FOREIGN DIRECT INVESTMENT,NON‐TRADED GOODS AND REAL WAGES

Using a three‐sector general equilibrium model with non‐traded goods, we investigate the impact of foreign direct investment on the real wages of skilled and unskilled workers. We show that foreign direct investment increases the real wages of skilled and unskilled workers alike, but widens the gap between the two under plausible conditions.     

THE DETERMINANTS OF KOREA'S FOREIGN DIRECT INVESTMENT FROM THE UNITED STATES, 1980–2001: AN EMPIRICAL INVESTIGATION OF FIRM-LEVEL DATA

This paper examines the link between Korea's foreign direct investment (FDI) inflows from the United States and locational, financial, and macroeconomic variables using firm-level data of FDI transactions, which were completed during the period from January 1980 to February 2001. Korea's FDI inflows from the United States are found to have significant associations with real exchange rates, relative wealth, relative wage costs, expected exchange rate changes, and interest rate differentials. The extent and direction of the links, however, have varied according to different FDI regimes during the last 20 yr in Korea. Industry-specific factors have also played a role in determining Korea's FDI inflows . ( JEL F21, F30)     

AN OLIGOPOLISTIC HECKSCHER–OHLIN MODEL OF FOREIGN DIRECT INVESTMENT*

We develop a 2 × 2 × 2 trade model in which one of the two sectors is perfectly competitive and the other is oligopolistic. The oligopoly sector consists of a given number of identical firms for each country, but they are free to locate in either country. The allocation of the firms between the two countries is endogenously determined, and changes in factor prices play a crucial role in establishing this equilibrium. Under this framework we examine the validity of factor price equalization, patterns of trade and gains from trade. Effects of technological progress and preference changes on firm locations are also analysed.     

TARIFF JUMPING FOREIGN DIRECT INVESTMENT DECISION IN A QUALITY‐DIFFERENTIATED MARKET

Using a product differentiation model, this paper discusses the issue of transnational firms evading tariffs and investing directly in a host country (through foreign direct investment (FDI)). Where product quality is differentiated between foreign and host country firms and assuming a firm's quality requirement is a long‐term strategy and is not affected by a foreign firm's trade decision, we obtain the following findings. First, whether or not a host country firm produces high or low quality products, raising the quality requirement for foreign products will increase the possibility of a foreign firm choosing FDI instead of exporting a product to the host country. Second, raising the quality requirement for domestic products will lower the possibility of foreign firms choosing FDI without regard to the product's quality. Finally, given a competitor in the host country, in FDI, a foreign high‐quality product‐producing firm has an advantage over a low‐quality product‐producing firm. We also find that even when firms' quality decisions are affected by a foreign firm's trade decision, most of the above results will still hold.     

AN EVALUATION OF FINANCIAL INCENTIVE POLICIES FOR ORGAN DONATIONS IN THE UNITED STATES

This paper examines the association between financial incentives and organ donations. Although the National Organ Transplant Act of 1984 prohibits financial compensation for organs for transplant, we focus on the impact of laws that influence the relative cost of deceased and live organ donations on the supply of organs for transplant. First, we hypothesize that states that have relatively stringent funeral regulations, which have been associated with higher whole‐body donations, will have fewer organ donations. Second, we examine the impact of two common state laws that offer financial compensation to live donors: one that allows a tax deduction for costs incurred and the other which entitles government employees up to 30 days of paid leave. We find no evidence to support that these laws affect organ donations. (JEL I11, I18)     

THE DISTRIBUTIONAL EFFECTS OF THE 1969–75 INFLATION ON HOLDINGS OF HOUSEHOLD WEALTH IN THE UNITED STATES*

Using a simple simulation model, this paper assesses the impact of relative movements in asset prices on the distribution of wealth during the 1969–75 period. Because of the strong negative correlation between wealth level and the ratio of debt to wealth, this particular inflation induced a substantial drop in the overall level of wealth inequality. Moreover, comparing the portfolios of different demographic groups, we found that middle-aged households gained relatively to younger and older ones, married couples gained relatively to singles, whites gained relatively to non-whites, and home-owners gained relatively to renters. The biggest gainers from this inflation were home-owners with large mortgages and the biggest losers the large stock holders.     

FOREIGN DIRECT INVESTMENT: THE KNOWLEDGE‐CAPITAL MODEL AND A SMALL COUNTRY CASE

This research looks at how foreign direct investment (FDI) in a small open economy compares with that of larger countries. I apply several specifications of the knowledge‐capital model to unique FDI data from the isolated country of Iceland, allowing for comparison with previous analysis of larger and similarly open economies. Using this together with other techniques, I seek to explain investment determinants by geography, economic size and skilled labor availability. The results of these analysis show that popular specifications do not accurately predict the effects for a small country case.     

RISING OCCUPATIONAL AND INDUSTRY MOBILITY IN THE UNITED STATES: 1968–97*

We document and analyze the high level and the substantial increase in worker mobility in the United States over the 1968–97 period at various levels of occupational and industry aggregation. This is important in light of the recent findings that human capital of workers is largely occupation‐ or industry‐specific. To control for measurement error in occupation and industry coding, we develop a method that utilizes the PSID Retrospective Occupation‐Industry Supplemental Data Files. We emphasize the importance of our findings for understanding a number of issues such as the changes in wage inequality, aggregate productivity, job stability, and life‐cycle earnings profiles.     

INEQUALITY OF WAGE RATES,EARNINGS AND FAMILY INCOME IN THE UNITED STATES, 1975–2002

This paper analyzes distributional changes over the last quarter of the twentieth century. We focus on four distinct distributions: the distribution of hourly wage rates, the distribution of annual earnings of individuals, the distribution of annual earnings of families, and the distribution of total family income adjusted for family size. Both male wage rate inequality and family income inequality accelerated during the early 1980s, increased at a slower rate through the early 1990s and then stabilized at a high level through the early 2000s. The similarity in the timing of changes in these two distributions has been used as evidence that increased family income inequality primarily reflects increased inequality of wage rates. We show that other important factors were also at work.     

FOREIGN DIRECT INVESTMENT IN CHINA: HOW BIG ARE THE ROLES OF CULTURE AND GEOGRAPHY?

Abstract. I assess the importance of geography and cultural ties in foreign direct investment in China. Using an estimated gravity model to construct predicted FDI stocks in China for 1997 from major source countries, I find that the total FDI stock would be lowered by about 45% if China's economic center were located in New Delhi, India, and would be lowered by about 70% if it were located in New Delhi and there were no cultural ties. These estimates suggest that much of China's ability to attract FDI is due to its natural advantages.     

中国资本外逃与外国直接投资关系的实证分析(1984-1999)

本文分别采用相关分析、因子分析和因果分析三种计量分析方法,分析了中国资本外逃与外国直接投资之间的关系。本文的研究表明,中国资本外逃与外国直接投资之间存在着显著性很强的正相关关系,并且因子分析与因果分析的结果也支持这一结论,说明驱动中国资本外逃的主要因素不是投资环境恶化,中国资本外逃在很大程度上是由于对内资和外资采取的差别政策待遇所引起的,并据此提出了相应的政策启示。     

中国资本外逃与外国直接投资关系的实证分析(1984-1999)

该文分别采用相关分析、因子分析和因果分析三种计量分析方法,分析了中国资本外逃与外国直接投资之间的关系.该文的研究表明,中国资本外逃与外国直接投资之间存在着显著性很强的正相关关系,并且因子分析与因果分析的结果也支持这一结论,说明驱动中国资本外逃的主要因素不是投资环境恶化,中国资本外逃在很大程度上是由于对内资和外资采取的差别政策待遇所引起的,并据此提出了相应的政策启示.     

外商投资与天津电子信息产业群的形成演化研究

产业群是产业发展的一种内在规律,也和经济的对外开放程度有很大关系。文章以天津电子信息产业群为例,分析了外商直接投资对地方产业群形成演变所起的作用,认为大量的外资进入是产业群形成的直接动力,建立在供给与需求机制上的跨国公司与当地国有企业之间产业链的融合是产业群成长的根本动力。随着跨国公司在全球的投资目标和经营方式的改变,本地生产网络和全球生产网络格局发生了变化,对于这一类产业群,其持续的发展有赖于不断的制度创新。     

RELIABILITY OF THE QUARTERLY NATIONAL INCOME AND PRODUCT ACCOUNTS OF THE UNITED STATES, 1947–1971*

The reliability of the quarterly national income and product (NIP) accounts of the United States is examined from several standpoints. First, possible sources of error in the quarterly NIP accounts are explored, the most important being the lack of appropriate data, seasonal adjustment errors, sampling errors and biases, and the nature of the U.S. statistical system. Next, four ways of assessing the reliability of the accounts are considered. The most weight is given to measures of revisions in early estimates of the quarterly NIP aggregates. Results of previous studies of revisions are reviewed, and a summary of a major study of revisions for the period 1947–71 is given. The other ways of assessing reliability which are examined are the effect of errors on economic policy making, analysis of the statistical discrepancy, and expert judgment on sources and methodology. The degree of accuracy is judged to be generally sufficient for the policy decisions for which the NIP estimates are used. The early estimates of a quarter's change in GNP almost always distinguish whether the ultimate estimate will be large or small and will usually distinguish whether the ultimate estimate will be larger or smaller than the preceding quarter. While the accuracy of the estimates has generally been sufficient, the accuracy for 1965 was judged insufficient by policymakers. There is some evidence that errors have been reduced over time.     

COMMERCIAL ACTIVITY AS INSURANCE: THE INVESTMENT BEHAVIOUR OF NON‐PROFIT ORGANIZATIONS

ABSTRACT ** : We provide a new explanation for commercial activities by non‐profit organizations whose primary concern is to supply mission output. Starting from the observation that donations to individual non‐profits are often highly volatile, we show how investment in commercial activity can constitute a form of insurance for mission activity. Although investment in commercial activity has an opportunity cost in terms of capacity to produce mission output, if donations turn out to be low the commercial revenue will enable cross‐subsidization of mission output. The equilibrium commercial investment is (weakly) positively related to the degree of risk aversion.     

VERTICALLY INTEGRATED MEASURES OF THE RATE OF PROFIT IN THE UNITED STATES 1950–90

This paper investigates the importance of increases in the productivity of producing capital in estimates of the profit rate decline which occurred in the United States during the period 1950–90. We find that, when profit rate measures take into account the increasing productivity of producing capital stock (as measured by the embodied labor required to produce it), the observed decline is about one-half that found using conventional measures of profit. This finding has important implications for interest rate and investment policies.     

FOREIGN DIRECT INVESTMENT IN A TWO‐TIER OLIGOPOLY: COORDINATION,VERTICAL INTEGRATION,AND WELFARE*

We study foreign direct investment (FDI) by two independent investors/entrants into a two‐tiered oligopolistic industry. An FDI subsidy at a single stage of production can be sufficient to resolve the coordination problem facing investors thereby inducing entry at both stages. However, due to linkage offsetting, FDI at both stages may yield lower domestic welfare than FDI at a single stage. Vertical integration not only solves the coordination problem, it also eliminates double marginalization. But since the integrated multinational does not sell the intermediate to local firms, its entry generates no vertical linkages and can yield lower welfare than FDI by independent firms.     

DOES GNP EXAGGERATE GROWTH IN “ACTUAL” OUTPUT? THE CASE OF THE UNITED STATES

Measures of national product can be misleading because there is nonmarket production. There are also distortions due to transactional activities, which are expenditures to support transactions, not actual output consumed. For 1950–89, this study recalculates output for the United States, adjusting for transactional activities and nonmarket production. Due to relatively rapid growth in transactional activities, GNP overstates output growth in the 1950s; because there was slow expansion of transactional activities in the early 1970s, GNP understates actual output. Since 1974, increases in transactional activities and shifts to market production lead GNP to exaggerate improvement of "actual" output per capita.