An empirical assessment of the effects of trade in innovative tasks on innovation output

Multinational firms are increasingly sending their innovative tasks abroad. This article examines whether offshoring research and development, design, and engineering activities provides any gains in terms of firm‐level innovation output. The effects of trade in innovative tasks on the probability of firms being innovative and the share of innovative product sales in total turnover are examined using an instrumental variable approach. The data in use come from a recent survey, which provides cross‐section observations for more than 14,750 firms in seven European countries. The results suggest that those firms that offshore their innovative activities are 60% more likely to successfully innovate. Also, offshoring innovative activities increases the share of innovative product sales in total turnover up to 35%. Furthermore, firms in this sample appear to gain from trade in innovative tasks when such trade is in product innovation but not when such trade is in process innovation. This is a postprint of the published article.Ye

Productivity and offshoring innovative activities

Recent studies suggest that firms may gain from global sourcing of innovative activities. Yet, only a small number of firms offshore their R&D, design, and engineering tasks. To explain this selection pattern, this paper examines the heterogeneity in total factor productivity among a large group of European firms. The results suggest that those firms that offshore their innovative activities tend to be more productive than domestic firms, exporters, and other multinational corporations. This finding implies that firms with superior productivity are more likely to exploit the global task distribution in innovative activities, which may provide an explanation for why such low participation is observed in the data. This is a postprint of the published article.Ye

Industrial research and development and real exchange rate depreciation in a small open economy

To examine how changes in relative national prices affect innovation input, this paper studies the impact of changes in industry‐specific effective real exchange rates on industrial R&D expenditures in Korea. In particular, it explores the heterogeneous responses of industries with different export intensities. Employing dynamic panel data estimation techniques, the results suggest that among industries with medium levels of export intensity a lagged depreciation in industry‐specific effective real exchange rate leads to a decline in contemporaneous industry‐level R&D expenditures. However, this adverse effect is insignificant for industries that either mostly serve the domestic markets or that are heavily engaged in foreign markets. This is a postprint of the published article.Ye

Political Agreements and Exporting Activities: An Empirical Assessment of the Effects of the JCPOA Agreement on Iran’s Exports

Conflicts hinder international trade. Political agreements that restrain conflicts and remove sanctions may contribute positively to exporting and importing activities. In this study, we examine the effects of the Joint Comprehensive Plan of Action, commonly known as Iran Nuclear Deal, on Iran’s non-oil exports. Employing a dynamic panel model, we find a significant increase in the growth rate of industry-level exports following the removal of nuclear-related sanctions, resulting from this political agreement. In particular, the exports of industries that have relatively low shares in Iran’s non-oil exports grow significantly faster than industries with relatively high shares in those exports. Our findings suggest that even a short-lived political agreement could have significant positive effects on exporting activities in middle-income countries. This is a postprint of the published article.Ye

Exchange Rates and Trade Balances: Effects of Intra-Industry Trade and Vertical Specialization

To examine how changes in relative national prices affect trade flows, this study estimates the impact of changes in industry-specific effective real exchange rates on industry-level trade balances, exports, and imports. We analyze the variations in industry-specific intra-industry trade and vertical specialization, which may both govern the long-run relationship between real exchange rates and trade flows. We employ sample information from 13 manufacturing industries across five Asian countries from 2001 to 2015. Rather than country-level aggregate measures, we use disaggregated industry-specific real exchange rates, which provide better measures of relative national prices and may help to uncover different responses that are masked by aggregate data. Fixed-effect estimations reveal that greater price competitiveness, as measured by depreciation in industry-specific effective real exchange rates, increases industry-level trade balances. We find that the elasticity of industry-level trade balances with respect to industry-specific real exchange rates declines as vertical specialization increases. There is also some limited evidence that this elasticity increases as intra-industry trade increases. Taken together, our findings suggest that global supply chains are more important than intra-industry trade in examining the response of trade balances to real exchange rate changes. Importantly, these heterogeneous impacts imply that policies regarding exchange rate management may be of limited potency and will affect different industries in different ways. This is a postprint of the published articleYe

Inflation in Iran: An Empirical Assessment of the Key Determinants

Purpose: To study the key determinants of chronically high inflation in Iran.Design/Methodology/Approach: Relying on annual data from 1978 to 2019, we employ an Auto-Regressive Distributed Lag Model (ARDL) and Error Correction Model (ECM) to study the inflationary effects of monetary and fiscal policies as well as exchange rate swings and sanctions intensification.Findings: We find that increase in money supply, depreciation of nominal exchange rate, increase in fiscal deficit, and intensification of sanctions are among the key drivers of inflation in Iran. Their impact is profound in the long run, but in the short run only money supply and currency depreciation are significant. Also, when exploring the inflation in different components of Consumer Price Index (CPI), we find robust long- and short-run effects from money supply and exchange rate, while the effects of fiscal deficit and sanctions vary across different components.Originality/Value: We contribute to the literature by setting apart the long- vs. short-run effects of key variables on inflation in Iran. We also employ improved measures of fiscal deficit and sanctions that are shown to be of significance in the long run. Lastly, we go beyond the aggregate index and examine the variations in different CPI components.Yes© Journal of Economic Studies, Emerald Publishing Limited. DOI: 10.1108/JES-07-2022-0370. This author accepted manuscript (AAM) is provided for your own personal use only. It may not be used for resale, reprinting, systematic distribution, emailing, or for any other commercial purpose without the permission of the publisher

Is ‘no news’ really ‘good news’? Country visibility and FDI location choice

In choosing where to invest, firms seek out information on a set of possible locations. Information asymmetries may make country visibility particularly important in decisions to locate investment abroad. We develop a country visibility index based on international news stories in The Economist, and show that broad country visibility is at least as important in attracting foreign direct investment (FDI) as other specific investment promotion activities or proxies for information frictions. Controlling for standard gravity model determinants of FDI, we find that greater visibility of developing countries, in particular lower middle- and low-income countries, increases the investment that they receive from US multinational corporations. This is a postprint of the published article.Ye

Investigation of CO2 Enhanced Oil Recovery Using Dimensionless Groups in Wettability Modified Chalk and Sandstone Rocks

The paper addresses enhanced oil recovery in chalk and sandstone rocks by CO2 injection, with different wettability, porosity, and permeability as well as injection rate and flooding conditions. Results indicate that an increase in Bond number has a positive effect on oil recovery whereas for capillary number, there is a limit in which recovery is improving. This limit is estimated when the pressure drop by viscous force is approximately equal to the threshold balance between capillary and gravity forces. A dimensionless group is proposed that combines the effect of capillarity, injection rate, permeability, and CO2 diffusion on the oil recovery. Recovery from all experiments in this study and reported data in the literature shows a satisfactory relationship with the proposed group

Gendered effects of sanctions on manufacturing employment: Evidence from Iran

International sanctions have significant economic effects with long-lasting negative consequences for human development. However, academic research on the gendered effects of sanctions is scarce. In fact, most work on sanctions has been either gender neutral or gender blind. This article examines the labor market effects of economic and noneconomic sanctions, imposed by the United States and the United Nations, on male and female employment in manufacturing industries in Iran. The empirical analysis is based on four-digit industry-level employment data from 102 manufacturing industries between 1995 and 2014. Our main findings suggest that international sanctions have disproportionate effects on male and female employment. In particular, we find that sanctions hurt female employment significantly more than male employment. This effect is further compounded in industries that are more capital intensive, where labor compensation has a relatively low share in value added. Furthermore, in industries with relatively high reliance on imported inputs, female employment suffers more from sanctions.This is the peer reviewed version of the following article: Demir, Firat, and Saleh S. Tabrizy. "Gendered effects of sanctions on manufacturing employment: Evidence from Iran." Review of Development Economics (2022). It has been published in final form at https://doi.org/10.1111/rode.12917. This article may be used for noncommercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. This article may not be enhanced, enriched or otherwise transformed into a derivative work, without express permission from Wiley or by statutory rights under applicable legislation. Copyright notices must not be removed, obscured or modified. The article must be linked to Wiley’s version of record on Wiley Online Library and any embedding, framing or otherwise making available the article or pages thereof by third parties from platforms, services and websites other than Wiley Online Library must be prohibited.The authors received funding from the University of Oklahoma College of Arts and Sciences Senior Faculty Summer Fellowship; University of Oklahoma Libraries; Fulbright Commission, and Carnegie Corporation of New York. Grant Number: G-20-57642.Ye