Outsourcing Jobs? Multinationals and US Employment

Critics of globalization claim that US manufacturing firms are being driven to shift employment abroad by the prospects of cheaper labor. Others argue that the availability of low-wage labor has allowed US based firms to survive and even prosper. Yet evidence for either hypothesis, beyond anecdotes, is slim. Using firm-level data collected by the US Bureau of Economic Analysis (BEA), we estimate the impact on US manufacturing employment of changes in foreign affiliate wages, controlling for changing demand conditions and technological change. We find that the evidence supports both perspectives on globalization. For firms most likely to perform the same tasks in foreign affiliates and at home ("horizontal" foreign investment), foreign and domestic employees appear to be substitutes. For these firms, lower wages in affiliate locations are associated with lower employment in the US. However, for firms which do significantly different tasks at home and abroad ("vertical" foreign investment), foreign and domestic employment are complements. For vertical foreign investment, lower wages abroad are associated with higher US manufacturing employment. These offsetting effects may be combined to show that offshoring is associated with a quantitatively small decline in manufacturing employment. Other factors, such as declining prices for consumer goods, import competition, and falling prices for investment goods (which substitute for labor) play a more important role.

Does Direct Foreign Investment Affect Domestic Firms' Credit Constraints?

Firms in developing countries cite credit constraints as one of their primary obstacles to investment. Direct foreign investment, by bringing in scarce capital, may ease domestic firms' credit constraints. Alternatively, if foreign firms borrow heavily from domestic banks, they may exacerbate domestic firms' credit constraints by crowding them out of domestic capital markets. One plausible mechanism by which this may happen is indirect. Foreign firms may be more experienced and have better financial ratios and thus, be a safer bet for lending institutions. Using firm-level data from the Ivory Coast for the period 1974-1987 we test the following hypotheses: (1) domestic firms are more credit constrained than foreign firms and (2) borrowing by foreign firms exacerbates the credit constraints of domestic firms. Results suggest that domestic firms are significantly more credit constrained that foreign firms and that borrowing by foreign firms aggravates domestic firms' credit constraints. By splitting the sample into state-owned (SOE) and privately owned domestic enterprises we are able to show that SOEs are less financially constrained than other domestic enterprises, consistent with the notion of a 'soft budget constraint'. Borrowing by foreign firms affects only privately owned enterprises. Finally, we explore possible explanations for the crowding out effect.

Models for the Effects of G-seat Cuing on Roll-axis Tracking Performance

Including whole-body motion in a flight simulator improves performance for a variety of tasks requiring a pilot to compensate for the effects of unexpected disturbances. A possible mechanism for this improvement is that whole-body motion provides high derivative vehicle state information whic allows the pilot to generate more lead in responding to the external disturbances. During development of motion simulating algorithms for an advanced g-cuing system it was discovered that an algorithm based on aircraft roll acceleration producted little or no performance improvement. On the other hand, algorithms based on roll position or roll velocity produced performance equivalent to whole-body motion. The analysis and modeling conducted at both the sensory system and manual control performance levels to explain the above results are described

Relationship between emergency presentation, systemic inflammatory response, and cancer-specific survival in patients undergoing potentially curative surgery for colon cancer

Background Emergency presentation is recognized to be associated with poorer cancer-specific survival following curative resection for colorectal cancer. The present study examined the hypothesis that an enhanced systemic inflammatory response, prior to surgery, might explain the impact of emergency presentation on survival. Methods In all, 188 patients undergoing potentially curative resection for colorectal cancer were studied. Of these, 55 (29%) presented as emergencies. The systemic inflammatory response was assessed using the Glasgow Prognostic Score (mGPS), which is the combination of an elevated C-reactive protein (>10 mg/L) and hypoalbuminemia (<35 g/L). Results In the emergency group, tumor stage was greater (P < 0.01), more patients received adjuvant therapy (P < 0.01) more patients had an elevated mGPS (P < 0.01), and more patients died of their disease (P < 0.05). The minimum follow-up was 12 months; the median follow-up of the survivors was 48 months. Emergency presentation was associated with poorer 3-year cancer-specific survival in those patients aged 65 to 74 years (P < 0.01), in both males and females (P < 0.05), in the deprived (P < 0.01), in patients with tumor-node-metastasis (TNM) stage II disease (P < 0.01), in those who received no adjuvant therapy (P < 0.01), and in the mGPS 0 and 1 groups (P < 0.05) groups. On multivariate survival analysis of patients undergoing potentially curative surgery for TNM stage II colon cancer, emergency presentation (P < 0.05) and mGPS (P < 0.05) were independently associated with cancer-specific survival. Conclusions These results suggest that emergency presentation and the presence of systemic inflammatory response prior to surgery are linked and account for poorer cancer-specific survival in patients undergoing potentially curative surgery for colon cancer. Both emergency presentation and an elevated mGPS should be taken into account when assessing the likely outcome of these patients

Atomistic to continuum models for crystals

The theory of nonlinear mass-spring chains has a history stretching back to the now famous numerical simulations of Fermi, Pasta and Ulam. The unexpected results of that experiment have led to many new fields of study. Despite this, the mathematics of the lattice equations have proved sufficiently rich to attract continued attention to the present day. This work is concerned with the motions of an infinite one dimensional lattice with nearest-neighbour interactions governed by a generic potential. The Hamiltonian of such a system may be written $H = \sum_{i=-\infty}^{\infty} \, \Bigl(\frac{1}{2}p_i^2 + V(q_{i+1}-q_i)\Bigr)$, in terms of the momenta $p_i$ and the displacements $q_i$ of the lattice sites. All sites are assumed to be of equal mass. Certain generic conditions are placed on the potential $V$. Of particular interest are the solitary wave solutions which are known to exist upon such lattices. The KdV equation has long been known to emerge in a formal manner from the lattice equations as a continuum limit. More recently, the lattice's localized nonlinear modes have been rigorously approximated by the KdV's well-studied soliton solution, in the lattice's long wavelength regime. To date, however, little is known about how, and to what extent, lattice solitary waves differ from KdV solitons. It is proved in this work that a solution (which we prove to be unique) to a particular linear ordinary differential equation provides a correction to the KdV approximation. This gives, in an explicit way, the lowest order effect of lattice discreteness upon lattice solitary waves. It is also shown how such discreteness effects are propagated along the lattice both in isolation (single soliton case), and in the presence of another soliton correction (the bisoliton case). In the latter case their interaction is studied and the impact of lattice discreteness upon lattice solitary wave interactions is observed. This is possible by virtue of the discovery of an evolution equation for discreteness effects on the lattice. This equation is proved to have appropriate unique solutions and is found to be strikingly similar to corresponding equations known in both the theories of shallow water waves and ion-acoustic waves

Global capital flows and financing constraints

Firms often cite financing constraints as one of their primary obstacles to investment. Global capital flows, by bringing in scarce capital, may ease the financing constraints of host country firms. But if incoming foreign investors borrow heavily from domestic banks, foreign direct investment may exacerbate financing constraints by crowding host country firms out of domestic capital markets. Combining a unique cross-country firm-level panel with time-series data on restrictions on international transactions and capital flows, Harrison, Love, and McMillan find that different measures of global flows are associated with a reduction in firm-level financing constraints. First, the authors show that one type of capital inflow-foreign direct investment-is associated with a reduction in financing constraints. Second, they test whether restrictions on international transactions affects the financing constraints of firms. The results suggest that only one type of restriction-those on capital account transactions-negatively affects firms'financing constraints. The authors also show that multinational firms are not financially constrained and do not appear to be sensitive to the level of foreign directinvestment. This implies that foreign direct investment eases financing constraints for non-multinational firms. Finally, the authors show that (1) foreign direct investment only eases financing constraints in the non-G7 countries, and (2) other kinds of flows, such as portfolio investment, have no impact on financing constraints.International Terrorism&Counterterrorism,Payment Systems&Infrastructure,Financial Intermediation,Economic Theory&Research,Fiscal&Monetary Policy,Economic Theory&Research,International Terrorism&Counterterrorism,Financial Intermediation,Environmental Economics&Policies,Banks&Banking Reform

Global Capital Flows and Financing Constraints

Firms often cite financing constraints as one of their primary obstacles to investment. Global capital flows, by bringing in scarce capital, may ease host-country firms' financing constraints. However, if incoming foreign investors borrow heavily from domestic basnks, direct foreign investment (DFI) may exacerbate financing constraints by crowding host country firms out of domestic capital markets. Combininb a unique cross-country firm-level panel with time-series data on restrictions on international transactions and capital flows, we find that different measures of global flows are associated with a reduction in firm-level financing constraints. First, we show that one type of capital inflow--DFI--is associated with a reduction in financing constraints. Second, we test whether restrictions on international transactions affect firms' financing constraints. Our results suggest that only one type of restriction--those on capital account transactions--negatively affect firms' financing constraints. We also show that multinational firms are not financially constrained and do not appear to be sensitive to the level of DFI. This implies that DFI eases financing constraints for non-multinational firms. Finally, we show that DFI only eases financing constraints in the non-G7 countries.