Do innovations affect mergers and acquisitions? *Eero LehtoLabour Institute for Economic ResearchOlavi LehtorantaStatistics Finland : Do innovations affect mergers and acquisitions? * Eero Lehto Labour Institute for Economic Research Olavi Lehtoranta Statistics Finland IAOS Conference on the New Economy London, 27-29 August 2002 * The original publications can be downloaded from: www.labour.fi


Data on innovations and M&As: Data on innovations and Mandamp;As The innovation data used in this study are the Sfinno database compiled by the VTT Technology Studies. These data have been collected using three main sources: expert opinions, a review of trade and technical journals and a special study of large firms. There are about 1,600 innovations in this database. The data on mergers and acquisitions (Mandamp;As) are based on the Business Register of Statistics Finland complemented with data collected by the magazine ‘Talouselämä’ and covering the years 1994-1999.


Some reasons for M&As: Some reasons for Mandamp;As In the literature the following are seen as some of the reasons for Mandamp;As: 1. Strivings to internalise different benefits of synergies 2. Strivings to internalise the economies of scale and scope 3. Managers’ empire building It is possible that innovative activities - which create new knowledge assets and reform the nature of old assets - make the assets of two firms complementary and thus generate synergies between the firms. These benefits can be materialised if either an acquiring or acquired firm obtains access to the relevant knowledge.


Collaboration or M&A: Collaboration or Mandamp;A Mandamp;A can be used as a means to transfer knowledge in such a situation in which collaborative schemes do not work. The imperfect nature of information often makes it impossible to define ex-ante what products and what portion of arisen income streams are generated by the innovation. This uncertainty makes the outcome generated by the innovation non-contractible. Furthermore, if knowledge is embodied in human capital, the benefits of Mandamp;A as an instrument to transfer technology are increased at the expense of contractual means.


Models used in this study: Models used in this study Acquisition propensity estimates: Firm-level random effects negative binomial model. Dependent variable= the number of acquisitions per firm in each year, 1994-1999. The probability of ownership changes for the target firm: Firm-level random effects logit model for the panel data. Dependent variable = ownership changes (1), does not change (0), 1994-1999.


The signs of the estimated effects: The signs of the estimated effects


Conclusions: Conclusions In the non-processing industries acquiring firms are searching for new technology and target firms turn out to be innovators, who in many cases possess unfinished innovations and are searching for entry to the product market. Acquiring firms tend to introduce a new innovation two years after the acquisition. Recently also Beers andamp; Sadowski (2001) have found that acquisitions affect the innovation performance of the acquiring firm. In the processing industries innovative (efficient) firms buy technologically inefficient firms to transfer their own technology to them.


Challenges to statistics: Challenges to statistics Innovations and changes in business structures are essential in the new economy. Collecting data on (real) innovations (object approach) and on ownership changes to complement CIS data on innovations and, on the other hand, Business Register data on Mandamp;As is crucial for statistical relevance. Entries, exits, mergers, takeovers, split-offs, enterprise groups, joint ventures, strategic alliances, changes in ownership, etc. are examples of the information that is needed.


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IAOS CONFERENCE LONDON 2002: IAOS CONFERENCE LONDON 2002 Contributed paper Title: How Africa’s sub-Saharan developing countries can profit of the new economy context marked by the implosion of communication ? Author: ACCROMBESSY Félicien Donat (Statistics engineering) Address :BP 323, Cotonou, Bénin Tel : (229) 96 53 96 ; (229) 30 82 44/45 ; (229) 39 24 17 ; Fax : (229) 30 82 46 Institut National de la Statistique et de l’Analyse Economique (INSAE) E mail : afdet_accro@yahoo.fr


Introduction:: Introduction: With the globalisation of the economy, and with the revolution of new technologies of communication, the implosion of networking, we assist to a rapid increase of the economics productivity. The new economy seems to accelerate the gap between developing and developed countries. The multinational companies spread their hegemony beyond the countries geographic borders. The most important part of the world wealth is concentrated by a few groups of firms while the technological progress is still continuing at a great speed. In the same time, most of the developing countries, especially, Africa’s sub-Saharan countries, seem being to the gap of the world trade.


Problematic: Problematic Africa’s countries can, with efficient policies, pull out great benefits of the new technologies of communication, which subtend the new economy. The aim of this paper is to attempt to show the ways these countries should insert themselves favourably the new economy process and its gigantic supported technology. Recommendations provided to the actors of those developing countries.


1 The expansion of the new economy: 1 The expansion of the new economy 1.1 Technological basis of the new economy The new economy is the fruit of the technological innovations. eg. Arpanet project, the first version of internet in 1971 first microprocessor (1974), personal computer, computer and software (Micrososft, Intel, Cisco and Dell) Later, in the years 1990, the founding of the start-ups, the expansion of the venture capital will contribute to the development of the new economy phenomenon with the concept of 'globalisation'. Then two categories of components are at the basis of the expansion of the new technology of information and communication: the microelectronic components such as microprocessors, memories, chip or optic fibers, lasers… and the software.


Slide14: 1.1 The sectors of the new economy For the statisticians, the choice is made on the sectors of economic activities and products. International organisations such as the United Nations Statistics Department (UNSD) attempt to co-ordinate the definition of new sectors of ICT. On the international level, three channels are defined as the new economy’s activities: the computer science which integrates the machinery (material) and productions branches and its connected services activities, particularly maintenance services; the electronics in the production and manufacturing of components; and the telecommunications including service activities and also equipment’s manufacturing. In the USA, the ICT sectors are extended to those, which distribute multimedia programs and trading of ICT goods and services.


2 The overthrow of the traditional economic statement: 2 The overthrow of the traditional economic statement 2.1 New organisation of the production - A new kind of work organisation appears. E.g. the start-up, their sectors of activities are: computer data processing, computer manufacturing, networking and internet, multimedia, telecommunications, simply, ICT sectors. - Technological and financial revolutions of the years 1980-1990. - Valorisation of research activities on the market. One of the reasons of the success of the start-up provides of the part of the research and development activities. The context of globalisation seems to profit to the developed countries enterprises. Then great inequalities are observed with developing poor countries.


2.2 The new face of the world economy: domination of the developed world.: 2.2 The new face of the world economy: domination of the developed world. The developed countries dominate the international trade. - According to the World Report on human development 2000, at the end of the years 1990, the fifth part of the world population living in developed countries holds: 86% of the word GDP against scarcely 1% for majority of poor; 68% of the direct foreign investments against scarcely 1% for the poor; 74% of the world telephone lines, the most elementary communication tool nowadays, against 1.5% for the most poor. With only 19% of the world population, the OECD countries supply 71% of the world exchange of goods and services, receive 58% of the foreign direct investments and possess 91% of internet internet users. .


Slide17: The question is to know if developing countries could have some profit from the ICT without producing it? In other words, could them organise themselves in order to recover profit in user sectors? It seems in fact possible, but in favourable conditions. Moderation: to learn and to have good skills in ICT products needs to have great knowledge of its culture, then to increase capabilities in conceiving and in producing new technology


3 Some policies to make developing countries pulling out profit of the new economy: 3 Some policies to make developing countries pulling out profit of the new economy 3.1 Social and politic policies: Promote and liberalise the access to information and communication for more democracy and governance Some social and politic conditions authorities must facilitate the access of all the population to information and its technology. Democracy and Good governance the following aspects are important: Education. Health, agriculture and others ICT user sectors. Research groups. Freedom of the press.


3.2 Economic policies: 3.2 Economic policies Evidently, economics is the motor of development in any country. Good governance in economy is the first condition to fulfil. Specific measures should be provided in order to promote local and regional start-up. Promotion of innovating small business: Improve the private sector. For example, those sectors must be developed in Africa: Art and culture by using multimedia distribution tools (web sites creation, CD-ROM, etc); Tourism; We the part of tourism of countries such as Mauritius, Spain, Switzerland, etc. Africa’s countries have undeniable potentials in tourism and must profit of ITC to diffuse them;


Slide20: Craftsmen: craft industries, local handicrafts must be encouraged. All those products must be available on internet in order to join the great market of the world wide web. Improve trade. Promote E-commerce or E-business Some heads of States in Africa have an initiative named New Partnership for Africa’s Development (NEPAD). It is a great deal. But at the first level, the countries have to create adapted environment for the development: the social, politic and economic policies mentioned above.


Conclusion: Conclusion The growth of Information and Communication Technology (ICT): computer, electronics, telecommunications, audio-visual broadcasting in USA implies the improvement of the productivity. Dynamic growth ICT manufacturing sectors (hardware and services) risen in 1998 3.8% of total jobs and value added of more than 8% of GDP, while ICT’s share in business Research and Development reached 54%: that’s known as the new economy. This economic revolution born in the USA reached all the world and can be for developing countries especially, as the paper attempts to show it, for Africa’s Sub-Saharan countries an opportunity of development.


Slide22: For that, those countries have to put into place some radical policies in both socio-politic and economic sectors. First Democracy, free circulation of information and good governance promotion are important, primordial to create a competitive environment for the development of the ITC: some special policies are indispensable in education, media, production, etc. After that economic policies must accompany the socio-politic measures by developing small business in ITC sectors, promoting private sector, improving trade and e-commerce. Common measures should success only if each country is ready, has prepared itself.


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International comparisons, case of West African Economic and Monetary Union: International comparisons, case of West African Economic and Monetary Union Mister VIGAN Fortune Evariste


Content: Content Abstract Introduction 1. International comparisons concepts 1.1. International comparisons roles 1.2. International comparisons and regional integration in west africa 2. International comparisons tools used by waemu 2.1. Use’s difficulties 2.2. Solutions 3. Conclusion


THE IMPLEMENTATION OF DECENTRALIZATION AND THE NEW ECONOMY: A CHALLENGE FOR INDONESIAN DEVELOPMENT: THE IMPLEMENTATION OF DECENTRALIZATION AND THE NEW ECONOMY: A CHALLENGE FOR INDONESIAN DEVELOPMENT Ali Said BPS-Statistics Indonesia E-mail: ali@mailhost.bps.go.id


THE IMPLEMENTATION OF DECENTRALIZATION AND THE NEW ECONOMY: A CHALLENGE FOR INDONESIAN DEVELOPMENT: THE IMPLEMENTATION OF DECENTRALIZATION AND THE NEW ECONOMY: A CHALLENGE FOR INDONESIAN DEVELOPMENT Background Implementation of decentralization Implementation of AFTA and other free trade agreement Objectives of the study To set out the problems emerged in the implementation of decentralization To assess the possible impacts of the implementation of ASEAN Free Trade Area on Indonesian development To highlight the role of official statistics in the new economy and decentralization era


The Emerging Problems in the Implementation of Decentralization: The Emerging Problems in the Implementation of Decentralization Design of decentralization - tight time schedule - mismatch between revenues shared and expenditures assigned to the region - increasing barriers to domestic trade - appropriateness of regency/city as a unit of decentralization - problem of coordination Lack of socialization of Law on regional governance and Law on fiscal balance Other potential problems - An increase in regional disparities - A rising conflict between neighboring districts - A tendency to increase local taxes and charges, triggered by limited local revenue at the district level - A transfer of corruption to the local level


The Implementation of AFTA: Means and Implication: The Implementation of AFTA: Means and Implication The realization of AFTA: Two Implications - increase in connection and networks between societies, politics and economies - states and political elites prepare to implement the AFTA regulations The realization of AFTA: Means in Practice - there will be a high competition at all market level in ASEAN countries (prices and quality) - there will be a high competition among workers and among business communities in ASEAN countries


The Possible Impacts of Globalization on Indonesian Development: The Possible Impacts of Globalization on Indonesian Development The Impact of the Implementation of AFTA on Decentralization Program * Positive: Provide a big opportunity for the local regions to accelerate local development and the success of decentralization program: - foreign direct investment to the district - other possible direct business arrangements - direct collaboration between the district and foreign institutions for local capacity building


Slide31: The evidence of Singapore-Johor-Batam (or the SIJORI) triangle, which is a limited free trade area developed by Indonesia, Singapore and Malaysia clearly indicates that the creation of free trade area will have a significant impact on development of the region. BUAT PETA


Slide32: Negative Globalization may hamper the success of decentralization program. Why? - Problems faced in the decentralization program and the emerging problem of high inequality in socio-economic development between the regions - Indonesia is lack behind other 4 neighboring countries (Singapore, Malaysia, Thailand and the Philippines)


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The Role of Official Statistics in the Decentralization and the New Economy Era : The Role of Official Statistics in the Decentralization and the New Economy Era Collecting information and indicators on socio-economic conditions, natural resources and human resources to set up development programs and policies providing data, which are comparable at both the national and international level


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Slide39: Thank you for your attention


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