Global production sharing and the FDI–trade nexus: New evidence from the Japanese automobile industry

The growing importance of global production sharing makes the nexus between outward foreign direct investment (FDI) and trade in intermediate goods ever more important. This study employs newly-constructed product-level data covering 32 products and 49 host countries over the period 1993–2008 and finds evidence that FDI by upstream firms leads to additional exports of intermediate goods from the home country. The finding of a complementary relationship between FDI and intermediate exports from Japan runs counter to the popular view that the growing overseas activity of multinational enterprises could replace intermediate exports from a home country, thereby depriving the home country of job opportunities.     

Neutrality and free trade: Sweden and trade liberalisation, 1948–1958

Abstract

This article discusses the Swedish attitude to European economic cooperation, an attitude that has been described as reluctant. The traditional explanation for this has been Sweden's neutrality. This explanation has been challenged by researchers, who have claimed that a nationally self-sufficient social democracy was responsible for the reluctance towards Europe. In this article, neutrality is still seen as the main explanatory factor. Swedish strategies for dealing with European integration linked the concepts of neutrality and global free trade. Nordic cooperation was also seen as a strategy to meet demands for European integration. Swedish activities within the European organisations were limited by neutrality concerns. Within these limits Sweden worked for economic policy solutions, which might be called social democratic.     

Smoking and wage rates – Evidence from Japanese panel data

This paper analyzes smoking behavior and its effects on wage rate. It is widely known that smoking has negative health effects and to discourage the practice, governments frequently implement policies such as tax increases and restrictions on public smoking. To evaluate these policies, it is necessary to understand the economic benefits and costs of reducing the number of smokers. We conduct a panel data analysis while controlling for unobserved heterogeneity and show that smoking is not the main factor causing observed wage differentials between smokers and non-smokers in Japan.As for the relationship between smoking and wages, we find that male smokers receive lower hourly wages than male nonsmokers. Smoking behavior generally depends on environmental, congenital, or social factors. These factors, however, do not only affect smoking behavior but also the wages of these individuals. To isolate the effect of smoking on wages, we control for individual heterogeneity using panel data to verify the existence of such an effect.Using tax change as an instrumental variable in the fixed effects model and several robustness checks, the results show that smoking has no statistically significant effect on wage rate. This suggests that smoking does not directly affect wages; rather, unobserved individual heterogeneity (other factors influencing both smoking and wages) leads to wage differences between smokers and nonsmokers. Nevertheless, smoking can affect wages in the long run through health problems. The nine-year panel data used in this research, however, is insufficient to capture the long-term indirect health effects. Thus, future research should consider analyzing indirect health effects using panel data spread across a wider time frame.     

Sources of export fluctuations: empirical evidence from Taiwan and South Korea, 1981–2000

This paper examines the sources of export fluctuations in Taiwan and South Korea using two structural VAR models and cointegration. The empirical evidence shows that changes in real variables have a significant and persistent influence on the variation of export growth while the monetary disturbances have only a short-lived effect. Furthermore, the U.S. disturbances are found to be important for explaining export fluctuations for Taiwan, while they have an insignificant and short-run effect on South Korea’s exports. Comparing the influences of different real factors, the innovation accounting shows that changes in the world oil price have the most important and robust effects on exports in both counties.     

The U.S.–China trade war: Tariff data and general equilibrium analysis

The current trade war between the United States and China is unprecedented in modern history. This study introduces a database of tariff increases resulting from the trade war and quantifies the impacts using the canonical GTAPinGAMS model calibrated to the recently released GTAP version 10 accounts. We find that the remaining tariff increases as of March 2020 after the phase one trade deal decrease welfare in China by 1.7% and welfare in the United States by 0.2%. Impacts on sectoral revenue are reported for both countries. China's exports to and imports from the United States are reduced by 52.3% and 49.3%. The trade flow between the United States and China will be diverted to their major trade partners resulting in higher welfare in those countries, including many Asian countries. The estimated impacts are robust to using alternative trade elasticities and are amplified in the absence of the phase one tariff reductions.     

Intra-industry trade by types: What can we learn from Portuguese data?

We provide evidence on intra-industry trade (IIT) in the Portuguese case from 1994 onwards by disentangling vertical from horizontal IIT with two different indexes—the Grubel-Lloyd and the so-called CEPII index- and analyse the determinants of both IIT types. Distinct explanatory factors are identified for each IIT type and we confirm the comparative advantage explanation in the vertical case. The regression results are robust to different estimation methods and to alternative IIT indexes. Nonetheless, sensitivity of the IIT levels to the arbitrary criterion of the CEPII measurement points out to the Grubel-Lloyd index as a preferable method. JEL no. F12, F14     

The relationship between the monetary regime and output volatility: a multivariate GARCH-M model of the Japanese experience, 1919–1996

In this paper we tried to determine whether or not adherence to a floating exchange rate regime helped the Japanese economy to absorb shocks which originated from domestic and foreign sources based on the Japanese experience from the interwar to the post Bretton Woods floating exchange rate period. Using a multivariate GARCH-M model, we analyzed the relation of exchange rate volatility and output volatility directly. The results imply that the floating exchange rate regime has helped the Japanese economy to insulate itself from foreign shocks. The estimated coefficient which represents the response to the foreign shocks decreases and the decrease is significant in the floating exchange rate regime.     

Exploring the effects of capital mobility on the saving–investment nexus: evidence from Icelandic historical data

We explore the effects of capital mobility on the relationship between saving and investment using historical data for Iceland. First, we analyse the saving–investment (S-I) correlation for the period of restricted capital mobility using data from 1960 and 1994. We then add a period of free capital mobility between 1994 and 2008 and estimate the correlation for the period 1960–2008. Finally, we extend our analysis to the 2008 to 2016 period, when capital controls were imposed in response to the crisis. Institutions matter: We find institutional changes, in particular, Iceland’s entry into the European Single Market in 1994, coincided with a fall in the long-run correlation between saving and investment. However, the correlation weakens further when we include the post-crisis regime of capital controls, suggesting a weaker relationship between savings and investment in this regime. We discuss the possible reasons for this pattern and also the implications of our findings for post-crisis policy in small open economies.     

Musket War and Musket trade: The New South Wales to New Zealand firearms trade, 1829–1840

The intertribal Musket wars that spread throughout Māori society in the 1820s and 1830s have received much attention from historians. This is also true of the history of trade between New South Wales and New Zealand occurring at the same time. However, at present, the link between these two phenomena remains poorly established. This article draws on the primary material available about the trans-Tasman arms trade from a relatively untapped source, Sydney newspapers, revealing the surprising extent of this commerce and the fact that firearms imports peaked in the early 1830s. This information necessarily requires revision of our understanding of the Musket wars themselves.     

Carbon emissions,trade liberalization,and the Japan–ASEAN interaction: A group-wise examination

As in any modern economy, trade is central to the progress of the economy in the Association of Southeast Asian Countries (ASEAN) region, but environmental degradation occurs with globalization. Using panel data from the period 1970–2006, this study examines the interaction between trade and the environment in terms of carbon emissions for the group of ASEAN countries. The results demonstrate that CO₂ emissions display an inverted-S shape in the region. In general, exports as a percentage of the gross domestic product (GDP) are main contributors to carbon emissions in the developed, developing and late-developing ASEAN countries. The study found no evidence for the Foreign Direct Investment’s (FDI) deteriorating impact on environmental quality. Moreover, Japan’s imports from the region do not cause pollution while China’s imports stimulate the pollution per capita.     

Exports,imports and growth: New evidence on Italy: 1863–2004

The nexus between trade and economic growth in Italy has been widely debated by historiography. However, there are no long run analyses on this topic that cover the whole span from Unification to present days. This paper contributes to fill this gap by investigating the relationship between real exports, imports and GDP in Italy from 1863 to 2004 by using cointegration analysis and causality tests. The outcome suggests that these variables comove in the long run but the direction of causality varies across time. In the period prior to the First World War import growth led GDP growth that in turn led export growth. Conversely, in the post-Second World War period we have a strong bidirectionality between imports and exports consequent on the increase in intra-industry trade. We also find a weak support for export-led growth and growth-led imports. This suggests that exports were not the only or the main driver of economic growth. There was probably a multiplicity of factors at work, among which high rates of capital formation and the expansion of internal demand probably stood out.     

Energy prices and investment in energy efficiency: evidence from Chinese industry 1997–2004

The paper develops and implements a methodology for assessing the role of energy prices and new investment in reducing energy intensity in Chinese industry. Analysing a unique panel data set which reports firm-level energy consumption and price from 1997 to 2004, the paper finds: the energy prices, not only the current but also the past energy prices, are key factors that driving down firms' energy intensity for all three types of firms: state-owned enterprises (SOEs), domestic non-SOEs (NSOEs) and foreign-funded firms (FFEs); furthermore, SOEs exhibit a robust price-investment channel: responding to rising energy prices, SOEs tend to invest in new energy-efficient capital, through which SOEs reduce energy intensity; the same price-investment channels are less robust for non-SOEs or foreign-funded firms.     

Geographical location and urbanisation of the Swedish manufacturing industry, 1900–1960: evidence from a new database

Abstract

This article introduces a new database, based on official statistics, of regional manufacturing industries in Sweden. We employ this database to examine the distribution of manufacturing activity across Swedish regions and cities, 1900–1960. Over this period we observe an increasing concentration of manufacturing activities, reaching a peak around 1940, across the northern, southern and western parts (NUTS-I areas) of Sweden. Over the same period, the North-South divide in terms of manufacturing employment grew larger. Across counties (NUTS-III) and cities we, however, observe two shorter periods of convergence of manufacturing activities, in the early twentieth century and in the post-war period, whereas the inter-war period was characterised by divergence. These developments occurred to the backdrop of the urbanisation of industry in Sweden, as the rural share of manufacturing employment declined from roughly 60 to 25% between 1900 and 1960. We also find that the regional patterns of individual industries over time followed different trajectories, suggesting that that the determinants of industry location differed significantly across industries.     

Higher wages in exporting firms: self-selection, export effect, or both? First evidence from linked employer-employee data

While it is a stylized fact that exporting firms pay higher wages than non-exporting firms, the direction of the link between exporting and wages is less clear. Using a rich set of German linked employer-employee panel data we follow over time plants that start to export. We show that the exporter wage premium does already exist in the years before firms start to export, and that it does not increase in the following years. Higher wages in exporting firms are thus due to self-selection of more productive, better paying firms into export markets; they are not caused by export activities.     

Panel unit root tests of purchasing power parity between Japanese cities, 1960–1998: disaggregated price data

This paper makes use of new panel unit root tests of Im et al. [Testing for unit roots in heterogeneous panels, Working paper, Department of Applied Economics, University of Cambridge, 1997], and Maddala and Wu [Oxford Bull. Econ. Stat. 61 (1999) 631] to examine whether long-run purchasing power parity (PPP) holds between major Japanese cities. By using a panel of 13 disaggregated consumer price indices from seven cities in Japan over the period 1960–1998, we are able to reject the null hypothesis that the relative price of goods between Japanese cities is non-stationary at the 5 percent level for all eight tradable goods and in two of the five non-tradable goods. Hence, we conclude that long-run PPP holds between major Japanese cities and PPP holds more for tradable goods than for non-tradable goods.     

Balancing the Baltic trade: colonial commodities in the trade on the Baltic, 1773–1856

Abstract

This article attempts to look at the connection between the Atlantic and the Baltic economies during the transition from early modern to the modern era. Previous research has seriously underestimated the importance of colonial commodities traded on the Baltic during this period. Colonial commodities, particularly from the American plantation complex, became ever more important for the Western European balance of payments on the Baltic. Already by the late eighteenth century, these commodities were on aggregate worth approximately as much as the exports of strategic commodities such as grains or iron from the Baltic at the same time. By the middle of the nineteenth century, the value of colonial commodities imported to the region far surpassed the value of such key exports from the Baltic. The colonial commodities thus constituted an important part of the balance of payments for the trade on the Baltic.     

The efficiency and productivity of Japanese securities firms, 1988–93

Non-parametric linear programming methods are used to construct the production technology and measure overall cost efficiency for Japanese securities firms during the period 1988–93. Overall cost efficiency is decomposed into allocative efficiency, pure technical efficiency, scale efficiency, and congestion efficiency. The Malmquist input-based productivity index is also constructed and used to compare productivity change between the Big Four Japanese securities firms and other securities firms. The effects of various keiretsu links between securities firms and banks on overall cost efficiency are also examined.