KNOWLEDGE SPILLOVERS AND OUTPUT PER WORKER: AN INDUSTRY‐LEVEL ANALYSIS FOR OECD COUNTRIES

This study analyzes the impact of knowledge spillovers on output per worker at the industry level using a primal production function approach. The article makes three different contributions to the international spillovers literature: (1) it identifies trade‐related spillovers under alternative assumptions regarding the information transferred through imports; (2) it explores the importance of horizontal and vertical foreign direct investment (FDI) in knowledge spillovers; and (3) it looks at how institutional factors determine the impact of FDI‐related spillovers on productivity. The main findings of the study are: (1) international knowledge spillover is an important driver of industry output per worker, and the magnitude of this spillover effect varies with alternative assumptions about the information content embodied in imports, while high technology industries benefit significantly more from import‐related knowledge spillovers; and (2) the gains from FDI spillovers are primarily horizontal, but when institutional factors are considered, countries with stronger protection of intellectual property rights and a high “ease of doing business” tend to experience a substantial increase in the effectiveness of both horizontal and vertical FDI‐related spillovers. (JEL E24, F1, F6, O3, O4)     

Bonuses,unions, and labor productivity in South Korea

Using a set of time-series (1972–1989) and cross-sectional data on eight two-digit Korean manufacturing industries, we examine the variability of South Korea’s employee bonus system and the effect of the employee bonus on productivity. A test of the variability of the bonus showed that the bonus rate (ratio of the bonus to the wage) was positively influenced by industrial output, so the bonus is not merely a disguised wage. An augmented Cobb-Douglas production function estimation shows that the bonus has a positive and significant productivity effect. Capital-intensive and laborintensive industries did not have significantly different productivity effects due to the bonus. Lastly, Korean unions reduced labor productivity and negatively affected the productivity effect of the bonus. Also, compared with the previous period, the productivity effect of the bonus has become negative since the1987 Great Labor Offensive.     

A New Analytic Approach to Urban Differentiation: Occupational Differentiation within Industries

Abstract

Urban-ecological theory predicts that functional differentiation occurs through time in a system of cities. The preponderance of evidence from relevant studies, however, has suggested convergence rather than differentiation. In contrast to previous studies which have limited themselves to an examination of employment in either industrial or occupational categories, this study examines occupational differentiation within industries. This strategy reveals an overall trend of increasing urban differentiation. It appears that consideration of the occupational composition within industries may be an important precondition to the discovery of functional differentiation among urban communities.     

Impact of Political Risk and Uncertainty on FDI in South Asia

This study examines the potential effect of political risk and macroeconomic policy uncertainty on FDI in South Asia. To highlight the affect of political risk and macro policy uncertainty on FDI, we setup a theoretical framework based on oligopolistic and imperfect competition environment in host country. Autoregressive distributed lags (ARDL) is used to examine the impact of political risk and macro economic policy uncertainty index on FDI inflows. Macroeconomic policy uncertainty and political risk indices are constructed for this purpose. The long run results show negative affect of political risk and macroeconomic policy uncertainty indices on FDI inflows. Trade openness shows positive effect on FDI inflows only in short run while in long run it has negative impact on due lack of creditability regarding consistent trade liberalization policy and high trade cost. Furthermore, the market size significantly affects the inflow of FDI both in long run and short run which shows that FDI inflows in South Asia are mainly depend on market size. South Asian economies need to focus on political and macroeconomic factors along with FDI incentives policies to attract more FDI.     

OFFSHORE OUTSOURCING DECISION AND CAPITAL INTENSITY: FIRM‐LEVEL RELATIONSHIPS

In offshore sourcing, a firm chooses outsourcing to independent suppliers or in‐sourcing from own foreign direct investment (FDI) subsidiaries. Based on the firm‐level data on offshore make‐or‐buy decision covering all manufacturing industries, this paper compares averages, documents inter‐firm distributions, and estimates multinomial logit models of the firm's sourcing mode choice. As predicted by previous theoretical models, this paper directly confirms at the firm level that outsourcing firms tend to be substantially labor‐intensive compared with firms in‐sourcing from the same region, even after the firm's R&D intensity, firm size, or industry is controlled for. (JEL F23, L23, L24, L14)     

UNIVERSITY STARTUP INTENSITY AND FACULTY QUALITY

Using a theoretical model of university technology transfer and licensing survey data from 1991 to 2013, we show that greater faculty quality and venture capital availability is positively associated with licenses to startups. We employ a two‐stage game of licensing terms (royalty rate and fixed fee) and development efforts to show that under reasonable conditions, licensing to a startup rather than an established firm will be more attractive to a technology transfer office (TTO) because the inventor's ownership share in a startup firm will increase total development efforts by the inventor and licensee. TTOs will be more likely to target startup licensees when the marginal effect of the faculty inventor's additional development effort on the probability of success is large relative to that of the venture capitalist or established firm. Empirical evidence supports the results of the model; using Associated University Technology Data licensing survey data and employing panel and cross‐sectional analyses, we show that an increase in the quality of engineering faculty has roughly twice the positive impact on startup licenses than on established firm licenses. Startup licensing is also strongly impacted by venture capital availability within institutions over time. (JEL L24, L26, D86)     

CLIMBING TO THE TOP? FOREIGN DIRECT INVESTMENT AND PROPERTY RIGHTS

This article operates at the interface of the literature on the impact of foreign direct investment (FDI) on host countries and the literature on the determinants of institutional quality. We argue that FDI contributes to economic development by improving institutional quality in the host country. This proposition is tested within a large panel data set of 70 developing countries for the period 1981–2005. We show that FDI inflows have a positive and highly significant impact on property rights. Results are very robust and not affected by model specification, different control variables, or estimation technique. To our knowledge this is the first article to empirically test the FDI—property rights linkage. (JEL F23, O43, P48)     

International trade, foreign direct investment, and transaction costs in languages

We examine the roles of major trade languages in international trade and foreign direct investment (FDI) flows. Empirical results confirm that speaking a common language increases trade and FDI flows, yet the effect of major languages is more substantial in FDI than in international trade. In addition, we find evidence of a hierarchy in transaction costs of major languages in both trade and FDI.     

FDI AND INCOME INEQUALITY: EVIDENCE FROM A PANEL OF U.S. STATES

This study employs state‐level panel data to explore the relationship between inward foreign direct investment (FDI) and income inequality in the United States. Using panel cointegration techniques that allow for cross‐sectional heterogeneity and cross‐sectional dependence, we find that, in the long run, FDI exerts a significant and robust negative effect on income inequality in the United States. This result for the United States as a whole does not imply that FDI narrows income gaps in each individual state. There is considerable heterogeneity in the long‐run effects of FDI on income inequality across states, with some states (21 out of 48 cases) exhibiting a positive relationship between FDI in income inequality.(JEL F21, D31, C23)     

LICENSING POLICY AND TECHNOLOGY ADOPTION IN STANDARD SETTING ORGANIZATIONS

The standard setting organizations' decisions on licensing policy and standard's technological specification, and the ensuing implications for social welfare are analyzed. The author finds the conditions under which a licensing rule that grants monopoly power to the licensors whose technology is adopted in the standard can be employed by the members of the consortium (ex‐post licensing). Moreover, it is shown that the adoption of ex‐post licensing might lead to the inefficient exclusion of an efficient stand‐alone licensor. Finally, the author discusses the conditions under which a policy of ex‐ante licensing can be less efficient than ex‐post licensing. (JEL K21, L15, L24, L42)     

LABOR MARKET SEGMENTATION AND INCOME DETERMINATION IN POLAND

The model of income determination, as introduced by labor market segmentation students, is applied to Polish data. This article argues that divisions between sectors, industries, branches, and enterprises, imposed institutionally by the Polish central management system, determine dimensions of labor market segmentation in Polish society. Research findings demonstrate a substantive effect of economic segmentation dimensions on income inequalities, with industrial divisions affecting income variation the most strongly. The second stage of anaysis shows substantive differences in the process of income determination between five industries. This article argues that industrial differentials cannot be explained away by differences in labor force composition and that there are substantial variations in how worker characteristics are rewarded. The results are interpreted as evidence of the effect of labor market segmentation on social inequalities in Poland. In addition, differences in structural mechanisms of segmentation between Poland and capitalist societies are noted.     

PATENT BREADTH IN AN INTERNATIONAL SETTING

We examine the Nash equilibria of a game where two national governments set patent breadth strategically. Broader patents make R&D more attractive, but the effect on static efficiency is nonmonotonic. In a North–South model, where only the North can innovate, harmonization of patent breadth lowers welfare relative to the Nash equilibrium. When both countries can innovate, harmonization toward narrower patent breadth may raise world welfare. (JEL F02, F13, O3, O31, O32)     

STRATEGIC DISCLOSURE OF MEANINGFUL INFORMATION TO RIVAL

I study a model of strategic disclosure of a private signal to a rival in the presence of a payoff externality. In the model, two agents forecast the unknown true state of a future period. Specifically, the quality of the signal is also private information. Hence, which quality of signal is revealed for which incentive is the main question of interest. I show that, even when disclosure is costly, the revealing equilibrium, where an agent voluntarily reveals his signal, can exist and it should be a monotone equilibrium. Asymmetry between the penalty for an incorrect forecast and the reward for a correct forecast is a necessary condition for the existence of this revealing equilibrium. If the penalty is larger than the reward, the unique revealing equilibrium is a separating equilibrium, where only the low quality signal is disclosed in order to induce the rival's imitation. On the other hand, if the reward is much larger than the penalty, the unique revealing equilibrium is a pooling equilibrium, where the signal is always revealed in order to induce the rival's deviation. If the reward is not much larger than the penalty, no revealing equilibrium is robust to a costly disclosure. (JEL D81, D82)     

Policy Reform and Foreign Direct Investment in Africa: Absolute Progress but Relative Decline

Despite improvements in the policy environment, sub‐Saharan Africa's share of foreign direct investment (FDI) in developing countries continues to decline. This article provides an explanation for the deterioration in SSA's FDI global position. It argues that, although SSA has reformed its institutions, improved its infrastructure and liberalised its FDI regulatory framework, the degree of reform has been mediocre compared with the reform implemented in other developing countries. As a consequence, relative to other regions, SSA has become less attractive for FDI. An important implication of these results is that in a competitive global economy, it is not enough just to improve one's policy environment: improvements need to be made both in absolute and relative terms.     

ANALYZING INDUSTRY‐LEVEL VULNERABILITY BY PREDICTING FINANCIAL BANKRUPTCY

This study introduces a novel framework for building company bankruptcy models and a methodology for assessing the vulnerability of industrial economic activities. We consider the identification of bankruptcy as a classification problem and assume that bankruptcy criteria differ across industries. We build highly accurate industry bankruptcy models by constructing separate models for each industry. We also propose a method of analyzing the vulnerability of industrial economic activities in various countries and industries using new indicators we call “expected potential loss,” which we obtain using the predicted likelihood of bankruptcy and company information. (JEL G0, C0)     

OLIGARCHIES AND DEVELOPMENT IN A GLOBAL ECONOMY: A TALE OF TWO ELITES

This paper studies how comparative advantage and the political elites' endowments shape long‐run performance in economies with imperfect political institutions. The trade regime interacts with industrial policy and regulations on capital mobility in governing capital accumulation. In a capital‐scarce economy, capitalist oligarchs striving for import substitution industrialization (ISI) initially shelter the economy from trade, while promoting industrial policies that promote total factor productivity growth in the manufacturing sector. This gradually shifts the comparative advantage toward manufacturing and renders the economy attractive to foreign investors. Allowing for trade and foreign capital inflows are thus complementary policies that spur growth in the capital oligarchy. By contrast, landed oligarchs in a capital‐scarce economy favor openness to trade at an early stage of development, neglect industrial policies, and block foreign capital to maximize extractable rents. The policy mix causes the economy to stagnate. Consistent with the experiences of South Korea and Argentina in the postwar era, the model predicts that the success of ISI policies depends crucially on the conditions governing the incentives for capital accumulation. (JEL F10, F20, P40, P50, O10, O24)     

FOREIGN DIRECT INVESTMENT AND COUNTRY‐SPECIFIC HUMAN CAPITAL

This paper exploits an international bilateral data set over the period 1963–1998 to investigate the relationship between foreign direct investment (FDI) and foreign‐educated labor in an FDI host country. Workers educated abroad acquire country‐specific human capital that is more productive in the host country of study. A foreign subsidiary sharing a parent firm's technology will invest more if it has more foreign‐educated labor, since it can utilize this labor more productively because of the country‐specific human capital. Consistent with our predictions, our empirical findings show that foreign‐educated labor accounted for a sizable portion of growth in FDI flows. (JEL F21, F10)     

Martial arts and the globalization of US and Asian film industries

Abstract

This article investigates how globalization is affecting film industries in the USA and Asia. It argues that these industries are becoming more closely integrated with one another both materially and aesthetically, and that this in turn is leading to the denationalization of individual films and film industries on both sides of the Pacific. The article explores how globalization is experienced differently by different film industries – and by different sectors within individual industries – and how it entails both losses and opportunities for Asian film makers. Taking the contemporary Hollywood and East Asian martial arts film as an exemplary cultural style of globalization, it also looks at how integration involves both cultural homogenization and the production of difference. Specific topics discussed include the growth of Hollywood's Asian markets, Jackie Chan and the flow of Hong Kong talent into Hollywood, Hollywood remakes of South Korean movies, the resurgence of Asian film industries, Hollywood's local-language film production and Zhang Yimou's Hero.     

No Compelling Evidence That Newborns Imitate Oral Gestures

Newborns (N = 83) were presented with 3 conditions, each for 160 sec: tongue protrusion (TP), mouth opening (MO), and control (CO). In TP and MO, a female model alternated between demonstrating the gesture for 20 sec and presenting a passive, motionless face for 20 sec. In CO, she presented a passive face in both the “demonstration” and “passive” intervals. The participants' eyes were more widely open in the demonstration intervals of TP and MO than in the passive intervals, indicating that they were attending to the gestures. In TP, the participants produced more TP responses than MO responses, but in MO there was no effect, undermining the neonatal imitation hypothesis.     

Local planning and global implementation: Foreign investment and urban development of Pudong, Shanghai

Competitive planning programmes for global integration have been created in cities throughout developed and developing countries during the past 2 decades. In China, global aspiration planning has been characterised by the establishment of Pudong New Area of Shanghai in 1990, with a group of foreign direct investment (FDI)-oriented themed zones targeting different types of global flows. Pudong very rapidly became a focus of FDI in the city, which extended to China as a whole in the 1990s, and now is further extended to playing a global role. However, spatial planning for the themed zones in Pudong has been limited in its scope to the physical design, land use, and the pattern of transport routes. This limited role of land use planning has been inadequate to coordinate the mutual engagement between global and local factors; however, an improved mechanism for coordinating planning has not yet emerged to replace it. The competitive and entrepreneurial approach of land management in conjunction with the imperatives of global firms has effectively diminished the original plan's intention that each zone should focus on particular industries, with each of them complementing the others.