Intellectual property rights, multinational firms and economic growth

This paper develops a model of North-South trade with multinational firms and economic growth in order to analyze formally the effects of stronger intellectual property rights (IPR) protection in developing countries. In the model, Northern firms invent new higher-quality products, multinational firms transfer manufacturing operations to the South and the Southern firms imitate products produced by multinational firms. It is shown that stronger IPR protection in the South (i.e., the adoption and implementation of the TRIPs agreement) leads to a permanent increase in the rate of technology transfer to the South within multinational firms, a permanent increase in R&D employment by Southern affiliates of Northern multinationals, a permanent decrease in the North-South wage gap, and a temporary increase in the Northern innovation rate.     

Heterogeneity of southern countries and southern intellectual property rights policy

Abstract.  We develop a model with one innovating northern firm and heterogeneous southern firms that compete in a final product market. We assume southern firms differ in their ability to adapt technology and study southern incentives to protect intellectual property rights. We find that, in a non-cooperative equilibrium, governments resist IPR protection, but collectively southern countries benefit from some protection. We show that, in general, countries with more efficient firms prefer higher collective IPR protection than those with less efficient firms. Given the aggregate level of IPR protection, it is more efficient if the more efficient countries have weaker IPR protection.     

Trade‐related intellectual property rights: industry variation and technology diffusion

Abstract This paper assesses how a strengthening of intellectual property rights (IPRs) affects international technology diffusion by altering the volume of high‐tech exports into developing countries. A simple North‐South general equilibrium model in which industries differ in their imitation rates is developed. Stronger IPRs encourage Northern firms in a wider range of industries to start exporting. Exports in industries with the highest risk of imitation rise, while exports in other industries may fall. More technology diffuses to the South because new high‐tech products are introduced in the Southern market. This works against the reduction in technology diffusion caused by limited imitation.     

The composition of foreign direct investment and protection of intellectual property rights: Evidence from transition economies

While existing literature examined the impact of intellectual property protection on the volume of foreign direct investment (FDI), little is known about its effect on the composition of FDI inflows. This paper addresses this question empirically using a unique firm-level data set from Eastern Europe and the former Soviet Union. It finds that weak protection deters foreign investors in technology-intensive sectors that rely heavily on intellectual property rights. Moreover, the results indicate that a weak intellectual property regime encourages investors to undertake projects focusing on distribution rather than local production.     

The microeconomic determinants of emigration and return migration of the best and brightest: Evidence from the Pacific

A unique survey which tracks worldwide the best and brightest academic performers from three Pacific countries is used to assess the extent of emigration and return migration among the very highly skilled, and to analyze, at the microeconomic level, the determinants of these migration choices. Although we estimate that the income gains from migration are very large, not everyone migrates and many return. Within this group of highly skilled individuals the emigration decision is found to be most strongly associated with preference variables such as risk aversion and patience, and choice of subjects in secondary school, and not strongly linked to either liquidity constraints or to the gain in income to be had from migrating. Likewise, the decision to return is strongly linked to family and lifestyle reasons, rather than to the income opportunities in different countries. Overall the data suggest a relatively limited role for income maximization in distinguishing migration propensities among the very highly skilled, and a need to pay more attention to other components of the utility maximization decision.     

International migration and “educated unemployment”

This paper provides a novel explanation of “educated unemployment”, which is a salient feature of the labor markets in a number of developing countries. In a simple job-search framework we show that “educated unemployment” is caused by the prospect of international migration, that is, by the possibility of a “brain drain”. In addition, the analysis shows that a developing country may end up with more educated workers despite the brain drain and educated unemployment.     

Rent-seeking activities and the 'brain gain' effects of migration

Abstract .  This paper studies migration and rent-seeking activities in a framework of heterogeneous ability. It is shown that, despite the depletion of productive resources known as the 'brain drain,' the possibility of migration could sufficiently reduce participation in rent-seeking activities and increase participation in productive activities such that the net effect of migration is a 'brain gain.' Moreover, the possibility of migration that sufficiently enlarges the relative reward to ability in the productive sector could result in qualitative improvements in the allocation of talent.     

The impact of the credit crisis on poor developing countries: Growth,worker remittances,accumulation and migration

We show that the credit crisis of OECD countries has a negative impact on the growth of the world economy according to an error-correction model including China and Australia. This causes negative growth effects in poor developing countries. The reduced growth has a direct or indirect impact on the convergence issue, aid, remittances, labour force growth, investment and savings, net foreign debt, migration, tax revenues, public expenditure on education and literacy. We estimate dynamic equations of all these variables using dynamic panel data methods for a panel of countries with per capita income below $1200 (2000). The estimated equations are then integrated to a dynamic system of thirteen equations for thirteen variables that allows for highly non-linear baseline simulations for these open economies. Then we analyze the effects of transitional shocks as predicted by the international organizations for the OECD and world growth for 2008 and 2009. Whereas growth rates return to the baseline scenario until 2013 with overshooting for China and Australia, the level of the GDP per capita shows permanent effects, which are positive only for China. In the poor countries, investment, remittances, savings, tax revenues, public expenditure on education, all as a share of GDP as well as literacy and the GDP per capita, are reduced compared to the baseline until 2087 where our analysis ends. Investment, emigration and labour force growth start returning to baseline values between 2013 and 2017. GDP per capita and tax revenues start returning to baseline around 2040. Education variables do not return to baseline without additional effort.     

Return migration and the transfer of gender norms: Evidence from the Middle East

Does international return migration transfer gender norms? Focusing on Jordan, an Arab country where gender inequality and emigration rates are high, this paper exploits unique data in which detailed information on female empowerment allows us to construct several measures of social norms in Jordan on the role of women, female freedom of mobility, and female decision-making power. Controlling for both emigration and return migration selections, we find that women with a returnee family member are more likely to bear traditional gender norms than women in households with no migration experience. Further analysis shows that results are driven by returnees from more conservative Arab countries, suggesting a transfer of conservative norms from destinations with highly traditional gender roles. We also show the implications of our results beyond perceptions for several economic and development outcomes, such as female labour force participation, education and fertility.     

On the intensity and balance of intra-European migration

This paper seeks to examine changes in the balance of intra-European migration during the years 1985-99. We construct two indices for measuring intra-European migration between each member state and the rest of the EU15. Non-parametric tests indicate that there is a close and increasing relationship between real GDP per capita and the pattern of net migration within Europe. Further, statistical tests suggest that, on the whole, intra-European migration has actually become more balanced after the implementation of the Schengen agreement in 1995. A Chow test also reveals that 1995 is the break-year after which levels of intra-European migration shifted upwards.     

Return migration, human capital accumulation and the brain drain

In this paper we present a model that explains migrations as decisions that respond to where human capital can be acquired more efficiently, and where the return to human capital is highest. The basic framework is a dynamic Roy model in which a worker possesses two distinct skills that can be augmented by learning by doing. There are different implicit prices, in different countries and different rates of skill accumulation. Our analysis contributes to the literature on the selection of immigrants and return migrants by offering a richer framework that may help to accommodate selection of emigrants and return migrants that are not immediately compatible with the one-dimensional skill model. Our analysis also has implications for the debate on brain drain and brain gain. In the two skills model presented here, return migration can lead to a mitigation of the brain drain, or even the creation of a “brain gain”, where those who return bring the home country augmented local skills.     

Labor market rigidity and productivity growth in a model of innovation-driven growth

Empirical studies investigating the relationship between productivity performance and labor market rigidity have generated a negative result. In this paper we try to provide a theoretical explanation for this empirical result. In doing so, we construct a no-shirking model of innovation-based growth and investigate the steady-state impact of a set of active labor market policies aimed at reducing labor market rigidity and knowledge mismatch generated by innovations. We find that, while enhancing job finding activity definitively improves the equilibrium growth-unemployment mix of the economy, reducing the knowledge mismatch of innovation through active measures is less effective in reducing the equilibrium unemployment and improving growth.     

Testing the ‘brain gain’ hypothesis: Micro evidence from Cape Verde

Does emigration really drain human capital accumulation in origin countries? This paper explores a unique household survey designed and conducted to answer this research question. We analyze the case of Cape Verde, a country with allegedly the highest ‘brain drain’ in Africa, despite a marked record of income and human capital growth in recent decades. We propose the first explicit test of ‘brain drain’ arguments, according to which the prospects of own future migration can positively impact educational attainment. Our most conservative estimates using individual specific variation in economic conditions at the destination indicate that a 10 pp increase in the probability of own future migration improves the probability of completing intermediate secondary schooling by nearly 4 pp for individuals who do not migrate before age 16. These findings are robust to the choice of instruments and econometric specification. Counterfactual simulations point to significant human capital gains from lowering migration barriers.     

The propensity to return: Theory and evidence for the Italian brain drain

Return migration is the positive counterpart of the brain drain. The effects of the brain drain in Italy could be negative: this paper shows that highly skilled migrants decide not to return to their native country.     

The mover’s advantage: The superior performance of migrant scientists

Migrant scientists outperform domestic scientists. The result persists after instrumenting migration for reasons of work or study with migration in childhood to minimize the effect of selection. The results are consistent with theories of knowledge recombination and specialty matching.     

Worker remittances,migration, accumulation and growth in poor developing countries: Survey and analysis of direct and indirect effects

A broad but brief survey of the literature on remittances and growth shows that indirect effects are only included via interaction terms. Then, we regress data for migration, worker remittances, savings, investment, tax revenues, public expenditure on education, interest rates, literacy, labor force growth, development aid and GDP per capita growth on migration, remittances and other variables for a panel of countries with income below $1200. The estimated dynamic equations are integrated to a system used for baseline simulations. Comparison with the counterfactual policy simulations ‘only 50% remittances’ or ‘no net migration anymore’ shows that the total effect of remittances on levels and growth rates of GDP per capita, investment and literacy are positive, and that of net migration is negative for literacy and investment but positive for growth.     

Employment protection, international specialization, and innovation

We develop a model to analyze the implications of firing costs on incentives for R&D and international specialization. The key idea is that countries with a rigid labor market will tend to produce relatively secure goods, at a late stage of their product life cycle. Consequently, their researchers tend to specialize in ‘secondary innovation’ which improves existing products, rather than ‘primary innovation’ which introduces new products. This is roughly consistent with the observed pattern of R&D in Europe versus the U.S. Employment protection does not necessarily harm the country where it prevails, but typically reduces world welfare and the world number of goods.     

Selection and network effects—Migration flows into OECD countries 1990-2000

This paper presents empirical evidence on immigration flows into the OECD countries during the period 1990-2000. Our results indicate that network effects are strong, but vary between different groups of welfare states and between countries according to the type of immigration policy being applied. Network effects seem to be less important in the Nordic countries which also seem to attract immigrants from the lowest income level source countries. We do not find clear evidence that selection effects measured by migration flows being sensitive to differences in public social expenditures have had a major influence on the observed migration patterns until now. This may partly be explained by restrictive migration policies which may have dampened the potential selection effects.     

Estimating labour supply elasticities under rationing: a structural model of time allocation behaviour

Abstract .  This paper presents a structural model of the allocation of time to various non-market activities and market work by couples and single men and women. Parameters are estimated using a sample taken from the UK 2000 Time Use Survey. Own-wage effects are found to be positive for both men and women and are larger for cohabiting individuals than for singles. The presence of young children leads to a much larger increase in the time spent in home production by women than by men. However, the presence of young children causes men to increase their total time spent working by more than women.     

Trade liberalization and unemployment: Theory and evidence from India

A widely held view among the public is that trade liberalization increases unemployment. Using state and industry-level unemployment and trade protection data from India, we find no evidence of any unemployment increasing effect of trade reforms. In fact, our state-level analysis reveals that urban unemployment declines with trade liberalization in states with flexible labor markets and larger employment shares in net exporter industries. Moreover, our industry-level analysis indicates that workers in industries experiencing greater reductions in trade protection were less likely to become unemployed, especially in net export industries. Our results can be explained within a theoretical framework incorporating trade and search-generated unemployment and some institutional features of the Indian economy.