Papers Received in 2002
International Technology Diffusion through Imports and its Impact on Economic Growth
J. Crespo, UCM and FUNCAS and EEG
C. Martin, UCM and FUNCAS and EEG
F. J. Velazquez, UCM and FUNCAS and EEG
Abstract: This paper explores the role of imports as a mechanism of transmission of international technology spillovers and its significance for the growth of the OECD countries. For this purpose we estimate a version of the growth model proposed by Benhabib and Spiegel (1994), which includes two main modifications in order to better specify the nature of international knowledge diffusion. The first is the inclusion of the R&D capital stock into this framework. The second consist of using a direct measurement of international technology spillovers instead of using per capita GDP gap in respect to the leader country as approach to it. Our results reveal that international technology spillovers transmitted through imports have had a favourable influence on the economic growth of the OECD countries. However, they show the predominant role of the domestic human and R&D capital endowments in economic growth.
Keywords: Growth, Knowledge, OECD, Spillovers, Technology, Trade
Download paper; Contact address: ecap2z3@sis.ucm.es
Foreign Lobbying in the U.S. - a Latin American Perspective
A. Jobst, London School of Economics
Abstract: The following paper purports to analyzing the nature of lobbying by Latin American, and to some extent, Caribbean countries and its impact on trade policy formation in the U.S. from 1990 to 2000. In line with recent literature, which endogenizes lobbying as a function of policy making, we derive a highly significant relationship between the degree of marginal lobbying for export promotion, on the one hand, and the first moment of changes in export and import growth by Latin American and Caribbean countries. Despite the data limitations involved in the two-stage least-squares regression model used in the course of this paper, we confidently derive robust estimates to support viable recommendations as to the implementation of sustainable lobbying policy in the U.S.
Keywords: Lobbying, Trade Barrier, Trade Policy, Political Economy
Download paper; Contact address: andy@jobst.info
Does North-South Integration affect Multinational Firms' Strategies?
S. Montout, TEAM, University of Paris1 Panthéon Sorbonne and CNRS
H. Zitouna, TEAM, University of Paris1 Panthéon Sorbonne and CNRS
Abstract: Regional integration implies a gradually fall in transaction costs influencing foreign firms' strategies and inward foreign direct investment. Moreover, if it occurs between countries in different stages of development, it has specific outcomes. In this paper, wepresent a theoretical model distinguishing between FDI and/or exports motives. Our results suggest that tariff jumping and export-platform motives depend on a trade-off between transaction and fixed costs in addition to wage differences. In addition, local firms may affect foreign ones in their strategic behavior by reducing the market accessibility advantages.
Keywords: Regional integration, FDI, multinationals
Download paper; Contact address: hzitouna@univ-paris1.fr
Tariffs, Transport Costs and the WTO Doha Round: The Case of Developing Countries
M. Busse, HWWA - Hamburg Institute of International Economics
Abstract: The WTO Doha Round of multinational trade negotiations is labelled "development round" to highlight the fact that progress could be achieved through the enhanced integration of the poor countries into the world economy. Since the trade agenda focuses to a large extent on the level of direct and indirect trade barriers as well as other aspects of trade and competition policy, an important aspect of the relative trade performance of developing countries has been neglected somewhat. This paper will argue that, in addition to trade barriers, other trade costs, such as communications and transport costs, have to be taken into account as well. These other costs can be significantly higher in developing countries, which impedes their successful integration into world markets.
Keywords: Transport Costs, Developing Countries, WTO Doha Round
Download paper; Contact address: busse@hwwa.de
Anti-Dumping versus Anti-Trust: Trade and Competition Policy
I. Wooton, University of Glasgow and CEPR
M. Zanardi, University of Glasgow
Abstract: This chapter surveys the use of anti-dumping (AD) and anti-trust (AT) policies in encouraging and maintaining competition in the international marketplace. The recent surge in the use of AD is documented and the debate on AD versus AT is analyzed, with a particular focus on the experiences of various Regional Trade Agreements. Some of the possible solutions to the debate are evaluated, taking as granted the political constraint that AD cannot be abandoned without an alternative policy being put in its place.
Keywords: Antidumping, antitrust, competition policy
Download paper; Contact address: M.Zanardi@socsci.gla.ac.uk
Effects of Tariffication: Tariffs, Quotas and VERs under Monopolistic Competition
J.G. Jørgensen, University of Southerns Denmark
P.J.H. Schröder, DIW Berlin
Abstract: Recent rounds of GATT and later WTO have advocated widespread tariffication, meaning that existing non-tariff barriers be converted into import equivalent tariffs. From an economic point of view, the effects of such tariffication are not entirely clear. The paper presents a general equilibrium model with monopolistic competition to examine the welfare effects of tariffication. The ranking of pre- and post-tariffication welfare depends crucially on the nature of the initial trade barrier and the tariff tool applied. Tariffication using a specific (an ad valorem) tariff results in the same (a reduced) welfare level compared to an initial quota, whereas welfare is increased (the same) compared to an initial VER.
Keywords: Trade policy, tariffication, specific tariff, ad valorem tariff, quota, VER
Download paper; Contact address: pschroeder@diw.de
Much ado about nothing? Do domestic firms really benefit from foreign direct investment?
H. Gorg, University of Nottingham
D. Greenaway, University of Nottingham
Abstract: Many governments offer significant inducements to attract inward investment, motivated by the expectation of spillover benefits. This paper reviews the possible sources of such spillovers and the empirical evidence for their existence in developing, developed and transitional economies. Although theory can identify a range of possible spillover channels, empirical support is hard to find. In the light of this, the paper concludes with a review of policy aspects.
Keywords: Foreign Direct Investment, Spillovers, Investment Incentives
Download paper; Contact address: holger.gorg@nottingham.ac.uk
Spillovers from foreign firms through worker mobility: An empirical investigation
H. Gorg, University of Nottingham
E. Strobl, University College Dublin
Abstract: While
there has been a large empirical literature on productivity spillovers from
foreign to domestic firms this literature treats the channels through which
these spillover effects work as a black box. This paper attempts to fill
this gap in the literature. Our results suggest that firms which are run
by owners that worked for multinationals in the same industry immediately
prior to opening up their own firm have higher productivity growth than other
domestic firms. This suggests that these entrepreneurs bring with them some
of the knowledge accumulated in the multinational which can be usefully employed
in the domestic firm. We do not find any positive effects on firm level productivity
if the owner had experience in multinationals in other industries, or received
training by multinationals.
Keywords: Foreign Direct Investment, Spillovers, Worker Mobility, Training
Download paper; Contact address: holger.gorg@nottingham.ac.uk
Footloose Capital, Market Access, and the Geography of Regional State Aid
G.I.P. Ottaviano
Abstract: The global welfare implications of home market effects in trade models with imperfect competition are little understood. This paper proposes a simple model in which such implications can be easily analyzed. It shows an overall tendency of imperfectly competitive sectors to inefficiently cluster in locations that offer market access advantages. The more so the stronger the market power of firms as well as the intensity of increasing returns to scale and the lower the trade costs. As such features are likely to differ widely across sectors, those results provide theoretical ground to the promotion of regional policies that are also sector-specific and not only region-specific as currently in the EU.
Keywords: economic integration, specialization, home market effect, regional disparities, regional policy
Glocalisation, Foreign Direct Investment and Regional Development Perspectives: Empirical Results for West German Regions
H. Knödler, Speyer
U. Albertshauser, Speyer
The present paper examines the economic development perspectives of the manufacturing sector of 31 major West German regions in the process of globalisation. Public statistics do not provide FDI data on a regional basis. Therefore our study was based on indicators based on the data from the INDAT-file which gives information about some 6,500 West German manufacturing firms in 1986, 1990 and 1996. The paper draws a stylised picture of the regional structure of West German FDI involvement in the manufacturing sector. The present participation in glocalisation benefits and the mid term development perspectives showed that Hamburg, Darmstadt and Oberbayern belong to the winners of glocalisation. In order to evaluate the long term development perspectives of the industrial cores we checked which regions had far above average access to the future growing areas of the world through FDI outflows. It turned out, that Oberbayern, Stuutgart and Hamburg face the best long term perspectives. Between 1986 and 1996 disparities between the investigated regions with regard to their integration in the global division of labour through FDI-flows have decreased, especially between peripheral regions.
Keywords: Regional Development, Agglomeration, Glocalisation, Manufacturing, Foreign Direct Investment
Download paper; Contact address: Lammers@hwwa.de
The trade impact of the integration of the Central and Eastern European Countries on the European Union
C. Martin, European Economy Group-UCM and FUNCAS
J. Turrion, European Economy Group-UCM and FUNCAS
Abstract: This paper analyses the determinants of trade patterns between the CEECs and the OECD countries since the latter began their processes of transition and opening-up within the framework of the Association Agreements with the EU, with the ultimate aim of helping to anticipate the trade impact of their accession to the EU. To this end, we estimate an empirical model for a set of countries formed by the EU states, the CEECs and -by way of a control area- the other members of the OECD. Thus, we obtain new evidence about the determinants of the trade shares of the countries analysed. In addition, by using the corresponding dummies, we confirm that the Association Agreements have led to a preferential expansion of the exchanges between the EU and CEECs.
Keywords: European Integration, Trade, Central and Eastern European Countries (CEECs)
Download paper; Contact address: ecap2z2@sis.ucm.es
Time series analysis of inward foreign direct investment and imports in Spain
M.T. Alguacil, Universidad Jaume I
V. Orts, Universidad Jaume I
Abstract: In this paper, we investigate the linkages between inward foreign direct investment and imports in Spain. We show that FDI in this country has been trade-oriented, encouraging greater imports. A cointegration analysis in a multivariate VAR model is applied for Granger temporal causality testing. The strength and direction of the causal relationship are shown through the dynamic variance decomposition and the impulse response technique.
Keywords: inward foreign direct investment; imports; multivariate cointegration; Granger causality
Download papers; Contact address: alguacil@eco.uji.es
A Comparative Analysis of Elasticities in the European Union External Trade
M. Cantavella, University of Castellón
A. Cuadros, University of Castellón
I. Fernández, University of Valencia
C. Suárez, University of Castellón
Abstract: This paper aims to test for long- and short-run differences in the elasticities of aggregate demand of MERCOSUR and NAFTA for European exports during the 1967-1995 period. Based on the imperfect substitutes model proposed by Goldstein and Khan (1985), the long-run results provide consistently enough evidence about the existence of differences in income and price elasticities with respect to these two regionally integrated areas’ demand for European exports. The error correction model appears to predict the adjustment of variables to long-run equilibrium reasonably well.
Keywords: European Union, MERCOSUR, NAFTA, export demand equation.
Download the paper; Contact address: cuadros@eco.uji.es