Agricultural productivity differences and credit market imperfections

This paper presents a simple model to examine the implication of credit market imperfections when considering the huge variation of agricultural labor productivity across countries. The development of credit markets enables more agents to acquire skills to work in non-agricultural sectors. The expansion of the sectors decreases the labor supply to agriculture as well as increases the supply of modern intermediate inputs to agriculture. Agricultural producers accordingly substitute the relatively cheap intermediate inputs for labor to produce a given level of an agricultural good, and, thereby, the output per worker in agriculture is improved. Poor countries with less developed credit markets are, therefore, far less productive in agriculture than rich countries with well-developed credit markets.     

Foreign Direct Investment and Training in the Host Country: The Tariff-Jumping Argument Revisited

We analyze the direct investment versus export decision of a multinational firm in competition with a potential entrant in a host country. We consider a workers' skills asymmetry between the host and the multinational home countries. We also give the multinational the possibility to train all (or a part of) the hired workers when investing. We show that an improvement in the workers' skills in the host country does not systematically increase the multinational incentive to invest. We also demonstrate that the tariff-jumping investment can improve the welfare of the host country even if it excludes the local firm from the market.     

Intensive and extensive margins of exports: What can India learn from China?

We decompose India's export performance in manufactured products during 2000–15 into changes at the intensive and extensive margins. India's performance, along different margins, is compared and contrasted with that of China. The results show that while China outperforms India at both the margins, the gap is particularly wide at the intensive margin. Decomposition of intensive margin along quantity and price margins shows that Chinese products are generally sold cheaper than Indian products. Higher price margin, however, has not translated into high intensive margin for India due to its abysmally low quantity margin. We examine different explanations for China's superior performance relative to India, along different margins, using a gravity model. Our results suggest that China's exchange rate policy was not the prime reason for its export success. Neither do we find that FDI inflows were significant in explaining the export performance gap between them. The results show that China's export relationship bias towards high‐income partner countries holds the key in understanding its superior performance. This bias is a natural consequence of China's high degree of specialization in labor‐intensive activities. India, by contrast, due to an idiosyncratic pattern of specialisation, has failed to exploit its export potential in high income countries.     

Industry-Specific Human Capital,Occupation and Firm Size: Evidence from Taiwan

This paper investigates the importance of various types of human capital and highlights the role played by industry tenure in determining wages in Taiwan. It also aims to offer possible explanations as to why industry-specific human capital is much less significant than it is in the United States. Empirically, it is found that, other things being equal, accumulating industry tenure decreases earnings for both the least-skilled workers and those employed in mid-sized firms. Industry-specific skills are not yet deeply implemented in most occupations and firms of all sizes. This might also account for the remarkable level of labor reallocation among industries that is observed in Taiwan. Furthermore, the capital stock accumulated through education is found to be the most crucial in determining wages in all estimations and a factor considered the engine of growth during the miraculous development of Taiwan's economy. However, the importance of other types of human capital on earnings – namely, general labor market experience and firm-specific human capital, varies substantially across groups.     

Employment and Labor Laws

Abstract

This article reviews and compares the employment and labor laws of three countries-US, South Africa, and Ghana. The methodology employed is a qualitative review of each countries employment and labor laws that are centered on collective bargaining, employment discrimination and other workplace standards, unemployment compensation, pensions, workplace safety, and workers compensation. Even though, the three countries have laws covering various areas of employer/employee relationships, perusal of the various countries' laws reveals there are considerable differences between the three countries with respect to the importance of labor market institutions and the role they play in determining the terms of employment.     

Unobservable skill dispersion and comparative advantage

This paper investigates a theoretical mechanism linking comparative advantage to the distribution of skills in the working population. We develop a tractable multi-country, multi-industry model of trade with unobservable skills in the labour market and show that comparative advantage derives from (i) cross-industry differences in the substitutability of workers' skills and (ii) cross-country differences in the dispersion of skills. We establish the conditions under which higher skill dispersion leads to specialization in industries characterized by higher skill substitutability across tasks. The main results are robust when the model is extended to allow for partial observability of skills. Finally, we use distributions of literacy scores from the International Adult Literacy Survey to approximate cross-country productivity differences due to skill dispersion and we carry out a quantitative assessment of the impact of skill dispersion on the pattern of trade.     

Market knowledge: Evidence from importers

Previous firm‐level literature established that there are substantial costs of entry into new export markets. Chaney (The American Economic Review, 104, 2014, 3600) opens the black‐box of entry costs by building a dynamic network model of international trade where firms acquire customers in new destinations through their existing customers in other destinations. Following his conjecture, this paper examines whether firms use their existing suppliers in a destination to find their first clients in those markets. I use a disaggregated data set on Turkish firms' exports and imports for the 2003–08 period, and investigate the effect of import experience on export entry. By identifying import experience using instrumental variables, and shutting down productivity channels with firm‐year fixed effects, I find that having a supplier in the destination country raises the probability of starting to export to that country by 5.5 percentage points on average, revealing a “market knowledge” phenomenon. The paper's main contribution to the literature is finding that firms' country‐specific import experience increases the likelihood of export‐market entry. Digging further to explore heterogeneous effects, I find that this effect does not exist when trading with low‐income countries, but it increases with the destination country's size, proximity, language similarity and the size of its Turkish immigrant community. Moreover, the strength of the firm's relationship with its supplier as proxied by several variables such as the share of imported products that are differentiated increases the probability of export‐market entry.     

Exporting,demand for skills and skill mismatch: Evidence from employers' hiring practices

We exploit information from a classification of occupations to identify separately formal qualification requirements linked to a job and formal qualifications of a worker who filled the job for the universe of firms in Slovenia. We find that exporters were more likely to hire over‐qualified workers than they did prior to becoming exporters even though they did not change the qualification requirements of their vacancies. Firms were more likely to demand other skills (leadership, knowledge of foreign languages) once they began to export. These findings suggest that skill upgrading by exporters reflects differences in terms of skill demand as well as the way workers match to jobs. This distinction is blurred in existing studies on skill upgrading by exporters because these studies rely solely on the information about the qualifications of hired workers. Our findings are consistent with a framework in which firms become more productive and offer higher wages once they start to export, workers' qualifications and firms' productivity are complementary inputs, and search is costly.     

Firm Heterogeneity,Endogenous Quality,and Traded Goods Prices

A model with endogenous quality and firm heterogeneity is developed. Firms can invest in quality, and quality investment is relatively skill intensive. The model is used to account for two findings in the empirical literature on traded goods prices, lacking a formal explanation in the theoretical literature thus far. First, the model provides a theoretical explanation for Schott's (Quarterly Journal of Economics 2004, 119, 647) empirical finding that relatively skill‐abundant countries export higher priced goods. Firms in these countries invest more in quality and therefore sell higher quality, higher priced goods. Second, the opposite effects of importer market size on traded goods prices at the firm level (positive) and at the aggregate level (negative) identified in the empirical literature can be explained with the model. In a larger market, the incentive to invest in quality is larger for each firm, leading to higher firm‐level prices. Due to a selection effect, also less productive firms selling goods of lower quality can export to larger markets, implying lower aggregate prices.     

Host market characteristics,FDI, and the FDI – trade relationship

This paper empirically examines how a host nation's market characteristics, particularly its market maturity and role as an export platform, affect the amount of inward FDI it receives and its FDI?–?bilateral trade relationship with the FDI source. For the period 1989?–?1999, using Japanese outward FDI into 85 geographically and developmentally diverse countries, we find a positive and significant relationship between FDI inflows and the host's market maturity levels. However, the FDI?–?trade interaction between the host and the FDI source appears to vary inversely with the host country's market maturity level. In addition, after controlling for the host's market maturity, we find that the nature of the host's ‘export platform’ status also significantly impacts both inward FDI flows and the FDI?–?trade relationship.     

Export diversification,margins and economic growth at industrial level: Evidence from Thailand

This paper examines the relationship between export diversification, export margins and economic growth at the industry level using Thailand as a case study during 2002–16. Our results show that the effects of export diversification and margins on economic growth vary across industries. Export diversification helps boost growth only in some sectors, including electronics, automotive and chemicals, plastic and rubber, while in the processed food, and textiles and apparel industries, specialisation matters more in promoting growth. In almost all industries, a non-linear relationship between diversification and economic growth is not revealed, except in textiles and apparel. The diversification is crucial in enhancing the impact of exports on growth only in the processed food and textiles and apparel industries. Expansion of intensive margins plays an important role in boosting growth in key industries within Thailand. The role of extensive margins, both in terms of new products and new market destinations, in promoting economic growth is limited. For extensive margins (new products), it is found to be significant in boosting economic growth only in processed food and textiles and apparel, while in the case of extensive margins (new market destinations), its significance in boosting growth is revealed only in the electronics sector.     

Modeling firm specific internationalization risk: An application to banks’ risk assessment in lending to firms that do international business

Drawing on internationalization process theory, we develop a new model for firm-specific internationalization risk assessment. The model shows that firm-specific internationalization risks can be determined from a firm's experiences and from current business activities in a firm's network. Experiential risks are categorized as international, country market, network, or relationship experience risks. Risk assessment in current network activities can be determined from a firm's dependency on a network and from the network's performance and evolution. We apply our model to credit risk assessment by banks and other credit institutions. This article adds to research on financial institutions’ credit risk assessment by focusing on firm-specific internationalization risk assessment, an area that has previously received little attention in the literature. In addition, this article provides a better understanding of risk assessment in the internationalization process, shedding light not only on the risks involved in firms’ commitment to internationalization but also on the risks that banks and other institutions take when they commit by lending to internationalizing firms.     

An analysis of Korea's export performance using US import data

This paper assesses the relative sophistication of the Korean export products in manufacturing industry both across and within products between 1989 and 2012 using the very detailed United States import data. I first compare Korea's export performance in the US market in terms of market share, product penetration and export similarity to those of its rival countries. Next, I propose far more extensive estimates of difference in export quality between Korea and its trading rivals. The estimated quality difference reveals substantial heterogeneity across products and countries. In particular, this paper shows that the current greatest competitor of Korea is still Japan in the US market, but China is steadily climbing up the quality ladder and is chasing after Korea.     

What drives stock market development in emerging markets—institutions,remittances, or natural resources?

In this paper, we assess the macroeconomic determinants of stock market capitalization in a panel of 17 emerging markets in the Middle East and Central Asia, including both hydrocarbon-rich countries and economies without sizeable natural resource wealth. In addition to traditional variables, we include an institutional variable and remittances among the regressors. We find that (i) both institutions and remittances have a positive and significant impact on market capitalization; and (ii) both regressors matter, especially in countries without significant hydrocarbon sectors; whereas (iii) in resource-rich countries, stock market capitalization is mainly driven by the oil price.     

Participation in export and Chinese firms’ capacity utilization

This paper first sets up a firm heterogeneity trade model and shows that given capital stock and productivity, export firms will have higher rates of capacity utilization. In addition, given capital stock and fixed export costs, firms with higher productivity are more likely to export. I then use the 2012 Chinese enterprise survey from the World Bank to empirically investigate the impact of participation in export on Chinese firms’ capacity utilization rate. The results show that on average, export firms have capacity utilization rate 1.55–2.01 percent higher than non-export firms, which amounts to 14.6–18.9 percent of the standard deviation of capacity utilization rate in the sample. I also find that firms with a larger part of shares owned by the government have lower capacity utilization. Stronger market competition leads to over-investment and therefore lower capacity utilization rate. Faced with more rigorous labor market regulation, firms will substitute capital for the use of labor, resulting in higher capacity utilization rate.     

Export Credit Guarantees and Export Performance: An Empirical Analysis for Germany

Recent literature finds that exporters are particularly vulnerable to financial market frictions. As a consequence, exports may be lower than their efficient levels. For this reason, many countries support exporters by underwriting export credit guarantees. The empirical evidence on the effects of those policies is, however, very limited. In this paper, we use sectoral data on export credit guarantees issued by the German government. We investigate whether those guarantees indeed do increase exports and whether they remedy the export‐restricting effect of credit market imperfections both on the sectoral and on the export‐market levels. Exploiting the sectoral structure of a rich three‐way panel data set of German exports, we control for unobserved heterogeneity on the country‐year, sector‐year and country‐sector dimensions. We document a robust export‐increasing effect of guarantees. There is some evidence that the effect is larger for export markets with poor financial institutions and in sectors that rely more on external finance.     

Sectoral Technical Progress and Aggregate Skill Formation

Recent studies discuss micro-transmission mechanisms to measure spillover effects of MNC (Multinational Corporations) activity on human capital in host countries. We develop an aggregate transmission mechanism to show that technology deepening in advanced sectors affect economy-wide skill formation, not analyzed in previous studies. Sector-specific advanced technological input and borrowing from local capital market at preferential rates dampens rate of skill formation if local firms are more skill-intensive. Liberal trade policies applied only to MNC sector may lower traditional export if credit subsidy offered to MNCs is simultaneously withdrawn.     

PROFIT,SURPLUS PRODUCT,EXPLOITATION AND LESS THAN MAXIMIZED UTILITY: A NEW EQUIVALENCE PROPOSITION ON THE FUNDAMENTAL MARXIAN THEOREM

Morishima's Generalized Fundamental Marxian Theorem (GFMT) is an extended form of Okishio's Fundamental Marxian Theorem, which showed the equivalence between positive profit and the exploitation of labor. GFMT is not developed as a system of equivalence proposition between five conditions, which I call ‘The Strong System of Exploitation Theory’. But by the definition of this system, there remains the possibility of positive profit without exploitation. In this paper, I demonstrated an alternative system of equivalence proposition, naming it ‘The Weak System of Exploitation Theory’, in which positive profits always mean exploitation. Here I introduced workers' utility function to define the exploitation concept. Then I could also show that the exploitation is equivalent with the situation where workers' utilities are under‐maximized.     

Mind the Gender Wage Gap – the Impact of Trade and Competition on Sectoral Wage Differences

This paper examines differences between women’s and men’s wages in 18 selected OECD countries in the period 1970 to 2005. The study is based on 12 manufacturing sector‐ and skill‐specific sets of panel data on the gender wage gap. We apply a system generalised method of moments (GMM) estimator to the extended version of the conditional gender wage gap convergence equation, controlling for sector concentration and industry‐specific measures of openness using a difference‐in‐difference approach: trade‐affected concentrated sectors versus trade‐affected competitive sectors. The results indicate that: (i) an increase in sector concentration is associated with wage gap growth; (ii) both import and export penetration are associated with a reduction of the high‐skill gender wage gap growth in concentrated industries; (iii) there is evidence of a widening impact of trade on the medium and low‐skill occupational gender wage gap growth in less competitive industries; (iv) institutional regulations of the labour market have an impact on the development of the gender wage gap: for highly‐skilled labour an increase in labour market regulation raises the growth of the gender wage gap, while for medium‐ and low‐skilled workers, it lowers it.