The impact of thin‐capitalization rules on the location of multinational firms’ foreign affiliates

This paper examines how restrictions on the tax deductibility of interest cost affect location choices of multinational corporations (MNCs). Many countries have introduced so‐called thin‐capitalization rules (TCRs) to prevent MNCs from shifting their tax base to countries with lower tax rates. As of 2012, in our sample of 172 countries, 61 countries have implemented a TCR. Using information on nearly all new foreign investments of German MNCs, we provide a number of new and interesting insights in how TCRs affect the decision of where to locate foreign entities. In particular, stricter TCRs are found to negatively affect location choices of MNCs. Our results include estimates of own‐ and cross‐elasticities of location choice and also novel results on the relative importance of tax base vs. tax rate effects. We finally provide estimates for different uncoordinated as well as coordinated policy scenarios.     

Technology and jobs

The article investigates the employment effects of technology. A set of models is developed where changes in industry-level employment are explained by changes in demand, wages, by the diffusion of innovation and its market impact. The empirical test uses data from two EU innovation surveys – CIS (Community Innovation Survey) 2 (1994–1996) and CIS 3 (1998–2000) – on 10 industrial sectors and 10 European countries. The results of the models show the importance to discriminate between different strategies for innovation, between high- and low-innovation industries, and between short-term labour market effects and the long-term impact of structural change.     

Explorations: Time-use surveys in the south

Abstract

Time-use surveys show how individuals spend their time during the day or week, which provides evidence of the gendered division of labor within households and the interdependence of women's and men's paid and unpaid work. Time-use experts in the South face similar challenges to those working in other countries, but they also have to come to terms with the restrictions faced in less developed contexts – notably higher illiteracy rates and limited statistical budgets. These Explorations bring together contributions from three experts on time-use survey design and administration working in three diverse Southern regions to highlight the ongoing processes of learning-by-doing and of building local expertise in these regions. Their discussion of methodological and logistical issues holds particular relevance for developing countries moving toward the implementation of time-use surveys. It also bears on more general feminist concerns regarding the classification and measurement of unpaid care.     

What makes a joint venture: Micro‐evidence from Sino‐Italian contracts

This paper provides new contract-level evidence on control rights allocation in order to define what makes a joint venture. Property rights theory of the firm identifies circumstances under which joint control alleviates investment distortions due to contract incompleteness. We compare predictions of the theoretical literature with actual governance structures of Sino-Italian joint ventures, as reported in a questionnaire submitted to the entire population of Italian enterprises operating in China. With an exceptional response rate of 60%, our evidence confirms most of the theoretical predictions and helps select among competing approaches to model joint ventures.     

International outsourcing versus FDI under contractual incompleteness

This paper empirically analyses the boundaries of a large sample of Italian multinational enterprises, with firm-level data from Capitalia, AIDA and Centrale dei Bilanci. Within the broad array of feasible contracts in a foreign country, we focus on the trade-off between international outsourcing and foreign direct investment (FDI), in a context of contractual incompleteness. Probit estimates reveal that Italian enterprises operating in highly relation-specific environments are more prone to international outsourcing than FDI, consistently with recent theoretical contributions on the topic. Results are robust to different specifications and alternative measures of contractual incompleteness and international outsourcing.     

Do droughts have long-term effects on water consumption? Evidence from the urban area of Barcelona

This article examines the long-term effects of droughts on water consumption using data of municipalities of the urban area of Barcelona. Two important characteristics of the sample of municipalities are the relatively low water consumption in the pre-drought period and the fact that indoor uses are clearly predominant. Controlling for prices, income and various socio-demographic factors, we find a reduction in water consumption not only during the drought episode but also in subsequent periods. These permanent reductions in water use may be explained by household behavioural changes, technological changes or structural water policy changes.     

Bureaucracy transcended? New patterns of employment regulation and labour control in the international automotive industry

Contemporary changes in patterns of work and management are alleged to have given rise to the post-modern organisation and the diminishing importance of traditional bureaucracy. This paper is concerned with the changing nature of labour control in new 'multi-enterprise' settings in the international automotive sector. Rather than eliminating bureaucracy, the tools of industrial bureaucracy are becoming more sophisticated.     

Bargaining Coalitions in the WTO Agricultural Negotiations

This paper aims to understand the structural features of bargaining coalitions in the Doha Round of the WTO. We provide an empirical assessment of the preferences of each negotiating actor considering general economics indicators, development levels, structure of agricultural sectors and trade policies. Bargaining coalitions are analysed by grouping countries using a cluster analysis procedure. The clusters are compared with existing coalitions in order to assess their degree of internal homogeneity as well as their common interests. Such a comparison allows the identification of possible ‘defectors’, i.e. countries that, according to their economic conditions and policies, seem to be relatively less committed to the positions of the coalition they join. In addition, the ex‐post analysis of the counterfactual coalitions sheds light on the ‘distance’ between different coalitions as well as between individual countries and the best alternative group available. Empirical results confirm our research hypothesis: clusters of structurally homogeneous countries well represent existing bargaining coalitions. In particular, the G‐20 shows a high degree of internal coherence, which, in our framework, may provide a clue to the ‘sustainability’ of this coalition and to its relevance in the Doha Round negotiations.     

Supplier selection using a multi-criteria decision aid method

An ever-increasing trend in today's industrial firms is to exploit outsourcing for those products and activities deemed to be outside the company's core business. Given the financial importance and the multi-objective nature of supplier selection decision, in this paper an effort is made to highlight those aspects that are crucial to process qualitative and quantitative performance measures. In this paper, the contribution of a multi-criteria decision aid method ( ) to such problems is investigated, together with how to allow for a simultaneous change of the weights (importance of performance criteria), generating results that can be easily analysed statistically, performing an innovative sensitivity analysis. By way of example, the model is applied to a mid-sized Italian firm operating in the field of public road and rail transportation. The whole suppliers selection model presented ( techniques plus high-dimensional sensitivity analysis) seems to be a useful additional tool inside the final choice phase of a supplier selection process. Finally, potential issues for future research are presented.     

New evidence on the firm-university linkages in Europe. The role of meritocratic management practices

ABSTRACT

This paper investigates the determinants of university-industry links in five European countries (France, Germany, Italy, Spain and the UK), using internationally comparable firm-level data for the period 2007–2009. Besides the usual firm-specific variables, it examines the role of meritocratic management practices in firms’ decisions to collaborate in R&D. Firm innovative efforts, the export status and the R&D government support are positively related to business-university links in almost all countries, human capital and firms’ size in two out of five countries under scrutiny, while belonging to science-based sectors does not seem to play a significant role in all countries but Italy. Importantly, we find that meritocratic managerial practices positively affect the firm-university nexus in Germany, France and the UK, while meritocracy does not appear to enhance businesses’ R&D collaboration in Italy and in Spain.