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Foreign Direct Investment in the Post-Mugabe Era
Abstract
This chapter examines whether the Zimbabwean economy is a compatible foreign direct investment (FDI) host market. Central to the discussion is defining what FDI is and the motives of multinational enterprises (MNEs), which are agents of FDI. This chapter aims to assess if Zimbabwe can advance their objectives. The discussion revolves around three major academic disciplines: political economy, international trade, and economics and business. Given the nature of Zimbabwe’s economy and politics, there is no doubt that the political competence of the new government (November 2017) will be measured on how it returns a failed economy to productivity. In this context, the new government has made an effort to reach out to the international community in search of FDI. Documentary evidence suggests that the flow of FDI and the selection of host markets are guided by the motives of MNEs, which are informed by transaction cost theory (the essence of the firm). The transaction cost creates path dependency, with host market selection revolving around the size of the economy, size of supporting industry, the consumer index, and infrastructure and capital market development.
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This study critically explores the link between internationalisation theories and outward foreign direct investment (FDI) – a linkage which is well documented in the literature. Numerous studies have established that the internationalisation process recognises both firm- and market-specific aspects, which greatly determine the direction of outward FDI in terms of volume and pattern. In this interaction, path dependency is determined by the intensity of overlapping aspects or linkages, from firm-level heterogeneity and host market aspects that direct investment patterns in terms of the latter, to the volumes of firm-level adjustments. Firm-level heterogeneity comprises those traits, which enable an individual firm to make an investment decision, select a market-entry strategy and create the competitive advantages that will sustain its investments. Macro-level or country-specific aspects encompass those traits or characteristics of host markets, which encourage FDI on the part of multinational enterprises (MNEs).
This paper explores the dynamics of inflation in the dollarised Zimbabwean economy using the autoregressive distributed lag (ARDL) model with monthly data from 2009:1 to 2012:12. The main determinants of inflation were found to be the US dollar/South African rand exchange rate, international oil prices, lagged Zimbabwean inflation rate and South African inflation rate. During the local currency era, inflation dynamics in Zimbabwe were explained by excess growth in money supply, changes in import and administered prices, unit labour costs and output (Chhibber, Cottani, Firuzabadi & Walton 1989). According to Makochekanwa (2007), hyperinflation during the same era was attributed to excess money supply growth, lagged inflation and political factors. Coorey, Clausen, Funke, Munoz & Ould-Abdallah (2007) affirmed these findings by identifying excess money supply growth as a source of high inflation in Zimbabwe during the local currency era. In essence, the findings of this study point to a shift in inflation dynamics in Zimbabwe. This shift in inflation dynamics means that policies, which were used to respond to both internal and external shocks that have an impact on price formation, might not be applicable in a dollarised economy.
Modern revenue managers understand, anticipate, and react to market demand to maximise their businesses’ revenues. They often do so by analysing, forecasting, and optimising their fixed, perishable inventory, and time-variable supply, through dynamic prices. Hence, the objective of pricing and revenue management is to stimulate demand from different customers to earn the maximum revenue from them. The essence of this discipline is to understand the customers' perceptions of value and to accurately align the right products to each customer segment. Therefore, this chapter suggests that revenue management systems combine data mining and operational research with strategy. Essentially, this involves maximising revenue from a combination of high-yield and price-sensitive customers; as these systems are intended to reduce seat spoilage and to increase load factors; thereby filling excess capacity. Moreover, these systems also manage overbookings, and are intended to minimise denied boarding.
div>The strategic importance of foreign direct investment in the contemporary economies has been tremendous.
While various countries (developed and developing economies) have benefitted from the direct and spillover
effects of FDI, which range from improved technology and knowledge diffusion through to individual and
corporate capability enhancement, FDI outflow remains largely channelled to the developed countries, and
the rapidly developing countries in Asia and South America. Evidence suggests that the developmentenhancing
effects of FDI are felt more highly in the developing economies, such as economies in Africa.
However, FDI inflow to the developing economies has been very low. Using data generated from the African
Development Indicators (ADI) between 1980 and 2008 in econometric estimations, this paper finds that
government policies (especially fiscal and monetary policies) play significant roles in facilitating FDI inflow to
the African countries studied. The study thereby suggests an improved regulatory framework to make Africa
more attractive to inflow of FDI.</div
From being the second most industrialized country in Sub-Saharan Africa at independence in 1980, Zimbabwe’s economy has declined rapidly to a point where the country ranks among the poorest economic performers in the region. The three pillars which had underpinned the country’s vibrant economy, namely, agriculture, mining and manufacturing, have suffered greatly from poor government policy choices, resulting in the near collapse of each of the sectors and massive unemployment. As a result, an estimated 90% of the Zimbabwean population was unemployed at 2015 and was forced to eke out a living in the informal sector, mostly through vending of second-hand clothes and other basic items. With regard to the manufacturing sector specifically, the sector had all but collapsed by 2015, as companies either folded or relocated to escape the country’s harsh economic climate. This article traces the decline of the Zimbabwean manufacturing sector from 1990 to 2015 and seeks to explain the factors contributing to this decline.
President Robert Gabriel Mugabe’s over three-decade tenure as president of Zimbabwe has been characterized by controversy, more recently over his government’s growing economic nationalism, or what some commentators have called its “nativism,” that resulted in contentious policies such as the fast-track land reform and the black empowerment or indigenization campaign. Not surprisingly, his policies have stimulated animated debate between his supporters who hail the measures as long overdue in order to correct the inequities of the past and to consolidate Zimbabwe’s political independence and some commentators, particularly in the West, who dismiss these policies as irrational and motivated merely by political expediency and the racist and nativist tendencies of one man, namely, Robert Mugabe.
http://link.springer.com/article/10.1007%2Fs10602-014-9184-9
The Weimar Republic is analysed within the concept of limited and open access orders. Before World War I, Imperial Germany had developed into a mature limited access order with rule of law and open economic access but lack of competition in politics. After World War I and inflation, Weimar Germany developed toward an open access order; open access was not, however, sustainable and collapsed in 1930–31. This case of a failed open access order suggests refining the framework of limited and open access orders in further work. It shows that the political process of “creative destruction” might result in dissolution of open access and that the political system needs the capacity of efficiently creating legitimacy in order to sustain openness. The failure of Weimar Germany also indicates that the international political system might work as a destabilizing factor of open access and that the nation-state perspective of the limited and open access order framework needs to be supplemented by an international perspective.
This paper estimates potential output losses from the global financial crisis by comparing recent OECD published projections with a counter-factual assuming a continuation of pre-crisis productivity trends and a trend employment rate which is sensitive to demographic trends. Among the 19 OECD countries which experienced a banking crisis over the period 2007-11, the median loss in potential output in 2014 is estimated to be 3¾ per cent, compared to 2¾ per cent among all OECD countries. The crisis hit does, however, vary widely across countries, being more than 10% for several smaller European, mainly euro area, countries. The largest adverse effects come from lower trend productivity, which is a combination of both lower total factor productivity and lower capital per worker. Despite large increases in structural unemployment in some countries, the contribution of lower potential employment to the crisis hit is limited because the adverse effect on labour force participation is generally much less than might have been expected on the basis of previous severe downturns. This may partly reflect pension reforms and a tightening up of early retirement pathways. Pre-crisis conditions relating to over-heating and financial excesses, including high inflation, high investment, large current account deficits, low real interest rates, high total economy indebtedness and more rapid growth in capital-per-worker are all correlated with larger post-crisis potential output losses. This suggests that underlying the potential output losses was a substantial misallocation of resources, especially of capital, in the pre-crisis boom period. On the other hand, more competition-friendly product market regulation is associated with smaller crisis-related losses of potential output, suggesting it facilitates a reallocation of resources across firms and sectors in the aftermath of an adverse shock and so helps to mitigate its consequences.
In this paper we suggest that 2011–2012 may mark a paradigm shift in dominant constructions of ‘foreign aid’ and a substantive shift of power within the architecture of global development governance. We evaluate critically the emergence and central principles of the ‘aid effectiveness paradigm’ over the last 10–15 years, and the various internal and external pressures that have mounted around it. We then discuss the Fourth High Level Forum on Aid Effectiveness, a global conference which was held in Busan, South Korea in 2011, which we suggest can be seen as a pivot point in the emergence of a new ‘development effectiveness’ paradigm. Among other things, this elevates the role of the private sector and re‐centres economic growth and enhanced productivity to the core of mainstream ‘development’ thinking. At the same time, the emerging aid architecture aims to enrol more fully the ‘(re‐)emerging’ donors and development partners, and is likely to involve more differentiated commitments to global aid targets and renegotiated ‘norms’. This paper provides a commentary on the debates, omissions and achievements of the Busan High Level Forum, with the wider aim of providing critical insights into the current state of flux around foreign aid norms, institutions and governance.
This article investigates the role of entrepreneurial social and business networks in the internationalization of hightechnology firms. The authors present case study evidence from born-global information and communication technology firms that shows that established and newly formed social networks can be instrumental in exploring internationalization opportunities. These social networks potentially lead to collaborative cooperation and form part of an entrepreneur's broader business network that facilitates exploitation of internationalization opportunities culminated by successful entry into foreign markets. The study incorporates contemporary literature and offers an internationalization opportunity exploration-exploitation model emanating from the entrepreneur's network configuration. In doing so, it takes a process approach and provides much needed qualitative evidence in network research.
International entrepreneurship (IE) is an emerging field with a rapidly growing body of knowledge. This paper examines gaps, issues and trends of the IE in the last two decades. First, it suggests an integrative framework based on international business, entrepreneurship, strategic management, social network and marketing theories. The suggested model highlights the significant role played by the entrepreneur/team, firm and network resources that act as antecedents to international opportunity development and value innovation. Second, it suggests four typologies of firms (born global, enduring global, early exporter and mature exporter) that can be studied under the IE theme. Finally, we discuss future research directions.
This paper decomposes aggregate TFP growth in Britain for 1997-2008 to show the contribution of different LEPs and the role played by manufacturing and services and UK- and foreign-owned plants within these LEPs. These contributions are further decomposed to show the role of productivity growth in continuing plants vis-à-vis reallocations in output shares. The results show that the largest LEPs, in population terms, with higher levels of job density, greater reliance on manufacturing and skilled worker occupations, higher proportions of workers with NVQ4+ qualifications, and lower turnover of businesses, achieved the highest TFP growth. This strong performance is mostly the result of reallocations of output shares towards high productivity continuing plants and the opening of high productivity plants.
In 1937, Ronald H. Coase published The Nature of the Firm, a classic paper that raised fundamental questions about the concept of the firm in economic theory. Coase proposed that the comparative costs of organizing transactions through markets, rather than within firms, are the primary determinants of the size and scope of firms. This volume derives from a conference held in 1987 to commemorate the fiftieth anniversary of the publication of Coase's classic article. The first chapter gives an overview of the volume. It is followed by a re-publication of the 1937 article, and by the three lectures Coase presented at the conference. These lectures provide a lively and informative history of the origins and development of his thought. Subsequent chapters explore a wide range of theoretical and empirical issues that have arisen in the transaction cost economic tradition. They illustrate the power of the transaction cost approach to enhance understanding not only of business firms, but of problems of economic organization generally. Contributors: Ronald H. Coase, Sherwin Rosen, Paul Joskow, Oliver Hart, Harold Demsetz, Scott Masten, Benjamin Klein, Oliver Williamson, and Sidney Winter.
Cambridge Core - Microeconomics - Social Norms and the Theory of the Firm - by Douglas E. Stevens
Nationalist movements in the South have been superseded by a plethora of different social movements. This book examines these new movements and considers emerging paradigms of organization and mobilization, which are related to the role movements play in economic and political development. The book analyzes a number of cases and their context and discusses the implications for social movement theory. The focus is on social movements among underprivileged and middle class groups, and the book is global in scope.
Foreign direct investment (FDI) is often considered positive for the host countries in emerging markets as it brings in foreign capital and job opportunities. The relationship between MNEs and local governments has however seen its ups and down. Over the years, it has changed from a period of conflict after the World War II, where MNEs were investing for purposes felt to be detrimental to government policies, to a more co-operative nature. The 1980s and major part of 1990s saw the co-operative relationship leading to the danger of race to the bottom through excessive locational competition. In this paper, we examine the most influential literature from 1970s onwards and the current state of this relationship. Our analysis reveals that the increased tensions caused by anxiety due to 9/11 and subsequent development in the political economy, company strategies and government policies. We examine the changing relationship between multinationals and national governments. Thanks to globalisation MNEs are increasingly becoming more powerful and often this process is accelerated due to lack of any collaboration between MNEs and the governments. Thus, governments, particularly in emerging markets, are becoming more and more dependent on multinationals from the developed countries. In this study, we intend to evaluate whether MNEs can play a positive role towards problems of emerging markets such as poverty reduction and economic development.
Surviving is a daily task for all of us. We try to survive in a world full of diseases, viruses, and natural threats. We also try to survive in professionally competitive employment. And, obviously, we try to survive emotionally, independently of being a single man or woman or a lovely grandfather or grandmother with a full hand of lovely, noisy grandchildren. Formula One drivers also survive, professionally and physically. They try to survive in cars reaching more than two hundred miles per hour, in teams with many competitors, and under the pressure of the many millions of dollars invested by rarely patient powerful people. This chapter will discuss how Formula One’s drivers have been trying to survive in such a hard world.
Among the prominent economic trends in recent decades is the exponential increase in flows of goods and capital driven by technological progress and falling of restrictions. A key driver of this phenomenon has been the cross-border production, foreign investment, and trade both final and intermediate goods by multinational corporations. Research has sought to understand how foreign direct investment (FDI) affects host economies. This paper reviews the main theories and empirical evidence of two streams of literature: the mechanisms by which multinational activity might create positive effects and externalities to countries and the role of complementary local conditions, also known as “absorptive capacities,” that allow a country to reap the benefits of FDI paying particular attention to the role of factor markets, reallocation effects, and the linkages generated between foreign and domestic firms. The survey focuses mainly on work related to developing countries.
This article discusses the implications of the advent of alliance capitalism for our theorizing about the determinants of MNE activity. In particular, it argues that, due to the increasing porosity of the boundaries of firms, countries and markets, the eclectic, or OLI, paradigm of international production needs to consider more explicitly the competitive advantages arising from the way firms organize their inter-firm transactions, the growing interdependencies of many intermediate product markets, and the widening of the portfolio of the assets of districts, regions and countries to embrace the external economies of interdependent activities.
There are new avenues for development assistance emerging within the twenty-first century. Such prospects have in some cases liberated or increased the ability of African developing economies from the crippling debt associated with more traditional forms of conditional donor aid. As such, the structural adjustment programmes furthered by the Washington Consensus are rapidly losing ground within sub-Saharan Africa. Nations such as Zimbabwe who have often been criticised by Bretton Woods institutions and have had sanctions placed against them by the said institutions. Through comparing these interactions in two distinct time periods (1991–1995 and 2009–2013), the paper shows that the emergent intensified engagement with BRICS has in fact produced more desirable effects, such as growing industry, an improved health care system and better fiscal management. Given the findings mentioned above, the emergence of BRICS intensified engagement poses a threat to neo-liberal imperialism.
This volume provides a state of the art review of current thinking on the full range of trade policy issues, addressing the economic and political dimensions of international trade policy. The volume contains a systematic examination of: - specific trade policy instruments (such as tariffs, non-tariff barriers and trade rules) - sectoral concerns (in agriculture, manufacturing and services) - trade linkages (to issues such as the environment and labour standards) - systemic considerations (what role for the WTO?). The organising theme of the volume is that open markets for trade and investment yield large potential gains in human welfare as long as trade policy is conducted as an integral part of broader domestic economic management and regulatory reform, and as long as the particular challenges facing developing countries are effectively addressed. This 'case' is presented on the basis of rigorous analysis of first principles and of empirical experience among key trading nations. An integrated set of original and comprehensive perspectives from a diverse group of experts, linked by a common organisational thread. The contributing authors create an ideal mix of internationally recognised experts together with younger specialists making their mark in trade policy analysis; academics as well as trade policy practitioners; and representatives of both developed and developing countries. © Kenneth Heydon and Stephen Woolcock 2012. All rights reserved.
Cross-border mergers and acquisitions are now the fundamental mechanisms of globalization and considered as prime vehicles for business engagement across the countries through the foreign direct investment route. Significant amounts of foreign funds are crossing the country borders for acquisitions with the objectives of earning super normal returns. But realizing super normal returns from foreign acquisitions are far more difficult than that of foreign greenfield projects or domestic M&As or greenfield projects. The super normal profit itself is "synergy" which is the main driving force for any M&A including the cross-border one. Even though foreign policies of individual countries affect crossborder M&A decisions, corporate and market-driven financial numbers significantly influence the synergy estimation. Synergy should bring in all round greater efficiency and value addition to all stakeholders. But if the cross-border deal is not financially crafted properly, it may fall flat causing more distress to the acquirer compared to domestic acquisition. The theory of synergy is well developed which mostly applies to the domestic M&As. But due to inherent differences between cross-border and domestic M&As, the same synergy theory may not apply equally to the cross-border ones. Therefore, a different connotation of synergy is propounded in this work for cross-border M&As, which can be a corollary to the conventional theory of synergy. This alternative theory of synergy aims at helping the companies in developing their own financial strategies before making their strategic decisions for cross-border M&A deals.
The dynamic capabilities framework has had a significant impact on strategic management theory and practice, but the sizable literature on the topic has not always been unified. This paper begins with a restatement of the framework encompassing clarifications and extensions that have occurred since it was introduced. The paper highlights key elements that have been omitted or poorly integrated into the dynamic capabilities literature: the role of individual action by entrepreneurial managers, the role of resources, strategy, and the distinction between ordinary and dynamic capabilities. Dynamic capabilities is advanced as a multidisciplinary framework to explain long-run enterprise performance. Ambidexterity and other related frameworks are tailored versions of dynamic capabilities. Linkages between (strategic) management theory and (Austrian) economic theory are explored. The concepts of x-inefficiency and d-ineffectiveness are compared.
Purpose
– The purpose of this paper is to review the key analytical principles of internalisation theory as a general theory of the multinational enterprise (MNE). It illustrates the vitality, relevance and flexibility of the approach in explaining the continued evolution of the MNE. As a grounded social science theory, it provides, in combination with history and economic geography, satisfying and novel explanations of the key phenomena of the modern globalising economy.
Design/methodology/approach
– This paper examines the origins and principles of internalisation theory as the foundation theory of the MNE. It considers internalisation theory in the context of current and mainstream theories and concepts in the field of international business.
Findings
– Internalisation theory is equally valid for the MNEs of yesteryear as it is for those today. The theory continues to have strong explanatory power for MNE activity. Current research areas, such as multiple embeddedness, fine-slicing of the value chain, etc., and other theories, such as dynamic capabilities and the resource-based view, either are subsets of internalisation and thus explained by the theory, or contain weakness and/or inconsistencies not found in internalisation theory.
Originality/value
– This paper coherently synthesises internalisation theory, its origins and evolution. It shows how commonly held and current concepts and theories are related to internalisation theory or have weaknesses, thus making internalisation theory a superior theory to explain the MNE, and identifies potential applications of the theory to novel research areas in the field of international business.
Using a network perspective of multinational firms, this article develops conceptions of global cluster networks and global city-region networks that are based on foreign direct investment (FDI) activities. The article first formulates a global cluster-network hypothesis suggesting that multinational cluster firms are more likely to set up new foreign affiliates in other, similarly specialized clusters to keep up with global industry dynamics. Conversely, it is suggested that non-cluster firms are more likely to avoid cluster destinations in their FDIs. Second, it is hypothesized that cluster networks generate connections between city-regions in different countries that are horizontal and vertical in character and thus shape global city-region networks. To test these hypotheses, the spatial patterns of 299 FDI cases from Canada to China between 2006 and 2010 are investigated, generally supporting the hypotheses developed. © The Author (2013). Published by Oxford University Press. All rights reserved.
Using a dynamic spatial framework, this paper investigates how foreign direct investment (FDI), foreign aid and remittances impact the economic growth of 53 African and 34 Latin American and Caribbean countries. Previous growth studies examine how one factor or two of these factors impacts economic growth, which results in biased estimation because of the omitted variable(s). Separate estimation shows foreign aid and FDI affects economic growth in Africa, but when we control for all three factors, only FDI affects African economic growth. For Latin America and the Caribbean, foreign aid and remittances affect growth when estimated separately, while remittances affect growth when they are estimated simultaneously. Finally, both regions' results confirm spatial interdependence is important in explaining economic growth, as growth in one country depends on the growth of its neighboring countries.
Oliver E. Williamson delivered his Prize Lecture on 8 December 2009 at Aula Magna, Stockholm University. He was introduced by Professor Bertil Holmlund, Chairman of the Economic Sciences Prize Committee. (This abstract was borrowed from another version of this item.)
This chapter shows how knowledge and learning are seen as key factors impacting economic organization. The dynamic capabilities framework is used to explain how the distinctive experience-based and knowledge-based assets of firms drive their vertical and lateral integration, their heterogeneity, and indeed, their very existence. In the dynamic capabilities framework, organizational learning is at the heart of a firm's capabilities. The chapter reviews the nature of firm resources and then outlines the dynamic capabilities framework. Dynamic capabilities can usefully be thought of in three clusters: sensing opportunities, seizing these opportunities to capture value, and transforming the organization as needed to adapt to the requirements of new business models and the competitive environment.
Purpose
The purpose of this paper is to discuss incentive mechanisms and procedures for cost internalization by both potential defendants and plaintiffs.
Design/methodology/approach
The approach taken is to rely on the concepts of liability, negligence, precaution and methodologies for estimation of compensatory damages in conjunction with the Coase theorem.
Findings
The paper finds that the decision to internalize and minimize cost depends upon marginal precautionary costs and marginal expected harms.
Research limitations/implications
Research needs to be conducted from a law and economic perspective on developing procedures for estimating precautionary costs and expected harms.
Practical implications
This paper calls upon business firms and their stakeholders (primarily employees and customers) to use and pro‐actively manage their precautionary responsibilities and further refine the existing formulas. More specifically, it aims to help law and economics students as well as practitioners in law and regulation to better understand the implications of marginal precautionary costs and marginal expected harms in the process of cost internalization.
Originality/value
In exploring the precautionary responsibilities of firms and their stakeholders, this paper contributes to a better understanding of liability and negligence issues and, as a result, to the important intersection of law and microeconomics.
A. Wald has presented a model of production and a model of exchange and proofs of the existence of an equilibrium for each of them. Here proofs of the existence of an equilibrium are given for an integrated model of production, exchange and consumption. In addition the assumptions made on the technologies of producers and the tastes of consumers are significantly weaker than Wald's. Finally a simplification of the structure of the proofs has been made possible through use of the concept of an abstract economy, a generalization of that of a game.
Firm internationalisation has for long been regarded as an incremental process, wherein firms gravitate towards ‘psychologically close’ markets and increase commitment to international markets in a gradual, stepwise manner through a series of evolutionary ‘stages.’ However, much of the recent literature provides clear evidence of rapid and dedicated internationalisation by ‘born global’ firms. Typically, these are smaller entrepreneurial firms that internationalise from inception or begin shortly thereafter. Their main source of competitive advantage is often related to a more sophisticated knowledge base that they use to exploit the dynamics of an increasingly global market environment. This contribution posits that there is growing evidence of another phenomenon, that of the emergence of ‘born-again’ global firms. These are firms that have been well established in their domestic markets, with apparently no great motivation to internationalise, but which have suddenly embraced rapid and dedicated internationalisation. The underlying motivations and triggers leading to such a strategy are explored and illustrated through a number of case studies. Research and public policy implications of the ‘born-again’ global phenomenon are discussed.
This article analyses the impact of economic diplomacy on the geography of international trade for the year 2006 and 63 importing
and exporting countries. We demonstrate that diplomatic representation via embassies and consulates is not a relevant trade-enhancing
factor for trade within the OECD, but that it is significant in bilateral trade relationships of developing countries. We
discuss implications for developing countries especially in view of South–South trade.
The paper considers a two-region model of trade based on the authors’earlier (HS) model, in which two nontraded goods, one urban and one rural, were introduced into the Harris-Todaro model. The HS framework captures the duality of the labour market, and it is argued that the HS model is suited to the purpose of regional analysis where the urban and rural agents may be in conflict as their welfare (income) may not respond in an identical manner to exogenous shocks and policy changes. The paper examines the implications of a change in capital and the terms of trade on outputs and regional incomes. It is established that in response to a terms-of-trade shock the prices of urban and rural nontraded goods could move in opposite directions, so structural change could also be in opposite directions. The same could also be true of welfare in the two regions.
This research investigates the effects of merger and acquisition negotiations on subsequent target company top management turnover. Three attributes of the companies and seven attributes of the merger and acquisition transactions are examined. The results indicate that the primary impact of negotiations is evident in the fourth year after a settlement date. When a buyer approaches an unrelated company that has been subject to previous takeover interest with a merger proposal, and an agreement is reached, the target'S management team is likely to experience abnormally high turnover 4 years later. Additional research ideas are suggested to help explain the sizeable turnover rates in the 3 years immediately following a merger or acquisition.
This paper presents an overview of various models of regional growth that have appeared in the literature in the last 40 years. It considers the past, and therefore supply-side models, such as the standard neoclassical, juxtaposed against essentially demand-side approaches such as the export-base and cumulative causation models (as integrated into the Kaldorian approach); before moving on to the present and more recent versions of the neoclassical model involving spatial weights and "convergence clubs", as well as New Economic Geography core-periphery models, and the "innovation systems" approach. A key feature of the more recent literature is an attempt to explicitly include spatial factors into the model, and thus there is a renewed emphasis on agglomeration economies and spillovers. Discussing "present" and "future" approaches to regional growth overlaps with the current emphasis in the literature on the importance of more intangible factors such as the role of "knowledge" and its influence on growth. Lastly, there is a discussion of the greater emphasis that needs to be placed at the "micro-level" when considering what drives growth, and thus factors such as inter alia firm heterogeneity, entrepreneurship, and absorptive capacity.