The ‘amelioration’ of child labor, ‘a modest proposal’

More than 317 million children between the age of 5 and 17 are working in the world. Child labor is a persistent phenomenon, even though its incidence has subsided with economic development. In this paper, we conduct a panel study of 101 countries from 1980 to 2004 where child labor is proxied by the labor force participation of children aged 10–14. We look at the relationships between child labor and investments in human capital, foreign direct investments, countries’ openness to trade, and credit market constraints. We depart from the contributions of cross-country studies by employing a fixed effects instrumental variable (FE-IV) panel data model by employing a fixed effects instrumental variable (FE-IV) panel data model to account for unobserved heterogeneity and endogeneity of child labor and individual country-specific effects. We find support for the conclusions of the above-mentioned studies: countries that trade more and have a higher stock of foreign direct investment have less child labor. More generally, we find that trade openness, investments in human capital, and financial development are associated with a reduction of child labor. Child labor persists but tailored policies on trade, investment, and financial reform can lessen child labor along with economic growth, improvements in health, and rising standards of living.     

The rise of the machines: Capital imports and real manufacturing wages in 57 nations

Outward-oriented policy reform has attracted a large number of academics to the study of the trade-labour market nexus. One of these fields has focused on capital intensive (machinery) imports and its effect on manufacturing wages. The skill-enhancing-trade (SET) hypothesis was put forth to explain a potential relationship where an inflow of capital imports results in increased demand for skilled labour and decreased that of unskilled labour, and thus resulted in a rise in skilled wages and a decrease in their unskilled counterparts. This study revisits this hypothesis with a panel from the manufacturing sector of 57 nations. We improve upon previous studies in a number of ways. We add developed nations to the sample and examine capital imports from rich countries as well as the rest of the world. This takes into account the prominence of vertical production networks in international trade. We adhere closely to the neo-classical trade model and employ definitions of skilled and unskilled workers that capture the production process of particular items. Finally, we fit a robust dynamic panel data model that accounts for the endogeneity of the determinants of trade and wages. In this way we test whether the SET hypothesis is generally applicable as opposed to previous studies which use an ad hoc selection of countries and variables. We find that the SET hypothesis is not driving changes in manufacturing wages. Instead, worker productivity and GDP per capita explain these labour market outcomes.     

Are Human and Social Capital Linked? Evidence from India

This paper develops a two‐period Overlapping Generations (OLG) model of endogenous growth in which a two‐way relationship between social capital and human capital is studied. In order to illustrate the impact of public policies, the model is calibrated using the data for a low‐income country, India and a sensitivity analysis is reported under different parameter values. Based on the numerical analysis, this paper focuses on possible trade‐offs in the allocation of government spending between two productive components, that is, social capital‐related activities and education. The results of this paper show that an increase in the share of public spending on social capital‐related activities through a cut in spending on education or vice versa entails trade‐offs. However, the trade‐off fades away and the net impact on long‐run growth turns out to be positive for different parameter values in the case where a higher share of spending on education is financed by a cut in spending on social capital‐related activities but a policy in improving social capital accumulation at the expense of education is always detrimental to long‐run growth.     

Economic integration,market discipline and productivity growth in Spain

This paper explores the changes on productivity growth, economies of scale and market discipline experienced by a selected number of Spanish manufacturing industries as a result of the 1986?–?92 integration of Spain into the European Union. Since the intra-union trade liberalization process spanned a seven-year, multi-stage, adhesion period we employ a model with a smooth transition variable to account fully for its impact. An additional model that uses separate sets of dummy variables captures differences in the regression estimates during the transitional and liberalized periods. In both model specifications we find strong evidence of increases in returns to scale and reductions in producers' mark-ups, whereas productivity growth increases are found to be small and uneven.     

社会资本、人力资本与内生经济增长

通过构建基于社会资本、人力资本的内生经济增长模型,研究社会资本、人力资本与经济增长之间的影响机制,并基于社会信用这种社会资本,运用面板数据对人力资本、社会资本、经济增长之间的影响机制进行实证检验,结果显示:私人生产性的教育消费支出和公共教育支出总体上促进了人力资本的积累,但前者作用大于后者;相对于政府培育社会资本的公共支出,人力资本积累更加有利于促进社会资本的积累;社会资本对中国经济增长产生了积极的影响。但是,上述三个方面的影响存在着较大的地区差异性。     

Trade liberalisation and domestic brands: Evidence from China's accession to the WTO

In this paper, we examine how trade liberalisation affects firms' branding behaviours. We investigate this question with China's accession to the WTO in late 2001. We find that firms in sectors with large import tariff reductions discontinue more trademarks. Meanwhile, these firms file more trademark applications and their total number of effective trademarks increases after trade liberalisation. This growth in trademarks is mainly driven by large firms, as measured by the number of employees. In fact, small firms' applications and effective trademarks decline during trade liberalisation. It is also found that trademark applications are mainly filed for the traditionally non-dominant products of industries. We provide a conceptual model that incorporates the channels through which both passive and active responses occur.     

INTERNATIONAL TRADE COMPOSITION AND MEDIUM-RUN GROWTH: Evidence of a Causal Relationship

The motivation for this article stems from Mazumdar's (1996) hypothesis that international trade composition impacts a country's ability to achieve transitional economic growth. In his article, Mazumdar suggested that developing economies, generally known for exporting consumption goods and importing capital goods, benefit more from international trade than do developed economies. In addition to static gains, developing economies experience a decline in the replacement costs of capital as the relative price of capital falls with trade. To empirically test this hypothesis, a trade composition variable is created using unpublished SITC export and import data of both consumption and capital goods. Incorporating this variable into a linear equation, a Granger Causality test and a more extensive VAR test are performed for a select group of developed and developing economies. The empirical results are suggestive, and indicate some support for the hypothesis that trade composition "causes" medium-run transition.     

Trade Growth in a Heterogeneous Firm Model: Evidence from South Eastern Europe

In 2007 a free trade area (BFTA) will be created in the Balkans. In this paper we study BFTA‐induced trade growth in the SEE. Given that welfare impacts associated with trade growth depend on the growth channels, more goods and varieties exported or at higher price or more volume of exported goods and varieties, we study the structure of integration‐induced export growth in the Balkans. Given that no firm‐level trade data is available for the Balkans, we adopt the heterogeneous firm framework, which allows to decompose aggregate trade growth into intensive margin of trade and extensive margin of trade using only aggregate trade data. Our empirical findings predict that the BFTA would primarily increase the export volume through a growing number of shipments (the extensive margin of trade) suggesting that the actual welfare gains from the trade growth in the Balkans might in fact be larger than predicted in previous trade studies. We also found that reducing variable trade costs leads to higher export growth rates compared to reducing fixed trade costs by the same percentage.     

Does foreign direct investment expand the capability set in the host economy? A sectoral analysis

Most empirical studies examining the impact of foreign direct investment (FDI) on economic development use aggregate monetary-based measures such as GDP or TFP growth as indicators for development. We deviate from this approach and use instead the recently developed economic complexity index; this measure summarises the complexity of the productive structure of an economy, and its values can be interpreted as the number of capabilities present in a country. These capabilities are units of productive knowledge necessary for the production of goods, and goods differ in the number of necessary capabilities. Furthermore, we use sectoral FDI data to take differences between sectors of an economy into account, since the number of necessary capabilities also varies between the sectors. In our empirical analysis, covering 63 developing and developed countries over the period 2005–14, we find that FDI in the tertiary sector has a statistically significant and robust positive effect on the number of capabilities, whereas FDI in the primary and secondary sectors generally does not increase the capability set of an economy.     

Distributive trade and regional productivity growth

The paper aims to investigate the relationship between distributive trade (wholesale and retail trade) and productivity growth across Italian provinces. In most studies, the potential determinants of productivity in the distributive trade have been investigated, while the impact of these activities on economic growth of the whole system has received less attention. By using panel data during the time period 2000–2013, the paper tests if the increase in the share of employees in distributive trade over the given period has promoted the productivity growth. This study applies both a random-effects model and, among the dynamic panel data estimators, a generalized method of moments estimator (GMM). In order to control both the issue of endogeneity, due to the presence of some potentially endogenous variables among the explanatory variables, and the problem of instrument proliferation, the GMM estimator is implemented together with a statistical method, which reduces the number of instruments when the set of endogenous variables is wide. The findings show that the distributive trade has a strong positive impact on the productivity growth. Moreover, this link is reinforced when we control the potential endogeneity. The results also support the idea that distributive trade can promote provincial convergence.     

Temporary trade and heterogeneous firms

Using Hungarian firm-transaction level export data, we show that about one third of firm–destination and about one half of firm–product–destination export spells are short-lived, or temporary, each year. This is in odds with theories where comparative advantage is stable and market entry costs are sunk. We show how endogenous choice between variable and sunk cost trade technologies can explain the empirical importance and some characteristics of temporary trade. We build a model in which the likelihood of temporary trade depends on productivity and capital cost of the firm as well as well-known gravity variables of destinations. These predictions are borne out by the data; the likelihood of permanent trade, defined by a simple filter, rises with firm productivity, financial stability, proximity and GDP of destination countries.     

Where Do Firms Export,How Much and Why?

The empirical finding that exporting firms are more productive on average than non‐exporters has provoked a large theoretical literature based on models such as Melitz ( 2003 ), where more productive firms are more likely to overcome costs associated with trade. This paper investigates how closely the productivity heterogeneity framework fits the data from a firm‐level survey that includes information on export destinations and firm characteristics such as productivity. We find a high degree of unpredictable idiosyncratic participation in export markets by firms and a relatively weak positive correlation between the extent of a firm's export market participation and its export sales. We find that a small number of standard gravity variables provide a close fit to the country‐level determinants of trade but that greater variation results in more difficulty in explaining firm‐specific factors driving exporting behaviour. We also illustrate some elements of the dynamics over time in firm exporting patterns by destination. We show that lagged exporting activity has a significant effect on a firm's current exporting profile.     

The Relationship between Political Tensions,Trade and Capital Flows in ASEAN Plus Three

We estimate the effects of political tension on trade and capital flows in ASEAN Plus Three countries in the framework of a gravity model. We quantify political tension through text‐parsing software reading daily Reuters’ articles from 1990 to 2013 and exclude Brunei and Laos due to sparsity of news coverage. Regarding bilateral trade, we find that political conflict, measured by negative reports in Reuters’ articles, seems to only affect bilateral trade between countries that are not both members of the World Trade Organization (WTO). For these countries, a 1 per cent rise in the tension score results in a 0.05 per cent decline in trade. There is weaker evidence that improvement in bilateral relationship, measured by positive reports in Reuters’ articles, is associated with more trade. As for capital flows, while long‐term capital flows, measured by foreign direct investment, appear to be unaffected by short‐term tensions, both a non‐democratic government and a history of war negatively affect FDI.     

Productivity and externalities: models of export-led growth

In developing countries, successful export-led growth (ELG) industrialization has been associated with rapid structural change and productivity growth. There are major difficulties in explaining this performance using a standard neoclassical growth model. To develop a more satisfactory framework, we start from empirical and theoretical work with models incorporating externalities. We develop a simple analytical model with an export externality that captures the large increase in both total factor productivity and trade share associated with ELG. A second model is developed to decompose growth into various components: (i) factor accumulation, (ii) a factor reallocation effect from moving factors from low to high productivity sectors, (iii) an export externality effect arising from exporting light and heavy manufactures and (iv) an import externality effect arising from importing capital goods (heavy manufactures). The second model is implemented with data for an archetype semi-industrial country. In addition to accounting for the higher total factor productivity growth observed in countries pursuing ELG strategies, the model captures the patterns of structural change experienced by such countries better than simpler neoclassical models without disequilibrium features or externalities.     

Towards an ecological technology for global growth in a North-South trade model

In a world of rapid and cheap communication, where countries are not isolated, ideas and information spread quickly across international borders. Technological progress, leading to more efficient productive processes, in terms of the required amount of natural resources, seems to be the key to overcoming the conflict between environmental concerns and economic growth. This paper investigates the relationship between natural resources and sustainable economic growth in a North-South trade model. We assume that a process of capital transfer from North to South is performed in two different scenarios depending on the effect of this transfer upon the Southern economy. Within a game theory framework, we characterize the optimal paths of global economic growth which respects the sustainable use of natural resources.     

On the origins of comparative advantage

This paper proposes a simple theory of international trade with endogenous productivity differences across countries. The core of our analysis lies in the determinants of the division of labor. We consider a world economy comprising two large countries, with a continuum of goods and one factor of production, labor. Each good is characterized by its complexity, defined as the number of tasks that must be performed to produce one unit. There are increasing returns to scale in the performance of each task, which creates gains from specialization, and uncertainty in the enforcement of each contract, which create transaction costs. The trade-off between these two forces pins down the size of productive teams across sectors in each country. Under free trade, the country where teams are larger specializes in the more complex goods. In our model, it is the country where the product of institutional quality and human per worker capital is larger. Hence, better institutions and more educated workers are complementary sources of comparative advantage in the more complex industries.     

The impact of firmspecific capabilities on the amount of capital raised in an initial public offering: Evidence from the biotechnology industry

Going “public” has a magical sound to most entrepreneurial managers. By going public the firm increases its legitimacy in the business community, improves access to debt financing, and creates a means of exit for major shareholders. However, by far the most important reason for going public is to infuse a significant amount of investment capital into the firm. It is well documented that small businesses frequently fail because of insufficient funding and heavy debt loads. Issuing an initial public offering (IPO) allows entrepreneurial firms to overcome these pitfalls. Clearly, if access to capital is the major goal of going public, then the success of an offering is measured by the amount of capital raised by the firm. This study presents a model of the total amount of capital raised by a firm through an IPO. The explanatory variables include several indicators of the scientific capabilities of the firm including the location of the firm, the quality of the research staff, the number of products under development, the number of patents held by the firm, and the firm's prior spending on research and development (R&D). The model is empirically tested on a sample of 92 biotechnology IPOs. The results provide strong support for the hypothesized positive relationship between the total amount of capital raised by a firm's IPO and the scientific capabilities of the firm.Our results have important implications for entrepreneurs. First, an entrepreneur needs to develop and send credible signals indicating the value of the firm's intangible assets to the market. Second, the market values as deep a product pipeline as possible given a firm's resource constraints. Third, choice of location is a key strategic decision that should not be overlooked. Fourth, the market values firm-specific capabilities and will increase the capital it is willing to invest in a firm accordingly. Finally, the amount of capital a firm raises in its IPO can be influenced by entrepreneurial managers' strategic decisions.     

出口贸易与全要素生产率增长的动态效应分析——基于中国省际面板数据的角度

大量的研究表明,出口贸易通过出口学习效应、出口溢出效应、出口规模效应和出口竞争效应促进了生产率的发展。我国省际面板数据的动态实证研究表明,出口量的增长不能促进我国全要素生产率的发展;人力资本和研发活动作为衡量一国吸收能力的指标,是发挥出口—生产率效应的关键因素;我国鼓励出口政策和引进外资政策的实施,使得出口—生产率效应具有明显的区域色彩。     

Problems of developing and transition economies

ABSTRACT

The Solow growth model was extended to account for the graft by corrupt individuals from domestic savings, which could have been used for productive capital accumulation, the productive stock of capital to be augmented by foreign direct investment (FDI), and the expatriation by FDI international investors. The results indicate that higher levels of FDI inflows, savings rates, and more advanced technology embedded productive capital would result in higher steady-state per capita productive capital to labor ratio. The graft from domestic savings, expatriation of FDI, and growth rate of labor negatively affect steady-state per capita productive capital to labor ratio.     

贸易促进了中国人力资本的积累吗?——来自中国省级面板的经验证据

本文使用中国省级面板数据考察了内生国际贸易与中国人力资本积累的关系。通过采用外生的地理因素,本文捕捉到了内生国际贸易变量,并计算了各省贸易变量的工具变量。面板2SLS和IV-GMM估计的结果显示控制住其他变量,贸易并没有显著性促进中国人力资本的积累。因此,实现产业结构的优化升级,改善贸易结构,有利于促进中国人力资本的积累和经济的发展。