THE IMPACT OF EXPORTING AND FOREIGN DIRECT INVESTMENT ON PRODUCT INNOVATION: EVIDENCE FROM CHINESE MANUFACTURERS

To understand the drivers of product innovation at the firm level, I compare the effects of foreign direct investment (FDI) and exporting on product innovation using a rich firm‐level database of manufacturing and industrial enterprises. The article focuses on product innovation, as it is vital to economic development. Estimates from linear regressions and propensity score matching tests show that learning‐by‐exporting is a stronger predictor of product innovation. Firms that receive foreign investment also tend to engage in more product innovation, but not at the same level as the firms that export. Additional tests confirm that as they start and stop exporting, firms change their patterns of investment in the drivers of product innovation—fixed capital and research. (JEL D22, F14, F23, L25, O31)     

Whose policy uncertainty affects trade flows between Japan and the U.S.?

Previous studies mostly assumed that the effects of policy uncertainty on trade flows are symmetric. In this article, we add to this literature by arguing and demonstrating that the effects could be asymmetric. Since asymmetry analysis requires using non-linear models, such models yield a more significant outcome than linear models. We show this by considering the trade flows of 66 two-digit U.S. exporting industries to Japan and 59 two-digit Japanese exporting industries to the United States. While both the linear and non-linear models predicted short-run effects of the U.S. and Japanese policy uncertainty on exports of most industries, the long-run effects were significantly different. In the long run, while the linear model predicted no significant effects of either uncertainty measure, the non-linear model 12 (14) U.S. exporting industries that were affected by changes in the Japanese (the U.S.) policy uncertainty measure and six (10) Japanese exporting industries that were affected by changes in the Japanese (the U.S.) policy uncertainty measure. Several large industries were among the affected industries.     

Product standards, trade disputes, and protectionism

Abstract.  Disputes over national product standards are a major source of tension in international trade negotiations. The usual pattern is that exporters challenge new product standards as a 'disguised barrier to trade.' The paper develops a two‐country political agency model of standard setting. It is shown that there exists a political equilibrium in which the importing country on average applies a more stringent standard than the exporting country. This difference can be due either to a too lax standard in the exporting country or a too stringent standard in the importing country. JEL classification: F18, F13, D72     

U.S. EXTERNAL ADJUSTMENT: IS IT DISORDERLY? IS IT UNIQUE? WILL IT DISRUPT THE REST OF THE WORLD?

This article focuses on the historical experience with U.S. external adjustment, that is, narrowings of the trade deficit. Using data from the past 35 years, we compare economic performance in episodes during which the U.S. trade balance declined against episodes during which it rose. We find that trade balance adjustment has been generally benign: U.S. real gross domestic product growth tended to fall but not to a statistically significant extent; housing construction slumped; inflation generally rose modestly; and although nominal interest rates tended to rise, real interest rates fell. The article then compares these outcomes to those in foreign industrial economies. We find that the economic performance of the United States during periods of external adjustment is remarkably similar to the foreign experience. Finally, we also examine the performance of the foreign industrial economies during the periods when the U.S. trade deficit widened and narrowed. Contrary to concerns that U.S. adjustment will prove injurious to foreign economies, our analysis suggests that the foreign economies fared reasonably well during past periods when the U.S. trade deficit narrowed. ( JEL F32, F41)     

Refinery mix in the U.S., Canada,and the E.E.C.

This paper examines the response of gasoline's share of a barrel of crude oil to changes in relative petroleum product prices. An inter-country comparison of the U.S., Canada, and the E.E.C. allows investigation of different parts of the production possibility frontier. In the U.S. and Canada, with relatively large amounts of cracking capacity, there is price responsiveness of the product mix to changes in relative product prices. In the U.S., both residual and distillates are substitutes in production for gasoline, but for Canada, only distillate is a substitute. Part of this difference is attributed to the U.S. oil quota. For the E.E.C. with relatively small amounts of cracking capacity there was no discernible effect of product prices on product mix.     

U.S. immigration regulations and India's information technology industry

The export-led growth of India's information technology (IT) industry has been nothing short of phenomenal over the past half-dozen years. Other studies have provided a number of explanations for the growth. This paper proposes that a significant factor has been overlooked or understated in prior explanations. Specifically, the Indian IT industry has utilized U.S. immigration regulations for competitive advantage to accelerate its growth. The importance of this factor is estimated through quantitative data analysis at the macro and firm levels. The analysis helps to explain why India's IT industry grew while that of other developing countries, with similar human capital resources and wage rates, did not. The U.S. Congress is currently debating U.S. immigration policies and may change them in the near future. Any changes will have significant effects on the future growth pattern of the Indian IT industry. Many developing countries have recognized India's success, and policymakers in those countries are implementing strategies to replicate it. The results from this study may help those policymakers better understand a key factor of India's success in exporting IT.     

出口战略、代工行为与本土企业创新—来自江苏地区制造业企业的经验证据

对来自江苏省微观企业大样本调查问卷的实证分析表明:以代工方式切入全球价值链生产体系是我国制造业本土企业参与全球市场的主要手段之一;我国制造业企业对国外市场依赖程度的不同会对其创新活动产生倒U型非线性影响效应;完全依赖于国外市场的代工企业创新活动显著受到代工"俘获效应"和"锁定效应"的负面作用影响。进一步分析还发现,我国代工企业的关键设备引进等行为,可能是阻碍其自主创新能力形成的重要因素之一。     

Multinationals,Information Update,and Product Adaptation *

This paper develops a dynamic model of decision making by multinational firms. The firm chooses between exporting and producing abroad when it expands the market. Bayes learning is incorporated into this model in addition to fixed cost and transport cost Production in a foreign country gives the firm new information about the demand function. This information is applied to adjust the firm's expectation as well as output choice in the future. This process not only reduces the risk encountered by a firm in a foreign market, but also increases acceptance of the product which the firm manufactures. This paper concludes even if producing abroad loses money in the first period, the firm may still choose to set up plants in foreign countries rather than exporting, due to the dynamic information advantage associated with going multinational. [F23,F21]     

Causality Between Exports,Imports and Income In Trinidad and Tobago

This study examines the relationship between exports, imports and income in the economy of Trinidad and Tobago, using the methodology of Granger causality and error correction modeling. Our results show that there is unidirectional Granger causation from exports to income (GDP), and bidirectional causation between exports and imports and imports and income. The Economy of Trinidad and Tobago is a petroleum exporting economy where oil-export booms raise income levels, but this is usually followed by a slump. The bivariate models should be interpreted with caution because of the possibility of omitted variable bias. [F14, C22]     

Transition from unemployment benefits to social assistance in seven European OECD countries

The topic of this paper is the transition from unemployment benefit schemes to social assistance in seven European OECD countries. The unemployment benefit schemes are formally quite different in the seven countries. Most are mandatory but Denmark and Sweden have voluntary unemployment insurance and Finland has a mandatory basic scheme with a voluntary income related component on top of that. Self employed people can join the U.B. schemes in the 3 Scandinavian countries. All the U.B. schemes have working or contribution conditions to be met by the members in order to obtain eligibility for benefits. These conditions are relatively tight in the Netherlands, France and Sweden and relatively easy in Denmark and Great Britain with Germany and Finland in between (based on rules in 1994–95). Recent developments in several countries have been to tighten the access conditions to the U.B. schemes and from 1997 Denmark will be ‘on line’ with Germany. The Netherlands have tightened the access criteria very significantly in 1995. There is a considerable variation as far as the duration of the unemployment benefit period is concerned. Sweden has a benefit period in fact without effective time limitations. The Danish benefit period is also very long, 7 years now being reduced to 5 years. 5 years is also the maximum duration in the Netherlands and in France, but only after many years of work and after a relatively high age has been reached. The maximum period in Germany, 22/3 years, also requires a long work history and a relatively high age. Finland and Great Britain have uniform benefit period (just as in Denmark and Sweden), in Finland it is appr. 2 years (longer for elderly unemployed just as in Sweden and Denmark) and in Great Britain it was 1 year but from October 1996 it was reduced to 1/2 year. The differences in the duration of the benefit periods between the seven countries are very considerable. As already mentioned, there has been a tendency to reduce the benefit period in several countries. Such a change is also being considered for the ‘never ending’ benefit period in the Swedish U.B. scheme. The benefit formula is purely flat rate in Great Britain and income related in the other countries. There is a maximum benefit level in 5 of these countries, but not in Finland, where the compensation is stepwise decreasing with increasing income. In the 5 countries with income related benefits and a maximum benefit level, this maximum level is reached at a relatively low income in Denmark (2/3 APW income) and Sweden (close to APW income) and at a relatively high income in the Netherlands (appr. 1.5 APW income) and Germany (appr. 1.7 APW income) and at a very high income level in France. France is the only country among the 7, where the benefits after an initial period are being reduced regularly (every 4 months) in the benefit period down to a minimum level. Sweden and Germany have reduced the benefit levels in recent years. Denmark has the highest gross compensation percentage, 90, in relation to lost income, but it is only effective over a relatively narrow income interval, from approx. 133,000 DKK to 162,000 DKK (1996), ‘between’ the min. and max. U.B. rates. According to the 3 institutional criteria applied here, access to the schemes, duration of the benefit period and the type of benefit formula, the U.B. schemes of the seven countries studied are very different. The exit scheme from U.B is social assistance in most of the countries, but not in Germany, where it is possible to continue in a scheme with lower compensation but still income related. For Sweden it is hardly meaningful to speak of an ‘exit scheme’ when the U.B. insurance is without effective time limitations. The exit schemes in the other countries are all characterized by having flat rate benefits. All the exit schemes are means tested and this is a crucial difference to the U.B. schemes, and they are without time limitations. Means testing and no effective time limitations are usual characteristics for social assistance and social assistance like schemes. In all the countries, except in Denmark and Sweden, there is ‘topping-up’ from social assistance to a guaranteed minimum level disregarding the income sources. In the two Scandinavian countries mentioned, a ‘social event’, i.e. illness or unemployment, is required in order to be eligible for social assistance benefits. Net replacement rates are used to illustrate the levels of compensation within the U.B. and the S.A. schemes, to identify possible incentives problems, and to illustrate the economic implications of the transition from U.B. to S.A. schemes. The net replacement rates presented are calculated by using the ‘disposable income after net housing costs’ income concept. The calculations include several family types, singles and couples with and without children and for the couples with one or two incomes. A general result but with some modifications, cf. the following, could be that the U.B. based replacement rates usually are higher than the S.A. based, but that the difference is minor when the U.B. scheme is flat rate or income related with a maximum benefit level being reached at a relatively low income, for Great Britain there are in several cases no difference at all. The ‘topping-up’ has the implication that the U.B. and S.A. based replacement rates are often identical at the lower end of the income scale. The very high S.A. based replacement rates (well over 100 per cent) often seen for Denmark and Sweden at low income levels do not necessarily imply, that social assistance in those two countries is more generous than in the other countries, it is very much an effect of not having more or less automatic ‘topping-up’ to a guaranteed minimum income level when earned income is low. The single parent family type seems to have incentives problems at relatively low income levels in most of the countries, especially when receiving U.B., she may temporarily be caught in the ‘unemployment trap’. The one earner couple with children may also be exposed to the ‘unemployment trap’ but on a more permanent basis. The S.A. based replacement rates for this family type are extraordinarily high (and higher than the U.B. based) in Denmark and Sweden, where this family type, however, is very rare. For the two earner family (where one of the spouses always has earned income) the means testing of S.A. makes an impact on the S.A. based net replacement rates, they are in most cases substantially lower than the U.B. based. The results of the net replacement calculations indicate no or only minor economic implications by a transition from U.B. to S.A. in the lower end of the income scale while the effect in most cases will be more substantial in the higher end of the income scale. This is not always the case in Sweden and Denmark where S.A. for some family types are preferable to U.B. and where the difference in other cases may be so small, that it implies incentives problems for joining the voluntary U.B. scheme. The calculation of ‘long term’ (5 years) net replacement rates for families at a low income level (the point in the income distribution where only 5 per cent have lower income) and only including one earner families, reveals that either the long benefit period in the U.B. scheme (Sweden and Denmark) or ‘topping-up’ (Germany, the Netherlands and Great Britain) generate ‘constant’ net replacement rates, and quite high ones, at low income levels. Only in France and to some extent in Finland will there be a decrease in net replacement rates over time. Most of the differences concerning the duration of unemployment benefit periods and to some extend the benefit formulas have no effect on the long term net replacement rates. At higher income levels the time limitations in the U.B. schemes will be visible again, except in Great Britain where the U.B. and S.A. benefits are almost identical. It is not possible to point out a ‘worst’ country with respect to ‘incentives’ problems, but the Danish, and to some degree also the Swedish, U.B. schemes with their high net replacement rates at lower income levels and long duration periods ‘stand’ out in many cases, and the S.A. schemes in those two countries may also contribute to permanent ‘unemployment traps’ as well as lack of incentives to join the voluntary insurance schemes. The two Scandinavian countries are, however, not alone with ‘incentives problems’. The section on long term net replacement rates showed that for low income levels the replacement rates were high and constant in most countries. This result is often due to ‘topping-up’ to a guaranteed minimum standard.     

风险补偿视角下的汇率传递及其国别差异——基于深圳和黄埔港出口数据的实证

本文基于2000年1月至2008年12月深圳和黄埔港口大类8位数HS编码出口商品月度单价,构建面板模型,研究经两港出口至美、德、英和日本商品的汇率传递效应及汇率预期对厂商定价的影响。实证显示,即期汇率传递率较高,厂商定价对人民币即期升（贬）值较敏感,且国别差异显著;出口商根据本币预期升（贬）值幅度相应调高（低）报价,以规避汇率风险。因此,汇率波动向出口商品本币价格的传导实际上存在两个渠道,当市场普遍预期未来汇率会发生较大的变化,即使即期名义汇率保持稳定,预期的改变可能已经悄然传导到价格上,并实际地影响到贸易量。     

The Welfare Effects of U.S. Most-Favored-Nation Tariff Treatment of Exports From China: An Empirical Inquiry *

This Study provides estimates of the elasticities of the U.S. import demand for Chinese goods and of China's export supply to he U.S. and China of granting Most-Favored-Nation (MFN) tariff treatment for China's exports. In general, if Washington denies MFN status to Beijing, Sino-American commercial as well as political relations world be seriously harmed. [F13, F14]     

Firm heterogeneity and trade-induced layoffs: An empirical investigation

We use a novel data set with verified observations of trade-induced layoffs by U.S. firms to study the interaction between firm productivity and trade liberalization as key determinants of firm-level job destruction due to trade. We find that patterns of trade-induced layoffs are broadly consistent with the predictions for firm-level employment generated by the Melitz (2003) heterogeneous firms theory – the number of trade-induced layoffs increases with firm productivity for non-exporting firms but decreases with firm productivity for exporting firms. The fact that exporting firms incur trade-induced layoffs at all invites a refined interpretation of the theory. Our findings suggest that exporting firms may lay off some workers who work in production for their shrinking domestic segments, while also engaging in some within-firm reallocation of workers. We also find that, even after controlling for productivity and export status, larger firms lay off more workers due to trade competition.     

THE ROLE OF EXCHANGE RATE IN SINO-U.S. BILATERAL TRADE

We use the error component two-stage least squares estimation method to examine the effects of the Sino-U.S. exchange rate and the weighted exchange rate between the United States and other Asian countries on the Sino-U.S. trade patterns. Our study suggests that both the exchange rates have contributed to China's increased trade surplus with the United States. China has imported intermediate goods from the Asian countries, produced final goods using its cheap labor, and exported those goods to the United States. This is especially true for bilateral trade of high-tech manufacturing goods. Our study also reveals that the U.S. bilateral trade balance could improve if China appreciates its currency (Yuan) against the U.S. dollar. ( JEL F14, F10, F19)     

Corruption,product complexity and African exporters

Several studies have shown that African manufacturers perform poorly, especially in comparison to their counterparts from other developing countries. We build on these studies by (a) examining the decision to stop exporting among African manufacturers and (b) investigating whether these decisions can be linked to institutional dimensions (such as corruption). Consistent with previous studies, we observe that a significant fraction of African firms stop exporting every year. Using product complexity as a measure of an industry’s ‘sensitivity’ to corruption, we find that firms in more ‘corruption-sensitive’ industries are more likely to stop exporting if there is an increase in overall corruption in the exporting country. Firm characteristics (such as size and productivity) also seem to influence the decision to stop exporting. Our finding about the relationship between corruption and the decision to stop exporting supports the conventional wisdom that corruption is detrimental to economic performance.     

Product Space,Potential Comparative Advantages and Export Technological Complexity

To investigate the evolution process of comparative advantage and the factors affect this process is an important topic, and for developing exporting countries, it is even more important to see what factors will promote them to export more technological complex products. In this paper, we utilise the theory of product space raised by Hausmann and others and modify the indicators of product proximity, product path and product density in this theory. We also utilise the method raised by Rodrick to calculate the product and country‐level export technological complexity. Based on a multinational panel data set, we show that if a country's exported products with higher product density or higher product path also have higher technological complexity, then in the short term, the country's overall export technological complexity tend to be increased, and in the long term, the effect of distribution of the path of technological complexity of exports is more significant.     

THE IMPACT OF TRADE AND FOREIGN DIRECT INVESTMENT POLICIES ON TECHNOLOGY ADOPTION AND SOURCING OF CHINESE FIRMS

How do trade and foreign direct investment (FDI) policies impact the decisions of firms in technology adoption (process vs. product innovations) and sourcing (internal vs. external and foreign vs. domestic)? We use a sample of Chinese firms to address this question. China's trade and FDI policies lead to different forms of internationalization: ordinary exports, processing exports, majority FDI, and minority FDI. We find that both exporting and FDI stimulate process innovation; ordinary exports, processing exports, and FDI have strong, weak, and no effects on stimulating product innovation, respectively. Exporting firms source technologies both internally through R&D and externally from foreign and domestic sources. FDI firms have a lower tendency of internal technology development and domestic technology sourcing, but a much higher tendency of foreign technology sourcing than exporting firms. (JEL F13, F23, O32)     

美国金融危机对我国进出口贸易冲击的实证研究

中美两国互补型的直接贸易关系紧密,美国金融危机导致美国国内收入水平的下降、美元贬值以及物价水平波动易通过直接贸易溢出对中国进出口贸易状况形成冲击。研究发现,危机通过收入效应对我国贸易状况产生的溢出较弱,而通过价格效应对我国贸易状况产生了明显溢出,并且对我国的出口贸易冲击较大。出口贸易对美国价格水平变化冲击的响应强度、持续时间和衰减方式都发生了显著变化。     

Incentive regulation,service quality,and standards in U.S. electricity distribution

The widespread use of incentive regulation in telecom, electricity, and other industries in the U.S. and elsewhere has raised questions about its possible adverse effect on the quality of service. This paper examines U.S. electricity distribution utilities in the years 1993–1999, several of which were subject to incentive regulation. Controlling for other possible influences, including possible endogeneity of the regulatory regime, the data and model indicate that incentive regulation is indeed associated with significantly longer duration of service outages, although not necessarily more frequent outages. Importantly, this quality reduction is offset in cases where regulation incorporates service quality standards. We also examine the causal chain connecting incentive regulation, cost expenditures, and service quality. We conclude that careful design of quality standards can allow incentive regulation to achieve cost savings without quality degradation.     

NAFTA AND THE MAQUILADORAS: BOON OR BANE?

This article examines the factors that affect the value added of the maquiladoras as a group as well as the apparel, electrical equipment, food, furniture, and motor vehicle equipment industries. It also explores the impact of the North American Free Trade Agreement (NAFTA) on the maquiladoras. The economic variables of relative wage rates, relative prices between Mexico and the United States, and U.S. real gross domestic product generally appear to have their expected effects. However, with the possible exceptions of the clothing and electrical equipment industries, this study suggests that NAFTA had either a negative impact or no effect on the maquiladoras. ( JEL F14, 054)