Offshoring and Home Country R&D

National concerns are sometimes raised against offshoring of economic activities to other countries. While most of the existing literature has focused on the effects on labor demand and productivity the effects on domestic R&D have been neglected. This is unfortunate since the decision to offshore activities also includes R&D. We use unique and rich firm level data for the Swedish manufacturing sector to analyze how offshoring impacts domestic R&D and how these effects vary with respect to target region and type of firm. The results suggest that offshoring of production alter a firm’s investments in R&D in Sweden and that a negative impact on home country R&D is confined to offshoring by non-multinationals and offshoring to Europe and EU15 countries.Offshoring; R&D; Manufacturing sector; EU15

Offshoring of Services and Corruption: Do Firms Escape Corrupt Countries?

In this paper, we analyze how the offshoring of services by Swedish firms is affected by corruption in target economies. The results suggest that firms avoid corrupt countries and that corruption reduces the amount of offshored services. In addition, the sensitivity to corruption is highest for poor countries, and large and internationalized firms are the ones that tend to be the most sensitive to corruption.Corruption; Services; Offshoring; Gravity model; Firm level data

Is There Really a Foreign Ownership Wage Premium? Evidence from Matched Employer-Employee Data

Numerous studies on firm-level data have reported higher average wages in foreign-owned firms than in domestically-owned firms. This, however, does not necessarily imply that the individual worker’s wage increase with foreign ownership. Using detailed matched employer-employee data on the entire Swedish private sector, we examine the effect of foreign ownership on individual wages, controlling for individual and firm heterogeneity as well as for possible selection bias in foreign acquisitions. We distinguish between foreign greenfields and takeovers and compare foreign owned firms with both domestic multinationals and local firms. Our results show a considerably smaller wage premium in foreign owned firms than what has been found in studies conducted at a more aggregate level. Moreover, foreign takeovers of Swedish firms tend to have no or even a negative effect on wages.FDI; Foreign Ownership; Wages; Matched Employer-Employee Data; Propensity Score Matching

Is there Really a Foreign Ownership Wage Premium? Evidence from Matched Employer-Employee Data

Numerous studies based on firm-level data have reported higher average wages in foreign-owned firms than in domestically-owned firms. This, however, does not necessarily imply that the individual worker’s wage increases with foreign ownership. Using detailed matched employer-employee data, we examine the effect of foreign ownership on individual wages, controlling for individual and firm heterogeneity as well as for possible selection bias in foreign acquisitions. We distinguish between foreign greenfields and takeovers and compare foreign ownership with both domestic multinationals and local firms. Our results indicate that employees in foreign-owned firms do not have systematically higher wages than comparable workers in similar Swedish owned firms.FDI; Foreign ownership; Wages; Matched Employer-Employee data; Propensity score matching

IS CHINA DIFFERENT? A META ANALYSIS OF THE EFFECT OF FOREIGN DIRECT INVESTMENT ON DOMESTIC FIRMS

Empirical evidence suggests that China has benefited from foreign direct investment (FDI). However, an important question that remains unanswered is whether China has benefited more from FDI than other countries in general and other transition and developing countries in particular. This paper investigates this issue by performing a Meta-analysis on a sample of 67 country-specific studies yielding 125 observations that have gauged the nexus between FDI and measures of income growth. The results show that studies on China report relatively high t-values and thus indicate that China may have benefited more than other countries from FDI.Meta-analysis; Foreign direct investment; Economic growth; China

Is There Really an Inverted U-shaped Relation Between Competition and R&D?

We test whether predictions of the Aghion and Howitt (2004) model are supported by firm level data. In particular, we analyze if there is an inverted U-shaped relation between competition and R&D. Results show that the inverted U-shaped relation is supported by the Herfindahl index but not by the price cost margin. Using the Herfindahl index results suggest that breaking up monopolies increases R&D while further increases in competition most likely leads to reduced R&D. Comparing different estimators, we find that time-series based estimators typically result in less clear-cut results, probably driven by a lack of time series variation in measures of competition.R&D; competition; firm size; spillovers

Service-sector competition, innovation and R&D

The central prediction of the Aghion et al. (2005) model is an inverted U-shaped relation between innovation and competition. The model is built on the assumption of a product market and has not yet been empirically tested on service-sector firms. Using detailed firm-level data, we find the inverse U-shaped relation to hold for both small and large service-sector firms. However, non-exporting service firms deviate from the overall pattern. A more detailed breakdown of innovation expenditures shows that the inverse U-shaped pattern holds for both intramural R&D and training, but not for extramural R&D. Finally, as competition increases, small firms tend to seek more strategic alliances with competitors while large firms tend to decrease their collaboration with competitors. To some extent, the behavior of large firms can be due to their greater capacity to handle innovation projects internally and as competition increases, so does the payoff of an edge to competitors.R&D; innovation; competition; service sector

Is There Really an Inverted U-shaped Relation Between Competition and R&D?

We test whether predictions of the Aghion and Howitt (2004) model are supported by firm level data. In particular, we analyze if there is an inverted U-shaped relation between competition and R&D. Results show that the inverted U-shaped relation is supported by the Herfindahl index but not by the price cost margin. Using the Herfindahl index results suggest that breaking up monopolies increases R&D while further increases in competition most likely leads to reduced R&D. Comparing different estimators, we find that time-series based estimators typically result in less clear-cut results, probably driven by a lack of time series variation in measures of competition.R&D; Competition; Firm size; Spillovers

ECONOMIC GROWTH AND GROWTH LINKAGES IN CHINA 1994-2003

This paper investigates to what degree neighboring Chinese provinces were linked to each other in terms of economic growth, income levels, and foreign direct investment during the period 1994-2003. When looking at mainland China, we find that both the level of income and the rate of income growth in a province depend on developments in neighboring provinces. However, we find no evidence of any positive interdependence between growth in rich coastal provinces and their immediate inland neighbors. This suggests that there has been little harmonization in economic growth rates between these regions, and that the immediate hinterland of the coastal growth centers might be bypassed as China’s manufacturing sector is moving west.Domestic integration; growth interdependence; China’s Economy

Vision zero: How it all started

This is a presentation of how I remember the first steps of Vision Zero, the Swedish reorientation of traffic safety policy that took place from the mid-1990s and onwards. It is not an objective text that would be impossible to write as one of the initiators of the policy change. But it brings up some of the steps of the process and presents some hypotheses on how policy change might happen. It is claimed that there was no planned process, not even an ideology or well-developed idea, behind VZ from the very beginning. But there were opportunities and events where one thing led to another. The most fundamental being the immediate acceptance from the Swedish Minister of Infrastructure back in January 1995. The most prominent ideas behind VZ are that firstly safety is a matter of how the providers of the road transport system design and build and manage the system. The second idea is that a professional provider cannot trade off the citizens\u27 life and health for benefits to the society and its citizens. The underlying hypothesis is that tradition and road traffic rules for the road users have been used as an excuse for not undertaking necessary system changes and modifications. The users have always been blamed for crashes and its consequences by the legal system as well as general approach from the society. The last part of the paper reflects on what is necessary to do in the future to eradicate amateurism, populism, and trade-offs from the road traffic safety field. Maybe a "duty of care" legislation needs to be introduced, protecting the citizen from poor design and operations