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PurposeThe purpose of this paper is to test the merits of the view that the English language has emerged as the dominant language in international business. If there is merit to this view, then the ability to speak English and its role as a lingua franca in the global economy would imply that countries which have English as an official language should have a benefit over non‐English‐speaking countriesvis‐à‐vistheir abilities to undertake international business.Design/methodology/approachWithin an augmented gravity model framework, the importance of the English language in explaining bilateral foreign direct investment (FDI) data within the OECD is tested. In addition to English, all other common official languages within the OECD are also tested. Furthermore, the linguistic distance to English is used to test whether closeness of languages to English enhance international business activity.FindingsThe results indicate that English‐speaking countries within the OECD do have a benefit that comes with the English language. Furthermore, countries whose official languages are linguistically close to English benefit from the special role played by the English language. These results therefore highlight the importance of the English language in deploying multinational strategies, even in countries whose official language is not English.Research limitations/implicationsThese results therefore indicate the importance of the English language in international business. As such, having a proficiency with English within any corporation should enhance that corporation's ability to engage in international business.Originality/valueSharing a common language with FDI partners enhances the ability to communicate, and hence enhances FDI between the countries. This paper extends this evidence to show that when the common language is English, the common language effect is strongest.

Abstract.  Although recent research has led to a deeper understanding of the factors determining yields on long‐term Canada bonds, there has been little corresponding work on provincial bonds. By using a carefully constructed new data set, we establish two important results. First, provincial fiscal positions (debt and deficits) are an important factor in determining yield spreads between provincial and Canada bonds. Second, we show that provincial bonds are a substitute for corporate debt, in that during recessionary 'flights to quality' their yields react like those on corporate bonds.

AbstractUsing weekly data on Canadian and U.S. T‐bill and T‐bond yields over the 1982 to 1996 period, we find evidence in support of the generalized interest parity model (i.e., co‐movement) for T‐bond term structures, but not for T‐bill term structures. This evidence is robust to the introduction of fractional cointegration. However, structural breaks induced by political uncertainty surrounding Quebec separation and Canada's move to zero inflation had larger impacts on the T‐bill term structure than on the T‐bond term structure. This paper highlights the importance of accounting for structural breaks, and how a failure to do so may affect statistical analyses undertaken by both financial economists and practitioners. As an example, we discuss the implications for portfolio management. In particular, incorrect conclusions that Canadian and U.S. T‐bill markets are not cointegrated can result in a less than optimal amount of diversification, thus affecting the performance of portfolio managers.RésuméEn utilisant des données hebdomadaires de rendements sur les effets et bons du Trésor canadiens et américains pendant la période de 1982 à 1996, nos résultats sou‐tiennent le modéle géneralisé de la parité des taux d'in‐térěts (co‐mouvement) dans le cas des structures des échéances des bons du Trésor et non dans celui des effets du Trésor. Cette évidence est robuste à l'introduction de la co‐intégration fractionnelle. Cependant, les ruptures structurelles introduces par l'incertitude politique que présentent la séparation du Québec et les politiques anti‐inflationaires canadiennes ont eu un impact plus important sur les structures des échéances des effets que sur ceux des bons du Trésor, ce qui parvient à expliquer les refus de la théorie. La présente étude souligne l'importance de l'incorporation des ruptures structurelles sans laquelle les analyses statistiques entreprises par les économistes de finance et par les practiciens seraient inversement affectées. Entre autre, nous présentons les implications qu'ont les ruptures structurelles sur la ges‐tion de portefeuilles. En particulier, la conclusion incor‐recte que les marchés des effets du Trésor canadiens et américains ne sont pas sont cointégrés (lorsqu'ils le sont) mènerait à un niveau de diversification sous‐optimal, et donc, affecterait négativement la performance des gestionnaires de portefeuille.

In this paper monthly data are used over the period 1960:7 to 1995:12 to examine the determinants of term premia implicit in the Canadian T‐bill term structure of interest rates. In sharp contrast to U.S. evidence, the conditional variances of Canadian macroeconomic variables are found to be insignificant predictors of term premia in the Canadian T‐bill term structure. The conditional variances of U.S. macroeconomic variables, however, are found to be important determinants of Canadian term premia. JEL Classification: E43, G1 L'hypothese des anticipations, les primes de temps et la structure temporelle des taux d'intérêt canadiens. Ce mémoire utilise des données mensuelles de juillet 1960 à décembre 1995 pour examiner les déterminants des primes de temps implicites dans la structure des taux d'intérêt pour les bons du trésor canadiens. Contrairement à ce que l'on trouve aux Etats‐Unis, il semble que les variances conditionnelles des variables macroéconomiques canadiennes ne sont pas des prédicteurs utiles de ces primes. Cependant, il appert que les variances conditonnelles des variables macroéconomiques des Etats‐Unis sont des déterminants importants de ces primes.

Safarian, A. E. ; Dobson, Wendy: Do institutions matter for growth? Dobson, Wendy: East Asia: a new regional player in the world economy? Brandt, Loren ; Zhu Xiadong: What ails China? A long-run perspective on growth and inflation (or deflation) in China. Hejazi, Walid ; Shum, Pauline: East Asia's ageing populations. Pension reform and its implications. Job, Brian L.: The challenges of attaining security in the Asia Pacific. Head, Keith ; Ries, John: Canadian business in East Asia. Better than expected