104,712 research outputs found
Multinational firms in the world economy
No full textAddresses the concerns surrounding multinational enterprises (MNEs) and clarifies the debate about MNEs, providing an assessment of what they are, why and where they arise, and their economic impact on home and host countries. Presents an overview of theory and empirical findings relating to MNEs. Examines theory on the determinants and impact of MNEs, looking at horizontal and vertical FDI, respectively. Provides a theoretical treatment of the choice of the mode of supplying a foreign market, whether internalized through a foreign subsidiary or outsourced through a market transacting with another firm. Reviews the available theoretical evidence on the determinants of FDI. Surveys the empirical evidence on the effects of FDI on host countries and provides a case study of Ireland, a country which has been very successful in attracting FDI and in using FDI to boost its economic development. Reviews the empirical evidence on the effects of FDI in home countries. Considers the implications for policy. Barba Navaretti is Professor of International Economics at the University of Milan and Scientific Director of the Centro Studi Luca d'Agliano. Venables is Professor of International Economics at the London School of Economics and directs a research program at the Centre for Economic Performance. Glossary; index
Multinationals and Industrial policy
No full textAre there benefits to the host country from multinational investments? Does potential value from these investments make active industrial policy worthwhile? We answer the first question affirmatively, having reviewed economic principles and evidence concerning the effects of projects locating in (or not being off-shored from) a country. On the second, policy can have a limited effect in influencing location decisions, but it is doubtful that it is cost effective. Implementation faces lack of information, risk of capture and, in many cases, non-rigorous processes. Competition between jurisdictions means that much policy is investment diversion not investment creation. There is a case for supra-national controls (as with EU State Aid regulations), for policy to be used only for well-defined market failures, and for better implementation and more rigorous ex-ante appraisal and ex-post evaluation
Geography and development
No full textThe most striking fact about the economic geography of the world is the uneven spatial distribution of economic activity, including the coexistence of economic development and underdevelopment. High-income regions are almost entirely concentrated in a few temperate zones, half of the world's GDP is produced by 15 percent of the world's population, and 54 percent of the world's GDP is produced by countries occupying just 10 percent of the world's land area. The poorest half of the world's population produces only 14 percent of the world's GDP, and 17 of the poorest 20 nations are in tropical Africa. The unevenness is also manifest within countries and within metropolitan concentrations of activity. Why are these spatial differences in land rents and wages not bid away by firms and individuals in search of low-cost or high-income locations? Why does economic activity cluster in centers of activity? And what are the consequences of remoteness from existing centers? The authors argue that understanding these issues is central for understanding many aspects of economic development and underdevelopment at the international, national, and subcontinental levels. They review the theoretical and empirical work that illuminates how the spatial relationship between economic units changes and conclude that geography matters for development, but that economic growth is not governed by a geographic determinism. New economic centers can develop, and the costs of remoteness can be reduced. Many explicit policy instruments have been used to influence location decisions. But none has been systematically successful, and many have been very costly-in part because they were based on inappropriate expectations. Moreover, many ostensibly nonspatial policies that benefit specific sectors and households have spatial consequences since the targeted sectors and households are not distributed uniformly across space. These nonspatial policies can sometimes dominate explicitly spatial policies. Further work is needed to better understand these dynamics in developing countries.Economic Theory&Research,Decentralization,Labor Policies,Environmental Economics&Policies,Banks&Banking Reform,Banks&Banking Reform,Municipal Financial Management,Health Economics&Finance,Economic Theory&Research,Environmental Economics&Policies
Multinational corporations and global production networks : the implications for trade policy : report prepared for the DG trade of the European commission
No full textThe objective of this report is to understand the role of multinational enterprises (MNEs) and production networks in economic activity, and to investigate their implications for the design of trade policies. The focus of the report is the European Union. MNEs account for a significant share of economic activities in Europe. 18 % of EU employees in manufacturing work in foreign owned subsidiaries and 8.6 % in subsidiaries owned by non-EU residents. The report also devotes particular attention to the activities of US subsidiaries in Europe and of EU subsidiaries in the US, the only ones for which comprehensive data are available.
The empirical analysis in the report reveals a positive correlation between sectors with relatively high protection and a high presence of US foreign direct investments (FDI). This indicates that a substantial proportion of any rents created by restrictive trade policy is transferred to foreign firms. European trade policy is protecting those industries where subsidiariesâ sales dominate over imports from the US and where the US subsidiariesâ share in EU employment is large. The phenomenal increase of European networking in the Central and Eastern European Countries (CEECs) following the Europe Agreements or between the US and Mexico after the implementation of the North American Free Trade Agreement (NAFTA) are good examples of how trade liberalisation, proximity and differences in factor costs jointly provide strong incentives for firms to split geographically their production processes.
There are some strong arguments in favour of international co-ordination of foreign investment policies. A new investment agreement could take care of this need for co-ordination; however, extending existing trade agreements could also do at least part of the jo
Shifts in economic geography and their causes
No full textRecent decades have seen momentous changes in the economic geography of the world. Political transitions and economic liberalization have brought formerly closed countries into the world economy. Such changes have challenged our understanding of the location of economic activity and of the determinants of changes in the pattern of location. ; In a presentation at the Federal Reserve Bank of Kansas City’s 2006 economic symposium, “The New Economic Geography: Effects and Policy Implications,” Venables explored how a new economic geography perspective provides a number of additional insights into existing patterns of activity and into the forces driving future changes. ; His discussion focused on three key propositions. First, proximity to other economic agents—workers, consumers, and firms—is good for productivity. Second, large income disparities are a perfectly natural outcome of a world in which proximity matters. And, third, the effects of increased trade are potentially ambiguous—there are circumstances in which cheaper spatial interactions cause inequality, not convergence.Economic conditions
Economic Linkages across Space
No full textOverman H. G., Rice P. and Venables A. J. Economic linkages across space, Regional Studies. A diagrammatic framework is developed to study the economic linkages between regions or cities. Hitherto, such linkages have not been a focus of the literature. The framework is used to analyse the impact of shocks that occur in one region (for example, productivity improvements or increases in housing supply) on other regions, highlighting the key adjustment mechanisms and their long-run implications for incomes, the cost of living, and the spatial distribution of population. The approach is linked to both the New Economic Geography and urban systems literatures and empirical studies are reviewed that quantify the key mechanisms that are identified. Spatial linkages Urban systems New Economic Geography Urban and regional policy [image omitted] Overman H. G., Rice P. et Venables A. J. Des maillons geographiques economiques, Regional Studies. On construit un cadre schematique afin d'etudier les maillons interregionaux ou interurbains economiques. Jusqu'ici, de tels maillons n'ont pas ete le point de mire de la documentation. On se sert de ce cadre pour analyser l'impact des chocs qui ont lieu dans une region (p.e. des ameliorations de la productivite ou des augmentations de l'offre de logement) sur d'autres regions, soulignant les mecanismes d'ajustement essentiels et leurs impacts de longue duree sur les revenus, le cout de la vie et la distribution geographique de la population. L'approche se voit lier a la fois a la documentation sur la Nouvelle geographie economique et les Systemes urbains, et fait la critique des etudes empiriques qui quantifient les mecanismes essentiels identifies. Maillons geographiques Systemes urbains Nouvelle geographie economique Politiques urbaine et regionale Overman H. G., Rice P. und Venables A. J. Wirtschaftliche Verknupfungen zwischen Raumen, Regional Studies. Wir entwickeln einen diagrammatischen Rahmen zur Untersuchung der wirtschaftlichen Verknupfungen zwischen Regionen oder Stadten. Bisher waren solche Verknupfungen kein Schwerpunkt der Literatur. Mit Hilfe dieses Rahmens analysieren wir die Auswirkungen von Schocks in einer Region (z.�B. eine verbesserte Produktivitat oder ein erhohtes Wohnungsangebot) auf andere Regionen, wobei wir die wichtigsten Anpassungsmechanismen und ihre langfristigen Auswirkungen auf Einkommen, Lebenshaltungskosten und die raumliche Verteilung der Bevolkerung herausarbeiten. Unseren Ansatz verknupfen wir mit der Literatur der neuen Wirtschaftsgeografie und urbanen Systeme; ebenso werten wir empirische Studien aus, in denen die wichtigsten von uns identifizierten Mechanismen quantifiziert werden. Raumliche Verknupfungen Urbane Systeme Neue Wirtschaftsgeografie Stadt- und Regionalpolitik Overman H. G., Rice P. y Venables A. J. Vinculos economicos en el espacio, Regional Studies. Desarrollamos una estructura esquematica para estudiar los vinculos economicos entre regiones o ciudades. Hasta ahora no se habia prestado mucha atencion a estos vinculos en la literatura. Con ayuda de esta estructura analizamos las repercusiones de los choques que ocurren en una region (p. ej., mejoras de productividad o aumentos en la oferta de hogares) en otras regiones, destacando los mecanismos de ajuste principales y sus efectos a largo plazo para los ingresos, el coste de la vida y la distribucion espacial de la poblacion. Unimos nuestro planteamiento con las literaturas de la Nueva Geografia Economica y los Sistemas Urbanos y analizamos los estudios empiricos que cuantifican los mecanismos clave que hemos identificado. Vinculos espaciales Sistemas urbanos Nueva geografia economica Politica urbana y regional
Trading arrangements and industrial development
No full textHow do different trading arrangements influence the industrialization process of developing countries? Can preferential trading arrangements (PTAs) be superior to multilateral liberalization, or at least an alternative when multilateral liberalization proceeds slowly? If so, what form should the PTAs take? Are developing countries better advised to seek PTAs with industrial countries or among themselves? Traditional analysis of these issues has been based on the idea of trade creation and trade diversion. The problem with this analysis is that it starts from assuming a pattern of comparative advantage of newly industrialized countries. The experience of these countries suggests the need for an analysis in which the pattern of comparative advantage is not set in stone but is potentially flexible, and in which less developed countries can develop and converge in both income and economic structure to industrial economies. The authors outline an alternative approach for analyzing the role of trade in promoting industrial development. There are few fundamental differences between countries that generate immutable patterns of comparative advantage. Instead the pattern of trade and development in the world economy is determined mainly by history. Cumulative causation has created concentrations of industrial activity in particular locations (industrial countries) and left other areas more dependent on primary activities. Economic development can be thought of as the spread of these concentrations from country to country. Different trading arrangements may have a major impact on this development process. By changing the attractiveness of countries as a base for manufacturing production they can potentially trigger or postpone industrial development. This approach explains why firms are reluctant to move to economies that have lower wages and labor costs, and shows how trade liberalization can change the incentives to become established in developing countries. It provides a mechanism through which import liberalization can have a powerful effect in promoting industrialization. And it suggests that import liberalization may create or amplify differences between liberalizing countries with the possible political tensions this may create. While these features are consistent with the world economy, they fall short of providing convincing empirical support for the approach. Using the approach, the authors derive number of conclusions about the effects of trade liberalization. First, that unilaterally liberalizing imports of manufactures can promote development of the local manufacturing industry. The mechanism is forward linkages from imported intermediates, but this may be interpreted as part of a wider package of linkages coming from these imports. Second, the gains from liberalization through PTA membership are likely to exceed those obtained from unilateral action. South-South PTAs will be sensitive to the market size of member states, and North-South PTAs seem to offer better prospects for participating Southern economies, if not for North and excluded countries. Third, the effects of particular schemes (such as the division of benefits between Southern economies) will depend on the characteristics of the countries and cross-country differences in these characteristics.Economic Theory&Research,Environmental Economics&Policies,Water and Industry,Labor Policies,Banks&Banking Reform,Economic Theory&Research,Environmental Economics&Policies,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Trade and Regional Integration,Water and Industry
The economic geography of trade, production and income : a survey of empirics.
No full textThis paper surveys the empirical literature on the economic geography of trade flows, factor prices, and the location of production. The discussion is structured around the empirical predictions of a canonical theoretical model. We review empirical evidence on the determinants of trade costs and the effects of these costs on trade flows. Geography is a major determinant of factor prices, and access to foreign markets alone is shown to explain some 35% of the cross-country variation in per capita income. The paper documents empirical findings of home market (or magnification) effects, suggesting that imperfectly competitive industries are drawn more than proportionately to locations with good market access. Sub-national evidence establishes the presence of industrial clustering, and we examine the roles played by product market linkages to customer and supplier firms, knowledge spillovers, and labour market externalities.
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