Do Multinational enterprises push up wages of domestic firms in the Italian Manufacturing sector?

This paper analyzes the effects of foreign direct investment on wages paid by domestic firms in the Italian manufacturing sector over the period 2002–2007. In particular, the authors investigate the im-pact of multinational enterprises on wages paid by local firms which operate in the same industry, known and horizontal wage spillovers, or have linkages with multinational enterprises in both downstream and upstream industries, known as vertical wage spillovers. By using a large panel dataset, consisting of 551,000 observations, the authors find evidence of wage spillovers only at inter-industry level and, more specifically, for those firms who supply their goods to multinational enterprises, described as backward wage spillovers. Moreover, findings suggest that the wage spillover effect is strongly affected by the technological gap between local and foreign firms: only workers employed in domestic firms with a low-medium technological absorptive capacity seem to benefit from the presence of multinational enterprises in terms of higher wages

Estimates of the impact of static and dynamic knowledge spillovers on regional factor productivity

We develop an empirical approach to examine static and dynamic knowledge externalities in the context of a regional total factor productivity relationship. Static externalities refer to current period scale or industry-size effects which have been labeled localization externalities or region-size effects known as agglomeration externalities. Dynamic externalities refer to the relationship between accumulated or prior period knowledge and current levels of innovation, where past learning-by-doing makes innovation positively related to cumulative production over time. Our empirical specification allows for the presence of both static and dynamic externalities, and provides a way to assess the relative magnitude of spillovers associated with spillovers from these two types of knowledge externalities. The magnitude of own-region impacts and other-region (spillovers) can be assessed using scalar summary measures of the own- and cross-partial derivatives from the model. We find evidence supporting the presence of dynamic externalities as well as static, and our estimates suggest that dynamic externalities may have a larger magnitude of impact than static externalities.

Intra- and Inter-Industry Productivity Spillovers in OECD Manufacturing: A Spatial Econometric Perspective

We adopt a spatial econometric approach to estimate intra- and inter-industry productivity spillovers in total factor productivity transmitted through input-output relations in a sample of 13 OECD countries and 15 manufacturing industries. Both R&D spillovers as well as remainder, input-output-related linkage effects are accounted for, the latter of which we model by a spatial regressive error process. We find that knowledge spillovers occur both horizontally and vertically, whereas remainder spillovers are primarily of intra-industry type. Notably, these intra-industry remainder spillovers turn out economically more significant than R&D spillovers.intra-industry spillovers, inter-industry spillovers, productivity, spatial econometrics, research and development

Trade costs, openness and productivity: market access at home and abroad

This paper discusses the channels between openness and productivity and trade hampering factors. The stylized facts from the heterogeneous firms literature suggests that firms face market entry costs for each new product they export and to each new export market. Transport costs, border costs and retail and wholesale distribution costs might add up to 170% of the export value, but formal import tariffs and duties are relatively unimportant. The results by the Observatory of European SMEs survey, which has firm-level data for the whole European Union confirm this result. Lack of knowledge on export markets and regulations in other countries are important trade barriers for European firms. From these outcomes it could be derived that EU trade policies should be directed to deep integration with other countries, preferably by implementing internal market policies for goods and services trade and foreign direct investment. These policies can deal with reducing regulations heterogeneity, non-tariff barriers and customs procedures. Providing public information on export markets (e.g. customers, contact, and distribution networks) could also be helpful, if well targeted