Globalization

This paper proposes a simple model to study how domestic institutions affect patterns of international capital flows. Inefficient financial system, and poor corporate governance, may be bypassed by two-way capital flows in which domestic savings leave the country in the form of financial capital outflows but domestic investment takes place via inward FDI. While financial globalization always improves the welfare of a developed country with a good financial system, its effect is ambiguous for a developing country with an inefficient financial sector or poor corporate governance.

This article starts by discussing the concept of "inflation hedging" and provides estimates of "inflation betas" for standard bond and well-diversified equity indices for over 45 countries. We show that such standard securities are poor inflation hedges. Expanding the menu of assets to Treasury bills, foreign bonds, real estate and gold improves matters but inflation risk remains difficult to hedge. We then describe how state-of-the-art term structure research has tried to uncover estimates of the inflation risk premium, the compensation for bearing inflation risk.

This is a fictitious case in which Universal Studies, a major U.S. theme parks and resorts company, has to negotiate with China's central government to build its first theme park in the country. Students are divided into groups and each student is assigned a role as one of the negotiators or as an observer. The topics covered in the negotiation include the new theme park's location, ownership structure, size, nature of theme zones, local employment and hospitality training programmes.

As the world becomes interconnected, the interest in comparisons among countries has grown. A veritable cottage industry of comparison-spewing institutions has emerged, this author not excepted. Who of the 195?plus sovereign nations on this planet is the most democratic? The happiest? The most innovative? The most electronically connected? No problem, lists exist for everything.

Suresh Sundaresan offers several insights on the development of financial markets in Asia and the Pacific. First, financial market development in the region should take account of the large number of households who are effectively unbanked, given the potential for positive feedback effects between financial markets, economic growth and stability. Second, there is a need for fundamental banking reforms of capital structures and liquidity sources to mitigate bankruptcy risks, as well as the cost to taxpayers of insolvency and bailouts.

We document the market response to an unexpected announcement of proposed sales of government-owned shares in China. In contrast to the "privatization premium" found in earlier work, we find a negative effect of government ownership on returns at the announcement date and a symmetric positive effect in response to the announced cancellation of the government sell-off.

Trade reform conditions are common in IMF supported programs. Of the 99 countries that had IMF programs during 1993–2003, 77 had trade reform conditions in their programs. Since the WTO has not been found especially effective in promoting trade openness for most developing countries, it is of great interest to see if the IMF has been more effective as it combines carrots and sticks not available to the WTO. Yet, the effectiveness of these trade conditions has not been systematically studied. Using a unique dataset, this paper provides such an assessment.

Much discussion has focused on the economic and financial issues related to the continued growth of China. Of equal importance are the marketing and branding issues. How Chinese managers develop and implement their marketing and branding strategies has enormous implications for the future growth of Chinese organizations.