nep-int New Economics Papers
on International Trade
Issue of 2013‒11‒29
71 papers chosen by
Luca Salvatici
Universita' di Roma 3

  1. How big is the impact of infrastructure on trade? Evidence from meta-analysis By Celbis, Mehmet Güney; Nijkamp, Peter; Poot, Jacques
  2. Heterogeneous Technology Diffusion and Ricardian Trade Patterns By William R. Kerr
  3. The end of the multifibre arrangement (MFA) and the heterogeneous performance of quota-constrained countries By Gebreeyesus, Mulu
  4. The Trade-FDI Nexus: Evidence from the European Union By Valeriano Martínez-San Román; Marta Bengoa-Calvo; Blanca Sánchez-Robles Rute
  5. A Note on the Link between Firm Size and Exports By Hernandez, Pedro J.
  6. High-End Variety Exporters Defying Distance: Micro Facts and Macroeconomic Implications By Julien MARTIN; Florian MAYNERIS
  7. International tradability indices for services By van der Marel, Erik; Shepherd, Ben
  8. Idea Flows, Economic Growth, and Trade By Fernando E. Alvarez; Francisco J. Buera; Robert E. Lucas, Jr.
  9. IPR, Product Complexity and the Organization of Multinational Firms By Alireza Naghavi; Julia Spies; Farid Toubal
  10. Offshoring and Patterns of Quality Growth: Evidence from Danish Apparel By Valerie Smeets; Sharon Traiberman; Frederic Warzynski
  11. Transnational Trade In Ecowas: Does Export Content Matter? By Ogundipe, Adeyemi; Amaghionyeodiwe, Lloyd
  12. Estimated Impacts of TAA on Participants' Outcomes Under the Trade Act of 2002. By Peter Schochet
  13. Trade margins and exchange rate regimes: new evidence from a panel VAR By Cavallari, Lilia; D'Addona, Stefano
  14. North-South standards harmonization and international trade By Disdier, Anne-Celia; Fontagne, Lionel; Cadot, Olivier
  15. Disentangling Demand-Enhancing and Trade-Cost Effects of Maximum Residue Regulations By Bo Xiong; John C. Beghin
  16. Wage bargaining, job loss fears and offshoring By Riedl, Maximilian
  17. Are clusters more resilient in crises? Evidence from French exporters in 2008-2009 By Philippe MARTIN; Thierry MAYER; Florian MAYNERIS
  18. Endogenous trade restrictions and exporters' pricing behavior By Laura Rovegno
  19. Determinants of firms' investment behaviour: A multilevel approach By Farla, Kristine
  20. The Role of Services Trade in Economic Development By Alege, Philip; Ogundipe, Adeyemi
  21. Border Carbon Ajustment in Europe and Trade Retaliation: What would be the Cost for European Union? By Jean Fouré; Houssein Guimbard; Stéphanie Monjon
  22. Does online trade live up to the promise of a borderless world? Evidence from the EU Digital Single Market By Bo Cowgill; Cosmina Dorobantu; Bertin Martens
  23. Exporter dynamics, firm size and growth, and partial year effects By Bernard, Andrew B.; Massari, Renzo; Reyes, Jose-Daniel; Taglioni, Daria
  24. The Role of Foreign Direct Investment (FDI) in a Dualistic Growth Framework: An Application of Smooth Coefficient Semi-parametric Approach By Aurangzeb Zeb; Thanasis Stengos
  25. Mobility of Students and Quality of Higher Education: An Empirical Analysis of the “Unified Brain Drain” Model By Elise S. Brezis; Ariel Soueri
  26. FDI and investment barriers in developing economies By Arita, Shawn; Tanaka, Kiyoyasu
  27. The Italian technology balance of payments By Enrico Tosti
  28. Quantifying International Production Sharing at the Bilateral and Sector Level By Zhi Wang; Shang-Jin Wei; Kunfu Zhu
  29. Offshoring, trade and environmental policies: Effects of transboundary pollution By Keisuke Kawata; Yasunori Ouchida
  30. Heaven's Swing Door: Endogenous Skills, Migration Networks and the Effectiveness of Quality-Selective Immigration Policies By Bertoli, Simone; Rapoport, Hillel
  31. Does medieval trade still matter? Historical trade centers, agglomeration and contemporary economic development By Wahl, Fabian
  32. International Resource Tax Policies Beyond Rent Extraction By Simone Valente; Luca Bretschger
  33. The World Bank Group Trade Strategy: Fit for Purpose? By Bernard M. Hoekman
  34. Tax Principles and Coordination of Trade and Domestic Policies under Imperfect Competition By Kenji Fujiwara
  35. Toward a Multilateral Framework for Identifying National Security Threats Posed by Foreign Acquisitions : With Special Reference to Chinese Acquisitions in the United States, Canada, and Australia By Theodore H. Moran
  36. The Environmental Kuznets Curve: The Role of Renewable and Non-Renewable Energy Consumption and Trade Openness By Ben Jebli, Mehdi; Ben Youssef, Slim; Ozturk, Ilhan
  37. Understanding the diversity of cooperation on innovation across countries: Multilevel evidence from Europe By Srholec , Martin
  38. The growth of outward FDI and the competitiveness of the underlying economy: the case of India By Narula, Rajneesh; Prasad Kodiyat, Tiju
  39. Economic Growth in the Euro-Med Area through Trade Integration: Focus on Agriculture and Food. North Africa case studies - Egypt, Morocco, Tunisia By Mohamed Ben Abdallah; Abdelkader Ait El Mekki; Gamal Siam
  40. Emerging Economies, Productivity Growth, and Trade with Resource-Rich Economies by 2030 By Kym Anderson; Anna Strutt
  41. Using a 'Systems' Perspective to Explain the Limits of 'New' Multinational Enterprises: the role of 'members-only' location advantages By Narula, Rajneesh
  42. International Corporate Governance Spillovers: Evidence from Cross-Border Mergers and Acquisitions By Rui Albuquerque; Luis Brandao-Marques; Miguel A. Ferreira; Pedro Matos
  43. Skilled Immigration and the Employment Structures of U.S. Firms By Sari Pekkala Kerr; William R. Kerr; William F. Lincoln
  44. Guest Workers in the Underground Economy By Slobodan Djajic; Alice Mesnard
  45. Demand shocks and open economy puzzles By Jose-Victor Rios-Rull; Yan Bai
  46. Price and Quality Dispersion in an Offshoring Market: Evidence from Semiconductor Production Services By David Byrne; Brian K. Kovak; Ryan Michaels
  47. Intellectual Property Rights and Foreign Direct Investment: A Welfare Analysis By Hitoshi Tanaka; Tatsuro Iwaisako
  48. FDI Technology Spillovers and Spatial Diffusion in the People’s Republic of China By Lin, Mi; Kwan, Yum K.
  49. Institutions, Foreign Direct Investment, and Domestic Investment: crowding out or crowding in? By Farla, Kristine; de Crombrugghe, Denis; Verspagen, Bart
  50. Foreign direct investment as a driver of industrial development: why is there so little evidence? By Narula, Rajneesh
  51. Foreign Direct Investments in Southeast Asia By Sjöholm, Fredrik
  52. Quantifying the integration of the Babylonian economy in the Mediterranean world using a new corpus of price data, 400-50 BC. By Robartus J. van der Spek; Bas van Leeuwen
  53. Natural resource curse: a non linear approach in a panel of oil exporting countries By Seghir, Majda; Damette, Olivier
  54. China’s Regulatory Framework for Outward Foreign Direct Investment By Karl P. Sauvant; Victor Zitian Chen
  55. Do High-Income or Low-Income Immigrants Leave Faster? By Bijwaard, Govert; Wahba, Jackline
  56. Regional Economic Links in Latin America: lessons from Asia and challenges from the regional links of other BRICS By Renato Baumann
  57. Economic Growth in the Euro-Med Area through Trade Integration: Focus on Agriculture and Food. Regional impact analysis By Aikaterini Kavallari; Marie-Luise Rau; Martine Rutten
  58. Asian globalisations: market integration, trade and economic growth, 1800-1938 By Chilosi, David; Federico, Giovanni
  59. The dynamic implications of liberalizing global migration By Marco DELOGU; Frédéric DOCQUIER; Joël MACHADO
  60. Migration Plans and Strategies of Recent Polish Migrants to England and Wales: Do They Have Any and How Do They Change? By Stephen Drinkwater; Michał Garapich
  61. Global Production Sharing, Trade Patterns and Industrialization in Southeast Asia By Prema-chandra Athukorala; Archanun Kohpaiboon
  62. Internationalization of academic journals: is there still a gap between social and natural sciences? By Ekaterina Dyachenko
  63. Australia’s Foreign Investment Review Board and the Regulation of Chinese Investment By Rebecca Mendelsohn; Allan Fels
  64. Internationalization and Performance of Italian Enterprises By Valeria Gattai
  65. The Return of the Prodigy Son: Do Return Migrants make Better Leaders? By Marion Mercier
  66. Value adaptation to a new social environment: Impacts from country of birth and country of residence on values of intra-European migrants By Maksim Rudnev
  67. The Changing US-China Investment Relationship By Daniel H. Rosen; Thilo Hanemann
  68. How much did China’s WTO accession increase economic growth in resource-rich countries? By Barnebeck Andersen,Thomas; Barslund, Mikkel; Worm Hansen, Casper; Harr, Thomas; Sandholt Jensen, Peter
  69. The Financialization of Food? By Valentina G. Bruno; Bahattin Buyuksahin; Michel A. Robe
  70. The Effect of Immigration on Public Finances By Ian Preston
  71. Capital market integration and optimal employment protection policies By Keisuke Kawata

  1. By: Celbis, Mehmet Güney (UNU-MERIT / MGSoG, Maastricht University); Nijkamp, Peter (Vrije Universiteit Amsterdam); Poot, Jacques (University of Waikato)
    Abstract: Low levels of infrastructure quality and quantity can create trade impediments through increased transport costs. Since the late 1990s an increasing number of trade studies have taken infrastructure into account. The purpose of the present paper is to quantify the importance of infrastructure for trade by means of meta-analysis and meta-regression techniques that synthesize various studies. The type of infrastructure that we focus on is mainly public infrastructure in transportation and communication. We examine the impact of infrastructure on trade by means of estimates obtained from 36 primary studies that yielded 542 infrastructure elasticities of trade. We explicitly take into account that infrastructure can be measured in various ways and that its impact depends on the location of the infrastructure. We estimate several meta-regression models that control for observed heterogeneity in terms of variation across different methodologies, infrastructure types, geographical areas and their economic features, model specifications, and publication characteristics. Additionally, random effects account for between-study unspecified heterogeneity, while publication bias is explicitly addressed by means of the Hedges model. After controlling for all these issues we find that a 1 per cent increase in own infrastructure increases exports by about 0.6 per cent and imports by about 0.3 per cent. Such elasticities are generally larger for developing countries, land infrastructure, IV or panel data estimation, and macro-level analyses. They also depend on the inclusion or exclusion of various common covariates in trade regressions
    Keywords: Infrastructure, Trade, Transportation, Communication, Public Capital, Public Goods, Meta-Analysis
    JEL: O18 F10 H54 R53 C10 F19 R49
    Date: 2013
  2. By: William R. Kerr
    Abstract: This study tests the importance of Ricardian technology differences for international trade. The empirical analysis has three comparative advantages: including emerging and advanced economies, isolating panel variation regarding the link between productivity and exports, and exploiting heterogeneous technology diffusion from immigrant communities in the United States for identification. The latter instruments are developed by combining panel variation on the development of new technologies across U.S. cities with historical settlement patterns for migrants from countries. The instrumented elasticity of export growth on the intensive margin with respect to the exporter's productivity growth is between 1.6 and 2.4 depending upon weighting.
    JEL: F11 F14 F15 F22 J44 J61 L14 O31 O33 O57
    Date: 2013–11
  3. By: Gebreeyesus, Mulu (UNU-MERIT / MGSoG)
    Abstract: On 1 January 2005, the international trade in textile and clothing was freed from the quota restrictions that had persisted for more than four decades. This study tests one of the predictions that countries effectively constrained by quotas in the major world markets will increase their exports at the expense of non-quota-constrained suppliers. The focus is on clothing imports of the two major markets, the US and EU-15. These markets are separately analysed as they constitute different lists of quota-constrained countries, QCCs. Unlike others, this study uses a relatively longer data set of post-quota years, which allows us to understand the medium-term adjustment process of exporters following quota removal. We find a large amount of heterogeneity among the QCCs in their post-quota export performance. Only a few QCCs have benefited at the expense of not only the non-quota countries but also fellow QCCs. The estimates show that almost half of the QCCs were better off under the quota regime at least in terms of exports. The factors most likely to have influenced their heterogeneous performance are also examined.
    Keywords: Global apparel trade, Quotas, MFA, Heterogeneous country performance, Trade Quota, Textile Industry, Clothing Industry, Multifibre Arrangement, QCC, export performance, trade policy
    JEL: F13 F14 L67 O24
    Date: 2013
  4. By: Valeriano Martínez-San Román (Department of Economics, Universidad de Cantabria, Spain); Marta Bengoa-Calvo (Colin Powell Center for Policy Studies, City College of New York (CUNY), USA); Blanca Sánchez-Robles Rute (Department of Economics, Universidad de Cantabria, Spain)
    Abstract: The objective of this paper is to examine the relationship between international trade and Foreign Direct Investment (FDI) empirically. It analyses whether the reduction of trade barriers over time has increased FDI for the particular case of the European Union (EU) during the period from 1995 to 2009. To analyze this issue the authors estimate in first place the European Border Effect by means of a gravity equation. Once the border effect is obtained we test whether there is a positive (complementary) or negative (substitution) relationship between this border effect and the FDI within the European countries. A gravity model for trade and FDI is estimated using the Poisson pseudo-maximum likelihood. The results suggest that there is a positive and decreasing border effect up to 2007 while it turns upward for 2008 and 2009, offsetting the previous decline. For the particular case of the EU, commercial integration and FDI reinforce each other, thus being complements rather than substitutes. In addition to trade integration measures, this paper also analyzes the potential role of other traditional determinants of FDI, as the market size of the host country and the cost differential among home-host economies. Cost differentials are not as relevant as the possibility of gaining market share which leads us to conclude that in the EU the FDI pattern follows a market-seeking strategy rather than a cost-efficient model.
    Keywords: International trade, FDI, gravity model, Home Bias, Border Effect, European Union
    JEL: F10 F14 F15 F21
    Date: 2013
  5. By: Hernandez, Pedro J.
    Abstract: This paper re-examines the link between firm size and exports in order to study the proposal that consists of increasing the firm size to raise exports as a way out of the current economic crisis. The elasticity of export propensity (percentage of exported sales) with respect to firm size depends on several firm characteristics. The new theories of international trade emphasize the firm heterogeneity as the theoretical basis of this behaviour. In the context of such heterogeneity, this paper uses the quantile regression methodology to analyze the effect of firm size on export propensity of the firms, confirming the existence of a positive relationship that becomes less important as export propensity increases. The traditional estimate of this elasticity on the average of the export propensities distribution underestimates the effect in the bottom of the distribution and overestimates the effect on most of it.
    Keywords: Exports, Firm Size
    JEL: F14 L25
    Date: 2013–11–19
  6. By: Julien MARTIN (Department of Economics, Universite du Québec a Montreal); Florian MAYNERIS (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches économiques et sociales (IRES) and Center for Operations Research and Econometrics (CORE))
    Abstract: We develop a new methodology to identify high-end variety exporters in French firm-level data. We show that they do not export to many more countries, but they export to more distant ones. This comes with a greater geographic diversification of their aggregate exports. These facts are explained by a lower sensitivity to distance of high-end variety export(er)s. We also show that high-end export(er)s are more sensitive to the average income of the destination country. Because of this different sensitivity to gravity variables, the within-product specialization of a country in the production of high-end varieties is likely to affect its export growth and volatility. We show that a higher sensitivity to per capita income tends to increase the volatility of high-end variety exports. However, a lower sensitivity to distance reduces volatility through a greater geographic diversification. Furthermore, we point out that a lower sensitivity to distance allows high-end varieties to benefit more from growth in more distant markets.
    Keywords: Gravity, Distance, Firm-level data, Growth, Volatility
    JEL: F14 F43 L15
    Date: 2013–10–31
  7. By: van der Marel, Erik; Shepherd, Ben
    Abstract: This paper uses a theoretically grounded model of international trade to estimate the cross-border tradability of services. The resulting indices cover up to 99 countries and ten sectors. The results show that information and communications technology capital and legal institutions are particularly important determinants of a country's ability to successfully export services. The tradability indices are strongly correlated with outcome indicators, such as trade shares of individual countries. In addition, they are strongly correlated with important inputs, including country productivity and size, factor endowments, trade costs, and regulatory measures. In particular, the results suggest that a more restrictive regulatory environment significantly reduces the international tradability of services.
    Keywords: Economic Theory&Research,Trade and Services,Free Trade,ICT Policy and Strategies,Trade Law
    Date: 2013–11–01
  8. By: Fernando E. Alvarez; Francisco J. Buera; Robert E. Lucas, Jr.
    Abstract: We provide a theoretical description of a process that is capable of generating growth and income convergence among economies, and where freer trade has persistent, positive effects on productivity, beyond the standard efficiency gains due to reallocation effects. We add to a standard Ricardian model a theory of endogenous growth where the engine of growth is the flow of ideas. Ideas are assumed to diffuse by random meetings where people get new ideas by learning from the people they do business with or compete with. Trade then has a selection effect of putting domestic producers in contact with the most efficient foreign and domestic producers. We analyze the way that trade in goods, and impediments to it, affect this diffusion. We find that exclusion of a country from trade reduces productivity growth, with large long-term effects. Smaller trade costs have moderate effects on productivity.
    JEL: F1 O11 O19 O33
    Date: 2013–11
  9. By: Alireza Naghavi; Julia Spies; Farid Toubal
    Abstract: This paper studies how the Intellectual Property Right (IPR) regime in destination countries influences the way multinationals structure the international organization of their production. In particular, we explore how multinationals divide tasks of different complexities across countries with different levels of IPR protection. The analysis studies the decision of firms between procurement from related parties and from independents suppliers at the product level. It also breaks down outsourcing into two types by distinguishing whether or not they involve technology sharing between the two parties. We combine data from a French firm-level survey on the mode choice for each transaction with a newly developed complexity measure at the product level. Our results confirm that firms are generally reluctant to source highly complex goods from outside firm boundaries. By studying the interaction between product complexity and the IPR protection, we obtain that (i) for technology-sharing outsourcing IPRs promote outsourcing of more complex goods to a destination country by guaranteeing the protection of their technology, (ii) for non-technologyrelated-outsourcing IPRs attract the outsourcing of less complex products that are more prone to reverse engineering and simpler to decodify and imitate.
    Keywords: outsourcing;product complexity;intellectual property rights;technology sharing
    JEL: F12 F23 O34
    Date: 2013–10
  10. By: Valerie Smeets (Department of Economics and Business, Aarhus University); Sharon Traiberman (Princeton University); Frederic Warzynski (Department of Economics and Business, Aarhus University)
    Abstract: Recently a small empirical literature has taken off attempting to analyze the role that quality plays in our understanding of trade. In particular, the recent work of Khandelwal (2010) has brought the insights of structural IO models of demand to bear into trade data. Our work builds on this new structural literature; we use similar demand estimation techniques on a panel of Danish apparel firms from 1997 to 2010 in order to analyze how firms responded to China’s entry to the WTO and the dismantling of the Multi-Fibre Agreement. We find substantial changes in the aggregate level as the distribution of quality tightens up and import competition appears to spur entry of higher quality firms and exit of lower quality producers. The reduction in trade costs leads to a massive increase in offshoring. The association of offshoring and quality depends on the quality of the sourcing country – while offshoring is generally associated with higher quality, offshoring to China is not. The reductions in trade costs also lead to changes in the distribution of prices and quality-adjusted prices. This has implications for policy as understanding the distribution of prices faced by heterogeneous consumers is key to understand how trade affects consumers along the income distribution.
    Keywords: quality upgrading, offshoring
    JEL: L15
    Date: 2013–11–19
  11. By: Ogundipe, Adeyemi; Amaghionyeodiwe, Lloyd
    Abstract: In spite of the vast deposit of resources and human endowments in ECOWAS region, gains from trade have really been marginal in the region. ECOWAS members have poor performance in export of dynamic products; they remained commodity dependent in its exports, leading to transfer of economic gains across border. Over 90% of the region’s export is primary products with very little value-added which accentuated from commodity price and demand inelasticity resulting in terms of trade losses and volatile foreign earnings. Based on these facts, the study tries to investigate the impact of export diversification and composition on GDP growth and GDP per capita respectively. This was achieved using econometric analyses involving co-integration technique and a panel least square technique for the period of 1975-2009 and 1990-2007 respectively in 15 ECOWAS states. The study was deemed significant, as export diversification and manufacturing value-added index induced a positive and significant impact on per capita income growth. The study found high skewness of ECOWAS to commodity export in the period observed but a vertical diversification of product base would emanates more spill-over and surplus gains from the regions endowments. The conclusive finding centred on that fact that it is not how much that is exported that matters but very important is what is exported as regions with less specialization and more diversified exports generally experienced higher economic growth rates and contributed much more to overall exports. Notable recommendation for ECOWAS policy makers is the need to develop domestic processing capability and see export as originating from domestic sufficiency.
    Keywords: ECOWAS, Commodity export, Co-integration technique and Panel least square
    JEL: F1 F14 O10
    Date: 2013–11–14
  12. By: Peter Schochet
    Keywords: TAA, Trade Adjustment Assistance, Trade Act of 2002, Labor
    JEL: J
    Date: 2013–11–08
  13. By: Cavallari, Lilia; D'Addona, Stefano
    Abstract: This paper studies how trade margins respond to output and terms of trade shocks in different exchange rate regimes within a panel of 23 OECD economies over the period 1988-2011. Using a panel VAR model, we confirm the predictions of entry models about the behaviour of export margins over the cycle. In addition, we find remarkable differences depending on the exchange rate regime. We document that fixed exchange rates have a positive effect on the extensive margin of trade in response to external shocks while flexible exchange rates have a pro-trade effect in response to output shocks. Our results imply that as long as extensive margins are a relevant portion of trade and external shocks are a major source of business cycle variability, the stabilization advantage of flexible exchange rates may be lower than previously thought.
    Keywords: trade margins, international business cycle, Panel VAR model, exchange rate regimes.
    JEL: F14 F4
    Date: 2013
  14. By: Disdier, Anne-Celia; Fontagne, Lionel; Cadot, Olivier
    Abstract: Recent years have seen a surge in economic integration agreements (EIAs) and the development of non-tariff measures (NTMs). As a consequence, a growing number of EIAs include provisions on NTMs. However, little attention has been given in the literature to the effects of NTM liberalization in the context of EIAs. In this paper, we focus on provisions for technical regulations and analyze whether the North-South harmonization of technical barriers affects international trade. Using a gravity equation, it tests whether, as a result of the deep integration associated with standards provisions included in the EIA, the Southern partners'trade expands with the North, but at the expense of their trade with non-bloc Southern partners. Empirical results provide strong support for this conjecture. Moreover, harmonization on the basis of regional standards negatively impacts the exports of developing countries to the North.
    Keywords: Free Trade,Trade Law,Emerging Markets,Trade and Regional Integration,Trade Policy
    Date: 2013–11–01
  15. By: Bo Xiong; John C. Beghin (Center for Agricultural and Rural Development (CARD))
    Abstract: Maximum residue levels (MRLs) regulations in plant products can create unnecessary trade barriers on one hand and enhance demand via risk mitigation or quality assurance on the other. We stipulate a generalized gravity equation model to disentangle the effects of MRLs on the import demand and foreign exporters’ supply. Applying the framework to the MRLs on pesticides imposed by high-income OECD countries, we find that the MRLs jointly enhance the import demand and hinder foreign exporters’ supply. In addition, exporters from the less and least developed countries are more constrained by the MRLs than their competitors from the developed world.
    Keywords: maximum residue level, sanitary and phytosanitary, food safety, nontariff barriers, gravity model. JEL classifications: F14, Q17
    Date: 2013–11
  16. By: Riedl, Maximilian
    Abstract: In this paper I present a simple theoretical model where firms and trade unions negotiate over wages. Firms have the possibility to offshore parts of the ir production and trade union members have a disutility from individual job loss fears. I show that higher job loss fears result in lower wages. As a Nash bargaining result, firms can use potential but non realized offshoring as a threat to enforce lower wages. Using a large German household survey, I can show evidence that increasing potential offshoring lowers wages through high job loss fears. --
    Keywords: offshoring,wage bargaining,job loss fears
    JEL: F16 J50
    Date: 2013
  17. By: Philippe MARTIN (Sciences-Po and CEPR); Thierry MAYER (Sciences-Po, CEPII and CEPR); Florian MAYNERIS (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches économiques et sociales (IRES) andCenter for Operations Research and Econometrics (CORE))
    Abstract: Clusters have already been extensively shown to favor firm-level economic performance (productivity, exports, innovation etc.). However, little is known about the capacity of firms in clusters to resist economic shocks. In this paper, we analyze whether firms that agglomerate in clusters and firms that have been selected to benefit from the \competitiveness cluster" industrial policy, implemented in France in 2005, have performed better on export markets during the recent economic turmoil. We show that, on average, both agglomeration and the cluster policy are associated with a higher survival probability of firms on export markets, and conditioning on survival, a higher growth rate of their exports. However, these effects are not stronger during the 2008-2009 crisis; if anything, the opposite is true. We then show that this weaker resilience of competitiveness cluster firms is probably due to the fact that firms in clusters are more dependent on the fate of the \leader", i.e. the largest exporter in the cluster.
    Keywords: Clusters, Competitiveness clusters, Exports, Crisis, Resilience
    JEL: F1 R10 R11 R12 R15
    Date: 2013–09–19
  18. By: Laura Rovegno (CREA, University of Luxembourg)
    Abstract: This paper analyses the effect of antidumping (AD) duties on the pricing behaviour of exporters targeted with these measures. Using product and firm-level data for South Korea, the study provides evidence of increased export unit values and firms’ markups following the imposition of AD ad valorem duties. These findings are consistent with the hypothesis that, unlike other import tariffs, AD duties are not absorbed by exporters. The results on firms’ average markups also suggest that the price adjustment following the imposition of AD duties occurs mostly through the export price, and not through reductions in the exporter’s home price. The analysis controls for the presence of other trade measures as well as the endogeneity in AD and other contingent protection measures.
    Keywords: endegenous trade policy, import tariffs, ad valorem duties, antidumping, markup, unit values, contigent protection
    JEL: F13 D22 D43 L11
    Date: 2013
  19. By: Farla, Kristine (UNU-MERIT / MGSoG)
    Abstract: This paper investigates micro and macro determinants of firms' investment behaviour using firm data from 101 developing and emerging economies. A substantial number of firms in our sample does not invest in fixed capital or invests little relative to sales revenue. Using a multilevel probit model we study what factors trigger investment and using a multilevel Heckman selection model we study what factors influence a firm's investment to sales ratio. Although we find that both micro and macro determinants explain investment behaviour, firms' investment behaviour is heterogeneous in nature and has little dependency on a country's macroeconomic setting. In addition, we find that, on average, firms which are completely foreign owned have a relatively lower investment to sales ratio. Finally, we find evidence which suggests that the probability of investing is higher for firms located in countries with more property rights protection and control of corruption and we find some evidence which suggests that foreign owned firms located in countries with `good' institutions invest relatively more.
    Keywords: Multilevel, Investment, Foreign ownership, Institutions
    JEL: E22 F20 O11 O12 O43
    Date: 2013
  20. By: Alege, Philip; Ogundipe, Adeyemi
    Abstract: This paper is an attempt to investigate the impact of services trade on economic development of Sub-Sahara African (SSA) countries. Our analysis is based on a panel data framework over the period 1990 to 2010 covering thirty-three countries. The paper employs the endogenous growth model to examine the nonlinearities associated with services exports and services imports in the economic development process of SSA countries under consideration. The trade data was disaggregated into travel, transport and other services. The panel data constructed was estimated using ordinary pooled, fixed effects and random effects model techniques and the efficient model was selected based on the Hausman test. The paper finds that both services exports and services imports enhance economic development process. The study also indicates that labour and capital play an important role in the SSA economies.
    Keywords: Economic Development, Services Trade, Panel Data Analysis
    JEL: C33 F1 O1
    Date: 2013–11–24
  21. By: Jean Fouré; Houssein Guimbard; Stéphanie Monjon
    Abstract: Unilateral climate policy, such as carbon pricing, represents an additional cost to the economy, especially to energyintensive industrial sectors, as well as those exposed to international competition. A border carbon adjustment (BCA) is often presented as an attractive policy option for countries that want to go ahead without waiting for a global climate agreement. We used the computable general equilibrium model MIRAGE-e to simulate the impact of the introduction of a BCA on imports of energy intensive products in EU and EFTA countries and to evaluate the export losses their main trade partners would suffer. Given that a BCA is a trade measure, it would certainly lead to disputes at the World Trade Organization (WTO). If the BCA is considered illegal, the losses suffered by some partners may justify retaliation, as authorized by a WTO dispute settlement. The overall aggregated impacts of these measures would be negative but marginal, meaning that neither the BCA nor trade retaliation would have a marked impact on consumers’ real income or GDP, while prohibitive retaliatory tariffs are more likely to target sensitive products in the EU. A BCA would ultimately be a signal of the EU’s willingness to maintain an ambitious climate policy.
    Keywords: emission trading scheme;border carbon adjustment;trade retaliation
    JEL: D58 F18 Q56
    Date: 2013–11
  22. By: Bo Cowgill (University of California at Berkeley); Cosmina Dorobantu (Oxford University); Bertin Martens (European Commission – JRC - IPTS)
    Abstract: An important EU Digital Single Market policy objective is to achieve an open and integrated market for online e-commerce in the EU, to make it easy for consumers to go outside their domestic market and shop online in other EU Member States. This study applies a standard gravity model of international trade to Google e-commerce data to estimate the prevalence of home bias in online shopping in the EU. It compares how much EU Member States trade domestically and with other Member States, and how much the EU trades with itself and with the rest of the world. The research confirms the findings of the (offline) international trade literature, according to which there is strong home bias. There is no unambiguous evidence about the strengths or weaknesses of the EU Digital Single Market. Strong intra-EU home bias suggests that online consumers have a tendency to stay in their home country market. Equally strong extra-EU home bias suggests that online consumers who do decide to shop abroad have a tendency to stay in the EU however, rather than going to a non-EU country. There are indications that online home bias is lower in a comparable cross-border trade setting in North America. Data and methodological limitations do not allow a more detailed analysis.
    Keywords: online trade, e-commerce, gravity, barriers to trade, home bias
    JEL: F15 O52
    Date: 2013–09
  23. By: Bernard, Andrew B.; Massari, Renzo; Reyes, Jose-Daniel; Taglioni, Daria
    Abstract: Two otherwise identical firms that enter the same market in different months, one in January and one in December, will report dramatically different annual sales for the first calendar year of operations. This partial year effect in annual data leads to downward biased observations of the level of activity upon entry and upward biased growth rates between the year of entry and the following year. This paper examines the implications of partial year effects using Peruvian export data. The partial year bias is very large: the average level of first-year exports of new exporters is understated by 65 percent and the average growth rate between the first and second year of exporting is overstated by 112 percentage points. This paper re-examines a number of stylized facts about firm size and growth that have motivated rapidly expanding theoretical and empirical literatures on firm export dynamics. Correcting the partial year effect eliminates unusually high growth rates in the first year of exporting, raises initial export levels, and shifts 10 percent of market entrants from below to above the median size. Revisiting an older set of facts on firm size and growth, the paper finds that correcting for partial year biases reduces the number of small firms in the firm size distribution and weakens the negative relationship between firm growth and firm size.
    Keywords: Microfinance,Markets and Market Access,Achieving Shared Growth,Economic Growth,Debt Markets
    Date: 2013–11–01
  24. By: Aurangzeb Zeb (University of Greenland, Denmark); Thanasis Stengos (University of Guelph, Canada; The Rimini Centre for Economic Analysis (RCEA), Italy)
    Abstract: This paper examines the relationship between Foreign Direct Investment (FDI) and economic growth. We extend the dualistic growth framework by Feder (1982), whereby we divide the economy into an exports and a non-exports sector and assume that the FDI is mainly entering the former. In order to empirically estimate the effects of FDI on economic growth, we employ a smooth coefficient semi-parametric approach. Our results show that countries with higher levels of FDI inflows experience higher productivity in the exports sector as compared with those with low level of FDI inflows. In general, we provide some evidence that FDI inflows play an important role during the development process: Initially, as an important determinant of growth, later on, by helping improve factor productivity in the exports sector and finally, through spillover effects due to fostering the linkages between the Multinational Corporations (MNC) and their host economy partners.
    Keywords: FDI; dualistic growth model; spillovers; productivity; smooth coefficient
    JEL: O47 F10 F21
    Date: 2013–09
  25. By: Elise S. Brezis (Bar-Ilan University); Ariel Soueri
    Abstract: Globalization has led to a vast flow of migration of workers but also of students. The purpose of this paper is to analyze the migration of individuals encompassing decisions already at the level of education. We present a “unified brain” drain model that incorporates the decisions of an individual related to migration vis‐à‐vis both education and work. In the empirical part, this paper addresses international flows of migration within the Bologna Process and presents strong evidence of concentration of students in countries with high‐quality education.
    Keywords: Brain drain; Globalization, Higher education; Human capital; Migration, Mobility, Bologna process
    JEL: F22 I23 J24
    Date: 2013–11
  26. By: Arita, Shawn; Tanaka, Kiyoyasu
    Abstract: Does investment liberalization in developing economies affect FDI decisions differently across individual firms? To address this question, we simulate the response of individual firms to reductions in investment costs across developing economies. We explore two policy experiments: elimination of setup-procedure requirements for foreign investors and a reduction in corporate tax rates on foreign-owned multinationals. We find that a relaxing of discriminatory foreign investment procedures induces middle productive firms to increase their entry and production in developing economies substantially, but the most productive firms to expand moderately. Multinationals expand their entry and production in developing economies more substantially following a decline in entry barriers than following a decrease in corporate tax rates.
    Keywords: Developing countries, Foreign investments, International business enterprises, FDI, Firm heterogeneity, Investment liberalization
    JEL: C68 F21 F23 O2
    Date: 2013–11
  27. By: Enrico Tosti (Bank of Italy)
    Abstract: The technology balance of payments concerns external transactions in disembodied technology. Since the introduction in Italy of a new data collection system based mainly on direct reporting by enterprises, credits and debits tend to be appreciably greater than they had been under the old system based on bank settlements; the overall deficit increases, especially in sales or other transfers of patents, royalties and other licences. The new data and the revision of the time series from 1992 are presented for the first time in this paper. Italy’s trade in disembodied technology remains relatively low as a percentage of GDP by comparison with most of the advanced economies. Its deficit is concentrated with the advanced economies, while it has surpluses vis-à-vis non-EU countries in general and some developing countries in particular. More than half of exports can be ascribed to manufacturing enterprises, whose position is in balance; the deficit, instead, derives from the service sector, with the exception of professional services (notably architecture and engineering). Finally, trade in disembodied technology is concentrated in a limited number of multinational enterprises.
    Keywords: technology balance of payments, disembodied technology, royalties and licenses, research and development
    JEL: O30 L84 L86 F23
    Date: 2013–10
  28. By: Zhi Wang; Shang-Jin Wei; Kunfu Zhu
    Abstract: Recent research by Koopman, Wang and Wei (AER, February 2014) has provided a framework to decompose a country’s total gross exports into four parts: (a) exports of domestic value-added that are eventually absorbed abroad, (b) exports of domestic value added that eventually return home, (c) foreign value added embedded in the country’s exports, and (d) pure double counted items due to intermediate goods crossing borders multiple times. While the KWW framework already has useful applications, many other applications would need decompositions at the sector, bilateral, or bilateral sector level. Such generalizations are challenging. In this paper, we overcome these challenges and derive a decomposition methodology appropriate for these levels. We present a number of results based on applying our methodology to the World Input-Output Database (WIOD) for 40 countries and 35 industries from 1995 to 2011.
    JEL: F1 F15
    Date: 2013–11
  29. By: Keisuke Kawata (Graduate School for International Development and Cooperation, Hiroshima University); Yasunori Ouchida (Graduate School of Social Science, Hiroshima University)
    Abstract: This study develops a two-country model, Home and Foreign, with offshoring and environmental spillover. A final good producer in Home can produce (homogeneous) final goods using customized inputs produced by its partner-supplier in Foreign. The intermediate input price is determined by Nash bargaining, presenting a hold-up problem. Additionally, input production causes transboundary pollution. Home and Foreign governments can set trade taxes. Moreover, the Foreign government can set the environmental standard. This model demonstrates that, under no international policy agreement, both the environmental standard and the quantity of the intermediate input are lower than the first-best levels. This ineffciency persists even if both governments conclude an agreement.
    Keywords: Offshoring; Intermediate input trade; Emission spillover; Environmental standard; Incomplete contract
    JEL: F21 F13 F18 L24 Q56
    Date: 2013–11
  30. By: Bertoli, Simone (CERDI, University of Auvergne); Rapoport, Hillel (Bar-Ilan University)
    Abstract: A growing number of OECD countries are leaning toward adopting quality-selective immigration policies. The underlying assumption behind such policies is that more skill-selection should raise immigrants' average quality (or education level). This view tends to neglect two important dynamic effects: the role of migration networks, which could reduce immigrants' quality, and the responsiveness of education decisions to the prospects of migration. Our model shows that migration networks and immigrants' quality can be positively associated under a set of sufficient conditions regarding the degree of selectivity of immigration policies, the initial pattern of migrants' self-selection on education, and the way time-equivalent migration costs by education level relate to networks. The results imply that the relationship between networks and immigrants' quality should vary with the degree of selectivity of immigration policies at destination. Empirical evidence presented as background motivation for this paper suggests that this is indeed the case.
    Keywords: migration, self-selection, brain drain, immigration policy, discrete choice models
    JEL: F22 O15 J61
    Date: 2013–11
  31. By: Wahl, Fabian
    Abstract: This study empirically establishes a link between medieval trade, agglomeration and contemporary regional development in ten European countries. It documents a statistically and economically significant positive relationship between prominent involvement in medieval trade and commercial activities and regional economic development today. Further empirical analyses show that medieval trade positively influenced city development both during the medieval period and in the long run; they also reveal a robust connection between medieval city growth and contemporary regional agglomeration and industry concentration. A mediation analysis indicates that a long-lasting effect of medieval trade on contemporary regional development is indeed transmitted via its effect on agglomeration and industry concentration. This research thus highlights the long-run importance of medieval trade in shaping the development of cities as well as the contemporary spatial distribution of economic activity throughout Europe. The path-dependent regional development processes caused by medieval commercial activities help explain the observed persistent regional development differences across the European countries considered. --
    Keywords: Medieval Trade,Agglomeration,Regional Economic Development,Path-Dependency,New Economic Geography
    JEL: F14 N73 N93 O18 R12
    Date: 2013
  32. By: Simone Valente (Department of Economics, Norwegian University of Science and Technology); Luca Bretschger (Center of Economic Research, ETH Zürich)
    Abstract: We study the incentives of selfish governments to tax tradable primary inputs under asymmetric trade. Using an empirically-consistent model of endogenous growth, we obtain explicit links between persistent gaps in productivity growth and the observed tendency of resource-exporting (importing) countries to subsidize (tax) domestic resource use. Assuming uncoordinated maximization of domestic welfare, national governments wish to deviate (i) from inefficient laissez-faire equilibria as well as (ii) from efficient equilibria in which domestic distortions are internalized. The incentive of resource-rich countries to subsidize hinges on slower productivity growth and is disconnected from the typical incentive of importers to tax resource inflows i.e., rent extraction. The model predictions concerning the impact of resource taxes on relative income shares are supported by empirical evidence.
    Keywords: Productivity Growth, Exhaustible Resources, International Trade.
    JEL: F43 O40
    Date: 2013–11–22
  33. By: Bernard M. Hoekman
    Abstract: In 2011 the World Bank Group (WBG) issued a new trade strategy. This identifies the primary axes for WBG engagement and support activities and areas where action is likely to have the greatest positive impact in terms of helping developing countries to integrate further into the world economy and to benefit from global trade opportunities. This paper briefly discusses the rationale for the development of a strategy and some criticisms that have been directed at it, in particular the view that the strategy neglects to prioritize trade liberalization and as a result is less effective.
    Keywords: World Bank, trade, development, strategy, economic development, policy advice, development assistance
    JEL: F13 O19 O24
    Date: 2013–06
  34. By: Kenji Fujiwara (School of Economics, Kwansei Gakuin University)
    Abstract: We construct an exporting monopoly model to compare destination- and origin-based commodity taxes in a context of a trade and domestic tax reform. We show that an export tax reduction and a change in destination (resp. origin) tax that fix the world price is strictly Pareto-improving (resp. deteriorating), which holds whether markets are integrated or segmented. This result may provide a new rationale for preferring the destination-based consumption tax to the origin-based production tax that has been discussed in the literature of tax harmonization and tax competition.
    Keywords: export tax, consumption tax, production tax, monopoly, strict Pareto improvement/deterioration
    JEL: F12 F13 H2
    Date: 2013–11
  35. By: Theodore H. Moran (Georgetown University)
    Abstract: This paper presents a framework for differentiating between foreign acquisitions of companies that might plausibly pose a national security threat to the home country of the target acquisition and those that do not. 1 This framework originally derives from the experience of the United States. The framework is then shown to be relevant and useful for foreign acquisitions in Canada and Australia. In each case, Chinese acquisitions of US, Canadian, or Australian firms are highlighted. The paper concludes by arguing that this framework can serve as an effective non-discriminatory basis for separating genuine from implausible national security threats from foreign acquisitions across OECD states, to include all countries around the world.
    Keywords: Multinational Firms and International Business, Globalization and Finance, Policies to Deal with the Impacts of Globalization, Regulation and Business Law
    JEL: F23 K23
    Date: 2013–11
  36. By: Ben Jebli, Mehdi; Ben Youssef, Slim; Ozturk, Ilhan
    Abstract: We use panel cointegration techniques to investigate the causal relationship between CO2 emissions, renewable and non-renewable energy consumption, and trade openness in three different models for a panel of twenty five OECD countries over the period 1980-2009. Also the validity of the Environmental Kuznets Curve (EKC) hypothesis has been tested for these countries. Short-run Granger causality tests show the existence of a unidirectional causality running from the square of per capita output to per capita CO2 emissions and per capita non-renewable energy consumption and a unidirectional causality running from per capita real exports to per capita CO2 emissions. There is an indirect short-run causality running from per capita output to per capita non-renewable energy consumption. In the long-run, the FMOLS and DOLS estimates suggest that per capita GDP and per capita non-renewable energy consumption have a positive impact on per capita CO2 emissions. The long-run estimates suggest that the square of per capita GDP, per capita renewable energy consumption, and per capita real exports and imports have a negative impact on per capita CO2 emissions. Therefore, more trade openness and more use of renewable energy are efficient strategies to combat global warming.
    Keywords: Environmental Kuznets curve; Renewable energy; Non-renewable energy; Trade openness; CO2 emissions; Panel cointegration techniques.
    JEL: C33 F18 Q42 Q43
    Date: 2013–11
  37. By: Srholec , Martin (CIRCLE, Lund University)
    Abstract: Much has been written about innovation cooperation. But little research has been done to explain national differences thereof. Using macro and micro evidence from the fourth Community Innovation Survey, we econometrically investigate the extent to which national framework conditions account for the propensity of firms to cooperate on innovation at home and abroad. The results indicate strong differences across countries in the latter. Firms operating in countries with less developed research infrastructure are shown to be more likely to cooperate with foreign partners, hence supporting the thesis that in this context the foreign linkages tend to be diasporic. Size and openness of the economy matters too. But characteristics of firms that explain cooperation have not been found to differ much by country. In this respect, the results draw attention to limits of the existing micro datasets on innovation cooperation.
    Keywords: Innovation; cooperation; innovation system; multilevel model; Europe
    JEL: D21 F23 L16 O23
    Date: 2013–11–19
  38. By: Narula, Rajneesh (John H. Dunning Centre for International Business, Henley Business School, University of Reading); Prasad Kodiyat, Tiju (Centre for Research in Economics and Finance, Cranfield School of Management)
    Abstract: There has been an impressive spurt in the outward FDI activity of Indian MNEs since the 1990s. However, despite the rhetoric, this growth has not been exceptional, when compared to other similarly developed countries. Received economic arguments propose that successful outward investors tend to be the most competitive domestic firms in their home economy. Their firm-specific assets tend to be a function of the political economy and economic structure of the home economy. In IB terms, this means that the ownership-specific assets of Indian multinationals are a subset of the ownership assets of their parent companies, which in turn are largely determined by the location-specific assets of the home economy. The evidence suggests that the strengths and weaknesses in the location assets of India have caused pockets of excellence to emerge, but that these conditions do not lend themselves to a broader growth in competitiveness, meaning that further rapid growth is ultimately not sustainable. Systematic upgrading and radical policy changes are needed to build up India's knowledge infrastructure and institutions to support a shift in India's competitive advantages to new sectors outside these pockets. This ultimately means a policy emphasis on the manufacturing sector, and within that, promoting a shift from low-tech to higher technology manufacturing sectors, and a strengthening of the formal sector.
    Keywords: India, innovation systems, comparative advantage, competitiveness, MNEs, infrastructure, globalization, location advantages
    JEL: F23 O32
    Date: 2013
  39. By: Mohamed Ben Abdallah (Tunis El-Manar University, Faculté des Sciences Economiques et de Gestion de Tunis (FSEGT), Laboratoire d'Intégration Economique Internationale (LIEI)); Abdelkader Ait El Mekki (National School of Agriculture in Meknes); Gamal Siam (Faculty of Agriculture at Cairo University)
    Abstract: This report presents the macro-effects of deep trade integration between the EU and respectively Egypt, Morocco and Tunisia. Overall, the simulation results from both a Computable General Equilibrium (CGE) model and Social Accounting Matrixes (SAM) analyses show that further trade liberalisation leads to a general gain for the countries under review, with the effect being more pronounced for combining tariff elimination with Non-Tariff Measures (NTMs) reduction.
    Keywords: Economic integration, agricultural trade, modelling tools, food security
    JEL: F15 C68 D57 Q17
    Date: 2013–09
  40. By: Kym Anderson; Anna Strutt
    Abstract: Rapid economic growth in some emerging economies in recent decades has significantly increased their global economic importance. If this rapid growth continues and is strongest in resource-poor Asian economies, the growth in global demand for imports of primary products also will continue, to the on-going benefit of natural resource-rich countries. This paper explores how global production, consumption and trade patterns might change over the next two decades in the course of economic development and structural changes under various scenarios. We employ the GTAP model and Version 8.1 of the GTAP database with a base year of 2007, along with supplementary data from a range of sources, to support projections of the global economy to 2030. We first project a baseline assuming trade-related policies do not change in each region but that factor endowments and real GDP grow at exogenously-estimated rates. That baseline is compared with two alternative scenarios: one in which the growth rates of China and India are lower by one-quarter, and the other in which this slowdown in emerging economies leads to slower productivity growth in the primary sectors of all countries. Throughout the results, implications are drawn out for natural resource-abundant economies, including Australia and New Zealand.
    Keywords: Global economy-wide model projections; Asian economic growth and structural change; booming sector economics; food security
    JEL: D58 F13 F15 F17 Q17
    Date: 2013
  41. By: Narula, Rajneesh (J.H. Dunning Centre for International Business, Henley Business School)
    Abstract: I take as a starting point that the location-specific assets of the home country determine to a significant degree firm-specific assets of its firms and MNEs. This strong bond persists because of the interdependence between actors within a system, which has a growing cross-border aspect due to globalization. I highlight the importance of institutions, not as a black box of rules, but as an invisible mesh that envelope, shape and constrain the actions of actors in a given system, and these actors are themselves - collectively and occasionally individually - responsible for the nature of institutions. I highlight that location advantages are not always freely available to all actors in a given location. There are important location advantages that are 'members-only' for which access is restricted to incumbents, and do not have a public good nature implied in the IB literature. This lies at the heart of the inertia of firms, and the difficulties of successfully leveraging location-bound assets in other countries, as well as the challenges of 'leaving home', since they may forfeit domestic 'membership' to do so. Home country L assets play a large part in defining EMNE FSAs, and where governments are unable to upgrade these (due to government failure or regulatory capture) it weakens the building block upon which sustainable outward FDI is possible.
    Keywords: collocation, innovation systems, emerging countries, MNEs, institutions, globalization, location advantages
    JEL: F23 O32
    Date: 2013
  42. By: Rui Albuquerque; Luis Brandao-Marques; Miguel A. Ferreira; Pedro Matos
    Abstract: We develop and test the hypothesis that foreign direct investment promotes corporate governance spillovers in the host country. Using firm-level data on cross-border mergers and acquisitions (M&A) and corporate governance in 22 countries, we find that cross-border M&As are associated with subsequent improvements in the governance, valuation, and productivity of the target firms’ local rivals. This positive spillover effect is stronger when the acquirer is from a country with stronger shareholder protection and if the target’s industry is more competitive. We conclude that the international market for corporate control promotes the adoption of better corporate governance practices around the world.
    Keywords: Foreign direct investment;Corporate governance;Spillovers;Competition;Foreign direct investment, Corporate governance, Cross border mergers and acquisitions, Spillovers
    Date: 2013–11–12
  43. By: Sari Pekkala Kerr; William R. Kerr; William F. Lincoln
    Abstract: We study the impact of skilled immigrants on the employment structures of U.S. firms using matched employer-employee data. Unlike most previous work, we use the firm as the lens of analysis to account for a greater level of heterogeneity and the fact that many skilled immigrant admissions are driven by firms themselves (e.g., the H-1B visa). OLS and IV specifications find rising overall employment of skilled workers with increased skilled immigrant employment by firm. Employment expansion is greater for younger natives than their older counterparts, and departure rates for older workers appear higher for those in STEM occupations compared to younger worker.
    JEL: F15 F22 J44 J61 O31 O32
    Date: 2013–11
  44. By: Slobodan Djajic (The Graduate Institute); Alice Mesnard (City University)
    Abstract: Guest-worker programs have been providing rapidly growing economies with millions of temporary foreign workers over the last couple of decades. With the duration of stay strictly limited by program rules in most of the host countries and wages paid to guest workers often set at sub-market levels, many of the migrants choose to overstay and seek employment in the underground economy. This paper develops a general-equilibrium model that relates the flow of guest workers transiting to the underground economy to the rules of the program, enforcement measures of the host country and market conditions facing migrants at home and abroad.
    Keywords: Temporary migration, undocumented workers, underground economy
    JEL: F22
    Date: 2013–11
  45. By: Jose-Victor Rios-Rull (University of Minnesota); Yan Bai (University of Rochester)
    Abstract: The paper explores to what extent demand shocks can solve the open economy puz- zles. To this purpose, we pose a shopping model structure a la Bai, R 퀱os-Rull, and Storesletten (2011) on top of an otherwise standard two-country international real busi- ness cycle model. Shopping for goods take effort, which prevents perfect matching between potential customers and producers. Larger demand in a country increases its consumption for both home and foreign goods. Real exchange rate and terms of trade depreciate in response to the larger demand. Larger demand also induces more shop- ping and so higher output and TFP. Thus, demand shock under our shopping model generates countercyclical terms of trade and solves the Backus-Smith puzzle.
    Date: 2013
  46. By: David Byrne; Brian K. Kovak; Ryan Michaels
    Abstract: This paper studies price and quality differences across international intermediate input suppliers. We develop price measures that account for (i) differences in product characteristics, (ii) unobserved quality differences, and (iii) pure (frictional) price dispersion across suppliers. Using uniquely detailed transaction- level data from the semiconductor industry, we document large average price differences across suppliers for observationally identical products, and find that price differentials close over the product life cycle. We interpret this finding in a model where buyers face costs of switching suppliers. The theory demonstrates how to use the observed price dynamics to adjust prices for unobserved quality differences across suppliers. The results of this analysis reveal that pure price dispersion and unobserved quality differences are both important in this market. These two features make it difficult to construct constant-quality import price indexes, which generally assume away pure price dispersion. We document the resulting upward bias in standard price indexes, develop a quality-adjusted index for semiconductor fabrication, and propose a general method for bounding the true constant-quality price index.
    JEL: D43 L63
    Date: 2013–11
  47. By: Hitoshi Tanaka (Faculty of Economics, Hokkai-Gakuen University); Tatsuro Iwaisako (Graduate School of Economics, Osaka University)
    Abstract: This paper examines how intellectual property rights (IPR) protection affects innovation and foreign direct investment (FDI) using a North-South quality-ladder model incorporat- ing the exogenous and costless imitation of technology and subsidy policies for both R&D and FDI. We show that for the interior steady state to be stable, either R&D or FDI sub- sidy rates must be positive. Our findings also indicate that strengthening IPR protection promotes both innovation and FDI. Moreover, a strengthening of IPR protection can also improve welfare if the initial IPR protection in the South is weak and the R&D subsidy rate is not too high.
    Keywords: foreign direct investment, innovation, intellectual property rights protection
    JEL: F43 O33 O34
    Date: 2013–07
  48. By: Lin, Mi (University of Lincoln); Kwan, Yum K. (Department of Economics & Finance, City University of Hong Kong)
    Abstract: This paper investigates the geographic extent of foreign direct investment (FDI) technology spillovers and diffusion in the People’s Republic of China (PRC). We employ spatial dynamic panel econometric techniques to detect total factor productivity (TFP) innovation clusters, uncover the spatial extent of technology diffusion, and quantify both the temporal and spatial dimensions of FDI spillovers. Our empirical results show that FDI presence (measured as employment share) in a locality will generate negative and significant impacts on the productivity performance of domestic private firms in the same location. Nevertheless, these negative intra-regional spillovers are found to be locally bounded. Domestic private firms enjoy positive FDI spillovers through interregional technology diffusion via labor market channels; these interregional spillovers appear in spatial feedback loops among higher-order neighboring regions. In the long run, the positive interregional spillovers outweigh the negative intra-regional spillovers, bestowing beneficiary total effects on domestic firms through labor market channels. FDI spillovers measured as sales income share, however, are negative in both intra-regional and interregional dimensions.
    Keywords: FDI spillovers; spatial diffusion; spatial dynamic panel; PRC economy
    JEL: F21 O33 R12
    Date: 2013–11–01
  49. By: Farla, Kristine (UNU-MERIT / MGSoG); de Crombrugghe, Denis (Maastricht University); Verspagen, Bart (UNU-MERIT / MGSoG)
    Abstract: Studies of the relationship between FDI and domestic investment levels reach contradictory findings. We revisit this empirical relationship and argue that some of the conflicting evidence may be explained by the use of poor proxies for the true underlying variables and by questionable methodological choices. Using more appropriate proxies and statistical models, we conclude that FDI inflows contribute positively to domestic investment levels. We also find weak evidence that `good governance', proxied with using the Worldwide Governance Indicators (and two rent seeking indicators we built), encourages investment. Theoretical arguments support either positive or negative interaction effects of `good governance' and FDI on investment, invoking either technological spillovers or rent seeking behaviour. We tend to conclude that the negative rent seeking effect is dominant.
    Keywords: Investment, FDI, Institutions, Technology spillover, Rent seeking
    JEL: E02 F21 O11 O30 O57
    Date: 2013
  50. By: Narula, Rajneesh (J.H. Dunning Centre for International Business, Henley Business School)
    Abstract: This paper examines the role of FDI in promoting industrial development, and raises a rather important question: Why, if FDI is such an important avenue to promote development, is their little evidence on concomitant industrial development in most developing countries? This chapter takes a look at the evidence on FDI and development and explores some of the causes for this ambiguity. The complexities of global value chains and networks have begun to trivialize the simplistic principle that increased MNE activity automatically implies a proportional increase in spillovers and linkages. Policies towards MNEs need to be closely linked and integrated with industrial policy. MNE activity needs to be evaluated by considering the kinds of externalities that are generated; whether and how domestic actors can internalize them, and building up absorptive capacities to achieve this.
    Keywords: MNEs, absorptive capabilities, motives, IDP, services, developing countries
    JEL: F23 O14 O19
    Date: 2013
  51. By: Sjöholm, Fredrik (Research Institute of Industrial Economics (IFN))
    Abstract: Foreign direct investment has been of great importance in economic growth and global economic integration over the last decades. South East Asia has been part of this development with rapidly increasing inflows of FDI. However, there are large variations over time and between countries in the region as regard to the policies towards FDI, and in actual inflows of FDI. This chapter aims at examining the size of FDI in South East Asia and the trends in it. The main determinants of FDI in Southeast Asia as well as their effect on the host countries are also discussed and examined.
    Keywords: Foreign direct investment; Multinational firms; Southeast Asia; Economic development
    JEL: F21 F23 O53
    Date: 2013–11–14
  52. By: Robartus J. van der Spek; Bas van Leeuwen
    Abstract: In this paper we try to analyse market efficiency during the Seleucid and Parthian era in the Babylonian Empire. We find that prices in Babylon were less correlated with those in Rome than of most other regions around the Mediterranean. This suggests that Rome was indeed the urban centre of the Roman Empire and it also suggests that extensive trade (and/or tribute) relations existed around the Mediterranean Sea. Babylon, however, was located far away from direct sea or land trade routes. In addition, it produced largely barley (because of salinization of the soil) which was the less preferred grain around the Mediterranean. The price in Babylon remained relatively low, however, because of its productive agriculture and because barley has less nutritional value per litre than wheat. This lack of trade meant that markets were more sensitive to external shocks. Markets could not cope with external supply or demand shocks by means of imports (or exports). This increased volatility, as described by Persson, means less efficient markets. Indeed, we find that coefficient of variance of prices of staple crops was higher in Babylon than elsewhere, indicating less efficient markets. In addition, after a price shock, prices take a long to converge to their normal values. We find that for both barley and dates the expected average duration of a deviation of the price was considerable, varying between 9.5 months and 3.5 years. This suggest that often there may be autocorrelation, that is that bad harvest in year t may lead to a bad harvest in year t+1 because of lack of storage and lack of seed. Equally, recovery to normal prices seems largely to take place during a harvest instead of in between harvests. Hence, the relatively long duration of high prices and the lack of recovery in between harvests suggest the absence of substantial imports. Quick recovery was possible, though, and this must be related then to the fertility of the land, which allowed abundant harvests, and not to imports from afar. On occasion relief could be effected by short distance trade (e.g. from Uruk or the Diyala region) if famine was caused by a very local problem which only affected the city of Babylon and its close environment.
    Keywords: Babylon, Rome, trade, price volatility
    Date: 2013–11
  53. By: Seghir, Majda; Damette, Olivier
    Abstract: This paper explores the idea of regime switching as a new methodological approach to bring new insights into the natural resource curse hypothesis in the case of oil exporting countries. The basic idea is that when a threshold of oil dependence is passed, the relationship between economic growth and its determinants could move smoothly from a regime to another. Relying upon the estimation of a PSTR model, our findings offer strong evidence that oil revenues non-linearly impacts economic growth and that resource curse only exists under the condition of high oil dependence. More precisely, below the level of 51% of oil dependence, oil revenues have a positive impact on economic growth, whereas above this level, it have serious drawbacks on economic growth through inefficiencies into the quality and the quantity of government expenditures.
    Keywords: Natural resource curse, Panel Smooth Transition Regression, Oil exporting countries,
    JEL: O11 O43 Q32 Q43
    Date: 2013
  54. By: Karl P. Sauvant (Columbia University and University of North Carolina); Victor Zitian Chen
    Abstract: China has become the world’s third largest outward investor, behind the United States and Japan. A growing body of literature suggests that China’s regulatory framework for outward foreign direct investment (OFDI) is a determinant of the country’s rising OFDI. This paper presents a holistic review of that framework, including some possibilities for its improvement. Overall, China’s framework serves two objectives : to help Chinese firms become more competitive internationally and to assist the country in its development effort. In pursuing these objectives, the regulatory framework has moved from restricting, to facilitating, to supporting, to encouraging OFDI; but there are still strong elements of administrative control that make it cumbersome. State-owned enterprises (SOEs) seem to benefit particularly from the current framework when internationalizing through FDI.
    Keywords: China, Outward foreign direct investment, OFDI, formal institutions, government
    JEL: F21 F23 F31 G18 G28 G38 H1 H2 H3 K2 K3 M16 P33
    Date: 2013–11
  55. By: Bijwaard, Govert (NIDI - Netherlands Interdisciplinary Demographic Institute); Wahba, Jackline (University of Southampton)
    Abstract: We estimate the impact of the income earned in the host country on return migration of labor migrants from developing countries. We use a three-state correlated competing risks model to account for the strong dependence of labor market status and the income earned. Our analysis is based on administrative panel data of recent labor immigrants from developing countries to the Netherlands. The empirical results show that intensities of return migration are U-shaped with respect to migrants' income, implying a higher intensity in low- and high- income groups. Indeed, the lowest-income group has the highest probability of return. We also find that ignoring the interdependence of labor market status and the income earned leads to an overestimating the income effect on departure.
    Keywords: migration dynamics, labour market transitions, competing risks, immigrant assimilation
    JEL: F22 J61 C41
    Date: 2013–11
  56. By: Renato Baumann
    Abstract: Since the early 1950s Latin American countries have made systematic efforts to foster regional transactions. Nevertheless, the indicators of relative importance of regional trade remain well below the corresponding figures in other regions. This paper argues that a process of integration should take into account the differences between what can be achieved by negotiating with closer neighbours and with geographically distant partners. Also, at present there is an increasing competition from Asian goods, which have negatively affected Latin American producers. Among the lessons from the recent Asian experience are the economic links among countries that have helped to improve competitiveness as well as to foster the degree of convergence of the GDP growth rates of the participating countries.
    Keywords: regional integration, productive complementarity, competitiveness and trade barriers
    Date: 2013–06
  57. By: Aikaterini Kavallari (LEI, part of Wageningen UR); Marie-Luise Rau (LEI, part of Wageningen UR); Martine Rutten (LEI, part of Wageningen UR)
    Abstract: This report presents the simulations of deeper economic integration in the Euro-Mediterranean area by applying the general equilibrium model MAGNET. The scenarios are conducted in order to provide insight about how growth in North Africa, specifically Egypt, Morocco and Tunisia, could potentially be promoted. The focus is on the agri-food sectors, which are investigated in the context of the Euro-Mediterranean Partnership, framed within the negotiations of Deep and Comprehensive Free Trade Agreements (DCFTAs) between the European Union and respectively Egypt, Morocco and Tunisia. The report also refers to Turkey, being a significant trading partner in the Mediterranean basin. Four scenarios are analysed in the horizon 2020, by paying special attention to key challenges such as non-tariff measure removal, world food price rising, productivity gains, and food waste mitigation.
    Keywords: Economic integration, agricultural trade, modelling tools, food security
    JEL: F15 C68 D58 Q17
    Date: 2013–09
  58. By: Chilosi, David; Federico, Giovanni
    Abstract: This paper contributes to the debate on globalization and the great divergence with a comprehensive analysis of trends, causes and effects of the integration of Asia in the world market from 1800 to the eve of World War Two, based on a newly compiled data-set. The analysis finds that: most price convergence occurred before 1870, with only little disintegration in the inter-war years; market integration was determined to a large extent by the fall of Western trading monopolies; it implied significant static welfare gains and emerges as a major cause of substantial improvements in the terms of trade.
    JEL: B1 O53 N0
    Date: 2013–11
  59. By: Marco DELOGU (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and University of Luxemburg); Frédéric DOCQUIER (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and FNRS, National Fund for Scientific Research); Joël MACHADO (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: This paper quantitatively investigates the short- and long-run effects of liberalizing global migration on the world distribution of income. We develop and parametrize a dynamic model of the world economy with endogenous migration, fertility and education decisions. We identify bilateral migration costs and their legal component for each pair of countries and two classes of worker. Our analysis reveals that the effects of a liberalization on human capital accumulation, income and inequality are gradual and cumulative. In case of a complete liberalization, the world average level of GDP per worker increases by 20 percent in the short-run, and by more than 55 percent after 50 years. The world average index of inequality decreases and the liberalization path has stochastic dominance over the Baseline-As-Usual. These results are very robust to our identifying assumptions. We also analyze partial liberalization shocks: effi ciency and inequality e¤ects are roughly proportional to the "liberalization rate".
    Keywords: Migration, Migration policy, Liberalization, Growth, Human Capital, Fertility, Inequality
    JEL: O15 F22 I24
    Date: 2013–11–15
  60. By: Stephen Drinkwater (WISERD, CMPR and Department of Economics, Swansea University); Michał Garapich (CRONEM, University of Roehampton)
    Abstract: Debates have persisted about the character of the large East-West population flows that followed the accession of Poland and other Central and Eastern European states to the EU in 2004. Some of the key discussions surround the extent to which the mobility has been temporal and hence how likely these migrants are to settle permanently or to stay for long periods in host countries. This paper further enhances the understanding of such issues mainly through examining survey data on 700 Polish nationals in seven English and Welsh towns and cities, and supplemented by an analysis of qualitative information obtained from the respondents. Three categories of migrants are initially identified on the basis of their intentions of stay in the UK. Multinomial logit models are then estimated to examine the characteristics of individuals in each category to establish the factors that influence migration strategies and changes in plans. The results indicate that although standard socio-economic characteristics tend to be insignificant, migration strategies and changes in intentions are affected by the migrant’s view of whether their job matches their expectations, the time of entry into the UK and remittances. Analysis of the qualitative information provides a complementary perspective and re-inforces some of the key findings in relation to the factors determining changes in the anticipated length of stay.
    Date: 2013–11
  61. By: Prema-chandra Athukorala; Archanun Kohpaiboon
    Abstract: This paper examines the emerging trends and patterns of merchandise trade in Southeast Asia and their implications for growth and structural changes in domestic manufacturing, with emphasis on the on-going process of global production sharing. The analysis reveals that participation in global production networks (GPNs) has strengthened economic interdependence among the Southeast Asian countries, and between these countries and China and the other major economies in East Asia, but this has not lessoned the dependence of growth dynamism of these countries on the global economy. The operation of the regional cross-border production networks depends inexorably on trade in final goods with North America and the European Union. Reflecting differences in policy regimes and the overall business climate, the degree of integration within GPNs and the resultant impact on industrial upgrading varies notably among the countries in the region.
    Keywords: global production sharing, global production networks, Southeast Asia, industrialization
    JEL: F14 L60
    Date: 2013
  62. By: Ekaterina Dyachenko (National Research University Higher School of Economics. HSE Branch in Perm, Library. Electronic resources librarian;)
    Abstract: In this study we compare internationalization of academic journals in six fields of science. Internationalization was investigated through journals' concentration on publishing papers from particular countries, relationship between the geographical distributions of editors and authors, and relationship between language of publication and the geographical distribution of papers. Having analyzed more than 1000 journals we can state that social sciences literature in the fields considered is still nationally and linguistically fragmented more than natural sciences literature, but in some cases the gap is not so big. One of the consequences concerning research output assessment is that usefulness of international databases having national disparity in coverage is still limited in social sciences
    Keywords: scientometrics, Web of Science, sociology, economics, political science.
    JEL: Z
    Date: 2013
  63. By: Rebecca Mendelsohn (Australian National University and Australia and New Zealand School of Government); Allan Fels
    Abstract: Foreign investment has played an important role in the Australian economy since the country's foundation. Part of the latest wave of foreign direct investment (FDI) in Australia has been by Chinese firms, and largely by state-owned enterprises with connections to the Chinese state. Despite the value it has generated for the Australian economy, Chinese FDI has been controversial and has exposed some of the shortcomings in Australia's foreign investment review process. This paper evaluates Australia's foreign investment regime, and pays particular attention to the Foreign Investment Review Board (FIRB). Questions are asked about how closely the FIRB's role and processes regulatory best practice. The paper also considers whether greater fidelity by the FIRB to principles of good governance could better serve Australia's broad policy interests and reduce Chinese perceptions of an opaque and discriminatory foreign investment regime.
    Keywords: China; Australia; Foreign Direct Investment; Regulation; Good Governance
    JEL: K2
    Date: 2013–11
  64. By: Valeria Gattai
    Abstract: This paper surveys recent contributions about internationalization and performance of Italian enterprises. It covers both theoretical and empirical studies taking a microeconomic perspective and studying a potential link between firms’ global involvement and heterogeneity in economic, human capital & innovation and financial measures. The discussion is organized in an intuitive and non-technical way. More than 40 papers are analyzed from a multifaceted perspective, considering their research outline, internationalization measures, performance indicators, causality and results.
    Keywords: Internationalization, Performance, Italy, Firm-level data, Survey
    JEL: F1 F2 L2
    Date: 2013–11
  65. By: Marion Mercier (DIAL - Développement, institutions et analyses de long terme - Institut de recherche pour le développement [IRD], PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: This paper investigates the impact of political leaders' migration experience on the quality of their leadership. We build up an original database on the personal background of 932 politicians who were at the head of the executive power in a developing country over the 1960-2004 period. We put forward a positive e ffect of the leader having studied abroad on the level of democracy in his country during his tenure. This e ffect is shown to be independent from the leader's education level, as well as from his profession. Moreover, it is mainly driven by countries with a poor initial level of democracy. These results are con rmed by various robustness tests. They propose a new channel through which migration may a ect politics in the sending countries, namely the emergence of the elites.
    Keywords: Political leaders ; Migration ; Democracy ; Developing countries
    Date: 2013–11
  66. By: Maksim Rudnev (National Research University Higher School of Economics, Laboratory for Comparative Studies of Mass Consciousness. Research Fellow)
    Abstract: This paper challenges the common assumption that basic human values remain stable during the lifetime of an individual. The author demonstrates individual value change by studying migrants’ values which are prone to change after a move to a new country. Using cross-sectional data, the author estimated the relative impacts of country of birth and country of residence – and values that are common – on individual values of migrants. Values were measured by Schwartz’s questionnaire as well as Inglehart’s Self-Expression items. Cross-classified multilevel regression models were applied to the sample of migrants, selected from five rounds of the European Social Survey. The results demonstrated the significance of both the country of residence and the country of birth as well as values which are common in these countries. Surprisingly, the impact of the country of residence on migrants’ values appeared to be higher than the country of birth. Furthermore, values which are common in the country of residence have a higher impact on migrant values than values widespread in their country of birth. The findings suggest that values are only partly formed during the formative period and keep changing throughout a person’s life
    Keywords: basic values, cross-classified multilevel model, value change, value adaptation, intra-European migrants, European Social Survey
    JEL: Z10
    Date: 2013
  67. By: Daniel H. Rosen (Rhodium Group); Thilo Hanemann
    Abstract: The United States and China are at a turning point in their investment relationship. China’s previous investments in the US were predominantly in government securities, while other holdings were negligible. Recently, the accumulation of treasury securities has slowed and direct investments by Chinese firms have risen steeply, with Beijing signaling greater support for portfolio investment outflows as well. This article describes the nascent shift in patterns of Chinese investment in the United States and uses the case of direct investment to examine the implications for US-China relations. We discuss current and future policy issues presented by Chinese foreign direct investment (FDI) in the US, including national security, market access and antitrust.
    Keywords: International Investment, International Economic Order, foreign direct investment, FDI, Foreign Exchange
    JEL: F21 F02 F31 P16
    Date: 2013–11
  68. By: Barnebeck Andersen,Thomas; Barslund, Mikkel; Worm Hansen, Casper; Harr, Thomas; Sandholt Jensen, Peter
    Abstract: This Working Document provides an estimate of China’s impact on the growth rate of resource-rich countries since its WTO accession in December 2001. The authors’ empirical approach follows the logic of the differences-in-differences estimator. In addition to temporal variation arising from the WTO accession, which they argue was exogenous to other countries’ growth trajectories, the authors exploit spatial variation arising from differences in natural resource wealth. In this way they can compare changes in economic growth in the pre- and post-accession periods between countries that benefited from the surge in demand for industrial commodities brought about by China’s WTO accession and countries that were less able to do so. They find that that roughly one-tenth of the average annual post-accession growth in resource-rich countries was due to China’s increased appetite for commodities. The authors use this finding to inform the debate about what will happen to economic growth in resource-rich countries as China rebalances and its demand for commodities weakens.
    Date: 2013–10
  69. By: Valentina G. Bruno; Bahattin Buyuksahin; Michel A. Robe
    Abstract: Commodity-equity and cross-commodity return co-movements rose dramatically after the 2008 financial crisis. This development took place following what has been dubbed the “financialization” of commodity markets. We first document changes since 2000 in the intensity of speculative activity in grain and livestock futures. We then use a structural VAR model to establish the role of speculative activity in explaining the strength of co-movements between grain, livestock and equity returns. We find that speculative intensity does not in itself affect the extent to which grain markets move in sync with the stock market. Rather, pre-crisis, financial speculators’ futures positions facilitated the transmission of macroeconomic shocks into grain markets. Strikingly, in the post-crisis period, this transmission channel weakened to the point of statistical insignificance. The role of speculative activity is less evident in livestock markets, where only macroeconomic conditions have a statistically significant impact on return co-movements with equities.
    Keywords: International topics; Recent economic and financial developments
    JEL: Q11 Q13 G12 G13
    Date: 2013
  70. By: Ian Preston (University College London)
    Abstract: The impact of immigration on the public finances is an important influence on public opinion. This paper aims to provide a thorough conceptual survey, pointing out the complexities of a full understanding and the relevance of indirect effects and covering both static perspectives and longer run dynamic issues. It considers simple accounting approaches which are relatively neglectful of behavioural responses but also tries to bring out the complexities in the nature of the relationship between rates of immigration and the public exchequer that come with more sophisticated modelling of its economic effects.
    Date: 2013–11
  71. By: Keisuke Kawata (Graduate School for International Development and Cooperation)
    Abstract: This study analyzes the effect of capital markets integration on labor market policies. To that end, it incorporates imperfect labor markets into a tax competition model. There exist two types of households, types 1 and 2, that are risk-averse. Each type of household is endowed with one unit of a worker. Additionally, households are endowed with capital. Type 2 households own lager amounts of capital than type 1 households. The government can choose the following policies: unemployment bene?ts and layoff, payroll, and capital subsidies or taxes. When capital markets are integrated, households can invest their capital in foreign capital markets. This study shows that the integration of capital markets leads to ineffcient policies under which labor productivity is high, but income inequality within a country and the risk of job loss are also high. As a result, the social welfare of each country in integrated capital markets is lower than in non-integrated capital markets.
    Keywords: Capital market integration, Unemployment risk, Labor market policies, Tax competition
    JEL: F21 J63 J65
    Date: 2013–11

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