New Economics Papers
on Central and South America
Issue of 2006‒02‒26
four papers chosen by

  1. Spillovers from Foreign Direct Investment: Within or between Industries? By Maurice Kugler
  2. Income Fluctuation, Poverty and Well-Being Over Time: Theory and Application to Argentina By Guillermo Cruces
  3. "Inferring Conduct under the Threat of Entry: The Case of the Brazilian Cement Industry." By Alberto Salvo
  4. Assessing the Wellbeing of the Spanish Elderly By Michele Boldrin; Sergi Jiménez-Martín

  1. By: Maurice Kugler
    Abstract: This paper contributes an estimation framework to measure both technological and linkage externalities from foreign direct investment (FDI). Empirical research dealt mainly with intra-industry spillovers from FDI with restrictive treatment of inter-industry effects until recently. However, as optimal organization of the multinational corporation (MNC) involves minimization of profit losses due to leakage of technical information to competitors, host country firms within the MNC’s sector experience limited productivity gains ensuing FDI. Host-country producers in other sectors may benefit. For example, MNCs transfer knowledge to local downstream clients, or outsource to local upstream suppliers. Hence, FDI substitutes within-sector domestic investment but complements it across sectors. The net impact on aggregate capital formation by host-country producers hinges on the interaction between linkages and spillovers. Estimations based on the Colombian Manufacturing Census yield the sectoral pattern of FDI spillovers displaying knowledge propagation between but not within industries. The findings reveal outsourcing relationships of MNCs with local upstream suppliers as a channel of diffusion.
    Keywords: Foreign direct investment, inter-industry spillovers; generic technology; vertical linkages; absorptive capacity.
    JEL: O41 F43 F21 F23 C52
  2. By: Guillermo Cruces
    Abstract: This paper studies poverty as a dynamic phenomenon, motivated by the recurringeconomic crises that affect developing countries and the incidence of income fluctuationson household welfare. While the increasing availability of household panel data has beenexploited in theoretical analysis and empirical applications, the methodological andapplied literatures still lack a unified framework. Echoing Atkinson (1987), this paperaddresses the question of how poverty should be measured over time - or, in moregeneral terms, how to measure well-being based on repeated observations of householdincome. The paper develops and illustrates a set of tools for empirical work based ontheoretically sound extensions of the existing methodology for static distributionalanalysis. Moreover, this framework encompasses some of the existing approaches asspecial cases. These tools are illustrated with longitudinal data for Argentina in the 1995-2002 period, which is well suited for this type of analysis given the large fluctuations inhousehold income due to the repeated economic crises in the country.
    Keywords: Risk, Income Fluctuations, Panel Data, Poverty Measurement, Argentina
    JEL: D81 I32 D63
    Date: 2005–07
  3. By: Alberto Salvo
    Abstract: This paper demonstrates that when an industry faces potential entry and this threat of entry constrains pre-entry prices, cost and conduct are not identified from the comparative statics of equilibrium. In such a setting, the identifying assumption behind the well-established technique of relying on exogenous demand perturbations to empirically distinguish between alternative hypotheses of conduct is shown to fail. The Brazilian cement industry, where the threat of imports restrains market outcomes, provides an empirical illustration. In particular, price-cost margins estimated using this established technique are considerably biased downward, underestimating the degree of market power. A test of conduct is proposed, adapted to this constrained setting, which suggests that outcomes in the industry are collusive and characterised by market division.
    Keywords: Conduct, Multimarket competition, Market division, Limit pricing, Cement
    JEL: L13 L41 L70 F14
    Date: 2004–10
  4. By: Michele Boldrin; Sergi Jiménez-Martín
    Abstract: In this paper we use a variety of data sources, both micro and macro, time series, cross section, and panel data to provide an empirical evaluation of the current level of economic wellbeing of the Spanish elderly, and of its determinants. We focus, in particular on the role played by the pension system and its generosity in terms of minimum pension supplements and non-contributive pensions. In an IV context, we find that actual Social Security benefits contribute substantially to explain income and consumption poverty levels and trends of low income and consumption percentiles. Thus we offer support to previous evidence for Spain emphasizing the role of minimum benefit policies.
    Keywords: Welfare State, Social Security, Retirement, Income Inequality, Poverty
    JEL: I3 H5 J14 J26
    Date: 2006–02

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