Policy competition for foreign direct investment between asymmetric countries

The present paper analyses policy competition for foreign direct investment between countries of different size and different market structure. We demonstrate how policy competition affects the location decision of the foreign investor and derive welfare implications. The key variables in our analysis are intra-regional trade costs, differences in market size, and minimum wages.     

The core periphery model with asymmetric inter-regional and intra-regional trade costs

We generalize the model of Krugman (J Polit Econ 99(3):483–499, 1991) to allow for asymmetric trade costs between regions and for (asymmetric) trade costs that are internal to the regions. We find that industrial activity, in a region, is enhanced by higher costs of importing and lower costs of exporting (more precisely, by a higher ratio between the two trade costs). This suggests that countries may impose tariffs on imported goods and seek to remove the import tariffs in other countries (unilateral protectionism) in order to foster industrial activity. Industrial activity is also promoted by lower domestic internal trade costs and higher foreign internal trade costs (more precisely, by a lower ratio between the two trade costs).     

On the static and dynamic costs of trade restrictions for small developing countries

We analyze the costs of trade restrictions for a small developing economy (LDC). Intermediate goods invented elsewhere are only introduced on the LDC market if it is profitable to do so. The LDC economy evolves to a balanced growth path in which income, welfare, and the share of available goods increase if trade restrictions fall. The adjustment path is asymmetric: an increase in trade restrictions leads to a slow-down of economic growth, while a decrease may lead to a rapid catch-up process. The dynamic costs of trade restrictions are in general substantially larger than the static costs.     

Welfare effects of energy subsidy reform in developing countries

We analyze the potential welfare effect of energy subsidy reforms. The income distributions of eleven developing countries from different geographical regions are simulated using the assumption that income is lognormally distributed. We use the concept of the compensating variation to measure how much compensation is required to compensate consumers for a price increase in formerly subsidized goods. The behavior of consumers is modeled by a standard Cobb–Douglas and a quasilinear utility function. In the Cobb–Douglas case, a fixed fraction of income is spent on the subsidized good, which does not change after a price increase. With quasilinear preferences, the optimal amount of the subsidized good does not vary with income, but does change as prices change. We show theoretically and empirically that the required compensating variation can be set below the saved expenditures on subsidies, so a budget neutral reform can have a positive effect on social welfare.     

The explanatory power of market-based trade theories for the trade between market economies and reform countries

We try to explain the bilateral trade structure between Austria and three of its former socialist neighbours by trade theories developed for market economies, specifically focussing on the Heckscher-Ohlin model in its commodity version. We use data on factor intensities in about 100 industries in the EC and in Austria and can explain a modest amount of the trade structure before and after the start of the transition process and to some degree also of the change in the trade structure. The restrictions given by the data, the absence of a price system in socialist countries and the disequilibria in the actual trade suggest why the explanatory power of the tested theory is not higher. The study however indicates that at least some part of the industry in the former Czechoslovakia and in Poland had been well endowed with capital and energy before the transition. In the first five years of the transition a balanced trade turned into a high deficit of the reform countries.The authors wish to thank the participants of the EMPIRICA ECONOMIC POLICY FORUM Consequences of Eastern European Reform in Vienna, October 18, 1993 for an intensive discussion. Thanks to Robert Holzmann, Michael Landesmann, Gabor Oblath, Sandor Richter, Gunther Tichy, Michael L. Wyzan for comments. We also thank Christa Magerl and Elisabeth Neppl-Oswald for the calculations and for reading various drafts of the paper.     

FDI技术外溢对发展中国家的影响

随着科学技术的突飞猛进,企业的技术水平已成为制约其跨国竞争能力提高的重要瓶颈。利用外国直接投资(FDI )的技术外溢提升本国企业的技术水平,是当前多数发展中国家的愿望,也是我国“以市场换技术”引资政策的重要依据之一。近几十年来,FDI 的技术外溢问题一直备受学术界关注,并直接影响了许多发展中国家在跨国公司直接投资问题上的态度。FDI 技术 外溢的原因FDI 技术外溢是外商直接投资在东道 国的 生产经营 活动 的 副产品。联合国贸发会议 2001 年《世界投资报告》指出,FDI 可能产生的外溢主要包括:工艺(技术)溢出、非关联企业的…     

Cournot competition,intra-industry trade,and nonconstancy of marginal costs: A three-country case

In this paper we shall develop and investigate a three-country and two-commodity model of international trade with an imperfectly competitive good which is produced under increasing marginal costs by explicitly incorporating intra-industry trade between industrialized countries. The main results we obtain are: (1) the full optimal discriminatory tariffs levied by a third importing country are necessarily positive; (2) the imposition of tariff can cause an increase in intra-industry trade, and therefore (3) under certain conditions the importing country's intervention into the international market can be a Pareto superior policy for the world as a whole as well as for the country.     

Welfare effects of 1992: A general equilibrium assessment for EC and EFTA countries

In this paper production, trade and welfare effects of European integration are discussed, with particular emphasis on the effects for the EC and EFTA. Insights from previous partial and general equilibrium analyses of the internal market are reviewed, and new model simulations are presented. In addition to the standard experiments of 1992 — as reduced trade costs and as full market integration — for the EC alone, and for the European Economic Area (EEA), an intermediate case, with full integration in the EC but only lower trade costs between the EC and EFTA, is analysed. All cases show that EFTA will benefit significantly from freer trade and closer integration with the EC. With regard to non-European regions, the simulations of European integration show some degree of trade diversion, but stylized model experiments indicate that a successful outcome of the Uruguay-round may more than offset the trade-diverting effects of 1992.     

引资效应:东盟自由贸易区的实例

在1992年新加坡东盟第4次首脑会议上,东盟各国宣布从1993年1月1日起的15年内建成东盟自由贸易区,关税最终降至0.5%,基本实现成员国之间免除关税。同时,各国经济部长批准了《共同有效优惠关税协定》(CEPT)。至此,标志着东盟区域经济合作进入新阶段的东盟自由贸易区计划正式出台了。经过十年的努力,东盟各国在执行CEPT减免关税方面取得较大进展。至2001年5月,东盟10国的加权平均关税税率为3.85%。作为成功实行CEPT计划的结果,东盟内部贸易额已经从1993年的442亿美元增加到2000年的952亿美元,平均年增长率为11.6%。区内出口份额从1993年东…     

Trade-creation and trade-diversion effects of regional trade arrangements: low-income countries

Although the number of regional trade arrangements (RTAs) among the lowest-income developing countries is surging, the literature on their welfare effects is still scarce, and the few that exist fail to provide conclusive results. Furthermore, these RTAs are dominated by countries with a small share of total exports destined for intraregional trade flows. Our study focuses on the welfare effects of RTAs (pertaining to trade creation and trade diversion) among this group of countries. We use a theoretically justified gravity model to estimate welfare effects, focusing on trade creation and trade diversion and deviating from the norm in related studies, accounting for heterogeneity in third countries. Using ECOWAS as a sample, we estimate welfare effects on 1992–2012 annual bilateral imports for 14 countries from 169 countries. Contrary to conventional expectations in the literature, we find that economic integration among small and relatively low-income countries that have a small share of total trade with each other is welfare-improving for the members as a group, for the majority of the individual member countries, and for some third countries. Accounting for heterogeneity in third countries reveals that an RTA among low-income countries has a particularly robust trade-creation effect.     

On the theory of international trade between capitalist and labour-managed countries

This paper attempts to establish a model of international trade between capitalist and labour-managed countries and to reexamine whether or not the basic theorems of the traditional trade theory carry over to environments characterized by the coexistence of capitalist and labour-managed countries.     

The effects of company taxation in EU accession countries on German FDI1

This article investigates how company taxation affects German foreign direct investment (FDI) in European Union (EU) accession countries. In 2004 and 2007, 10 former socialist eastern European countries joined the EU. Although the EU integration is associated with increasingly favourable investment conditions, accession countries also pursue active strategies to attract foreign firms. In particular, taxes on corporate income have been significantly reduced during the last decade. We analyse whether corporate tax policies of eastern European countries affect three aspects of multinational activity: the location decision, the investment decision and the capital structure choice. The results suggest that local taxes are negatively related to both location and investment decisions. The analysis of the capital structure confirms that higher local taxes imply higher debt‐to‐capital ratios.     

Asymmetric effects of trade costs on entry modes: Firm level evidence

Standard foreign direct investment (FDI) theory suggests that falling trade costs should discourage horizontal FDI. Most FDI is horizontal. Yet, the world witnessed an FDI boom in 1990s, a period of striking falls in trade barriers. This paper carries out an empirical analysis with rich, firm-level data on the activities of Swedish multinationals around the globe in manufacturing sectors from 1987 to 1998 to shed light on this apparent conflict. The analysis is based on the predictions of a recent literature with an industrial organization (IO) angle: Trade costs have asymmetric effects on foreign expansion modes. This view posits that falling trade costs encourage entry realized as mergers and acquisitions (M&As), one of the potential explanations for the conflict between received theory and recent trends in FDI. Empirical results confirm the findings of this recent literature and add to it by testing its extensions.     

Productivity effects of trade and product innovations: an empirical analysis for 13 OECD countries

This article distinguishes two sources of productivity increases, namely product/process innovations and trade innovations. An empirical analysis for 13 OECD countries shows that product/process innovations, represented by aggregated investments in Research and Development (R&D), are major determinants for productivity growth in large industrial countries, whereas trade innovations, represented by export intensity, seem to contribute most to productivity in trade-oriented economies. These trade innovations relate to the ability to reduce transaction costs so that these trading nations specialize in the organization of production in this era of globalization where the production chain is split up in more and more component parts.     

The employment effects of UK manufacturing trade expansion with the EEC and the newly industrialising countries

This paper uses an input-output framework to consider the employment effects in the U.K. of a balanced trade expansion with the Newly Industrialising Countries and the EEC. Both the overall net effects and the results by industry are presented. They are subdivided into the direct effects on an industry due to the trade change in that industry and the indirect effects arising from that part of the industry's production which is sold as an intermediate input to other industries. The exercise, carried out for 1979, finds small negative net overall employment effects in each case examined, but important differences in the inter-industry pattern of employment changes are reported.     

The role of information in the competition for FDI under uncertainty

This paper mainly focuses on the role of information in the competition for FDI when host countries are not sure of the “fixed cost” differences MNEs are working with to make FDI in different countries. It is found in this paper that as the public information increases and the uncertainty declines, host countries will first provide more and more subsidies to compete for FDI, which will reduce their welfare; then after the current uncertainty has been reduced to a relatively low level, any further reduction in uncertainty will pull down their subsidies and increase their welfare.     

Welfare analysis of a market with pairwise meetings and asymmetric information

Summary We study the welfare properties of a market with pairwise meetings and asymmetric information, establishing an equivalence between asymptotically expost individually rational and asymptotically (ex-ante, interim and ex-post) efficient equilibrium sequences.We thank Andreu Mas-Colell, Eric Maskin, and Thomas Sjöström for having raised the question which led to the writing of this paper. We are grateful to Nicholas Yannelis and two anonymous referees for helpful comments.     

On the asymmetric effects of exchange rate volatility on trade flows: New evidence from US-Malaysia trade at the industry level

All previous studies that assessed the impact of exchange rate volatility on trade flows assumed that the effects are symmetric. In this paper, we open a new path in the literature by arguing that indeed the effects of exchange rate volatility on trade flows could be asymmetric. The asymmetric effects are mostly due to the change in expectations of traders when a currency depreciates as compared to a case when that currency appreciates. We demonstrate the asymmetric effects by using monthly data from 54 Malaysian industries that export to the U.S. and from 63 Malaysian industries that import from the U.S. The application of the nonlinear Autoregressive Distributed Lag (ARDL) approach of Shin et al. (2014) supports short-run as well as long-run asymmetric effects in almost 1/3rd of the industries. The approach identifies industries that are affected when volatility increases versus those that are affected when volatility declines.     

加强中国与其他发展中国家的经贸合作

当前,世界多极化趋势愈益明显,经济全球化加速推进,国际政治经济格局正在发生深刻变化.近年来,随着中国经济实力的增强和对外开放水平的不断提高,我国与外部世界的经济联系明显加强,与其他发展中国家的经贸关系也将步入一个新阶段.