Innovativeness along the business cycle

A la fecha, la literatura internacional ha contribuido de manera significativa a la comprensión de los mecanismos que subyacen en el comportamiento innovador de las empresas, su impacto en el desempeño y, en menor grado, la inercia inherente al fenómeno. En el lado opuesto, la dinámica de la acumulación del capital de conocimiento a lo largo del ciclo económico sigue siendo un tema inexplorado. El artículo analiza esta dimensión en el marco de referencia propuesto en 1998 por Crépon, Duguet y Mairesse, utilizando un panel equilibrado de empresas uruguayas medianas y grandes. Los resultados revelan que, en promedio, la intensidad de la innovación evoluciona procíclicamente, mientras que la propensión a la innovación y el grado de innovación siguen una trayectoria no cíclica. El tipo de innovación buscado durante las recesiones económicas es heterogéneo a través de las empresas. Los innovadores que son capaces de desviar sus ventas a los mercados mundiales tienden a innovar en productos de mayor originalidad, mientras que los orientados al mercado local generalmente innovan en procesos de bajo grado de novedad. Los resultados sugieren también que las ganancias de productividad que son impulsadas por innovaciones significativamente relevantes a lo largo de períodos de alza, independientemente de su tipo, son menos importantes que las alcanzadas en períodos de recesión.[Basado en resumen de autor

Four Essays on Firm Offshoring and Innovation Behavior

This dissertation deals with two major topics. The first topic looks at the behavior of multinational companies (MNCs) in terms of their offshoring behavior. Chapters1 and 2 are contributions to this area, focussing on the choice of entry-mode madeby MNCs when going offshore. The second field of interest is devoted to firm’s innovation behavior. Chapters 3 and 4 analyze those issues in the context of Uruguayan firms.Chapter 1 reviews and criticizes in depth the literature on foreign establishmentmode choices by MNCs providing a motivation to perform a robustness analysis,that is then performed in Chapter 2. Through a review of the theoretical approaches behind each study, as well as by comparing the way theoretical constructs are operationalized, Chapter 1 pools different studies that are part of empirical literature in the field of foreign entry-mode decisions into different classes, comparing their results. The literature’s main results are then compared within those classes, finding inconsistencies in the significance and sign found for almost every explanatory variable studied in the context of entry-mode decisions. An explanation on the reasons behind those inconsistencies is also provided, yielding a strong motivation forpursuing model misspecification checks and robustness analysis for those variables.Motivated by Chapter 1, in Chapter 2 a robustness analysis is performed on thevariables usually found in literature to be determinants for entry-mode choices. Iperform a so-called Extreme Bound Analysis (EBA) to determine which of almost 60explanatory variables are robust to different model specifications. I do so by lookingat the entire distribution of the estimator for each explanatory variable’s coefficient,following the methodology introduced by Sala-i-Martin (1997a) in a multinomial logit framework. To perform this analysis I build a unique dataset, that accounts for more than 4000 offshoring events of the largest 50 Multinational Companies (MNCs) worldwide in the last 15 years. In Chapter 2 I use 640 of those events, them being entries into foreign countries done by the largest 22 financial MNCs in the last 15 years. Based on over eight million regressions, my results are able toisolate 15 variables that seem robustly related to an MNC’s entry-mode decision.Multinational firms’ size and its international experience increase the likelihood of Greenfield Investments (GI) over choosing Merger & Acquisitions (M&A) or anytype of entry-mode involving a partner. Conversely, its host-country experience aswell as the larger its experience differential in M&A over GI, make greenfields lessprobable. In terms of the host-country’s characteristics, more cultural distance betweenhome and host-country, a better developed financial sector (or local creditmarket) in the host-country, a more regulated environment for obtaining licenses and more macroeconomic sustainability increase the chances of GI, while a worse localinfrastructure, higher ITC costs and more difficulties in registering property andemploying workers decrease the odds of greenfields. Joint Ventures are more likelyif the MNC is larger and if the host-country has more macroeconomic sustainabilityand/or if it has a worse investment environment. A small and expensive talent pool,make Joint Ventures (JV) less likely if compared to M&A. In addition, I find thatthe size, expensiveness and quality of the talent pool determine the likelihood of fullGI due to the latter’s character of being generated from scratch, rather than becauseit is done in a full ownership mode or without interacting with another company, beit a target or a partner. The same applies for a host-country’s political stability.Chapter 3 is the result of joint work with Adriana Cassoni and was developed underthe sponsorship of the IADB, for the Innovation Network. We there analyze theinnovation behavior of Uruguayan firms using a microeconomic dataset, stemmingfrom Uruguayan Innovation Surveys (IS) which we matched to Uruguayan EconomicActivity Surveys (EAS). We there review the theoretical and applied literature onthe innovative behavior of firms and its impact on productivity, so as to depict thesetting within which the models estimated for Uruguay are specified. We describethe main characteristics of Uruguayan data, thus setting a benchmark for a betterunderstanding of the descriptive analysis afterwards summarized. Finally, we estimatea model using a panel approach and correcting for survey design and samplebias, following in general lines the specification of Cr´epon et al. (1998), although with several modifications and making use of new innovation and output indicatorsproposed by us. Our results depict an innovation behavior that heavily relies oninnovation in processes and whose main impact on firm productivity occurs throughthe improvement of firm internal efficiency, as opposed to product innovation.In the context of the paper prepared for the IADB we encountered that the empiricalliterature dealing with the innovation behavior has difficulties to empiricallyimplement the theoretical model derived by Cr´epon et al. (1998). Most variablesand proxies used to operationalize the mentioned model are mediocre in terms ofreplicating the underlying theoretical concepts and are not able to capture the complexity of innovation behavior when it comes to model innovation inputs and thevalue of the innovation output obtained. In Chapter 4 we therefore suggest and constructalternative measures for capturing those dimensions. Two of our indicatorscan be applied using standard IS data, while the remaining three indicators make useof EAS data. We analyze their comparative performance in a productivity equationand conclude that our specification based on value added per employee as a proxyof productivity and using our indicators for innovation output value significantlyimproves the measuring of the impact of innovation on productivity growth yieldingmore accurate and detailed results

The impact of international organizations on the environment: An empirical analysis

When analyzing the impact of international organizations on the environment, two main issues arise. First, we have to quantify the participation of the organizations on countries they deal with. Second, the environmental impact of this involvement has to be measured. This paper attempts to do this. We employ panel data to empirically analyze whether and to what extent the presence of IMF, World Bank, regional Multilateral Development Banks, WTO and Global Environmental Facilities has an impact on environmental governance and outcomes. Our results for a large number of countries and years show that the international organizations affect the environment directly via their impact on CO2 emissions. Projects financed by World Bank, ADB, UNDP, and membership in the WTO increase emissions, while IADB projects reduce emissions. EBRD and UNEP do not significantly affect CO2 emissions, while the AfDB increases emissions after 1985 only. Taking the indirect impact through trade liberalization into account, however, the WTO reduces emissions, while the IADB increases emissions. There is some evidence that the international organizations investigated here also influence SO2 emissions, water pollution, and round wood production; environmental governance is not affected

The Impact of International Organizations on the Environment: An Empirical Analysis

Abstract When analyzing the impact of international organizations on environmental governance, two main issues arise. First, we have to quantify the participation of the organizations on countries they deal with. Second, the environmental impact of this involvement has to be measured. This paper attempts to do this. We employ panel data to empirically analyze whether and to what extent the presence of IMF, World Bank, regional Multilateral Development Banks, WTO and Global Environmental Facilities has an impact on environmental governance and outcomes. Our results for a huge number of countries and years show that IMF, AfDB and UNEP affect environmental quality predominantly positively, while the impact of the World Bank and the EBRD is negative. There are mixed results for IADB and WTO membership. ADB and UNDP have no significant impact on the natural environment. Environmental governance is not affected by the international organizations investigated here

The Impact of International Organizations on the Environment: An Empirical Analysis

When analyzing the impact of international organizations on the environment, two main issues arise. First, we have to quantify the participation of the organizations on countries they deal with. Second, the environmental impact of this involvement has to be measured. This paper attempts to do this. We employ panel data to empirically analyze whether and to what extent the presence of IMF, World Bank, regional Multilateral Development Banks, WTO and Global Environmental Facilities has an impact on environmental governance and outcomes. Our results for a large number of countries and years show that the international organizations affect the environment directly via their impact on CO2 emissions. Projects financed by World Bank, ADB, UNDP, and membership in the WTO increase emissions, while IADB projects reduce emissions. EBRD and UNEP do not significantly affect CO2 emissions, while the AfDB increases emissions after 1985 only. Taking the indirect impact through trade liberalization into account, however, the WTO reduces emissions, while the IADB increases emissions. There is some evidence that the international organizations investigated here also influence SO2 emissions, water pollution, and round wood production; environmental governance is not affected.International Organizations, Environment, Governance, IMF, World Bank, WTO, Trade Liberalization

Are Uruguayan Housing Policies Reaching the Poor? An Assessment of Housing Deficit, Housing Informality and Usage of Housing Programs in Uruguay

This document surveys the Uruguayan housing market, first describing the main housing programs and policies, then comparing their design with households’ characteristics and needs. The document additionally measures Uruguay’s housing deficit, using the basis deficit as well as quantitative and qualitative deficits, and provides a definition of housing informality that captures most irregular housing situations, thus delineating the size and attributes of the informal housing market. Considering both the housing deficit and informality permits an understanding of which population segments have the most urgent housing needs and whether they are currently eligible for participation in housing programs. Finally, the study considers how many households eligible for housing programs actually make use of them. Uruguay’s housing programs do not necessarily target those who actually need them. On the other hand, although eligible households have housing deficits that could be addressed through the use of specific housing programs, program usage remains low.

Housing Markets in Uruguay: Determinants of Housing Demand and its Interaction with Public Policies

This paper analyzes the determinants of housing demand for Uruguay and the extent to which housing policies have an impact on their target population. The paper first analyzes the determinants of housing demand, following an approach based on Rosen’s (1974) two-step procedure consisting of fitting a hedonic price regression in 34 different geographical units (or markets) to estimate a housing demand function. The determinants of formality and ownership choices were examined using a multinomial logit framework. Determinants of these choices include both household demographic attributes and access to and use of public housing programs and other social programs. Policy recommendations are offered on the basis of the finding that a price and income-inelastic formal housing market greatly contrasts with a rather price and income-elastic informal housing market.