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Abstract: This paper analyses currency union integration by testing whether price levels in member countries possess a common stochastic trend. The trace statistic test for cointegration proposed by (Johansen, 1995) demonstrates the presence of such a trend for most unions. A disaggregated analysis identifies a common stochastic trend for several though fewer than half of country pairs within a union. Some unions such as the Eurozone have small shares of cointegrated country pairs. Yet, the share of cointegrated country pairs is large relative to countries outside currency unions. Comparison to a control group (country pairs where one country belongs to a given union and the other country does not) indicates that the cointegration found within a currency union is a union‐specific trait and not a feature of the individual countries within the union. These results provide an alternative metric to intraunion trade for gauging the extent of currency union integration. [ABSTRACT FROM AUTHOR]

This paper examines the welfare effects of powerful labour unions when the government levies a uniform tax rate - as is currently the case in most OECD countries - and firms are heterogeneous with respect to productivity. I show that an increase in the bargaining power of labour unions can decrease the welfare loss generated by restriction of the tax policy and provide conditions under which powerful labour unions decrease the likelihood that firms will move abroad. I also reproduce the well-known effect whereby powerful labour unions decrease corporate tax rates if firms are mobile. [ABSTRACT FROM AUTHOR]

This paper aims to shed light on why the downturn in global trade during the intensification of the financial crisis in 2008Q4-2009Q1 was so severe and synchronised across the world and also examines the subsequent recovery in global trade during 2009Q2-2010Q1. The paper finds that a structural imports function which captures the different and time-varying import-intensities of the components of total final expenditure - consumption, investment, government expenditure, exports, etc. - can explain the sharp decline in global imports of goods and services. By contrast, a specification based on aggregate total expenditure cannot fully capture the global trade downturn. In particular, panel estimates for a large number of OECD countries based on the individual components of expenditure suggest that the high import-intensity of exports at the country-level can explain a significant proportion of the decline in world imports during the crisis, while declines in the highly import-intensive expenditure category of investment also contributed to the remaining fall in global trade. At the same time, the high and rising import-intensity of exports also reflects and captures the rapid growth in 'vertical specialisation', suggesting that widespread global production chains may have amplified the downturn in world trade and partly explains its high degree of synchronisation across the globe. In addition, the estimates find that stockbuilding, business confidence and credit conditions also played a role in the global trade downturn. Meanwhile, the global trade recovery (2009Q2-2010Q1) can only be partially explained by differential elasticities for the components of demand (although the results confirm that the upturn in OECD imports was also driven by strong export growth and the reactivation of global production chains, as well as the recovery in stockbuilding and the fiscal stimulus). This may be in part because of the many policy measures that were implemented to boost global trade at that time and which cannot be captured by the specification. The paper is also a pseudo-real-time robustness test of the specification in that the first analysis of the global trade downturn is based on the data available at the time (i.e. October 2009 vintage), while an updated analysis of the global downturn as well as the trade upturn is based on a more recent dataset (i.e. October 2010 vintage). The results for the global downturn remain robust regardless of which vintage of the dataset is used. [ABSTRACT FROM AUTHOR]

This paper investigates the trend of servicification in global value chains (GVCs). The degree of servicification is measured as the share of service value added in manufacturing exports. Service inputs are either from domestic market or from foreign countries, which are measured by the domestic servicification and the foreign servicification, respectively. Using the international input–output tables from 1995 to 2011, we estimate the degree of servicification across 61 countries with a focus on Asian nations which have been rarely studied in previous research. We observed an evident trend of servicification in manufacturing in the Asian countries, especially in the 16 countries associated with Regional Comprehensive Economic Partnership (RCEP). Asian countries tend to have a lower level of domestic servicification but a higher level of foreign servicification than OECD countries. We also identified five key factors in driving the trend of servicification. Countries with broader participation and lower positions in GVCs tend to have higher levels of foreign servicification in manufacturing. Improvements in information and communication technology (ICT) also raise the level of foreign servicification. However, countries with a larger supply of service workers, better regulation quality and less government governance have a higher level of domestic servicification in manufacturing. [ABSTRACT FROM AUTHOR]

Abstract: This paper analyses the effect of birthplace diversity on exports of creative and cultural goods, for 19 OECD countries, over the period 1990–2010. By matching UNESCO's creative and cultural exports classification to trade and migration data, we find a strong positive effect of birthplace diversity on the export of creative products. In particular, a 10% increase in the birthplace diversity index implies a 4% increase in creative goods exports. These results are robust across several specifications and shed light on a potential new channel through which migrants can contribute to the host country's export performance. It is interesting to note that only diversity of secondary and tertiary educated immigrants contributes to an increase in exports of creative and cultural goods. An instrumental variables approach addresses the potential endogeneity problems and confirms our results. [ABSTRACT FROM AUTHOR]

How does globalisation affect inter-occupational wage inequality within countries? This paper examines this by focusing on two dimensions of globalisation: openness to trade and openness to capital flows, using a relatively new data set on occupational wages. Estimates from a dynamic model for 15 OECD countries spanning the period 1983-2003 suggest that increased openness increases occupational wage inequality in poorer OECD countries as predicted by the Heckscher-Ohlin-Samuelson model, but for the more advanced OECD countries, we find no significant effect. The absence of the expected result for the latter category can be due to a rapid increase in the supply of skilled labour, to outsourcing of skilled jobs or because changes in the trade flows are too small to have any significant effect in those countries. [ABSTRACT FROM AUTHOR]

This paper empirically investigated the extent to which China displaced its competitors in high-tech exports using disaggregated data for the period 1992-2013. To address the endogeneity problem, we used a comprehensive set of instruments for Chinese high-tech exports in relevant markets, including China's GDP and distances to those markets. Results of our IV regressions revealed that in most of the high-tech sectors, Chinese exports had displaced the exports of its developing competitors such as India, South American exporters like Brazil and Mexico, and South-East Asian countries like Malaysia, Singapore, Thailand and Vietnam, especially in the period prior to the 2007-08 global financial crisis. Yet, Chinese exports had been associated with more high-tech exports of developed exporters like OECD countries, South Korea and Japan. Our findings suggest that while China became the world's top high-tech exporter, its high-tech exported products had been substitutes to those of other developing and emerging economies but complementary to that of developed economies. [ABSTRACT FROM AUTHOR]

Current account ( CA) dispersion within European Union ( EU) Member States has been increasing progressively since the 1990s. Interestingly, the persistent deficits in many peripheral countries have not been accompanied by a significant growth process able to stimulate a log run rebalancing as neoclassical theory predicts. To shed light on the issue, this paper investigates the determinants of Eurozone CA imbalances, focusing on the role played by financial integration. The analysis considers two samples of 22 OECD and 15 EU countries, three time horizons corresponding to various steps in European integration, different control variables and several panel econometric methods. The results suggest that within the EU group of countries financial integration contributed to explain the CA deterioration in the peripheral countries especially in the post- EMU period creating an asymmetric behaviour within the EMU. From a financial stability perspective, this 'divergence' could hinder the effectiveness of monetary policy. By reducing the apparent benefits of participating in the monetary union, it also raises the risk of a break-up. [ABSTRACT FROM AUTHOR]

In this paper, we study if and how country-specific factors affect intra-industry trade (IIT) when heterogeneity among sectors is allowed for. The paper is novel in that it is the first that addresses an issue raised by Greenaway et al. (Oxford Bulletin of Economics and Statistics, 1999, 61, 365). Specifically, employing data on a sample of OECD countries over a 10-year period (1997-1998), we build on and take forward a methodology pioneered by Balassa and Bauwens (Economic Journal, 1987, 97, 923) to study the determinants of horizontal and vertical IIT using a multi-industry approach. In doing this, we seek to avoid the more extreme measurement problems by allowing for heterogeneity among sectors when country-specific factors are analysed and among countries when industry-specific factors are considered. The results are compared to those obtained using the traditional method that does not consider intersectoral heterogeneity. We find that the two models yield statistically different results. Moreover, the tests regarding the choice of model - that is, econometric tests designed to compare one model with another when different sets of explanatory variables are used - confirm the relevance of intersectoral heterogeneity in affecting IIT. To the best of our knowledge, a similar analysis has not yet appeared in the empirical literature on IIT. [ABSTRACT FROM AUTHOR]

Whereas competition in the manufacturing sector was progressively ensured beginning with the end of the Second World War, services have been progressively opened to international competition only since the late 1980s and are still among the most regulated sectors in OECD countries. In this paper, we analyse the impact of deregulation in that sector on cross-border mergers and acquisitions (M&As) in services. We find that deregulation favours inward M&As in services. This positive effect occurs through two channels: a reduction in entry costs and an increase in investment opportunities. On the other hand, deregulation has an ambiguous impact on outward M&As that depends on the initial level of regulation in the acquiring country. In particular,we provide some evidence of a U-shaped relationship between deregulation and outward M&As in the service sector. In countries that are initially highly deregulated,deregulation fosters outward M&As. Conversely, in situations in which government control is large, privatisation and deregulation are likely to reduce the incentive for firms to engage in cross-border M&A deals. [ABSTRACT FROM AUTHOR]

Abstract: This paper investigates how government ideology and globalisation are associated with top income shares in 17 OECD countries over the period 1970 to 2014. We use top income shares of the World Wealth and Income Database (WID). Globalisation is measured by the KOF index of globalisation. Static and dynamic panel model results show that the top income shares increased more under right wing governments than under left wing governments. The ideology‐induced effect was stronger when globalisation proceeded more rapidly. Globalisation was positively correlated with income shares of the upper‐middle class (P99–P90), but negatively with income shares of the rich (top 1%) in the overall sample. We show that the relationship differs between Anglo‐Saxon countries and other OECD countries. Globalisation was more pro‐rich in Anglo‐Saxon countries than in other OECD countries. Government ideology does not turn out to have a statistically significant effect on top income shares in Anglo‐Saxon countries after the 1980s, whereas ideology‐induced differences in the distributional outcomes continued in other OECD countries. [ABSTRACT FROM AUTHOR]

There is significant academic evidence that growth in one country has a positive impact on growth in neighbouring countries. This paper contributes to this literature by analysing the heterogeneous strength of growth spillovers across world regions and by investigating the contribution of transport and communication infrastructure to explain this heterogeneity and promote neighbourhood effects. By defining neighbourhood on the basis of membership of regional trade agreements, we focus on spillovers that work through regional integration and trade. The analysis finds significant evidence for heterogeneity in growth spillovers, which are strong between OECD countries and essentially absent in sub-Saharan Africa (SSA). We further find strong interaction between infrastructure and being a landlocked country. This suggests that growth spillovers from regional 'success stories' in SSA and other lagging world regions will depend on first strengthening the channels through which such spillovers can spread - most importantly connective infrastructure such as transport and telecommunication links. [ABSTRACT FROM AUTHOR]

This paper aims to identify the main causes of bilateral trade flows in OECD countries. The specific features of the study include the explicit introduction of R&D and FDI as the two important explanatory variables, conduct of unit root tests in the panel data framework and careful consideration of endogeneity. The main findings are that the levels and similarities of market size, domestic R&D stock and inward FDI stock are positively related to bilateral trade, while the distance, measured by both geographical distance and relative factor endowment, between trade partner countries has a negative impact. These findings lend support to new trade, FDI and new growth theories. [ABSTRACT FROM AUTHOR]

Regionalism in Asia, particularly in the form of free-trade areas (FTAs), is a recent trend that is becoming increasingly important. This has been disturbing to many, given the significance of trade and investment in Asian economic growth and development and the region's key role in global commerce. In light of this trend, the goal of this paper is to develop a blueprint, or a set of 10 ‘best practices’, that can be used as a guide to FTAs in order to ensure that they approximate first-best outcomes to the greatest extent possible. Next, the paper applies this framework to the existing FTAs between Asian countries and their regional and extra-regional partners. The results suggest that the more advanced regional accords generally receive high grades, with the notable exception of rules of origin, which tend to be even more problematic in the context of accords in which an OECD country is a party. [ABSTRACT FROM AUTHOR]

This paper provides quantitative estimates of the impact of removing agricultural support in both OECD and developing countries in partial and general equilibrium frameworks. The results show that agricultural support in OECD countries is highly distortionary, and tariffs have a larger distortionary impact than subsidies. Removal of agricultural support would likely raise the international prices of food, resulting in an increase in the cost of food for many net-food importing countries, although the size of the increase is generally small. The results also show that most of the benefits from removing agricultural support accrue to the countries that liberalise. [ABSTRACT FROM AUTHOR]

This paper investigates the links between product quality and the pro-trade effect of ethnic networks using a large panel on bilateral stocks of immigrants with information for 19 OECD destination countries and 177 origin countries. In line with the approach of Rauch and Trindade, we classify traded goods according to their quality level and separately estimate pro-trade elasticity of ethnic networks for each subgroup. We allow for heterogeneity of immigrants according to both the level of per capita income of their country of origin and their education level. Our findings suggest that the trend of the pro-trade effect of immigrants over quality seems to be driven by the North-South specialisation across varieties for both supply and demand. Indeed, ethnic networks mostly facilitate imports of those varieties for which their countries of origin have a comparative advantage; as for exports, ethnic networks are more effective in promoting exports to their homeland of those varieties for which there is relatively higher demand. We show that the same trend applies to products characterised by the same degree of differentiation according to the classification proposed by Rauch and - given their lower liquidity constraints and advantages in human capital - we find a greater impact of high-skilled migrants consistent across all quality levels. [ABSTRACT FROM AUTHOR]

This paper comprehensively investigates the effect of government ideology on the type of exchange rate regime that a country implements via multinomial logit and multinomial probit models for 147 countries in the period 1974-2009. Our results clearly indicate that a left-wing government increases the likelihood that a country implements a flexible regime in the classifications of exchange rate regimes. Nevertheless, evidence is weaker when using the de jure IMF course classification, which is set up by Ilzetzki et al. (). In a deeper investigation, we find that left-wing governments are more likely to choose a flexible regime relative to a fixed one in our sample of OECD, non- OECD and non-Eurozone countries, as the impacts from government ideology on the determinant of the choice of exchange rate regime in Eurozone countries disappear. More importantly, we present many explanations for exchange rate regime choices when macroeconomic conditions, political constraints and institutions impact the choice of exchange rate regime. [ABSTRACT FROM AUTHOR]

This paper aims at assessing the empirical relevance of new economic geography models of tax competition. We rely on a simple model to specify tax reactions functions, which we estimate with a panel covering (up to) 26 OECD countries over the period 1982 to 2006. We provide striking support for the two main predictions regarding the slope and the constant of the reaction function: national governments seem to adjust their corporate tax rate towards the level chosen in countries that are more populated, and they tend to set higher corporate tax rates when their country enjoys a high real market potential. Through the latter effect, trade integration exerts a positive influence on the level of corporate taxation. However, using a theoretically grounded index of bilateral trade integration, we also show that trade liberalisation gives rise to significant tax interactions in the setting of effective average tax rates in the case of European countries, thus exerting a downward pressure on corporate tax rates. [ABSTRACT FROM AUTHOR]

This paper tests empirically whether the effect of idiosyncratic income shocks on aggregate consumption depends on institutional features of national labour markets. The results show that, in a sample of 15 OECD countries, institutional heterogeneity is a significant determinant of the response of household consumption to country-specific income shocks. This is consistent with the idea that institutionally provided social insurance may help increase income stability when people differ in their ability to access financial markets and smooth consumption fluctuations. [ABSTRACT FROM AUTHOR]

Working with a set of global social accounting matrices spanning intermittent years from 1992 to 2011, this paper examines the services embodied in trade on a value added basis. Data include not only the direct and indirect contribution of services to value added contained in a given country's exports, but also the extent to which third‐country value added in services, through intermediate linkages of imported goods and services, is also embodied in production and trade. Our data indicate, in line with previous findings, that the ratio of value added to gross trade has been decreasing both for goods and for services, which is consistent with growing vertical production fragmentation. On the other hand, while value added in goods sectors including indirect exports is less than the gross value of exports, in services, it is greater, highlighting the service intensity of trade. [ABSTRACT FROM AUTHOR]

This paper examines differences between women's and men's wages in 18 selected OECD countries in the period 1970 to 2005. The study is based on 12 manufacturing sector- and skill-specific sets of panel data on the gender wage gap. We apply a system generalised method of moments (GMM) estimator to the extended version of the conditional gender wage gap convergence equation, controlling for sector concentration and industry-specific measures of openness using a difference-in-difference approach: trade-affected concentrated sectors versus trade-affected competitive sectors. The results indicate that: (i) an increase in sector concentration is associated with wage gap growth; (ii) both import and export penetration are associated with a reduction of the high-skill gender wage gap growth in concentrated industries; (iii) there is evidence of a widening impact of trade on the medium and low-skill occupational gender wage gap growth in less competitive industries; (iv) institutional regulations of the labour market have an impact on the development of the gender wage gap: for highly-skilled labour an increase in labour market regulation raises the growth of the gender wage gap, while for medium- and low-skilled workers, it lowers it. [ABSTRACT FROM AUTHOR]

This paper looks empirically at the implications that protectionist measures implemented during the current crisis may have had for a country's ability to attract foreign direct investment. The research utilises data on such measures that are available from Global Trade Alert, combined with bilateral FDI data between OECD countries and a large number of partner countries for 2006 to 2009. This allows us to examine the short-run effect that protectionist measures may have had on bilateral FDI flows. The verdict from this analysis is clear: a country that implements new protectionist measures may expect that this may result in lower foreign direct investment inflows into the economy. The point estimates from our preferred specifications suggest that, depending on the empirical model, the implementation of a trade protection measure is associated with about 40 to 80 per cent lower FDI inflows. Trade protection does not appear to have any implications for the country's FDI outflows, however. The negative effect on FDI inflows does not appear to be due to direct investment measures but rather to actions related to intellectual property rights protection and other more trade-related measures. [ABSTRACT FROM AUTHOR]

This paper estimates the Feldstein-Horioka equation from 1960-2007 with a panel of 13 OECD countries with the Pedroni method. It is found that the Feldstein-Horioka puzzle exists in a weaker form. Structural break tests indicated that there was a break in the mid-1970s or in the early 1990s. These break dates seem to capture the effects of the last decade of the Bretton Woods agreement and the early years of the Maastricht agreement. In the post-break periods, this relationship is weaker and the saving retention coefficient has declined, implying that capital mobility has increased between these OECD countries. It is likely that these two agreements may have decreased investor uncertainty and improved capital mobility. However, this conclusion should be interpreted cautiously because alternative explanations for the observed correlation between the saving-investment ratios are possible. For example, have argued that the observed correlation between investment-saving ratios could be due to common global factors and therefore may not be useful for testing whether capital mobility has decreased or increased. [ABSTRACT FROM AUTHOR]

(1285) Ben Lockwood and John Whalley We discuss emerging proposals for border tax adjustments (BTAs) to accompany commitments to reduce carbon emissions in the EU, the US and other OECD economies. The rationale offered for such border adjustment is that various entities, such as the EU, if making commitments to reduce emissions which go beyond those undertaken in other regions of the world, impose added costs on domestic producers which create a competitive disadvantage for them. Some form of remedy is viewed as reasonable to maintain the competitiveness of domestic industries when responding to global environmental problems. In this paper, we argue that despite its current carbon manifestation, the issue of border tax adjustments and both their rationale and their effects on trade are not new and, despite the present debate (which seems to overlook older literature), have arisen before. Earlier debate on border tax adjustments occurred at the time of the adoption of the value-added tax (VAT) in the EU as a tax harmonisation target in the early 1960s. But academic literature of the time showed that a change between origin and destination basis in the VAT would be neutral and hence the use of a destination-based tax in the EU to accompany the VAT offered no trade advantage to Europe. Here we argue that essentially the same arguments also apply for carbon-motivated BTAs, and in the current debate there seems to be a misconception between price-level effects and relative price effects stemming from a BTA, which needs correcting. We also argue that the impact of border tax adjustments should be viewed as independent of the motivation of the adjustments. [ABSTRACT FROM AUTHOR]

This paper has two main objectives: first, to consider country specific determinants that attract services FDI, and second, to compare the importance of these determinants vis-à-vis traditional determinants that attract manufacturing FDI. Using OECD countries as our sample, and 1980 to 2003 as our time period, we consider the determinants of inward FDI in a panel setting. Our results provide empirical evidence to support the view that no new theories may be necessary to explain the determinants of services FDI. [ABSTRACT FROM AUTHOR]

Europeans work much less than Americans. Some studies claim this is due to Europe's high taxes and that Europeans would gain by adopting US tax rates and work time. I argue that Americans would gain by reducing work time to Europe's level. Due to historical experience, Europe is able to internalise work-time-related negative externalities by enacting restrictive work-time policies, while the United States is not, resulting in a prisoner's dilemma equilibrium and 'overworking trap.' A simple model and work-time data are used to derive the US welfare gain from reducing work time to Europe's level. Findings are as follows: (i) parameter values are consistent with experimental results on own vs. other people's income value; (ii) the welfare gain's present value is between 80 and 120% of annual welfare; and (iii) a European policy that reduces work time excessively remains beneficial if the reduction is less than twice the optimal one. [ABSTRACT FROM AUTHOR]

This study investigates the effects of free trade agreements ( FTAs) on trade in transport services using OECD data from 2003 to 2006. Our analysis found that FTAs had a positive overall impact on transport services for multiple countries (i.e., 26 home and 56 partner countries). The resulting positive overall impact assures that, even with the challenges associated with different layers of services and the obstacles formed by generally low trade openness in the sector, the provisions in FTAs (e.g., national treatment and market access for goods and services) promote transport service trades. Our findings suggest that the provisions in FTAs encourage economic agents to increase engagement in transport services because of expanded openness of the physical movement of goods across international borders. [ABSTRACT FROM AUTHOR]

Global imbalances are attributable to savings deficiency in some economies and savings glut in others. The recent global crisis has triggered widespread social conflict over income inequality. The inequality-saving link has again become a pressing issue needing serious attention. We present a new theory to explain why the link between inequality and saving is negative in OECD countries but positive in emerging Asia. We also offer an econometric analysis of differences in inequality-saving links between those economies. We find that aggressive financial services lead to a negative link by creating income illusion for overconsumption, but imperfect financial markets contribute to a positive link by interacting with industrial policies as part of growth strategies while ignoring liquidity constraints on consumption. [ABSTRACT FROM AUTHOR]

Previous studies find that a trade treaty positively impacts foreign direct investment (FDI). But does a trade treaty always have positive effects on FDI? What is the effect of bilateral free trade agreement (FTA) on bilateral FDI among developed countries? Based on the Knowledge-Capital model, I hypothesize that bilateral FTA has negative effects on bilateral FDI in developed-developed country pairs, but positive effects in developed-developing country pairs. To test this hypothesis empirically, I conduct the within estimator, the Difference-in-Difference estimator and the Arellano-Bond estimator with panel data of bilateral FTA and outward FDI in 30 OECD countries and 32 non-OECD countries between 1982 and 2005. The result supports the hypothesis. The existence of bilateral FTA decreases bilateral FDI in the OECD-OECD country pairs but increases bilateral outward FDI in the OECD-non-OECD country pairs. The finding of negative effects of bilateral FTA on FDI is robust to different country classifications by gross national income (GNI) per capita and secondary school enrolment. Hence, the results are consistent with what predicts about the effects of trade cost on FDI in developed-developed country pairs and in developed-developing country pairs. [ABSTRACT FROM AUTHOR]

We explore an issue at the nexus of domestic competition policy and international trade, the interaction between goods trade and market power in domestic trade and distribution sectors. We examine the effect of variations in conditions of domestic competition in services on trade volumes in goods in the cases of both linear and nonlinear import demand, including standard form CES-based gravity models of bilateral trade flows. Theory suggests a set of linkages between service-sector pricing and goods trade supported by econometrics involving imports of 22 OECD countries vis-a-vis 69 exporters. Competition in distribution services affects the volume of trade in goods. Additionally, because of interaction between tariffs and pricing, the market structure of the domestic service sector becomes increasingly important as tariffs are reduced. Indeed, depending on the degree of competition, market access concessions on tariffs may be effectively undone in some cases by changes in margins. For exporters, we find that service competition in destination markets matters most for exporters from smaller, poorer countries. Our results also suggest that while negotiated agreements leading to cross-border services liberalisation may boost goods trade as well, they may also lead to a fall in goods trade when such liberalisation involves FDI leading to increased service sector concentration. [ABSTRACT FROM AUTHOR]

Throughout the OECD, the period since the 1970s saw a secular decline in manufacturing's share of GDP and a secular rise in the share of services. Despite this being a central feature of growth, the economic forces behind deindustrialisation and the reasons why its pace varied so markedly across OECD countries are not well understood. Adopting an econometric approach founded in neoclassical production theory, we provide an empirical analysis of the role of changes in relative prices, technology and factor endowments in driving changes in production structure. The speed of adjustment to changes in these determinants of production structure varies across OECD countries and is correlated with levels of employment protection. [ABSTRACT FROM AUTHOR]

This study examines how importers' preferences for environmentally friendly products influence the effect of China's export growth on the exports of OECD countries to third markets. The effect of China's export growth is systematically investigated using the theoretical gravity model, which assumes that importers' environmental preferences are heterogeneous among countries. A new measure is also proposed to represent importers' revealed preferences for environmental quality across countries. Panel data consisting of observations for 30 OECD exporting countries and 60 importing countries over the 2000–10 period confirm that the crowding‐out effect of China's export growth on the exports of OECD countries observed in markets for consumption goods and the dampening effect observed in markets for intermediate goods are becoming weaker as the importer preference for environmental quality becomes stronger. [ABSTRACT FROM AUTHOR]

We use a panel of 20 OECD countries over a 30‐year period to investigate empirically the implications of international capital mobility for aggregate unemployment dynamics. To this aim, we employ standard regression analysis and dynamic simulations to illustrate the channels through which international capital mobility impacts unemployment adjustments to productivity shocks and quantify its effect on unemployment volatility. We find that capital mobility plays a significant role in generating unemployment responses to idiosyncratic productivity shocks which are wider but less persistent. Moreover, the empirical evidence suggests that the responsiveness effect dominates the persistence effect, implying that higher international capital mobility increases unemployment volatility. The effect is not negligible. Monte Carlo simulations of the model show that moving from a closed economy to an open economy scenario causes the standard deviation of unemployment to increase by around 26%. [ABSTRACT FROM AUTHOR]

Abstract: We investigate the interplay of language skills and immigrant stocks in determining bilateral FDI outstocks of OECD reporting countries. Applying a Poisson panel estimator to 2004–11 data, we find robust evidence for a positive effect of bilateral immigrants on bilateral FDI‐provided that residents of the two countries have few language skills in common. We find a similar effect for immigrants from third countries that speak the language(s) of the FDI host country, making them potential substitutes for bilateral migrants. Our findings suggest that immigrants facilitate outgoing FDI through their language skills, rather than through other characteristics like cultural familiarity. [ABSTRACT FROM AUTHOR]

We study the growth effects of outward-ori,ented econ,o,mies by using sto,chas,tic fron,tier anal,y,sis to mea,sure the effi,ciency exter,nal,i,ties of three forms of eco,n,omic cross-bor,der activ,i,ties - inter,na,tional trade, for,eign direct invest,ment (FDI) and migra,tion - for OECD coun,tries. The study also exam,ines whether the effi,ciency of these cross-bor,der activ,i,ties is affected by the level of human cap,i,tal in the host coun,try. We find that inter,na,tional trade and FDI are impor,tant chan,nels for improv,ing effi,ciency, as is human cap,i,tal accu,mu,la,tion, and that the positive effects of inter,na,tional trade, FDI, and migra,tion depend cru,cially on the level of accu,mu,lated human cap,i,tal. Our results show that the impact of human cap,i,tal is impor,tant for increas,ing effi,ciency via inter,na,tional trade flows and FDI flows, while immi,gra,tion into coun,tries that are richer in human cap,i,tal enhances their effi,ciency rel,a,tively more than immi,gra,tion into coun,tries with lower human cap,i,tal. These results remain robust to alter,nate mea,sures of human cap,i,tal, con,trols on edu,ca,tion lev,els among immi,grants, and to a non-para,met,ric esti,ma,tion of the model. [ABSTRACT FROM AUTHOR]

The purpose of this study is to discuss the various issues regarding de-industrialisation and to systematically analyse the causes of this phenomenon. In addition, the effect of the recent increase in foreign direct investment on de-industrialisation will be analysed. Unlike extant studies, this study employs a more reliable method of estimation, known as the generalised method of moments system, for establishing the importance of foreign direct investment (FDI) with regard to de-industrialisation. For a general assessment of the different factors of de-industrialisation, including FDI, this study classifies the causes of de-industrialisation in OECD countries into external and internal factors. As a result, the analysis has proved that not only internal and external factors are major factors of de-industrialisation, FDI inflow and outflow are also major factors. [ABSTRACT FROM AUTHOR]