North-South knowledge spillovers and competition: convergence versus divergence

Technology spillovers from high-productivity countries in the North allow low-productivity countries in the South to improve productivity in high-tech sectors relatively easy. However, the South's share in world goods markets for high-tech products is relatively low, which reduces opportunities for learning by doing. Our simple Ricardian endogenous growth model shows how the balance between toughness of competition in trade and the strength of North-South spillovers determines whether productivity levels diverge, partially converge or fully converge in the long run. If convergence prevails, the North is confronted with declining employment in high-tech sectors. Temporary (trade) policy measures can turn a diverging economy into a converging one.     

The border effects in Spain: an industry-level analysis

A gravity-model approach is used to estimate the magnitude of the internal border (home bias) and external border (frontier) effects in Spain using industry-level trade flows. We find that the average border effects are about 30 and 10, respectively. Next we explore the variation in the industry-specific border effects. First, the border effects are larger in highly product differentiated industries. Second, the internal border effect is twice bigger for trade in intermediate goods than for trade in final goods. Third, conditioning on the geographic concentration of firms reduces significantly the internal border effect.     

Technology adoption, convergence, and divergence

A new mechanism to explain simultaneous convergence among industrialized countries and divergence between these countries and the rest of the world is presented. Specifically, the adoption of technologies, as embodied in machines, is examined in the context of a world in which capital goods are produced in a few centers and then exported. Since the local cost of introducing machines varies from region to region, technology is not adopted everywhere, and when it is adopted, its intensity varies from place to place. Technological progress diminishes the differences within the group of countries that adopt technologies but increases the gap between those countries and the rest of the world. The model is applied to cases of investment costs generated by deficient institutions and to transport costs. Its predictions are supported by recent research.     

Regional divergence and club convergence in India

This paper examines regional divergence in income across different states in India, and estimates convergence clubs endogenously. The paper makes two useful contributions. First, the data is analyzed using a novel method due to Phillips and Sul (2007) leading to different conclusions in comparison to past studies, and secondly sectoral level data is employed which to our knowledge has not been employed in the literature before. Applying the novel approach to panel data relating to fifteen major states of India for the period 1968/69–2008/09, the results display significant divergence in per capita income across states at the aggregate and sectoral levels. There is also evidence of convergence clubs and variations in the number and composition of clubs across sectors. While three clubs are identified at the aggregate level, at the sectoral level we find three clubs in the industrial sector, two clubs are identified in both the agriculture and services sectors. The final part of the paper deals with the policy implications.     

Technology and the demand for skills in Canada: an industry-level analysis

In this paper we examine the effect of technological change on the relative demand for skilled workers across Canadian industries. We find that skill upgrading at the aggregate level is less evident in Canada than in the United States and other industrialized economies over the 1981–94 period. Behind this overall trend on skill upgrading, there is substantial variation across industrial sectors. Consistent with the skill-biased technological change hypothesis, the technology indicators – the stock of patents used by the industry and the age of capital stock – are found to be significantly correlated with skill intensity. JEL Classification: E24, J23, J31, O33
Technologie et demande de travailleurs qualifiés: une analyse au niveau de l'industrie. Ce mémoire examine les effets du changement technologique sur la demande de travailleurs qualifiés dans les industries canadiennes. On montre que l'amélioration du niveau des compétences au niveau agrégé est moins claire au Canada qu'aux Etats-Unis et dans les autres économies industrialisées au cours de la période 1981–94. Derrière cette tendance générale, il y a cependant des variations importantes entre les secteurs industriels. On trouve que les indicateurs de niveau technologique (le stock de brevets, l'âge du stock de capital) sont co-reliés positivement au degré d'intensité d'utilisation des compétences – ce qui s'arrime bien avec l'hypothèse du changement technologique liéà une amélioration du niveau des compétences     

Global capitalism: A perspective of convergence

The role of government in the capitalist system is reviewed; the instrumentality of competition in the growth of an economy and its effects on the social system is discussed. Also, the phenomenon of inflation in the advanced economies as well as the industrial countries' high consumption and the social effects thereof are examined. The incidence of unemployment is discussed and comparison is made between capitalist and socialist countries. On the issue of income distribution and political power the interplay of political strife on redistributional policies and the penetrability of such political expediencies on future socioeconomic stability is examined. Also, an attempt is made to focus upon critical and polemic issues such as self-interest, social interest, wealth and power and their impact upon the socioeconomic and political structure of the society. Finally, the globalization of economics and the likelihood of new trends is discussed. Opinions and thoughts on the political growth of capitalism are expressed. Although this article does not claim to present final solutions, it does intend to electrify existing thought and hopefully generate new thinking on most politically controversial economic issues so that capitalism can gain ground against other systems in the new era of geopoliticosocioeconomic strife.     

Rights,governance, and foreign direct investment: an industry-level assessment

Theories of multinational enterprises emphasize that foreign direct investment (FDI) is undertaken in different industries for different reasons, yet studies of the effects of rights and governance on FDI generally rely on aggregate-level FDI data. This paper evaluates US FDI outflows to 15 industries (eight manufacturing, seven non-manufacturing) in 54 countries in a linear dynamic panel data gravity FDI model using a ‘system’ generalized method of moments estimator and several widely used rights and governance indexes. At the aggregate level, we estimate that stronger rights and governance have a positive effect on FDI, consistent with most prior studies. At the industry level, we estimate larger positive effects of rights and governance on FDI for service than manufacturing industries, particularly for the information and the finance and insurance industries.     

North-South and South-South trade-related technology diffusion: an industry-level analysis of direct and indirect effects

Abstract .  This paper examines one direct and three indirect channels of North-South trade-related technology diffusion. We find that i) the largest impact on TFP in the South is from direct North-South technology diffusion; ii) there are also significant effects from indirect North-South technology diffusion, though their magnitude is smaller than that of the direct one; and iii) the impact of direct North-South technology diffusion on TFP in the South occurs faster than the impact of indirect technology diffusion.     

Diversity of technology acquisition in technological catch-up: an industry-level analysis of Chinese manufacturing

Using panel data analysis for an industry-level sample of Chinese manufacturing industries from 2000 to 2009, the study examines how latecomers dynamically adapt technology acquisition strategy in terms of technology acquisition diversity during the transition process from imitation to innovation. Our research considers technology acquisition as a portfolio of technology channels and thus examines the impact of technology gap between domestic firms and foreign firms on technology acquisition strategy at the industry level. The findings reveal that technology gap positively affects technology acquisition diversity of Chinese manufacturing industries. Further, it shows that technological uncertainty weakens the positive impact of technology gap on diversity of technology acquisition.     

International convergence in regulation: The case of measurable standards

Recent literature on competition in regulation concludes that the iterative adjustment that may start with mutual recognition is an open-ended process. This paper shows that, even without acceptance of reciprocal minimum standards, a process of iterative adjustment may be triggered by the coexistence of foreign goods with high standard levels and domestic goods with relatively low standard levels. Focusing on the case of international heterogeneity of levels of a specific standard, the paper offers an intuitive counter-argument to the fear that free trade necessarily implies a “race to the bottom“ of standard levels.     

Country and industry-level determinants of vertical specialization-based trade

Abstract

This paper investigates country and industry-level determinants of vertical specialization-based trade. Industries that engage in this pattern of trade are identified through their use of offshore assembly provisions in the US tariff code. Findings explain why industries engage in vertical specialization-based trade and shed light on factors that enter production location decisions. Identifying factors that encourage vertical specialization-based production and trade will enhance our understanding of industry strategy and how trade patterns will evolve as the process of globalization continues. Results suggest vertical specialization-based trade will continue to grow relative to total trade.     

International reserves and trilemma policy convergence in Malaysia

Some observations have suggested that international reserves contribute to trilemma policy convergence in emerging countries. Nonetheless, this hypothesis needs more solid empirical evidence to determine its validity. This article tests this hypothesis by examining the relationships among the index of policy dispersion, international reserves and trade openness in a threshold model in Malaysia. As a small open economy, Malaysia has accumulated a relatively large amount of international reserves since the mid-1990s. The results indicate that the positive impact of international reserves on reducing policy dispersion or achieving policy convergence is found only if the international reserves are above a threshold. Hence, this conclusion supports the need to hold a relatively high level of international reserves in Malaysia.     

The costs of tax havens: evidence from industry-level data

ABSTRACT

Multinational enterprises make use of tax havens to avoid paying corporate income taxes and this costs 100 billion USD and more in lost government revenue worldwide according to an increasing number of recent studies. None of those studies assigns these costs to industries. I aim to shed more light on this gap by using some of the best available industry-level US data to determine to what extent the location of the MNEs’ profit is aligned with the location of their economic activities. My first finding is that the most important tax havens for US multinational enterprises are the Netherlands, Ireland and Luxembourg (all EU member states). Second, I systematically identify the specific industries in specific tax havens responsible for the costs, which should be useful information for tax authorities aiming to reduce tax avoidance. Finally, I argue that the current data are not detailed enough to provide a reliable industry breakdown of the costs, but the prospect of combining input-output tables with forthcoming country-by-country data seems more promising.     

Regional income inequality in China revisited: A perspective from club convergence

Growing income inequality in China has elicited considerable concern, and consensus has not been reached regarding whether regional income converges into one common steady state. The controversy may be attributed to the various definitions and methodologies for testing convergence. This study analyzes regional income inequality and convergence in China from the perspective of club convergence proposed by Phillips and Sul (2007). Instead of one convergence at the national level, we determine that provincial incomes are converging into two clubs: seven east-coastal provinces (Shanghai, Tianjin, Jiangsu, Zhejiang, Guangdong, Shandong, and Fujian) and Inner Mongolia are converging into a high income club, and the remaining provinces are converging into a low income club. In addition, we obtain strong evidence that income inequality within a club decreases, while that between clubs deteriorates over time. Between-club inequality is associated with investment in physical and human capital, as well as population growth rates.     

Distributional impacts of car road pricing: Settlement structures determine divergence across countries

Social questions of distribution and equity are of major importance for the political acceptance of car road pricing. The argument that kilometre-based private vehicle charging disadvantages the poor is often the core reason for opposing its introduction. An article in this journal [Steininger, K.W., Friedl, B., Gebetsroither, B., 2007. Sustainability impacts of car road pricing: a computable general equilibrium analysis for Austria. Ecological Economics 63, pp. 59–69] proved the opposite for one European country, i.e. that the rich bear most of the burden. In the present paper we use the very same model structure and apply it in a simulation to the data of another country. While macroeconomic and environmental conclusions are similar, we find a different distributional impact of car road pricing in our case. This issue is also of relevance in the analysis of the distributional implications concerning (recently significant) gasoline price increases.     

Distributional impacts of car road pricing: Settlement structures determine divergence across countries

Social questions of distribution and equity are of major importance for the political acceptance of car road pricing. The argument that kilometre-based private vehicle charging disadvantages the poor is often the core reason for opposing its introduction. An article in this journal [Steininger, K.W., Friedl, B., Gebetsroither, B., 2007. Sustainability impacts of car road pricing: a computable general equilibrium analysis for Austria. Ecological Economics 63, pp. 59–69] proved the opposite for one European country, i.e. that the rich bear most of the burden. In the present paper we use the very same model structure and apply it in a simulation to the data of another country. While macroeconomic and environmental conclusions are similar, we find a different distributional impact of car road pricing in our case. This issue is also of relevance in the analysis of the distributional implications concerning (recently significant) gasoline price increases.     

Decomposing productivity growth and divergence: an index number approach

We propose a cross-country productivity growth decomposition that allows us to quantify the industry-level contributors to an aggregate productivity growth differential. We deploy this cross-country decomposition to quantify—for the first time—the disaggregate contributors to the divergence in market sector productivity growth between Australia and New Zealand. The results suggest that large contributions to the divergence arise from differences in labour growth across the two countries and that cross-country structural differences are large, and generally act to reduce the divergence. Most of the industries are found to add to the divergence, with particularly large contributions coming from differences across the mining and wholesale trade industries. The views expressed in the paper are entirely my own, and do not necessarily reflect those of the Reserve Bank of New Zealand. I would like to thank Les Oxley and Kevin Fox for useful comments on earlier drafts. All errors and omissions are my own.     

A research of material input and environmental impact for Chinese economy： 1990-2005

The process of economic activities is on the basis of tremendous material inputs. China has been discharging an enormous amount of waste, giving rise to a wide range of environmental impacts. The method of economy-wide material flow analysis （EW-MFA） is one of the effective tools to examine the flow of materials entering physical economies, and recognize early environmental problems. Relevant researches are still at the early stage in China and most focus on material throughput but are rarely concerned about the utilization of recycling resource and environmental impact. Based on more than 3,000 items of data related, materials entering Chinese economy are classified into three types, and then the characteristics of material input and environmental impact are presented for the years 1990-2005 by using the indicators derived from EW-MFA. The Ratio of Recycled Material （RRM） is added as the new indicator in order to be in accordance with the need of circular economy being promoted in China. Results show that the great changes in the structure of material input cause the continuous increase of industrial solid waste emissions and the bogging down of material productivity. The RRM reveals that the utilization of recycling resources remains at a fairly low level in China. Finally, some weakness of EW-MFA is discussed according to the calculated results.     

The contribution of start-ups and young firms to industry-level efficiency growth

This article examines the impact of start-ups (active for 1 up to 5 years) and young firms (active for 6 up to 10 years) on industry-level efficiency growth in six EU countries, covering the period 2002–2009. Using semi-parametric estimates of meta-frontier efficiency, it is found that surviving entrants gradually raise their efficiency level in all countries considered. Firm-level efficiency growth decreases with firm age, whereas reallocation towards efficient firms contributes more to industry-level growth as firms mature. The relative contribution of start-ups appears to have been important as they actually contributed positively to overall efficiency growth which, over the period under consideration, was negative in most countries, even before the ‘Great Recession’. There are indications of ‘cleansing’, due to the exit of less efficient firms, during the ‘Great Recession’.     

Time stability of the beta convergence among EU countries: Bayesian model averaging perspective

This paper analyzes the time stability of the GDP beta convergence in two subsamples: EU27 countries during 1993–2010 and EU15 during 1972–2010. Additionally, the article checks for the strength and stability of influence of particular economic growth factors. In order to address the problem of variables' selection, Bayesian model averaging (BMA) is used while choosing the appropriate variables for the regression. In order to loose the assumption of stability overtime in the regression, interaction terms of particular regressors are introduced with time dummies (the whole sample is divided into time intervals and is allowed for structural breaks). Finally, in order to address the problem of potential inconsistency of “typically used” estimators, the study employs Blundell and Bond's GMM system estimator. The main findings are the following. (1) The EU27 countries converged at the rate of about 5% per annum while the EU15 countries—at 3% p.a., which is an enormous difference as compared with the widely cited 2% rate of convergence. (2) The pure mechanism of conditional convergence of the countries under study was rather constant over time: there were periods of more rapid or slower convergence but the differences were not as huge as one could expect. (3) The considered economic growth determinants exhibited very mixed and differentiated impact on economic growth in various subperiods.