A knowledge-and-physical-capital model of international trade flows, foreign direct investment, and multinational enterprises

This paper addresses two important issues at the nexus of the literatures on international trade, foreign direct investment (FDI), foreign affiliate sales (FAS), and multinational enterprises (MNEs). First, the introduction of a third internationally-mobile factor (physical capital) to the standard 2 × 2 × 2 “knowledge-capital” model of MNEs with skilled and unskilled labor allows us to resolve fairly readily the puzzle in the modern MNE literature that foreign affiliate sales among two identical economies completely displace their international trade. Intra-industry trade and intra-industry FDI (and FAS) can coexist for national and multinational firms (with identical productivities) in identical countries. Second, the introduction also of a third country to the model suggests a formal N-country theoretical rationale for estimating gravity equations of bilateral FDI flows and FAS, in a manner consistent with estimating gravity equations for bilateral trade flows.     

How trade and investment agreements affect bilateral foreign direct investment: Results from a structural gravity model

We employ a structural gravity approach to analyse the impact of preferential trade agreements (PTAs), bilateral investment treaties (BITs) and other policies on bilateral foreign direct investment (FDI). We use the UNCTAD global database on bilateral FDI stocks and flows. To control for the heterogeneous nature of PTAs, we employ two different indicators of PTA depth. We find that on average signing a PTA increases bilateral FDI stocks by around 30%. Nevertheless, we also find that ‘deeper’ or comprehensive PTAs (e.g., including provisions on investment, public procurement and intellectual property rights provisions) do not have a significantly different impact than signing regular PTAs. Belonging to the EU single market, on the other hand, has a strong impact and increases bilateral FDI by around 135%, and signing a BIT has an effect that is comparable to signing a PTA.     

A Ricardian model of international trade with oligopolistic competition

This paper studies a Ricardian model of international trade with a continuum of products in a general equilibrium model in which firms engage in oligopolistic competition. It provides a bridge between trade models based on perfect competition and models based on imperfect competition. Compared with a model based on perfect competition, the incorporation of fixed cost leads to the result that an increase of domestic labor may increase the relative wage of the domestic country.     

Optimal trade,industrial, and privatization policies in a mixed duopoly with strategic managerial incentives

Abstract

This paper examines optimal trade, industrial, and privatization policies in a home-market model of mixed international duopoly with strategic managerial incentives. Under linear demand and constant marginal costs, the optimal degree of privatization is shown to depend crucially on cost and demand parameters and on the availability of strategic trade and industrial policies. If both firms are equally efficient, optimal trade and industrial policies drive out the foreign firm and the privatization policy loses its effect on national welfare; however, if the home firm is less efficient, then full privatization combined with an import tariff and a production subsidy is optimal for the home country, while an export subsidy is optimal for the foreign country. If trade and industrial policies are unavailable and if both firms are equally efficient, full state-ownership, which drives out the foreign firm, becomes optimal; however, if the home firm is less efficient, only partial privatization is optimal, The state-ownership share is increased if either the market size grows, the home firm's efficiency increases, or the foreign firm's efficiency decreases. Further, the paper demonstrates the potential conflict between privatization and trade liberalization policies.     

Immiserizing deindustrialization: A dynamic trade model with credit constraints

The paper develops an open economy dynamic model with bequests and credit constraints. The agricultural sector uses only labor, the industrial sector needs an indivisible investment. Under autarky, productive agriculture provides the funds needed for investment in industry and in equilibrium credit constraints are not binding. If agriculture is not sufficiently productive, the price of the industrial good must be high enough to make the industrial sector sustainable. In an open economy, if the country has the comparative advantage in agriculture, deindustrialization may occur over time. Deindustrialization is welfare-reducing when the negative wealth distributional effects swamp the gains from trade.     

Foreign multinationals in service sectors: A general equilibrium analysis of Brexit

We examine the role of foreign multinationals in service sectors in the context of Brexit, which is assumed to induce an increase in different types of barriers: (a) FDI barriers to multinationals in services; (b) non-tariff barriers to trade; and (c) import tariffs between the UK and the rest of the EU. We use a state-of-the-art Melitz approach in manufactures with multinationals operating in imperfectly competitive service sectors in a multiregional general equilibrium framework. We find that the increased FDI barriers in services explain about one third of the total welfare loss of Brexit. Furthermore, our decomposition analysis (by introducing each type of barriers separately) shows that the barriers against the EU service multinationals in the UK are harmful to British manufacturing sectors because they face a reduced (and more expensive) supply of intermediate services.     

International R&D spillovers in emerging markets: The impact of trade and foreign direct investment

While economic theory predicts that growth in developing countries will gain significantly from technology spillovers, the empirical evidence on this issue remains relatively scarce. The present study focuses on a panel of 27 transition and 20 developed countries between 1990 and 2006 and uses the latest developments in panel unit root and cointegration techniques to disentangle the effects of international spillovers via inflows of trade and FDI on total factor productivity (TFP). The findings show that imports remain the main channel of diffusion for both sets of countries, while FDI, although statistically significant, has a lower impact on productivity of the recipients. The domestic R&D capital stock plays an active role in Western Europe while in the Eastern part it is less significant owing to lower levels, transitional disinvestment and relative obsolescence. Human capital affects TFP directly as a factor of production as well as indirectly by enhancing a country's absorptive capacity. In aggregate, the results show that transition countries from Eastern Europe and Central Asia seem to enjoy bigger productivity gains from the international diffusion process than their Western counterparts.     

以内陆物流港建设为中心，加快内陆自由贸易 试验区建设

运输成本是内陆地区发展最大的障碍,其次是远离中心大市场。地理位置的劣势迫使内陆地区只能选择替代沿海地区产业的发展战略。在这些障碍存在的情况下,只靠设立自由贸易试验区难以完全克服内陆地区发展所面临的问题。本文认为,内陆自由贸易试验区的建设必须与内陆物流港的建设相结合,完善内陆与沿海、内陆与地区中心市场、内陆与中心市场一体化建设和运输模式创新4个方面的主要任务。研究结果显示,我国内陆自由贸易试验区所在地区的基础设施不仅落后于我国沿海地区,而且同亚洲发展中国家相比也不乐观。因此,加大基础设施建设的投资仍然是一项迫切的任务。我国现行的自由贸易试验区的特征更像投资便利化试验区,内陆自由贸易试验区未来的发展必须增加贸易开放内容,以适应全球价值链变迁的挑战。内陆地区的产业优势应该向着成为沿海地区中间品供应基地的方向转变,内陆自由贸易试验区应该最终成为高端产业集聚、国内改革和创新的领先者。最终内陆地区的崛起要在不依赖运输成本的高价值/重量比产品和服务业上建立起优势。     

A reappraisal of strategic trade policies with the endogenous mode of competition under vertical structures

This paper examines the endogenous choice of competition mode with strategic export policies in vertically related markets when each upstream firm located in each country determines the terms of the two-part tariff contract by maximizing generalized Nash bargaining. We show that (i) choosing Cournot (Bertrand) competition is the dominant strategy for both downstream firms when goods are substitutes (complements), which leads Pareto superior regardless of the nature of goods under the optimal trade policies; (ii) irrespective of rival’s competition mode, the optimal trade policy is an export subsidy under Cournot competition and an export tax under Bertrand competition; and (iii) trade liberalization may give rise to changes of competition mode and increase of social welfare.     

Seeking greener pastures: a theoretical and empirical investigation into the changing trend of foreign direct investment flows in response to institutional and strategic factors

A generic theoretical model is proposed that provides a holistic conceptualization of the phenomenon of changing trend of FDI flows. Integrating both institutional and strategic factors, a rationale for such a change is provided, and the circumstances under which future shifts might take place are identified. A collection of criteria and incentives that various host governments and their agencies must provide to attract FDI are outlined. Several propositions that lead to empirically testable hypotheses are developed from this model. Statistical evidence is then provided of a shift in FDI flows, and the change in their determinants, by empirically analyzing investment by US multinational enterprises into Western Europe and Asia over the 20-year period, 1981–2000.     

A computable general equilibrium model of international sanctions in Iran

We detail recent international sanctions against the Iranian economy and its government imposed by a subset of developed countries. The effects of these sanctions on the Iranian economy in general and upon upper and lower‐income rural and urban Iranian households, as well as the Iranian government, are modelled using a computable general equilibrium (CGE ) model. We supplement the Global Trade Analysis Project 8 data set using income and expenditure shares from the Urban and Rural Household Income and Expenditure Survey from the Statistical Centre of Iran (SCI ). The model is calibrated to simulate the effects of international sanctions as closely as possible. We use endogenous trade taxes to simulate the effects of sanctions on Iranian oil and petrochemical exports and Iranian imports of petroleum products, metal products and motor vehicles. Our study finds that international sanctions reduced aggregate Iranian welfare by 14%–15%. Rural households in Iran suffered welfare losses which were almost double those experienced by urban households, and the poorest urban and rural households experienced the largest welfare losses, in the order of 5%–10%. But the government of Iran sees a decrease in real revenue of 40%–50%, due to the large negative effect of sanctions on the Iranian oil sector.     

Asymmetric cointegration with threshold adjustment model of exchange rates and the trade balance in Turkey

This paper aims to investigate the long-run equilibrium relationship between the trade balance and exchange rates in Turkey using the asymmetric error correction model with threshold cointegration. The results provide new evidence for the asymmetric long-run relationship between the trade balance and exchange rates. Besides, deviations from the long-run equilibrium due to a relative increase in real exchange rates have a lower speed of adjustment in comparison to the deviations caused by a relative decrease in real exchange rates.     

A qualitative analysis of factors associated with user acceptance and rejection of a new workplace information system in the public sector: a conceptual model

This study examines the factors that lead employees to endorse or resist the introduction of a new information system (IS). Findings suggest that attitudes toward adopting IS are related to psychological characteristics of the potential adopters, including, open‐mindedness, self‐efficacy, interest in the information and communication technology, and time remaining before retirement. Also figuring prominently in influencing attitudes are the end‐users' perceptions and expectations with respect to project management, IS quality, IS usefulness, and its effects on organizational positions, work organization, performance, skills, jobs, and worker health. Finally, user attitudes also relate to features of change management practices, including leadership, training, support, recognition, communication, and participation. An integrative conceptual model of IS user adoption is proposed and suggestions for future research are offered. Copyright © 2008 ASAC. Published by John Wiley & Sons, Ltd.