The determinants of small and medium-sized firm internationalization and its relationship with productive efficiency

The Determinants of Small and Medium-Sized Firm Internationalization and Its Relationship with Productive Efficiency. — The creation of sale structures abroad (CSSA) is an intermediate stage in the process of internationalization when firms are small and foreign direct investment entail high sunk costs. This paper finds that ownership concentration (technological innovation, size, and age) negatively (positively) affects the CSSA decision and that, after controlling for the effect of access to foreign markets under the form of exports, CSSA firms are significantly more efficient than the control sample when efficiency is measured with a stochastic frontier approach. Ownership concentration seems to have two offsetting effects on efficiency: it increases participation to profits and therefore incentives to perform well, while it leads controlling shareholders to underinvest in risky ventures (such as internationalization).     

International specialization and structural change in the Swedish Manufacturing Industry, 1969–1992

International Specialization and Structural Change in the Swedish Manufacturing Industry, 1969–1992. — The increasing trade orientation of Swedish manufacturing 1969–1992 was mainly caused by increasing intraindustry specialization with most industries. Intraindustry specialization was found to be related positively to the skill intensity of the industry and negatively to average plant size and the incidence of trade barriers. The paper evaluates the links between specialization and inter-as well as intraindustry structure. It was found that changing patterns of relative international competitiveness among industries accounted for more than half of the total interindustry structural change in employment in 1969–1992. The mean plant size tends to increase with intraindustry specialization.     

Inward investment, industry concentration and the speed of adjustment

Inward Investment, Industry Concentration and the Speed of Adjustment. — The paper develops a model of concentration, based on the standard literature of concentration determination, which is then estimated using a frontier approach within a panel framework. Such a model provides an estimate of the lower bound of concentration in the industry, based on observed industry level characteristics. The paper then develops a model of concentration change, which shows that foreign penetration acts to reduce concentration levels, and also acts to increase the rate at which the industry moves towards this equilibrium. Finally, the importance of this deviation, in terms of explaining foreign penetration is explored.     

Antidumping jumping: Reciprocal antidumping and industrial location

Antidumping Jumping: Reciprocal Antidumping and Industrial Location. — Antidumping policies are often justified as legitimate actions by governments in their efforts to protect domestic producers from unfair foreign competition. The authors investigate the impact of antidumping rules on firms’ production decisions as to how much and where to produce. Antidumping measures may have unforeseen effects if they induce direct foreign investment and consequently increase domestic competition. The authors therefore focus on location choice and consider the strategies of national governments attempting to advance the interests of their citizens through antidumping legislation. The analysis also has implications for the effects of market integration policies, such as Europe 1992.     

Vertical Integration,Foreign Multinationals and Stigler's Hypotheses: An Empirical Test Using Malaysian Data*

In this paper the hypotheses on motives for vertical integration as proposed by Stigler are empirically tested using a panel dataset from Malaysian manufacturing under both fixed‐effects and random‐effects specifications. Because the degree of multinational participation is expected to influence the results of the regression estimates, empirical tests are conducted with and without controlling for the effect of foreign firms’ participation. Depending on model specifications, evidence is found in favor of Stigler's hypotheses where vertical integration is positively related to demand growth and industry concentration. This result is generally consistent with those found in other vertical integration studies. Significantly, the coefficient estimates of the growth variable are not significant and biased downwards if there is no control on the effect of foreign multinationals in the estimation process.     

The link between immigration and trade: Evidence from the United Kingdom

Immigration and Trade: Evidence from the United Kingdom. — This paper investigates the link between immigration and trade using recent UK data. Immigration from non-Commonwealth countries is shown to have a significant export-enhancing effect. By contrast, immigration from Commonwealth countries is found to have no substantial impact on exports. We conjecture that this could be because immigrants from the UK’s former colonies do not bring with them any new information that can help substantially reduce the transaction cost of trade between their home countries and the host nation. The study also reveals a pro-imports effect of immigration from the non-Commonwealth countries, whereas immigration from the Commonwealth appears to be reducing imports, perhaps reflecting trade-substituting activities by immigrants.     

Testing Heckscher-Ohlin-Vanek in the G-7

Testing Heckscher-Ohlin-Vanek in the G-7. —This paper extends previous tests of the Heckscher-Ohlin-Vanek (H-O-V) model by restricting testing to a group of countries expected to best conform to the assumptions of the model. Specifically, this study restricts the sample to the G-7 countries which are similar in relative endowments and technology. In this sample, limited empirical support for H-O-V is found in the “rank” test of factors across countries and the regressions. The results suggest that serious consideration of the assumptions of the model may improve the concordance of the theory to the data.     

Give Heckscher and Ohlin a chance!

Give Heckscher and Ohlin a Chance! — This paper argues that criticism of the empirical inaccuracy of Heckscher-Ohlin theory has been much exaggerated. Most tests have mis-specified the theory, particularly in their treatment of capital, a factor of production which is internationally mobile and therefore generally does not influence the pattern of trade. The argument is illustrated by a review of empirical studies of North-South trade in manufactures, which is well explained by a skill-only Heckscher-Ohlin model.     

Demand, comparative advantage and economic geography in international trade: Evidence from the OECD

Demand, Comparative Advantage and Economic Geography in International Trade: Evidence from the OECD. — This paper examines the influence of demand on the pattern of net trade for 17 OECD countries. It is found that demand differences are important as a cause of international trade. In fact, for the majority of countries, demand factors explain more of the net trade pattern than do factor proportions. The evidence offers some support for the modern geography and trade theories: high domestic demand in an industry leads to a net export for the majority of cases. The evidence is, however, not clear-cut. Moreover, a demand bias in favour of domestic varieties leads to a net export. Here, the evidence is clear-cut.     

An empirical test of the Dixit-Norman approach to factor price equalization, using cointegration techniques

An Empirical Test of the Dixit-Norman Approach to Factor Price Equalization, Using Cointegration Techniques. — Factor price equalization (FPE) occurs when international trade equilibrium reproduces the integrated world equilibrium (IWE). This allows a straightforward test of a necessary condition for FPE provided one has an idea of the IWE. The author considers Germany as such for France, Belgium and the Netherlands. Cointegration estimation techniques are preferred to SURE, because of endogenity and nonstationarity of the variables. Using the coefficient restrictions, estimation is performed with French and Belgian factor endowments and German sector allocations. Finally, FPE is checked by testing appropriate coefficient restrictions. Concluding, the author finds no long-term trade equilibrium with FPE for the countries considered.     

Investment and institutional uncertainty: A comparative study of different uncertainty measures

Investment and Institutional Uncertainty: A Comparative Study of Different Uncertainty Measures. — There is ample empirical evidence of a negative relationship between aspects of institutional uncertainty and investment. Most studies, however, do not allow a comparison between different dimensions of such uncertainty because they focus on specific indicators, particular regions or different periods. The paper concludes with an evaluation of the quantitative effects of the significant uncertainty indicators on investment finding that a lack of rule of law, high corruption, and volatility in real exchange rate distortions are the most detrimental for investment.     

Has the Canada-US trade agreement fostered price integration?

Has the Canada-US Trade Agreement Fostered Price Integration? — This paper assesses the Canada-US Trade Agreement (CUSTA) from the perspective of market integration. Using monthly data on producer price indices and the exchange rate of both countries for the 1974:1–1996:1 period, a Johansen procedure is used to test for a long-run equilibrium or cointegrated price system among the price series. In addition, to determine whether product markets are converging after the implementation of CUSTA, a Kaiman filter or time-varying parameter analysis is used. Empirical evidence supports the conclusion that CUSTA did not cause price integration or convergence, rather for the two markets convergence and integration were well established prior to CUSTA. The success of CUSTA appears to be in maintaining Canadian access to the US market in the face of rising US protectionism.     

Cultural Baggage: Do Immigrants Import Corruption?

Do immigrants undermine culture in a way that destroys productivity in destination countries? Some scholars have argued that because immigrants come from countries with dysfunctional social capital—norms and institutions—they will import it and pollute the social capital in destination countries. One potential channel through which this could occur is corruption. We examine stocks and flows of immigrants over a 20‐year time period to see if corruption increased in destination countries. We generally find that immigration is not associated with increases in corruption. Additionally, we find that immigration tends to decrease corruption in destination countries with low levels of corruption or high levels of economic freedom.     

ASYMMETRIC PRICE TRANSMISSION AND MARKET CONCENTRATION: AN INVESTIGATION INTO FOUR SOUTH AFRICAN AGRO-FOOD INDUSTRIES

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On the-job training as a cause of brain drain

On-the-Job Training as a Cause of Brain Drain. —This paper presents a simple model based on the assertion that the efficacy of on-the-job training, as well as the productivity of skills, depends on the social stock of capital. It shows that as the degree of this dependency of on-the-job training upon capital stock increases, the problem of brain drain becomes more severe and more difficult to correct. The model may explain why the failure of foreign-educated students to repatriate is a more prevalent form of brain drain than outright migration of skilled labor. It is consistent with the repatriation pattern of Taiwanese students who received post-secondary education in Japan.     

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