Foreign enclaves and economic development: A theoretical analysis

We consider an urban foreign enclave with sector-specific foreign capital in an otherwise mobile-capital Harris-Todaro model. We consider the taxation of foreign capital. A dynamic version of this model is considered. The long-run equilibrium and the comparative steady-state effects are analyzed. We get some interesting effects of reduction in tax rate on foreign capital on the short-run and the long-run equilibrium levels of domestic factor income and national income under some meaningful conditions.     

Protectionism, Export Requirements, and Joint Ventures

Economic distortions often accompany the attempt by lower-income countries to develop. This paper examines the consequences of two such distortions: an export-share requirement whereby foreign capital producing in a local enclave is allowed to sell only a fraction of its output in the local protected market, and some local capital must be allowed into a joint venture in the enclave, even if it must be paid a higher return there than foreign capital earns in its country of origin. The welfare effect of such measures is investigated as well as the effect on local wages of measures that drive out some foreign investment. Such a loss of foreign capital may serve to raise the wage rate.     

English Proficiency and Earnings of Foreign-Born Immigrants in the USA from 1980 to 2000: The Effect of Minority-Language Enclaves

This paper compares the importance of English proficiency (EP) on earnings among the foreign-born immigrants from 1980 to 2000 and shows its importance varied over time. The key issue examined is changes in the impact of being in a minority-language enclave and its interactions with the return to EP. Results show that the negative effects of enclaves were the greatest in 1990 and such effects were significantly stronger among those fluent English speakers. The relationship between EP and the enclave effects is explored, which confirms their strong interaction in 1990. However, the evidence of fluent speakers' large migrations from enclaves between 1990 and 2000 is not strong, as of the 24 foreign language groups, 13 showed decreases in fluency in enclaves relative to non-enclaves, while 11 showed increases in fluency in enclaves relative to non-enclaves. This may relate to non-wage benefits of living in enclaves, such as social benefits.     

基于Multi-agent的企业知识管理网络化模块组织体系构建

从国内外学者对知识管理的研究以及对网络组织和Multi-agent的简单介绍出发,将人工智能领域的Agent概念引入到企业知识管理的网络化模块组织设计。在介绍了网络化模块组织主体构成的基础上,构建了基于Multi-agent的企业知识管理网络化模块组织体系,最终通过多agent来协同实现企业知识管理过程,以满足企业知识的集成和智能化决策的实现。     

Welfare‐reducing Domestic Cost Reduction*

We show that cost reduction by a domestic firm may reduce domestic welfare if it changes a foreign firm’s production strategy from foreign direct investment to export. Domestic cost reduction can be welfare reducing when the domestic market is sufficiently small and domestic firm’s marginal cost of production is higher than the foreign firm’s marginal cost of production under foreign direct investment, which is a usual feature of trade between developed and developing countries. So, developing countries with small domestic markets need competent competition policies when encouraging domestic innovation and also trying to attract foreign direct investment.     

The Safeguard Clause, Asymmetric Information, and Endogenous Protection

When imports surge, governments often must seek simultaneously to satisfy protectionist pressures through increased tariffs, induce adjustment to foreign competition, and minimize consumer costs of protection. The WTO's safeguard clause can be viewed as an attempt to resolve these potentially conflicting goals since it allows governments to offer an implicit contract to protected industries to induce adjustment. In this paper, we show that with asymmetric information about costs, protected industries behave strategically which leads to under-adjustment. The safeguard clause therefore cannot optimally resolve the conflict among domestic political objectives.     

Are Standards Always Protectionist?

We analyze the effect of heterogeneity of foreign and domestic producers on product standard and investigate whether the standard chosen by the welfare-maximizing policymaker is protectionist. In a partial-equilibrium set-up, both domestic and foreign producers compete in selling a product in the domestic market, in the presence of consumption externalities. The policymaker chooses a minimum domestic standard that has to be met by both domestic and foreign producers. Protectionism occurs when the welfare-maximizing domestic standard is higher than the international standard maximizing welfare inclusive of foreign profits. We show that the standard is anti-protectionist when foreign producers are much more efficient at addressing the externality than are domestic producers. Possible exclusion of domestic or foreign producers arises with large standards, which may alter the classification of a standard as protectionist or non-protectionist. The paper identifies multiple caveats for the estimation of tariff equivalents of nontariff barriers.     

Mergers and Trade Policy under Oligopoly

For an oligopolistic industry, the effects of mergers on the domestic country's optimal trade policy are analyzed. If the domestic country pursues an optimal trade policy then it will always lose as a result of a foreign merger. The optimal domestic response to a foreign merger is to decrease (increase) the tariff if demand is concave (convex) and to increase the production subsidy. The foreign merger reduces foreign welfare when the domestic country pursues its optimal trade policy. The optimal domestic response to a domestic merger is to leave the tariff unchanged and to increase the production subsidy.     

Who Benefits from Foreign Direct Investment in the UK?

The presumed higher productivity of foreign firms and resulting spillovers to domestic firms has led governments to offer financial incentives to foreign firms. We investigate if there is any productivity or wage gap between foreign and domestic firms in the UK and if the presence of foreign firms in a sector raises the productivity of domestic firms. Our results indicate that foreign firms do have higher productivity than domestic firms and they pay higher wages. We find no aggregate evidence of intra‐industry spillovers. However, firms with low productivity relative to the sector average, in low‐skill low foreign competition sectors gain less from foreign firms.     

Managing Foreign Direct Investment: Commitment, Deterrence, And Diversion

The paper models the multinational choice between foreign direct investment in and exporting to a domestic market as an equilibrium outcome of strategic play between domestic and foreign firms. Two cases are considered, one in which the domestic firm can precommit to output levels (as, for example, through investment in a distribution network), and one in which such precommitment is not possible. The domestic firm's strategy in the case of precommitment includes aggressive efforts to deter or divert foreign investment and results in fewer observed equilibria with foreign investment than would otherwise occur. Tariffs designed to switch the foreign decision from exporting to direct investment may lead instead to monopolization of the market by the domestic firm.     

How Labour Markets affect Trade Policies and Trade: The Case of the Foreign Labour Union

This paper highlights the point that the presence of a foreign union affects significantly the characterization of domestic trade policies, and thus, trade. Specifically, both the objective functions of the foreign union and the nature of interactions between the foreign firm and the foreign union are important determinants of the sign and magnitudes of the domestic trade policies. The importance of the foreign union effect holds regardless of whether the domestic trade policies are politically motivated or whether they are set to maximize national welfare. The foreign union effect is also present with or without a domestic producer.     

Environmental Regulation: An Incentive for Foreign Direct Investment

Empirical evidence has so far failed to confirm that lenient environmental regulation attracts investment from polluting firms. In a Cournot duopoly with a foreign firm and a domestic firm, we show that the foreign firm may want to relocate to the domestic country with stricter environmental regulation, when the move raises its rival domestic firm's cost by sufficiently more than its own. The domestic (foreign) country's welfare is (usually) lower with foreign direct investment.     

Trade Liberalization and the Profitability of Domestic Mergers

It is often thought that a tariff reduction, by opening‐up the domestic market to foreign firms, should lessen the need for a policy aimed at discouraging domestic mergers. This implicitly assumes that the tariff in question is sufficiently high to prevent foreign firms from selling in the domestic market. However, not all tariffs are prohibitive, so that foreign firms may be present in the domestic market before it is abolished. Furthermore, even if the tariff is prohibitive, a merger of domestic firms may render it nonprohibitive, thus inviting foreign firms to penetrate the domestic market. Using a simple example, the authors show that, in the latter two cases, abolishing the tariff may in fact make the domestic merger more profitable. Hence trade liberalization will not necessarily reduce the profitability of domestic mergers.     

Trade costs, wage rates, technologies, and reverse imports

Abstract .  This paper explores the effects of transport costs, tariffs, and foreign wage rates on the domestic economy in the presence of reverse imports, with special emphasis on inter-firm cost asymmetry in an international oligopoly model. To serve the domestic market, a foreign firm produces in the foreign country, while two domestic firms produce either at home or abroad. Surprisingly, an increase in the foreign wage rate may increase the profits of a firm producing in the foreign country. Even if all firms produce in the foreign country, an increase in the foreign wage rate may improve domestic welfare.     

Convergence of bank competition in Central and Eastern European countries: do foreign and domestic banks go hand in hand?

Following the massive entry of foreign banks into the Central and Eastern European (CEE) banking markets, one may wonder whether their competitive behaviour differs from that of their domestic counterparts, possibly leading to the segmentation of these markets at the regional and national levels. We find that the competitive behaviour of foreign and domestic banks differs, with foreign banks having less market power until the recent financial crisis and more market power after this financial turmoil. Despite this difference, banks tend to behave similarly, and their market power converges to a similar level. The tendency towards similar competitive behaviour is observed at the regional and national levels and for both foreign and domestic banks, although foreign institutions that enter these markets through the acquisition of domestic banks have slightly more market power. Our findings suggest the regional integration of CEE banking markets and no segmentation between foreign and domestic institutions.     

国际农产品价格如何影响了中国农产品价格?

本文使用月度数据考察国际农产品价格是否影响中国农产品价格,以及影响程度和可能的影响机制。在控制了其他影响因素的条件下,本文证实了国际农产品价格对国内价格具有经济意义上的显著影响,各种农产品的国内价格对相同产品国际价格的反应程度存在较大差异,玉米、大米和大豆价格的国际价格弹性介于0.20到0.36之间,小麦的国际价格弹性为0.05左右,国内外农产品市场间高度的整合关系主要是通过国际贸易建立的。中国在未来为保持粮价稳定需要加大对农业的扶持力度,加强国内农产品储备,合理地对农产品贸易进行管制,建立农产品价格预警机制,并通过财政补贴等手段平抑因国际价格波动而带来的国内农产品价格上涨。     

The cost of capital for a multinational corporation

Evaluating foreign investments requires as inputs the costs of various sources of financing. A multinational firm could raise both debt and equity in capital markets located in different countries. This paper derives the required rates of return for a foreign investment from: domestic bonds, domestic equity, foreign bonds and foreign equity from both the domestic and foreign investors' perspectives. These required returns serve as the basic components in the calculation of the weighted cost of capital for a foreign project.     

Does foreign ownership matter?

The paper both compares productivity of Russian firms that have foreign direct investments with productivity of fully domestically owned firms and analyses spillovers from foreign‐owned firms to domestic firms. Foreign firms are found to be more productive than domestic ones, but productivity of the former is negatively affected by slow progress of reforms in the regions where they operate. It is also found that there are positive spillovers from foreign‐owned firms to domestic firms in the same industry, but negative effects on domestic firms that are vertically related to foreign‐owned firms. The stock of human capital in regions where foreign firms operate is one of the factors which help domestic firms to benefit from the entry of foreign firms.     

Local linkages: The interdependence of foreign and domestic firms in Ireland

This paper contributes to the literature on backward linkages—the degree of localization in input usage, focusing on the potential interdependence between foreign and domestic producer firms. Drawing on Irish sectoral data during 2000–2013, our main objective is to empirically examine how foreign and domestic producer firms' backward linkages might dynamically influence each other, and the extent to which they respond to export intensity and productivity levels from the two groups of firms. We find an interesting asymmetric interdependence pattern: (1) domestic firms' backward linkages are not impacted by the backward linkages of foreign firms; (2) more robust backward linkages of domestic firms can potentially induce more backward linkages from foreign firms; and (3) domestic firms' productivity shocks could generate a dynamic crossover impact on foreign firms' backward linkage status, but similar shocks originating from foreign firms generate little crossover impact on domestic firms’ backward linkage status. Our result on interdependent local linkages points to a potentially important role for domestic-to-domestic backward linkage formation in promoting foreign-to-domestic backward linkages.     

Foreign Acquisitions,Domestic Multinationals,and R&D

Our aim in this paper is to evaluate the causal effect of foreign acquisition on research and development (R&D) intensity in targeted domestic firms. We are able to distinguish domestic multinational enterprises (MNEs) and non‐MNEs, which allows us to investigate the fear that the change in ownership of domestic MNEs to foreign MNEs leads to a reduction in R&D activity in the country. Overall, our results give no support to the fears that foreign acquisition of domestic firms leads to a relocation of R&D activity in Swedish MNEs. Rather, in this paper, we find robust evidence that foreign acquisitions lead to increasing R&D intensity in acquired domestic MNEs and non‐MNEs.