Global Sourcing under Imperfect Capital Markets

We develop a simple model to study the interactions between a supplier’s financial constraints and contract incompleteness in a vertical relationship. Production complexity increases the extent of contract incompleteness and the hold-up problem, which generates a cost when the supplier needs financial participation from the downstream firm. Vertical integration alleviates the impact of financial constraints but reduces the supplier’s incentives. We apply the model to an analysis of multinational firms’ sourcing strategies and predict that (1) complex and specific inputs are more likely to be sourced from financially developed countries and (2) multinationals are more likely to integrate suppliers located in countries with poor financial institutions, especially when trade involves complex goods. We examine and validate these predictions using firm-level trade data on multinational firms with operations in France. We provide evidence that financial development generates a comparative advantage in the supply of complex goods. Moreover, we find higher shares of intra-firm imports of complex inputs from countries with a lower level of financial development. The findings are robust to different measures of complexity and specificity, and are not driven by industry differences in fixed costs or traditional measures of external financial dependence. Quantitatively, we find that financial development is as important as contract enforcement in alleviating hold-up problems.Sourcing, FDI, financial constraints, contractual frictions.

Multinationals, technological incompatibilities and spillovers

Empirical studies provide evidence of positive spillovers from multinational firms to upstream suppliers coupled with negative spillovers to firms in the same industry. This paper shows that these empirical regularities can be rationalized in a model with incompatibilities between foreign and domestic technologies. When foreign technologies require specialized inputs, some local suppliers self-select into production for multinational firms. This "technological segmentation" in the upstream industry magnifies the productivity advantage of multinationals by restricting backward and forward linkages to groups of firms using the same technology. In this setting we study the role of heterogeneity among domestic firms. We show that only the best suppliers adopt the foreign technology and cater to multinationals. In the long run, technology adoption by the most productive downstream firms creates complementarities with multinationals that can offset the negative impact of segmentation.MNEs ; backward and forward linkages ; technological segmentation ; firm heterogeneity ; spillovers

Global sourcing under imperfect capital markets

We develop a simple model to study the interactions between a supplier's financial constraints and contract incompleteness in a vertical relationship. Production complexity increases the extent of contract incompleteness and the hold-up problem, which generates a cost when the supplier needs financial participation from the downstream firm. Vertical integration alleviates the impact of financial constraints but reduces the supplier's incentives. We apply the model to an analysis of multinational firms sourcing strategies and predict that (1) complex and specific inputs are more likely to be sourced from financially developed countries and (2) multinationals are more likely to integrate suppliers located in countries with poor financial institutions, especially when trade involves complex goods. We examine and validate these predictions using firm-level trade data on multinational firms with operations in France. We provide evidence that financial development generates a comparative advantage in the supply of complex goods. Moreover, we find higher shares of intra-firm imports of complex inputs from countries with a lower level of financial development. The findings are robust to different measures of complexity and specificity, and are not driven by industry differences in fixed costs or traditional measures of external financial dependence. Quantitatively, we find that financial development is as important as contract enforcement in alleviating hold-up problems.sourcing ; FDI ; financial constraints ; contractual frictions

Economic Geography and Wages in Brazil: Evidence from Micro-Data

This paper estimates the impact of market and supplier access on wage disparities across Brazilian states, incorporating the control of individual characteristics to the new economic geography methodology. We estimate market and supplier access disaggregated by industry, and we compute separately access to international and internal markets. We find a strong correlation between market access and wages differentials, even after controlling for individual characteristics, firm productivity, the source of market access (international, national or local), and using instrumental variables. Furthermore, market access turns out to be more important than supplier access.

Measuring the Upstreamness of Production and Trade Flows

We propose two distinct approaches to the measurement of industry upstreamness (or average distance from final use) and show that they yield an equivalent measure. Furthermore, we provide two additional interpretations of this measure, one of them related to the concept of forward linkages in Input-Output analysis. On the empirical side, we construct this measure for 426 industries using the 2002 US Input-Output Tables. We also verify the stability of upstreamness across countries in the OECD STAN database, albeit with a more aggregated industry classification. Finally, we present an application that explores the determinants of the average upstreamness of exports at the country level using trade flows for 2002.

Lehren und Lernen neu: digitale Geo-Medien im Schulunterricht

Dieser Beitrag diskutiert didaktische Potentiale und Herausforderungen, die neue digitale Geo-Medien für den Schulunterricht bieten. Neben der Präsentation von Kompetenzstufen-Modellen und Lehrplan-Ansätzen werden sowohl die historische Entwicklung, der aktuelle Forschungsstand bzw. die gegenwärtige Umsetzung der skizzierten Lernprozesse in Österreich und Europa dargestellt. Zum Schluss werden die aus den aktuellen Entwicklungen abgeleiteten Ziele und Herausforderungen im Rahmen des Netzwerks "digitalearth.eu" vorgestellt. (DIPF/Orig.

Multinationals, technological incompatibilities and spillovers

Empirical studies provide evidence of positive spillovers from multinational firms to upstream suppliers coupled with negative spillovers to firms in the same industry. This paper shows that these empirical regularities can be rationalized in a model with incompatibilities between foreign and domestic technologies. When foreign technologies require specialized inputs, some local suppliers self-select into production for multinational firms. This "technological segmentation" in the upstream industry magnifies the productivity advantage of multinationals by restricting backward and forward linkages to groups of firms using the same technology. In this setting we study the role of heterogeneity among domestic firms. We show that only the best suppliers adopt the foreign technology and cater to multinationals. In the long run, technology adoption by the most productive downstream firms creates complementarities with multinationals that can offset the negative impact of segmentation.Les études empiriques mettent en évidence des retombées positives de la présence de multinationales sur les fournisseurs (de l'industrie amont) qui s'accompagnent de retombées négatives pour les entreprises du même secteur. Cet article montre que ces régularités empiriques peuvent être rationalisées dans un modèle d'incompatibilité entre technologie étrangère et technologie nationale. Lorsque les technologies étrangères exigent des biens intermédiaires spécialisés, certains fournisseurs locaux choisissent de se spécialiser dans la production à destination des entreprises multinationales. C'est cette segmentation technologique dans l'industrie en amont qui amplifie l'avantage de productivité des multinationales en limitant les transferts en amont et en aval entre groupes d'entreprises utilisant la même technologie. Dans ce cadre, en étudiant le rôle de l'hétérogénéité entre les entreprises nationales, nous montrons que seuls les meilleurs fournisseurs adoptent la technologie étrangère afin de servir le marché des multinationales. Dans le long terme, l'adoption de la technologie étrangère par les entreprises de l'industrie aval les plus productives crée des complémentarités avec les multinationales qui peuvent contrebalancer l'impact négatif de la segmentation

Global sourcing under imperfect capital markets

We develop a simple model to study the interactions between a supplier's financial constraints and contract incompleteness in a vertical relationship. Production complexity increases the extent of contract incompleteness and the hold-up problem, which generates a cost when the supplier needs financial participation from the downstream firm. Vertical integration alleviates the impact of financial constraints but reduces the supplier's incentives. We apply the model to an analysis of multinational firms sourcing strategies and predict that (1) complex and specific inputs are more likely to be sourced from financially developed countries and (2) multinationals are more likely to integrate suppliers located in countries with poor financial institutions, especially when trade involves complex goods. We examine and validate these predictions using firm-level trade data on multinational firms with operations in France. We provide evidence that financial development generates a comparative advantage in the supply of complex goods. Moreover, we find higher shares of intra-firm imports of complex inputs from countries with a lower level of financial development. The findings are robust to different measures of complexity and specificity, and are not driven by industry differences in fixed costs or traditional measures of external financial dependence. Quantitatively, we find that financial development is as important as contract enforcement in alleviating hold-up problems