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62. Criss-Crossing Globalization: Uphill Flows of Skill-Intensive Goods and Foreign Direct Investment
- Author:
- Arvind Subramanian and Aaditya Mattoo
- Publication Date:
- 08-2009
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics (PIIE)
- Abstract:
- Th is paper documents an unusual and possibly significant phenomenon: the export of skills embodied in goods, services, or capital from poorer to richer countries. We fi rst present a set of stylized facts. Using a measure that combines the sophistication of a country's exports with the average income level of destination countries, we show that the performance of a number of developing countries, notably China, Mexico, and South Africa, matches that of much more advanced countries, such as Japan, Spain, and the United States. Creating a new combined dataset on foreign direct investment (FDI) (covering greenfi eld investments as well as mergers and acquisitions) we show that fl ows of FDI to Organization for Economic Cooperation and Development (OECD) countries from developing countries like Brazil, India, Malaysia, and South Africa as a share of their GDP are as large as fl ows from countries like Japan, Korea, and the United States. Th en, taking the work of Hausmann et al. (2007) as a point of departure, we suggest that it is not just the composition of exports but their destination that matters. In both cross-sectional and panel regressions, with a range of controls, we fi nd that a measure of uphill fl ows of sophisticated goods is signifi cantly associated with better growth performance. Th ese results suggest the need for a deeper analysis of whether development benefi ts might derive not from deifying comparative advantage but from defying it.
- Topic:
- Economics, Globalization, and Foreign Direct Investment
- Political Geography:
- China, South Africa, and Mexico
63. Emerging Market Business Cycles Revisited: Learning about the Trend
- Author:
- Emine Boz, Christian Daude, and Ceyhun Bora Durdu
- Publication Date:
- 04-2008
- Content Type:
- Working Paper
- Institution:
- Board of Governors of the Federal Reserve System
- Abstract:
- The data reveal that emerging markets do not differ from developed countries with regards to the variance of permanent TFP shocks relative to transitory. They do differ, however, in the degree of uncertainty agents face when formulating expectations. Based on these observations, we build an equilibrium business cycle model in which the agents cannot perfectly distinguish between the permanent and transitory components of TFP shocks. When formulating expectations, they assign some probability to TFP shocks being permanent even when they are purely transitory. This is sufficient for the model to produce "permanent-like" effects in response to transitory shocks. The imperfect information model calibrated to Mexico predicts a higher variability of consumption relative to output and a strongly negative correlation between the trade balance and output, without the predominance of trend shocks. The same model assuming perfect information and calibrated to Canada accounts for developed country business cycle regularities. The estimated relative variance of trend shocks in these two models is similar.
- Topic:
- Economics, Emerging Markets, and Markets
- Political Geography:
- Canada and Mexico
64. Can America Still Lead in the Global Economy?
- Author:
- Lael Brainard and David Lipton
- Publication Date:
- 08-2008
- Content Type:
- Working Paper
- Institution:
- The Brookings Institution
- Abstract:
- From the vantage point of 2008, some of the most memorable initiatives of U.S. international economic leadership—the Paris and Louvre Accords, the support for Poland and Russia after the fall of communism, the Uruguay Round, and the Mexican Financing Loan—seem like quaint reminders of a simpler time. In the coming years, the exercise of international economic leadership will surely prove more complex than in the past. The very success of the American vision of a global spread of vibrant and competitive markets has created a huge, rapidly integrating private economy of trade and finance much less amenable to guidance, let alone control, by governments. Unlike in diplomacy and defense, where non state actors are growing in importance but still a side show, in inter- national economics, households, corporations, labor unions, and non-profits are now the dominant players in most parts of the world. While they respond to national laws and policies, their interests are varied and their operations often span borders.
- Topic:
- Economics, International Political Economy, International Trade and Finance, and Markets
- Political Geography:
- Russia, United States, Paris, Poland, Uruguay, and Mexico
65. Emerging Market Business Cycles with Remittance Fluctuations
- Author:
- Ceyhun Bora Durdu and Serdar Sayan
- Publication Date:
- 09-2008
- Content Type:
- Working Paper
- Institution:
- Board of Governors of the Federal Reserve System
- Abstract:
- This paper analyzes the implications of remittance fluctuations for various macroeconomic variables and Sudden Stops. The paper employs a quantitative two-sector model of a small open economy with financial frictions calibrated to Mexican and Turkish economies, two major recipients, whose remittance receipts feature opposite cyclical characteristics. We find that remittances dampen the business cycles in Mexico, whereas they amplify the cycles in Turkey. Their quantitative effects in the long run, approximated by the stochastic steady state are mild. In the short run, however, remittances have quantitatively large impacts on the economy, when the economy is borrowing constrained. This is because agents in the economy cannot adjust their precautionary wealth to sudden tightening in credit, hence, fluctuations in remittances get magnified through an endogenous debt-deflation mechanism. Our findings suggest that procyclical (or countercyclical) remittances can play a significant deepening (or mitigating) role for Sudden Stops.
- Topic:
- Debt, Economics, and Credit
- Political Geography:
- Europe, Turkey, Asia, North America, and Mexico
66. Banking the Mexican Immigrant Population: Analysis of Profiling Variables
- Author:
- Paulina Ennis
- Publication Date:
- 01-2008
- Content Type:
- Working Paper
- Institution:
- Institute for Latin American and Iberian Studies at Columbia University
- Abstract:
- The aim of this thesis is to provide actionable recommendations for banks to target the Mexican immigrant market. To achieve this, I analyze survey data collected from the Mexican immigrant population to amplify a subject commonly seen from a sociological viewpoint – the immigrants' use of bank accounts with the objective of accumulating money to send home. Specifically, the objective of this paper is to answer the following questions: Does having a bank account entail larger amounts of savings sent to Mexico at the end of the migration spell? What is the profile of a bank account user within the Mexican migrant population? What does this mean in terms of targeting the Mexican migrant market?
- Topic:
- Economics, International Trade and Finance, Markets, and Migration
- Political Geography:
- Latin America and Mexico
67. The BRICSAM Countries and Changing World Economic Power: Scenarios to 2050
- Author:
- Manmohan Agarwal
- Publication Date:
- 10-2008
- Content Type:
- Working Paper
- Institution:
- Centre for International Governance Innovation (CIGI)
- Abstract:
- Rapid economic growth in the large developing countries collectively known as BRICSAM (Brazil, Russia, India, China, South Africa and Mexico) has the potential to change the balance of economic power in the world. This paper analyzes this potential building on developments in these economies over the past four decades in the context of the evolution of the world economy. This evolution has two significant features: increasing economic integration and a hiatus in growth. Increasing integration can be observed in the almost universal rise in the share of the exports of goods and services in GDP, and the increase in private capital flows. There has been a hiatus in growth since the 1973-1974 increase in the price of oil.
- Topic:
- Economics, Globalization, International Political Economy, and International Affairs
- Political Geography:
- Russia, China, India, South Africa, Brazil, and Mexico
68. Why the Code of Conduct for Resolving Sovereign Debt Crises Falls Short
- Author:
- Barry Herman
- Publication Date:
- 03-2008
- Content Type:
- Working Paper
- Institution:
- The New School Graduate Program in International Affairs
- Abstract:
- The Institute of International Finance, a bankers group, has promoted its “Principles for Stable Capital Flows and Fair Debt Restructuring” as a code of conduct for debtor governments and their private creditors to avoid and if necessary resolve sovereign defaults. Although drafted with Brazil, Korea, Mexico and Turkey, I argue this purely voluntary code is excessively creditor friendly. Instead, a more balanced code should be developed in a broad, open and politically legitimate forum, and be coupled with an international disciplining mechanism that pushes creditors and debtor to a negotiated outcome under the code. A suggested approach concludes the paper.
- Topic:
- Development, Economics, International Trade and Finance, and Foreign Aid
- Political Geography:
- Turkey, Brazil, Korea, and Mexico
69. Regional Inequality and Convergence in Europe, 1995 – 2005
- Author:
- Arne Melchior
- Publication Date:
- 11-2008
- Content Type:
- Working Paper
- Institution:
- Norwegian Institute of International Affairs
- Abstract:
- The paper presents new results on within-country regional inequality in per capita income for 36 countries during 1995-2005; focusing on Europe but with some non-European countries included for comparison. In 23 of the 36 countries there was a significant increase in regional inequality during the period, and in only three cases there was a reduction. Regional inequality increased in all countries of Central and Eastern Europe, while for most Western European countries there was little change. For the EU-27 as a whole, there was a modest increase in within-country regional inequality, but convergence across countries. The latter effect was quantitatively more important, so on the whole there was income convergence in the EU-27, especially after 2000. Regional inequality is particularly important for some large middle-income countries such as China, Russia and Mexico. In such countries there may however be considerable price differences across regions, and the use of common price deflators for the whole country may lead to a biased assessment of regional inequality.
- Topic:
- Economics, Political Economy, Social Stratification, and Sociology
- Political Geography:
- Russia, China, Europe, and Mexico
70. The Implications of Service Offshoring for Metropolitan Economies
- Author:
- Howard Wial and Robert Atkinson
- Publication Date:
- 02-2007
- Content Type:
- Working Paper
- Institution:
- The Brookings Institution
- Abstract:
- In the months running up to the 2004 election the issue of off- shoring—the movement of jobs from the United States to other nations—seemed to be on the front pages of newspapers every day. Some of the concern was about the loss of manufacturing jobs to lower-wage countries such as China and Mexico, a process that had been going on for decades. The offshoring of service jobs, though, was something new. Service workers—including college- educated professionals—who previously thought their jobs immune to foreign competition began to worry about this new source of job in security. Policymakers concerned about the American standard of living wondered whether service offshoring would eliminate the United States' advantage in high technology industries.
- Topic:
- Demographics, Economics, Government, and Poverty
- Political Geography:
- United States, China, and Mexico