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on International Trade |
| By: | Davis, Christina L.; Fuchs, Andreas; Johnson, Kristina |
| Abstract: | Can governments still use trade to reward and punish partner countries? While WTO rules and the pressures of globalization restrict states’ capacity to manipulate trade policies, politicization of trade is likely to occur where governments intervene in markets. We examine state ownership of firms as one tool of government control. Taking China and India as examples, we use new data on imports disaggregated by firm ownership type, as well as measures of political relations based on bilateral events and UN voting data to estimate the effect of political relations on import flows since the early 1990s. Our results support the hypothesis that imports controlled by state-owned enterprises (SOEs) are more responsive to political relations than imports controlled by private enterprises. This finding suggests that politicized trade will increase as countries with partially state-controlled economies gain strength in the global economy. |
| Keywords: | International trade, Diplomatic tensions, State-owned enterprises, Firm ownership, Event data, UN voting, China, India |
| JEL: | D74 F13 P16 P26 |
| Date: | 2016–10–16 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:74597&r=int |
| By: | Larue, Bruno; Pouliot, Sébastien |
| Abstract: | We develop a theoretical framework showing that import demand shocks and export supply shocks can increase, keep constant, or reduce the expected level of trade relative to the volume of trade in the absence of volatility. The effect of volatility can be magnified or mitigated by the type of trade policy instrument used by an importing country. In the absence of volatility, the gains from trade for an exporting country can be reproduced whether an importing country uses a specific tariff, an ad valorem tariff or a tariff‐rate quota (TRQ). This equivalence is generally not robust to the introduction of volatility and exporting countries’ preferences vis‐à‐vis the type of trade barriers they face is influenced by the convexity of the import demand and export supply functions and the nature of the shocks. We show that the expected level of trade need not increase for the exporting country’s expected trade gains to rise. This result also holds when perfect competition is relaxed in favor of Cournot competition. Empirical evidence from the estimation of a commodity gravity model about trade in corn confirms the pertinence of accounting for the volatility of daily futures prices. The positive effect exerted by daily variations in futures prices on annual bilateral trade flows is augmented by an interaction effect for the use of non‐ad valorem tariffs. |
| Keywords: | International Relations/Trade, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaa149:246419&r=int |
| By: | Cheptea, Angela |
| Abstract: | The paper investigates how the overseas activity of multinational retailers (MRs) affects the global export patters of host country firms. Recent empirical work testifies that the entry of foreign retailers leads to a productivity upgrade in the domestic upstream sectors. Combined with the main result of the new new international trade theory on firm heterogeneity, an increase in the export capacity of local firms should follow. The current paper establishes a connection between these empirically identified effects and the new theory of international trade with heterogeneous firms and intermediaries. Two mechanisms are analyzed. First, the higher productivity at industry and firm level leads to an increase in the overall export capacity of local firms. Second, the expansion of transnational retail networks reinforces trade between host countries. |
| Keywords: | multinational retailers, export patterns, productivity gains, transnational networks, intermediaries, International Relations/Trade, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaa149:244952&r=int |
| By: | Chiara Bentivogli (Bank of Italy); Francesco Bripi (Bank of Italy); Andrea Carboni (Bank of Italy); Luca Cherubini (Bank of Italy); Eleonora Laurenza (Bank of Italy); Andrea Locatelli (Bank of Italy); Paola Monti (Bank of Italy); Elisabetta Nencioni (Bank of Italy); Valeria Pellegrini (Bank of Italy); Diego Scalise (Bank of Italy) |
| Abstract: | This paper presents some analyses of FDI and international trade in services based on microdata used to produce balance of payments statistics. The microdata reveal and mitigate some informative limitations of official statistics, which no longer satisfy the growing need for internationalization data. The analysis shows that both FDI and trade in services are highly concentrated by size and geographic location; moreover, international trade in services also involves firms in the manufacturing industry, while FDI microdata indicate a significant presence of large companies and holdings. Indeed, the microdata show that internationalization often affects individual firms in different ways and is therefore suited to being studied from a number of perspectives; this opens up new possibilities for the empirical analysis of internationalization. |
| Keywords: | statistics, internationalization, international trade in services, foreign direct investment, microdata |
| JEL: | F21 F23 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_327_16&r=int |
| By: | HIGUCHI Yoshio; KIYOTA Kozo; MATSUURA Toshiyuki |
| Abstract: | This paper examines the theoretically ambiguous relationship between the volatility of employment growth and the foreign exposure of a firm. We use unique firm-level data for Japan for the period 1994-2012, which allow us to examine the differences between 1) multinational firms, trading firms, and nontrading firms; 2) manufacturing and wholesale and retail trade; and 3) intrafirm and interfirm trade. One of the major findings is that, in manufacturing, the effect of exports on the volatility of employment varies depending on the share of intrafirm exports to total sales. In contrast, in wholesale and retail trade, exports do not have significant effects on employment volatility. The results suggest that intrafirm trade transmits the effects of foreign demand and supply shocks differently between manufacturing and wholesale and retail trade. |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:16087&r=int |
| By: | Raimondi, Valentina; Falco, Chiara; Curzi, Daniele; Olper, Alessandro |
| Abstract: | We investigate the relationship between international trade and product quality using the EU food policy on Geographical Indications (GIs). Building on the quality sorting model proposed by Crozet et al. (2012), we derive three predictions about the relationship between the EU quality policy and different trade margins (extensive and intensive) as well as firms export prices. To test these predictions, we create a new dataset that collects country information on GIs and bilateral trade flows during the period 1996-2014, at HS 6-digit level. We empirically test the theoretical model through Poisson Pseudo Maximum Likelihood (PPML) estimation procedure on panel data. The main results show that GIs affect trade but differently, depending on whether GIs are produced in the exporter or importer country. In particular, the presence of GIs in the exporter country seems to exert a pro-competitive effect, while when registered only in the importer country, GIs act as an anti-competitive measure. |
| Keywords: | Geographical indicators, EU trade, Extensive-intensive margins, Export prices, Agricultural and Food Policy, International Relations/Trade, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaa149:244795&r=int |
| By: | Rajneesh Narula (Henley Business School, University of Reading); André Pineli (Henley Business School, University of Reading) |
| Abstract: | The attraction of multinational enterprises (MNEs) has become a key component of development policies. Generous incentive packages are offered by governments to attract foreign direct investment (FDI), although few countries perform proper cost/benefit analyses. MNEs can have a decisive influence on the development path of countries, although the effectiveness of an FDI-assisted development strategy depends on a variety of factors. Net benefits depend not only on quantity, but also on the quality of FDI. Quality has to do with the MNE’s investment motivations, the affiliates’ mandate and autonomy, which in turn determine the potential for linkages and spillovers. These effects also depend on the capacity of domestic firms to absorb, internalise and upgrade their knowledge assets. A sound FDI policy must not be exclusively concerned with attracting capital investment, but must prioritise enhancing the local embeddedness of the MNEs. Globalization and subsequent changes in economic organization require both policy makers and scholars to reconsider their understanding of FDI and development. “FDI” and “MNEs” are no longer synonyms, as MNEs are increasingly able to control value chains without ownership through equity. Poor data and weak methodologies mean making realistic estimations of development effects is also increasingly fraught with difficulty. The tools to measure linkages and spillovers are increasingly outdated, as we cannot estimate non-equity engagements or knowledge flows, and this means we are unable to objectively judge if foreign investments have a net positive or negative effect, and whether such effects persist or attenuate over time. |
| Keywords: | multinational enterprises; foreign direct investment; economic development; developing countries; externalities; spillovers; linkages |
| JEL: | D62 F23 O14 O19 O24 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:rdg:jhdxdp:jhd-dp2016-01&r=int |
| By: | Anne-Célia Disdier (PSE - Paris School of Economics, PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC)); Charlotte Emlinger (Centre d'Etudes Prospectives et d'Informations Internationales); Jean Fouré (Centre d'Etudes Prospectives et d'Informations Internationales) |
| Abstract: | Trade liberalization of the agri-food sector is a sensitive topic in both Transatlantic Trade and Investment Partnership (TTIP) and Trans-Pacific Partnership (TPP) discussions. This paper provides an overview of current trade ows and trade barriers. Then, using a general equilibrium model of international trade (the MIRAGE model), it assesses the potential impact of these two agreements on agri-food trade and value added. The results suggest that the US agri-food sectors would gain from both agreements while almost all their partners and third countries would benefit less, and might register losses in some sectors. However, the two agreements are not competing, since all the contracting parties' defensive and offensive interests are complementary. Finally, we show that the Atlantic trade may be impacted by the inclusion of harmonized standards within the Pacific agreement but not by its extension to additional members (e.g. China or India). |
| Keywords: | Transatlantic Trade and Investment Partnership,Trans-Pacific Partnership,Mega-trade deals,agri-food,CGE model |
| Date: | 2015–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01190840&r=int |
| By: | Maria del Pilar Esguerra (Banco de la República de Colombia); Sergio Parra Ulloa (Banco de la República de Colombia) |
| Abstract: | Las cadenas globales de valor (CGV) se definen como un rango amplio de actividades que llevan a cabo las firmas en sus procesos de producción y que van desde diseño, producción, mercadeo, distribución y servicio al cliente. Estas actividades pueden ser llevadas a cabo por la misma empresa en una determinada ubicación geográfica o por diferentes empresas en distintas ubicaciones. Este documento analiza el papel que está desempeñando Colombia dentro de las CGV y como ha sido su inserción en estas. Para ello se utilizaron estadísticas de la OECD para varios países, en donde se muestra la descomposición de los flujos de comercio y la participación del valor agregado interno y el que viene de otros países. Usando estos datos, se encuentra que Colombia no ha aprovechado suficientemente las CGV que hoy predominan en el comercio mundial. La oferta exportadora colombiana, excesivamente concentrada en productos primarios y en ventas de productos terminados a países vecinos, no favorece una mejor inserción del país en el contexto global a través de este tipo de cadenas. Otro factor fundamental que impide la inserción del país en estas cadenas es la persistencia de múltiples barreras tanto arancelarias como no arancelarias que protegen los distintos eslabones de la cadena productiva de los bienes finales que se fabrican en el país. **** The global value chains (GVC) are defined as a broad range of activities performed by firms in their production processes, ranging from design, production, marketing, distribution and customer service. These activities can be performed by the same company in a particular geographic zone or by different companies in different locations. The objective of this paper is to analyze the role that Colombia is playing within GVC and how has been its integration into these global chains. To do that, we use OECD’s statistics for several countries, where are shown the breakdown of trade flows and the share of domestic and foreign value added. Results from this data indicate that Colombia has not exploited properly its comparative advantages to join the GVCs. The Colombian export supply is excessively concentrated in primary products and sales of finished products to neighboring countries; fact that does not favor better integration of the country in the global context through such chains. Another key factor that prevents Colombia’s integration is the persistence of multiple tariff and non-tariff barriers protecting the links in the production chain of different final goods manufactured domestically. Classification JEL: F10, F13, F14, F21 |
| Keywords: | Colombia, Comercio exterior, Cadenas Globales de Valor, Política comercial |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:bdr:borrec:966&r=int |
| By: | Rita Cappariello (Bank of Italy); Alberto Felettigh; João Amador (Banco do Portugal); Robert Stehre; Giacomo Oddo (Bank of Italy); Stefano Federico (Bank of Italy); Alessandro Borin (Bank of Italy); Michele Mancini (Bank of Italy); Sara Formai (Bank of Italy); Filippo Vergara Caffarelli (Bank of Italy); Luca Cherubini (Bank of Italy); Bart Los; Antonio Accetturo (Bank of Italy); Anna Giunta; Andrea Linarello (Bank of Italy); Andrea Petrella (Bank of Italy) |
| Abstract: | The workshop entitled 'Global Value Chains: new evidence and implications' was held in Rome on the 22nd of June 2015. The workshop presented the results of a research project carried out by a group of economists from the Bank's Directorate General for Economics, Statistics and Research. The first session focuses on the structure of global value chains and how they function in the euro area economies. The second and third sessions examine the implications of global value chains on competitiveness and economic performance, respectively. The last session concentrates on specific countries, regions and firms. |
| Keywords: | China, competitiveness, demand for skills, domestic value added activation, Euro Area, final demand, firm organization, foreign direct investment, Germany, global value chains, industrial firms, input-output tables, International trade, intra-regional differentiation, Italy, market shares, multinational companies, ownership-based competitiveness, trade elasticity, trade in value added, world trade |
| JEL: | C67 D23 E16 E21 E22 E27 F1 F10 F12 F14 F15 F21 F23 F23 F66 L14 L22 L60 R11 R15 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:workpa:sec_21&r=int |
| By: | Lee, Hyun-Hoon (Kangwon National University.); Park, Donghyun (Asian Development Bank); Shin, Kwanho (Korea University.) |
| Abstract: | The Chinese economy is slowing down and, at the same time, it is in the midst of a structural transformation from an export- and investment-led economy to a domestic demand- and consumption-led growth paradigm. While there are widespread concerns in the People’s Republic of China’s (PRC) trading partners about the effect of the PRC’s growth slowdown on their exports, the PRC’s structural change is also likely to have a significant impact—e.g. the PRC will import fewer machines and more cosmetics. The central objective of our paper is to empirically examine the effect of the PRC’s structural transformation on the exports of East and Southeast Asian economies, which have close trade linkages with the PRC. We find that economies which failed to increase the share of consumption goods in their exports to the PRC suffered larger declines in their exports to the PRC. In addition, economies that suffered losses in their shares of the PRC’s parts and components imports suffered losses in their shares of the PRC’s total imports. |
| Keywords: | People’s Republic of China; East Asia; export; global value chain; structural change |
| JEL: | F14 F41 |
| Date: | 2016–07–21 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbewp:0492&r=int |
| By: | Fedoseeva, Svetlana |
| Abstract: | This paper is a back-of-the-envelope attempt to assess the losses that German agri-food exporters encountered due to the Russian import ban that was introduced in August 2014 and recently has been extended for at least one more year. Looking at exports in a time-series perspective it is shown that exporters’ losses due to the boycott itself are not that severe if two earlier episodes of rather drastic export reductions are taken into account: first, due to Russian import restrictions of meat and milk products in 2013 and second, due to an increased uncertainty in European-Russian trade relations as the Ukrainian conflict escalated and sides exchanged the very first sanctions. The results suggest that although the import ban had a negative impact on German agri-food exports to Russia, its extent was not as large as one may guesstimate without considering a broader picture of trade barriers imposed by Russia on German exporters in the recent years. |
| Keywords: | Sanctions, import ban, Russia, Germany, agri-food exports, International Relations/Trade, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ags:gewi16:244867&r=int |
| By: | Jonathan I. Dingel |
| Abstract: | A growing literature suggests that high-income countries export high-quality goods. Two hypotheses may explain such specialization, with different implications for welfare, inequality, and trade policy. Fajgelbaum, Grossman, and Helpman (2011) formalize the Linder hypothesis that home demand determines the pattern of specialization and therefore predict that high-income locations export high-quality products. The factor-proportions model also predicts that skill-abundant, high-income locations export skill-intensive, high-quality products. Prior empirical evidence does not separate these explanations. I develop a model that nests both hypotheses and employ microdata on US manufacturing plants' shipments and factor inputs to quantify the two mechanisms' roles in quality specialization across US cities. Home-market demand explains as much of the relationship between income and quality as differences in factor usage. |
| JEL: | F12 F14 R12 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22757&r=int |
| By: | Chia-Lin Chang (Department of Applied Economics Department of Finance National Chung Hsing University Taichung, Taiwan.); Michael McAleer (Department of Quantitative Finance National Tsing Hua University, Taiwan and Econometric Institute, Erasmus School of Economics Erasmus University Rotterdam and Tinbergen Institute, The Netherlands and Department of Quantitative Economics Complutense University of Madrid, Spain.); Dang-Khoa Nguyen (International Master Program of Agriculture National Chung Hsing University Taichung, Taiwan.) |
| Abstract: | The paper explores the trade competitiveness of seven major shrimp exporting countries, namely Vietnam, China, Thailand, Ecuador, India, Indonesia and Mexico, to the USA. Specifically, we investigate whether the United States (US) antidumping petitions impact upon the bilateral revealed comparative advantage (RCA) indexes for each of the seven shrimp exporting countries with the USA. Monthly data from January 2003 to December 2014 and the panel data model are used to examine the determinants of the RCA for the shrimp exporting countries. The empirical results show the shrimp exporting countries have superior competitiveness against the shrimp market in the USA. Moreover, the RCA indexes are significantly negatively influenced by shrimp prices, and are positively affected by US income per capita. However, the EMS (Early Mortality Syndrome) shrimp disease, domestic US shrimp quantity, exchange rate, and US antidumping laws are found to have no significant impacts on the RCA indexes. In terms of policy implications, the USA should try to reduce production costs of shrimp in the US market instead of imposing antidumping petitions, and the shrimp exporting countries should maintain their comparative advantage and diversify into new markets. |
| Keywords: | Shrimp, Antidumping, Revealed comparative advantage, Panel data model. |
| JEL: | C23 F13 P45 Q17 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:ucm:doicae:1617&r=int |
| By: | Gary Clyde Hufbauer (Peterson Institute for International Economics); Zhiyao Lu (Peterson Institute for International Economics) |
| Abstract: | Global trade growth slowed abruptly after 2010, following decades of expansion. According to the World Trade Organization (WTO), 2015 marked the fourth consecutive year in which annual world merchandise trade growth stayed below 3 percent. The WTO forecasts growth in global trade volume to remain sluggish in 2016, at 2.8 percent. A variety of reasons have been cited for the decelerating growth of trade: sluggish world economy, shorter supply chains, absence of new liberalization on a global scale, and rise of microprotectionism. |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:iie:pbrief:pb16-15&r=int |
| By: | Garfinkel, Michelle (University of California, Irvine); Syropoulos, Costas (Drexel University) |
| Abstract: | We analyze how trade openness matters for interstate conflict over productive resources. Our analysis features a terms-of-trade channel that makes security policies trade-regime dependent. Specifically, trade between adversarial countries reduces their incentives to arm given the opponent's arming. If they have a sufficiently similar mix of initial resource endowments, a move to trade brings with it a reduction in resources diverted to conflict and thus wasted, as well as the familiar gains from trade. Otherwise, a move to trade can induce greater arming by one of them and thus need not be welfare improving for both. Moreover, when the two adversarial countries do not trade with each other but instead trade with a third (friendly) country, a move from autarky to trade intensifies conflict between the two adversaries. Building on the welfare implications, we also analyze the endogenous choice of trade regimes. |
| Keywords: | resource insecurity; interstate disputes; conflict; trade openness; comparative advantage |
| JEL: | D30 D74 F10 F51 F52 |
| Date: | 2016–09–16 |
| URL: | http://d.repec.org/n?u=RePEc:ris:drxlwp:2016_013&r=int |
| By: | Kang, Jong Woo (Asian Development Bank) |
| Abstract: | Tepid trade growth since the 2008/2009 global financial crisis (GFC) has been partly attributed to sluggish demand from developed countries. However, data reveals that developing countries play a bigger role in holding back trade growth, while developed countries show quite robust import growth. Post-GFC, the exchange rate volatility has grown significantly. As decomposition of country groups by changes in currency valuation shows, however, local currency depreciation is not contributing to export growth as much as conventional wisdom dictates. On the other hand, countries with appreciating currencies show rising import intensity and significant export growth. This implies that the more countries undergo currency devaluation—the deeper the degree of devaluation and even competitive devaluations—the more likely international trade will grow slower. |
| Keywords: | gravity model; real effective exchange rate; trade volume |
| JEL: | C23 F10 F31 |
| Date: | 2016–10–20 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbewp:0498&r=int |
| By: | MAMIYA Isamu; KOMETANI Kazumochi |
| Abstract: | This paper proposes a theoretical framework for global governance in economic relations. In reaction to the rapid development of various international regimes, concerns are growing for the "fragmentation" of international law and the infringement on national "sovereignty." Good "global governance" has to be elaborated by taking into consideration important phenomena in this field, e.g., the increasing use of soft law, enhanced participation by non-governmental entities, and increasing arrangements for regional economic integration. The current literature focuses on the "input" legitimacy of the international regimes on the premise that nations pursue their own national interests. The approach proposed by this paper considers from the viewpoint of "output" legitimacy that the functionally divided international regimes constitute a single integrated regime, or "international law for cooperation," that pursues a common goal, e.g., that of global economic optimization through a decentralized scheme in which all member nations pursue economic optimization within their own jurisdictions while liberalizing trade, investment flows, etc. This approach provides effective interpretative guidance for the substantive rules adopted in the international regimes, including the World Trade Organization (WTO) disciplines over free trade agreements, and clarifies where soft law is a better policy tool and what roles should be given to non governmental entities. |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rdpsjp:16056&r=int |
| By: | SK, Shanthi; Sircar, Sanjoy; Reddy, Kotapati Srinivasa |
| Abstract: | Purpose: The purpose of this special issue is to get a deeper understanding of global trade and investment flows and how they affect the competitiveness of economies. There have been some tectonic shifts in global flows both in terms of actual goods and services and also in terms of financial capital. The emerging economies have been aggressively competing in markets, which were hitherto dominated by the so-called developed world. This has been facilitated by the increased orientation towards openness in the emerging economies as also the other developing countries. These developments have been essential for strategically positioning them in the global marketplace and have been instrumental in improving the well-being of citizens across the globe. Findings: The papers offer rich insights in to the different angles of the global trade and capital flows and are nuanced to specific countries or regions. They will contribute to a better understanding of the various issues and will be of great use to academics for further research and practitioners in their new policy initiatives in the area of improving their performance be it in terms of improving growth and exports or in terms of attracting capital from the capital surplus countries. |
| Keywords: | Economic growth; Openness; Capital flows; Remittances; Trade flows; Emerging markets; Competitiveness |
| JEL: | E5 E58 F2 F4 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:74288&r=int |
| By: | Wani, Mr. Nassir Ul Haq; Dhami, Dr. Jasdeep Kaur; Rehman, Dr. Afzal Ur |
| Abstract: | In order to understand the India’s import trade with its partners, this paper applies the generalized gravity model to analyse the import structure by employing the panel data estimation technique. The results portray that India’s imports are determined by the inflation rates, per capita income differentials and the overall openness of the countries involved in trade. It has been also found out that imports are influenced to a great degree by the common border, as the case is between India, China and Bangladesh. Furthermore, the country precise effects describe that the sway of neighbouring countries is more than that of distant countries on India’s imports. |
| Keywords: | Gravity Model, Panel Data, India’s Imports. |
| JEL: | F1 F14 K00 |
| Date: | 2016–10–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:74700&r=int |
| By: | Randolph Bruno; Nauro Campos; Saul Estrin; Meng Tian |
| Abstract: | This paper investigates whether and to what extent foreign direct investment inflows into the United Kingdom are caused by its membership in the European Union (EU). It reports two main sets of econometric estimates: (a) synthetic counterfactual method with annual data for large sample of developing and developed countries over 1970-2014 and (b) gravity estimates using 34 OECD countries bilateral data for 1985-2013. The two sets of estimates strongly concur: EU membership increases FDI inflows by about 30%. This result is robust to changes in specification, country samples, time windows, and the use of different estimators (panel, PPML and Heckman). |
| Keywords: | foreign direct investment, gravity, SMC, European Union |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1453&r=int |
| By: | Kunal Dasgupta; Jordi Mondria |
| Abstract: | Information frictions prevent importers from observing the price of a good in every market. In this paper, we seek to explain how the presence of such frictions shape the flow of goods between countries. To this end, we introduce rationally inattentive importers in a multi-country Ricardian trade model. The amount of information importers process about each country is endogenous and reacts to changes in observable trade costs. Unlike traditional trade costs, changes in information processing costs have non-monotonic and asymmetric effects on bilateral trade flows. We go on to show quantitatively how small differences in distance generate large differences in trade flows, thereby shedding light on the distance elasticity puzzle. The model also generates a novel prediction regarding the relationship between information processing costs and the concentration of import distributions that finds support in the data. |
| Keywords: | Rational inattention, incomplete information, distance elasticity. |
| JEL: | D83 F10 F19 L15 |
| Date: | 2016–10–17 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-566&r=int |
| By: | Iader Giraldo |
| Abstract: | In spite of increasing globalization around the world, the e¤ects of international trade on economic growth are not very clear. I consider an endogenous economic growth model in an open economy with the Home Market Effect (HME) and non-homothetic preferences in order to identify some determinants of the di¤erent results in this relationship. The model shows how trade between similar countries leads to convergence in economic growth when knowledge spillovers are present, while trade between very asymmetric countries produces divergence and may become trade in a poverty or growth trap. The results for welfare move in the same direction as economic growth since convergence implies increases in welfare for both countries, while divergence leads to increases in welfare for the largest country and the opposite for its commercial partner in the absence of knowledge spillovers. International trade does not implicate greater welfare as is usual in a static context under CES preferences. |
| Keywords: | International Trade, Economic Growth, Home Market E¤ect, Non-homotheticPreferences. |
| JEL: | F12 F43 O41 O33 |
| Date: | 2016–09–09 |
| URL: | http://d.repec.org/n?u=RePEc:col:000092:015161&r=int |
| By: | Maria Bas (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Lionel Fontagné (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique); Philippe Martin (Sciences Po); Thierry Mayer (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, Sciences Po) |
| Abstract: | The arrival of powerful new players on world markets –the foremost of these being China– automatically decreases market share for advanced economies. But France's export market share has decreased more than that of other European countries. This is not a result of poor geographic or sectoral specialisation, insuf-fi cient exporter support, under-representation of SMEs in exports or credit constraints, but, more fundamentally, is caused by an inadequate " quality/price ratio " for French products on average. When products are of quality, results are exceptional, as demonstrated by the luxury, aeronautical and electrical distribution goods sectors –sectors, with a flagship– and/or by brands, which appear to play a key role. A country's competitiveness comprises a price dimension and a non-price dimension. Regarding price competitiveness , direct labour costs represent just 23%, on average, of the total value of French exports and 44% when including the cost of labour for domestic intermediate consumption. Price competitiveness is therefore not solely a matter of labour costs for exporting companies. We also need to look at the input side, whether it be at intermediate goods (possibly imported), energy or even services produced in France for exporting companies. The central message here is that competitiveness is everybody's concern, and not just that of industrial companies. Greater effi ciency in non-tradable sectors (business services, construction, public services) also contributes to the creation of price competitiveness. |
| Keywords: | market shares,competitiveness |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01299873&r=int |
| By: | Lionel Fontagné (PSE - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique); Angelo Secchi (PSE - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Chiara Tomasi (Università di Trento - Dipartimento di Economia e Management) |
| Abstract: | This paper analyzes how multi-product firms adjust their exported product-mix across destinations. Using cross sections of Italian and French data, we show that firms do not follow a rigid ordering in their product mix exported in different markets but rather they adapt their choices to better match with country characteristics. By using metrics based on export shares and on sequences of product names we provide new insights on the extent a firm’s products portfolio changes across destinations that go beyond simple rank correlations. Demand asymmetries, market structure heterogeneity and differential abilities to match unit values of products supplied by competitors emerge as three significant factors in explaining the variety-country variability observed in firms’ export patterns. Our results resist when we control for a firm’s choice of not exporting an available product to a given destination, an explicit choice likely to contain relevant information |
| Keywords: | multi-product, multi-country firms, product vectors, demand and concentration |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01299822&r=int |
| By: | Roberto Basile (Second University of Naples); Aleksandra Parteka (Gdansk University of Technology); Rosanna Pittiglio (Second University of Naples) |
| Abstract: | This paper contributes to the empirical literature on the relationship between ‘export variety’ (export diversification) and economic development by relaxing the assumption of cross-country independence and allowing for spatial diffusion of shocks in observed and unobserved factors. Export variety is measured for a balanced panel of 114 countries (1992-2012) using very detailed information on their exports (HS 6-digit product level). The estimation results of a dynamic spatial panel data model confirm the relevance of spatial network effects: indirect effects (spatial spillovers) strongly reinforce direct effects, while spatial proximity to large countries accelerates the diversification process. These results are robust to the choice of the weights matrix (an inverse-distance matrix, an exponential distance matrix and a matrix based on bilateral trade flows are used). |
| Keywords: | export diversification, economic development, panel spatial data models |
| JEL: | F14 F43 C31 O11 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:lui:lleewp:16127&r=int |
| By: | ZHU Lianming; ITO Koji; TOMIURA Eiichi |
| Abstract: | While global sourcing by multinational firms has changed the landscape of international trade, little is known as to how firms alter their global sourcing pattern when facing uncertainty or negative shocks. In this paper, we use the Great East Japan Earthquake as an exogenous shock to identify the macro fluctuation on firms' offshoring. Using Japanese firm-level data from 2010-2013, we show that the earthquake increases offshoring in terms of yen value. By decomposing total offshoring into goods and service offshoring, we find the positive effect of earthquake is statistically significant for manufacturing offshoring, but not for service offshoring. |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:16089&r=int |
| By: | de Vries, Gaaitzen (University of Groningen); Chen, Quanrun (University of International Business and Economics); Hasan, Rana (Asian Development Bank); Li, Zhigang (Asian Development Bank) |
| Abstract: | This paper examines the trends in skill and activity upgrading in global value chains (GVCs) and the drivers of upgrading in Asian economies. It uses the newly constructed ADB Multi-Region Input-Output Tables as well as occupation data on jobs by educational attainment and business activities, namely research and development; production; logistics, sales, and marketing; administration and back-office; and headquarter activities. Our results suggest an ongoing specialization process in high-income Asian countries and in developing member countries (DMCs) toward high-skilled knowledge-intensive activities. The pace of upgrading differs across Asian countries, being more rapid and encompassing in the People’s Republic of China in comparison to other DMCs. We use a structural decomposition method to account for the drivers of the trends observed. In particular, technological change in GVCs that is biased toward knowledge-intensive activities is important in accounting for the trends observed. |
| Keywords: | functional upgrading; global multiregional input–output model; global supply chains; structural decomposition analysis; World Input-Output Database |
| JEL: | D57 F16 F63 |
| Date: | 2016–08–30 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbewp:0496&r=int |
| By: | Blaise Gnimassoun; Marc Joëts; Tovonony Razafindrabe |
| Abstract: | This study revisits the important link between oil prices and current account for oil exporting countries by paying particular attention to the time-varying nature of this link. To this end, we rely on an innovative method, the time-varying parameter vector autoregressive (TVP-VAR) model with sign restriction. We find that while an oil supply shock has a non-significant impact on the current account, an oil demand shock has a positive and significant impact, which tends to increase over time. In addition, by studying the economic factors underlying the evolution of this relation, we find that although the propensity to spend oil revenues on imports has a significant negative influence on the pass-through of oil demand shocks on current account, a deepening of the domestic financial market and an accumulation of foreign exchange reserves have a significant positive effect. |
| Keywords: | Curent account, Oil prices, Time-varying parameters. |
| JEL: | F32 Q43 C32 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2016-41&r=int |
| By: | Maurice Kugler (The Interdisciplinary Center Herzliya - The Interdisciplinary Center Herzliya); Oren Levintal (Bar-Ilan University [Israël]); Hillel Rapoport (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics) |
| Abstract: | The gravity model has provided a tractable empirical framework to account for bilateral flows not only of manufactured goods, as in the case of merchandise trade, but also of financial flows. In particular, recent literature has emphasized the role of information costs in preventing larger diversification of financial investments. This paper investigates the role of migration in alleviating information imperfections between home and host countries. We show that the impact of migration on financial flows is strongest where information problems are more acute (that is, for more informational sensitive investments, between culturally more distant countries, and when the source country of migrants is a developing country) and for the type of migrants that are most able to enhance the flow of information on their home country, namely, skilled migrants. We interpret these differential effects as additional evidence pointing to the role of information in generating home-bias and as new evidence of the role of migration in reducing information frictions between countries. |
| Keywords: | gravity models,information asymmetries,international loans,international financial flows,Migration |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01134465&r=int |
| By: | Andrea Ascani (The London School of Economics and Political Science (LSE)); Riccardo Crescenzi (The London School of Economics and Political Science (LSE)); Simona Iammarino (The London School of Economics and Political Science (LSE) and The John H Dunning Centre for International Business (Henley Business School, University of Reading)) |
| Abstract: | This paper investigates how the location behaviour of Multinational Enterprises (MNEs) is shaped by the economic institutions of the host countries. The analysis covers a wide set of geographically proximate economies with different degrees of integration with the ‘Old’ 15 European Union (EU) members: New Member States, Accession and Candidate Countries, as well as European Neighbourhood Policy (ENP) countries and the Russian Federation. The paper aims to shed new light on the heterogeneity of MNE preferences for the host countries’ regulatory settings (including labour market and business regulation), legal aspects (i.e.protection of property rights and contract enforcement) and the weight of the government in the economy. By employing data on 6,888 greenfield investment projects, the randomcoefficient Mixed Logit analysis here applied shows that, while the quality of the national institutional framework is generally beneficial for the attraction of foreign investment, MNEs preferences over economic institutions are highly heterogeneous across sectors and business functions. |
| Keywords: | multinational enterprises, economic institutions, location choice, European Union |
| JEL: | F23 P33 L20 R30 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:rdg:jhdxdp:jhd-dp2015-07&r=int |
| By: | THORBECKE, Willem |
| Abstract: | China's trade surplus remains huge. Researchers have reported that China's exports decimate manufacturing job abroad and stoke protectionist pressures. China's surplus is concentrated in the electronics sector. Much of the value-added of China's exports of smartphones, tablet computers, and consumer electronics goods comes from processors, sensors, and other parts and components (p&c) produced in Taiwan, South Korea, Japan, and the Association of Southeast Asian Nations (ASEAN). This paper finds that exchange rates in countries supplying p&c are crucial for understanding China's electronics exports. A concerted appreciation of East Asian currencies is needed to rebalance the region's exports. However, because of underdeveloped financial markets, the U.S. dollar remains the most important currency in the currency baskets of many East Asian economies. Countries resist appreciation against the dollar to maintain competitiveness vis-Ã -vis neighboring economies. This paper considers ways to overcome this coordination failure and develop stronger consumption-oriented economies in the region. |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:16088&r=int |
| By: | Costanza Biavaschi (University of Reading); Michal Burzynski (University of Luxembourg); Benjamin Elsner (Institute for the Study of Labor (IZA)); Joël Machado (Fonds National de la Recherche, Luxembourg) |
| Abstract: | High-skilled workers are four times more likely to migrate than low-skilled workers. This skill bias in migration - often called brain drain - has been at the center of a heated debate about the welfare consequences of emigration from developing countries. In this paper, we provide a global perspective on the brain drain by jointly quantifying its impact on the sending and receiving countries. In a calibrated multi-country model, we compare the current world to a counterfactual with the same number of migrants, but those migrants are randomly selected from their country of origin. We find that the skill bias in migration significantly increases welfare in most receiving countries. Moreover, due to a more efficient global allocation of talent, the global welfare effect is positive, albeit some sending countries lose. Overall, our findings suggest that more - not less - high-skilled migration would increase world welfare. |
| Keywords: | migration, brain drain, global welfare |
| JEL: | F22 O15 J61 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:1624&r=int |
| By: | David Chilosi; Giovanni Federico |
| Abstract: | This paper contributes to the debate on globalization and the great divergence with a comprehensive analysis of the integration of Asia in the world market from 1800 to the eve of World War II. We examine the patterns of convergence in prices for a wide range of commodities between Europe and the main Asian countries (India, Indonesia, Japan and China) and we compare them with convergence between Europe and the East Coast of the United States, hitherto the yardstick for the 19th century. Most price convergence occurred before 1870, mainly as a consequence of the abolition of the European trading monopolies with Asia, and, to a lesser extent, the repeal of duties on Atlantic trade. After 1870, price differentials continued to decline thanks to falling freights and to better communication after the lay-out of telegraph cables. There was only little disintegration in the inter-war years. |
| Keywords: | Globalization; Market integration; International trade; Economic growth; Asia; Nineteenth century |
| JEL: | F14 F15 N74 N75 O40 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:64785&r=int |
| By: | Chul Chung (Henley Business School, University of Reading, UK); Masayuki Furusawa (Faculty of Business Administration, Osaka University of Commerce Japan) |
| Abstract: | Europe has been a major destination for foreign direct investment as one of the triad economies with the USA and Japan. MNCs have brought not just financial resources but also human resources and, in many cases, particular ways of managing workforces from their home base. Transferring HRM practices could be highly complex and challenging, as human resources are the most country-bounded resources. Foreign MNCs operating in Europe face cross-national challenges stemming from the process of transfer and adaptation of HRM practices, due to the uniqueness of European traditions as well as the national diversity within Europe in relation to employment relations. This paper examines how MNCs from three different countries – the USA and Japan, the two other triad economies, and South Korea, a home base of emerging MNCs – have dealt with the challenges in managing human resources in their European operations within the given institutional contexts. |
| Keywords: | multinational corporation, human resource management, Europe, Japan, USA, South Korea |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:rdg:jhdxdp:jhd-dp2015-04&r=int |
| By: | Ronald B. Davies (UCD - University College Dublin [Dublin]); Rodolphe Desbordes (University of Strathclyde - University of Strathclyde); Anna Ray (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics) |
| Abstract: | Relying on a large foreign direct investment (FDI) transaction level dataset, unique both in terms of disaggregation and time and country coverage, this paper examines patterns in greenfield (GF) versus merger & acquisition (MA) investment. Although both are found to seek out large markets with low international barriers, important differences emerge. MA is more affected by geographic and cultural barriers and exhibits opportunistic behaviours as it is more sensitive to short-run changes, such as a currency crisis. On the other hand, GF is relatively driven by long-run factors, such as origincountry technological and institutional development or comparative advantage. These empirical facts are consistent with the conceptual distinction made between these two modes, i.e. MA involves transfer of ownership for integration or arbitrage reasons while GF relies on firms own capacities, which are linked to the origin countries attributes. They also suggest that GF and MA are likely to respond differently to policies intended to attract FDI. |
| Keywords: | Multinational Firms,Greenfield Investment,Mergers and Acquisitions,Foreign Direct Investment |
| Date: | 2015–03–04 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01122659&r=int |
| By: | Benjamin.Jung; |
| Abstract: | Neuere Freihandelsabkommen wie die geplante Transatlantische Handels- und Investitionspartnerschaft (TTIP) beinhalten den Abbau regulatorischer Unterschiede. Die Überwindung technischer Barrieren verursacht im Unterschied zu klassischen Instrumenten der Handelspolitik wie Zöllen und Quoten realen Ressourcenaufwand und generiert keine Renten. Dieser Beitrag präsentiert stilisierte Fakten üuber die Implementierung technischer Barrieren und analysiert aufbauend auf den Erkenntnissen der sog. "neuen neuen" Außenhandelsliteratur die Wirkungen des Abbaus regulatorischer Fixkosten. Die gegenseitige Anerkennung von Standards fuhrt zu mehr Handel als Harmonisierung von Standards, wenn Konsumenten die Produktvielfalt wichtig ist und/oder die Anpassungskosten, um auf einen gemeinsamen Standard zu kommen, hoch sind. Die theoretischen Überlegungen werden, wenn moglich,durch empirische Evidenz erganzt. |
| JEL: | F12 F |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:iaw:iawdip:127&r=int |
| By: | Franck Galtier (UMR MOISA - Marchés, Organisations, Institutions et Stratégies d'Acteurs - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - INRA Montpellier - Institut national de la recherche agronomique [Montpellier] - CIHEAM - Centre International des Hautes Études Agronomiques Méditerranéennes, Centre de Coopération Internationale en Recherche Agronomique pour le Développement) |
| Abstract: | In this paper, we analyze the WTO rules that specify how to estimate the subsidy provided to farmers by public stocks. We identify three biases in these rules: - Bias B1, resulting from using a fixed past unit value of import or export as external reference price, instead of the current price cost of imports or exports. - Bias B2, resulting from using the procurement price of the public stock instead of the price prevailing on the domestic market to estimate the price support received by the farmers who sell their production on the domestic market. - Bias B3, resulting from using the national production instead of the marketed share of national production, by this way ignoring farmer self-consumption. The effect of these three biases on the estimated subsidy varies with the country but, on average, WTO rules lead to overestimate the subsidy by a factor 2 to more than 300, depending on the modalities of public stock interventions and other parameters. This means that in the most favorable scenarios, the estimated subsidy is (on average) twice the real subsidy. The effect of these biases on country compliance proves to be huge: many countries have an estimated subsidy above their maximum allowed level (even with very light public stock interventions), just because the subsidy provided by public stocks is overestimated by WTO rules. This result challenges the widespread idea that almost all countries comply with WTO rules on public stocks. We also test the effect of correcting only some of the biases. It appears that doing this would not allow eliminating the biases in country compliance. An implication of this is that expressing the fixed external reference price (FERP) in US dollar, correcting it with the country inflation rate or replacing it by the average unit value of imports or exports over the last five years (as proposed by several experts and WTO Members) would not be enough to remove the bias on country compliance. There is therefore a need to correct all the three biases, what can be done in a rather simple way, as is shown at the end of the paper. |
| Abstract: | Dans cet article, nous analysons les règles de l’OMC qui définissent comment estimer la subvention procurée par les stocks publics aux producteurs agricoles. Nous identifions trois biais dans ces règles : - le biais B1, qui résulte du fait d’utiliser comme prix extérieur de référence la valeur unitaire des importations ou des exportations au cours d’une période fixe passée, au lieu d’utiliser le coût de revient actuel des importations ou des exportations. - le biais B2, qui résulte du fait d’utiliser le prix d’achat du stock public (au lieu du prix en vigueur sur le marché domestique) pour estimer la subvention reçue par les agriculteurs qui vendent leur production sur le marché domestique. - le biais B3, qui résulte du fait d’utiliser la production nationale au lieu de la part commercialisée de cette production (ignorant par la même l’autoconsommation des producteurs). L’effet de ces trois biais sur la subvention estimée diffère selon les pays mais, en moyenne, les règles de l’OMC conduisent à surestimer la subvention d’un facteur 2 à plus de 300, selon les modalités d’intervention des stocks publics et d’autres paramètres. Cela signifie que, dans les scénarios les plus favorables, la subvention estimée représente le double de la subvention réelle. L’effet de ces biais sur la conformité des pays avec leurs engagements à l’OMC se révèle être très important: beaucoup de pays ont une subvention estimée au-dessus du plafond autorisé (même avec des interventions de faible ampleur), simplement parce que la subvention est surestimée par les règles de l’OMC. Ceci remet en cause l’idée très répandue selon laquelle presque tous les pays seraient en règles vis-à-vis de leurs engagements sur les stocks publics et le soutien interne. Nous avons également testé les effets d’une correction partielle des biais B1, B2 et B3. Il s’avère que cette correction partielle ne permet pas d’éliminer le biais sur la conformité des pays avec leurs engagements à l’OMC. Ceci implique notamment qu’exprimer le prix fixe extérieur de référence (FERP) en dollar US, que le corriger par le taux d’inflation du pays ou que le remplacer par la moyenne de la valeur unitaire des importations ou des exportations au cours des cinq années précédentes (comme proposé par différents experts et pays Membres) ne serait pas suffisant pour corriger le bais sur la conformité des pays avec leurs engagements. Il est donc nécessaire de corriger les trois biais, ce qui peut être fait d’une manière assez simple, comme nous le montrons à la fin de l’article. |
| Keywords: | subsidy,domestic support,organisation mondiale du commerce,world trade organization,Doha round,Bali agreement,public stock,cycle de Doha,accord de Bali,stock public,subvention,soutien interne |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01295403&r=int |
| By: | Riccardo Crescenzi; Simona Iammarino |
| Abstract: | Regional economic development has been long conceptualised as a non-linear, interactive and socially embedded process: these features were traditionally regarded as spatially mediated and highly localised. However, unprecedentedly fast technological change coupled with the intensification of global economic integration processes has spurred the need to place regional development in a truly open and interdependent framework. Despite substantial progress made by the academic literature, rethinking regional development in this perspective still presents a number of challenges in terms of concepts, empirical evidence and policy approaches. Following an interdisciplinary assessment of how openness and connectivity – proxied by one particular of the many cross-border flows, i.e. global investments – interact with regional economic development trajectories, this paper presents a picture of the geography of foreign investments from and to the European regions and its change after the financial and economic crisis in 2008. This simple exercise allows us to shed some initial light on how the operationalisation of regional connectivity can improve our empirical understanding of the evolution of regional economies and the policy approach needed to support their reaction to change. |
| Keywords: | FDI, regions, local-global connectivity, regional development, Europe |
| JEL: | F2 R11 R12 O19 O3 O52 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:eiq:eileqs:118&r=int |
| By: | Olivier Blanchard (Peterson Institute for International Economics); Julien Acalin (Peterson Institute for International Economics) |
| Abstract: | Foreign direct investment (FDI)—whether mergers and acquisitions or “greenfield” ventures built from the ground up—is generally thought of as reflecting decisions based on long-run factors. Conventional wisdom on capital flows holds that FDI inflows are “good flows,” while assessments of portfolio and other flows are more ambiguous. When considering restrictions on capital flows, the first reaction of researchers and policymakers is to want to exclude FDI inflows. Blanchard and Acelin find that FDI flows measured in the balance of payments are actually quite different from this depiction of FDI. Their analysis reveals that FDI inflows and outflows are highly correlated, even at high frequency and using different methodologies, and that FDI flows to emerging-market economies appear to respond to the US monetary policy rate, even at high frequency. Based on these findings they reach two conclusions. First, in many countries, a large proportion of measured FDI inflows are just flows going in and out of the country on their way to their final destination, with the stop due in part to favorable corporate tax conditions. Second, some of these measured FDI flows are much closer to portfolio debt flows, responding to short-run movements in US monetary policy conditions rather than to medium-run fundamentals of the country. Both these conclusions have implications for how researchers and policymakers should think about capital controls and the exclusion of measured FDI from such controls. |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:iie:pbrief:pb16-17&r=int |
| By: | Fromenteau, Philippe; Schymik, Jan; Tscheke, Jan |
| Abstract: | We study how foreign competition affects the composition of investments inside firms. A parsimonious model predicts that firms have an incentive to shift their investments towards more short-term assets when exposed to tougher competition. Using data on expenditures of listed US companies into various asset classes with different lifespans, we document empirical evidence that is consistent with this prediction. Over a fifteen year period between 1995 and 2009, the rise in import competition is associated with a reduction of the firm-specific asset lifespan by about 4.5% on average. We additionally exploit the Chinese WTO accession as an exogenous shock in firm expectations about future exposure to competition. |
| Keywords: | import competition; firm investment behavior; investment life-span; shorttermism |
| JEL: | F14 F36 F65 G32 L20 D22 |
| Date: | 2016–10–12 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:29654&r=int |
| By: | Rajneesh Narula (Henley Business School, University of Reading) |
| Abstract: | This paper argues that the rapid growth of certain emerging economies over the last two decades is not only due to liberalised markets, MNEs and laissez-faire policies, but also to the effects of industrial development strategies that continue to share several similarities to the import-substitution industrialisation approach. The building up of capabilities in the domestic sector is crucial. At the same time, the heterogeneity in country experiences and their varying degrees of success at becoming internationally competitive indicates that understanding MNEassisted development requires us to go beyond just improving absorptive capacities. We also need to understand the role of political economy and issues of path-dependency in both policies and resources. I illustrate my arguments by contrasting the experiences of East Asian and Latin American economies. |
| Keywords: | MNEs, development, import substitution, policy, FDI, Latin America, Asia |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:rdg:jhdxdp:jhd-dp2015-05&r=int |
| By: | Rajneesh Narula (Henley Business School, University of Reading RG6 6UD) |
| Abstract: | The modern MNE has to be a ‘meta-integrator’, able to leverage knowledge within and between its different constituent affiliates, which requires efficient internal markets and well-structured cross-border hierarchies. EMNEs will need to strengthen the ownership advantages necessary to achieve such internal embeddedness, which are hard to acquire, and must be learnt. I couch this discussion in the ongoing debate about the nature of ownership advantages. The ability to be competitive in an era of globalization depends as much on the EMNE’s technological assets as it does on its ability to achieve economies of common governance. The EMNE (like all MNEs) has to be able to promote internal knowledge flows, both to and from the parent, as well as between affiliates located in different countries, and the ability to achieve organizational, scale and scope economies. |
| Keywords: | Multinationality, R&D, productivity |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:rdg:jhdxdp:jhd-dp2016-02&r=int |
| By: | Meyers, William H.; Schroeder, Kateryna G. |
| Abstract: | The paper provides an overview of the factors contributing to the decline in agricultural commodity prices and prospects to 2025 with a particular focus on supply, demand and policy factors. Agricultural and other commodity markets continue to be depressed, causing concern among farmers and their organizations as well as among policy makers concerned about the well-being of farmers. Factors contributing to these market changes are the excellent crops in recent years and growing stocks, the massive decline in petroleum prices that reduce production cost and slow biofuel demand growth, slowing economic growth in major importing countries like China, and changing exchange rate dynamics. We will use the FAPRI outlook update from August 2016 to assess the factors that are driving those results. Then we will offer commentary on what changes in market conditions or policies could alter the projected outcomes. Recent developments in trade disputes and regional trade agreements will also be assessed based on recent studies of these developments. |
| Keywords: | Agricultural markets, commodity prices, trade, exchange rates, agricultural policy, International Relations/Trade, |
| Date: | 2016–09–20 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaa155:245172&r=int |