The role of public infrastructure and subsidies for firm location and international outsourcing

This paper presents a model in which final goods producers outsource intermediate input production. Intermediate inputs are differentiated and their production can be located at home or abroad. The model is used to examine competitive location policy in a (two-country) free trade area (FTA). It is shown that national public infrastructure investment has a positive effect on both the number of intermediate input producers and the return to the immobile factor in the home country. International outsourcing from home declines. Opposite effects are triggered in the partner country. In a welfare analysis we characterize national infrastructure policies that aim to maximize national income (net of tax costs) and compare the non-cooperative FTA-equilibrium with optimal policies from an integrated point of view. We show whether or not there is a need for policy coordination. Firm subsidies are discussed as an alternative to public infrastructure investment.     

Productivity effects of international outsourcing: evidence from plant-level data

Abstract.  We investigate the impact of international outsourcing on productivity using plant-level data for Irish manufacturing. Specifically, we distinguish the effect of outsourcing of materials from services inputs. Moreover, we examine whether the impact on productivity is different for plants being more embedded in international markets through exporting or being part of a multinational. Our results show robust evidence for positive effects from outsourcing of services inputs for exporters, either domestic or foreign owned. By contrast, we find no statistically significant evidence of an impact of international outsourcing of services on productivity for firms not operating on the export market.     

A North–South model of outsourcing and growth

In this paper, I formulate a simple North–South R&D‐based growth model where final goods firms in the North endogenously determine the range of international outsourcing of intermediate goods to the South. I show that a fall in the trade cost (through trade liberalization) of intermediate goods in the North: (i) reduces the wage of the North relative to that of the South; (ii) increases the outsourced variety of intermediate goods in the North; and (iii) stimulates Northern R&D activity and economic growth in both countries. By conducting welfare analysis, I also show that a decline in the trade cost of intermediate goods in the North improves welfare in the South more than in the North.     

Competitiveness of Egyptian cotton exports in the international market

Cotton plays a vital role in the Egyptian economy by meeting domestic and export demands,contributing significantly to agriculture,industry,export earnings,and providing a cash income to roughly one million small farmers.This paper examines the competitiveness of Egyptian cotton exports（ECE） in the international market during the period 1990-2006.It mainly aims at investigating the trends in cotton exports over the studied period,analyzing the competitive position of Egyptian cotton by employing several economic and trade indices,and identifying the key factors that influence Egypt＇s cotton exports to the world.The results revealed that the total quantity of ECE has fallen from 196.8 thousand tons in 2003 to 87.2 thousand tons in 2006.It also shows a high degree of geographic concentration of ECE,into India,Italy,the Republic of Korea,and Japan.Together,these markets imported about 50%of ECE during 1990-2006.The competitive advantage of Egyptian cotton would appear dependent on quality not price.Japan,the Republic of Korea and Italy presented the most stable markets for ECE.Linear regression analysis suggests that a one percent increase in the Egypt-to-USA export price ratio leads to a decrease in ECE by about 27.8 thousand tons.Such analysis has also shown a positive and significant effect of the World Trade Organization on ECE.     

外商直接投资对中国对外贸易影响的实证分析

本文以中国和其它24个国家或地区的最近3年的外贸和外资的实际数据为基础,用统计计量学方法对外商直接投资(FDI)和国际贸易关系进行实证研究,定量论证了FDI的贸易促进作用,在此基础上,还对中国与各个国家或地区之间贸易规模差异进行了阐述.     

Technology licensing or cost-reducing outsourcing? Game theoretical analysis on consumers' home bias effects and firms' optimal strategies

International cost-reducing outsourcing lowers consumers' perceived quality of products due to home bias. This paper envisages a vertically differentiated Cournot duopoly associated with international, cost-reducing outsourcing and non-outsourcing schemes in both licensing and non-licensing cases. It examines the impacts of home bias effect on the behaviour of firms and welfare. It shows that the optimal strategy of the patent holder varies from situation to situation associated with the home bias effect. In equilibrium, the dominant strategy for the patent holder is licencing and no outsourcing. If a licensee will outsource its inputs after upgrading the quality of its products, then the patent holder will earn higher profits than one in a case where the licensee does not outsource. If both the patent holder and the licensee produce without outsourcing, a welfare-reducing licensing occurs. On the other hand, if the licensee outsources its production inputs but the patent holder does not outsource, then a welfare-improving licensing generates a win-win situation for the patent holder and for society. Furthermore, the smaller the quality gap between two goods prior to implementing licensing, the lower the royalty rate imposed by the patent holder.     

Concentration and Wage Earnings in an Open Economy: A Case Study of Korea

The object of this paper is to increase our understanding of the effect of output market power (the degree of concentration in an industry) on wage earnings in Korea. We conduct a series of econometric investigations based on the traditional human capital theory and find that workers in a more concentrated industry are paid higher. This wage premium is not explained in terms of the differences in the quality of labor and/or compensating factors. It suggests to us that the conventional estimates of the misallocation of resources due to the output market power are underestimated since this source of higher unit costs is disregarded. [820]     

The productivity effects of local R&D outsourcing: the moderating role of subsidiary mandate and internal R&D

This study examined the moderating effects of two kinds of internal R&D (parent R&D and subsidiary R&D) on the relationship between local R&D outsourcing and subsidiary productivity as internal R&D challenges the collaborative relationships in the local environment. Due to the specific feature of a subsidiary mandate, we further investigate whether two distinct kinds of internal R&D have different moderating effects between exploitation-oriented subsidiaries and exploration-oriented subsidiaries, based on a sample of longitudinal data set of 263 Taiwan-based manufacturing subsidiaries over the period 2006–2009. The empirical results show that for exploitation-oriented subsidiaries parent R&D plays a significant and negative moderating role on the impact of local R&D outsourcing based on local collaboration, while a positive moderating role is observed with parent R&D and subsidiary R&D for exploration-oriented subsidiaries.     

我国基金羊群行为:测度与影响因素

本文以1998年第1季度至2003年第4季度在沪深两市交易的94家基金的投资组合明细数据为样本,借鉴LSV思想构造新的羊群行为测度指标,探讨了我国基金投资者羊群行为的特征及其形成机制。研究发现:基金的羊群行为受到时间、季节、市场规模、基金规模、市场态势和基金盈利水平等因素的影响;羊群行为测度与基金盈利能力、基金/市场的相对规模等因素正相关;熊市中的羊群行为测度值大于牛市中的测度值;基金的羊群行为随着时间的进程没有显著改善,但每年的第2和第3季度是高发期。作者认为,基金在交易模式演变过程中产生的“代表性心理”,以及“心理阻抗”和“控制幻觉”加剧了羊群行为。     

The effects of portfolio size on international equity home bias puzzle

This paper investigates a new explanation for the international equity home bias puzzle based on an endogenous asymmetric information model. Using a cross-sectional mutual fund data set, it is found that the degrees of home bias across fund managers are negatively correlated to the asset sizes under their management. This result is consistent with the theoretical prediction in the endogenous asymmetric information model—the portfolio managers with the larger assets tend to acquire more information regarding foreign equity and, hence, hold more foreign equity holdings.     

The trade reducing effects of market power in international shipping

Developing countries pay substantially higher transportation costs than developed nations, which leads to less trade and perhaps lower incomes. This paper investigates price discrimination in the shipping industry and the role it plays in determining transportation costs. In the presence of market power, shipping prices depend on the demand characteristics of goods being traded. We show theoretically and estimate empirically that ocean cargo carriers charge higher prices when transporting goods with higher product prices, lower import demand elasticities, and higher tariffs, and when facing fewer competitors on a trade route. These characteristics explain more variation in shipping prices than do conventional proxies such as distance, and significantly contribute to the higher shipping prices facing the developing world. A simple back of the envelope calculation suggests that eliminating market power in shipping would boost trade volumes by 5.9% (for the US) to 15.2% (for Latin America). Our findings are also important for evaluating the impact of tariff liberalization. Cargo carriers decrease shipping prices by 1–2% for every 1% reduction in tariffs.     

国际技术扩散的度量、途径及阻碍:一个文献综述

全球大部分技术来源于少数发达国家,在经济全球化背景下,技术通过各种渠道在世界范围内的扩散,对各国的技术水平和经济发展产生了重要影响,国际技术扩散日益成为经济增长理论关注的核心问题之一。本文从三个方面对国际技术扩散的文献进行了梳理和总结,包括技术扩散度量的方式、技术扩散的途径及影响技术扩散的因素。相关研究文献表明,在数量上更精准地度量国际技术扩散已经取得了重要进展;通过国际贸易实现的技术扩散能够提高几乎所有国家的生产效率,但是与FD I流入相联系的技术扩散溢出效应却在发达国家和发展中国家之间呈现出显著的差异;一国的地理距离、技术差距、要素禀赋以及政治制度等若干因素为理解这一现象提供了解释。     

Winners and losers: a micro-level analysis of international outsourcing and wages

Abstract.  Our paper investigates the link between international outsourcing and wages utilizing a large household panel and combining it with industry-level information on industries' outsourcing activities from input-output tables. This approach avoids problems such as aggregation bias, potential endogeneity bias, and poor skill definitions that commonly hamper industry-level studies. We find that outsourcing has had a marked impact on wages. Applying two alternative skill classifications, we find evidence that a 1 percentage point increase in outsourcing reduced the wage for workers in the lowest skill categories by up to 1.5%, while it increased wages for high-skilled workers by up to 2.6%. This result is robust to a number of different specifications.     

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.     

Purchasing Power Parity and aggregation bias for a developing country: The case of Mexico

This paper investigates long-run Purchasing Power Parity (PPP) between the US and Mexico. We use a panel of disaggregated price data between the US and Mexico with a long time series to look at two types of aggregation bias. The first is examined in Imbs et al. — which we refer to as estimator aggregation bias — and the second is put forth by Broda and Weinstein — hereafter, data aggregation bias. The findings indicate substantial estimator aggregation bias and data aggregation bias. Although estimates using aggregate data and imposing homogeneous coefficients provide little evidence of PPP, findings with disaggregated data and heterogeneous coefficient estimators offer strong support. The results also suggest the presence of small-sample bias as examined in Chen and Engel, but with little effect on the qualitative results. Tradable goods and non-tradable goods show little distinction in convergence rates. Estimated half-lives are lower under flexible than fixed exchange rates and indicate rapid convergence during the Mexican peso crisis.     

The influence of cultural distance on the volatility of the international stock market

Along with the development of cultural dimensions and cultural distance, the influence of cultural variables on the stock market is attracting more and more attention. In this study, we propose an improved gravity model to examine the relationship between culture and the volatility of the international stock market. Firstly, based on Hofstede's cultural dimensions theory, a model of the impact of cultural dimensions on the volatility of the national stock market is presented. Secondly, cultural distance is incorporated into the extended gravity model. Then, models of the impact of cultural distance on fluctuations in the international stock market and on foreign securities investment are proposed. Finally, the results of case studies using samples of national stock market indices indicate that different cultural dimensions have different influences on the volatility of national stock markets. The smaller the cultural distance between countries, the more similar the level of volatility in those countries' stock markets. Greater cultural similarity promotes increased securities investment between countries.     

The labor market effects of trade union heterogeneity

Empirical evidence suggests that the bargaining power of trade unions differs across firms and sectors. Standard models of unionization ignore this pattern by assuming a uniform bargaining strength. In this paper, we incorporate union heterogeneity into a Melitz (2003) type model. Union bargaining power is assumed to be firm-specific and varies with firm productivity. This framework allows us to re-analyze the labor market effects of (i) a symmetric increase in the bargaining power of all unions and (ii) trade liberalization. We show that union heterogeneity unambiguously reduces the negative employment effects of stronger unions. Firm-specific bargaining power creates a link between unionization and the entry and exit of firms, implying a reduction of the unions' expected bargaining power. Moreover, union heterogeneity constitutes an (un)employment effect of trade liberalization. If unions are most powerful in the high-productivity (low-productivity) firms, trade liberalization will increase (decrease) unemployment.     

The impact of economic sanctions on international trade: How do threatened sanctions compare with imposed sanctions?

We draw on established theoretical works in international political economy to compare the empirical effect of threatened and imposed economic sanctions on international trade. To deepen the analysis, we analyze whether there are any differential effects when different instruments of sanctions are employed, as well as whether the effect of sanctions is product specific. To do this, we use the gravity model and recent detailed disaggregated data on sanctions spanning the period 1960–2009. Our results show that the impact of threatened sanctions differs qualitatively and quantitatively from imposed sanctions. Whereas imposed sanctions lead to a decrease in the trade flow between the sender and its target, a threat of sanctions leads to an increase. The positive impact of the threat may be due to economic agents in both the sender and its target resorting to stockpiling prior to the actual imposition of sanctions to minimize any adverse consequences of the sanctions. These differential effects of threatened and imposed sanctions also extend to food and medicinal products, as well as when different instruments of sanctions are employed.     

Waves of international banking integration: A tale of regional differences

We propose an original measure of international banking integration based on gravity equations and a spline function on a panel of 14 countries and their 186 partners between 1999 and 2012. Contrary to the conventional wisdom, we uncover that: (1) the international banking integration outside the euro area has been tenaciously increasing since \1999 and has even strengthened after the crisis. (2) In contrast, the international banking integration of the euro area has been cyclical since 1999 with a peak in 2006 and a complete reversal since then. (3) This decline is not a correction of previous overshooting but a marked disintegration. (4) Outside the euro area, the level of income does not affect the shape of banking integration.     

Evaluating the effects of embodied energy in international trade on ecological footprint in China

Based on sub-sectoral level of economy and detailed traded items, embodied energy (EE) in international trade flow in China is estimated during 1996-2004, and the effects of EE on sustainability are quantified by using one of the most popular indicators—Ecological footprint (EF). A framework of EF method, which is more relevant to realism of specific country, is proposed in this paper. The results show that China is a net importer of EE during the period covered by this study except for the year from 1997 to 1999. Imported, Exported and Net imported EE tends to increase sharply along time series. Net imported energy would increase 38% and energy consumption would increase 2.8% in 2004 if EE were taken into account. Footprint_energy is the most important part of EF components and is significantly affected by EE, and the effects of EE on EF are similar to that of Footprint_energy. Footprint_energy, EF and ecological deficit of 2004 will be underestimated about 2.92%, 1.36%, 2.83%, res pectively, if EE is not taken into the national energy budget. Continuous increase of EF and ecological deficit along time series indicates that China is moving away from sustainability. 1.47 times Chinese territories are accurately occupied by China in 1996 while 1.71 times in 2004. Obviously unsustainability procedure of China is accelerated by EE. The contribution of EE to EF and ecological deficit is small in absolute terms expressed in per capita, but the effects on whole nation are huge if the population of China multiplies them. To curb the increase of EF and ecological deficit and to achieve the goal of sustainability, some policy and measures are also proposed.