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on International Trade |
| By: | Evdokia Moïsé; Silvia Sorescu |
| Abstract: | This report assesses how specific border procedures impact on the operation of supply chains and the resulting policy implications, using data from the OECD Trade Facilitation Indicators (TFIs) database and from the OECD-WTO database on trade-in-value-added. The assessment focusses on the impact of trade facilitation measures in three areas: on the amount of foreign value-added embodied in final domestic demand; on the amount of foreign value-added embodied in the gross exports of a reference country; and on the amount of domestic value-added embodied in foreign final demand for agriculture and primary products, low tech industries, medium-low tech industries, and high and medium-high tech industries. A small increase of 0.1 in TFIs performance could potentially generate increases in a country’s value-added “imports” in a range of between 1.5 and 3.5%, while in the case of “exports” these increases could range between 1 and 3%. Measures that enhance the predictability and the speed of movement of goods are critical factors that shape the sourcing decisions of companies. The impact is strongest when the value-added originates in medium-low tech industries, such as mining and quarrying or basic metals sectors, or in high and medium-high tech industries, such as transport equipment, chemicals and electrical and optical equipment, and is destined to high and medium-high tech industries. Key words: Customs, global value chains, GVCs, intermediate inputs, trade facilitation, trade flows, trade policy, transparency, simplification |
| Keywords: | transparency, customs, intermediate inputs, trade policy, trade facilitation, trade flows, global value chains, simplification, GVCs |
| JEL: | F1 F13 F14 F2 |
| Date: | 2015–05–29 |
| URL: | http://d.repec.org/n?u=RePEc:oec:traaab:181-en&r=int |
| By: | Ottaviano, Gianmarco; Peri, Giovanni; Wright, Greg C. |
| Abstract: | This paper explores the impact of immigrants on the imports, exports and productivity of service-producing firms in the U.K. Immigrants may substitute for imported intermediate inputs (offshore production) and they may impact the productivity of the firm as well as its export behavior. The first effect can be understood as the re-assignment of offshore productive tasks to immigrant workers. The second can be seen as a productivity or cost cutting effect due to immigration, and the third as the effect of immigrants on specific bilateral trade costs. We test the predictions of our model using differences in immigrant inflows across U.K. labor markets, instrumented with an enclave-based instrument that distinguishes between aggregate and bilateral immigration, as well as immigrant diversity. We find that immigrants increase overall productivity in service-producing firms, revealing a cost cutting impact on these firms. Immigrants also reduce the extent of country-specific offshoring, consistent with a reallocation of tasks and, finally, they increase country-specific exports, implying an important role in reducing communication and trade costs for services. |
| Keywords: | immigration; services; trade |
| JEL: | F10 F16 F22 F23 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10627&r=int |
| By: | URATA Shujiro |
| Abstract: | This paper examines the impacts of Japan's free trade agreements (FTAs) and bilateral investment treaties (BITs) on the locational choice of Japanese firms' foreign direct investment (FDI). Japan's FTAs have comprehensive coverage, as they cover not only trade liberalization in the form of tariff elimination/reduction but also FDI liberalization and facilitation in the forms of granting foreign firms national treatment, non-application of performance requirements, etc. In light of the inclusion of provisions concerning FDI liberalization/facilitation in Japan's FTAs, the paper analyzes whether Japan's FTAs have expected positive impacts on Japanese firms' decision of the location of FDI by applying the conditional logit model. The paper also examines the impacts of BITs. The analysis finds that both FTAs and BITs have positive impacts on Japan's FDI. |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:15066&r=int |
| By: | Gianmarco I. P. Ottaviano; Giovanni Peri; Greg C. Wright |
| Abstract: | This paper explores the impact of immigrants on the imports, exports and productivity of service-producing firms in the U.K. Immigrants may substitute for imported intermediate inputs (offshore production) and they may impact the productivity of the firm as well as its export behavior. The first effect can be understood as the re-assignment of offshore productive tasks to immigrant workers. The second can be seen as a productivity or cost cutting effect due to immigration, and the third as the effect of immigrants on specific bilateral trade costs. We test the predictions of our model using differences in immigrant inflows across U.K. labor markets, instrumented with an enclave-based instrument that distinguishes between aggregate and bilateral immigration, as well as immigrant diversity. We find that immigrants increase overall productivity in service-producing firms, revealing a cost cutting impact on these firms. Immigrants also reduce the extent of country-specific offshoring, consistent with a reallocation of tasks and, finally, they increase country-specific exports, implying an important role in reducing communication and trade costs for services. |
| Keywords: | Immigration, services trade |
| JEL: | F16 F10 F22 F23 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1353&r=int |
| By: | Aksel Erbahar (IHEID, The Graduate Institute of International and Development Studies, Geneva); Yuan Zi (IHEID, The Graduate Institute of International and Development Studies, Geneva) |
| Abstract: | In a world with increasingly integrated global supply chains, trade policy targeting upstream products has unintended consequences on their downstream industries. In this paper, we examine whether protection granted to intermediate manufacturers leads to petition for protection by their downstream users. We first provide a simple model which identifies the key factors and their interactions that cause cascading protection to motivate our empirical analysis. Then, we test our model by identifying the input-output relationships among the time-varying temporary trade barriers of the U.S. using its detailed input-output tables. As predicted by the theory, we find that measures on imported inputs increase the likelihood of their downstream users' subsequent trade remedy petition over the 1988-2013 period. Additionally, our simulation exercise shows that cascading protection can cause additional welfare losses, and hence we propose that trade policy investigations should take vertical linkages into account. |
| Keywords: | Trade policy, protectionism, trade barriers, global supply chains, antidumping |
| JEL: | F12 F13 F14 |
| Date: | 2015–03–06 |
| URL: | http://d.repec.org/n?u=RePEc:gii:cteiwp:ctei-2015-04&r=int |
| By: | Berthou, Antoine; Dhyne, Emmanuel; Bugamelli, Matteo; Cazacu, Ana-Maria; Demian, Calin-Vlad; Harasztosi, Péter; Lalinsky, Tibor; Meriküll, Jaanika; Oropallo, Filippo; Soares, Ana Cristina |
| Abstract: | This paper provides a new cross-country evaluation of competitiveness, focusing on the linkages between productivity and export performance among European economies. We use the information compiled in the Trade module of CompNet to establish new stylized facts regarding the joint distributions of the firm-level exports performance and productivity in a panel of 15 countries, 23 manufacturing sectors during the 2000’s. We confirm that exporters are more productive than non-exporters. However, this productivity premium is rising with the export experience of firms, with permanent exporters being much more productive than starters. At the intensive margin, we show that both the level and the growth of firm-level exports rise with firm productivity, and that the bulk of aggregate exports in each country are made by a small number of highly productive firms. Finally, we show that during the crisis, the growth of exports by high productive firms sustained the current account adjustment of European “stressed” economies. This last result confirms that the shape of the productivity distribution within each country can have important consequences from the point of view of the dynamics of aggregate trade patterns. JEL Classification: F10, F14 |
| Keywords: | firm heterogeneity, firm-level exports, productivity |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20151788&r=int |
| By: | Bas, Maria; Mayer, Thierry; Thoenig, Mathias |
| Abstract: | Models of heterogeneous firms with selection into export market participation generically exhibit aggregate trade elasticities that vary across country-pairs. Only when heterogeneity is assumed Pareto-distributed do all elasticities collapse into an unique elasticity, estimable with a gravity equation. This paper provides a theory-based method for quantifying country-pair specific elasticities when moving away from Pareto, i.e. when gravity does not hold. Combining two firm-level customs datasets for which we observe French and Chinese individual sales on the same destination market over the 2000-2006 period, we are able to estimate all the components of the dyadic elasticity: i) the demand-side parameter that governs the intensive margin and ii) the supply side parameters that drive the extensive margin. These components are then assembled under theoretical guidance to calculate bilateral aggregate elasticities over the whole set of destinations, and their decomposition into different margins. Our predictions fit well with econometric estimates, supporting our view that micro-data is a key element in the quantification of non-constant macro trade elasticities. |
| Keywords: | firm-level data; gravity; heterogeneity; log-normal; Pareto; trade elasticity |
| JEL: | F1 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10637&r=int |
| By: | Amador, João; Cappariello, Rita; Stehrer, Robert |
| Abstract: | This paper describes the main features of Global Value Chains (GVCs) in the euro area taken as a whole and compares with other large trade players like the US, China and Japan. In addition, the perspective of individual euro area countries is considered, with a focus on intra euro area linkages. The analysis relies primarily on the concept of foreign value added in exports, as a way to assess the pervasiveness of GVCs, it covers the period 2000-2011 and bases on the World Input-Output Database (WIOD). The paper finds that GVCs are important for the euro area as whole and they have rebounded after the great trade collapse. Moreover, there is a strong relevance of regional production linkages in Europe, with Germany playing a key role. JEL Classification: F1, F14, F15 |
| Keywords: | euro area, global value chains, international trade |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20151761&r=int |
| By: | Shintaku, Koji |
| Abstract: | We theoretically investigates that how firms decide to exports and the extent of the division of labor under heterogeneous fixed export costs. In the equilibrium, exporters and non-exporters coexists and all exporters behave as borderline firms. Exporters promote the division of labor more strongly than non-exporters. A decrease in trade costs raises the cut off export fixed costs. It expands firm size and promotes the division of labor of exporters, while it shrinks firm size and make non-exporters refrain from the division of labor. These links between the cut off fixed export costs and the division of labor of exporters and non-exporters bring a new insight for the research line of trade and heterogeneous fixed export costs |
| Keywords: | heterogeneous fixed export costs; division of labor within firms; export decision |
| JEL: | F1 F12 |
| Date: | 2015–03–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:64655&r=int |
| By: | V. Vicard |
| Abstract: | This paper provides direct evidence of profit shifting to low tax jurisdictions by multinational companies through transfer prices. Using detailed firm level export and import data by origin/destination and product for France, I show that the price wedge between arm's length and related party transactions varies systematically with the differential in corporate tax rate between France and the partner country. Profit shifting through transfer prices is estimated to have reduced the French corporate tax base by 8 bn USD in 2008. Its extent is growing in France over the 2000s. The related missing tax revenues amounts to 10% of the corporate tax paid by multinational groups located in France that trade with related party. |
| Keywords: | Transfer pricing, Multinational firms, Tax avoidance, Base erosion, International trade, Investment income. |
| JEL: | H26 H25 H32 F14 F23 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:555&r=int |
| By: | Matilde Bombardini; Gianluca Orefice; Maria D. Tito |
| Abstract: | Does opening a market to international trade affect the pattern of matching between firms and workers? And does the modified sorting pattern affect welfare? This paper answers these questions both theoretically and empirically in three parts. We set up a model of matching between heterogeneous workers and firms where variation in the worker type at the firm level exists in equilibrium only because of the presence of search costs. When firms gain access to the foreign market their revenue potential increases. When stakes are high, matching with the right worker becomes particularly important because deviations from the ideal match quickly reduce the value of the relationship. Hence exporting firms select sets of workers that are less dispersed relative to the average. We then document a novel fact about the hiring decisions of exporting firms versus non-exporting firms in a French matched employer-employee dataset. We find that exporting firms feature a lower type dispersion in the pool of workers they hire. The matching between exporting firms and workers is even tighter in sectors characterized by better exporting opportunities as measured by foreign demand or tariff shocks. In a calibrated general equilibrium version of the model we show that trade opening increases welfare by more when search costs are high, pointing to an additional source of gains from trade. |
| JEL: | F16 J2 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21225&r=int |
| By: | Zaman, Gheorghe; Antonescu, Daniela |
| Abstract: | Under the global and financial crisis impact, the structure of regional and local trade flows witnessed significant changes. In this context, Romania’s exports are dominated by the cars, devices, electric equipment, transportation means, agricultural food products’, chemical, basic metals, textiles and footwear industry, etc. The exported goods have, to a large extent, a low technological level, being controlled by a small number of companies that have a relatively high share in their volume and being, as a rule, direct foreign investments. In the Romanian' top of exporters and importers we found the same counties where operates, as a rule, at least one large company with foreign capital. The study paid a specific attention to the crisis impact on foreign trade in Romania, focusing on export sector as revealing the endogenous growth generating potential at regional and county level. |
| Keywords: | endogenous regional growth, global crisis; foreign trade, export resilience |
| JEL: | F1 F15 F4 F43 R1 R11 R58 |
| Date: | 2015–05–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:64678&r=int |
| By: | Gorodnichenko, Yuriy; Kukharskyy, Bohdan; Roland, Gérard |
| Abstract: | This paper develops a model of global sourcing with culturally dissimilar countries. Production of final goods requires the coordination of decisions between the headquarter of a multinational firm and managers of their component suppliers. Managers of both units are assumed to have strong beliefs about the right course of action and are reluctant to adjust their decisions. We characterize the optimal allocation of decision rights across firms when contracts are incomplete. Our theoretical model delivers two key predictions: the incentive of a firm to integrate (rather than outsource) its input supply is decreasing in the cultural distance between the home and the host country and decreasing in trade costs between the two countries. Combining data from the U.S. Census Bureau's Related Party Trade with various measures for cultural distance and trade cost, we find empirical evidence strongly supportive of these two predictions. |
| Keywords: | cultural distance; global sourcing; organization of multinational firms; property rights; vertical integration |
| JEL: | F14 F23 P14 Z1 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10620&r=int |
| By: | Benkovskis, Konstantins; Wörz, Julia |
| Abstract: | We propose a comprehensive decomposition of changes in a country’s global market shares that accounts for the value added content of trade. We perform the analysis by combining two datasets – disaggregated trade data from UN Comtrade with internationally integrated Supply and Use Tables from the WIOD. The inclusion of international fragmentation alters the underlying story behind changes in market shares. The ongoing global outsourcing affects market shares directly by shifting production from G7 to BRIC countries. Moreover, accounting for the providers of the value added alters the balance between price and non-price drivers of market shares. Changes in relative quality of countries’ exports are often due to the use of intermediate inputs. For instance, the seemingly improved relative quality of BRIC export goods largely arose from intermediate inputs rather than from improvements in the quality of domestic production. In most cases, the dynamics of the value- added market shares is dominated by price factors. JEL Classification: C43, F12, F15, L15, O47 |
| Keywords: | BRIC, China, fragmentation, G7, non-price factors, value added content of trade |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20151787&r=int |
| By: | Lopez Gonzalez, Javier |
| Abstract: | The increased spread in the location of value added coupled with the growing impetus for new forms of bilateral integration are re-shaping international economic activity. The world is becoming more regional and more fragmented but little empirical work has been dedicated to examining the nature of the links between these processes. This thesis aims to fill this gap in the literature. The primary aim of the first essay of this thesis is to extend current indicators of international production so that the bilateral degree of vertical specialisation can be captured. This has been one of the major hurdles in examining the links between vertical specialisation and Free Trade Agreements (FTAs). The comparative static analysis of this first essay reveals that there appears to be a high incidence of regional value chain activity and this motivates the aims of the second essay. It attempts to isolate the impact of an FTA on these flows through a theoretically derived gravity model of input trade. The results suggest that an FTA increases the use of intermediate inputs that are part of a bilateral value chain by 65%. Moreover, the results identify the presence of ‘magnification’ which implies that this type of trade is also more responsive to changes in trade costs and income variables. The third essay then looks at how the changing nature of trade affects the formation of new FTAs. It suggests that the propagation of international production alters the political economy dynamics of countries towards favouring further liberalisation. It also identifies regulatory quality and a growing FTA ‘contagion’ as determinants of new FTAs. |
| URL: | http://d.repec.org/n?u=RePEc:sus:susphd:0212&r=int |
| By: | Marin, Dalia; Schymik, Jan; Tarasov, Alexander |
| Abstract: | We incorporate trade in tasks à la Grossman and Rossi-Hansberg (2008) into a small open economy version of the theory of firm organization of Marin and Verdier (2012) to examine how offshoring affects the way firms organize. We show that the offshoring of production tasks leads firms to reorganize with a more decentralized management, improving the competitiveness of the offshoring firms. We show further that the offshoring of managerial tasks relaxes the constraint on managers but toughens competition, and thus has an ambiguous impact on the level of decentralized management and CEO wages of the offshoring firms. In sufficiently open economies, however, managerial offshoring unambiguously leads to more decentralized management and to larger CEO wages. We test the predictions of the model based on original firm level data we designed and collected of 660 Austrian and German multinational firms with 2200 subsidiaries in Eastern Europe. We find that offshoring firms are 33.4% more decentralized than non-offshoring firms. We find further that the average fraction of managers offshored reduces the level of decentralized management by 3.1%, but increases the level of decentralized management by 4% in industries with a level of openness above the 25th percentile of the openness distribution. Lastly, we find that one additional offshored manager lowers CEO wages relative to workers by 4.9%. |
| Keywords: | CEO pay; international trade with endogenous organizations; multinational firms; the rise of human capital; theory of the firm |
| JEL: | D23 F12 F14 L22 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10626&r=int |
| By: | Osman, Rehab Osman Mohamed |
| Abstract: | This thesis examines the potential impacts of the Economic Partnership Agreements (EPAs) between the EU and the Southern African Development Community (SADC). It provides a quantitative assessment of the prospective implications for welfare, output and trade structures, resource allocation, prices and fiscal revenue. The thesis undertakes country- and sector-specific analyses using the multi-region, multi-sector computable general equilibrium (CGE) GLOBE model. The model is calibrated to the Global Trade Analysis Project (GTAP) Database- version 7 for 2004. Different scenarios are implemented in order to simulate the alternative EU-SADC EPA scenarios in addition to their WTO-compatible alternatives. The thesis aims to contribute novel insights to the ongoing debate on the EU-SADC EPAs. It provides detailed country- and sector-specific impact projections within an internally consistent modelling framework. Furthermore, it contemplates the other WTO-compatible arrangements for SADC-EU trade in the case of not signing final EPAs. The simulation results inform answers for several research questions, as follows. Who gains and who loses from the EU-SADC EPAs? Do the agreements help SADC to effectively integrate into the world economy? What type of structural change might SADC experience under the EU-SADC EPA scenarios? How significant are potential adjustment costs for the SADC members likely to be? Are the WTO-compatible alternatives preferable for SADC members compared to the EU-SADC EPAs scenario? The simulation results suggest that a comprehensive EPA scenario is welfare-improving for many SADC members. The agreements, however, do not serve as a stumbling block towards more integration for SADC members into the world markets. Overall, SADC production structures become more concentrated in export-oriented sectors. These structural changes are accompanied by a high degree of adjustment in factor markets and substantial fiscal losses. A comprehensive EPA scenario is the best option vis-à-vis the WTO-compatible alternatives for SADC non-LDCs, whereas the results for SADC LDCs are mixed. |
| URL: | http://d.repec.org/n?u=RePEc:sus:susphd:0412&r=int |
| By: | Shintaku, Koji |
| Abstract: | This paper theoretically investigates how trade affects skill intensity at firm level. In order to analyze this, we develop a model in which firms engages in the division of labor within firms by in putting two types of labor. Unskilled labor is inputted into the production line of the production division and skilled labor is inputted into the production division to conduct the production line. Firms can reduce marginal cost by promoting the division of labor in the production division. Both types of labor are also inputted into head office for domestic market and for export market. These head offices are different in skill intensity. Though all firms are ex-ante identical, the division of labor of exporters is stronger than that of non-exporters on the unique equilibrium. That fixed labor input of headquarter division for export market is more skill intensive than that for domestic market is equivalent to the fact that total labor input of exporters is more skilled intensive than that of non-exporters. Furthermore, all firms reduce the type of labor inputted intensively into head quarter division for the export market while raising the type of labor inputted less intensively into that division. |
| Keywords: | export decision; division of labor within firms; skill intensity |
| JEL: | F12 |
| Date: | 2015–02–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:64654&r=int |
| By: | Giordano, Claire; Zollino, Francesco |
| Abstract: | Since the mid-2000s price-competitiveness indicators for some euro-area countries have been providing conflicting signals. Against a stability of the producer price (PPI)-based measure, the manufacturing unit labour cost (ULCM)-deflated indicator points to a major competitiveness loss in Italy; we argue that the discrepancy mostly reflects a divergence of ULCM and PPI trends in competitor countries. Owing to the fading representativeness of labour on overall costs, price-based indicators appear to be more appropriate than those based on ULCMs to assess external competitiveness. In Italy ULC-based indicators play a less relevant role relative to price-deflated measures in explaining exports; the opposite holds true for Germany and France, whereas in Spain exports are insensitive to prices. Non-price competitiveness proves important in explaining Italian, German and, in particular, Spanish exports. Imports react to price-competitiveness dynamics only in Italy; considering the participation in global value chains is useful to correctly identify import sensitivity to domestic and foreign demand. JEL Classification: F14, F62 |
| Keywords: | non-price competitiveness, price competitiveness, producer prices, unit labour costs |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20151789&r=int |
| By: | Angela Cheptea (SMART - Structures et Marché Agricoles, Ressources et Territoires - Institut national de la recherche agronomique (INRA) - Agrocampus Ouest); Lionel Fontagné (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics, Banque de France, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS); Soledad Zignago (Centre de recherche de la Banque de France - Banque de France) |
| Abstract: | Using an econometric shift-share decomposition, we explain the redistribution of world market shares at the level of the product variety and by technological content. We decompose changes in market shares into structural eff ects (geographical and sectoral) and a pure performance e ffect. We regard the EU-27 as an integrated economy, excluding intra-EU trade. Revisiting the competitiveness issue in such a perspective sheds new light on the impact of emerging countries on the reshaping of world trade. Since 1995 the EU-27 withstood the competition from emerging countries better than the United States and Japan. The EU market shares for high-technology products, as well as in the upper price range of the market, proved comparatively resilient, though less so since the crisis. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:hal-00975534&r=int |
| By: | Thanh Le (University of Queensland, Brisbane, Australia); Cuong Le Van (IPAG - Business School, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics, VCREME - VanXuan Center of Research in Economics, Management and Environment - VanXuan Center of Research in Economics, Management and Environment, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS) |
| Abstract: | We set up a theoretical framework to discuss the impact of trade liberalization and R&D policies on domestic exporting firms' incentive to innovate and social welfare. In this framework, exporting firms invest in R&D to reduce their production costs and, in return, receive R&D subsidies from the government. While firms target at maximizing their profits, the government aims to maximize the social welfare. We consider different settings of firm competition to explore their strategic behaviors as well as the government's strategic behavior at the policy stage. We find that trade liberalization in the foreign market always increases firms' output sales and social welfare and, in most cases, leads to higher R&D investments and productivity at firms as well as industry level. When firms are independent monopolies in the overseas market, it is optimal for the government not to provide any R&D subsidy. When goods are close substitutes, the social optimum can be achieved as a Nash equilibrium by applying an optimal R&D tax. Trade liberalization induces a higher R&D tax rate to be levied on firms. When firms also conduct business in the home market, it is always optimal for the government to provide firms with a financial support to their R&D activity. While this R&D subsidy is decreasing in the trade cost when firms are independent monopolies, its monotonicity in the trade costs is determined by the convexity of the R&D cost function when firms produce close substitutes. |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-01130413&r=int |
| By: | Davide Del Prete (Dipartimento di Scienze Sociali ed Economiche, Sapienza University of Rome (Italy).); Armando Rungi (IMT Lucca (Italy).) |
| Abstract: | In the last two decades, technological progress and a decrease in trade barriers fostered the formation of global value chains, in which different sequences of production stages, previously performed in close proximity, can now be unbundled globally. In this contribution we test at the ?firm level the optimal allocation of ownership rights along a productive sequence, as in the framework set by Antras and Chor (2013). For this purpose we exploit an own-built dataset made of 4,214 parents which have acquired or established at least one affiliate in the period 2004-2012. Overall, they control 104,720 affiliates and operate in 185 countries. Assuming a technological orientation of the value chain from the fi?nal consumer upwards, we positively test that incentives to integrate suppliers vary systematically with: i) the relative upstream or downstream position of the affiliate with respect to the parent; ii) the elasticity of demand faced by the parent. Further, we ?find new insights for fi?rm-level heterogeneity along supply chains, as more productive and bigger parent companies are more likely to choose affiliates next to the fi?nal consumer. Once controlling for the complexity of the internal supply chain at the moment the investment decisions occur, we fi?nd that bigger internal chains show a lower propensity to integrate at the margin, probably discount increasing coordination costs. Results are robust after different speci?fications. However, we detect some non-linearities over ?firm-level distributions, when integrated affiliates approach the bottom of the supply chain, next to the ?final consumer, after the VIII decile of the affiliates' ?downstreamness. In this case we presume that a horizontal rather than a vertical integration strategy could prevail. |
| Keywords: | global value chains, vertical integration, property rights theory, multinational enterprises, downstreamness, business groups. |
| JEL: | F14 F23 D23 G34 L20 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:saq:wpaper:02/15&r=int |
| By: | Glick, Reuven; Rose, Andrew K |
| Abstract: | In our European Economic Review (2002) paper, we used pre-1998 data on countries participating in and leaving currency unions to estimate the effect of currency unions on trade using (then-) conventional gravity models. In this paper, we use a variety of empirical gravity models to estimate the currency union effect on trade and exports, using recent data which includes the European Economic and Monetary Union (EMU). We have three findings. First, our assumption of symmetry between the effects of entering and leaving a currency union seems reasonable in the data but is uninteresting. Second, EMU typically has a smaller trade effect than other currency unions, often estimated to be negligible or negative. Third and most importantly, estimates of the currency union effect on trade are sensitive to the exact econometric methodology; we find no substantive reliable and robust effect of currency union on trade. |
| Keywords: | bilateral; common; country; exports; fixed; gravity; Poisson; specific; time-varying |
| JEL: | F15 F33 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10615&r=int |
| By: | Ewout Frankema; Jeffrey Williamson; Pieter Woltjer |
| Abstract: | This is the first study to present a unified quantitative account of African commodity trade in the long 19th century from the zenith of the Atlantic slave trade (1790s) to the eve of World War II (1939). Drawing evidence from a new dataset on export and import prices, volumes, composition and net barter terms of trade for five African regions, we show that Sub-Saharan Africa experienced a terms of trade boom that was comparable to other parts of the ‘global periphery’ from the late 18th century up to the mid-1880s, with an exceptionally sharp price boom in the four decades before the Berlin conference (1845-1885). We argue that this commodity price boom changed the economic context in favor of a European scramble for Africa. We also show that the accelerated export growth after the establishment of colonial rule deepened Africa’s specialization in primary commodities, even though the terms of trade turned into a prolonged decline after 1885. |
| JEL: | F10 O40 O55 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21213&r=int |
| By: | Riccardo Crescenzi; Carlo Pietrobelli; Roberta Rabellotti |
| Abstract: | This paper contributes to the current debate in both Economic Geography and International Business on the nature and strategies of Multinational Enterprises (MNEs) from emerging countries (EMNEs). The paper fills a relevant gap in the existing literature by shedding new light on the location strategies of EMNEs at the national and regional level, looking at their investment drivers and systematically comparing them with those of multinationals from advanced countries (AMNEs). The empirical analysis looks at the location choices of MNEs in the European Union (EU-25) regions and unveils that EMNEs follow distinctive location strategies. Their attraction into large regional markets is similar to AMNEs as well as their irresponsiveness to efficiency seeking motives. Conversely, the most knowledge-intensive investments of EMNEs respond mainly to two ‘attraction’ factors: strategic assets (in the form of local technological dynamism) and the agglomeration of foreign investments in the same business functions. In addition, both the national and the regional levels are simultaneously relevant to EMNEs decisions. |
| Keywords: | multinationals, emerging countries, regions, European Union |
| JEL: | F21 F23 O33 R12 R58 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:eiq:eileqs:93&r=int |
| By: | Debaere, Peter; Glaser, Toni; Willmann, Gerald |
| Abstract: | We develop a two-sector, two-factor general equilibrium model of international trade with imperfect short-term mobility of one factor that features uncertainty about sectoral productivity, and hence uncertainty about the terms of trade. Uncertainty resolves after the sectoral capital allocation has been decided. We show that the capital allocation chosen by producers need not be welfare maximizing if producers and consumers have differing attitudes to risk. In a small country facing uncertain terms of trade, risk-neutral producers specialize more in exporting than is preferred by risk-averse consumers. From a national welfare perspective this misallocation can justify the use of trade policy that deviates from free trade. In the general case with uncertainty in both countries, there exists a trade-ofbetween trade as insurance against domestic shocks, and protection as insurance against foreign shocks. In our framework, the optimal trade policy of a country is thus very much a function of its particular circumstance: the nature of its comparative advantage and especially the size and correlation of domestic vs. international shocks that a country faces. The model we propose can explain the persistent protectionism especially in sectors such as agriculture. |
| Keywords: | trade policy |
| JEL: | F1 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10625&r=int |
| By: | Bobeica, Elena; Soares Esteves, Paulo; Rua, António; Staehr, Karsten |
| Abstract: | The paper investigates the link between domestic demand pressure and exports by considering an error correction dynamic panel model for eleven euro area countries over the last two decades. The results suggest that there is a statistically significant substitution effect between domestic and foreign sales. Furthermore, this relationship appears to be asymmetric, as the link is much stronger when domestic demand falls than when it increases. Weakness in the domestic market translates into increased efforts to serve markets abroad, but, conversely, during times of boom, exports are not negatively affected by increasing domestic sales. This reorientation towards foreign markets was particularly important during the crisis period, and thus could represent a new adjustment channel to strong negative domestic shocks. The results have important policy implications, as this substitution effect between domestic and external markets might allow the euro area countries under stress to improve their trade outcomes with a relatively small downward pressure on domestic prices. JEL Classification: C22, C50, F10 |
| Keywords: | asymmetry, domestic demand pressure, exports |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20151777&r=int |
| By: | Assaf Almog; Rhys Bird; Diego Garlaschelli |
| Abstract: | The bilateral trade relations between world countries form a complex network, the International Trade Network (ITN), which is involved in an increasing number of worldwide economic processes, including globalization, integration, industrial production, and the propagation of shocks and instabilities. Characterizing the ITN via a simple yet accurate model is an open problem. The classical Gravity Model of trade successfully reproduces the volume of trade between two connected countries using known macroeconomic properties such as GDP and geographic distance. However, it generates a network with an unrealistically homogeneous topology, thus failing to reproduce the highly heterogeneous structure of the real ITN. On the other hand, network models successfully reproduce the complex topology of the ITN, but provide no information about trade volumes. Therefore macroeconomic and network models of trade suffer from complementary limitations but are still largely incompatible. Here, we make an important step forward in reconciling the two approaches, via the introduction of what we denote as the Enhanced Gravity Model (EGM) of trade. The EGM combines the maximum-entropy nature of network models with the established econometric structure of the Gravity Model. Using a single, unified and principled mechanism that is transparent enough to be generalized to other economic networks, the EGM allows trade probabilities and trade volumes to be separately controlled via any combination of dyadic and country-specific macroeconomic variables. We show that the EGM successfully reproduces both the topology and the weights of the ITN, finally reconciling the conflicting approaches. Moreover, it provides a general and simple theoretical explanation for the failure of economic models that do not explicitly focus on network topology: namely, their lack of topological invariance under a change of units. |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1506.00348&r=int |
| By: | Simplice Asongu (Yaoundé/Cameroun); Uchenna EFOBI (Covenant University, Nigeria); Ibukun BEECROFT (Covenant University, Nigeria) |
| Abstract: | We investigate how foreign aid dampens the effects of terrorism on FDI using interactive quantile regressions. The empirical evidence is based on 78 developing countries for the period 1984-2008. Bilateral and multilateral aid variables are used, while terrorism dynamics entail: domestic, unclear, transnational and total number of terrorist attacks. The following findings are established. First, while the effects of multilateral aid are consistently significant with positive threshold evidence, bilateral aid is only positively significant in bottom quantiles. Second, with the slight exception of transnational terrorism in bilateral aid regressions, the impacts of terrorism dynamics are unexpectedly positive, in: (i) bottoms quantiles with domestic terrorism and the 0.25th quantile with total terrorism, for bilateral aid regressions, and (ii) the 0.25th quantile with domestic terrorism and bottom quantiles of transnational terrorism, for multilateral aid regressions. Third, interactions between terrorism and foreign aid dynamics unexpectedly yield negative effects in: (i) bilateral aid and domestic terrorism in bottom quantiles and (ii) multilateral aid and domestic (transnational) terrorism in the 0.25th(bottom) quantile(s). The modifying threshold value of bilateral aid is higher than that of multilateral aid. Fourth, there is positive threshold evidence from GDP growth, infrastructural development and trade openness. Policy implications are discussed |
| Keywords: | FDI; Foreign aid; Terrorism; Quantile regression |
| JEL: | C52 D74 F23 F35 O40 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:15/019&r=int |
| By: | Thibault Fally |
| Abstract: | The gravity equation for trade flows is one of the most successful empirical models in economics and has long played a central role in the trade literature (Anderson, 2011). Different approaches to estimate the gravity equation, i.e. reduced-form or more structural, have been proposed. This paper examines the role of adding-up constraints as the key difference between structural gravity with "multilateral resistance" indexes and reduced-form gravity with simple fixed effects by exporter and importer. In particular, estimating gravity equations using the Poisson Pseudo-Maximum-Likelihood Estimator (Poisson PML) with fixed effects automatically satisfies these constraints and is consistent with the introduction of "multilateral resistance" indexes as in Anderson and van Wincoop (2003). |
| JEL: | C13 C50 F10 F15 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21212&r=int |
| By: | Huu Thanh Tam Nguyen (EPEE - Centre d'Etudes des Politiques Economiques - Université d'Evry-Val d'Essonne); Ngoc-Sang Pham (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS) |
| Abstract: | We consider a small open economy with two productive sectors (an old and a new). There are two types of firms in the new industry: a well planted multinational firm and a potential domestic firm. Our framework highlights a number of results. First, in a poor country with low return of training and weak FDI spillovers, the domestic firm does not exist in the new industry requiring a high fixed cost. Second, once the host economy has the capacity to create the new firm, the productivity of the domestic firm is the key factor allowing it to enter into the new industry, and even eliminate the multinational firm. Interestingly, in some cases where FDI spillovers are strong, the country should invest in the new industry, but not train specific workers. Last, credit constraints and labor/capital shares play important roles in the competition between the multinational firm and the domestic one. |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-01147485&r=int |
| By: | Maurice Kugler (The Interdisciplinary Center Herzliya - The Interdisciplinary Center Herzliya); Oren Levintal (Bar-Ilan University - Bar-Ilan University); Hillel Rapoport (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics) |
| Abstract: | The gravity model has provided a tractable empirical framework to account for bilateral flows not only of manufactured goods, as in the case of merchandise trade, but also of financial flows. In particular, recent literature has emphasized the role of information costs in preventing larger diversification of financial investments. This paper investigates the role of migration in alleviating information imperfections between home and host countries. We show that the impact of migration on financial flows is strongest where information problems are more acute (that is, for more informational sensitive investments, between culturally more distant countries, and when the source country of migrants is a developing country) and for the type of migrants that are most able to enhance the flow of information on their home country, namely, skilled migrants. We interpret these differential effects as additional evidence pointing to the role of information in generating home-bias and as new evidence of the role of migration in reducing information frictions between countries. |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:gmonwp:halshs-01134465&r=int |
| By: | Chia-Lin Chang (Department of Applied Economics, Department of Finance, National Chung Hsing University, Taiwan); Michael McAleer (Econometric Institute, Erasmus School of Economics, Erasmus University Rotterdam and Tinbergen Institute, The Netherlands, Department of Quantitative Economics, Complutense University of Madrid, and Institute of Economic Research, Kyoto University.); Ju-Ting Tang (Department of Applied Economics National Chung Hsing University, Taiwan.) |
| Abstract: | With the advent of globalization, economic and financial interactions among countries have become widespread. Given technological advancements, the factors of production can no longer be considered to be just labor and capital. In the pursuit of economic growth, every country has sensibly invested in international cooperation, learning, innovation, technology diffusion and knowledge. In this paper, we use a panel data set of 40 countries from 1981 to 2008 and a negative binomial model, using a novel set of cross-border patents and joint patents as proxy variables for technology diffusion, in order to investigate such diffusion. The empirical results suggest that, if it is desired to shift from foreign to domestic technology, it is necessary to increase expenditure on R&D for business enterprises and higher education, exports and technology. If the focus is on increasing bilateral technology diffusion, it is necessary to increase expenditure on R&D for higher education and technology. |
| Keywords: | International Technology Diffusion, Exports, Imports, Joint Patent, Cross-border Patent, R&D, Negative Binomial Panel Data. |
| JEL: | F14 F21 O30 O57 E30 E31 E52 C22 F15 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ucm:doicae:1506&r=int |
| By: | Lopez-Garcia, Paloma; di Mauro, Filippo |
| Abstract: | Drawing from confidential firm-level balance sheets for 17 European countries (13 Euro-Area), the paper documents the newly expanded database of cross-country comparable competitiveness-related indicators built by the Competitiveness Research Network (CompNet). The new database provides information on the distribution of labour productivity, TFP, ULC or size of firms in detailed 2-digit industries but also within broad macrosectors or considering the full economy. Most importantly, the expanded database includes detailed information on critical determinants of competitiveness such as the financial position of the firm, its exporting intensity, employment creation or price-cost margins. Both the distribution of all those variables, within each industry, but also their joint analysis with the productivity of the firm provides critical insights to both policy-makers and researchers regarding aggregate trends dynamics. The current database comprises 17 EU countries, with information for 56 industries, including both manufacturing and services, over the period 1995-2012. The paper aims at analysing the structure and characteristics of this novel database, pointing out a number of results that are relevant to study productivity developments and its drivers. For instance, by using covariances between productivity and employment the paper shows that the drop in employment which occurred during the recent crisis appears to have had “cleansing effects” on EU economies, as it seems to have accelerated resource reallocation towards the most productive firms, particularly in economies under stress. Lastly, this paper will be complemented by four forthcoming papers, each providing an in-depth description and methodological overview of each of the main groups of CompNet indicators (financial, trade-related, product and labour market). JEL Classification: L11, L25, D24, O4, O57 |
| Keywords: | allocative efficiency, competitiveness, cross country analysis, firm-level data, productivity and size distribution, total factor productivity |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20151764&r=int |
| By: | Marina G. Enadarova (National Research University Higher School of Economics); Anna S. Petrik (National Research University Higher School of Economics) |
| Abstract: | This paper analyses the legal substance of the customs procedure of the free customs zone in the Eurasian Economic Union by investigating its main features and peculiarities. In particular, we show that the customs procedure of the free customs zone is an economic instrument of state regulation of foreign trade activity in the Eurasian Economic Union. Also, we highlight the need for the harmonization of the provisions of the current legislation on the respective customs procedure between the member states of the Eurasian Economic Union. We also show that the legal regulation of this customs procedure is now generally compliant with WTO law. |
| Keywords: | special economic zone, free economic zone, customs procedure of the free customs zone, Customs Union in the framework of the Eurasian Economic Community, Eurasian Economic Union |
| JEL: | K33 K39 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:51/law/2015&r=int |
| By: | Ronald B. Davies (UCD - University College Dublin [Dublin] - University College Dublin); Rodolphe Desbordes (University of Strathclyde - University of Strathclyde); Anna Ray (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics) |
| Abstract: | Relying on a large foreign direct investment (FDI) transaction level dataset, unique both in terms of disaggregation and time and country coverage, this paper examines patterns in greenfield (GF) versus merger & acquisition (MA) investment. Although both are found to seek out large markets with low international barriers, important differences emerge. MA is more affected by geographic and cultural barriers and exhibits opportunistic behaviours as it is more sensitive to short-run changes, such as a currency crisis. On the other hand, GF is relatively driven by long-run factors, such as origincountry technological and institutional development or comparative advantage. These empirical facts are consistent with the conceptual distinction made between these two modes, i.e. MA involves transfer of ownership for integration or arbitrage reasons while GF relies on firms own capacities, which are linked to the origin countries attributes. They also suggest that GF and MA are likely to respond differently to policies intended to attract FDI. |
| Date: | 2015–03–04 |
| URL: | http://d.repec.org/n?u=RePEc:hal:gmonwp:halshs-01122659&r=int |
| By: | David de Matías Batalla (Economics and Business Administration Dept. - University of Alcala - Madrid, Spain) |
| Abstract: | In this paper I present the impact of new players and determinant in international business activities, which have a direct influence on international economic structure. One of the most important determinants in last decades has been international mergers and acquisitions, an important foreign direct investment that many multinational firms have used as mode of entry to international markets. This, together with the rest of foreign direct investment, make me think to extend OLI model to OLIM. On the other hand, this new modes of entry, the disintegration of the value chain, the resources and capabilities approach and the role of national institutions imply a strong economic integration, having as consequence the extension of the international production framework that Dunning provides as a framework to study the economic structure. In order to provide empirical evidence, the paper shows an analysis and results of international mergers and acquisitions realized by Spanish multinational firms, adding as complementary evidence a business case focus on Ebro Foods |
| Keywords: | mergers and acquisitions, foreign direct investment, eclectic paradigm, international economic structure |
| JEL: | E02 E60 G15 M16 M21 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:aee:wpaper:1507&r=int |
| By: | Lisa Anouliès (Université Paris-Sud, RITM) |
| Abstract: | Cap-and-trade programs are presently the cornerstone of climate change policies and proposals in many countries. I investigate the economic and environmental effects of different designs for this policy in a general equilibrium setting when firms are heterogeneous and in monopolistic competition. This study first predicts that the cap on emissions perfectly defines the environmental quality but has no effect on firms’ profits and decisions to enter or exit the market. On the contrary, increasing the share of free allocation of emissions allowances reallocates resources among firms toward the most productive ones: the initial allocation of allowances therefore impacts firms’ entry and exit decisions and aggregate economic variables but not the environment. Firm heterogeneity magnifies this economic effect of a change in the initial allocation of allowances. |
| Keywords: | Emissions trading, Heterogeneous firms, Monopolistic competition |
| JEL: | Q58 D43 H23 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:fae:wpaper:2015.10&r=int |
| By: | Uslu, Çağrı Levent; Aydoğan, Ebru Tomris; Ketenci, Natalya |
| Abstract: | This paper examines the long-run relationships of the growth model in 21 emerging countries and their alteration when countries in the considered panel vary. Panel estimations using quarterly data for the period 1995-2013 are made for different groups of emerging countries, such as the Full, F-10, Advanced, and Secondary. Additionally, the paper analyzes the changes in the relationships between growth, financial development, and trade openness in groups of emerging countries by taking the presence of structural shifts into account where they exist. Recent panel techniques are employed in this study. The empirical findings reveal that economic growth is highly related to financial development and trade openness only in emerging countries which are not exposed to structural shifts. However, the estimation results illustrated that economic growth is not related to financial development and trade openness in countries exposed to structural shifts. Division of the sample into more narrow groups does not change the estimation results for unstable countries. |
| Keywords: | Economic growth, financial development, trade openness, emerging markets, cointegration test, structural shifts. |
| JEL: | F43 |
| Date: | 2015–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:64722&r=int |
| By: | Vladimir Mitroviæ, Ivana Mitroviæ |
| Abstract: | Creating a highly competitive economy is a goal of every country. However, even after more than 10 years of transition, competitiveness of our economy is extremely low according to all criteria and indicators recognized by relevant institutions. Incomplete and inefficient structural reforms in industry and activation of the industrial export and development resources are limiting the efficency of our industry’ s involvement on the international market. Serbia, as a small country, by nature of things is focused on trade exchange and international economical cooperation and without that has no chance for independent development, not even a chance to sustain the existing level of production. It can only develop if its industrial companies make their products for the international market and expand their business networks worldwide. For this to be achievable, Serbia first must adjust its products to the demands of the international market, by implementing adequate technology and increasing production efficiency levels. The aim of this work is to shed light on important conditions, factors, strategic goals and incentive policy for increasing the competitiveness of industries in Serbia, because only a strong and competitive industry can withstand the challenges and pressures of other participants, and at the same time, provide the quality and the range of export, in other words, economical growth and social welfare. |
| Keywords: | competitiveness, determinants of competitiveness, economy and industrial policy, re-industrialism, export industry |
| JEL: | F43 P45 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:esb:castrc:2014-323&r=int |
| By: | Milorad Bejatovic, Goran Bejatovic, Gordana Bejatovic (University Business Academy in Novi Sad, Belgrade Business School, University Business Academy in Novi Sad) |
| Abstract: | In order for a small country, such as Serbia, to be included in the trends of the modern world market primarily depends on the quality of the functioning of domestic enterprises as leaders of the economic integration. This serious and responsible task should enable domestic enterprises to handle international competition successfully. Having that in mind, this paper emphasizes the need for creating and strengthening the international business orientation of Serbian enterprises which function in conditions of the world economic crisis. |
| Keywords: | global environment, international competition, menagers, enterprises, innovation |
| JEL: | L12 M54 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:esb:casctr:2014-412&r=int |
| By: | Lawless, Martina; McCoy, Daire; Morgenroth, Edgar; O'Toole, Conor |
| Abstract: | The corporate tax rate and regime are policy instruments that are the subject of considerable attention for the role they play in attracting foreign multinationals making location decisions across countries. This paper examines the effects of corporate tax on these location decisions of newly established multinational subsidiaries across 26 European countries over an eight year period. We contribute to the existing literature by examining the effects of a non-linear response of firm location decisions to changes in the tax rate. We find that accounting for this non-linearity improves the performance of the model for all of the alternative measures of the tax rate. We also show that there are large variations in the sensitivity to tax rates across sectors and firm size groups. In particular, financial sector firms are more than twice as sensitive to changes in corporation tax rates relative to other sectors. |
| Keywords: | Corporation Tax, Location Choice, Multinational firms, FDI |
| JEL: | C25 F23 H25 |
| Date: | 2015–06–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:64769&r=int |
| By: | Sposi, Michael J. (Federal Reserve Bank of Dallas) |
| Abstract: | I quantitatively examine the effects of location-and sector-specific productivity growth on structural change across countries from 1970-2011. The results shed new light on the “hump shape" in industry's share in GDP across levels of development. There are two key features. First, otherwise identical changes in the composition of final demand translate differently into changes in the composition of value added because of systematic differences in sectoral linkages. Second, the mapping between sector-specific productivity and the composition of final demand systematically differs because of the relative importance of two components within final demand: final domestic expenditures and net exports. |
| JEL: | F10 F40 O14 |
| Date: | 2015–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:feddgw:231&r=int |
| By: | Biljana Grujic, Nataša Kljajic, Svetlana Roljevic (Institute of Agricultural Economics Belgrade) |
| Abstract: | Subject of this paper is to introduce the concept of globalization in general, and the possibility of making different strategies of development of this sector in Serbia. It also states the importance of the establishment of the World Trade Organization (WTO), which can be said with certainty that it is initiator of the globalization of all sectors of the economy. The aim of the study was to determine the strength of the globalization on agriculture in Serbia. Finally, given is the production of selected vegetables (potatoes, beans, peppers and tomatoes) in Serbia in the period 2000 - 2012 total and by population. Research methods are based on a literature search of specify themes, consultation with experts in agriculture and application of mathematical and statistical methods (rate of change). |
| Keywords: | globalization, WTO, transition, farming, population |
| JEL: | Q10 Q13 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:esb:casctr:2014-422&r=int |
| By: | Tausch, Arno |
| Abstract: | Background: A positive assessment of the role of globalization as a driver of a good public health performance has been the result of major new studies in the field. But the present re-analysis shows that neo-liberal globalisation has resulted in increasing inequality, which in turn negatively affects global health performance. This conclusion is valid on a global level but it also holds for the majority of the Arab countries, which are currently undergoing very dramatic political and social transformations, which have fundamental repercussions for the Western world. Methods: Standard IBM/SPSS OLS regressions and partial correlations with cross-national and time series aggregate, freely available data. The article also re-analysed the data, provided by Mukherjee N. and Krieckhaus J. Globalization and Human Well-Being. International Political Science Review, March 2012; vol. 33, 2: pp. 150-170. Results: We can show that different types of globalization processes affect public health performance differently. The absence of restrictions (direct effects on the availability of pharmaceuticals) and the free flow of information (direct effects on the availability of scientific information in medicine and the free movement for members of the medical profession) have the biggest impact on infant mortality reduction, while actual foreign capital flows and personal contacts have less influence on reducing infant mortality rates. The “de-composition” of the available data suggests that for most of the time period of the last four decades, globalization inflows even implied an aggregate deterioration of public health, quite in line with recent prominent public health research studies by Cornia, de Vogli, and other studies, referred to in this article. Conclusions: Globalization leads to increased inequality, and this, in turn, to a deteriorating public health performance. This is relevant for the health planners in the Middle Eastern region as well. The region witnessed a sharp increase in globalization in recent years. We show the validity of our conclusion also with an annual time series data analysis for 99 countries. In only 19 of 99 nations (i.e. 19.1%) globalization actually preceded an improvement in the public health performance. Far from falsifying the globalization critical research, our essay shows the basic weaknesses of the new “pro-globalization” literature in the public health profession. |
| Keywords: | Globalization, Infant Mortality, Inequality, Arab countries |
| JEL: | F5 I3 |
| Date: | 2015–05–21 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:64516&r=int |