Growth and institutions for the knowledge economy and the regulation of foreign direct invesment

Abstract

This thesis examines two sets of institutions that play important roles in growth. These institutions are the labour market in knowledge economy and the regulation of inward Foreign Direct Investment (FDI). There is an overview chapter, fours articles and a book chapter, appearing as they are published. The overview chapter demonstrates the motivation for the works by highlighting the neglect of institutions in growth theories since the 1950s while noting the recognition of institutions and other factors in pragmatic, empirical approaches to growth such as that of the World Bank in its Commission on Growth and Development (2008). It is argued that institutionalist economics and theories associated with other disciplines, including political science can usefully be applied to the analysis of institutions in economics.
Papers one and two assess the impact of labour market flexibility on progress
towards knowledge economy status of Australia, Singapore, and Ireland. Using a
range of data including earnings relative to the skills entailed in occupations shows that the demand for and returns to skill have increased in Australia while returns to skill in Singapore remained largely unchanged despite significant changes in demand. The picture for Ireland appears like that of Singapore though data limitations means that in Ireland’s case a different range of data and evidence is provided. Historical and institutional factors play a significant role in the different experience of the three countries regarding movement towards a knowledge economy.
Predominantly deductive methods give way to induction, historical and institutionalist approaches in the other three papers. Qualitative techniques examine the development of institutions in the regulation of inward foreign direct investment in Australia and New Zealand. In paper three the macroeconomic, political, and institutional factors that underpin the origin of and the continuing regulation of inward Foreign Direct in Australia are analysed. These factors underpin the establishment of the formal institution of the Foreign Investment Review Board and the course of current policy. Paper four compares the regulation of inward FDI in Australia and New Zealand. It focuses on the way cultural norms shape this governance. Textual analysis of the treatment of investment in the context of Closer Economic Relations (CER) demonstrates that political, social, and institutional factors are central to modelling the policy challenges faced in regulating FDI. Paper five considers the policy debate regarding foreign acquisition of agricultural land where there has been
concerns regarding food security and sovereignty. It argues that much of the concern, though embedded in social norms, is misplaced and that more restrictions would not necessarily be in the national interest. It is suggested that policy be directed to coordinating the regulation of FDI with regional partners while encouraging changes in the agricultural sector so that it might participate in global supply chains more fully.
These papers contribute to our critical understanding of institutions as central in
responding to policy challenges associated with two important areas that affect
growth.

Date of Award	31 Jul 2023
Original language	English
Supervisor	Cameron Gordon (Supervisor), Craig APPLEGATE (Supervisor), Cameron Gordon (Supervisor) & Craig APPLEGATE (Supervisor)