Tourism income and economic growth in Greece: Empirical evidence from their cyclical components

This paper examines the relationship between the cyclical components of Greek GDP and international tourism income for Greece for the period 1976–2004. Using spectral analysis the authors find that cyclical fluctuations of GDP have a length of about nine years and that international tourism income has a cycle of about seven years. The volatility of tourism income is more than eight times the volatility of the Greek GDP cycle. VAR analysis shows that the cyclical component of tourism income is significantly influencing the cyclical component of GDP in Greece. The findings support the tourism-led economic growth hypothesis and are of particular interest and importance to policy makers, financial analysts and investors dealing with the Greek tourism industry

'A Nation of Poets and Thinkers' - Less So with Eastern Enlargement? Austria and Germany

Many people in the European Union fear that Eastern Enlargement will lead to major job losses. More recently, these fears about job losses have extended to high skill labor and IT jobs. The paper examines with new firm level data whether these fears are justified for the two neighboring countries of Eastern Enlargement Austria and Germany. We find that Eastern Enlargement leads to surprising small job losses, because jobs in Eastern Europe do not compete with jobs in Austria and Germany. Low cost jobs of affiliates in Eastern Europe help Austrian and German firms to stay competitive in an increasingly competitive environment. However, we also find that multinational firms in Austria and Germany are outsourcing the most skill intensive activities to Eastern Europe taking advantage of cheap abundant skilled labor in Eastern Europe. We find that the firms' outsourcing activities to Eastern Europe are a response to a human capital scarcity in Austria and Germany which has become particularly severe in the 1990s. Corporations' outsourcing of skill intensive firm activity to Eastern Europe has helped to ease the human capital crisis in both countries. We find that high skilled jobs transferred to Eastern Europe account for 10 percent of Germany's and 48 percent of Austria's supply of university graduates in the 1990s. We then discuss what can be done to address the skill exodus to Eastern Europe. We show that R&D subsidies do not work in economies with a skill crisis and we suggest to liberalize the movement of high skill labor with Eastern Enlargement

Eurozone Membership and Foreign Direct Investment

Our aim in this chapter is to estimate the effects of European Monetary Union (EMU) membership on foreign direct investment (FDI). Previous literature on the cross-border impact of a common currency have concentrated on international trade effects. Our analysis is based on the gravity model, which has been successfully applied to explain most forms of bilateral cross-border flows. We estimate a structural gravity model using data for 34 OECD countries between 1985 and 2013 for bilateral FDI. We use a variety of econometric techniques to ensure the robustness of our findings including stock as well as flow measures of FDI and addressing selection issues. Our estimates of the impact of EMU underlines the role of FDI as a channel for benefits from deep economic integration between countries. The effect of EMU membership on FDI is estimated to be significant and positive, at around 130%

Estimating regional trade agreement effects on FDI in an interdependent world

Recent research on trade and multinationals highlights a novel issue with multinational firms. In particular, their integration strategies are complex and the degree of vertical integration varies in a multilateral world with many possible locations of activity. Multinationals may choose some plants to serve consumers locally only, whereas others engage in trade. Overall, this may explain the fact that a high percentage of world trade is actually controlled by multinational firms, although most of the foreign direct investment (FDI) occurs within the block of developed countries. The most important regional trade agreements (RTAs) are signed between members of the very same block of economies. This gives rise to the question asked in the present paper: what is the impact of RTAs on FDI in an interdependent world? The paper focuses on the role of the Europe Agreements between the member countries of the European Union and ten Central and Eastern European countries. In doing so, recent spatial HAC estimation techniques are applied to both estimation and testing

Is trade liberalization a solution to the unemployment problem?

This paper examines how trade liberalization affects the growth rate of sectoral employment in developed and developing countries. The estimation results imply that trade openness in the form of higher trade volumes has not been successful in generating jobs in developing countries. The overall weak, negative employment response to trade volumes may be explained by the negative output response to trade openness in these countries. Our estimates also indicate that higher trade volumes have adverse effect on industrial employment in developed countries. Moreover, while they have positive effect on employment in industry and services in developing countries, trade barriers have adverse effect on employment growth in services for developed countries. Our overall results imply that while trade barriers have relatively little adverse effects and/or in some case a positive effect on employment both in developing and developed countries, higher trade volumes have an adverse effect on industrial employment in developed economies. Thus, trade openness is not in itself a solution to the unemployment problems of developing countries and yet it has not been the prime factor to blame for the lower employment levels in developed countries.info:eu-repo/semantics/publishedVersio