Many economic reforms are undertaken during an economic crisis, but is a crisis a good time to undertake trade reform? We investigate whether an economic crisis at the time of trade liberalization ...affects a country’s subsequent growth performance. We employ threshold regression techniques on five crisis indicators to identify the “crisis values” and to estimate the differential growth effects in the crisis and non-crisis regimes. Although trade liberalization in both crisis and non-crisis periods raises subsequent growth, we find that an internal crisis implies a lower acceleration and an external crisis a higher acceleration relative to the non-crisis regime.
A rapidly expanding literature on firm heterogeneity and firm level globalisation strategies has developed over the last decade. There are new insights on why some firms export and others do not, why ...some firms fail to survive in export markets and some choose to produce overseas rather than export. This article provides a synthesis and evaluation of this literature. It reviews both new theories of firms in an open economy context and the extensive microeconometric evidence base, which has now developed. It highlights the implications of this evidence base for policy and includes an assessment of how the research agenda may evolve.
Attracting inward investment is a major preoccupation of policymakers worldwide, and a wide range of instruments, including direct subventions, are deployed to attract multinational enterprises ...(MNEs). Intervention is predicated on the assumption that there are direct productivity spillovers associated with the presence of MNEs and the policy of attracting them is targeted at capturing these externalities. Yet robust evidence on direct spillovers is hard to find. An underexplored indirect channel for productivity spillovers is via exports. Exporting firms are more productive than nonexporting firms. Thus, if the presence of MNEs results in more indigenous firms exporting, an indirect productivity spillover will result. In this paper, we identify possible transmission mechanisms for export spillovers and test for their existence on a large panel of firms in the UK. Our results confirm positive spillover effects from MNEs on the decision to export of UK-owned firms as well as on their export propensity.
An extensive evidence base affirms the importance of sunk costs and firm heterogeneity to exporting. Only higher productivity firms can profitably cover sunk costs and enter export markets. This is ...the standard explanation for the regularity with which econometric analyses report that exporters are more productive than non-exporters. But what happens to their productivity trajectory once they have entered? Some theory points to the possibility of a further productivity boost, attributable to the effects of learning and competition. We investigate whether this is because the potential for a post-entry boost depends upon how exposed to competition the firm is. We find that industry differences are an important marker for determining whether learning effects boost productivity after export market entry.
Interest in links between protection of intellectual property and growth has been revived by developments in new growth theory and by the WTO’s TRIPS Agreement. The relationship between the strength ...of a country’s intellectual property rights (IPRs) regime and rate of growth is ambiguous from a theoretical standpoint, reflecting the variety of channels through which technology can be acquired and their differing importance at different stages of development. We investigate the impact of IPR protection on economic growth in a panel of 79 countries using threshold regression analysis. We show that whilst the effect of IPR protection on growth depends upon the level of development, it is positively and significantly related to growth for low‐ and high‐income countries, but not for middle‐income countries. This suggests that, although IPR protection encourages innovation in high‐income countries, and technology flows to low‐income countries, middle‐income countries may have offsetting losses from reduced scope for imitation.
Membership of Advisory Panel Greenaway, David; Milner, Chris
World economy,
January 2022, 2022-01-00, 20220101, Letnik:
45, Številka:
1
Journal Article
Geo‐economic tensions, notably associated with the rise of China, and global collective action problems—climate change and the COVID‐19pandemic—call for international cooperation to revise and ...develop rules to guide both the use of domestic subsidies and responses by governments to cross‐border competition spillover effects. Current WTO rules dividing all subsidies into prohibited or actionable categories are no longer fit for purpose. Piecemeal efforts in preferential trade agreements and bi‐ or trilateral configurations offer a basis on which to build but are too narrow in scope. Addressing spillover effects of subsidies could start with G20 countries launching a work programme to mobilise an epistemic community concerned with subsidy policies, tasked with building a more solid evidence base on the magnitude, purpose and effects of subsidy policies. The need for such cooperation has become even more pressing by the COVID‐19 pandemic and associated increase in the use of subsidy programmes in major economies.
The presumed higher productivity of foreign firms and resulting spillovers to domestic firms has led governments to offer financial incentives to foreign firms. We investigate if there is any ...productivity or wage gap between foreign and domestic firms in the UK and if the presence of foreign firms in a sector raises the productivity of domestic firms. Our results indicate that foreign firms do have higher productivity than domestic firms and they pay higher wages. We find no aggregate evidence of intra‐industry spillovers. However, firms with low productivity relative to the sector average, in low‐skill low foreign competition sectors gain less from foreign firms.
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