international technology transfer and the technology gap abstract we build a quality ladders product cycle model that explores how the quality of technology transferred through foreign direct investment fdi is linked to innovation and imitation when the absorptive capacity of ldcs is limited successful imitation of low quality levels makes fdi involving high quality levels possible through reduction of the technology gap a subsidy to imitation or a tax on low quality fdi production encourages imitation relative to innovation thus releasing the constraint faced by foreign firms seeking to produce in the south these forces that stimulate high quality fdi raise southern welfare through lower prices faster innovation and higher wages

foreign direct investment and spillovers gradualism may be better the standard argument says that in the presence of positive spillovers foreign direct investment should be promoted and subsidized in contrast this paper claims that the very existence of spillovers may require temporarily restricting fdi our argument is based on two features of spillovers they are limited by the economy s absorptive capacity and they take time to materialize by letting in capital more gradually initial investment has the time to create spillovers and upgrade the economy s absorptive capacity before further investment occurs the economy converges to a steady state with a superior technology and a greater capital stock l argument conventionnel suggere que l investissement direct de l etranger ide devrait etre promu et subventionne si des effets de retombee positifs existent a contrario ce memoire suggere que l existence meme de ces retombees peut necessiter qu on restreigne temporairement les ide cette argumentation se fonde sur deux caracteristiques des retombees ces retombees sont limitees par la capacite de l economie receptrice a les absorber et elles prennent du temps a se materialiser en laissant entrer ce capital graduellement l investissement initial a le temps de creer des retombees et d ameliorer la capacite d absorption de l economie nationale avant que d autres investissements se produisent l economie nationale converge alors vers un regime permanent dote d une technologie superieure et d un stock de capital plus important

incentives for foreign direct investment under imitation we study the symmetric mixed strategy equilibrium of a dynamic model where at each instant two exporting firms choose their probability of foreign direct investment f1di the first firm s fdi generates cost lowering spillovers for the second and leads to local imitation thereby intensifying competition while an increase in imitation risk usually makes fdi less likely there exist parameter values for which the converse holds the key point is that by delaying the second firm s switch to fdi an increase in imitation risk can increase the value of being first to invest thereby increasing the equilibrium probability of fidi jel classification f23 f12 l13 incitation a l investissement direct a etranger quand il y a imitation les auteurs etudient 1 equilibre de strategies mixtes symetriques dans un modele dynamique ou a chaque instant deux firmes exportatrices choisissent leur probabilite d investissement direct a 6tranger l investissement direct a 1 etranger de la premiere firme engendre des effets de retomb6e qui reduisent le couits pour la seconde et engendre un effet d imitation au niveau local ce qui a pour effet d augmenter le degre de concurrence alors que l accroissement du risque d imitation reduit la probabilite d investissement direct a l etranger il existe des valeurs des parametres pour lesquels c est l inverse qui se produit le point central est que en faisant en sorte de reporter le recours a l investissement direct a l etranger par la seconde firme un accroissement du risque d imitation peut accroitre l avantage d avoir et6 le premier a investir a l etranger et donc accroitre la probabilite d equilibre d un investissement direct a 1 tranger

the comparative efficiency performance of small and large us commercial banks in the pre and post deregulation eras the purposes of this paper are twofold first to employ a flexible non parametric approach to contrast the productive efficiency of a sample of small and large banks in order to examine the relationship between size and productive performance in the banking industry second to investigate whether the relative efficiency performance of small and large banks has changed following the changes in the banking environment in the 1980s and to contrast the rate of technological change achieved by these two groups of banks over this time period the findings based on group specific frontiers suggest that in the pre deregulation environment small banks were more efficient than the large banks while in the deregulated environment small and large banks were equally efficient moreover the dispersion in the efficiency measures of the small banks is found to have increased substantially while that of the large banks changed little over the sample period

the dynamics of reform and development in china a political economy perspective abstract to make economic reforms acceptable people in power need to be bought out however compensation is limited by the lack of commitment and liquidity under these constraints development may begin with modest reforms in some areas or sectors where investment opportunities are large and expected benefits from the pre reform system are small reform then may extend to other regions or sectors if the propagation process generates enough savings and proper coordination of economic actors takes place a drastic reform of institutions may then occur

the impact of foreign direct investment on export structure and employment generation abstract the literature on foreign direct investment often treats its determinants and consequences independently this is particularly so for empirical studies the purpose of this paper is to consider both aspects simultaneously and to provide some empirical evidence on the nature of foreign investment and its impact on export structure and employment generation the method consists of a model which includes both industry specific and location specific determinants of foreign direct investment in the export sector and their effects on the employment generating capacity of individual manufacturing industries it is estimated for three digit s i c industries in puerto rico in 1979 the results suggest that puerto rico s export sector consists of us based firms producing on a large scale these firms are primarily attracted to the island by relatively higher profits than on the mainland low wage labor is not considered an important inducement to foreign investment in puerto rico the labor intensity of the island s export sector lags behind that of comparable countries due to the capital intensive nature of its principal exports the island s manufacturing employment can be more effectively increased by altering the composition of exports than by inducing present firms to hire more workers

competition economies of scale and diversity of firm sizes this paper presents an empirical example in which small firms are able to compete by specializing without monopolistic conduct despite economies of scale the viability of small commercial banks in illinois is established both by casual observation and by a finding of constant returns to scale not correcting for specialization a second specification of the cost function correcting for specialization exhibits economies of scale suggesting that specialization is the means by which small banks survive monopoly conduct is ruled out by a rosse panzar test rejecting the alternative hypothesis that monopoly power has allowed inefficient banks to survive

analysis of a small open economy the case of energy prices in canada the analysis suggests that land rental price decrease in the long run as a consequence of higher energy prices energy demand from agriculture decreases if land and energy are substitute inputs the necessary and sufficient conditions for expecting increasing average farm size decreasing agricultural output and number of farms also have been provided the analysis considers a competitive equilibrium environment with specific proviso that land prices adjust in response to higher domestic energy prices simple expressions for calculating long run agricultural responses to higher domestic energy prices were derived and used in estimating such responses for canadian agriculture

fdi policies under shared factor markets abstract we examine the consequences of foreign direct investment fdi policies in a general equilibrium setting with several oligopolistic industries by shifting labor demand across countries fdi raises the wage in the host country and lowers the wage in the source country thereby raising profits of source country firms at the expense of host country firms the extent of cross ownership of firms the relative number of firms and the relative supply of skilled labor alter the impact of fdi policy on national welfare the tension between profits and wages determines whether the optimal policy is designed to encourage fdi

the theory of the firm in long run equilibrium in a recent series of articles economists have investigated the comparative statics of the neoclassical firm in a competitive environment with the specific proviso that output price adjusts in response to changes in factor prices the older theory of the firm such as is found for example in paul samuelson 1947 is deficient in this regard metaphors such as short run have been used to gloss over the inconsistency of holding output price constant in the face of changing costs through changing factor prices in this paper a simple yet thorough analysis of a firm in a competitive industry i e a firm facing zero entry and adjustment cost conditions is given new results pertaining to restrictions on the behavior of such firms are offered also the length and complexity of established results is substantially reduced

externalities and technology transfer through multinational corporations a theoretical analysis abstract this paper examines the optimal behavior of a multinational firm s subsidiary in a host country when learning of its production techniques by its native rivals occurs in a dynamic framework it is shown among other things that a it is worthwhile for the subsidiary to import better technology from its parent firm and that b such technology transfer may not benefit the firms of the host country despite their learning while the host country as a whole does benefit

competition conduct and demand elasticity abstract this paper demonstrates the relationship between the rosse panzar test for competitive conduct and the firm s elasticity of demand and develops a method of increasing the test s discriminating power

the firm demand for liquid assets in an inflationary environment measures of inflation and the price level are added to the standard model of liquid asset demand and estimated with cross section data on brazilian manufacturing firms over a four year period characterized by substantial inflation annual rates of 19 23 34 and 35 results indicate that economies of scale exist in a model that is stable over time interest rates have a strong and elastic impact on liquid asset demand when inflation is explicitly controlled for although this result is not consistent across all subsets of data used the usual assumption of a unitary price level elasticity of liquid asset demand is rejected and firms appear to conserve on liquid asset holdings as the rate of inflation increases suggesting more careful management of payments flows some of these findings contradict those of ungar and zilberfarb 1980 there are also some difference in behaviour across ownership groups brazilian firms do not exhibit economies of scale while multinationals do and brazilian firms adjust ac

broken symmetry symmetry and price uncertainty or short and long run comparative statics of the competitive firm abstract the notion of broken or hidden symmetry is applied to a long run characterization of a competitive firm operating under price uncertainty the main result of the paper is the restoration of a slutsky type symmetry of the input demand functions within an expected utility framework which does not involve any assumption about risk aversion a second conclusion is that economic relations expressed in terms of relative quantities are essential in the long run comparative statics under price uncertainty

disparity in wages but not in returns to capital between rich and poor countries abstract one of the striking features of the international economy is that while the level of average wage rates in rich countries is many times that in pour countries their average rates of return to capital seem to be roughly similar or the differences in them relatively very small this cannot be fully explained away by the fact that capital is internationally much more mobile than labor there is remarkably little movement of return sensitive private capital between the richest and the poorest countries in this paper we assume instead that factors of production are internationally immobile and try to explain the observed asymmetry in the pattern of factor prices in terms of particular types of differences in production functions between rich and poor countries in terms of differential learning effects and differential degrees of specialization in the sector producing intermediate inputs and services

foreign ownership market structure and industrial performance brazil s electrical industry abstract using an industrial organization approach this article tests the hypothesis that the ownership of firms exerts an independent influence on industrial performance we compare the behavior of foreign and domestic firms in brazil s electrical industry in four areas the association of firms with particular types of domestic market structures their technology their trade conduct and their profitability regression analysis shows that tncs tend to produce in tightly organized differentiated oligopolies they generally employ a more capital intensive technology they import more per unit of sales but do not necessarily export more finally reported earnings of tncs are found not to be any higher than domestic firms but reported profits of all firms are positively related to the level of industrial concentration and product differentiation markets which tend to be the domain of tncs rather than domestic enterprises it is concluded that ownership is a strong variable of market structure in brazil s electrical industry and that the systematic effect of foreign ownership on industrial performance is not always helpful in attaining development objectives

on the economics of effluent charges using the theory of the competitive firm in long run industry equilibrium the authors investigate the effectiveness of an effluent charge in controlling an industry s long run level of pollution the success or failure of such a charge turns out to hinge upon the conditions prevailing in the industry s output and input markets if merely one of these markets is less than perfectly elastic and if in addition the corresponding demand or supply schedule has the normal slope the success of the charge is guaranteed otherwise it is not

international retail banking as a strategy an assessment we assess the viability of a bank s strategy of entering into retail banking worldwide wherever regulations permit via a review of literature and evidence on foreign direct investment in banking issues we discuss include the roles of regulation the costs of operating at a distance and in an unfamiliar environment and the advantages or offsetting factors which foreign banks may possess relative to their local competitors the factors the paper examines are uncompetitive host markets product differentiation economies of scale management and technology cost of capital government support and vertical integration

market structure and performance of u s multinationals in brazil and mexico this paper presents the results of a regression analysis of the market structure determinants of profitability among the brazilian and mexican manufacturing affiliates of us multinational corporations the study employs data on 206 firms derived from a special survey specifically designed to obtain detailed information on their market structure environments and performance characteristics our estimates confirm that seller concentration product differentiation and relative market share are three sources of market power of these firms despite the many economic and noneconomic differences between brazil and mexico there are no systematic differences between the two in their underlying structure performance relationships

factors affecting inter industry variation of foreign ownership of manufacturing industry a set of hypotheses incorporating various explanations to foreign direct investment are developed and tested on a simultaneous equation model on australian data the analysis shows that foreign ownership of industry tends to be higher in the humanskill intensive and technology intensive industries high protection seems to be an important inducement for multinational enterprises participation in australian industry the results demonstrate how a major bias can be introduced when the simultaneity involved in the determination of foreign ownership is ignored

the demand for liquid assets a firm level analysis analysts have exerted considerable effort attempting to demonstrate that the firm demand for liquid assets or money conforms to microeconomic theory the theory itself is splintered along three lines of inquiry a keynesian version stressing the transaction and asset motives 28 33 35 an essentially quantity theory approach 19 6 and an approach which incorporates money into the firm s production function 22 31 7 29 the empirical work used to test these theoretical approaches has a common element a measure of the firm s scale is included usually sales or business receipts and generally a common flaw the use of aggregated data most studies have used industry level data because it is more readily available this forces the analyst to assume that firms within an industry are homogeneous while firms across industries are heterogeneous the authors can then use the typical firm as the unit of analysis the typical firm is a hypothetical construct whose characteristics are statistical means of all firms aggregated within the industrial category while this is a useful assumption the aggregation may hide the influence of the distribution of firms within the industry these distributional impacts may be significant if there are substantial economies of scale or if firm size influences such things as cash management practices and access to financial markets katsimbris and miller 15 have warned that the size distribution of firms within an industry may alter money demand the greater the inequality in sales the lower the industry s demand for money they find no support for the assumption of identical structural specification across industries these observations have been echoed by hunter 12 and by other work of katsimbris and miller 13 14 under such circumstances the use of industry average data may yield misleading conclusions on the firm demand for money any study of firm behavior in this area should at the very least control for industry some time ago vogel and maddala 33 called for empirical studies using firm level data a call which has gone largely unanswered this study attempts to fill this void by using a comprehensive set of firm level data over a five year period but we also attempt to answer several other questions does the presence of foreign ownership alter the firm s demand for liquid assets