The economic analysis of multinationals and foreign direct investment: a review.

This article provides an up-to-date, comprehensive synthesis and evaluation of the existing literatura on multinational firms and foreign direct investment. Unlike most previous reviews it combines severalinsights showing their inconsistencies and complementarities. Through a chronological description it presents the main strands since the earliest perfect competition studies from the 1960s till some new recent contributions such as the knowledge-capital model, heterogeneous firms models, and internalisation issues. The paper also offers a new perspective, by reviewing the available computable general equilibrium models that include multinationals and foreign direct investment.Multinational enterprises, Foreign direct investment, Computable general equilibrium models.

Digitalization, multinationals and employment: an empirical analysis of their causal relationships

This study measures the effects of digitalization related to Information and Communication Technologies (ICT) investment on employment and other economic variables according to firms' ownership. We present two computable general equilibrium models (with full employment and with unemployment) which differentiate two types of firms: National and foreign multinationals (MNEs). Both types of firms allow for the substitution between labour and ICT capital. We conclude that ICT investments significantly create jobs and raise real wages, GDP and welfare. The aggregate positive effects are stronger for ICT investment in national firms than in foreign MNEs although the sign of some sectoral effects can be negative. We also analyze the role of wage flexibility in this context, with the most favorable results related to scenarios where wages are more rigid for both cases, when investors are national firms or foreign MNEs. The model is applied to the case of Spain, a country with a high unemployment rate where ICT investment has been large since the mid 1990s.The authors acknowledge financial support from the Spanish Ministry of Economy and Competitiveness, through the projects ECO2013-46954-C3-1-R and ECO2017-86054-C3-2-R (A. G. Gómez-Plana) and ECO2013-41317-R and ECO2016-78422-R (M.C. Latorre)

The impact of FDI on the production networks between China and East Asia and the role of the U.S. and ROW as final markets

This paper uses a 3 factor – 4 region – 15 sector computable general equilibrium model to study the impact of FDI accruing to China. We focus on the sectors of Electronics, Machinery and Textiles which account for 55.4% and 40% of Chinese overall exports and imports, respectively. Our data seem to confirm the existing empirical knowledge on the production networks between China and East Asia, and the role that the U.S. and ROW play as final markets for Chinese exports. Based on these differentiated geographical roles and on the contrasting production technologies of the three sectors, we offer an in-depth analysis of the effect of FDI inflows on production, prices and bilateral trade across China, East Asia, the U.S. and ROW. The magnitude of FDI inflows brings about proportional impacts on the increase in production and the fall in prices across the three sectors considered. However, the subsequent adjustment in bilateral trade differs. On the one hand, FDI leads to an increase of Chinese exports of Electronics and Machinery, crowding out production and exports in the rest of regions. On the other hand, the increase in FDI in Textiles still brings about increase in production which does not result in higher exports. The private consumption orientation of Textiles explains its contrasting trade pattern with respect to Electronics and Machinery. The fall in Chinese exports of Textiles in China underlies the increase on exports of Textiles across the rest of regions. However, world trade flows in Textiles are of smaller volume than the one in Electronics and Machinery. Therefore, the increase in Textiles of exports of the rest of regions does not compensate their big losses of exports in Machinery and Electronics

FDI in China and global production networks: Assessing the role of and impact on big world players (East Asia, Japan, EU28 and U.S.)

This paper analyzes several effects of FDI accruing to Textiles, Chemicals, Electronics and Machinery in China. Though the four sectors have contrasting production technologies and vary largely in trade patterns, the related Chinese exports and imports still follow a general trend: East Asia and Japan are the main intermediate suppliers while the rest of regions play more the role of final markets. The paper describes the networks among big regions, providing their relative importance across different levels (local industry, global industry, host economy and world economy). It also estimates a rich set of regional impacts after the rising FDI inflows

When multinationals leave: a CGE analysis of the impact of divestments

Most studies on Multinational Enterprises (MNEs) focus on the impact of their expansion through inward or outward foreign direct investment (FDI) flows. However, divestments are quite common among the operations of MNEs. In order to derive their effects, we build a computable general equilibrium (CGE) model that includes two non-standard characteristics: the presence of MNEs and unemployment. The model is applied to the Spanish economy, where FDI inflows have surpassed divestments at the aggregate level in the period 2005-2009, although divestments have been sizeable in ten sectors. We analyse two different scenarios: 1) divestments that involve the closure of plants of foreign affiliates and 2) divestments where national firms buy the plant of foreign affiliates. The model allows estimating the overall impact of the divestments occurring simultaneously in ten sectors and in particular sectors. Results not only show that national acquisitions are less harmful than closures, but quantify those effects, and provide information on the role of the divesting sector. Some adjustment costs arise in all scenarios.Financial support from the Spanish Ministry of Economics and Competitiveness through the projects ECO 2011-24304 (A. G. Gómez-Plana) and ECO2011-29314-C02-02 (María C. Latorre) is gratefully acknowledged

The effect on foreign multinationals: an under-explored aspect of Brexit

While most of the studies on Brexit have focused on its trade effects, very few have analysed the likely impact on foreign multinationals. Claudia Fernández-Pacheco Theurer (Universidad Autonoma de Madrid), Jose Luis López Ruiz and María C. Latorre (Universidad Complutense de Madrid, left) argue that this is an important omission. They show how data on trade and foreign multinationals affiliates' sales underlines the different relationship between the UK and EU-27 on both fronts. They go on to explain the EU trade and investment regulatory regimes and analyse a few studies of Brexit, including its effect on multinationals

How much can foreign multinationals affect the Chinese economy? A dynamic general equilibrium analysis of Japanese FDI

経済学 / EconomicsWe analyze the impacts of a sharp fall of Japanese foreign direct investment (FDI) to China that occurred after the worldwide financial crisis in 2009. The study is conducted by means of a three-region (Japan, China, and the rest of the world (ROW)) recursive dynamic computable general equilibrium (CGE) model with multinational enterprises (MNEs) driven by FDI. Our simulation experiment showed that the FDI fall would cause price rises of Japanese affiliates’ goods and a depreciation of the renminbi. These two forces with the FDI fall would heavily reduce exports and production of Japanese MNE affiliates, while increasing those in Chinese manufacturing. This, however, does not mean that China would be a gainer, because it would experience a contraction in its service sector. Its losses in its service sector would exceed the gains in the manufacturing sectors. Therefore, overall China would lose due to the FDI fall.JEL Classification Codes: C68, F21, F23, F17http://www.grips.ac.jp/list/jp/facultyinfo/hosoe_nobuhiro

Hydrological Variability In Chilean Altiplano Lakes during the Last Millennia

Peer Reviewe

Volcanism and climate change as drivers in Holocene depositional dynamic of Laguna del Maule (Andes of central Chile – 36° S)

Late Quaternary volcanic basins are active landscapes from which detailed archives of past climate and seismic and volcanic activity can be obtained. A multidisciplinary study performed on a transect of sediment cores was used to reconstruct the depositional evolution of the high-elevation Laguna del Maule (LdM) (36∘ S, 2180 m a.s.l., Chilean Andes). The recovered 5 m composite sediment sequence includes two thick turbidite units (LT1 and LT2) and numerous tephra layers (23 ash and 6 lapilli). We produced an age model based on nine new 14C AMS dates, existing 210Pb and 137Cs data, and the Quizapú ash horizon (1932 CE). According to this age model, the relatively drier Early Holocene was followed by a phase of increased productivity during the mid-Holocene and higher lake levels after 4.0 ka cal BP. Major hydroclimate transitions occurred at ca. 11, 8.0, 4.0 and 0.5 ka cal BP. Decreased summer insolation and winter precipitation due to a southward shift in the southern westerly winds and a strengthened Pacific Subtropical High could explain Early Holocene lower lake levels. Increased biological productivity during the mid-Holocene (∼8.0 to 6.0 ka cal BP) is coeval with a warm–dry phase described for much of southern South America. Periods of higher lake productivity are synchronous to a higher frequency of volcanic events. During the Late Holocene, the tephra layers show compositional changes suggesting a transition from silica-rich to silica-poor magmas at around 4.0 ka cal BP. This transition was synchronous with increased variability of sedimentary facies and geochemical proxies, indicating higher lake levels and increased moisture at LdM after 4.0 ka cal BP, most likely caused by the inception of current El Niño–Southern Oscillation and Pacific Decadal Oscillation (ENSO–PDO) dynamics in central Chile.Postprin