Trade liberalization and the Mexican steel industry

The impact of the North American Free Trade Agreement (NAFTA) on the competitive positions of Mexican and U.S. steel producers is investigated employing a translog cost function with four inputs (capital, labor, domestic intermediate goods, and foreign intermediate goods) to examine scale characteristics and input substitution in Mexican steel production. Results are consistent with diseconomies of scale at high levels of output and with substitute relationships between all input pairs except labor and domestic intermediate goods. Thus, output growth will likely result in cost reductions for Mexican producers only if the industry reaps significant benefits from substitution of foreign inputs for domestic. Recent increases in Mexico's imports of finished steel have much exceeded those of steel industry inputs, and it therefore does not seem likely that a Mexican cost advantage over steel producers in the United States will soon emerge as a result of economies of scale.     

A ray of hope? Another look at the Italian textile industry

Despite increasing competition from newly industrializing countries, Italy’s textile industry has continued to be an important contributor to the domestic economy. Many observers attribute this resilience to the industry’s focus on quality. Here, we take note of that view but also examine production and cost relationships to explore the existence of returns to scale and the interrelationships among inputs to gain additional insights about the future prospects for this industry. The findings are consistent with constant returns to scale and a substitute relationship between all input pairs except for domestic capital and foreign intermediate goods. The results also suggest some increasing flexibility in the labor market, perhaps including informal sector arrangements, greater responsiveness of labor demand to the price of capital, and more international production sharing arrangements. An increasing elasticity over time of the demands for domestic capital and domestic intermediate goods with respect to the price of foreign substitutes was also observed. Since further economies of scale do not exist, maintaining the Italian textile industry’s reputation for outstanding quality will likely be an important survival strategy for some products. For others, production sharing may be necessary to maintain international competitiveness.     

Globalization challenges for the Mexican textile industry

The Doha round and full integration of the textile industry into the GATT have the potential to dramatically affect the Mexican textile industry. This study investigates the nature of scale economies and input relationships for that industry using a cost function with capital, labor, domestic intermediate goods, and imported intermediate goods as inputs. The findings suggest that significant economies of scale exist, and that most inputs are substitutes, although for some years some inputs are complements. Increased domestic input sensitivity to the price of foreign inputs may present challenges for the industry as it struggles to be internationally competitive.     

FDI,Industry Heterogeneity and Employment Elasticity in China

We investigate the different impacts of foreign direct investment (FDI) on employment elasticity with China's firm level data from 1998 to 2007. Our analysis shows that the inclusion of FDI does significantly affect firms' employment elasticity when facing wage, capital and output shocks. These effects vary dramatically across industries with different factor intensities and export status. Specifically, we find that non‐exporters with FDI tend to increase employment elasticity more than exporters when wage, capital input or output changes. However, FDI firms that are engaging in labor‐intensive production tend to have larger output and capital input elasticity of employment while smaller wage elasticity of employment. Our findings help to explain the contradicting results in existing literature and provide important references for China's policy makers to design proper industry policies towards FDI.     

Factor analysis of demand growth for information technology input in Japan

The purpose of this article is to decompose demand changes for factor input and explore the factor that information technology (IT) capital stock has largely increased in Japan. The Allen partial elasticities of substitution are calculated and the variations in factor input demand are broken down into two effects—price effect and output effect, using industry-level data. From an estimation of the total cost function, the following conclusions are presented. While IT capital stock and ordinary capital stock are complementary, IT serves as a substitute for labor. The factors influencing the high growth rate in IT capital stock are the decrease in the prices of IT and ordinary capital services, and the increase in the labor price, in addition to the output effect. On the other hand, labor demand declines due to both the downward rigidity of wages and the decrease in prices of two kinds of capital services.     

Measuring Price Responsiveness Under a Profit Maximization Framework

The distinguishing feature of the study is in using a globally flexible functional form that permits one to calculate different types of elasticities under both constant and variable output hypotheses. The Symmetric Generalized McFadden cost function alongwith the output supply condition form the basis of the econometric model. To measure inputsubstitutabilities, we used Alien-Uzawa, Morishima, and Shadow elasticities of substitution. Empirical results, based on 300 farm households from West Bengal, India, show that fertilizer is most price sensitive input. It is a gross substitute for manure and human labor but complement to bullock labor. Manure is a gross substitute for all the inputs whereas human labor is gross complement to bullock labor. Using the Morishima measure we find that the fertilizer and bullock labor are complements when the price of the latterchanges. Similar complementary relationship is found between bullock and human labor due to changes in the price of human labor. All other inputs are Morishima substitutes. The Shadow elasticity of substitution estimates indicate that all factors are substitutes. The estimate of returns to scale indicates the presence of diminishing returns to scale.

     

Scale properties and input substitution in mexican electrical equipment manufacturing

This paper investigates the existence of scale economies in the Mexican electrical equipment industry and estimates direct and cross price input demand elasticities using a translog cost function. Although the estimated value of the cost elasticity was consistent with economies of scale, it was significantly less than 1 only at a significance level slightly greater than 5 percent. The estimated cross price elasticities indicated that all of the inputs were substitutes. Nevertheless, while lower trade barriers under the North American Free Trade Agreement, ceteris paribus, may have a short-term adverse effect on the demand for labor in this industry by increasing imports of cheaper capital and intermediate goods, the relatively low values for E_LK and E_LM also support the conclusion that the impact on employment may be relatively small.This project was supported by the Faculty Development Leave Program at the University of Texas at San Antonio.     

Supply-side effects of strong energy price hikes in German industry and transportation

This article studies the short-term effects of energy price hikes on the supply of industrial goods and transport services including the repercussions on remuneration of input factors. The empirical analysis is based on a theoretical model, which assumes that the output good is produced by capital, labour and energy according to a nested production function framework where capital and energy are combined by a CES function at the intermediate stage. The output responses to energy price changes are derived, using estimates of the elasticity of substitution. While industry suffered more from the oil price shock of the late 1970s than from that of the early 1970s and the 2004?C2008 upsurge, evidence suggests the reverse for transportation. Regarding the impact on income distribution, both sectors share the same pattern, whereby in the recent episode, rising energy costs were more than compensated by falling unit labour costs, while in the 1970s, cost structures had been strained by an expansive wage policy in addition to the oil price shocks.     

珠三角制造业劳动力成本上升的正负效应分析

近年来,殊三角制造业劳动力成本迅速上升。劳动力成本上升可能对出口、物价、外资和就业方面带来影响,长期来看,这些负面影响都是可以克服的;劳动力成本上升带来的扩大内需、提升劳动力素质、促进产业结构升级和环境保护等正面效应更大。珠三角应该从提高利用外资的质量、促进产业结构升级和发展教育培训特别是职业教育等方面来应对劳动力成本的上升。     

我国商业银行推行战略成本管理的思考

随着我国商业银行股份制改造步伐的加快,各家银行为了保持竞争优势,在产品、服务、价格、质量、人才等方面展开了全方位的竞争。从成本角度来看,商业银行能否改变传统成本管理在某些方面的局限性,通过推行有效的战略成本管理,建立起本行的“低成本竞争优势”,已成为商业银行是否具有核心竞争力的关键因素之一。文章对传统成本管理与战略成本管理进行了差异比较,分析了战略成本管理的优势及商业银行推行战略成本管理的必要性,提出了现阶段商业银行推行战略成本管理的着力点,并需不断寻求特定条件下的最优模式。     

要素投入结构变化对中国农业增长影响的实证研究

从生产要素结构变动的角度,分析了1985年与2004年中国各省(市、区)农业生产要素投入比例的变化,然后借助计量经济模型检验了两个时期要素产出弹性的差异。结果显示:随着资源配置市场化的深入,土地与劳动力在农业生产中的投入比例呈下降趋势,而资本的投入比例日益上升。就产出弹性而言,2004年资本要素的产出弹性最大,劳动次之,土地的产出弹性最小。但与1985年相比,各要素的产出弹性变化趋势不同,其中资本与土地的产出弹性呈现幅度不等的下降,而劳动的产出弹性则是上升的。研究同时表明中国农业产出处于规模报酬递增阶段,近期内增加农业的资本投入对农业的增长仍具有重要意义。     

Input cost, capacity utilization and substitution in the short run

This article studies the behavior of input cost shares in an environment where labor is costly to adjust, materials can be adjusted at no cost and capital is fixed. A model relating cost shares with relative prices and adjustment costs is proposed, allowing joint estimation of the elasticity of substitution and the adjustment cost function, which is an unknown function of the capacity utilization. Based on a panel of more than 700 manufacturing firms, we find evidence of strong input share variations according to the degree of capacity utilization. The estimated shapes of adjustment costs curves of labor are in agreement with our theoretical model, and we obtain sensible elasticities of substitution estimates. Based on such estimates, we find evidence of a negative (positive) bias in downturns (recoveries) in conventional productivity growth measures.     

A Cost Function Analysis of the Australian Transportation Equipment Industry

This article investigates the existence of economies of scale and input cross and direct price elasticities of demand in the Australian motor vehicle industry. Our estimated cost elasticities were less than one (consistent with economies of scale), but not significantly less than one at the 10 per cent level for two versions of the model. However, the estimated cost elasticity was significantly less than one at approximately the 2.5 per cent level for a third. Thus, these results give some credibility to the infant industry argument for continued assistance to the Australian transportation equipment industry. A four-input model separating domestic and foreign intermediate goods inputs suggests that while restrictions on imported components may have given some short-run relief to the domestic components industry and increased the demand for labour domestically, they decreased the demand for domestic capital. Although the infant industry argument could support short-run protectionist policies for the industry, it appears that such policies regarding the Australian motor vehicle industry must be designed carefully with a specified phase-out period if long-term adverse results are to be avoided.     

European Integration and Production in the French Economy

Effects of greater European integration on the French economy are explored with an aggregate cost function. Input direct price elasticities are inelastic, but greatest (absolute value) for capital and lowest for imports. Cross-price elasticities suggest inputs are substitutes and are higher for domestic inputs than domestic input and imports pairs. As trade restrictions fall, effects on domestic input demand may increase as substitution elasticities rise. Inverse output supply price elasticities indicate domestic input prices are relatively important factors affecting consumption goods prices and import prices more important for investment goods. Thus, import price decreases may stimulate investment and growth. (JEL F14 , O10 , O12 )     

Foreign Debt,Foreign Direct Investment and Volatility

We investigate how foreign debt and foreign direct investment (FDI) affect the growth and welfare of a stochastically growing small open economy. First, we find that foreign debt influences the growth of domestic wealth by lowering the cost of capital, while FDI affects the country's welfare by providing an additional source of permanent income. Second, a decline in domestic investment may improve domestic welfare as FDI replaces the gap. Even when the welfare deteriorates, its magnitude is mitigated, leaving more room for discretionary fiscal policy. Third, a fiscal policy aimed to stabilize domestic output fluctuations needs to be conducted not to crowd out the welfare benefit of FDI too much. Fourth, an economy with both types of foreign capital experiences wider welfare swings by external volatility shocks than the one with foreign debt alone, while the welfare effects from domestic volatility shocks are mitigated. The welfare effects of fiscal shocks are much smaller with both types of foreign capital. Lastly, the first-best labor income tax covers the government absorption by the labor's share of total output, and the capital income tax covers the rest. Investment is penalized or subsidized depending on the social marginal cost-gain differential.     

The external debt contribution to output,employment, productivity and consumption: A model and an application to Chile

A foreign-capital-dependent investment equation is used to generate capital stock series, towards estimating a non-homogeneous variable elasticity of substitution production function. Debt contributions are derived from here. For Chile between 1960 and 1982, a negative correlation between foreign capital and domestic savings, and a low marginal product of capital, account for minimal debt contributions. However, factor price distortions, capacity under-utilization, preferences for current consumption, short planning horizons combined with huge debt, unrealistically rigid assumptions of previous work and model limitations, all suggest substantial direct consumption costs of default or repudiation, and through them, indirect output and income costs.     

Labor market structure and offshoring

We consider a two‐country, two‐sector model in which a firm’s offshoring decision depends on labor market rigidities that impose additional costs on the firm. Firms endogenously choose their organizational form considering their productivity level and organizational costs. The costs generated by labor market frictions play a key role in determining the benefits of each organizational structure, and thus helps determine the conditions under which a firm decides to offshore. There are three different types of equilibria depending on the relative levels of the domestic and foreign labor market costs and the price of the intermediate input. In all equilibria, a relative rise in the domestic labor market cost increases the share of firms that offshore, while decreasing domestic integration. Furthermore, an economy with offshoring has a higher welfare level and a lower unemployment rate than it would under autarky.     

Wages in a factor proportions model with energy input

This paper examines US wage adjustment in a structural vector autoregression of the factor proportions model with capital, labor, and energy inputs. Data cover the years 1949 to 2006. The wage adjusts to changes in input levels and output prices over six to eight years. Energy has a more robust wage impact than capital. The wage reacts weakly if at all to the falling price of manufactures and rising price of services during the sample period. Estimates relate directly to factor proportions theory suggesting robust substitution with labor in the middle of the factor intensity ranking.     

Estimating productivity and returns to scale in the US textile industry

In light of the textile industry's growing foreign competition, trade deficit and job loss, we estimate its productivity and efficiency for the period 1975–93 utilizing a variable elasticity of substitution production function. The results indicate that, despite job losses, the industry adjusted by increasing labor productivity and maintaining fairly stable profits. This performance does not warrant protectionist policies. However, with an elasticity of factor substitution less than one and decreasing, the impact of factor price increases could result in higher apparel prices and preference for cheaper imports. Furthermore, with an elasticity of capital output rapidly decreasing, significant technological improvements will be required to improve competitiveness since textile production is capital intensive. Recently revised rules on trade liberalization could increase competition in the industry. First version received: October 1999/Final version received: August 2000     

Size and Foreign Ownership Effects on Productivity and Efficiency: An Analysis of Turkish Motor Vehicle and Parts Plants

The levels and interactions of foreign connections and size may be important determinants of plant productivity and efficiency, particularly in a developing country such as Turkey. We explore the productive contributions of foreign ownership (FDI), emphasizing its linkages with plant size and input composition, for plants in the Turkish motor vehicle and parts industry. We evaluate the implications of FDI for overall productivity, input-specific contributions, and returns to scale, using OLS, stochastic production frontier, and quantile (size-specific) regression estimates of a translog production function model. We find significantly higher productivity of plants with foreign ownership, driven by a higher marginal product of labor, particularly for smaller plants. This effect augments the productive contributions of technical progress, capital intensity, and increasing returns to scale. FDI is also associated with a greater productive contribution of imported capital investment.