On the exchange-rate elasticity of the demand for international reserves: Some evidence from industrial countries

Summary and Conclusion In this paper we tried to investigate the supposition that a change in exchange rate lowers the demand for international reserves. This goal was achieved by incorporating the real effective exchange rate into a standard real reserve demand equation from the literature. The model was estimated for a sample of 13 countries for which the effective exchange rate was available, using pooled quarterly data over the 1973-1985 period. The empirical results revealed that a change in exchange rate indeed reduces the demand for reserves supporting the theoretical arguments of the previous studies.     

Causes and consequences of civil strife: micro-level evidence from Uganda

To bridge the gap between case studies and highly aggregatecross-country analyses of civil unrest, we use data from Ugandato explore determinants of civil strife (as contrasted to theftand physical violence) at the community level, as well as thepotentially differential impact of these variables on investmentand non-agricultural enterprise formation at the household level.We find that distance from infrastructure (a proxy for scarcityof economic opportunities and government investment), assetinequality (social tension), presence of cash crops (expropriablewealth), and lower levels of human capital (ability to takeadvantage of opportunities in the ‘regular’ economy)all increase the propensity for civil strife. Furthermore, civilstrife, in marked contrast to violence and theft, reduces investmentand non-agricultural enterprise startups.     

Technological specialization in industrial countries: Patterns and dynamics

Technological Specialization in Industrial Countries: Patterns and Dynamics. — This paper employs distribution dynamics and patent data to study the empirical dynamics of technological specialization in industrial countries. Large countries spread innovation activities across a wider range of technologies, and their specialization level in a field displays lower probability to move around its initial level (country size effects). Mobility is high and asymmetric: it is difficult to improve specialization in very disadvantaged technologies, while high comparative advantages revert towards lower specialization levels. These findings undermine the theory of technological accumulation and path dependence, its implication of persistence in trade specialization patterns and the effectiveness of targeted industrial and technology policies.     

Labor market deregulation and globalization: empirical evidence from OECD countries

This paper empirically investigates the influence of globalization on various aspects of labor market deregulation. I employ the data set by Bassanini and Duval (2006) on labor market institutions in OECD countries and the KOF index of globalization. The data set covers 20 OECD countries in the 1982–2003 period. The results suggest that globalization did neither influence the unemployment replacement rate, the unemployment benefit length, public expenditures on ALMP, the tax wedge, union density nor overall employment protection. In contrast, protection of regular employment contracts was diminished when globalization was proceeding rapidly. In fact, domestic aspects, such as unemployment and government ideology are more important determinants of labor market institutions and deregulation processes in OECD countries than globalization. For this reason, working conditions of unskilled workers are not likely to deteriorate and the jobs of unskilled workers are not likely to disappear in the course of globalization. All this is, of course, not to insinuate that globalization has any benign influence on labor market institutions.     

Trading firms in the services sectors: comparable evidence from four EU countries

We establish a set of stylised facts for trade and trading firms in five market services sectors using comparable firm- and activity-level data from four EU countries. Our analysis shows that exports account for much lower shares of overall sales in the services sectors than in manufacturing. This is because fewer firms are engaged in trade in the services sectors and also because within particular sectors firms trade a lower share of their sales on average. Services producers trade mostly goods, but in terms of value, trade in services is much more important to them than to manufacturers. Larger and more productive firms are more likely to be two-way traders and to engage in both goods and services trade. Trade by services firms is somewhat less dominated by firms that both export and import than trade by manufacturing firms. Few firms export many services or to many countries. The value of services exports is increasing in the number of markets served but not necessarily in the number of services traded.     

Penetration of industrial country markets by agricultural products from developing countries

About 55% of food and about 60% of non-food agricultural exports of the developing countries are sold in industrial country markets. Market access is therefore important.While the developing countries have been able to increase the market penetration of their manufactured exports in industrial countries at a remarkable rate of about 8% in the 1970s, market penetration in agricultural commodities has generally been less successful.From 1970 to 1980 the developing countries were able to increase their market penetration in processed agricultural commodities from 3.5 to 3.7%, which amounts to an average annual increase of only 0.6%. In basic agricultural products like sugar, maize, tomatoes and beef they even incurred losses in their market share that corresponded to an increase in the degree of self-sufficiency (and probably of protective trade barriers) of the industrial countries, in particular the EC.     

Inequality in metropolitan industrial revenue bond programs

Industrial revenue bonds (IRBs) have become an increasingly popular, though expensive and controversial, tool of economic development at the state and local levels. That controversy has focused on the economic impact of IRBs: Whether or not they meet the intended goals of creating jobs and stabilizing the tax base of local communities, and whether the benefits are worth the costs. Though IRBs are often justified, at least in part, as a particularly useful program for older, urban, minority communities, little research has been done on the participation of racial minorities and women in IRB programs. This article examines Chicago’s IRB program and finds that minorities have not participated equitably. Racial minorities and women are underutilized in many firms receiving this form of publicly subsidized financial assistance, and minority-owned businesses receive a disproportionately small share of the loans. Policy recommendations are offered to assure equitable participation of racial minorities and women in IRB programs.     

Effectiveness of industrial policy on firm productivity: evidence from Thai manufacturing

This paper examines the effects of industrial policy on firm productivity, using a three-year panel data set of Thai manufacturing as a case study. A range of industrial policy tools is defined, including tariff measures, subsidies, and investment incentives through the Board of Investment (BOI), which represent the main industrial policy tools used in Thailand. The effect of ‘water in the tariffs’ and partial trade liberalisation undertaken through free trade agreements (FTAs) signed between Thailand and her trading partners is also examined. The key findings concern the role traditional tools, that is trade openness, R&D, and skills upgrading, play in fostering firm productivity. Promoting a conducive environment, especially within domestic competition, is crucial in encouraging firm productivity. Some industrial policy tools are effective in promoting firm productivity, that is providing investment incentives via the BOI and lowering tariff protection. Subsidies, by contrast, tend to degrade firm productivity. Among trade protection measures, the effective rate of protection, which includes water in the tariffs encountered by exporting firms, has the greatest effect on firm productivity. The FTA-led trade liberalisation fails to add substantial competitive pressure and induce firms to improve productivity. Such statistical insignificance reflects the nature of FTA commitments that Thailand has made so far.     

Global value chains and technology transfer: new evidence from developing countries

Review of World Economics - International trade has long been considered a channel of technology transfer. This paper draws from the World Bank’s Enterprise Surveys to provide a sample of 18...     

Innovation strategies and productivity growth in developing countries: Firm-level evidence from Pakistani manufacturers

We examine the determinants of product, process, and organizational innovations, and their impact on firm labor productivity using data from a unique innovation survey of firms in Pakistan. We find significant heterogeneity in the impact of different innovations on labor productivity: Organizational innovation has the largest effect followed by process innovation. But unlike much of the literature, we found a negative impact of product innovation suggesting a disruption effect of new products. We find a strong impact of engaging in knowledge creation on product and process innovation. We also find that external knowledge networks and innovation cooperation play no significant role in firms’ decision to engage in innovation and its intensity, however, vertical linkages with suppliers (clients) promote product (process) innovations. Foreign competition has a negative effect on product innovation and a positive effect on organizational innovation. Exposure to foreign markets both in term of exporting and quality standard certification leads to better innovation performance.     

The dynamic effects of shocks to labour markets: evidence from OECD countries

This paper uses a set of plausible long-run identifying restrictionson a three-variable system, including output growth, real wagegrowth, and the unemployment rate, to isolate three independentstructural shocks which drive fluctuations in those variablesin a sample of 16 OECD countries during 1950-96. These shocksare interpreted as aggregate demand, productivity, and laboursupply disturbances. As a by-product of the previous analysis,the cyclical behaviour of real wages in response to a demandshock is re-examined and two indices of real wage rigidity arederived.     

The productivity impacts of energy efficiency programs in developing countries: Evidence from iron and steel firms in China

We study the impact of a national energy efficiency program on total factor productivity (TFP) growth in firms in China's iron and steel industry. Using detailed firm-level survey data and multiple approaches to estimate program effects, we find participating firms experienced greater annualized TFP change. Our base specification estimates the program increased annual TFP growth by 3.1 percentage points, implying an annual private benefit of 148.7 million RMB/year per firm, with approximately equal contributions from technical change and scale efficiency change. Our results suggest that firms undervalued energy efficiency investments prior to the start of the program.     

The effects of IMF programs in the Third World: Debate and evidence from Latin America

This article reviews the debate about the effects of IMF-sponsored stabilization programs in the Third World. After examining recent studies by Fund economists, results of a new study on a Latin American country set are presented. In this research, IMF programs are associated with insignificant changes in the current account, significant improvements in the overall balance of payments, increases in inflation, mixed effects on growth, and a strong and consistent pattern of reduction in labor share of income. The latter result is incorporated into a distribution-oriented critique of Fund policy.     

The government revenue and government expenditure nexus: empirical evidence from nine Asian countries

The nexus between government revenue and government expenditure has been an important topic in public economics. In this paper, we investigate evidence for cointegration and causality between government revenue and government expenditure for nine Asian countries. We use the recently developed bounds testing approach to cointegration and the conventional F-test to examine Granger causality. Our empirical results suggest that for three out of the nine countries government revenue and government expenditure are cointegrated. Our results on the direction of causation are mixed: (a) for Indonesia, Singapore, Sri Lanka in the short-run and for Nepal in both the short- and long-run we find support for the tax-and-spend hypothesis; (b) Indonesia and Sri Lanka are in conformity with the spend-and-tax hypothesis in the long-run; and (c) for other countries there is evidence of neutrality.     

Oil import costs and domestic inflation in industrial countries

Zusammenfassung Kosten der ?limporte und heimische Inflation in Industriel?ndern.- In diesem Aufsatz wird das monet?re Modell erweitert, um zu untersuchen, welche Bedeutung der kr?ftige Anstieg der Preise und Ausgaben für importiertes Erd?l in den Industriestaaten von Herbst 1973 bis heute hatte und über welche Kan?le er sich auswirkte. Die empirischen Ergebnisse zeigen, da\ die Inflation vorwiegend durch die Abwertung der W?hrung des Einfuhrlandes “importiert” wurde, die sich aus den stark gestiegenen Einfuhrrechnungen für Erd?l ergab, und weniger durch die Erh?hung der Erd?lpreise selbst, der L?hne oder Haushaltsdefizite. Die Zunahme der Geldversorgung und inflation?ren Erwartungen sind für die Erkl?rung der heimischen Inflation weit wichtiger, wenn es sich um Entwicklungsl?nder und nicht um Industriel?nder handelt. Das Gegenteil gilt hinsichtlich der Ausweitung der heimischen Produktion und Preiserh?hung für importiertes Erd?l.

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Résumé Co?ts de pétrole importé et l’inflation locale dans les pays industriels. - Dans cet article l’auteur étend le modèle monétaire pour examiner le mécanisme et l’effet de l’augmentation forte du prix et des dépenses pour le pétrole importé sur l’inflation dans les pays industriels à partir de la fin 1973 jusqu’aujourd’hui. Les résultats empiriques démontrent que l’inflation apparamment fut importée particulièrement par les dévaluations des monnaies des pays d’importation résultant de leurs dépenses fortement accrues pour le pétrole importé au lieu de directement par l’augmentation des prix pétroliers eux-mêmes ou par l’augmentation des salaires industriels et des déficits budgétaires. L’ augmentation de la masse monétaire et les expectatives inflationnistes sont beaucoup plus importantes comme explication de l’inflation locale dans les pays en voie de développement que pour les pays industriels pendant que le contraire est vrai pour l’expansion de la production locale et l’augmentation du prix de pétrole importé.

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Resumen El costo del petróleo importado y la inflación interna en los países industrializados.- En este trabajo se extiende el modelo monetario para examinar el impacto de las manifestaciones y la importancia relativa del aumento del precio del petróleo y del gasto para importarlo sobre la inflación en los países industrializados a partir del oto?o de 1973. Los resultados empíricos demuestran que la inflación pareciera haber sido importada através de las devaluaciones de las monedas de los países importadores, debido más al importante aumento de las importaciones que al aumento de los precios mismos del petróleo, o que a aumentos de los salarios industriales o del déficit fiscal. Los aumentos de la oferta monetaria y de las expectativas inflacionarias tienen mayor importancia para explicar la inflación interna en los países en desarrollo que en los países industrializados, mientras que sucede lo contrario con la expansión de la producción nacional y con el aumento del precio del petróleo importado.