Industrial policies (IPs) are commonly used by countries to promote targeted sectors but may have significant impacts on downstream sectors. Using a new hand-collected database of steel-sector IP use ...in major steel-producing countries, I find that IP use is quite harmful to downstream sectors. A 1 standard deviation increase in steel IP presence leads to a 1.2% decline in export competitiveness for the average downstream manufacturing sector in the first few years of its application, and a 6% decline for downstream sectors that use steel most intensively. These results are largely driven by the less-developed countries in my sample.
This paper contributes to the induced innovation literature by extending the analysis of supply and demand determinants of innovation in energy technologies to account for international knowledge ...flows and spillovers. We select a sample of 38 innovating countries and study how knowledge related to energy-efficient and environmentally friendly technologies flows across geographical and technological space. We demonstrate that higher geographical and technological distances are associated with lower probabilities of knowledge flow. Next, we use previous estimates to construct internal and external knowledge stocks for a panel of 17 countries. We then present an econometric analysis of the supply and demand determinants of innovation accounting for international knowledge spillovers. Our results confirm the role of demand-pull effects, proxied by energy prices, and of technological opportunity, proxied by the knowledge stocks. Our results show that spillovers between countries have a significant positive impact on further innovation in energy-efficient and environmentally friendly technologies.
We study the role of financial development on the aggregate implications of reducing import tariffs on capital and intermediate inputs. We document empirically that financially underdeveloped ...economies feature a slower aggregate response following trade liberalization. To quantify these effects, we set up a general equilibrium model with heterogeneous firms subject to collateral constraints and estimate it using Colombian plant‐level data. We find that low financial development substantially limited the gains from trade liberalization in Colombia in the early 1990s. More broadly, we find that low financial development substantially limits both the aggregate and welfare gains from tariff reductions.
We examine whether macroeconomic risk can explain momentum profits internationally. Neither an unconditional model based on the Chen, Roll, and Ross (1986) factors nor a conditional forecasting model ...based on lagged instruments provides any evidence that macroeconomic risk variables can explain momentum. In addition, momentum profits around the world are economically large and statistically reliable in both good and bad economic states. Further, these momentum profits reverse over 1- to 5-year horizons, an action inconsistent with existing risk-based explanations of momentum.
Using panel data from 118 developing countries in 1971–2000, this paper explores the channels linking social spending, human capital, and growth and compares the effects of alternative economic ...policy interventions. With separate modeling for education and health capital, explicit control for governance, and incorporation of nonlinearity, the paper finds that both education and health spending have a positive and significant impact on education and health capital, and thus support higher growth. Also, other policy interventions, such as improving governance and taming inflation, can achieve similar results. Hence, higher spending alone is likely insufficient to achieve the Millennium Development Goals.
This paper aims to assess the effect of natural disasters closely related to climate change on migration rates in developing countries, observing how this effect varies according to the level of ...education. We investigate this relationship by using panel data that measure international migration from developing countries to the main OECD destination countries. Estimations are made with a pair-country fixed effects estimator. The results show that natural disasters are positively associated with emigration rates. Furthermore, we show that natural disasters may exacerbate the brain drain in developing countries when they are at their most vulnerable and need greater support from skilled workers. We also find that the effect of natural disasters on migration varies depending on the geographical location of countries, as well as according to the type of disaster.
We study how fragmentation of patent rights and the formation of the Court of Appeals for the Federal Circuit (CAFC) affected the duration of patent disputes, and thus the speed of technology ...diffusion through licensing. We develop a model of patent litigation which predicts faster settlement when patent rights are fragmented and when there is less uncertainty about court outcomes, as was associated with the "pro-patent shift" of the CAFC. We confirm these predictions empirically using a data set that covers patent suits in U.S. district courts during the period 1975–2000. Finally, we analyze how fragmentation affects total settlement delay, considering both the reduction in dispute duration and the increase in the number of patent negotiations.
Political economy theories of financial development argue that in countries where a narrow elite controls political decisions, financial development may be obstructed to deny access to finance to ...potential competitors. We use panel data on developed and developing countries from 1975-2000 to examine the effect of a country's democracy characteristics and regime change on financial development. Our results show that regime stability and democracy promote financial development, with additional benefits from fully democratic regimes.
We estimate the impact of corruption on growth of output per worker in U. S. states. We improve on existing studies of the cost of corruption by using a better specified empirical model, focusing on ...a study population that is less likely to be affected by parameter heterogeneity, and controlling for endogeneity using political variables to instrument for corruption. We find that corruption plays a significant and causal role in lowering growth and investment across the states.
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