major change in policy. The transformation in the intervening 22 years has been dramatic and palpable, as can be seen in the sky–lines of the major cities.Published in Journal of East Asian Studies 1, no. 1 (February 2001).
The purpose of this paper is to develop a greater understanding for US perceptions of Common European Security and Defence policy (CESDP) by looking at major factors, interests, threats, and opportunities that seem to influence thevarying degrees of US support. The first chapter of this paper gives a short historical overview of European security and defence issues and examines the current process of developing CESDP. The second chapter focuses on US strategic interests in Europe and the compatibility of American and European interests. The third chapter presents both opportunities and threats that European security and defence reforms could pose to the transatlantic security partnership. The final chapter looks at possible outcomes of CESDP and discusses ways to ensure a lasting transatlantic partnership on security and defence.
Can unofficial, academically based, third–party approaches contribute to the prevention and resolution of international and intercommunal conflicts? The article focuses on one such approach, interactive problem solving, which the author has applied primarily in the Israeli–Palestinian conflict. After describing the central took of the approach, the problem–solving workshop, the article goes on to address the role of interactive problem solving and related approaches to the larger process of conflict resolution. In this context, it discusses the relationship of the microprocess of problem–solving workshops to macroprocess on international conflict resolution; the relationship between official and unofficial diplomacy; the relationship between practice and scholarship in conflict resolution; the role of the university in the process; and the possibilities for institutionalizing this model of conflict resolution.
This paper outlines and tests two agency models of dividends. According to the "outcome" model, dividends are the result of effective pressure by minority shareholders to force corporate insiders to disgorge cash. According to the "substitute" model, insiders interested in issuing equity in the future choose to pay dividends to establish a reputation for decent treatment of minority shareholders. The first model predicts that stronger minority shareholder rights should be associated with higher dividend payouts; the second model predicts the opposite. Tests on a cross–section of 4,000 companies from 33 countries with different levels of minority shareholder rights support the outcome agency model of dividends.
Developing countries with highly unequal income distributions, such as Brazil or South Africa, face an uphill battle in reducing inequality. Educated workers in these countries have a much lower birthrate than uneducated workers. Assuming children of educated workers are more likely to become educated, this tends to increase the proportion of unskilled workers, reducing their wages, and thus their opportunity cost of having children, creating a vicious cycle. A model incorporating this effect generates multiple steady–state levels of inequality, suggesting that in some circumstances, temporarily increasing access to educational opportunities could permanently reduce inequality. Empirical evidence suggests that the fertility differential between the educated and uneducated is greater in less equal countries, consistent with the model.
Monetary rules matter for the equilibrium rate of employment when the number of price–wage setters is small. If the central bank is non–accommodating, sufficiently large unions, bargaining independently, have an incentive to moderate sectoral money wages, and thereby expected real wages. The result is an increase in the real money supply, and hence higher demand and employment. This does not hold, however, with accommodating monetary policy since unions? wage decisions cannot then affect the real money supply. A similar argument holds for large monopolistically–competitive price setters. Rational expectations, complete information, central bank pre–commitment and absence of nominal rigidities are assumed.
The paper examines the role of civil society in democratization processes, drawing on East European, mostly Polish, experiences. It begins with a brief overview of the major types of definitions of civil society. Its bulk is devoted to a detailed analysis of the origins and functions of various sectors of civil society during the three phases of democratization: (a) state"socialism's disintegration; (b) transfer of power; and (c)consolidation of democracy. For each phase and each sector of civil society the impact of international linkages and foreign (external) resources is assessed. The essay closes with a set of generalizations on the relationships between various types of civil society on the one hand and the forms of the domestic"international interaction, on the other.
Ekiert, Grzegorz. "Civil Society From Abroad: the Role of Foreign Assistance in the Democratization of Poland." Working Paper 00–01, Weatherhead Center for International Affairs, Harvard University, February 2000.Download PDF
Why do sovereign governments make international legal commitments, and what effect does international law have on state behavior? Very little empirical research tries to answer these questions in a systematic way. This article examines patterns of commitment to and compliance with international monetary law. I consider the signal governments try to send by committing themselves through international legal commitments, and I argue that reputational concerns explain patterns of compliance. One of the most important findings is that governments commit to and comply with legal obligations if other countries in their region do so. Competitive market forces, rather than overt policy pressure from the International Monetary Fund, are the most likely "enforcement" mechanism. Legal commitment has an extremely positive effect on governments that have recently removed restrictive policies, which indicates a desire to reestablish a reputation for compliance.
The explosion of international financial activity over the last decade has been a central fact of international economic life. Balance of payments statistics indicate that cross–border transactions in bonds and equities for the G–7 states rose from less than 10 percent of gross domestic product in 1980 to over 140 percent in 1995. International bond markets have reached staggering proportions: by the end of 1995, some US$ 2.803 trillion of international debt securities were outstanding worldwide. Capital flows to developing countries and countries in transition grew from US$ 7 billion in 1990 to over US$ 211 billion in 1995. Foreign lending in the form of international syndicated credit facilities has surged since the 1980s, to over US$ 320 billion at the end of 1995. Foreign exchange transactions – which represent the world's largest market – reached an estimated average daily turnover of nearly US$ 1.2 trillion in 1995 compared to US$ 590 billion daily turnover in 1989... Money laundering cannot be handled effectively on a unilateral or bilateral basis. Significantly different rules across jurisdictions invite "forum shopping," the shifting of business to countries with weaker controls. When the United States passed the Bank Secrecy Act of 1970, tightening reporting requirements for cash transactions over US$ 10,000, illicit money moved to Europe... To yield significant benefits, near–global cooperation is a virtual necessity...