Trends in Rainfall and Economic Growth in Africa: A Neglected Cause of the Growth Tragedy

We examine the role of trends in rainfall in the poor growth performance of sub-Saharan African nations relative to other developing countries. To do so we use a new crosscountry panel climatic data set in an empirical economic growth framework. Our results show that rainfall has been a significant determinant of poor economic growth for Africa, but not for other developing countries. Depending on the benchmark measure of potential rainfall, we estimate that the direct impact under the scenario of no decline in rainfall would have resulted in a reduction of between around 15 and 40 per cent of todays gap in African GDP per capita relative to the rest of the developing world. --

Spillovers through backward linkages from multinationals: Measurement matters!

We argue that the measures of backward linkages used in recent papers on spillovers from multinational companies are potentially problematic, as they depend on a number of restrictive assumptions, namely that (i) multinationals use domestically produced inputs in the same proportion as imported inputs, (ii) multinationals have the same input sourcing behaviour as domestic firms, irrespective of their country of origin, and (iii) the demand for locally produced inputs by multinationals is proportional to their share of locally produced output. We discuss why these assumptions are likely to be violated in practice, and provide alternative measures that overcome these drawbacks. Our results, using plant level data for Ireland, show clearly that the choice of backward linkage measure and thus, the assumptions behind them, matters greatly in order to draw possible conclusions regarding the existence of FDIrelated spillovers. Using the standard measure employed in the literature we fail to find robust evidence for spillovers through backward linkages. However, when we use alternative measures of backward linkages that relax assumptions (i)-(iii), we find robust evidence for positive FDI backward spillover effects

Trends in Rainfall and Economic Growth in Africa: A Neglected Cause of the Growth Tragedy

We examine the role of trends in rainfall in the poor growth performance of sub-Saharan African nations relative to other developing countries. To do so we use a new crosscountry panel climatic data set in an empirical economic growth framework. Our results show that rainfall has been a significant determinant of poor economic growth for Africa, but not for other developing countries. Depending on the benchmark measure of potential rainfall, we estimate that the direct impact under the scenario of no decline in rainfall would have resulted in a reduction of between around 15 and 40 per cent of today's gap in African GDP per capita relative to the rest of the developing world

Multinationals ' location choice, agglomeration economies and public incentives

We study the regional location of multinationals in Ireland since the 1970s by focusing on the role played by agglomeration economies and public incentives intent on dispersing industrial activity to the more disadvantaged areas of Ireland. We find that regional policy has only been effective in attracting low-tech firms to the disadvantaged areas during the time when there was a much more laissez-faire approach to regional policy and when the primary industrial policy emphasis was on attracting high-tech firms into Ireland in general. Our results also show that hi-tech firms spread more evenly across the country and that urbanization economies were for these firms a more important locational determinant than public incentives

Spillovers through backward linkages from multinationals: measurement matters!

We argue that the measures of backward linkages used in recent papers on spillovers from multinational companies are potentially problematic, as they depend on a number of restrictive assumptions, namely that (i) multinationals use domestically produced inputs in the same proportion as imported inputs, (ii) multinationals have the same input sourcing behaviour as domestic firms, irrespective of their country of origin, and (iii) the demand for locally produced inputs by multinationals is proportional to their share of locally produced output. We discuss why these assumptions are likely to be violated in practice, and provide alternative measures that overcome these drawbacks. Our results, using plant level data for Ireland, show clearly that the choice of backward linkage measure and thus, the assumptions behind them, matters greatly in order to draw possible conclusions regarding the existence of FDI-related spillovers. Using the standard measure employed in the literature we fail to find robust evidence for spillovers through backward linkages. However, when we use alternative measures of backward linkages that relax assumptions (i)-(iii), we find robust evidence for positive FDI backward spillover effects

Multinational enterprises and new trade theory: evidence for the convergence hypothesis

According to the ‘convergence hypothesis’ multinational companies will tend to displace national firms and trade as total market size increases and as countries converge in relative size, factor endowments, and production costs. Using a recent model developed by Markusen and Venables (1998) as a theoretical framework, we explicitly develop empirical measures to proxy bilateral FDI between two countries and address their properties with regard to the convergence hypothesis. Using a panel of data of country pairs over the years 1985-96 we econometrically test for the relationship between convergence and bilateral FDI. Our results provide some empirical support for the convergence hypothesis

Explaining firms export behaviour: the role of RD and spillovers

We examine the importance of a firm’s own R&D activity and intra-sectoral spillovers on the decision to export and the export intensity using firm level panel data for Spain for the period 1990 to 1998. Our results are in line with preceding findings on the role played by firmspecific variables such as age, firm size, productivity and workers’ skills. In addition, we show that export and R&D spillovers, either from MNEs or domestic firms in the sector, have a different impact on Spanish and foreign firms, the latter generally benefiting from positive spillovers. Further evidence shows a larger marginal impact of R&D spillovers on export intensity of Spanish firms exporting to other OECD countries than those exporting to non- OECD nations

Spillovers through backward linkages from multinationals: measurement matters!

We argue that the measures of backward linkages used in recent papers on spillovers from multinational companies are potentially problematic, as they depend on a number of restrictive assumptions, namely that (i) multinationals use domestically produced inputs in the same proportion as imported inputs, (ii) multinationals have the same input sourcing behaviour as domestic firms, irrespective of their country of origin, and (iii) the demand for locally produced inputs by multinationals is proportional to their share of locally produced output. We discuss why these assumptions are likely to be violated in practice, and provide alternative measures that overcome these drawbacks. Our results, using plant level data for Ireland, show clearly that the choice of backward linkage measure and thus, the assumptions behind them, matters greatly in order to draw possible conclusions regarding the existence of FDI-related spillovers. Using the standard measure employed in the literature we fail to find robust evidence for spillovers through backward linkages. However, when we use alternative measures of backward linkages that relax assumptions (i)-(iii), we find robust evidence for positive FDI backward spillover effects

Coagglomeration and Growth

We study the coagglomeration of domestic plants and foreign multinationals and the impact of this on domestic plant growth using data for Irish manufacturing. To this end we make use of the index developed by Ellison and Glaeser (1997) and find coagglomeration to be important for a number of industries. Foreign presence as well as foreign employment density are found to be important determinants of employment growth over the period, especially for those industries with a high degree of coagglomeration. --Coagglomeration,regional growth,multinational companies,Ireland