114 research outputs found
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Europe�s New Fiscal Rules
Full text linkEurope has put in place a new system of complex fiscal rules. These include the so-called �six pack� to upgrade the Stability and Growth Pact and a new Treaty incorporating the �fiscal compact�. Much of the discussion about the new rules has been procedural or theoretical. This paper shows what the rules will mean in practice under a medium-term scenario developed by the OECD. So far, fiscal consolidation has largely been driven by the recent wave of Excessive Deficit Procedures. Only once these commitments have been fulfilled will the new system of rules come into action. Its pillar will be the requirement to balance budgets in structural terms. The rules imply a tight fiscal stance over the coming years for many European countries by historical standards. Almost all countries will have to be as disciplined as the few countries that managed to make meaningful progress in tackling high debt levels in the past. Over the very long term, the rules imply extremely low levels of debt. Thus, the requirements are not likely to be permanent. The rules are complex. The methodology to calculate the structural balance has a number of weaknesses and discretion will be needed in implementing the rules
Lock-In, Vertical Integration, and Intra-group Sales: The Case of Eastern European Firms
Full text linkA key prediction of transaction cost economics is that the presence of relationship-specific assets increases the likelihood of vertical integration whenever contracts are incomplete. I explore a firm level data set on Eastern European and Central Asian firms, the BEEPS 2005 Survey provided by the EBRD and World Bank, to test this prediction. I measure lock-in by supplier substitution, and vertical integration by the presence of sales to the parent firm, and find the TCE prediction confirmed in the data: At the extensive margin, a firm whose customers are locked-in at medium or high levels is about 5 to 6 percent more likely to be vertically integrated than a firm whose customers are not locked-in. At the intensive margin, I find that high lock-in raises intra-group sales by about 2 percentage points. Being a large firm raises the probability of being vertically integrated significantly in itself, but does not alter the impact of lock-in on the probability of carrying out intra-group sales. Instead, operating in a non-manufacturing industry significantly reduces the probability of vertical integration, and also reduces the impact of high lock-in on the probability of having positive sales with a parent
Poverty and Natural Disasters: A Regression Meta-Analysis
No full textWith a meta-regression analysis of the existing literature on the impacts of disasters on households, we observe several general patterns. Incomes are clearly impacted adversely, with the impact observed specifically in per-capita measures. Consumption is also reduced, but to a lesser extent than incomes. Poor households appear to smooth their food consumption by reducing the consumption of non-food items; in particular health and education, and this suggests potentially long-term adverse consequences. Given the limits of our methodology and the paucity of research, we find no consistent patterns in long-term outcomes. We end by placing disaster risk for the poor within the discussions of sustainable development and future climatic change
Whether and How Network Structure Shapes the Value of Firm Capabilities?
Full text linkThis study examines how firm performance is driven jointly by individual firm-specific capabilities and the characteristics of networks in which firms are embedded. By using business groups in emerging economies as the organizational lens and adopting stochastic frontier estimation to measure firm capabilities, we find that the value of a firm�s capability is contingent upon the structure and the content of the intra-group network in which it is embedded. Specifically, we find that a dense intra-group network is likely to make innovative capability more valuable, although this effect varies across different types of network ties. While a dense network of intra-group buyer-supplier ties and equity ties enhances the value of innovative capability, a dense network of intra-group directorship ties does not influence the efficacy of a firm�s innovative capability
Service off-shoring and productivity growth in the European economies
Full text linkWe study the relation between service off-shoring and productivity growth in the manufacturing sector of a set of European economies in 1995-2005. We document that those countries resorting more to service off-shoring in 1995 experienced faster productivity growth in ICT/R&D intensive industries over the next decade. Our results show also that the productivity gap between more and less ICT/R&D intensive industries was relatively higher in those countries experimenting higher increases in service off-shoring intensity over the period. In both cases, ICT intensity is more relevant than R&D to explain the mechanism through which service off-shoring affects productivity growth. These findings are consistent with the enhancing productivity effects of the complementary relation between service off-shoring and IC
What Explains Small and Medium-Sized Business Groups? Comparing the Financial and the Entrepreneurial Perspective
Full text linkThe paper contrasts two theoretical perspectives that account for business group formation in the small business sector: the financial perspective and the organizational/entrepreneurial perspective. Two main hypotheses are derived from these perspectives: the first hypothesis concerns capital and knowledge intensity required by the business; the second one refers to the entrepreneur�s ownership of firms in business groups. The empirical results show that the financial and the organizational perspectives are both relevant in explaining business groups in the small business sector, but the entrepreneurial perspective is more appropriate when explaining the ownership structure of firms within an entrepreneur�s business group
Group Affiliation and Firms� Export Intensity: A Cross-Country Study
Full text linkThe paper investigates whether the export intensity of business companies is greater for group-affiliated firms (GAFs) or for standalone firms (SAFs). The empirical analysis makes use of the World Bank Enterprise Survey for Latin American economies. The results show that GAFs have lower export intensity than SAFs. We also find that the difference between GAFs and SAFs� export intensity is much stronger in the service sectors, industries in which Latin American business groups have actively been investing in recent years. These results provide support to the groups as parasites theoretical view, which emphasizes the negative consequences that groups have for economic development
Norm for redistribution, social capital, and perceived tax burden: comparison between highand low-income households
Full text linkThis paper explores how a perceived tax burden is influenced by the degree that neighbors prefer income redistribution. Further, this paper investigates how the influence of neighbors is affected by the degree of interaction between neighbors. For these purposes, individual-level data and place of residence data were combined. After controlling for individual characteristics, I obtained the following key findings: people are more likely to perceive the amount of tax as low when neighbors are more likely to support redistribution policies. Further, this neighbor effect increases when community participation rates are high. This tendency is clearly observed in high-income groups but not in low-income groups. This implies that the norm for redistribution leads rich people to consider the tax burden as low. Further, the effect of the norm increases when there is a greater accumulation of social capital within a residential area
Economic Institutions and the Outward FDI Location Strategies of Emerging Market Multinational Business Groups: Evidence from Central and Eastern European Countries
Full text linkUsing an extensive data set on the Outward Foreign Direct Investment (OFDI) projects from�Central and Eastern European Countries (CEEC), this study empirically examines the impacts�of �host �country �economic �institutions, �including �property �rights �protection, �corruption,�taxation, business operating regulations and economic stability, on firms� location decisions�in �the �European �Union �(EU), �while �controlling �for �other �conventional �determinants �of�location choice. From a data set of 24,726 location decisions of 951 firms for a time period�from 1995 to 2010, the robust empirical evidence suggests that a corruption-free country with�a lower tax burden and friendly business regulations positively influence the OFDI location�choice strategies of CEEC multinationals. However, these factors vary depending on whether�the host country has an advanced economy (EU15: original member countries of the EU), or�an emerging economy (CEEC). The effects of economic institutions are more profound on�the location activities in the advanced economies of the EU than in other CEEC. Furthermore,�CEEC investors generally prefer to be located in countries that have better institutions than�their home countries
Reinvestigating the Reciprocal Relationship between Democracy and Income Inequality
Full text linkFew social science relationships have spawned as much interest -- or as many elaborate theoretical models and arguments -- as that between democracy and income inequality. However, the empirical literature has generally employed statistical models based on problematic assumptions, and has produced quite mixed results. Hence, this paper makes an important empirical contribution by applying models that, for instance, account for endogeneity biases and control for country-specific effects. Despite being correlated, there is very little evidence of any effect of income inequality on level of democracy once employing appropriate model specifications. Furthermore, there is no robust evidence that inequality systematically affects either democratization prospects or democratic stability. In contrast, there is evidence that democracy reduces income inequality when inequality is proxied by share of income going to wages. However, also this effect is sensitive to choice of inequality measure. Democracy does, for instance, not reduce inequalities in disposable household incomes