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S T E WA R D S H I P REPORT

HSBC PROFESSORSHIP IN ASIAN COMMERCE & HSBC PROFESSORSHIP IN ASIAN BUSINESS B E NEFACTOR IMPACT R EPORT

For the period ending October 31, 2010

For more information, please contact: Simone Le Blanc External Relations Sauder School of Business University of British Columbia 800 Robson Square Vancouver, BC V6Z 3B7 Telephone: 604 827 5447 Email: simone.leblanc@ubc.ca

Thank You

We are pleased to present this Benefactor Impact Report for activities ending October 31, 2010. This report provides an update on the HSBC Professorship in Asian Commerce and the Professorship in Asian Business which HSBC has so generously established.

Our organizations share a belief in the bene! ts of education and a highly skilled community. HSBC has provided extensive and enduring support to many Sauder initiatives, helping us to broaden learning opportunities for our students and strengthen our ties to the local and global communities. The HSBC Professorships allow the Sauder School to serve both academic and industry needs through high-quality research into the Asian business environment.

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As the largest bank headquartered in the West and the leading international financial institution in Canada, HSBC plays a dynamic and multi-faceted role as employer, financial services provider and community leader. With your support the Sauder School strives to develop the business leaders of tomorrow, help maintain a vibrant business community at home and abroad, and create global opportunities for our alumni.

On behalf of the Sauder School of Business, students, faculty and staff, thank you again for HSBC’s generous support of UBC, our vision, the future of our students and the leaders of tomorrow.

Thank you!

November 2010 CONTENTS 1 A Decades-Long Partnership 2 Investment in Innovative Programs 10 Investment in New Knowledge 11 Investment in Students 13 Participation and Leadership 14 Appendix 1: Ch’nook Aboriginal Business Education 20 Appendix 2: S ummary of Research Supported by BC Hydro, 1999–2009 23 Appendix 3: Research Highlights 29 Appendix 4: Endowment Fund Report

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HSBC Professorship in Asian Commerce

The HSBC Professorship in Asian Commerce is currently held by Dr. Keith Head.

Professor Head earned BA’s in Economics and Philosophy from Swathmore University in 1986, graduating and with high honours. Following Swathmore, Dr. Head enrolled at the Massachusetts Institute of Technology earning his PhD in Economics in 1991, with future Nobel Prize winner Paul Krugman serving as his thesis supervisor. Professor Head joined the UBC faculty in 1991 becoming a full professor in 2001. In addition to the HSBC professorship, Dr. Head has also served on numerous committees and is the previous Chair of the Strategy and Business Economics Division at the Sauder School.

Dr. Keith Head

Professor Head is a highly acclaimed teacher at both the graduate and undergraduate level. His is a winner of the Killam Teaching prize (2002); a five-time nominee for the Commerce Undergraduate Society Teaching Excellence Award (1993, 1994, 1995, 1997, 1999) and a three-time nominee for the Masters of Business Administration Teaching Award (1996, 1997, 2002).

Professor Head’s research interests centre on international trade; multinational enterprises (MNE’s); economic geography; and industrial organization. His research often appears in the leading economic journals and is regularly cited in other scholars’ articles, books and publications (including the scientific background paper for the 2008 Nobel Prize for Economics). He is invited to present his research or serve as a discussant at events and conferences all over the world. In 2008, Professor Head was awarded the UBC Killam Research Prize for research and contributions of international significance.

Professor Head is an active and prominent member of the economics community, serving as a member of the Statistics Canada International Trade Advisory Council since 2005. He served as co-editor of the Canadian Journal of Economics from 2005-2008; co-editor of the Journal of Economics & Management Strategy from 2002-2004 and a referee for dozens of journals including the American Economic Review, Economic Journal, Economic Policy, European Economic Review and the Journal of Political Economy, among others. Dr. Head recently became an occasional contributor to the Globe and Mail’s Economy Lab section.

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HSBC Professorship in Asian Business

The HSBC Professorship in Asian Business is currently held by Professor John Ries.

Professor Ries earned his BA in Economics from the University of California at Berkeley and his PhD from the University of Michigan in 1990.

He teaches courses to undergraduates and graduate students on international business, international trade policy, and on relationships between government and business.

Dr. John Ries

Professor Ries’s primary research interests focus on international trade and business and the Japanese economy. He is fluent in Japanese and spent one year at Japan’s Ministry of International Trade and Industry in 1989. His research is targeted toward academic, government, and business audiences and often appears in leading economic journals, the media and edited volumes of conferences. In addition, Professor Ries is often called upon to contribute articles and studies to Canadian government sponsored conferences.

He has been a co-editor at the Journal of Japanese and International Economies since 2004. In 2010, he received the Sauder School Research Excellence Award, Senior category, in recognition of his outstanding research accomplishments.

In addition to the HSBC Professorship in Asian Business, Professor Ries is the Chair of the Strategy and Business Economics Division at the Sauder School, which specializes in entrepreneurship, industrial organization, international business, urban land economics, and public policy.

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Collaborative Research Publications “Do trade missions increase trade?”

Keith Head and John Ries Canadian Journal of Economics Vol: 43(3), pg. 754-775, August 2010 Abstract: In an effort to stimulate trade, Canada has conducted regular trade missions starting in 1994, often led by the Prime Minister. According to the Canadian government, these missions generated tens of billions of dollars in new business deals. This paper uses bilateral trade data to assess this claim. We find that Canada exports and imports above-normal amounts to the countries to which it sent trade missions. However, the missions do not seem to have caused an increase in trade. In the preferred specification, incorporating country-pair fixed effects, trade missions have small, negative, and mainly insignificant effects.

“The erosion of colonial trade linkages independence,” Keith Head, John Ries and Thierry Mayer Journal of International Economics Vol: 81(1), pg. 1-14, May 2010 Abstract: The majority of independent nations today were part of empires in 1945. Using bilateral trade data from 1948 to 2006, we examine the effect of independence on post-colonial trade. On average, there is little short run effect of trade with the colonizer (metropole). However, after three decades trade declines more than 60%. We also find that trade between former colonies of the same empire erodes as much as trade with the metropole, whereas trade with third countries exhibits small and unsystematic changes after independence. Hostile separations lead to larger and more immediate reductions. Trade deterioration over extended time periods suggests the depreciation of some form of trading capital such as business networks or institutions.

“Exposure to foreign media and changes in cultural traits: Evidence from naming patterns in France” Keith Head, John Ries and Thierry Mayer Journal of International Economics Vol: 80(2), pg. 226-238, March 2010 Abstract: Free trade in audio-visual services has faced opposition on the grounds that foreign media undermine domestic culture, and ultimately, global diversity.

Using a long panel of French birth registries, we assess the media-culture link using name frequencies as a measure of tastes. Controlling for the number of people who currently have a name and unobserved name effects, our regressions show that media influences choices via selective imitation. Parents are much more likely to adopt media names that they associate with youth. Using estimated parameters, we simulate our model of name choice to reveal that, absent foreign media, fewer than 5% of French babies would have been named differently. Our simulations also suggest a positive effect of foreign media on the welfare of parents.

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Collaborative Research & Publications Media Coverage

July 28, 2010 CANA DIA N TR A DE MISS IONS INEF F ECTIVE, UB C STUDY SAYS

Canadian trade missions designed to bolster business relationships and increase bilateral trade don’t do their job, according to a new report by the University of British Columbia.

In 2010, Professors Ries and Head were featured in the following media outlets: The Globe and Mail, Maclean’s, The Vancouver Sun, CBC Radio, CTV News, The Bill Good Show, India Abroad, Metro, Canadian Business, and Business without Borders.

The study, the first of its kind in Canada, contradicts other countries’ analyses.

Two of those reports found that short international visits by French, American and German heads of state increased exports by 6 to 10 per cent, as did setting up the first consulate in a new country.

Canada’s highly publicized trips don’t appear to have the same effect. “If following the mission there’s no increase in trade, how can we say there are any benefits?” asked Keith Head, professor at UBC’s Sauder School of Business, who co-chaired the study with John Ries.

Dr. Head said the study authors didn’t have a vested interest in the outcome. “We went into it with open minds,” he said. He noted that he was quite curious to find out which side of the argument was right.

For instance, the study quotes former Ontario premier Mike Harris calling a 2001 trade mission to China “an unqualified success,” and then points out that in a 2007 paper, Carleton University trade expert Michael Hart wrote “trade missions … have virtually no enduring impact on trade.” Dr. Head looked into an answer on his own and in doing so realized neither side had hard data as backup.

His team’s results have come out just as Canada and the European Union are immersed in free-trade talks after meeting at summits at least annually for the past decade.

But these gatherings wouldn’t make the cut for UBC’s report, which targeted only two types of trips. The first were Team Canada missions led by a prime minister and that included provincial premiers; the others were Canadian trade missions headed by the international trade minister. Business groups tagged along on both types, and the trip lengths varied from three days to two weeks.

The 23 missions studied took place between 1994 and 2005, and Dr. Head’s team analyzed trade data from one, two and four years after each, as well as current numbers. Combined, the figures showed the missions did not significantly boost the exchange of goods and services.

But Dr. Head said he doesn’t want to ruffle any feathers. “We’re not trying to say that trade missions can never, ever work.”

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Conferences & Presentations

Professors Ries and Head

2 01 0 CONF ER EN C ES & PR ES EN TATIONS

were featured presenters

J OH N R IES

and invited discussants at academic conferences, panel discussions and events around the world.

Rocky Mountain Empirical Trade Conference Banff, Canada, May 14-16, 2010 (paper discussed) Santa Cruz Institute for International Economics 13th Annual Conference, U.C. Santa Cruz, October 22, 2010 (paper discussed) 57th Annual North American Meetings of the Regional Science Association International, November 10-13, 2010 (paper presented)

K E I TH HEA D

“Import Sources of Chinese Cities: Order versus Randomness” 5th Meeting of the Urban Economics Association at the 57th Annual North American Meetings of the Regional Science Association International (RSAI) Denver, Colorado, November 10-13, 2010 “Quality sorting and trade: Firm-level evidence for French wine” Baruch College, CUNY. September 27, 2010 “The erosion of colonial trade linkages after independence” Conference on Trade Costs & International Trade Integration: Past, Present and Future, Venice, Italy June 25 & 26,2010 “Import Sources of Chinese Cities: Order versus Randomness” University of Oxford, May 4, 2010 Quality sorting and trade: Firm-level evidence for French wine” University of Calgary, March 19, 2010 “Quality sorting and trade: Firm-level evidence for French wine” Chinese University of Hong Kong, March 11, 2010

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Endowment Financial Information HSBC Professorship in Asian Commerce

Financial Update (2009/10 Fiscal Year) Book Value Balance, Beginning of Period (April 1, 2009) $ Contributions (Fiscal 2009/10) Transfers into Account (Fiscal 2009/10)

250,000.85 — (118,579.23)

Balance, End of Period (March 31, 2010)

$ 131,421.62

Market value Current Market Value (March 31, 2010) Three Year Adjusted Average Market Value Deficit (Initial Stabilization Account) as of January 1, 2009

$ 121,855.23 $ 138,457.14 $ (122,579.24)

Total Spending Allocation Spending Allocation for 2010/2011 Fiscal Year $ Restoration of Endowment Value Net Spending Available for 2010/2011 Fiscal Year Balance carried Forward from March 31, 2010 Total Budget Available for 2010/2011

4,846.00 — 4,846.00 6,076.25

$ 10,922.25

G LOSSARY OF T E RMS: Endowments: Philanthropic gifts that are given to support specific activities such as student awards, chairs, projects, and programs. The funds are invested and the income from the funds is used to support these activities.

Contributions and Transfers: Donations and/or transfers made to the endowment principal.

Market Value: The value assigned to an endowment that would represent the current value if all the investments attributed to the endowment were sold at the current market price.

Book Value: All gifts and transfers into the account by March 31, 2010 (including capitalized unused earnings and inflation capitalization).

Deficit (Initial Stabilization Account): Shortfall between the Book Value and the Market Value at Jan. 1, 2009.

Spending Allocation: The annual disbursement of revenue from the endowment calculated at 3.5% of the 3-year average market value (as of Dec. 31, 2009) plus 3.5% of all new contributions received from January 1 to March 31, 2010.

Balance Carried Forward: Unspent prior fiscal year budget allocation. This can either be carried forward into the next fiscal year’s Spending Available or placed into the principal, in certain circumstances.

Restoration of Endowment Value: 10% of the January 1, 2009 deficit deducted each year from the Spending Allocation until 2019 or until the Market Value recovers to the level of the Book Value.

Net Spending Available: Spending Allocation less the Restoration of Endowment Value (if applicable).

Total Budget Available: Net spending available plus any unspent budget carried forward from prior year (if applicable).

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Endowment Financial Information HSBC Professorship in Asian Business

Financial Update (2009/10 Fiscal Year) Book Value Balance, Beginning of Period (April 1, 2009) $ Contributions (Fiscal 2009/10) Transfers into Account (Fiscal 2009/10)

250,000.26 — (119,696.14)

Balance, End of Period (March 31, 2010)

$ 130,304.12

Market value Current Market Value (as of March 31, 2010) Three Year Adjusted Average Market Value Deficit (Initial Stabilization Account) as of January 1, 2009

$ 120,628.86 $ 137,857.14 $ (123,696.14)

Total Spending Allocation Spending Allocation for 2010/2011 Fiscal Year $ Restoration of Endowment Value Net Spending Available for 2010/2011 Fiscal Year Balance carried Forward from March 31, 2010 Total Budget Available for 2010/2011

4,825.00 — 4,825.00 13,772.41

$ 18,597.41

G LOSSARY OF T E RMS: Endowments: Philanthropic gifts that are given to support specific activities such as student awards, chairs, projects, and programs. The funds are invested and the income from the funds is used to support these activities.

Contributions and Transfers: Donations and/or transfers made to the endowment principal.

Market Value: The value assigned to an endowment that would represent the current value if all the investments attributed to the endowment were sold at the current market price.

Book Value: All gifts and transfers into the account by March 31, 2010 (including capitalized unused earnings and inflation capitalization).

Deficit (Initial Stabilization Account): Shortfall between the Book Value and the Market Value at Jan. 1, 2009.

Spending Allocation: The annual disbursement of revenue from the endowment calculated at 3.5% of the 3-year average market value (as of Dec. 31, 2009) plus 3.5% of all new contributions received from January 1 to March 31, 2010.

Balance Carried Forward: Unspent prior fiscal year budget allocation. This can either be carried forward into the next fiscal year’s Spending Available or placed into the principal, in certain circumstances.

Restoration of Endowment Value: 10% of the January 1, 2009 deficit deducted each year from the Spending Allocation until 2019 or until the Market Value recovers to the level of the Book Value.

Net Spending Available: Spending Allocation less the Restoration of Endowment Value (if applicable).

Total Budget Available: Net spending available plus any unspent budget carried forward from prior year (if applicable).

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