Foreign Owners and Plant Survival

In recent years, international capital flows of all types have increased dramatically and most governments have been actively encouraging inflows of direct investment. However, concerns remain that reliance on foreign multinationals may be a risky development strategy as foreign firms are likely to be less rooted in the local economy and may be quicker to close down production. This paper asks whether foreign owners are more likely to close plants than domestic owners. In Indonesia, plants with any foreign ownership are far less likely to close than wholly-owned domestic plants. However, the lower probability of shutdown is a result of the larger size of foreign plants rather than their nationality of ownership. Controlling for plant size and productivity, we find that foreign plants are significantly more likely to close than comparable domestic establishments.

The Deaths of Manufacturing Plants

This paper examines the causes of manufacturing plant deaths within and across industries in the U.S. from 1977-1997. The effects of international competition from low wage countries, exporting, ownership structure, product diversity, productivity, geography, and plant characteristics are considered. The probability of shutdowns is higher in industries that face increased competition from low-income countries, especially for low-wage, labor-intensive plants within those industries. Conditional on industry and plant characteristics, closures occur more often at plants that are part of a multi-plant firm and at plants that have recently experienced a change in ownership. Plants owned by U.S. multinationals are more likely to close than similar plants at non-multinational firms. Exits occur less frequently at multi-product plants, at exporters, at plants that pay above average wages, and at large, older, more productive and more capital-intensive plants.

Firm Structure, Multinationals, and Manufacturing Plant Deaths

Plant shutdowns shape industry productivity, the dynamics of employment, and industrial restructuring. Plant closures account for more than half of gross job destruction in US manufacturing. This paper examines the effects of firm structure on US manufacturing plant closures. Plants belonging to multi-plant firms and those owned by US multinationals are less likely to exit. However, the superior survival chances are due to the characteristics of the plants rather than the nature of the firms. Controlling for plant and industry attributes, we find that plants owned by multi-unit firms and US multinationals are much more likely to close.Exit, shutdown, closure, multi-plant firms, multinational firms, takeovers, entry costs, agglomeration, specialization

Who Wins the Olympic Games: Economic Development and Medal Totals

This paper examines determinants of Olympic success at the country level. Does the U.S. win its fair share of Olympic medals? Why does China win 6% of the medals even though it has 1/5 of the world's population? We consider the role of population and economic development in determining medal totals from 1960-1996. We also provide out of sample predictions for the 2000 Olympics in Sydney.

Understanding the U.S. Export Boom

U.S. exports grew at a rate of 8.2% per year from 1987-1994, far faster than the economy as a whole or even the manufacturing sector. This paper examines the source of this export boom and argues that the boom itself has been less remarkable for the rate of growth of exports than for the striking increase in export intensity. This increase in export intensity has occurred both in the aggregate and for individual plants across a wide range of industries. Competing explanations for the rise in exports are tested with a comprehensive plant level data set. Changes in exchange rates and rises in foreign income are the dominant sources for the export increase, while productivity increases in U.S. plants play a relatively small role. The results suggest that slower growth rates of U.S. trading partners and an appreciation of the dollar will have strong negative effects on the growth rate of U.S. manufacturing exports.

Who Dies? International Trade, Market Structure, and Industrial Restructuring

This paper examines the role of changing factor endowments in the growth and decline of industries and regions. The implications of an endowment-based Heckscher-Ohlin trade model for plant entry and exit are tested on 20 years of data for the entire US manufacturing sector. The trade model provides predictions for which industries will see growth through the positive net entry of plants. A multi-region version of the same model has predictions for which regions will see high turnover and net entry of plants. In a country such as the U.S. that is augmenting both its physical and human capital, the least capital-intensive, least skill-intensive industries are correctly predicted to have the lowest rate of net entry. In addition, increases in regional capital and skill intensity are associated with higher probabilities of shutdown, especially for plants in industries with low initial capital and skill intensities.

Intermediaries in International Trade: Direct versus indirect modes of export

This paper examines the factors that give rise to intermediaries in exporting and explores the implications for trade volumes. Export intermediaries such as wholesalers serve different markets and export different products than manufacturing exporters. In particular, high market-specific fixed costs of exporting, the (lack of) quality of the general contracting environment and product-specific factors play important roles in explaining the existence of export intermediaries. These underlying differences between direct and intermediary exporters have important consequences for trade flows. The ability of export intermediaries to overcome country and product fixed costs means that they can more easily respond along the extensive margin to external shocks. Intermediaries and direct exporters respond differently to exchange rate fluctuations both in terms of the total value of shipments and the number of products exported as well as in terms of prices and quantities. Aggregate exports to destinations with high shares of indirect exports are much less responsive to changes in the real exchange rate than are exports to countries served primarily by direct exporters.

Intermediaries in International Trade: direct versus indirect modes of export

This paper contributes to the relatively new literature on the role of intermediaries in international trade. Using Italian firm-level data, we document significant differences between exporters of different types and highlight the role of country-specific fixed cost in the choice of direct versus indirect modes of export. Recent theoretical work suggests that intermediaries are typically providing solutions to country-specific fixed costs. Our empirical results largely confirm this relationship. Measures of country fixed costs are positively associated with intermediary exports both in the aggregate and within firms. In contrast, proxies for variable trade costs are largely not correlated with differences between direct and indirect exports.heterogeneous firms, international trade, intermediation, wholesalers

Intermediaries in International Trade: direct versus indirect modes of export

This paper contributes to the relatively new literature on the role of intermediaries in international trade. Using Italian firm-level data, we document significant differences between exporters of different types and highlight the role of country-specific fixed cost in the choice of direct versus indirect modes of export. Recent theoretical work suggests that intermediaries are typically providing solutions to country-specific fixed costs. Our empirical results largely confirm this relationship. Measures of country fixed costs are positively associated with intermediary exports both in the aggregate and within firms. In contrast, proxies for variable trade costs are largely not correlated with differences between direct and indirect exports.heterogeneous firms, international trade, intermediation, wholesalers