the disaggregation of corporations selective intervention high powered incentives and molecular units a vast array of organizational innovations and changes are transforming us corporations large firms have dramatically downsized refocused and vertically disaggregated they increasingly obtain goods and services pursue complex development efforts and exploit horizontal synergies without the aid of formal hierarchy large firms are also internally disaggregating into smaller more autonomous units that are treated much like external subcontractors the authors argue that these organizational innovations share an important underlying commonalty economic activity is converging toward exchange involving either internal within firm or external between firm networks of small autonomous production or service units small units and small firms have become the basic building block the molecular units of these new forms further exchange among the small autonomous units is commonly a mix of both market like and hierarchical features the authors develop a theoretical explanation for these trends the

early tracking and the misfortune of being young recent research suggests that the relative age of a student within a grade has a causal effect on educational achievement and that this effect fades with the duration of schooling in this study we estimate the causal relative age effect on track choice in austria a country where students are first tracked in grade 5 at the age of 10 years and again in grade 9 we find a strong positive relative age effect on track choice in grades 5 8 the age effect persists beyond grade 8 for students from less favorable socioeconomic backgrounds and students in urban areas

global value chain governance a relational perspective global value chain gvc governance is an established field within international business research yet the relational aspects of gvcs have to date garnered less scholarly attention than have efficiency considerations this conceptual study s objective is to explore the relational dynamics of gvc governance using an internalization theory perspective and by linking gvc research with insights from the business network literature gvcs are argued to be a distinct form of asymmetrical networks associated with economizing and capability creation features as well as costs the orchestrating firm can thus enhance efficiency outcomes of the gvc using social mechanisms similar to those adopted by core actors in a business network in the study six such mechanisms were identified 1 selectivity 2 inclusion of non business intermediaries 3 joint strategizing 4 relational capital 5 multilateral feedback and 6 rules for equitable value distribution while safeguarding the gvc s efficiency the above social mechanisms are associated with challenges and limitations and therefore do not guarantee international competitive success however deployed in an integrative fashion these social mechanisms facilitate coordination thus economizing on bounded rationality reduce the hazards of imperfect effort by partners thus economizing on bounded reliability and foster innovation and new capability development

internal trade productivity and interconnected industries a quantitative analysis does trade within a country affect welfare and productivity what are the magnitude and consequences of costs to such trade to answer these questions we exploit unique canadian data to measure internal trade costs in a variety of waysthey are large and vary across sectors and provinces to quantify their consequences for welfare and productivity we use a recent multi sector trade model featuring rich inputoutput relationships we find interprovincial trade is an important contributor to canada s gdp and welfare though there are significant costs to such trade reducing interprovincial trade costs by 10 yields aggregate gains of 0 9 eliminating our preferred estimates of costs gains average between 3 and 7 equivalent to real gdp gains between 50 billion and 130 billion finally as policy reforms are often sector specific we liberalize sectors one at a time and find gains are largest in highly interconnected industries

the global value chain and internalization theory in a research note in this issue strange and humphrey discuss how a global value chain gvc approach serves to usefully move internalization theory towards a better understanding of the increasingly important middle ground between markets and hierarchies in the contemporary highly globalized international business scene after a brief recount of their main arguments we argue that their discussion needs to the extended as it does not adequately recognize important differences between internalization theory and the gvc approach specifically the approaches differ on the notions of efficiency opportunism and level of analysis we then argue that internalization theory can benefit from the systemic view implied in the gvc approach and discuss the role of trust as a coordinating mechanism in international business this leads to a more general discussion of internalization theory and the difficulty of encompassing dynamic considerations such as learning and foreign operation mode combinations and flexibility within value chain interdependencies we conclude with a research agenda that flows from our discussion

overcoming the liability of outsidership for emerging market mnes a capability building perspective this paper develops and discusses a model describing how multinational enterprises from emerging economies emnes overcome the liability of outsidership in their internationalization from a capability building perspective our aim is to celebrate the important intellectual contribution of johanson and vahlne j int bus stud 40 9 1411 1431 2009 who introduced the liability of outsidership concept we first discuss learning from the local environment that can reduce outsidership and then explain how greater absorptive capacity can translate into better performance internationally finally we elaborate on how the institutional environment further conditions the process and the outcomes of learning we conclude with some suggestions for future research from five theoretical perspectives learning social network theory institutional theory resource dependence theory and mne structure and design

how reliable are simple single equation specifications of import demand this paper examines nine models of aggregate import demand for each of five countries canada germany japan united kingdom and united states in an attempt to determine which of the frequently used single equation models of import demand are appropriate an appropriate model is defined as one which generates unbiased or at least consistent and efficient elasticity estimates while models without lagged adjustments and almon lag models perform rather poorly according to these criteria models including dynamic behavior through lagged values of the dependent variable are frequently accepted results are reported regarding functional form measures of variables and structural shift economists have devoted considerable attention to the estimation of aggregate import demand elasticities because of their importance in trade theory the simplest procedure for estimating these elasticities which is consistent with economic theory is to assume that the elasticity of supply of imports is infinitely elastic and to estimate

how does parental leave affect fertility and return to work evidence from two natural experiments this paper analyzes the effects of changes in the duration of paid job protected parental leave on mothers higher order fertility and postbirth labor market careers identification is based on a major austrian reform increasing the duration of parental leave from one year to two years for any child born on or after july 1 1990 we find that mothers who give birth to their first child immediately after the reform have more second children than prereform mothers and that extended parental leave significantly reduces return to work employment and earnings also decrease in the short run but not in the long run fertility and work responses vary across the population in ways suggesting that both cash transfers and job protection are relevant increasing parental leave for a future child increases fertility strongly but leaves short run postbirth careers relatively unaffected partially reversing the 1990 extension a second 1996 reform improves employment and earnings while compressing the time between births

do state borders matter for u s intranational trade the role of history and internal migration empirical evidence of the impact of borders on international trade flows using the gravity equation approach abounds this paper examines the empirical relevance of state borders in u s interstate trade for various specifications of the gravity equation we find a large and economically significant subnational border effect for some specifications however two model specifications drastically reduce if not eliminate the border effect i dynamic panel specifications controlling for past levels of trade and ii models conditioning on internal migration les resultats empiriques de l analyse des impacts des frontieres sur les flux de commerce international en utilisant les modeles de gravite sont devenus monnaie courante ce texte examine l impact des frontieres entre etats a l aide de cette technique il s avere que les effets de frontieres infranationales sont grands et significatifs pour certaines specifications du modele cependant deux specifications du modele reduisent dramatiquement s ils n eliminent pas l effet de frontiere i des specifications qui prennent en compte les niveaux anterieurs de commerce et ii des specifications qui dependent de la migration interne

applying and advancing internalization theory the multinational enterprise in the twenty first century internalization theory has provided a resilient analytical framework that explicitly or implicitly underlines much of international business scholarship internalization theory is not a monolithic body of knowledge instead it has devolved into several streams each of which focuses on the interests of particular epistemic communities while also acting as a more generic organizing framework for those more broadly interested in its application to real world challenges following a review of the various streams we trace the frontiers of current research of the broader internalization framework and identify emerging themes raised by the papers in the special issue these include transaction cost considerations in the bundling and recombination of assets across diverse contexts the growing relevance of quasi internalization the theoretical challenges of bounded rationality for internalization theory and the increasing disconnect between ownership control and responsibility these developments point to new research frontiers for scholars looking to apply or advance internalization theory

factoryless goods producing firms abstract this paper documents the existence and characteristics of us firms that do not manufacture themselves but nonetheless are heavily involved in the production of goods these factoryless goods producing firms fgpfs are formally in the wholesale sector but unlike traditional wholesale firms fgpfs design the goods they sell and coordinate production activities fgpfs in the wholesale sector are larger and younger pay higher wages span more sectors and had more manufacturing employment in previous years compared to traditional wholesalers fgpfs are more likely to import than typical wholesalers though their imports constitute a smaller share of their total domestic activity

the reliability of aggregate energy demand functions an application of statistical specification error tests abstract the paper examines the unbiasedness and efficiency of various energy elasticity estimates by means of statistical specification error tests the model selection procedure is applied to energy consumption data of eight industrialized countries it is found that models which describe dynamic behaviour by including the lagged dependent variable among the regressors are most frequently accepted and that long term income effects are important for all countries strong differences among countries prevail concerning the appropriateness of including a time trend elasticities derived from accepted models differ considerably among countries

thick and thin borders in the european union how deep internal integration is within countries and how shallow between them the existence of large border effects is one of the main puzzles of international macroeconomics the seminal paper by mccallum found that trade between any two canadian provinces was on average 22 times greater than trade between any canadian province and any united state us although various authors have estimated internal and external border effects for the whole european union and some specific european countries none has done so in the manner that mccallum s seminal paper stymied by lack of data on region to region international trade flows this study uses a novel data set that captures intra and international truck shipments between spanish regions and regions in seven european countries during the period 2004 11 it computes internal and external border effects offering novel results for aggregate flows and the importing countries and estimates several specifications of the gravity equation so as to tackle such issues as the multilateral resistance term heteroskedasticity and zero flows and non linear relation between trade and distance the paper also adds a detailed analysis on the external border effect for each spanish exporting region and each of the seven european countries considered by means of this analysis we shed new light on the relative integration between regions of these seven countries and spanish exporting regions finally we conduct an extrapolation exercise computing the trade potentials that would be expected in a fully integrated europe and estimating how long full integration would take to achieve between each spanish exporting region and each european importing country to this regard two alternative scenarios are considered one using the growth rates of the spanish exports before the crisis 2001 08 and other considering the postcrisis growth rates 2011 13

intra national home bias new evidence from the united states commodity flow survey abstract this paper estimates the us intra national home bias in trade using poisson pseudo maximum likelihood methodology to complement and extend wolf s 2000 work we use wolf s data from the 1993 commodity flow survey cfs and add the 1997 2002 2007 and 2012 waves we claim that wolf s home bias magnitude is overestimated due to the log linearization of the gravity equation and the control for distance used in the cross sectional study our results with panel data and latest econometric estimators show that the levels of us states home bias are in between 50 and 60 lower than in wolf s however since 2002 the home bias has experienced substantial growth which suggests that the us market is less commercially integrated in 2012 than in 1993

the economic significance of national border effects to address the economic significance of national border effects this paper provides evidence on two fundamental questions 1 do large border effects arise because of high perceived price wedges between foreign and domestic products or because imports and domestic goods are very close substitutes and 2 if price wedges are important do they reflect distortionary barriers to trade or do they arise from nondistortionary factors such as differences in transactions costs or product characteristics i conclude that while border effects may imply barriers welfare costs and a role for policy distortions are probably not as substantial as initial border results suggested jel f1

border effects and the availability of domestic products abroad trade between countries could fall short of trade within a country because 1 the volume of international trade is less than the volume of domestic trade for a given product the intensive margin or 2 some goods that are sold domestically are simply not exported the extensive margin my theoretical model illustrates that either of these two factors could explain a given aggregate border effect i examine the empirical relevance of this distinction by isolating the fraction of total domestic production attributable only to exporters finding that around one half of the border effect may be attributed to each explanation jel classification f1 les effets de frontieres et la disponibilite de produits domestiques a l etranger le commerce entre pays peut etre moindre que le commerce a l interieur d un pays parce que 1 le volume de commerce international est moindre que le volume du commerce interieur pour un produit donne la marge intensive ou 2 certains biens qui sont vendus a l interieur d un pays ne sont tout simplement pas exportes la marge extensive un modele theorique montre que l un et l autre de ces facteurs pourraient expliquer un certain effet de frontiere au niveau agrege on montre l importance empirique de cette distinction en isolant la fraction de la production interieure totale attribuable strictement aux exportateurs et il s avere qu a peu pres la moitie de l effet de frontiere est attribuable a chacune des deux explications

intra national versus international trade in the european union why do national borders matter the first objective of this paper is to estimate border effects among european union countries in this context the specification of the gravity equation together with the choice of the distance measure are shown to be crucial for assessing the size of the border effect the second objective is to evaluate the determinants of the cross commodity variation in national border effects contrary to previous findings reported in the literature we show that trade barriers do provide an explanation in particular technical barriers to trade together with product specific information costs increase border effects whereas non tariff barriers are not significant our results further suggest that these barriers are not the only cause since the spatial clustering of firms is also found to matter

towards a new trade policy between the usa and middle east countries estimating trade resistance and export potential at the time of the conclusion of free trade areas ftas between the usa and middle east and north african mena countries there is a lack of literature concerning the measurement of the current us export position with regards to these countries and the us export potential in this area from recent developments of gravity models this paper derives an estimable equation which includes various trade resistance variables notably border effects multilateral resistance as well as specific bilateral effects the model is tested in order to scrutinise the impact of these variables on us exports to mena countries as well as the us export potential in this area to that end a selection of panel data specifications is proposed mainly hausman and taylor models as well as arellano and bond dynamic models results unambiguously indicate that as compared to the other oecd countries the usa suffers from a substantial trade integration deficit with mena countries this is reflected by the strongly negative values of the us mena bilateral fixed effects as well as the high bilateral border effects in addition the estimated actual potential us export ratio to these countries is only 0 76 therefore implementing an fta between the usa and mena countries may allow the former to progressively improve its export position in this area this would also help mena countries diversify their supplying sources

the impacts of exchange rate volatility on vegetable trade flows trade flows of commodities are generally affected by the principles of comparative advantage in a free trade however trade flows might be enhanced or distorted not only by various government interventions but also by exchange rate fluctuations among others this study applies a commodity specific gravity model to selected vegetable trade flows among organization for economic co operation and development oecd countries to determine the effects of exchange rate uncertainty on the trade flows using the data from 1996 to 2002 the results show that while the exchange rate uncertainty significantly reduces trade in the majority of commodity flows there is evidence that both short and long term volatility have positive effect on trade flows of specific commodities this study also tests the regional preferential trade agreements such as the north american free trade agreement nafta the asia pacific economic cooperation apec and the eu and their different effects on commodities

within u s trade and the long shadow of the american secession using data from the us commodity flow surveys we show that the historical union confederacy border lowers contemporaneous trade between us states by about 16 percentrelative to trade flows within the former alliances amongst one million placebos there is no other constellation of state grouping that would yield a larger border effect the finding is robust over different econometric models treatment of the rest of the world available survey waves or levels of aggregation including contemporaneous controls such as network institutional or demographic variables and heckscher ohlin or linderterms lowers the estimate only slightly historical variables such as the incidence of slavery do not explain the effect away adding us states unaffected by the civil war we argue that the friction is not merely reflecting unmeasured north south differences finally the estimated border effect is larger for differentiated than for homogeneous goods stressing the potential role for cultural factors and trust

enforcing higher labor standards within developing country value chains consequences for mnes and informal actors in a dual economy the 2013 collapse of the rana plaza building in dhaka bangladesh led external stakeholders to insist on higher labor standards in apparel global value chains gvcs stakeholders now expect mnes to take full chain responsibility however the increased monitoring and enforcement costs of a large network of suppliers have been non trivial mnes instead implement a cascading compliance approach coupled with a partial re internalization elevated costs are further exacerbated in developing countries where the informal and formal sectors are linked and cost competitiveness greatly depends on this duality monitoring actors in the informal sector is difficult and few informal actors can achieve compliance gvcs have therefore reduced informal sector engagement by excluding non compliant actors and investing in greater automation by seeking to strictly enforce compliance mnes are attenuating some of the positive effects of mne investment particularly the prospects for employment creation especially among women and enterprise growth in the informal sector i discuss how these observations might inform other cross disciplinary work in development ethics and sociology finally i note implications for ib theory from the disparities between the ownership control and responsibility boundaries of the firm

the economic consequences of parental leave mandates lessons from europe this study investigates the economic consequences of rights to paid parental leave in nine european countries over the 1969 through 1993 period since women use virtually all parental leave in most nations men constitute a reasonable comparison group and most of the analysis examines how changes in paid leave affect the gap between female and male labor market outcomes the employment to populations ratios of women in their prime childbearing years are also compared with those of corresponding aged men and older females parental leave is associated with increases in women s employment but with reductions in their relative wages at extended durations

the dynamism of mexican exports lost in chinese translation summary this paper analyzes the extent to which mexican exports have penetrated us markets in recent years and juxtaposes such an analysis with the performance of china we find that mexico s main non oil exports are losing dynamism and their relative share in the us market is either declining or growing slower than china s this trend is a new one and begins after china s entry into the wto a number of factors could explain these findings these include i the real appreciation of the real exchange rate of the peso relative to the us dollar combined with the trend toward undervaluation of the chinese currency ii the decline of public investment in mexico especially in infrastructure iii limited access to bank credit in mexico and iv the absence of government policy in mexico to help spur technological innovation and to strengthening its domestic backward and forward linkages

ecosystem specific advantages in international digital commerce we consider the applicability to digital platforms of extant international business scholarship the organization of digital platforms has been seen to such an extent as predicated upon the bundling of external resources for collective value creation that their expansion may follow the logic of externalization we further that literature contrasting the governance of network multinationals with that of platform centric ecosystems building on and extending the theory of the ecosystem we propose the concept of ecosystem specific advantages we identify costs and difficulties in the transfer of such advantages to new markets emphasizing in particular the idea of bottlenecks we then propose a framework that can be applied to future research on digital platforms focusing on the users suppliers of complementary products and platform firms we also call for research on the dynamic process of creating transferring and upgrading ecosystem specific advantages

digitalized service multinationals and international business theory banalieva and dhanaraj argue that digital service multinationals dsmncs possess a new category of firm specific advantage fsa the network advantage and that contrary to extant theory they use networks as a mode of governance i review the business models used by dsmncs compare them to non digital ones and explore what we can learn about them from extant ib theory i conclude that network advantages are not a new category of fsas that networks are not a mode of governance and that their use by dsmncs is well explained by extant theory

global value chains a review of the multi disciplinary literature this article reviews the rapidly growing domain of global value chain gvc research by analyzing several highly cited conceptual frameworks and then appraising gvc studies published in such disciplines as international business general management supply chain management operations management economic geography regional and development studies and international political economy building on gvc conceptual frameworks we conducted the review based on a comparative institutional perspective that encompasses critical governance issues at the micro gvc and macro levels our results indicate that some of these issues have garnered significantly more scholarly attention than others we suggest several future research topics such as microfoundations of gvc governance gvc mapping learning impact of lead firm ownership and strategy dynamics of gvc arrangements value creation and distribution financialization digitization the impact of renewed protectionism the impact of gvcs on their macro environment and chain level performance management

what lies between market and hierarchy insights from internalization theory and global value chain theory in this paper we suggest that internalization theory might be extended by incorporating complementary insights from gvc theory more specifically we argue that internalization theory can explain why lead firms might wish to externalize selected activities but that it is largely silent on the mechanisms by which those lead firms might exercise control over the resultant externalized relationships with their gvc partners we advance an explanation linking the choice of control mechanism to two factors power asymmetries between the lead firms and their gvc partners and the degree of codifiability of the information to be exchanged in the relationship

the asymmetric effects of reversible tariff changes under the united states gsp in a partial equilibrium textbook model of competitive international trade the volume and net value of imports always vary inversely with the tariff rate this result depends on assumptions that the tariff changes are substantial exogenous permanent and applied on a most favorednation mfn basis empirical applications of this theory however encounter different conditions generalequilibrium effects such as changes in prices exchange rates and income tend to be offsetting imperfect competition can make the incidence of the tariff indeterminate many tariff changes are small endogenous temporary and or discriminatory to illustrate how these differences in tariffs can alter their observed relation to imports we offer the following examples a tokyo round cuts in u s tariffs were staged generally over eight years and averaged only 0 3 percent per annum 6 as compared to 6 4 percent average annual changes in american import prices over the same 1980 87 period 18 if search and recontracting costs caused buyers to ignore relatively small price variations then many observed tariff changes would produce negligible effects b governments tend to lower tariffs when imports are low enough to obviate political problems and they raise them as a response to import surges observers who ignore this endogeneity might conclude that imports are positively related to tariff rates c while many tariff concessions are bound under the gatt some duties are temporarily altered to provide import relief for domestic producers or preferential access for certain trade partners importers may not respond if the temporary benefits of doing so are exceeded by the costs of finding substitutes d the importers response to a tariff change will also differ between cases where some or all imports of a given product are affected a discriminatory tariff change might shift the shares of suppliers while leaving total imports virtually unaltered empirical studies seldom test the relation between imports and tariffs directly time series estimates of import demand equations usually subsume the tariff in a gross price variable

internal borders ethnic based market segmentation in malawi summary ethnic diversity is associated with poorer economic development but why i argue that market segmentation is one mechanism linking diversity to economic underdevelopment when ethnic groups are geographically segregated and trust is concentrated within groups markets will be tend to be segmented along ethnic lines i evaluate this argument using maize price data from seventy malawian markets over 14 years and combine it with census data on the spatial distribution of ethnic groups i find that maize price differences a key indicator of market segmentation are indeed larger for ethnically dissimilar markets even after taking sub national administrative borders geographic barriers and climatic differences into account these statistical findings are complemented by interview data from farmers and traders in three markets across malawi which highlight the centrality of trust in small scale maize trading as well as a preference for coethnic trading partners together these findings suggest that ethnic diversity and ethnoregional segregation in particular can have a negative impact on market integration an important driver of food security and long term economic development

the border effect in spain this paper analyses the border effect in spain using a unique dataset on intranational trade flows over the period 1995 98 the results indicate that after controlling for market size and distance spanish regions trade around 22 times more with the rest of spain than they do with oecd countries moreover the size of the spanish bias is lower in the case of the spanish regions exports than in the case of imports although the difference is not statistically significant in most cases finally the border effect is not uniform across spanish regions

estimates of a traditional aggregate import demand model for five countries abstract in this paper we show for five advanced economics that if the variables in the aggregate import demand relationship are best described as non stationary integrated process then the traditional estimates of the income and price elasticity will be subject to substantial upward bias

child care choices and children s cognitive achievement the case of single mothers we evaluate the effect of child care versus maternal time inputs on child cognitive development using single mothers from the nlsy79 to deal with nonrandom selection of children into child care we exploit the exogenous variation in welfare policy rules facing single mothers in particular the 1996 welfare reform and earlier state level policy changes generated substantial increases in their work child care use we construct a comprehensive set of welfare policy variables and use them as instruments to estimate child cognitive ability production functions in our baseline specification we estimate that a year of child care reduces child test scores by 2 1

unraveling the mne wage premium whereas ib has extensively studied mnes generic positive impact on host economies but rarely on employee wages economics research has only shown an overall mne wage premium we unravel this premium considering multiple levels of analysis and accounting for host country contextual contingencies to unveil mnes different positive or negative distributional effects using unique micro level data from over 40 000 employees in 13 countries we examine mnes distributional effects for employees gender experience and immigrant status the influence of host country property rights protection and labor regulation and interplays with region and industry effects mnes distributional effects show marked differences that largely depend on the host country context and that are positive for experienced and foreign born employees in developed countries but negative for females working in developing countries whereas in developed countries the gender wage gap is smaller in mnes than in domestic firms as hypothesized we find evidence of a larger wage gap in developing countries the analysis also reveals that the higher host countries level of property rights protection the lower the mne wage premium our study points at the need to reassess statements about the generic positive impact of mnes in host countries particularly in developing countries and discusses further research implications

intra national trade costs assaying regional frictions abstract the effects of intra regional inter regional and international frictions on the trade flows of canada s provinces are disentangled by gravity model techniques unexplained trade barriers utbs are the difference between inter provincial trade barriers inferred from pair fixed effects and from bilateral distance and contiguity the estimates reveal large intra national trade costs and utbs that vary significantly across canada s provinces decomposition of utbs into relative border effects and a systematic residual utb is based on a novel cobb douglas aggregator of intra provincial and pure inter provincial trade costs variation of both components across provinces is big

explaining the swollen middle why most transactions are a mix of market and hierarchy why are firms sometimes more efficient than markets at organizing transactions why are most transactions arrayed neither at the pure market nor at the pure hierarchy end of the continuum but rather in the swollen middle incorporating features of both market and hierarchy why don t firms make greater use of price incentives this paper addresses these three questions by developing a model of the choice of institution one key building block is the distinction between organizing methods hierarchy and the price system and institutions firms and markets hierarchy and the price system are two distinct methods for organizing transactions each with particular costs and benefits markets and firms are institutions which use one or both of these methods although markets predominantly use prices and firms rely principally on hierarchy there is not a one to one correspondence between prices and markets or between hierarchy and firms indeed the paper argues that it is generally more efficient to use a mix of both methods than to specialize in either the paper focuses on the enforcement properties of prices and hierarchy hierarchy controls individuals directly by constraining their behavior by imposing behavior constraints while prices do it indirectly by measuring their outputs through price constraints under hierarchy individuals receive a salary to do as told while self employed individuals governed by the price system are rewarded on the basis of their output each system has its own biases using prices maximizes effort minimizes shirking but incites individuals to inflate the price and or reduce the quality of their output it encourages cheating relying on hierarchy results in the opposite bias under hierarchy individuals are not paid in function of their output but instead are rewarded for following directives they have thus strong incentives to minimize effort to shirk unless properly supervised but being paid a fixed sum to follow orders they have few incentives to cheat hence the price system experiences low shirking but potentially high cheating costs while hierarchy faces low cheating but high shirking costs organizing costs are the sum of shirking and cheating costs any given transaction will be organized by the mix of price and hierarchy i e by the mix of price and behavior constraints that minimizes organizing costs a transaction will be organized within a firm if the reduction in cheating costs achieved by replacing price constraints by behavior constraints exceeds the resulting increase in shirking costs and by the market in the opposite case the paper shows that cheating and shirking costs increase more than proportionately as one concentrates in either pure price or behavior constraints hence using a mix of both methods generally minimizes the sum of cheating and shirking costs this explains why most transactions exhibit features of both markets and hierarchy the paper shows clearly the tradeoff involved between price and behavior constraints it explains the costs and benefits of using two types of price incentives in firms piecework and profit centers and predicts when they will be used

export sensitivity to time delays and the pattern of international trade a growing body of literature in the field of international trade highlights the increasing importance of the time delays associated with transporting goods over long distances and the differing eff

taxes and the timing of births because the tax savings of having a child are a realized only if the birth takes place before midnight january 1 the incentives for the marginal birth are substantial using a sample of children from the national longitudinal survey of youth we find that the probability that a child is born in the last week of december rather than the first week of january is positively correlated with tax benefits we estimate that increasing the tax benefit of having a child by 500 raises the probability of having the child in the last week of december by 26 9 percent

internalization advantage and subsidiary performance the role of business group affiliation and host country characteristics we extend internalization theory by examining the contingencies associated with market internalization and its impact on foreign subsidiary survival based on a sample of 6170 subsidiary year observations in 63 countries belonging to 292 mncs from korea during 1995 2013 we find that greater product and labor market internalization have weaker impacts on the survival of subsidiaries operating in countries with more developed institutional environments but stronger for subsidiaries of mncs affiliated with business groups the impact of business group affiliation is further dependent on host country institutional development and the diversification and size of the business group

north south and distance in the gravity model abstract it is generally assumed that distance in the gravity model strictly reflects frictions impeding bilateral trade however distances north south could also reflect differences in factor endowment that provide opportunities for profitable trade this paper investigates the hypothesis that if we control for distance in the ordinary sense differences north south promote international trade the hypothesis receives ample support moreover the significance of differences north south survives a battery of robustness tests concerning period distinctions between differences in latitude north north north south and south south and controls for other measures of differences in factor endowment such as differences in per capita output and differences in average temperature rainfall and seasonal range in temperature the impact of differences north south on bilateral trade has also been falling this decline in turn might be partly responsible for the weakening of the influence of distance that has been occurring since world war ii this last hypothesis receives confirmation as well finally the paper examines the impact of internal distance and remoteness on trade since both variables are country specific this is done by studying their impact on the country fixed effects themselves in the earlier estimates internal distance turns out to have a far greater impact than remoteness by an order of 10

causal effects of paternity leave on children and parents reserving a share of the parental leave period for fathers is considered necessary in order to induce fathers to take leave and to increase men s participation in child rearing we investigate how a parental leave reform directed towards fathers affected leave taking and in turn children s and parents long term outcomes a paternal leave quota greatly increases the share of men taking paternity leave we find evidence that children s school performance improves as a result particularly in families where the father has higher education than the mother we find no evidence that paternity leave counters the traditional allocation of parents labor supply

on the size of home bias home bias in consumption refers to consumers strongly preferring domestic over foreign products however if the products were to be differentiated would there then be a taste for country of origin if this were the case what would be the market shares if consumers were to only value prices and characteristics and not the brand s nationality using a structural demand we account for home bias in the european car market and compute the counterfactual market shares in the absence of home bias we find that home biased preferences explain more than half of the market shares of domestic car manufacturers in their domestic markets limiting the role of trade frictions

governance and trade in fresh vegetables the impact of uk supermarkets on the african horticulture industry production of fresh vegetables for export has grown rapidly in a number of countries in sub saharan africa over the last decade this trade brings producers and exporters based in africa together with importers and retailers in europe large retailers in europe play a decisive role in structuring the production and processing of fresh vegetables exported from africa the requirements they specify for cost quality delivery product variety innovation food safety and quality systems help top determine what types of producers and processors are able to gain access to the fresh vegetables chain and the activities they must carry out the control over the fresh vegetables trade exercised by uk supermarkets has clear consequences for inclusion and exclusion of producers and exporters of differing types and for the long term prospects for the fresh vegetables industry in the two major exporting countries studied kenya and zimbabwe

the trade creating effects of business and social networks evidence from france using theory grounded estimations of trade flow equations this paper investigates the role that business and social networks play in shaping trade between french regions the bilateral intensity of networks is quantified using the financial structure and location of french firms and bilateral stocks of migrants compared to a situation without networks migrants are shown to double bilateral trade flows while networks of firms multiply trade flows by as much as four in some specifications finally taking network effects into account divides the estimation of the impact of transport costs and of the effect of administrative borders by around three

the impact of non parental child care on child development evidence from the summer participation dip abstract although a large literature examines the effect of non parental child care on preschool aged children s cognitive development few studies deal convincingly with the potential endogeneity of child care choices using a panel of infants and toddlers from the birth cohort of the early childhood longitudinal study ecls b this paper attempts to provide causal estimates by leveraging heretofore unrecognized seasonal variation in child care participation child assessments in the ecls b were conducted on a rolling basis throughout the year and i use the participation dip among those assessed during the summer as the basis for an instrumental variable the summer participation dip is likely to be exogenous because ecls b administrators strictly controlled the mechanism by which children were assigned to assessment dates the ols results show that children utilizing non parental arrangements score higher on tests of cognitive ability a finding that holds after accounting for individual fixed effects however the instrumental variables estimates point to sizeable negative effects of non parental care the adverse effects are driven by participation in formal settings and contrary to previous research i find that disadvantaged children do not benefit from exposure to non parental care

border effects in the enlarged eu area evidence from imports to accession countries by looking at imports of eastern european countries we provide novel insights on the importance and magnitude of border effects and on how they are linked with technical barriers to trade all central eastern european countries ceecs traded with themselves more than with other countries we grouped products into three categories depending on the importance of applicaple technical barriers our results show border effects are the largest for products where we expect to have the most important technical barriers we assess if border effects changed over the transition period and we find that for products where technical barriers are less important the magnitude of border effects was declining at the end of the 90s

reorganising global value chains and building innovation capabilities in brazil and india abstract this paper is concerned with global shifts in innovation power it shows that brazil and india are accumulating significant innovation capabilities most explanations concentrate on factors within these rising powers this paper concentrates on explanatory factors which have their origin in the old powers europe and usa in order to understand the build up of innovation capabilities in brazil and india it examines their linkages with firms in europe and usa concentrating on the value chains which connect them it shows how the organisational decomposition of the innovation process emanating from the old powers contributes directly and indirectly to the build up of innovation capabilities in the new powers the empirical evidence comes from the brazilian auto and the indian software industry and the value chains which link them to the united states and germany two very different industries show a core of common findings on processes which contribute to building advanced innovation capabilities in india and brazil

trade in the triad how easy is the access to large markets in this paper we measure market access between the united states the eu and japan the triad using the effect of national borders on trade patterns we investigate overall and industry level trends of bilateral trade openness and provide explanations for those using proxies for bilateral observed protection tariffs and ntbs home bias of consumers product differentiation and levels of fdi the explanations related to actual protection home bias and substitutability of goods put together explain a large part of the border effect between blocs of the triad although they do not explain the whole of the border effect puzzle jel classification f12 f15 commerce dans la triade jusqu a quel point l acces aux grands marches est il facile cet article mesure le niveau d integration commerciale entre les pays de l ue le japon et les etats unis la triade en utilisant l effet des frontieres nationales sur le commerce international nous etudions le niveau et l evolution du degre d ouverture bilateral ainsi que les differentes explications possibles des effets frontiere estimes qui sont testees a l aide de variables capturant la protection tarifs et bnts le biais domestique des consommateurs le degre de differenciation des produits et les niveaux d ide bilateraux les explications liees a la protection au biais domestique et a la substituabilite entre produits considerees ensemble expliquent une bonne partie de l effet frontiere entre pays de la triade meme si elles n expliquent pas la totalite de l enigme

measuring internal trade distances a new method applied to estimate provincial border effects in canada in this paper we suggest an improved methodology for comparing the intensity of trade across and within national and provincial boundaries earlier efforts to assess border effects for provinces or for countries without internal trade statistics made fairly arbitrary assumptions about average distances for internal trade flows we improve on earlier efforts by taking more complete account of the distribution of population within each province or country internal distance is estimated as a population weighted average of intra city and intercity distances as well as distances to and within rural areas we find higher estimates of internal distances and hence border effects than found in previous studies

relative price effects and the demand for imports this paper addresses the issue of data selection in the estimation of import demand functions little attention is generally devoted to the choice of price and activity variables in empirical work yet this question is of crucial importance when estimated elasticities are used for instance to assess the effect of import price changes in a partial equilibrium framework or when elasticity estimates drawn from different sources are compared with each other throughout the paper imports are treated as intermediate products and the relationship between price and quantity elasticities corresponding to various specifications is established for constant and variable returns to scale prix relatifs etfonctions d importations ce m6moire examine le probleme du choix des donnees quand on veut faire la calibration de fonctions d importations le choix des indicateurs de prix et de niveau d activite ne regoit habituellement que peu d attention dans les travaux empiriques cette question est pourtant de grande importance quand on veut utiliser les mesures d elasticit6 qu on en tire pour evaluer les effets d un changement des prix a l importation dans le cadre d un modele d equilibre partiel ou lorsqu on d6sire comparer entre elles des mesures d elasticite construites a partir de sources differentes dans ce m6moire les importations sont considerees comme des biens intermediaires et l on etablit a la fois pour les cas de rendements a 1 echelle constants et variables la relation qui existe entre l lasticite par rapport au prix et l 6lasticite par rapport aux quantites pour un 6ventail de specifications du modele

internalization theory for the digital economy we study the internationalization of digital service multinational enterprises smncs focusing on how digitalization alters internalization theory s assumptions about the nature of firm specific assets fsas and the theory s predictions about governance choices in cross border transactions we invoke simon s proc am philos soc 106 6 467 482 1962 near decomposability concept to explain how digitalization enables two distinct types of fsas technology and human capital applying the ideas of modularity and skill complexity we further distinguish between core versus peripheral technology fsas and between generic versus advanced human capital fsas building on the transferability and appropriability of these strategic assets we theorize on the fsas internalization propensity in the digital age we propose that with rising digitalization the network plays a dual role as a governance mode and as a strategic resource integrating insights from network economics particularly increasing returns to scale we propose that network advantages on emerge as a distinct strategic resource that merits separate investigation from the traditional asset based oa and transaction based ot advantages

what is the case for paid maternity leave abstract we assess the case for generous government funded maternity leave focusing on a series of policy reforms in norway that expanded paid leave from 18 to 35 weeks we find the reforms do not crowd out unpaid leave and that mothers spend more time at home without a reduction in family income the increased maternity leave has little effect on children s schooling parental earnings and labor force participation completed fertility marriage or divorce the expansions whose net costs amounted to 0 25 of gdp have negative redistribution properties and imply a considerable increases in taxes at a cost to economic efficiency

more than intent a bundling model of mne sme interactions abstract as a counterpoint to prashantham and birkinshaw i present an alternative model of mne sme cooperation where either type of firms can take the role of content provider or distributor i argue that mnes will interact with smes when there are differences in optimal scale between the content creation and distribution stages of the value chain and it is not feasible or efficient for either party to vertically integrate between these two stages i then build two 2 2 bundling models one in which the sme provides content and the mne distributes it and another with the reverse configuration in these 2 2s the axes are the transactional properties of the two complementary inputs content and distribution that mnes and smes bundle to create value i show that these models can explain the forms taken by mne sme cooperation and their dynamics

tear down this wall on the persistence of borders in trade why do borders still matter for economic activity the reunification of germany in 1990 provides a unique natural experiment for examining the effect of political borders on trade both in the cross section and over time with the fall of the berlin wall and the rapid formation of a political and economic union strong and strictly enforced administrative barriers to trade between east germany and west germany were eliminated completely within a very short period of time the evolution of intra german trade flows after reunification then provides new insights for both the globalization and border effects literatures our estimation results show a remarkable persistence in intra german trade patterns along the former east west border political integration is not rapidly followed by economic integration instead we estimate that it takes at least one generation between 33 and 40 years or more to remove the impact of political borders on trade this finding strongly suggests that border effects are neither statistical artefacts nor mainly driven by administrative or red tape barriers to trade but arise from economic fundamentals

who profits from innovation in global value chains a study of the ipod and notebook pcs in an era when new ideas are brought to the market by global value networks of specialists rather than by one company a key question is who captures the most value from innovation in such a structure and why this paper addresses the question of who benefits from innovation in global value chains by looking at specific computer and electronics products we apply a novel industry studies methodology for measuring the distribution of financial value across the supply chains for two models from apple s ipod family and notebook pc models from lenovo and hewlett packard hp these are all examples of globally innovated products combining technologies from the u s japan and other countries and assembled in china our analysis shows that the gross margins of apple for its high end ipod products are generally higher than those earned by hp and lenovo for notebook pcs although not so high as to be considered supernormal a key reason for the difference is that apple s control of the core software proprietary standards and complementary infrastructure of the ipod enables it to retain greater profits whereas a large share of the pc industry profits are siphoned off to microsoft and intel who control key technical standards consistent with teece 1986 our results confirm the importance of stages of technical evolution appropriability regimes and complementary assets as determinants of profiting from innovation on the other hand we find that manufacturing has become commoditized and is no longer a key to profiting from innovation in final electronic products also contrary to recent suggestions in the literature we find no evidence of a causal link between product and industry architectures instead there is a vast electronics industry architecture that can easily support product level value chain configurations ranging from modular to integrated

does trade still follow the flag t he economic ties between any two nations are frequently affected by a warming or cooling of bilateral diplomatic relations but there is little to be found in modern economics or political science that helps us understand the connections between international politics and commerce the notion that international economics could be studied in isolation from its political underpinnings or consequences would have been quite alien to mercantilist thinkers in the eighteenth century or to the critics or advocates of imperialism in the nineteenth that economics and politics were inextricably intertwined was taken as a matter of course indeed trade follows the flag was central to these people s understanding of world politics and international economics intellectual trends over the past century radically changed this worldview the ascendancy of liberalism in economic thought brought with it a compartmentalization of disciplines that may now be eroding but we are left with theories of international politics and economics that are very weakly bridged the objective of this study is to map one of the many connections between international politics and commercial ties specifically i seek to identify and measure the effect of changes in state to state diplomatic relations on trade flows between those nations theoretical underpinnings of my effort are in the tradition of public choice political economy frey 1984 because i treat importers as rational utility maximizers and their behavior as determined by preferences pursued within a context of specified constraints the model i put forward is wholly consistent with contemporary neoclassical trade theory but i extend the economists notion of welfare and contend that importers take account not only of the price and quantity of goods and services but of the place of origin of these products and the political relationship between the importing and the exporting nation they do so essentially for traditional security reasons that is importers are motivated to manage their trade relations in ways that minimize risks of disruption in supply or the possibility of hurting friends or

residential energy demand additional empirical evidence by minority household type abstract in a number of recent studies household level data for specific urban areas or national household level micro data have been used to estimate price and income elasticities of energy demand none of this literature however provides us with elasticity estimates by minority majority household type the main focus of this paper is to measure the responsiveness of the quantity of electricity and total energy demanded for black hispanis and majority households to price and income price and income elasticities are compared among these groups over the short and long term a variable elasticity demand model is estimated the elasticities are allowed to vary with respect to non price and income variables the price elasticities of demand vary with heating and cooling degree days and the income elasticities with the number of household members mean estimates were calculated over the respective samples findings indicate that demand for electricity is relatively price inelastic irrespective of household group however blacks are more sensitive to variations in the short run to price than hispanic and majority households in the long run blacks are also more sensitive to price changes but the magnitude of the response to price changes in the long run relative to the short run is larger for hispanics and majority households respectively than for blacks

a note on the transnational solution and the transaction cost theory of multinational strategic management this article assesses the extent to which the results of bartlett and ghoshal s 1989 work can be incorporated in what has now become one of the core explanations of multinational strategic management i e the transaction cost based theory of international production we demonstrate that the transaction cost approach fully incorporates the empirical findings of bartlett and ghoshal s work to do so requires that we make a new distinction between location bound and non location bound firm specific advantages in addition three possible uses of country specific advantages by multinational enterprises need to be identified while the transnational solution as proposed by bartlett and ghoshal is not itself a new theory of multinational strategic management it is compatible with the transaction cost based model of multinational strategic management

trade flows in a spatial oligopoly gravity fits well but what does it explain large distance and border effects on trade flows in some industries may result from the collusive division of geographic markets in the brazilian cement industry traditional gravity equations fit the data well yet limited regional flows are due to firms strategic behaviour thanks to a unique institutional setting and an unusually rich data set i directly control for trade costs which despite their importance cannot account for the observed segmentation of local markets at current prices the paper highlights how collusive behaviour can magnify the effects of distance as firms use geography to coordinate on higher prices and less cross hauling les effets de grande distance et de frontieres sur les flux de commerce dans certaines industries peuvent etre le resultat d une division collusive des marches geographiques dans l industrie bresilienne du ciment les equations de gravite s ajustent bien aux donnees mais les flux regionaux limites entre regions sont attribuables au comportement strategique des firmes gr ce a un contexte institutionnel unique et a une base de donnees inhabituelles l auteur a pu prendre en compte directement les couts du commerce qui malgre leur importance ne peuvent pas expliquer la segmentation observee des marches locaux aux prix courants le memoire met en lumiere comment le comportement de collusion peut magnifier les effets de distance a proportion que les firmes utilisent la geographie pour assurer une coordination fondee sur des prix plus eleves et moins de transport transfrontalier

national borders and international trade evidence from the european union in this paper the impact of national borders on international trade within the european union is considered using a gravity model i find that averaged over all eu countries intranational trade is about ten times as high as international trade with an eu partner country of similar size and distance this relatively strong home bias suggests that even within the european union national borders still have a decisive impact on trade patterns jel classification f02 f14 f15 o52 ce memoire examine l impact des frontieres nationales sur le commerce international a l interieur de l union europeenne on montre que en moyenne pour tous les pays de l union europeenne le commerce intranational est a peu pres dix fois plus important que le commerce international avec un pays partenaire de l union europeenne de meme taille et a meme distance ce degre relativement important de preference nationale suggere que meme dans le cadre de l union europeenne les frontieres nationales ont encore un impact determinant sur les patterns de commerce

does brain drain lead to institutional gain a country s endowment of human capital affects its institutions through various channels this raises the possibility that skilled emigration can leave its mark on a country s institutional development we explore the impact of emigrant human capital on home country s institutional quality using geographical and genetic distance based instrumental variables for emigration and a dynamic panel estimation method we find that human capital emigration helps the home country s political institutions but hurts economic institutions the conventional brain drain argument therefore needs to incorporate the institutional changes due to skilled labour emigration

born on the first of july an un natural experiment in birth timing abstract it is well understood that government policies can distort behavior but what is less often recognized is that the anticipated introduction of a policy can introduce its own distortions we study one such introduction effect using evidence from a unique policy change in australia in 2004 the australian government announced that children born on or after july 1 2004 would receive a 3000 baby bonus although the policy was only announced seven weeks before its introduction parents appear to have behaved strategically in order to receive the benefit with the number of births dipping sharply before the policy commenced on july 1 2004 more australian children were born than on any other single date in the past thirty years we estimate that over 1000 births were moved so as to ensure that their parents were eligible for the baby bonus with about one quarter being moved by more than one week most of the effect was due to changes in the timing of induction and cesarean section procedures we find evidence to suggest that babies who were shifted into the eligibility period were more likely to be of high birth weight two years later on july 1 2006 the baby bonus was increased and we find that this again caused births to be moved from june to july these birth timing events represent an opportunity for health researchers to study the impact of planned birthdays and hospital management issues

do countries influence neighbouring pollution a spatial analysis of the ekc for co2 emissions abstract by considering spatial relationships this study aims to analyse to what extent per capita co2 emissions are determined by renewable energy consumption the share of the services sector in gdp energy intensity and real per capita income a panel data set composed of 173 countries over the 1990 2014 period is used to estimate an environmental kuznets curve ekc augmented by neighbouring per capita income and energy intensity both standard and spatial forms are estimated for seven different sets of countries to assess the robustness of the results finally several forecasts are performed to verify global sustainability and to provide some policy suggestions for the period 2015 2100 the empirical results indicate that i most areas support the standard ekc ii there seems to be an inverted u shaped relationship between neighbouring per capita income and national per capita emissions in europe asia and the world as a whole iii neighbouring energy intensity increases national per capita emissions and iv forecasts show that economic growth will accelerate climate change however a steady annual growth in renewable energy consumption and a steady decrease in energy intensity both close to 2 5 may guarantee environmental sustainability prior to 2100

managerial governance adaptation in the multinational enterprise in honour of mira wilkins we propose an analytical business history approach informed by new internalisation theory to study managerial governance adaptation in the multinational enterprise mne we shed new light on the timing and the scale of managerial governance adaptation these two issues have remained largely unaddressed in mainstream international business theory we uncover the importance of delayed larger scale governance adaptation as a response to cumulative localised commitment failures we illustrate our new perspective on managerial governance adaptation by providing a short retrospective of wilkins and hill s american business abroad ford on six continents cambridge university press cambridge 1964 classic historical account of ford motor company s expansion across six continents between 1903 and 1963 our brief retrospective highlights the value of in depth historical analysis informed by umbrella behavioural assumptions such as those adopted in new internalisation theory based research to gain improved understanding of international strategy and governance trajectories of large mnes

freight transportation costs and the thickening of the us mexico border border regulatory requirements and administrative practices changed subsequent to the september 11 2001 9 11 terrorist attacks in the united states research in this study examines the manners in which transportation cost data for merchandise imports from mexico behaved before and after 2001 evidence is obtained that confirms results earlier tabulated for imports from canada empirical results further indicate that beyond freight cost changes growth in the value of imports from mexico was disrupted by events associated with the aftermath of 9 11

intra national home bias some explanations wolf demonstrates that trade within the united states appears substantially impeded by state borders we revisit this finding with improved data we show that much intranational home bias can be explained by wholesaling activity shipments by wholesalers are much more localized within states than shipments from manufacturing establishments controlling for relative prices and the use of actual rather than imputed shipment distances also reduces home bias estimates

parental leave and mothers careers the relative importance of job protection and cash benefits parental leave regulations in most oecd countries have two key policy instruments job protection and cash benefits this paper studies how mothers return to work behavior and labor market outcomes are affected by alternative mixes of these key policy parameters exploiting a series of major parental leave policy changes in austria we find that longer cash benefits lead to a significant delay in return to work and that the magnitude of this effect depends on the relative length of job protection and cash benefits however despite their impact on time on leave we do not find a significant effect on mothers labor market outcomes in the medium run neither of benefit duration nor of job protection duration to understand the relative importance and interaction of the two policy instruments in shaping mothers return to work behavior we set up a non stationary job search model in which cash benefits and job protection determine decisions of when to return to work and whether or not to return to the pre birth employer despite its lean structure the model does surprisingly well in matching empirically observed return to work profiles the simulation of alternative counterfactual regimes shows that a policy that combines both job protection and benefits payments succeeds to induce mothers to spend some time with the child after birth without jeopardizing their medium run labor market attachment

the vanishing hand the changing dynamics of industrial capitalism alfred chandler s portrayal of the managerial revolution of the late nineteenth and early twentieth centuries does not extend well into the late twentieth century when widespread vertical disintegration began replacing the classical multi unit managerial enterprise this paper attempts to explain the new economy in a manner consistent with chandler by providing an enlarged theoretical account of industrial evolution in this account clusters of chandlerian firms appeared as a temporary episode within a larger smithian process of the division of labor

trade in polarized america the border effect between red states and blue states political and cultural polarization in the united states is widely discussed but does it relate to any economic disconnection among states we estimate the border effect between red and blue states using the gravity equation with a nonlinear generalized method of moments estimator to simultaneously overcome the problems associated with endogeneity cross state price differences and zero trade flow the border effect is robustly confirmed for the 2000s while not so robustly detected for the 1990s notably in 2007 the border reduces trade between red and blue states to approximately 75 of the trade within each set of states this estimated border effect is much smaller than the united states canada national border effect estimated by anderson and van wincoop 2003 and by feenstra 2002 yet is comparable to the border effect that nitsch and wolf 2009 find for the former west and east germanies approximately loyears after reunification while the border effect in germany after reunification is decreasing the border effect between the red and blue states is emerging we also find the border effect is more significant for consumption rather than intermediate goods the border effect is an important indicator for a potential dismantling of the economic connectivity in the united states jel d72 f10 fi5 r1 i introduction recent u s presidential elections have raised concern about polarization in u s politics and culture namely the united states is divided into two nations the red states we call it the red nation preserving the term state for an individual state and the blue states the blue nation in the red nation culturally and religiously conservative republicans are dominant while in the blue nation liberal democrats are the majority so far the focus of the discussion is the extent of the polarization abramowitz and saunders 2008 fiorina et al 2008 its determinants gelman et al 2010 and its implications on federal policy making glaeser et al 2005 mellow and trubowitz 2005 economic implications have not been largely discussed however the polarization may suggest economic divisions because it is a sign of geographic sorting of people and their preferences this article provides evidence that economic disconnectivity between the red and blue nations emerged in the 2000s we explore 1 whether there is a border effect on interstate trade 2 if the effect exists how large it is and 3 what types of goods are most affected in the context of existing literature and recent u s political and cultural events we then provide possible explanations for our findings this study uses a gravity equation of international trade to examine the effect of the fictional national border between the red and blue nations the methodology was originally applied by mccallum 1995 to estimate the degree of impact of the national border on trade between the united states and canada he finds that intercountry trade is less than 5 of the intracountry trade of canada controlling for other factors following mccallum s 1995 work several studies have proposed methodological improvements we apply an updated estimation method nonlinear generalized method of moments gmm estimator of a gravity equation to examine the border effect between the red and blue nations our analysis finds a statistically and economically significant border effect between the red and blue nations especially in years 2002 and 2007 we examine the border effect in 1993 1997 2002 and 2007 the years in which trade flow data are available from the federal commodity flow survey cfs the border effect is not robustly found in 1993 and 1997 however it is robustly detected in 2002 and 2007 even with additional controls or alternative specifications at the industry level analysis we find that the border effect is significant for consumption goods such as food tobacco and printed products but not for intermediate products i

mne sme cooperation an integrative framework although international business scholars have begun to recognize the division of entrepreneurial labor between mnes and smes there is a fragmented understanding of the different forms mne sme cooperation can take we develop a typology that takes into account not only complementarity of capabilities but also crucially the compatibility of intent between mnes exploration vs exploitation and smes international vs domestic orientation the framework offers a novel way to understand the forms and dynamics of mne sme cooperation we also show how it can be applied more broadly by considering its application to societal challenges such as achieving the united nations sustainable development goals

from chain liability to chain responsibility this article examines whether the involvement of stakeholders in the design of corporate codes of conduct leads to a higher implementation likelihood of the code the empirical focus is on occupational safety and health osh the article compares the inclusion of osh issues in the codes of conduct of 30 companies involved in international framework agreements ifas agreed upon by trade unions and multinational enterprises with those of a benchmark sample of 38 leading multinational enterprises in comparable industries it is found that codes of the ifa group have a higher implementation likelihood in osh than the codes of the benchmark group further european firms culturally more used to stakeholder involvement score higher than their us and japanese competitors and hence are more capable of addressing the safety and health issues in international supply chains the implementation likelihood of codes seems closely related to the type of corporate csr approach

the disappearance of the border barrier in some european union countries bilateral trade this paper estimates the tariff equivalent of the border barrier in each bilateral trade among european union countries the results show that there are large differences in the border barrier across european union countries bilateral trade in some bilateral trade flows the border barrier has almost disappeared whereas in other cases it is still equivalent to a 75 per cent tariff the results also show that some countries have low border barriers in most of their bilateral trade flows with other eu members whereas other countries persistently present large border barriers

paid parental leave and children s schooling outcomes this article investigates whether schooling outcomes at age 15 are affected by the duration of maternity leave i e the time mothers spend at home with their new born before returning to work we exploit an unanticipated reform in austria which extended the maximum duration of paid and job protected parental leave from 12 to 24 months for births as of 1 july 1990 using pisa data from the cohorts 1990 and 1987 we find no significant overall impact of the parental leave extension on standardised test scores however subgroup analyses reveal strong heterogeneity by maternal education and child gender