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)     

INTERNATIONAL R&D SPILLOVERS AND PRODUCTIVITY TRENDS IN THE ASIAN MIRACLE ECONOMIES

This paper examines the importance of the domestic research and development stock and foreign knowledge spillovers on total factor productivity for six Asian miracle economies over the period from 1955 to 2006. The productivity effects of international knowledge spillovers through the following channels are considered: imports, exports, inward foreign direct investment, patents, geographical proximity, and the general channel. The general channel is a transmission mechanism where knowledge spillovers occur automatically and do not pass through any specific channel. The estimates show that knowledge has been transmitted through all the channels considered but that the import channel and the general channel have probably been the most important ones for the Asian miracle economies. (JEL O10, O30, O40)     

Rethinking Trade Preferences for Sub‐Saharan Africa: How Can Trade in Tasks Be the Potential Lifeline?

Policy‐related discussion on assisting countries to make use of trade preferences tends to focus on the provision of hard infrastructure to facilitate external economies from modern‐sector exports. This is as opposed to harnessing potential knowledge spillovers. This omission is emblematic of tensions within new trade/new growth theory. Using two country case studies in Asia – Bangladesh and Cambodia – this article shows how different approaches towards making use of trade preferences have resulted in divergent industrial structures and firm‐level technological capability indicators. Less stringent rules of origin requirements may offer new opportunities for late industrialisers in sub‐Saharan Africa to tap into the modern export sector, but a more interventionist approach towards harnessing knowledge spillovers may also be necessary.     

CAN TRADE REALLY HURT? AN EMPIRICAL FOLLOW‐UP ON SAMUELSON'S CONTROVERSIAL PAPER

This paper investigates Samuelson's [Samuelson, P. A. “Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Supporting Globalization.” Journal of Economic Perspectives, 18(3), 2004, 135–46] argument that technical progress of the trade partner may hurt the home country. We illustrate this prospect in a simple Ricardian model for situations with outward knowledge spillovers. Within this framework Samuelson's Act II effects may occur. Based on industry level panel data for 17 OECD countries for the period 1973–2000 we show econometrically that the outflow of domestic knowledge via exports or foreign direct investment (FDI) to the rest of the world may have a negative impact on industry output in the home country. This is particularly so when exporting to technologically less advanced countries and, more specifically, China. (JEL F10, F11, F14, O30)     

THE DURATION OF FIRM‐DESTINATION EXPORT RELATIONSHIPS: EVIDENCE FROM SPAIN, 1997–2006

This article uses survival analysis to investigate the duration of Spanish firms' trade relationships by destination over 1997–2006. Whereas firm export status is highly persistent, firms' destination portfolio is very dynamic: a typical firm‐country exporting relationship has a median duration of 2 years. Yet, if a firm manages to export to a country beyond 2 years the risk of exiting that market sharply falls afterwards. The results indicate that not only firm heterogeneity but also destination heterogeneity are crucial to explain survival in export markets. In particular, country (political) risk heavily shapes the effect of firm, product, and other destination characteristics on the length of trade relationships. Whereas firm productivity, comparative advantage, partners' GDP, and proximity enhance duration of trade with low‐risk countries, they have no effect on trade survival with high‐risk countries. On the contrary, information spillovers are particularly relevant to enhance survival of trade relationships with high‐risk countries. (JEL C41, F10, F14)     

ASSET PRICE BUBBLES AND TECHNOLOGICAL INNOVATION

We introduce borrowing constraints into a two‐sector Schumpeterian growth model and examine the impact of asset price bubbles on innovation. In this environment, rational bubbles arise when the intermediate good producing R&D sector is faced with adverse productivity shocks. Importantly, these bubbles help alleviate credit constraints and facilitate innovation in the stagnant economy. On the policy front, we make a case for debt financed credit to the R&D sector. Further, we establish that a constant credit growth rule (akin to the Friedman rule) outperforms the often prescribed counter‐cyclical “lean against the wind” credit policy. (JEL E32, E44, O40)     

EMISSION TAXES,CLEAN TECHNOLOGY COOPERATION,AND PRODUCT MARKET COLLUSION: EXPERIMENTAL EVIDENCE

We use a laboratory experiment to study the link between cooperative research and development (R&D) in clean technology and collusion in a downstream product market in the presence of a time‐consistent emissions tax. Such a tax creates additional interconnections between firms, in addition to the standard technological spillovers. Our results show a strong link between R&D cooperation and market collusion under symmetric R&D spillovers in a duopoly, but when the spillovers are asymmetric, R&D cooperation does not necessarily result in collusion. With symmetric spillovers, the link between R&D cooperation and collusion remains strong even in three‐ and four‐firm industries. (JEL C90, L5, O30, Q55)     

THE CULTURE OF CORRUPTION,TAX EVASION,AND ECONOMIC GROWTH

This study uses a dynamic general equilibrium model to quantify the effects of corruption and tax evasion on fiscal policy and economic growth. The model is calibrated to match estimates of tax evasion in developing countries. The calibrated model is able to generate reasonable predictions for net tax rates, the corruption associated with public investment projects, and the negative correlation between corruption and tax revenue. The presence of corruption and evasion is shown to have significant, but not large, negative effects on economic growth. The relatively moderate effects help explain the absence of a robust negative correlation between growth and corruption in cross‐country data. The model also implies that cracking down on tax evasion before addressing corruption can be a bad idea and that higher wages for public officials can improve welfare. (JEL H3, O4)     

THE NATURE OF OUTSOURCING RELATIONSHIPS: EVIDENCE FROM OAP PRICES

This paper studies the extent and variation in production cost pass‐through for U.S. outsourcing imports. Data from 4,676 products imported through the U.S. overseas assembly program show that outsourcing imports were characterized by incomplete pass‐through of production and trade costs to import prices. Notably, pass‐through was higher for products assembled in high education countries while the response of outsourcing import prices to competing suppliers' prices was largest for products sold by firms in capital‐intense industries. The reasons for these cross‐country and cross‐industry differences, as they relate to theories of outsourcing and trade, are explored. (JEL F1, F2)     

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)     

WHO QUITS NEXT? FIRM GROWTH IN GROWING ECONOMIES

We document novel facts about the relationship between aggregate growth and firm dynamics using a large set of countries. We argue that firm employment patterns are not necessarily informative about cross‐country differences in aggregate growth because they are induced by changes in the productivity of a firm relative to others. In contrast, aggregate growth is linked to average firm‐level productivity growth and firm age. We formalize this intuition through a tractable model of endogenous aggregate growth and firm dynamics where firms realize positive returns to investment with some probability. We find that cross‐country disparities in this probability can account for two‐thirds of the variation in aggregate growth. (JEL D21, D22, E23, O4)     

THE CREDIT‐CHANNEL TRANSMISSION MECHANISM AND THE NONLINEAR GROWTH AND WELFARE EFFECTS OF INFLATION AND TAXES

With the credit‐channel effect driven by the central bank's open market operations, this paper's model easily gives rise to the nonlinear inflation‐growth nexus, which is evidenced by a number of cross‐country empirical studies. The threshold level of the inflation rate is found to be lower when tax rates are higher. The presence of the credit‐channel effect also provides the rationale for setting positive (and smaller than 1) tax rates on consumption, labor income, and capital income. The optimal tax rates rise as the inflation target declines. Under a fiscal policy rule where labor and capital income taxes move proportionally to each other, the optimal capital income tax rate could be higher than the optimal labor income tax rate. Under a sufficiently large central bank balance sheet, the credit‐channel effect will be so weak that inflation and all kinds of taxes are growth and welfare repressing. This provides a rationale for central banks that have implemented quantitative easing policies to shrink their balance sheets. (JEL E58, E62, O42)     

DOES THE PUBLIC SECTOR IMPLODE FROM BAUMOL'S COST DISEASE?

The root of the Baumol cost disease is higher productivity increases for manufactured goods than for services. The implied increase in relative costs of service production is widely claimed to have devastating implications for the public sector as a provider of tax‐financed services such as health, education, and care. To match the increasing costs it appears inevitable that tax rates would be ever increasing. It is shown that this inference does not follow under standard assumptions when accounting explicitly for service provision from both the private and public sectors. Strikingly under assumptions often made in the literature, the welfare maximizing tax rate for a utilitarian policy maker would remain constant despite the Baumol cost disease, and by implication the share of public employment in total employment will remain constant. (JEL H5, H11, O41)     

上海服务贸易创新突破发展对策思路研究

近年来上海服务贸易发展在规模与增速方面始终处于全国领先地位,但与我国香港、新加坡等国际大都市相比,仍总体规模偏小,反映服务贸易能级的信息化、知识化、离岸化程度较低,服务贸易创新能力薄弱,服务贸易结构需进一步优化升级。上海应以夯实生产性服务业的产业发展基础、增强高端服务贸易领域的竞争力和辐射力为导向,以体制机制创新为突破口,坚持国际化带动、市场化促进、信息化支撑和法治化保障,积极推进制造业服务化、服务业信息化、服务外包离岸化,加强对品牌、市场、人才的政策聚焦,搭建促进平台,改善创新环境,积极推动上海服务贸易的创新发展。     

RESEARCH UNIVERSITIES AND REGIONAL HIGH‐TECH FIRM START‐UP AND EXIT

If localized knowledge spillovers are present in the university setting, higher rates of both start‐up and/or survival would be observed in areas that are geographically proximate to the university. Using a detailed industry data set for Texas for 1999:3–2005:2, we analyze start‐up and exit rates for high‐tech firms. Based on a Poisson quasi‐maximum likelihood estimation, we find evidence that the level of R&D and proximity of a research institution positively affects the likelihood of technology start‐ups. However, using both the Cox proportional hazards model and Kaplan–Meier approach, our results suggest that geographic proximity to knowledge centers does not reduce hazard rates. (JEL R12, R53, O18)     

BANKS,DEBT AND RISK: ASSESSING THE SPILLOVERS OF CORPORATE TAXES

We find evidence of tax-driven strategic allocation of debt and asset risk across group entities of European banks. We evaluate the effects that establishing tax neutrality between debt and equity finance has on systemic risk, and show that the degree of coordination in implementing the hypothetical tax reform matters. In particular, a coordinated elimination of the tax advantage of debt would significantly reduce systemic losses in the event of a severe banking crisis. By contrast, uncoordinated tax reforms are not equally beneficial precisely because national tax policies generate spillovers through cross-border bank activities. (JEL G21, G28, H25)     

推进国际航运发展综合试验区新一轮政策突破

为了推进国际航运发展综合试验区建设,上海推出了中资"方便旗"船舶特案减免税、启动保税船舶登记、航运服务企业免征营业税、启运港退税政策落地、国际中转集拼功能试单运作、创新海关特殊监管区域的管理制度、期货保税交割功能业务等举措。这些举措在提升上海航运功能能级方面取得了不小的进展,但存在如下问题:免征营业税的覆盖范围有限、船舶回归登记不尽如人意、离岸账户尚未建立、启运港退税运行不佳、期货保税交割功能尚未真正体现、海关特殊监管区域的制度创新力度有限等。国际航运发展综合试验区新一轮政策突破的基本思路可体现为:实现中国(上海)自贸试验区和国际航运发展综合试验区的联动发展;实现国际航运发展综合试验区现行政策完善和未来政策突破相结合;形成国际航运发展综合试验区的新空间,实现与中国(上海)自由贸易试验区的错位发展。     

WHY CANNOT POOR COUNTRIES UTILIZE EXISTING KNOWLEDGE? EXPANSION OF FIRMS AND HUMAN CAPITAL ACCUMULATION BY TRAINING

Current growth literature does not explain the inability of poor countries to utilize existing knowledge. This study presents a stylized development model based on firms' expansion through on‐the‐job training. Since trained workers can supervise and train more workers, a development process in which output and productivity increase up to a full utilization of existing technology is generated. Unlike schooling‐based models, which require an assumption regarding a smaller local stock of knowledge, this study relies on the size of the industrial sector and the limited supply of training opportunities, therefore highlights barriers to development, even when technology and capital are available. (JEL O1, O4, J2)     

PRODUCTIVITY EFFECTS OF PUBLIC CAPITAL MAINTENANCE: EVIDENCE FROM U.S. STATES

This article assesses the productivity effects of infrastructure operation and maintenance (O&M) spending by state and local governments in the 48 contiguous U.S. states over the period 1978–2000. We explicitly account for transboundary spillovers of capital and O&M spending and follow a semiparametric methodology that allows us to estimate state‐specific output elasticities. We find strong evidence that in all 48 states the cross‐state spillover effects of O&M outlays on productivity exceed their within‐state impacts and are substantially higher than the spillover effects of capital expenditure. (JEL C14, E22, E62, H76, O11, O47, R11)     

IQ IN THE PRODUCTION FUNCTION: EVIDENCE FROM IMMIGRANT EARNINGS

We show that a country’s average IQ score is a useful predictor of the wages that immigrants from that country earn in the United States, whether or not one adjusts for immigrant education. Just as in numerous microeconomic studies, 1 IQ point predicts 1% higher wages, suggesting that IQ tests capture an important difference in cross‐country worker productivity. In a cross‐country development accounting exercise, about one‐sixth of the global inequality in log income can be explained by the effect of large, persistent differences in national average IQ on the private marginal product of labor. This suggests that cognitive skills matter more for groups than for individuals. (JEL J24, J61, O47)