the effect of immigration along the distribution of wages this paper analyses the effect immigration has on wages of native workers unlike most previous work we estimate wage effects along the distribution of wages we derive a flexible empirical strategy that does not rely on pre allocating immigrants to particular skill groups in our empirical analysis we demonstrate that immigrants downgrade considerably upon arrival as for the effects on native wages we find that immigration depresses wages below the 20th percentile of the wage distribution but leads to slight wage increases in the upper part of the wage distribution the overall wage effect of immigration is slightly positive the positive wage effects we find are although modest too large to be explained by an immigration surplus we suggest alternative explanations based on the idea that immigrants are paid less than the value of what they contribute to production generating therefore a surplus and we assess the magnitude of these effects

urban bias rural bias or state bias urban rural relations in post revolutionary china the authors aim to evaluate the relevance of urban bias and rural bias to the chinese case they present empirical evidence on the nature and extent of differentiation in rural urban living standards examine the political basis of relevant economic policies and investigate the relationship between these policies both the changes in labour productivity in each sector and the inter sectoral savings transfers both urban and rural bias hypotheses illuminate certain dimensions of chinese development strategy but the realities of rural urban relations have been complex and analysis must be supplemented by a focus on the divide between state and society and the question of state bias

what goals do business leaders pursue a study in fifteen countries goals in use of successful businesspersons were rated by over 1 800 junior managers and professionals attending evening mba courses at local universities in 15 countries a hierarchical cluster analysis of perceived goals divided the countries into seven clusters the relative ordering of goals within these clusters suggested seven different archetypal business leader roles perceptions correlated significantly with national wealth as well as with dimensions of national culture

time consistent immigration policy under economic and cultural externalities summarydiscussions of immigration policy are typically framed in the context of their economic effects in receiving countries notably labour market and fiscal effects in this paper we characterize immigration policy in a richer model where migrants are also a source of cultural externalities stemming from either preferences or the functioning of formal and informal institutions in receiving countries while in terms of pure economic effects immigrants do not generally have any more incentives than low skilled natives to allow for more immigration in the future this is not the case when accounting for cultural externalities therefore insofar as past immigrants have a voice in affecting future policies a time consistent immigration policy entails back loading as natives attempt at limiting voice of immigrants in the future the economic effects of immigration flows as well as the cultural externality they introduce furthermore natives exploit any pre commitment device to limit immigration flows e g building walls limiting immigrants political rights or accumulating fiscal surpluses

a global survey and review of the determinants of transaction costs of forestry carbon projects reducing carbon emissions in the forestry sector by means of market based schemes is considered a cost effective measure for tackling climate change impacts however the transaction costs tcs involved are typically unknown or unquantified and therefore often neglected in this study three types of tcs search design and negotiation costs were measured in person days and monetary terms based on a global survey of forestry carbon projects implemented across latin america asia and africa cost estimates vary between zero and 1 201 tco2 for person days and from zero to us 1 738 tco2 for monetary costs key drivers of tcs are identified based on the characteristics of the project in general the transaction the transactors involved and institutional design the latter type of characteristic is shown to have a particularly large impact on tcs

foreign entry cultural barriers and learning this paper examines the longevity of foreign entries hypotheses are developed on the mode start ups vs acquisitions and ownership structure wholly owned vs joint ventures in relation to cultural distance the hypotheses are tested within a framework of organizational learning using data on 225 entries that 13 dutch firms carried out from 1966 onwards results show that the presence of cultural barriers punctuates an organization s learning cultural distance is a prominent factor in foreign entry whenever this involves another firm requiring the firm to engage in double layered acculturation we also identify locational paths of learning the longevity of acquisitions is positively influenced by prior entries of the firm in the same country similarly the longevity of foreign entries in which the firm has a majority stake improves whenever the expanding firm engaged in prior entries in the same country and in other countries in the same cultural block

taxes tariffs and transfer pricing in multinational corporate decision making three interrelated aspects of u s multinational corporation activity are analyzed here the ability to shift profits from high tax countries to low tax countries the impact of host country taxes and tariffs on the distribution of real capital and the influence of these policies on international trade patterns of the united states and host countries the cross sectional empirical analysis indicates that the observed pattern of reported profits in high and low tax countries is consistent with income shifting behavior and that real investment responds to host country effective tax rates and tariffs the united states appears both to import more from and export more to low tax countries where mnc investment is greater but this bilateral focus must be amplified to consider multilateral effects if trade benefits are to be projected copyright 1991 by mit press

transaction costs of tradable white certificate schemes the energy efficiency commitment as case study this paper analyses the nature and scale of transaction costs tcs borne by obliged parties under a tradable white certificate twc scheme taking the first phase of the energy efficiency commitment eecl in great britain as a case study several sources of tcs were considered such as search for information persuasion of customers negotiation with business partners and measurement and verification activities information was obtained through interviews and a questionnaire distributed to obliged parties results show that the most significant sources of tcs were related to search for information persuading customers and negotiating with managing agents contractors to implement energy efficiency measures perceived high tcs related to contract negotiation and liability risks slightly reduced the low trading level the scale of tcs was estimated to be around 10 and 30 of total investments costs for the lighting and insulation segments respectively the results indicate that despite the presence and scale of tcs the eecl scheme generated energy savings that yielded net societal benefits estimated financial benefits range from 0 6 to 6 p kwh for insulation and lighting savings respectively when avoided external costs due to electricity savings are included estimated economic benefits range from 3 to 8 p kwh several lessons from the eecl can be drawn for twc schemes among others it is found that informative policy instruments to raise awareness among end users are critical if a twc scheme is to deliver cost effective energy savings in all the nature and scale of tcs under twc schemes will differ because of a number of endogenous and exogenous determinants c 2007 elsevier ltd all rights reserved less

in search of substitution between foreign production and exports abstract are foreign production and exports substitutes or complements standard theory of the multinational corporation mnc assumes substitution while previous empirical work examining the relationship has generally found strong evidence of complementarity this study examines product level data which more closely fits the assumption of a single product firm often used in mnc theory and finds substantial evidence for both a substitution and a complementarity effect between affiliate production and exports with japanese automobile parts for the us market i also test for and find evidence of substitution using product level data on a set of japanese produced final consumer goods

globalisation and values this paper discusses a central element in globalisation debate little addressed by economists namely the interactions at global national and community levels between globalisation and societally based values social values refer to wider notions of collective identity religious values attitudes towards materialism moral beliefs and a sense of collective awareness and are a broader and more encompassing concept than social capital discussed in recent economics and sociology literature social capital relates to trust honesty and the social fabric of accepted norms central to the successful implementation of individual optimising decisions and denotes a communal asset reflecting strength of joint collective commitment whose amount can be increased or improved upon through investment of time and resources social values are much discussed in sociological literature going back to comte durkheim parsons and others the issues taken up here are how different social values might interact and change as societies and their economies integrate globalise processes of value competition displacement and joint assimilation occur naturally to economists but seem little studied by sociologists who seemingly place less stress on analytical comparative statics scenarios for how values can interact under globalisation are discussed in the text

new institutional economics in the post socialist transformation debate the paper suggests that there is a tension between the basic tenant of new institutional economics nie and the manner in which it has been applied in the debate on post socialist transformation this tension is explored in the context of four main perspectives on nie i property rights ii transaction costs economics iii new economic history and iv evolutionary economics there are two main arguments the first is that the transformation phase should be seen as open ended rather than a closed process where the pure market is the inevitable end result the second is that although the nie literature touches on most of the issues which are relevant to post socialist transformation the insights that it offers are still too general for policy guidance

openness to trade in manufactures in the oecd abstract how open are the advanced economies to trade with each other in this paper openness is calculated relative to the predictions of the monopolistic competition trade model using data on manufacturing trade and production in the oecd in 1985 the paper finds that 1 japan imports much less than other large oecd countries while the european countries have larger import volumes than does the us 2 japan and the us engage in less intra industry trade than the rest of the oecd and 3 the eu countries are less open to imports from japan and the us than those countries are open to imports from the eu

tariff jumping dfi and export substitution japanese electronics firms in europe abstract analysis of micro data on japanese electronics firms establishes that the rapid increase in japanese manufacturing investments in the late 1980s has for a substantial part been induced by ec antidumping and other trade restricting measures targeting japanese firms evidence is found at the firm level that such tariff jumping investment has substituted for exports from japan on the other hand firms which invested in ec distribution activities acquired ec firms or produce components within a vertical keiretsu export relatively more to europe the latter finding suggests that subcontractor firms were able to expand components exports by supplying the european manufacturing plants of their parent firms

effects of inward investment on outward investment the venture capital industry worldwide 1985 2007 we identify inward investment as an important impetus to outward investment supplemental to the impetuses depicted in conventional internationalization frameworks by incorporating both the spillover and competition effects of foreign entrants we develop an integrated framework of the inward outward investment relationship for different investment modes and different home country and host country pairs our analysis of venture capital vc investments worldwide from 1985 to 2007 shows a positive spillover effect on outward investment for inward co investments and a negative competition effect on outward investment for inward standalone investments we find the strongest effects when the host country is a laggard in the vc industry and the home country is a leader

corporate leadership multilevel enforcement and biodiversity regulation globalization incentives the rise of non state actors in unprecedented ways along with the creation of transnational arenas which are neither international intergovernmental nor national domestic but transborder political processes where firms non governmental organizations ngos states and social communities set up rules and provide governance mechanisms to enforce those at local level the article is anchored in the idea that public private governance matters where the primary driver is the market incentive we test the hypotheses that public private cooperation at local level is based on shared knowledge and expertise among firms civil society and state authority dealing with a natural resource which comes from the brazilian biodiversity ngos and companies have developed the ability to act as enforcers as they interpret the public international national regulation and develop an expertise through best practices that are applied to enforce biodiversity regulation at the local level through a multilevel system that operates transnationally

the impact of ideas on trade policy the origins of u s agricultural and manufacturing policies since the close of world war ii the united states has supported contradictory trade policies in manufacturing the united states has fostered a liberal trade regime spurning government involvement in market transactions in agriculture it has sanctioned policies of import restrictions export subsidies and import fees this variation is rooted in decisions that were made in the 1930s and institutionalized in the 1940s in the wake of the great depression policymakers concluded that state intervention helped agriculture and hurt industry this article argues that the choice of government policy and its appropriateness to the economic problems faced by each sector reflect the accepted knowledge at the time neither liberalization nor subsidization was inevitable both were economically viable options however central decision makers made choices that were often based on inaccurate beliefs about the utility of different policy options

government policies market imperfections and foreign direct investment the internalization eclectic theory of foreign direct investment includes the important insight that government policies create market imperfections which make foreign direct investment an economically rational strategic alternative for firms this paper reexamines the effects of government policies on market imperfections and foreign direct investment fdi it broadens and refines the analysis of the impact of government policies by developing the following arguments 1 there is a wide range of government policies that affect firms fdi decisions via their effects on market imperfections 2 there are numerous dimensions of variability in government policies that need to be identified in order to understand fully the effects of government policies on market imperfections and hence fdi flows 3 some of the effects of government policies on market imperfections and fdi are the opposite of those previously noted in the fdi literature 4 the effects of government policies vary across the several individual components of fdi flows the paper thus examines the following variables and relationships more extensively and precisely than has the previous literature government policy variables as causal factors affecting fdi market imperfection variables as intervening factors in the causal connections between government policies and fdi and the multiple indicators of the various dimensions of fdi as dependent variables

insecurity and the pattern of trade an empirical investigation corruption and imperfect contract enforcement dramatically reduce international trade this paper estimates the reduction using a structural model of import demand in which insecurity acts as a hidden tax on trade we find that inadequate institutions constrain trade as much as tariffs do we also find that omission of indices of institutional quality biases the estimates of typical gravity models obscuring a negative relationship between per capita income and the share of total expenditure devoted to traded goods finally we argue that cross country variation in the effectiveness of institutions and the consequent variation in the prices of traded goods offer a simple explanation for the stylized fact that high income capital abundant countries trade disproportionately with each other

the new institutional economics and its applicability to development abstract the several remarkable developments in the social sciences which have come to be known as the new institutional economics nie have not yet been fully exploited for analyzing the determinants and effects of institutional change in the context of development this paper identifies two important components of the nie and illustrates both a potential complementarities between them and b their applicability to various problems and policies in the long term development of developing countries

the eclectic paradigm of international production a restatement and some possible extensions this article reviews some of the criticisms directed towards the eclectic paradigm of international production over the past decade and restates its main tenets the second part of the article considers a number of possible extensions of the paradigm and concludes by asserting that it remains a robust general framework for explaining and analysing not only the economic rationale of economic production but many organisational and impact issues in relation to mne activity as well

developmental states and socialist industrialisation in the third world development economics as a discipline and the idea of the state as the organiser of economic activity are inseparable basic concepts and distinctions are put forward to unravel the complex question of the role of the state in the industrialisation process these are then used to examine the state in three waves of socialist industrialisation which shows a strong capacity to mobilise and direct economic social and political resources the typically pervasive state may however outlive its historically progressive role and become a bastion of economic irrationality and political authoritarianism

drivers of institutional change around the world the case of ifrs today more than ever it is crucial to understand the dynamic and intricate institutional landscape that mnes operate in however the drivers of institutional change are still little understood we focus on a recent fundamental institutional change the worldwide switch to international financial reporting standards ifrs the switch to ifrs was unexpected and not particularly welcomed by mnes given that most national accounting systems in the pre ifrs period were considered to be well aligned to the local cultural and environmental characteristics of each country we test the drivers of this institutional change in a sample of 168 countries between 2002 and 2012 using empirical constructs from policy diffusion theory our findings show that the country level decisions to adopt ifrs are not driven by local determinants but instead by adoption decisions by other neighbouring countries and influential organizations we find evidence for competition learning and emulation as driving forces for the international spread of ifrs we conclude that the switch to ifrs was not driven by an economic rationale only and diffused beyond the influence and interest of mnes understanding these drivers is essential because it enables management to anticipate and respond to institutional changes and consequently enhance performance and create competitive advantage

using acquisitions to access multinational diversity thinking beyond the domestic versus cross border m a comparison prior research provides ambiguous results regarding the performance of international acquisitions drawing on a survey of 248 acquisitions we find that acquirers enhance their capabilities when they buy a target with a multinational geographic scope a financial event study uses a subsample of the acquisitions to show that the financial markets also value targets multinational scope both surveys and stock market based studies suggest that targets with access to heterogeneous resource environments provide the acquirer with greater potential for capability enhancement and financial performance in contrast simply acquiring firms across borders has less influence on post acquisition outcomes the study demonstrates greater value of the attributes of the target rather than of international expansion alone thus the multinational scope of the target is more likely to account for the resource diversity provided by the target than the country of origin of the target per se the study changes the emphasis on multinational acquisitions by shifting the focus from foreign market expansion country level emphasis to accessing geographically distributed resources that are embedded in target firms firm level emphasis

the impact of immigration on the structure of wages theory and evidence from britain immigration to the uk particularly among more educated workers has risen appreciably over the past 30 years and as such has raised labor supply however studies of the impact of immigration have failed to find any significant effect on the wages of native born workers in the uk this is potentially puzzling since there is evidence that changes in the supply of educated natives have had significant effects on their wages using a pooled time series of british cross sectional micro data on male wages and employment from the mid 1970s to the mid 2000s this paper offers one possible resolution to this puzzle namely that in the uk natives and foreign born workers are imperfect substitutes we show that immigration has primarily reduced the wages of immigrants and in particular of university educated immigrants with little discernable effect on the wages of the native born

a comparative analysis of the use of information inputs in the manufacturing sectors of korea and japan abstract the paper examines the use of two information inputs information labor and purchased information services in korean and japanese manufacturing sectors in 1980 marginal products and substitution elasticities are calculated from translog production function estimates for the average manufacturing sector both inputs seem to be relatively more underused in korea second the elasticity estimates suggest several hypotheses about the growth of private bureaucracies in the two economies the results are unlikely to apply to other economies which have not yet attained an advanced industrial structure a simplistic stages theory of economic development based on the growth of the information labor force is rejected

comment the elusive search for negative wage impacts of immigration labor demand curves slope down 1 from this statement it is a short leap to the malthusian proposition that an increase in the supply of workers reduces wages so short is the leap in fact that the title of george borjas s 2003 paper the labor demand curve is downward sloping reexamining the impact of immigration on the labor market seems to imply that as a theoretical matter immigration has to lower the wages of natives in a well functioning economy however increases in population do not necessarily cause falling wages the effect depends on the supply of capital on the characteristics of the added workers and on the structure of technology in fact the papers by ottaviano and peri op and manacorda manning and wadsworth mmw in this symposium argue that the impacts of immigration on native workers in the united states and the uk have been very small how can these papers arrive at such different conclusions than borjas 2003 who claimed that us immigration between 1980 and 2000 had lowered average native wages by about 3 and the wages of the least educated natives by 9 there are three crucial differences in the assumptions used by the different authors first borjas 2003 holds capital fixed in contrast op and mmw assume that in the longer run capital adjusts to keep the capital labor ratio on its long run path or equivalently that capital is perfectly elastically supplied as was illustrated in an earlier version of op e g ottaviano and peri 2008 table 8 and acknowledged by borjas and katz 2007 table 1 11 this matters a lot if immigration increases aggregate labor supply by 10 as it did in the united states between 1980 and 2000 and capital is fixed average wages would be expected to fall by about 3 if capital can adjust however the effect on average wages is approximately zero importantly op figure 2 show that the trend in the us capital labor ratio was similar in the 1980 2000 period as in earlier decades this and other evidence including the remarkable inflows of capital

trends in foreign direct investment flows a theoretical and empirical analysis this paper seeks to provide a rationale for changing trends in the flow and determinants of foreign direct investment fdi as a result of macro economic and firm strategy considerations we identify several factors that impact on such trends and develop propositions that could explain the phenomenon generically the study then provides preliminary empirical support for the propositions presented and outlines the path for further research needed to investigate more causal links the statistical analysis of investments by us multinational enterprises mnes reveals significant changes in the regional distribution of fdi and a change in some of its traditional determinants results show that us mnes are now making increasing investments into asia to exploit low wage levels and to secure entry into new markets

the new economics of organization over the last ten years or so an important new approach to the study of organizations has emerged within economics it is perhaps best characterized by three elements a contractual perspective on organizational relationships a theoretical focus on hierarchical control and formal analysis via principal agent models this paper provides political scientists with an overview of the new economics of organization and explores its implications for the study of public bureaucracy so far positive political theory has not contributed much to our understanding of public bureaucracy in part this is due to the unsympathetic treatment that rational modeling and most other modes of quantitative analysis have long received from students of public administration the other side of the coin however is that positive theorists have not made much of an effort to develop theories of bureaucracy their concerns have centered around two basic mechanisms of social choice voting and markets and they have devoted little systematic attention to a third mechanism that is clearly important for understanding how societies and other aggregates make collective decisions this third and relatively unexplored mechanism is hierarchy movement toward a positive theory of hierarchies would fill a serious gap in the social choice literature while at the same time making a theoretical contribution that strikes to the essence of public bureaucracy indeed of all organizations in fact significant steps toward a positive theory of hierarchies have very recently been taken but by economists not political scientists in small numbers of course economists made contributions to the study of public bureaucracy some time ago with the pioneering works of downs 1967 tullock 1965 and niskanen 1971 but this new wave of theoretical work is different it is already a large complex body of literature that is the focus of innovation and excitement among a growing number of economists and it reflects an unusual degree of theoretical coherence and cumulative effort work in this tradition tends to receive orientation from a distinctive economic approach to the analysis of organizations an approach perhaps best characterized by three elements a contractual perspective on organizational relationships a focus on hierarchical control and formal analysis via principal agent models this approach has emerged from recent attempts to move beyond the neoclassical theory of the firm which assumes away all organizational considerations to a theory of economic organizations that can explain why firms corporations and other enterprises behave as they do propo

an interpretive history of challenges to neoclassical microeconomics and how they have fared contemporary microeconomics has witnessed a resurgence of behavioral institutional and evolutionary critiques of the neoclassical mainstream that came to dominate the field during the 1980s today s critiques and proposals for reform have a long tradition in economics while synthesizing the intellectual history of these challenges this article explores the reasons why such critical strands of microeconomics fared poorly in the past and in contrast what factors may account for their partial acceptance into the mainstream in recent times

a transitional institution for the emerging land market in urban china chinese economic reforms since 1978 have been a continuous process of fundamental institutional change the new institution of ambiguous property rights over state owned urban land evolves from the

new frontiers in international strategy this paper studies a new frontier in the understanding of international strategy is to explore it we propose the analogy of the ecology of firms and places as a way to emphasize that the real problem is the colocation of different places with different types of firms locations are in fact the distinctive content of international business strategy we deal with this problem with four different perspectives first differences across countries must be addressed with integrative frameworks able to represent the multidimensionality of semiglobalization or intermediate states between total localization and total integration second differences in the development of intermediary markets in a particular place influence firm positioning and industry structure in that place but their impact also crosses different places and it is endogenous to the ecology of places and firms in a systemic integrative way that makes simplifications extremely risky in the design of competitive strategy in an international context third places firms and strategies form a complex ecology that can be studied with a framework focused in understanding the geography strategy link that incorporates different levels of analysis new economic actors and a set of primitives finally firms around the ecology of places face the challenge of developing strategies and business models to serve the majority of humanity today excluded from world trade it is a fundamentally different way to think about the ecology of places and firms overall we present an intriguing new frontier with the capacity to impact both research and practice in the field of international strategy based in understanding the interplay among firms and places

transaction costs telecommunications and the microeconomics of macroeconomic growth the sources of differences in growth rates across nations are unclear this observation constitutes one of the central intellectual challenges of our time why is the whole world not developed consequently a host of scholars offer various explanations for growth or nongrowth including cultural factors politics and economics 2 the objective of this article is to determine whether a link exists between transaction costs telecommunications and economic growth the article builds on recent research on the macroeconomic determinants of growth as well as on research regarding the significant economic effects of telecommunications on transaction costs it is organized as follows section i reviews the theory of transaction costs section ii the link between transaction costs and telecommunications section iii contains the empirical analysis and section iv some conclusions

the impact of immigration why do studies reach such different results we classify the empirical literature on the wage impact of immigration into three groups where studies in the first two groups estimate different relative effects and studies in the third group estimate the total effect of immigration on wages we interpret the estimates obtained from the different approaches through the lens of the canonical model to demonstrate that they are not comparable we then relax two key assumptions in this literature allowing for inelastic and heterogeneous labor supply elasticities of natives and the downgrading of immigrants downgrading occurs when the position of immigrants in the labor market is systematically lower than the position of natives with the same observed education and experience levels downgrading means that immigrants receive lower returns to the same measured skills than natives when these skills are acquired in their country of origin we show that heterogeneous labor supply elasticities if ignored may complicate the interpretation of wage estimates and particularly the interpretation of relative wage effects moreover downgrading may lead to biased estimates in those approaches that estimate relative effects of immigration but not in approaches that estimate total effects we conclude that empirical models that estimate total effects not only answer important policy questions but are also more robust to alternative assumptions than models that estimate relative effects

population growth and agriculture in poor countries a review of theoretical issues and empirical evidence abstract the paper contributes a critical survey of the very extensive literature dealing with various aspects of the economic and institutional responses of agriculture to population growth in poor countries encompassing a discussion of the main underlying theoretical issues such responses are evaluated in the framework of the general population development debate the main conclusion is that although population growth induces adjustments in agriculture in terms of technical progress intensification and definition of property rights optimism may not be justified in the context of very fast population growth and or already high densities especially when the environmental resource base is taken into account

the effect of national culture on the choice of entry mode characteristics of national cultures have frequently been claimed to influence the selection of entry modes this article investigates this claim by developing a theoretical argument for why culture should influence the choice of entry two hypotheses are derived which relate culture to entry mode choice one focusing on the cultural distance between countries the other on attitudes towards uncertainty avoidance using a multinomial logit model and controlling for other effects the hypotheses are tested by analysing data on 228 entries into the united states market by acquisition wholly owned greenfield and joint venture empirical support for the effect of national culture on entry choice is found

reversal of fortunes democratic institutions and foreign direct investment inflows to developing countries does increased democracy promote or jeopardize foreign direct investment fdi inflows to less developed countries we argue that democratic institutions have conflicting effects on fdi inflows on the one hand democratic institutions hinder fdi inflows by limiting the oligopolistic or monopolistic behaviors of multinational enterprises facilitating indigenous businesses pursuit of protection from foreign capital and constraining host governments ability to offer generous financial and fiscal incentives to foreign investors on the other hand democratic institutions promote fdi inflows because they tend to ensure more credible property rights protection reducing risks and transaction costs for foreign investors hence the net effect of democracy on fdi inflows is contingent on the relative strength of these two competing forces our argument reconciles conflicting theoretical expectations in the existing literature empirical analyses of fifty three developing countries from 1982 to 1995 substantiate our claims we find that both property rights protection and democracy related property rights protection encourage fdi inflows after controlling for their positive effect through property rights protection democratic institutions reduce fdi inflows these results are robust against alternative model specifications statistical estimators and variable measurements

technological capabilities of countries firm rivalry and foreign direct investment studies on foreign direct investment fdi have concentrated on sectoral effects but rarely on country patterns in this paper we use u s department of commerce data to identify the largest country shares of new fdi entries into the u s and the technological motivations for their investments based on the technological intensities of major investing countries in manufacturing industries we conclude that technological industries attract a disproportionate share of fdi entries however the acquisition of u s technology is not a major motivation the findings indicate that industry rivalry is an important dimension to understanding fdi

the integration of quality and safety concerns in the wine industry the role of third party voluntary certifications abstract over the past few years public attention has focused on the quality and safety control traceability and environmental issues surrounding food products several mandatory public standards and private voluntary schemes worldwide have been developed to address these concerns using survey data this paper analyses the key factors affecting the adoption of voluntary quality standards in the wine industry and the existence of a relationship between the adoption of voluntary quality standards and economic performance measured in terms of labour productivity and marketing behaviour the survey involved 89 cellars of which 68 were non certified and 21 had one or more food quality certifications using the data collected an index based on euclidean distances was constructed to compare economic performance between certified and non certified firms the findings provide evidence that internal motivations drive entrepreneurs to adopt voluntary standards and that wineries adopting voluntary standards exhibit better economic performance than non certified wine firms from a managerial viewpoint these results suggest that although the adoption of voluntary quality certifications does not have a direct effect in terms of a labour productivity increase it entails a business management improvement for policymakers the results suggest a need to develop policies and establish more stable financial assistance for the internationalisation of wine firms thereby supporting them through this transition

globalization and the environment determinants of firm self regulation in china critics assert that globalization is detrimental to the environment because it encourages location of polluting industries in countries with low environmental regulations we suggest that globalization might also have positive environmental effects because global ties increase self regulation pressures on firms in low regulation countries using survey data from firms in china we find that multinational ownership multinational customers and exports to developed countries increase self regulation of environmental performance

revisiting legal realism the law economics and organization perspective the contrast between american legal realism which ran itself into the sand schlegel 1979 p 459 and the law and economics movement which is perhaps the most important development in legal thought in the last quarter century posner 1986 p xix is dramatic that the one foundered while the other flourished is explained in large measure by the absence of an intellectual framework for legal realism and the use by law and economics of the powerful framework of neoclassical economics

monopolistic competition and international trade reconsidering the evidence we test some propositions about international trade flows that are derived from models of monopolistic competition developed by elhanan helpman and paul krugman we investigate whether the volume of trade between oecd countries is consistent with the predictions of a model in which all trade is intraindustry trade in differentiated products we then repeat the test with non oecd countries we also investigate whether the share of intraindustry trade is consistent with a more general theoretical model in which some but not all trade is intraindustry trade our results lead us to question the apparent empirical success of these models

on the cultural transmission of preferences for social status abstract we study the formation of preferences for social status as the result of intergenerational transmission of cultural traits we characterize the behavior of parents with preferences for status in terms of socialization of their children to this particular cultural trait we show that degenerate distributions of the population whereby agents have either all status preferences or all non status preferences are dynamically unstable moreover under some conditions there exists a unique stationary distribution which is non degenerate in which both status and non status preferences co exist in the population and this distribution is locally stable finally we study the dependence of the stable stationary distribution of status preferences on institutional technological and policy parameters which affect agents economic conditions

organizing knowledge processes in the multinational corporation an introduction this introduction discusses the contrast between on the one hand the current popularity of addressing mnc organization in knowledge terms and on the other the lack of adequate understanding of many of the causal mechanisms and contextual factors in relations between knowledge processes and organizational factors a number of the relevant research challenges are identified and it is clarified how the five articles in this focused issue addresses some of these

people flows in globalization the policy debate over globalization in the past decade has largely bypassed the international mobility of labor restrict trade and cries of protectionism resound suggest linking labor standards to trade and it s protectionism in disguise limit capital flows and the international monetary fund is on your back but restrict people flows that s just an accepted exercise of national sovereignty during the last few decades when most countries reduced barriers to trade in goods and services and liberalized financial capital markets most also sought to limit immigration in this essay i examine what we know about the causes and consequences of immigration i argue that people flows are fundamental to creating a global economy and that the interplay among immigration capital and trade is essential to understanding the way globalization affects economies i consider ways to reduce barriers to immigration that could improve the well being of workers around the world

cross cultural differences and joint venture longevity in this paper we test whether national cross cultural differences between joint venture jv parents affect jv longevity by comparing that of two categories of jvs placed in the same environment those between two or more japanese parents on one hand and those between japanese and american parents on the other carefully controlling for other factors that may affect jv longevity we find that the longevity of japanese american jvs is lower than that of japanese japanese jvs such effects however appear only for dissolutions that result from the sale of the venture to one of the partners not for those due to liquidation or sale to a third party

economics and identity this paper considers how identity a person s sense of self affects economic outcomes we incorporate the psychology and sociology of identity into an economic model of behavior in the utility function we propose identity is associated with different social categories and how people in these categories should behave we then construct a simple game theoretic model showing how identity can affect individual interactions the paper adapts these models to gender discrimination in the workplace the economics of poverty and social exclusion and the household division of labor in each case the inclusion of identity substantively changes conclusions of previous economic analysis

making sense of institutions as a factor shaping economic performance abstract there has recently been a resurgence of interest in how institutions affect economic performance a review of this literature reveals that the concept of an institution means different things to different scholars both within economics and across the social sciences we discuss what factors unify the different definitions of institutions and develop a concept of institutions useful for the analysis of economic performance and economic growth in particular specifically we develop the notion of institutions as standard social technologies economic growth results from the co evolution of physical and social technologies

the real exchange rate and foreign direct investment in the united states relative wealth vs relative wage effects abstract there has been a significant correlation between u s inward foreign direct investment and the united states real exchange rate since the 1970s in this paper we examine the determinants of four measures of inward foreign direct investment to the united states from seven industrial countries over the period 1979 1991 we find strong evidence that relative wealth significantly affects u s inward foreign direct investment we find no evidence that relative wages have a significant impact on the determination of u s foreign direct investment

the impact of international standards certification on the performance of firms in less developed countries this paper examines the effects of international standards certification isc on both productivity and sales performance for firms from a wide set of countries exhibiting different degrees of institutional development against a large dataset of manufacturing firms operating in 59 countries we find that isc raises productivity and sales performance of firms through efficiency gains and quality signaling with the effects being larger in countries where market supporting institutions are weak the largest gain in performance comes from direct productivity improvements helping firms to climb the technological ladder and closing the productivity gap with firms based in developed countries

the impact of iso 9000 diffusion on trade and fdi a new institutional analysis the effects of iso 9000 diffusion on trade and foreign direct investment fdi have gone understudied we employ panel data reported by oecd nations over the 1995 2002 period to estimate the impact of iso adoptions on country pair economic relations we find iso diffusion to have no effect in developed nations but to positively pull fdi i e enhancing inward fdi and positively push trade i e enhancing exports in developing nations

how well do supranational regional grouping schemes fit international business research models international business ib research has long acknowledged the importance of supranational regional factors in building models to explain phenomena such as where multinational corporations mncs choose to locate yet criteria for defining regions based on similar factors vary substantially thus undermining consensus regarding which regional grouping schemes fit ib research models better in response we develop and empirically validate a theory of comparative regional scheme assessment for model building purposes assuming that 1 schemes can be classified based on their source of similarity and 2 schemes within the same similarity class can be assessed for their structural coherence based on group contiguity and compactness schemes with better structural coherence will also exhibit better fit with ib research models we document support for our theory in comparative analyses of regional schemes used to explain where us based mncs locate operations around the world geography culture and trade and investment based schemes with better structural coherence exhibit better initial fit with mnc location models and less change in fit after modest scheme refinement using a simulated annealing optimization algorithm our approach provides criteria for comparing similar regional grouping schemes and identifying best in class schemes tailored to models of mnc location choice and other ib research models

formation and persistence of oppositional identities we develop a dynamic model of identity formation that explains why ethnic minorities may choose to adopt oppositional identities i e some individuals may reject or not the dominant culture and why this behavior may persist over time we first show that the prevalence of an oppositional culture in the minority group cannot always be sustained in equilibrium indeed because the size of the majority group is larger there is an imposed process of exposition to role models from the majority group that favors the diffusion of mainstream values in the minority community in spite of this an oppositional culture in the minority group can nevertheless be sustained in steady state if there is enough cultural segmentation in terms of role models or if the size of the minority group is large enough or if the degree of oppositional identity it implies is high enough we also demonstrate that the higher the level of harassment and the number of racist individuals in the society the more likely an oppositional minority culture will emerge we finally show that ethnic identity and socialization effort can be more intense in mixed rather than segregated neighborhoods 2011 elsevier b v all rights reserved

the institutional environment for infrastructure investment the empirical evidence that links political institutions to economic outcomes has grown dramatically in recent years however virtually all of this analysis is undertaken using data from the past three decades this paper extends this empirical framework by performing a two century long historical analysis of the determinants of infrastructure investment in a panel of over 100 countries the results demonstrate that political environments that limit the feasibility of policy change are an important determinant of investment in infrastructure copyright 2002 oxford university press

what differences in the cultural backgrounds of partners are detrimental for international joint ventures an international joint venture implies that a firm has to cooperate with a partner with a different cultural background in this study hypotheses about which differences in national culture are most disruptive for international joint ventures were developed and tested using hofstede s five dimensions the study focused on how these dimensions affect the survival of international joint ventures as well as their incidence relative to wholly owned subsidiaries the hypotheses were tested on longitudinal data about 828 foreign entries of twenty five dutch multinational in seventy two countries between 1966 and 1994 the database which spans almost three decades was also used to provide new evidence on a key assumption of hofstede s work that cultural values are stable over time

cointegrating institutions the time series properties of country institutional measures abstracta country s political and economic institutions are critical for economic prosperity the literature abounds with institutional measures precisely because institutions are multidimensional we use panel unit root and cointegration tests to examine the time series properties of several institutional measures to answer two questions first do institutional changes tend to be permanent second which subsets of institutions tend to converge or move together these answers have important implications for whether permanent institutional reform is possible and whether reforms can be undertaken one institutional area at a time or instead must simultaneously encompass multiple institutional areas

introduction to the symposium multinationals the janus face of globalization panning the globe its af liates andstrategic partnerships linking coun tries in complex webs of alliances themultinational enterprise mne is theembodiment of globalization and itsprincipal agent nation states have con tributed towards making the mne thekey agent of globalization through pro moting technological innovation reduc ing tariff and non tariff barriers and lib eralizing their domestic nancial sys tems multinationals have been theprime movers behind globalization tak ing advantage of the increased opennessof domestic economies to integrate theiractivities across national markets and so cieties given their mobility and visibility itis not surprising that mnes have becomea lightning rod for groups concernedabout the various costs of globalization social cultural political and perhapsmost importantly the economic costs although international business ib scholars and policymakers emphasizethe bene ts of globalization and cooper ative relations with mnes the publicand non governmental organizationshave ignored these views and focused onthe dark side of mne state relations with the growing backlash against glob alization and mnes more research onthe janus face of globalization is neededif the pro mne pro globalization viewsof most ib scholars are to prevail in pub lic policy debates this research symposium served as aninvitation to international businessscholars to further explore the janus faceof globalization through organizing thissymposium we have come to appreciatethat when scholars look at problemsidenti ed with globalization s dark side they also often contribute to our under standing of the bright side the potentialfor globalization to bring with it wide spread bene ts for all we submit that asscholars we can learn more when we tryto ferret out the causal relationships be tween globalization the mne the state

impact of state and civil institutions on the operation of rural market and nonmarket configurations abstract the approach undertaken in this study is based on the concept of configurations configurations are shaped by specific combinations of characteristics of the following elements the item transacted the actors and the underlying physical technological cultural and policy environment configurations can be either market or nonmarket configurations in turn transactions are endogenously determined within given configurations the impact of government intervention on the performance of a number of prototypical rural configurations and agrarian institutions such as the food and cash crops market configurations the farm household sharecropping and the rural official and unofficial credit markets is evaluated critically

competitiveness in a globalised world michael porter on the microeconomic foundations of the competitiveness of nations regions and firms in this paper we provide the text of an interview with professor michael porter discussing his research and ideas relating to the microeconomic foundations of global competitiveness the discussion provides a microeconomic perspective on some of the key issues relating to recent research on competitiveness productivity clusters us economic leadership economic growth and development

comparative business failures of foreign controlled firms in the united states we explore the comparative business failures of foreign owned or controlled firms and domestically owned firms original data are collected regarding foreign controlled firms in the u s that filed for bankruptcy protection were involuntarily liquidated or ceased operations mainly due to poor financial performance during the 1978 1988 period our results show that foreign controlled firms fail less often than domestically owned firms the patterns of foreign controlled business failures and the impacts of entry modes ownership types and national culture on the failures of foreign controlled firms are also examined

influences of transaction costs in environmental policy abstract there is a growing literature reporting the extent of transaction costs for environmental policies however understanding why transaction costs occur and why they are small or large is also important for efficient policy selection and evaluation following an analysis of the organisational economics literature and reports of the extent of transaction costs for a number of environmental policies three key influences to transaction costs in environmental policies are identified these are the following 1 the characteristics of the transaction for the environmental good 2 the nature of the transactors and 3 the current institutional environment and arrangements these affect transaction costs to the government and all other parties influenced by a policy transaction costs occur due to actions of information collection and policy design policy enactment and establishment implementation and contracting administration and monitoring and enforcement an interrogation of transaction cost influences reveals that 1 the influence varies between parties and is affected by the actions and interactions of and between all parties to a policy 2 how transaction costs are experienced varies across time and 3 who experiences transaction costs depends on the policy itself future policy selection and refinement will benefit from empirical analysis of the causes of transaction costs

dynamics and stability of constitutions coalitions and clubs a central feature of dynamic collective decision making is that the rules that govern the procedures for future decision making and the distribution of political power across players are determined by current decisions for example current constitutional change must take into account how the new constitution may pave the way for further changes in laws and regulations we develop a general framework for the analysis of this class of dynamic problems under relatively natural acyclicity assumptions we provide a complete characterization of dynamically stable states as functions of the initial state and determine conditions for their uniqueness we show how this framework can be applied in political economy coalition formation and the analysis of the dynamics of clubs the explicit characterization we provide highlights two intuitive features of dynamic collective decision making 1 a social arrangement is made stable by the instability of alternative arrangements that are preferred by sufficiently many members of the society 2 efficiency enhancing changes are often resisted because of further social changes that they will engender

the effect of immigration on public finances the impact of immigration on the public finances is an important influence on public opinion this study aims to provide a thorough conceptual survey pointing out the complexities of a full understanding and the relevance of indirect effects and covering both static perspectives and longer run dynamic issues it considers simple accounting approaches which are relatively neglectful of behavioural responses but also tries to bring out the complexities in the nature of the relationship between immigration and the public exchequer that come with more sophisticated modelling of its economic effects

strategic and financial performance implications of global sourcing strategy a contingency analysis using a contingency model of global sourcing strategy this study investigated the moderating effects of sourcing related factors on the relationship between sourcing strategy and a product s strategic and financial performance the results lent some support to the contingency model of global sourcing strategy in that product innovation process innovation and asset specificity were significant moderator variables for financial but not strategic performance however the results provided no support for bargaining power of suppliers and transaction frequency as moderator variables in other words in achieving high financial performance for a product whether a particular sourcing strategy should be used for a particular product depended on the levels of product innovation process innovation and asset specificity

governance infrastructure and us foreign direct investment this paper examines the statistical importance of governance infrastructure as a determinant of us foreign direct investment fdi in broad terms governance infrastructure represents attributes of legislation regulation and legal systems that condition freedom of transacting security of property rights and transparency of government and legal processes our econometric analysis uses a two stage estimation procedure in the first stage the probability that a country is an fdi recipient is estimated the results indicate that countries that fail to achieve a minimum threshold of effective governance are unlikely to receive any us fdi countries that receive no us fdi are typically countries that do not promote free and transparent markets that have ineffective governments and that often have legal systems that are not rooted in english common law in the second stage the analysis is restricted to those countries that did receive fdi flows the estimated equations focus on the determinants of the amount of fdi received given that a country is a recipient of us fdi governance infrastructure including the nature of the legal system is an important determinant of the amount received

does multinational activity displace trade kimberly a clausing using two panel data sets on the operations of u s multinational firms abroad and the operations of foreign multinational firms in the united states this article examines the empirical relationship between international trade and multinational activity the evidence supports the conclusion that multinational activity and trade are complementary activities particularly multinational activity and intrafirm trade this empirical result is consistent with the theoretical reasons one might expect a complementary relationship between the two activities and is also robust to different approaches and specifications jel f23 i introduction in recent years foreign direct investment fdi has become an increasingly important part of world integration flows of fdi have been increasing faster than trade flows which in turn have been growing faster than income 1 in addition multinational firms play a very large role in world trade for the united states 83 of exports in 1994 were either intrafirm shipments between multinational parents and their affiliates 36 or arms length trade between multinationals and unaffiliated buyers 47 2 although it is clear that multinational firms have an important role in world trade it is certainly less clear what the relationship is between production abroad and trade for multinational firms the popular press often assumes that multinational investment by u s firms replaces u s exports and in fact some economists have assumed that the rapid growth of foreign direct investment in recent years implies that multinational activity will eventually displace trade 3 this article examines the empirical relationship between multinational activity and trade and finds that there is evidence that multinational activity complements rather than displaces trade the article utilizes two panel data sets constructed from aggregate survey data published by the bureau of economic analysis bea the data vary by country and over time the first data set is used to study the relationship between u s exports and the activities of u s affiliates abroad this data set is constructed from data describing the operations of u s multinational firms in 29 host countries between 1977 and 1994 together with data on u s exports both intrafirm and arms length the second data set is used to study the relationship between u s imports and the activities of foreign affiliates operating in the united states it uses data describing operations in the united states by foreign affiliates of firms based in 29 home countries between 1977 and 1994 together with data on u s imports both intrafi rm and arms length most previous studies of this question have examined the relationship between multinational activity and trade for a cross section of countries by using data that also vary over time it is possible to explore more thoroughly the relationship between multinational activity and trade and how this relationship evolves it is also possible to control for fixed country effects that may be influencing the observed relationships previous studies have tended to focus on the relationship between outward multinational activity and exports this article looks as well at the relationship between inward multinational activity and imports finally this article considers the question of complementarity between multinational activity and trade in two ways in addition to looking at the relationship between the quantities of multinational activity and trade the article also studies complementarity much as one might think of complementarity in a demand study by considering cross price effects in particular the article includes an analysis of the relationship between price variables that measure the cost of multinational activity abroad and exports since the price of operating abroad is negatively related to exports this is further evidence of a complementary relationship between trade and multinational activity

trade industrialisation and the visible hand the paper examines the neo classical case for the export orientated industrialisation strategy questioning not only its representation of what has occurred in the newly industrialising countries but also raising some doubts about the validity of the analytical model which is implicit in its policy prescriptions an alternative analytical framework and political economy model is then sketched out the experience of south korea and taiwan is used for illustrative purposes highlighting areas where further conceptual and empirical analysis is required to give a fully blown alternative story an appendix offers a brief summary and critique of some recent neo classical work on the relationship between price distortion and growth

immigration wages and compositional amenities economists are often puzzled by the stronger public opposition to immigration than trade since the two policies have symmetric effects on wages unlike trade however immigration changes the composition of the local population imposing potential externalities on natives while previous studies have focused on fiscal spillovers a broader class of externalities arise because people value the compositional amenities associated with the characteristics of their neighbors and co workers in this paper we present a new method for quantifying the relative importance of these amenities in shaping attitudes toward immigration we use data for 21 countries in the 2002 european social survey which included a series of questions on the economic and social impacts of immigration as well as on the desirability of increasing or reducing immigrant inflows we find that individual attitudes toward immigration policy reflect a combination of concerns over conventional economic impacts i e on wages and taxes and compositional amenities with substantially more weight on composition effects most of the difference in attitudes to immigration between more and less educated natives is attributable to heightened concerns over compositional amenities among the less educated

the labour market effects of immigration and emigration in oecd countries in this paper we quantify the labor market effects of migration flows in oecd countries during the 1990 s based on a new global database on the bilateral stock of migrants by education level we simulate various outcomes using an aggregate model of labor markets parameterized by a range of estimates from the literature we find that immigration had a positive effect on the wages of less educated natives and it increased or left unchanged the average native wages emigration instead had a negative effect on the wages of less educated native workers and increased inequality within countries

a multi criteria evaluation framework for tradable white certificate schemes recent years have witnessed regained political momentum on energy efficiency and interest in establishing markets is growing as a result tradable white certificate twc schemes of differing design have been implemented in great britain italy and france much attention is being paid to justifying and evaluating such schemes in this paper we develop and apply a multi criteria framework for evaluating twc schemes an approach that attempts to cover their individual design features a broad evaluation is conducted regarding energy saving and environmental effectiveness economic efficiency cost effectiveness transaction costs political feasibility administrative burden and technical change the results show the design and performance of twc schemes to be case and context specific and generalisations are thus inappropriate this evaluation supports the cost effectiveness modelled for the british scheme and the assumption that a twc scheme is an economically efficient policy instrument for the other more complex twc schemes more data and experience are needed to judge their ex post merit on the whole the proposed multi criteria evaluation requires considerable data and complementary methods however the framework improves the understanding of the broad effects and attributes of twc schemes it deals with various empirical and normative aspects that can be applied in their evaluation

immigration and inequality immigration is often viewed as a proximate cause of the rising wage gap between highand low skilled workers nevertheless there is controversy over the appropriate theoretical and empirical framework for measuring the presumed effect and over the precise magnitudes involved this paper offers an overview and synthesis of existing knowledge on the relationship between immigration and inequality focusing on evidence from cross city comparisons in the u s while some researchers have claimed that a cross city research design is inherently flawed i argue that the evidence from cross city comparisons is remarkably consistent with recent findings based on aggregate time series data in particular cross city and aggregate time series comparisons provide support for three key conclusions 1 workers with below high school education are perfect substitutes for those with a high school education 2 high school equivalent and college equivalent workers are imperfect substitutes with an elasticity of substitution on the order of 2 3 within education groups immigrants and natives are imperfect substitutes together these results imply that the average impacts of recent immigrant inflows on the relative wages of u s natives are small the effects on overall wage inequality including natives and immigrants are larger reflecting the concentration of immigrants in the tails of the skill distribution and higher residual inequality among immigrants than natives even so immigration accounts for a small share 5 of the increase in u s wage inequality between 1980 and 2000

international standards and international trade empirical evidence from iso 9000 diffusion abstract empirical scholarship on the standards trade relationship has been held up due to methodological challenges measurement varied effects and endogeneity considering the trade effects of one particular standard iso 9000 we surmount methodological challenges by measuring standardization via national penetration of iso 9000 allowing standardization to manifest via multiple quality signaling information compliance cost and common language channels and using instrumental variable multilateral resistance and panel data techniques to overcome endogeneity we find evidence of common language and quality signaling augmenting country pair trade yet iso rich nations benefit the most from standardization while iso poor nations find iso 9000 to represent a trade barrier due to compliance cost effects

immigration and welfare magnets this article investigates if the location choices made by immigrants when they arrive in the united states are influenced by the interstate dispersion in welfare benefits income maximizing behavior implies that foreign born welfare recipients unlike their native born counterparts may be clustered in the states that offer the highest benefits the empirical analysis indicates that immigrant welfare recipients are indeed more heavily clustered in high benefit states than the immigrants who do not receive welfare or than natives as a result the welfare participation rate of immigrants is much more sensitive to changes in welfare benefits than that of natives