Multinational Companies, Backward Linkages and Labour Demand Elasticities

This paper investigates the link between nationality of ownership and wage elasticities of labour demand at the level of the plant. In particular, we examine whether labour demand in multinationals becomes less elastic with respect to the wage if the plant has backward linkages with the local economy. Our empirical evidence, based on a rich plant level dataset, shows that the extent of local linkages indeed reduces the wage elasticity of labour demand. This result is economically important and holds for a number of different specifications.labour demand, elasticities, linkages, multinational companies

Commercial Policy and Foreign Ownership

To serve the domestic market, foreign multinationals often not only export there but also control local firms through FDI. This paper examines the effects of trade and industrial policies on prices, outputs, profits, and welfare when exports and FDI coexist. Specifically, we focus on the case in which a foreign firm has full control of a local firm through partial ownership. Cross-border ownership on the basis of both financial interests and corporate control leads to horizontal market-linkages through which tariffs and production subsidies may harm a locally-owned firm but benefit a foreign firm. Foreign ownership regulation benefits a locally-owned firm.foreign direct investment, corporate control, tariffs, production subsidies, ownership regulation

When Does Competition Lead to Efficient Investments?

The paper studies agents’ investment decisions between general and speci…c in-vestments under di¤erent ownership structures in a thin, decentralized market where each agent’s decision a¤ects the decisions and welfare of other (otherwise unrelated) agents mainly through indirect market linkages. The paper demonstrates that “excess competition among investors,” in every equilibrium, will lead to e¢cient investments, regardless of asset ownership. In the absence of such excess competition, in every equilibrium, ine¢cient investments will result, unless some special ownership arrange-ment is made. The problem in which the choice variable is investment level, instead of investment type, is also studied.

THINKING GLOBALLY -- FARMING GLOBALLY

The agriculture industry continues to adopt business practices based on strategic alliances. Generally these alliances emphasize vertical coordination wherein producers enter into long-term agreements with suppliers, processors, and businesses in other sectors of the food and fiber industry. Alternatively, producers should explore initiating horizontal linkages; that is, strategic alliances among producers. Sharing ownership of seasonal equipment, multi-year land rotations among specialized farm operations, and sharing ownership of several farm businesses are strategies that can offer production and marketing efficiencies, as well as risk management opportunities.Agribusiness,

Commercialising Australia's interstate rail freight transport: Some ownership and investment issues

The paper addresses the issues of rights of way ownership and application of consistent investment appraisal techniques across modes of transport. There are linkages between ownership, rights of way, competitive strategies and market contestability which will have a significant bearing on the choice of investment criteria used by commercialised railways. Investment methodologies in competing modes of land transport must be consistent. Investment in individual elements of railway infrastructure must be integrated with the overall cost recovery strategy of the operator. Major railway projects must be submitted to both financial and economic evaluation, so that the interests of individual railway authorities and the community are considered

Surviving the global financial crisis : foreign ownership and establishment performance

This paper examines how different establishments performed during the recent global financial crisis, focusing on the role of foreign ownership. The paper investigates how foreign ownership affected establishments'responses to negative economic shocks, using a cross-country panel dataset with detailed information on operation, location and industry for more than 12 million establishments from 2005-2008. The evidence shows that multinational subsidiaries on average fared better than local counterfactuals with similar economic characteristics. Among multinational subsidiaries, establishments with stronger production and financial linkages with parent companies showed greater resilience. Finally, in contrast to the crisis period, the impact of foreign ownership and linkages on an establishment's performance was insignificant in non-crisis years.Economic Theory&Research,Investment and Investment Climate,Bankruptcy and Resolution of Financial Distress,Emerging Markets,Economic Conditions and Volatility

The socio-economic impacts of Singaporean cross-border tourism in Malaysia and Indonesia

Cross-border tourism is often proposed by governments as an incentive for economic growth, but critics have suggested that its impacts are, in fact, overplayed. This paper presents research in the Indonesia-Malaysia-Singapore Growth Triangle. It presents a study of Singaporean cross-border tourism to its neighbours and discusses its economic impacts in two locations: Kukup, a traditional fishing village in Malaysia; and Bintan island in Indonesia. The project examined the broad economic impacts of cross-border tourism on local host communities and given the lack of substantive research on this, examined employment, local ownership and economic linkages and leakages. The study found that cross-border tourism generated income, employment and some local economic linkages. Kukup had clear economic benefits with increased income and employment, but benefits were unevenly distributed between ethnic groups. The Bintan enclave had some linkages to the island economy but was reliant on immigrant labour. In both cases cross-border ethnic ties, specifically Chinese, also played an important role in the growth of cross-border tourism in the Indonesia- Malaysia-Singapore Growth Triangle The paper shows that cross-border tourism can be a useful addition to more conventional forms of international tourism within national tourism planning and could lead to significant economic benefits for local communities

Linkages and Spillovers from Foreign Ownership in the Indian Pharmaceutical Firms

The paper examines the spillover and linkage effects from the presence of foreign firms in the Indian pharmaceutical industry. A comprehensive panel data consisting of nearly 200 firms from 1989 to 2000 was used in the current study. The recent semi-parametric estimation methods as suggested by Olley and Pakes (1996) and Levinsohn and Petrin (2003) were adopted to account for the endogeneity in the input demand. Our results suggest the existence of positive and significant spillover from the foreign equity ownership in the Indian pharmaceutical industry. However, we also found negative and significant spillovers from the backward linkages with foreign firms. The negative spillovers from the backward linkages suggest the possibility of large technology and efficiency gap between local and foreign firms. The results also suggest that institutional arrangements that protect intellectual property rights such as product patents as opposed to process patents will be important for establishing positive linkages and spillovers between local and foreign firms in the Indian pharmaceutical industry.FDI, Backward and Horizontal Linkages, Olley-Pakes, Levinsohn-Petrin

FDI and the Consequences: Towards more complete capture of spillover effects

We analyze productivity spillovers of FDI on domestic companies, both within and across industries. In the identification of intraindustry spillovers, we separate out labor market effects from other effects. Interindustry spillovers are identified through upstream, downstream, and supply-backward linkage effects. Dynamic input output tables are used to construct the linkages. For a panel of Romanian firms, we find evidence that labor market effects differ from other intraindustry effects. Spillovers across industries dominate those within industries. The supply-backward effect behaves as predicted by theory. Firm-specific level of technology, firm size, and ownership structure are all found to affect spillovers.FDI, spillovers, absorptive capability, firm size, ownership structure

Perceived technology clusters and ownership of related technologies: the case of consumer electronics

We contribute to the understanding of how technologies may be perceived to be part of technology clusters. The value added of the paper is both at a theoretical and empirical level. We add to the theoretical understanding of technology clusters by distinguishing between clusters in perceptions and clusters in ownership and by proposing a mechanism to explain the existence of clusters. Our empirical analysis combines qualitative and quantitative methods to investigate clusters of consumer electronics for a sample of Dutch consumers. We find that perceived clusters in consumer electronics are mostly determined by functional linkages and that perceived technology clusters are good predictors of ownership clusters, but only for less widely diffused products.Technology clusters, consumer electronics, innovation