Foreign direct investment, regulations, and growth

This paper explores the linkage between income growth rates and foreign direct investment (FDI) inflows. So far the evidence is rather mixed, as no robust relationship between FDI and income growth has been established. The authors argue that countries need a sound business environment in the form of good government regulations to be able to benefit from FDI. Using a comprehensive data set for regulations, they test this hypothesis and find evidence that excessive regulations restrict growth through FDI only in the most regulated economies. This result holds true for different specifications of the econometric model, including instrumental variable regressions.Public Sector Regulation,Regulatory Regimes,Achieving Shared Growth,Economic Theory&Research,Foreign Direct Investment

La emigración hacia los países desarrollados: nueva evidencia

In spite of the relevance of international migration and of the recent advances in the theoretical literature, the evidence on its causes is still scarce and contradictory. Some datasets are not comparable and/or limited in scope, often restricted to the study of migration to only one country. This paper employs a new and comprehensive dataset on migration based on OECD national censuses that identify the country of birth of resident foreign workers and their educational level. Results lend support to the theory of human capital since migrants adopt migration decisions taking into account the wage gap between the origin and destination regions, although its effect depends on the educational (income) level of the migrants. Additionally, there is strong evidence that the larger the previous stock of migrants from the same country of origin and the larger the purchasing power parity, the higher the migration rate. Finally, this paper documents a positive effect of income growth volatility on migration propensity.international migrations, development, human capital

Trade Costs and Job Flows: Evidence from Establishment-Level Data

We present evidence of the impact of input and output trade liberalization on establishment-level job flows. Using a longitudinal database containing the universe of manufacturing establishments in California from 1992 to 2004, we find that a decline in input or output trade costs causes job destruction in the least productive establishments, job creation in the most productive establishments, and an increase in the death likelihood of the least productive establishments. The evidence is consistent with predictions of models of trade with heterogeneous firms. We also show that input trade liberalization has larger effects on establishment-level job flows than output trade liberalization.Heterogeneous firms; Job flows; Trade costs

Islands in Trade: Disentangling Distance from Border Effects [Dataset]

Trade between regions separated by a sea border is affected by specific transport costs that have not been considered by the border effects literature. Among these are the existence of a time barrier, the need to combine different transport modes, or to pay fees and taxes for the use of public infrastructures such as ports and airports. The empirical strategy used to estimate the “island effect” proceeds in two steps: first an augmented gravity model is estimated for mainland and island regions; then a Blinder–Oaxaca decomposition is applied to the gravity estimation results in order to disentangle the distance and border effects for those regions. Results show that island regions are at a substantial disadvantage compared to continental regions, which is due to the higher and non-linear effect of distance coefficients