Patterns of international fragmentation of production and the relative demand for labor

Growing shares of international trade flows consist of intermediate and unfinished goods shipped from one country to another to combine manufacturing or services activities at home with those performed abroad. This configuration of the productive structure has been named “internationally fragmented.” The purpose of our work is to analyze the labor market effects of international fragmentation of production, looking at how it affects relative labor demand. Models of trade due to fragmentation of production suggest that when international fragmentation takes place we might observe a change in the factor proportion in the affected industries. We use outward-processing-trade data - specifically related to international fragmentation of production - to test if the shift in the ratio of skilled and unskilled labor employed in Italy and Germany during the 1990s is related to fragmentation.

Italian districts in the international economy.

This paper presents descriptive evidence on the role of industrial districts in Italian exports. Recent data released by ISTAT allow to identify exports at the level of single industrial district. The paper first presents synthetically the main features of the Italian pattern of international specialisation. Then, the share of industrial districts in Italian exports is analysed both by sector and by the major industrial districts. In the final part, the paper surveys the results of the recent empirical literature on the performance of firms located in industrial districts. This group of firms is more profitable than those located outside the district not because of lower labour cost, but because of their higher efficiency.

Patterns of International Fragmentation of Production and Implications for the Labor Markets

Growing shares of international trade flows consist of intermediate and unfinished goods shipped from one country to another to combine manufacturing or services activities at home with those performed abroad. This configuration of the productive structure has been named “internationally fragmented”. The purpose of our work is to analyze the labor market effects of international fragmentation of production in Europe, looking at how it affects relative labor demand. Models of trade due to fragmentation of production suggest that when international fragmentation takes place we can expect to observe a change in the relative factor intensities of the affected industries. We use international trade data specifically related to international fragmentation of production to test if the shift in intensity of skilled and unskilled labor employed in Italy and Germany during the 1990s it related to the fragmentation activity.international fragmentation of production, trade, labour demand

Patterns of International Fragmentation of Production and Implications for the Labor Markets

Growing shares of international trade flows consist of intermediate and unfinished goods shipped from one country to another to combine manufacturing or services activities at home with those performed abroad. This configuration of the productive structure has been named “internationally fragmented”. The purpose of our work is to analyze the labor market effects of international fragmentation of production in Europe, looking at how it affects relative labor demand. Models of trade due to fragmentation of production suggest that when international fragmentation takes place we can expect to observe a change in the relative factor intensities of the affected industries. We use international trade data specifically related to international fragmentation of production to test if the shift in intensity of skilled and unskilled labor employed in Italy and Germany during the 1990s it related to the fragmentation activity.international fragmentation of production, trade, labor demand

The speed of adjustment to PPP: is there any puzzle?

In this paper we address the Rogoff's (1996) puzzle on the exchange rate excess volatility and the slow convergence to PPP. We argue that the evidence in favour of the latter stylised fact could be biased by the adoption of unreliable measures of the speed of convergence. In fact, adopting persistence profiles no evidence is found in favour of the puzzle: for a set of nine bilateral cases we estimate a relatively fast speed of adjustment. Since the robustness of the inference made on the basis of the persistence profiles depends on the correct identification of the cointegration relationships, a particular attention is devoted to this problem. We identify the cointegration space by imposing two competing sets of overidentifying restrictions: the first one identifies the PPP, the second implies a cointegrating relationship between the real exchange rate and the interest rates. Adopting a dominance criterion we conclude in favour of PPP for most cases. Keywords: purchasing power parity, cointegration, persistence profiles. JEL: C32, F31, F41.

Does the PPP need the UIP?

In this paper we focus on the post Bretton Woods period and analyze whether a PPP relationship is accepted by the data for Italy, United States and Germany. We adopt a multivariate system approach in which, initially, we test for cointegration and then we try to identify a cointegration space in which we have the PPP relationship (the Johansen approach). The studies that have adopted this approach have always rejected the PPP in favour of a long run relationship between the real exchange rate and the interest rate differential. On the contrary, our conclusions are in favour of the PPP for all the cases considered when we allow for a structural break in the data. We arrive to this conclusion, after having identified the cointegration space in two different ways: one in which we have the PPP as a cointegrated vector and one in which the real exchange rate plus the interest rate differential is a cointegrated vector. Adopting a dominance criterion we choose the former identification.

Technological change and international competitiveness: the case of Switzerland.

The paper presents the preliminary results of a research project on the relationship between technological and trade performance with a special focus on Switzerland. The analysis is based on two sources of data: a dataset based on patent applications by firms from major industrialized countries to the European Patent Office (EPO) and a data set on export flows of OECD countries (IMPEX database). For both datasets, the period of time is 1980-1992. The analysis is carried out both for the whole aggregate of manufacturing sectors (WS49) and for a subsample of high-tech sectors (HT49). In the first part of the paper, the relationship between trade and technological variables is analyzed descriptively using indexes of technological (RTA) and trade specialization (RCA). Then, in the second part of the paper, the relationship between trade and technological specialization is analyzed using econometric techniques and exploiting the information contained in the datasets along three dimensions: country, sector, time. Finally, sectoral and geographical patterns of innovative activities are analyzed for the case of Switzerland. The paper broadly confirms the existence of a positive relationship between technological and trade specialization. Such relationship is also stable over time. However, the relationship is not very strong and it holds differently across countries.

From Seattle to nowhere. Some considerations on the anti-globalisation games.

The failure of the WTO Ministerial Conference last December in Seattle was due to the unsettled network of conflicting interests of the member countries. What happened in the street of Seattle has not determined the outcome of the meeting. However, it would be a mistake to downplay the political role that the civil society can have on globalisation issues. Many of these topics are highly emotive and certain slogans are misused. This brings about misleading information that is amplified in public opinion by the media thanks to the clever choreography managed by these groups. Globalisation certainly requires corrections, but it needs mainly a good public relations office. In this paper, after having presented some stylised facts on globalisation, world poverty and income distribution looks at some of the current issues on the WTO's agenda.

On the Dynamics of Trade Patterns

In this paper we analyse the dynamics of trade patterns in the six largest industrialised countries and in eight fast growing Asian economies. For each of these countries we study the shape of the sectoral distribution of an index of trade specialisation and its evolution over time. Our analysis shows a marked difference between the advanced and the emerging countries as far as the degree of persistence is concerned: the former have in fact a highly persistent trade pattern, whereas the latter show a rapidly changing trade specialisation. However, the two groups of countries are more similar as far as the evolution of the degree of specialisation is concerned: although emerging countries are still more specialised than the industrialised countries, both groups show a tendency toward a reduced polarisation and a more symmetric distribution of the specialisation index. This evidence is in line with the traditional trade theory, in which changing comparative advantage is the determinant of a changing trade pattern. On the contrary, this evidence does not support the idea that self- reinforcing mechanisms are prominent in international trade specialisation.trade patterns, trade specialisation, comparative advantages, stochastic kernels

Globalization

This paper looks at some aspect of globalisation. After a discussion on its definition, the first part highlights historical evolution of globalisation in its major components (trade flows, foreign direct investments, portfolio movements and migration). The evidence shows that (1) globalisation its not new; (2) it is not irreversible; (3) the new elements in the last phase of globalisation are the low international mobility of labour, the changes in trade policy, the relevance in financial capita movement and their role in financial crisis. In the second part, the paper shows how poverty has not increased around the world (even if its level reaches dimension requiring a humanitarian attention). Inequality around the world is increased in the last two hundred years with an inversion in its trend in the last twenty years. In the third part, the paper analyses the role of economic actors at the international level. The problem of accountability and representatively both of governmental and non governmental organisation is analysed. A short guide to information available on the web closes the paper.