The seminar is part of the activities of FIW, the Centre of Competence in International Economics. Regular lecture series on current issues in international economics.

Location: wiiw Wiener Institut für Internationale Wirtschaftsvergleiche, Rahlgasse 3, 1060 Wien

Monday, February 29^th, 4pm

wiiw Rahlgasse 3, 1060 Vienna, lecture hall (ground floor)

Neil Foster-McGregor (with Rod Falvey)

UNU-MERIT

Abstract

Bilateral Investment Treaties (BITs) have become increasingly popular as a means of encouraging FDI from developed to developing countries. We adopt a difference-in-difference analysis to deal with the problem of self-selection when estimating the effects of BITs on FDI flows from a sample of OECD countries to a broader sample of lesser developed countries. Our results indicate that forming a BIT with a developed country significantly increases FDI inflows to developing countries, with BITs found to double FDI flows in some specifications. We further find that FDI flows along the extensive margin are much more responsive to BIT formation than flows along the intensive margin.

Keywords: Foreign Direct Investment, Bilateral Investment Treaties, Endogenous treatment effects.

JEL Codes: C21, F21.

Presentation Foster

Thursday, Jannuary 14^th, 4pm

wiiw Rahlgasse 3, 1060 Vienna, lecture hall (ground floor)

Sascha Sardadvar (with Rocha-Akis S. )

Vienna University of Economics and Business (WU)

Abstract

This paper investigates interregional migration on a pan-EU level for the era immediately following the accession of new member states with relatively low income levels. It is shown that it is possible to account for spatial effects of interregional migration despite the lack of data on region-to-region migration flows. In the paper, a spatial model framework of interregional migration is developed that corresponds to a spatial lag of X model or, by inclusion of a spatial autocorrelation term, a spatial Durbin error model. The framework shows that within a system, a linear model of  migration inevitably result  in a function of net-migration which is based on a column-standardised weight matrix. A region’s migration level is assumed to be simultaneously affected by determinants at home as well as in other regions, where the latter’s influences decrease with distance. The specifications are subsequently applied to data on net-migration  rates in 250 European NUTS2 regions over the period 2006–2008. The empirical results reveal a robust association between a region’s net-migration rate and its relative location in space. Moreover, migration is driven by income opportunities, labour market conditions, economic growth, human capital endowments as well as temporarily imposed restrictions on the freedom of movement of workers.

Keywords: Interregional migration, Enlarged EU, Spatial econometrics, Column-standardised weight matrix

JEL Codes: J61, R23, C21

Presentation Saredadvar

Working Paper Saredadvar

Thursday, November 26^th, 4pm

wiiw Rahlgasse 3, 1060 Vienna, lecture hall (ground floor)

Julia Wörz (with Al-Haschimi A., Skudelny F., and Vaccarino E. )

Österreichische Nationalbank

Abstract

We assess the impact of global value chains (GVCs) on global import demand and hence trade dynamics. Unexpectedly weak dynamics in global trade flows in 2012 and 2013 caused a renewed discussion of a potential structural change in global trade drivers which has become visible since the Great Recession in 2009 in addition to the cyclical weakness caused by subdued investment. Using an econometric model for import demand we analyse the role of international fragmentation of production in the trade-to-income relationship. Our measure of GVC participation is based on the decomposition of trade flows proposed in Koopman et al. (2014). We combine trade data from UN Comtrade and national accounts data from the IMF’s World Economic Outlook with information on global linkages from WIOD for a sample emerging and advanced economies over the period from 1996-2011. We find a higher demand elasticity for emerging economies and a reinforcing effect of GVC participation, both in advanced and emerging economies. Recursive estimates suggest a decline in the demand elasticity already before the Global Crisis, suggesting that the process of GVC integration may have reached its peak. Such non-linearities have to be taken into account when designing export strategies and in particular export-oriented growth policies. Our result is further important for re-designing existing forecasting models of trade and GDP growth.

Keywords: global value chains, income and price elasticity, trade

JEL Codes: E30, F15, F41

Presentation

Thursday, October 29^th, 4pm

wiiw Rahlgasse 3, 1060 Vienna, lecture hall (ground floor)

Dario Guarascio (with V. Cirillo and F. Bogliacino)

Sapienza University of Rome

Abstract

The evidence on growing inequality in OECD countries has raised an important debate over its main drivers, pointing out an increasing importance of capital-labour conflict. In this contribution, we aim at disentangling the role of some of the forces shaping this process. Our identification strategy relies on the sequential nature of wage setting and profits realization, in line with theoretical insights from the range theory of wages (postulating rents sharing at the shop floor level) and the principle of effective demand. In particular we focus on the role of technology and offshoring as instruments to create surplus and to shape the bargaining power of the parties involved in wage setting, and on different sources of demand as heterogeneous determinants of profits realization. The empirical analysis is performed on a panel of 38 manufacturing and service sectors over four time periods from 1995 to 2010, covering Germany, France, Italy, Spain, and United Kingdom. The contrasting effects of R&D and offshoring emerge as determinants of wages. Investment and internal demands are key variables in the realization of profits. When we look at the heterogeneity of the effects we see three main stylized facts. First of all, distinguishing for technological domain using Pavitt classes we can see that rents are effectively related with upgraded industries. Secondly, when we distinguish for the degree of openness we can see that, again, rents are mainly shared in open industries. Finally, when we disentangle the effect on wages per skill level, it is possible to confirm the intuition that offshoring hits the medium-low skill categories.

Keywords: rent; surplus; distribution; inequality; offshoring; R&D

 JEL Codes: O33, F15, J31

Presentation