How Large Is International Trade’s Effect on Economic Growth?

The estimated static welfare gains from international trade are very small, on the order of one percent of GDP. The case for free trade is therefore increasingly linked to trade’s apparent positive effects on economic growth. But how large are these growth effects? The vast empirical literature has emphasized the statistical significance, not the economic significance, of the trade‐growth relationship. This survey’s re‐examination of the empirical literature focuses on the size of the relationship between trade and growth. Our survey reveals that the many empirical studies are surprisingly consistent in terms of the size of the relationship: A one percentage point increase in the growth of exports is associated with a one‐fifth percentage point increase in economic growth. Given the power of compounding, the effect of trade on growth is very important for human welfare.     

Die nächste Ausgabe von Controlling &; Management erscheint am 12.06.07

Vorschau / 3/07

Die n?chste Ausgabe von Controlling & Management erscheint am 12.06.07     

Was tun auf dem Strommarkt? Weichenstellungen für mehr Wettbewerb!

Im November 2007 befasste sich die Wirtschaftsministerkonferenz mit der Frage, ob im Gesetz gegen Wettbewerbsbeschr?nkungen die M?glichkeit eines Zwangsverkaufs von Kraftwerken aufgenommen werden sollte. Sind derart drastische Vorschl?ge notwendig und ad?quat, um die Strompreise zu senken? Kommt es nicht vielmehr auf eine Ausweitung des Angebots an? Hendrik Hering, 43, ist Minister für Wirtschaft, Verkehr, Landwirtschaft und Weinbau des Landes Rheinland-Pfalz.     

Improving performance of corporate rating prediction models by reducing financial ratio heterogeneity

We introduce a new approach to improve the performance of rating prediction models for multinational corporations. In this segment, the low number of defaults poses a challenge, as it prevents rating models to be constructed for individual industry sectors or regions. We show that reducing group-level heterogeneity in financial ratios results in a rating prediction model with better performance than both unadjusted models and models adjusted by including industry dummies or other simpler procedures. Our approach fills a gap in cases where a limited dataset does not permit the construction of separate models for individual industries or regions.     

South Korean social enterprises and their networks: On their organizational linkages at the interstice between the third,public, and corporate sectors

Social enterprise and government interactions have become an increasingly prominent theme in the literature on social entrepreneurship, due in part to the pressures confronting the welfare state and the rise of precarious work. This analysis is motivated by the efforts of the government of South Korea to incubate social enterprises since 2007. The constant scaling of the South Korean government's monitored social enterprise certification scheme had led to the registration of approximately 3440 social enterprises as of May 2021. This study documents the interorganizational network behaviour of these enterprises relative to the public sector, corporate sector, and civil society and the social economy. A cluster analysis approach is utilized to analyse network data obtained from a self-administered survey of 103 government-certified social enterprises operating in South Korea. We find that a sizeable number of government-certified social enterprises have diversified networks, as opposed to public sector-centric networks, although such social enterprises are in the minority. This study references social innovation cluster theory to argue that the aforementioned scheme has attained a partial degree of success in facilitating the emergence of social enterprises with diversified networks.However, the majority remain quasi-governmental implementers of government contracts and, generally, do not engage in networking.     

Transfers in the gravity equation

This study integrates development aid into a theoretically founded structural gravity model that considers primary and secondary effects of aid as an income transfer and as a bilateral trade cost determinant. We identify the parameters of our model using a two‐stage approach that includes a state‐of‐the‐art Poisson pseudo‐maximum likelihood gravity estimation for a sample of 132 countries over the period 1995 to 2012. The main findings indicate that bilateral aid only increases bilateral trade for countries that do not have a common language, a past colonial relationship or an RTA. On average, 1 USD of additional foreign aid from all donors increases recipients’ net imports by around 0.36 USD. Our comparative statics indicate that donors experience a reduction in real consumption due to aid and recipients an increase. We also analyze the effect on third countries. The modelling framework also applies to the study of other transfers such as remittances.