Trade, Foreign Direct Investment or Acquisition: Optimal Entry Modes for Multinationals

We examine multinationals’ optimal entry modes into foreign markets as a function of market size, FDI fixed costs, tariffs and transport costs. Our results highlight why large countries are more likely to attract acquisition investment, while intermediate-sized countries may be served predominantly through trade, even in the presence of high tariffs. Small countries are most likely to experience either FDI or no entry. We also show how these results vary with the competition intensity in the host country. FDI fixed costs, tariffs and transport costs are crucial not only in determining whether to engage in FDI or trade, but they are also shown to influence the acquisition choice as trade and FDI threats influence the acquisition price. Finally we explore the welfare implications of tariff reductions for both the local firm and the multinational and investigate political motives to impose endogenous tariffs that influence not only the welfare of a local firm, but also the entry mode of the multinational

International trade and exchange rate

Tepid trade growth since the 2008/2009 global financial crisis (GFC) has been partly attributed to sluggish demand from developed countries. However, data reveals that developing countries play a bigger role in holding back trade growth, while developed countries show quite robust import growth. Post-GFC, the exchange rate volatility has grown significantly. As decomposion of country groups by changes in currency valuation shows, however, local currency depreciation is not contributing to export growth as much as conventional wisdom dictates. On the other hand, countries with appreciating currencies show rising import intensity and significant export growth. This implies that the more countries undergo currency devaluation - the deeper the degree of devaluation and even competitive devaluations - the more likely international trade will grow slower

How to fill the working-age population gap in Asia: A population accounting approach

The world faces growing challenges of aging populations. Asia is no exception with rapidly increasing life expectancies and falling fertility rates. To help policy makers address these issues, this paper examines three sociopolicy options: (i) extending the retirement age, (ii) augmenting labor migration within the region, and (iii) through using population accounting methodology with the goal of increasing fertility rates. When the retirement age is extended from 65 to 70, the overall dependency ratio in 2050 would decline from 56.7% to 44.7%. If the 2010 dependency ratio were to be maintained, the region would need to import significant numbers of workers aged 15.44 even as those aged 45.64 would be in surplus. India, Pakistan, and the Philippines will be major sources of surplus labor. Raising fertility rates to the 2.1% replacement level will increase the dependency ratio for the time being, but will eventually reduce it over several decades depending on each countryfs demographic structure

Electron and phonon band-structure calculations for the antipolar SrPt3_{3}P antiperovskite superconductor: Evidence of low-energy two-dimensional phonons

SrPt3P has recently been reported to exhibit superconductivity with Tc = 8.4 K. To explore its superconducting mechanism, we have performed electron and phonon band calculations based on the density functional theory, and found that the superconductivity in SrPt3P is well described by the strong coupling phonon-mediated mechanism. We have demonstrated that superconducting charge carriers come from pd\pi-hybridized bands between Pt and P ions, which couple to low energy (~ 5 meV) phonon modes confined on the ab in-plane. These in-plane phonon modes, which do not break antipolar nature of SrPt3P, enhance both the electron-phonon coupling constant \lambda and the critical temperature Tc. There is no hint of a specific phonon softening feature in the phonon dispersion, and the effect of the spin-orbit coupling on the superconductivity is found to be negligible.Comment: 5 pages, 5 figures, 1 tabl

Impact of Sanitary and Phytosanitary Measures and Technical Barriers on International Trade

In principle, sanitary and phytosanitary (SPS) measures aim to protect the health of humans, plants and animals, while technical barriers to trade (TBT) ensure product quality and safety. However, governments may overshoot the requirements of health and consumer safety and use SPS and TBT to shield domestic producers from fair competition. Potential abuses of both measures as protectionist tools not only constrain international trade but also consumers’ welfare by restricting the choices of goods available to them. Our analysis shows that in general the measures seem to be positive for trade after controlling for other factors. However, the impacts are mainly driven by exports from advanced economies. Less developed countries do not gain as much when implementing the measures or are disadvantaged in exporting goods, particularly when importers are advanced economies. Within South countries, developing Asia are more adversely affected by SPS while non-Asian developing country exports are afflicted more by TBT. SPS in particular is damaging intraregional agricultural trade among Asian countries, which calls for policy makers to act more proactively in resolving nontariff hurdles in the region

Impact of Sanitary and Phytosanitary Measures and Technical Barriers on International Trade

In principle, sanitary and phytosanitary (SPS) measures aim to protect the health of humans, plants and animals, while technical barriers to trade (TBT) ensure product quality and safety. However, governments may overshoot the requirements of health and consumer safety and use SPS and TBT to shield domestic producers from fair competition. Potential abuses of both measures as protectionist tools not only constrain international trade but also consumers’ welfare by restricting the choices of goods available to them. Our analysis shows that in general the measures seem to be positive for trade after controlling for other factors. However, the impacts are mainly driven by exports from advanced economies. Less developed countries do not gain as much when implementing the measures or are disadvantaged in exporting goods, particularly when importers are advanced economies. Within South countries, developing Asia are more adversely affected by SPS while non-Asian developing country exports are afflicted more by TBT. SPS in particular is damaging intraregional agricultural trade among Asian countries, which calls for policy makers to act more proactively in resolving nontariff hurdles in the region