Geographical advantage: Home market effect in a multi-region world

I propose a theoretical framework for studying the effects of geographical factors on the distribution of industries across many regions. The geographical feature of each region is summarized by a proximity matrix, whose elements measure the closeness between every pair of regions and depend on the parameters representing the transport and other costs of using a variety of trade routes. A change in these costs of trade affects the distribution of industries by amplifying the geographical advantages and disadvantages of regions. Through a series of examples, I demonstrate how this framework can be used not only to examine the effects of an improvement in transport infrastructure, but also to address some problems from economic history, regional economic integration, and the north-south division, and discuss some geopolitical issues.     

Foreign and domestic multinational presence in the UK

The determinants of multinational presence in Uk manufacturing industry in 1979 are analysed. It is argued that maultinational presence may result from strategic interaction as well as other firm and industry characteristics. The determinants of both foreign and Uk multinational presence are estimated using a dataset that enables both types of multinational to be indentified. Results show an important effect of both scale and concentration on multinational presence.     

Home bias in divestment decisions of multinational corporations in the EU

We empirically investigate the claim that multinational corporations (MNCs) suffer from a “home bias” in divestment decisions: MNCs prefer to divest from foreign subsidiaries because the “emotional involvement” and the commitment in divesting from domestic subsidiaries is larger. This issue has not been yet empirically explored in the economic literature, although it is quite recurrent in the political debate on MNCs and FDI. Using detailed company‐level data on the EU corporate groups during the economic crisis (2008–2014), we show that, in spite of prima facie empirical evidence of a home bias, the bias disappears when firm‐, country‐, and sector‐specific factors are accounted for.     

Corporate tax and location choice for multinational firms

This article examines the effects of corporate tax on these location decisions of newly established multinational subsidiaries across 26 European countries over an 8-year period. We contribute to the existing literature by examining the effects of a non-linear response of firm location decisions to changes in the tax rate. We also show that there are large variations in the sensitivity to tax rates across sectors and firm size groups. In particular, financial sector firms are more than twice as sensitive to changes in corporation tax rates relative to other sectors. Our baseline result is a finding that a 1% increase in the statutory or policy rate of corporation tax would lead to a reduction in the conditional location probability of 0.68%. Using the effective average tax rate, the marginal effect implies a reduction in the location probability of 1.15% following a 1% increase in the tax rate. Although overall tax has the expected negative effect on location probability, the marginal effect of an increase is lower at higher rates of tax.     

Emerging patterns of multinational enterprise operations in developed market economies: evidence and policy

In their attempt to adapt to the extreme flexibility requirements of the current international competitive environment multinational enterprises have enriched their menu of means for international expansion with many forms of minority equity investments and nonequity interfirm alliances. The rapid proliferation of these new means of international operation has opened a Pandora's box for governments; the increased internationalization of business in a large number of manufacturing industries has certainly decreased the possibilities for the successful implementation of strictly internally focused economic policies. The fact that this internationalization is a bottom-up procedure (firms reacting to market conditions) and that its causes seem only to be intensifying in the foreseeable future has conviced governments of developed market economies to accept the resulting global interdependence as a rather permanent feature of international competition and try to accomodate national priorities accordingly. Economic interdependence among nations can be a real solution for healthy development should it be strengthened through tailoring that maintains independence.     

The impact of multinational entry on domestic market structure and investment

We model the impact of different modes of multinational entry on the choices of domestic firms. Focusing on the competitive effects of foreign entry for the host country we demonstrate that greenfield investment will increase competition only if it is not countered by anti-competitive reactions on the part of the domestic firms. Together with cross-border mergers and acquisitions the model, thus, provides two alternative explanations for the increase in concentration ratios in industries with mostly horizontal foreign direct investment. Moreover, foreign presence is shown to raise total investment in the local industry at the cost of crowding out domestic investment.     

Subsidizing healthcare in the presence of market distortions

The paper develops a three-sector full-employment general equilibrium model for a small open developing economy with exogenous labour market imperfection and a non-traded sector providing healthcare services, the consumption of which generates positive externalities. Our main objective is to show that the optimal consumption subsidy to healthcare, if solely judged from the standpoint of economic growth, is strictly positive (zero) when the production technology of the healthcare sector is of the variable (fixed) coefficient type. However, in the variable coefficient case, the optimal per capita expenditure on healthcare crucially hinges on the degree of labour market imperfection and the quality of services provided by the healthcare sector. The latter result can possibly be considered as a theoretical justification why the magnitude of per capita public spending on healthcare services is significantly lower in the developing countries compared to that in the developed nations. Besides, using the Sen's (1974) index of social welfare that takes into consideration both the growth and income inequality aspects, we have proved that the optimal health subsidy is positive irrespective of the nature of production technology of the healthcare sector. Furthermore, most of these results are found to be valid even in the presence of Harris-Todaro type unemployment. Finally, the results lead to a few important policy implications in the context of the developing countries.     

Asymmetric effect of margin-trading activities on price crashes: evidence from Chinese stock market

Prior literature on the impact of margin-trading activity on stock price crashes is mixed and does not reach consensus. Using data from a Chinese margin-trading pilot programme initiated in 2010, this article employs both margin-buying and margin-covering activities to investigate the asymmetric impact on stock price crashes. We find that margin-buying activities are beneficial reducing the price crash prone, especially in bad times. In contrast, margin-covering activities amplify price crashes in both good times and bad times.     

跨国公司在华研发效果分析

当前,对于引资的主要目的与实现渠道这个问题的认识上,能够达成共识的是,吸引外资的意义远远超出资金本身的意义,技术、管理和人才效应,乃至创造就业的作用是我们对外资的期望所在。正如2005年1月21日《人民日报》评论员文章《充分利用对外开放条件,增强自主创新能力》中所指出的:“当前和今后的一个时期,我们应当把吸引外资的工作重点放在提高利用外资的质量上……以提升自主创新能力为出发点,不断优化利用外资结构,吸引外资的同时引进和利用其先进技术、管理经验和高素质人才,促进国内产业升级和技术创新。”因此,引进外资的目标定位于引…     

Home production,market production and the gender wage gap: Incentives and expectations

We study the joint determination of gender differences in labor earnings and time devoted to home production in an economy where informational frictions give rise to incentive problems in the labor market. Our model generates novel predictions on the relation between earnings, home hours and the incidence of performance pay, which we confront with the data. The empirical evidence broadly supports our hypothesis.     

Regional implications of financial market development: Industry location and income inequality

We develop a heterogeneous-firms model with trade in goods, labor mobility and credit constraints due to moral hazard. Mitigating financial frictions reduces the incentive of mobile workers to migrate to one region such that an unequal distribution of industrial activity becomes less likely. Hence, financial market development has opposite regional implications as trade liberalization. While the former leads to more dispersion of economic activity across space, the latter tends to drive clustering. This has immediate implications for income inequality both between regions and workers. According to our model, financial development reduces inequality in both dimensions.     

Economic liberalization and wage inequality in the presence of labour market imperfection

This paper is purported to analyze the consequences of liberalized economic policies on the skilled–unskilled wage inequality in the developing countries using a three sector general equilibrium model reasonable for at least a few developing economies. The analysis of the paper has found that the wage inequality rises unambiguously due to a reduction of import tariff from the low-skill manufacturing sector. However, an inflow of foreign capital produces a favourable effect on the wage inequality under a reasonable factor intensity condition. Interestingly, contrary to the common wisdom, a policy of labour market reform may raise the competitive unskilled wage and improve wage inequality under reasonable condition.     

碧桂园:"泛市场定位"与"成本领先"新赢利模式——专访碧桂园控股有限公司董事局主席杨国强先生

杨国强,现任碧桂园控股有限公司董事局主席,杨先生在建筑业务上拥有超过30年的经验,并拥有约17年的房地产开发经验,负责制定公司发展策略,做出投资决策及进行总体的专案规划。碧桂园于2007年4月在香港联交所主机板挂牌上市,目前是全国最大的综合性房地产开发企业之一,业务包含建安、装修、物业发展、物业管理、酒店开发和管理等,碧桂园品牌于2006年获中国工商行政管理局认定为房地产界中国驰名商标,2007年9月成为摩根士丹利资本国际环球标准指数成分股,恒生综合指数及恒生中国内地综合指数成分股,碧桂园致力于二、三、四线城市住宅专案的快速开发、快速销售。提供价廉物美的住宅产品,2007年度共缴纳税收20多亿元,并获得2005、2006年度中国私营企业纳税第一名,截至2007年底,碧桂园向社会捐赠达2亿多元。     

Collapsing exchange rate regimes in the presence of a parallel market

This paper develops a model of an economy where the fixed exchange rate is overvalued and coexists with a parallel market for foreign currency. Such a situation persists because the parallel marker is used by the central authorities as an instrument to delay policy changes. Using the Haïtian experience, this paper estimates a rationing parameter of foreign currency in the official market which translates the extent of tolerance of the parallel market. The paper also produces estimates of onestep-ahead probability of devaluation. Rationing has been severe and the probability of collapse has reached high levels during the period studied.     

The geography of market failure: Edge-effect externalities and the location and production patterns of organic farming

Perceptions of increasing land scarcity and negative impacts of chemical-based agriculture have led to increasing concern regarding the sustainability of food systems. Incompatible production processes among farming systems may lead to spatial conflicts and production losses between neighboring farms, and the magnitude of such losses may depend not only on the scale of each activity, but also on patterns of land use. Such conflicts can be classified as “edge-effect externalities”—spatial externalities whose marginal impacts decrease as distance from the border generating the negative impact increases. This paper tests the hypothesis that edge-effect externalities have influenced the location and production patterns of certified organic farms, using data from California Central Valley certified organic farmers. Using concepts from landscape ecology and spatial statistics, we investigate difference in parcel geometry and surrounding land uses between organic and non-organic parcels. Using a generalized method of moments (GMM) spatially autoregressive econometric model, we demonstrate that both parcel geometry and surrounding land uses influence the probability of a given parcel being certified organic. We conclude with suggestions for policies to encourage development of organic farming regions.     

The market value of preventive activities: A contingent-claims approach

We use a contingent-claims approach to determine the market value of preventive investments. We show that the lower the initial probability of accident, the greater is the market value of a reduction in this probability. Besides, at initially low probabilities, ceteris paribus, the market gives a higher value to a reduction in accident probability when aggregate (correlated) catastrophic risks rather than independent ones are involved. The reverse occurs at initially high probabilities.     

Subsidies for renewable energies in the presence of learning effects and market power

We study the impact of learning by doing, learning spill-overs, and imperfect competition in a model with two types of electricity producers, an oligopolistic sector of polluting fossil-fuel utilities and a competitive fringe of non-polluting generators of electricity from renewable energy sources (RES-E). Furthermore we consider an upstream industry of RES-E equipment producers engaged in learning by doing. We show that a first-best policy requires two instruments, a tax in the fossil-fuel sector and an output subsidy for RES-E equipment producers. We then study second-best-optimal feed-in tariffs that are paid to the generators of RES-E. By means of simulations we calculate the welfare loss of a second-best-optimal feed-in-tariff policy and analyze how market structure impacts on second-best-optimal feed-in tariffs.     

Labor market effects of export processing zones in the presence of unemployment

When foreign firms motivated by higher profits engage in off-shore production activities of unemployment ridden host countries, concerns increase about the possibility of exploitation of local workers. However, using a two good two factor model this paper shows that foreign firms’ engagement under the scenario actually improves the host country's structure of wages, skill composition, employment level and wage inequality which cannot be achieved under full employment in the host countries. This paper thus presents a mechanism that explains the effects of export processing zones observed in most of the transitional economies of the world. Results have practical implications for traditional structural changes expected for these economies. Although foreign firms come to earn profits, it is possible for host country workers to take a part of the rent away from the foreign firms as they are doing currently in different parts of the world.     

Trade, market size, and industrial structure: revisiting the home‐market effect

Abstract.  This paper shows that the issues in the recent discussion over the 'home‐market effects' are more complicated than previously thought. It is shown that, in general, market size matters for industrial structure even when both the homogeneous and the differentiated goods face transport costs. The home‐market effect for production structure can arise, disappear, or even reverse in sign. The analysis shall change a common perception about de‐industrialization of (small) economies and may also have important implications for the empirical research strategies in this area. JEL classification: F12, L1