The Role of the Intellectual Property Rights Regime for Foreign Investors in Post-Socialist Economies
Benedikt Schnellbächer, Johannes Stephan
IWH Discussion Papers,
No. 4,
2009
Abstract
We integrate international business theory on foreign direct investment (FDI) with institutional theory on intellectual property rights (IPR) to explain characteristics and behaviour of foreign investment subsidiaries in Central East Europe, a region with an IPR regime-gap vis-à-vis West European countries. We start from the premise that FDI may play a crucial role for technological catch-up development in Central East Europe via technology and knowledge transfer. By use of a unique dataset generated at the IWH in collaboration with a European consortium in the framework of an EU-project, we assess the role played by the IPR regimes in a selection of CEE countries as a factor for corporate governance and control of foreign invested subsidiaries, for their own technological activity, their trade relationships, and networking partners for technological activity. As a specific novelty to the literature, we assess the in influence of the strength of IPR regimes on corporate control of subsidiaries and conclude that IPR-sensitive foreign investments tend to have lower functional autonomy, tend to cooperate more intensively within their transnational network and yet are still technologically more active than less IPR-sensitive subsidiaries. In terms of economic policy, this leads to the conclusion that the FDI will have a larger developmental impact if the IPR regime in the host economy is sufficiently strict.
Read article
Development of Economy and Public Budgets in the Medium Term
Kristina vanDeuverden, Rolf Scheufele
Wirtschaft im Wandel,
No. 1,
2009
Abstract
The paper presents a forecast of the medium term development in Germany. In the years 2010 until 2013, economic growth will come on average to 1½%, basically borne by foreign trade as well as domestic demand. Public budgets will worsen in the years 2009 until 2010 mainly due to the present downturn and the political measures taken in this context. During the years afterwards, public finances will start to recover slightly.
Read article
The Exchange Rate of the Euro Cannot be Explained Fundamentally even Ten Years after the Introduction of the New Currency
Tobias Knedlik
Wirtschaft im Wandel,
No. 1,
2009
Abstract
On first of January 2009, the Euro’s tenth birthday can be celebrated. The introduction of the Euro led to diminishing importance of trade in foreign currency for the Euro-countries. However, a significant part of foreign trade of Germany and other Euro-members is still nominated in foreign currency. Therefore, the external value of the Euro plays a crucial role for the European economy. Since the early depreciation of the exchange rate just after the introduction until 2000, an almost steady increase in the external value of the Euro could be observed. The contribution elaborates on the exchange rate development and tests whether the Euro was following a path as it would be predicted by both, the interest rate parity theory and the purchasing parity theory. Both theoretical approaches are not able to explain the specific valuation figure of the Euro. For the conduct of economic forecasts, it is to conclude that modelling exchange rate developments as random processes can be legitimate. Regarding exchange rate policy, it remains to ask which alternative policy approaches might be better suitable for the European economy.
Read article
The Euro and the Competitiveness of European Firms
Filippo di Mauro, Gianmarco Ottaviano, Daria Taglioni
Economic Policy,
No. 57,
2009
Abstract
Much attention has been paid to the impact of a single currency on actual trade volumes. Lower trade costs, however, matter over and beyond their effects on trade flows: as less productive firms are forced out of business by the tougher competitive conditions of international markets, economic integration fosters lower prices and higher average productivity. We assess the quantitative relevance of these effects calibrating a general equilibrium model using country, sector and firm-level empirical observations. The euro turns out to have increased the overall competitiveness of Eurozone firms, and the effects differ along interesting dimensions: they tend to be stronger for countries which are smaller or with better access to foreign markets, and for firms which specialize in sectors where international competition is fiercer and barriers to entry lower.— Gianmarco I.P. Ottaviano, Daria Taglioni and Filippo di Mauro
Read article
Financial Crisis Burdens Economic Activity in Poland
Martina Kämpfe
Wirtschaft im Wandel,
No. 12,
2008
Abstract
In the first half of the year 2008, domestic demand –the main force behind growth – only marginally declined. Still extraordinarily high was the demand for the output of construction firms. Although demand from Western European countries declined since spring, the foreign trade was not much behind its level of the previous year because of high export activity to Asian and Eastern European countries. In the second half of the year, both, the finance and banking system as well as the real economy, were impacted by the consequences of global financial crisis. Indications of that are the temporary collapse of the polish stock market, the rapid fall of the Złoty and the weakening of domestic demand and exports. Against this background, expansion of economic activity in 2009 will continue at a markedly lower level.
Read article
Low Wages in the Service Sector in Eastern Germany: Extent and Reasons
Joachim Wilde, Christian Keller
Wirtschaft im Wandel,
No. 11,
2008
Abstract
In recent years, employment has grown noticeably in Germany. Although this is good news, some people criticize that many jobs are low-paid, i.e. the wage is less than two thirds of the medium wage. An eye-catching example is the service sector in Eastern Germany. However, a systematic analysis of this sector in Eastern Germany is missing until now. The article closes this gap in the literature.
Concerning the whole service sector in Eastern Germany, about 25 percent of the employees get a low (gross) wage. This is not much more than the average of all sectors. However, in some branches of the service sector, much more employees get low wages. More than 40% of the employees of retail trade, restaurant business and services near to companies (“unternehmensnahe Dienstleistungen”) are paid low. The probability to get a low wage is significantly higher for women and the so-called minijobbers.
Since the tax system adjusts differences, all calculations were also done for net wages. On the one hand, the part of low-paid workers decreases for all branches and all subpopulations. On the other hand, the probability to get a low wage does not differ anymore between minijobbers and full-time employees. Thus, the tax system does not only reduce low-paid employment, it also changes its structure.
Read article
Trade's Impact on the Labor Share: Evidence from German and Italian Regions
Claudia M. Buch
IAW Discussion Paper No. 46,
2008
Abstract
Has the labor share declined? And what is the impact of international trade? These
questions are not only relevant in an international context they also matter for
understanding the regional distribution of incomes in a given country. In this
paper, we study two regions with trade exposures that differ from the rest of the
country, and which display distinct changes in the labor share. East German and
Southern Italian regions have a degree of international openness which is below
the countries’ averages. At the same time, there has been a more pronounced
decline in the labor share in East Germany than in West Germany. In Southern
Italy, the labor share has increased in recent years. We show that increased trade
openness is not the main culprit behind changing labor shares.
Read article
The Great Risk Shift? Income Volatility in an International Perspective
Claudia M. Buch
CESifo Working Paper No. 2465,
2008
Abstract
Weakening bargaining power of unions and the increasing integration of the world economy may affect the volatility of capital and labor incomes. This paper documents and explains changes in income volatility. Using a theoretical framework which builds distribution risk into a real business cycle model, hypotheses on the determinants of the relative volatility of capital and labor are derived. The model is tested using industry-level data. The data cover 11 industrialized countries, 22 manufacturing and services industries, and a maximum of 35 years. The paper has four main findings. First, the unconditional volatility of labor and capital incomes has declined, reflecting the decline in macroeconomic volatility. Second, the idiosyncratic component of income volatility has hardly changed over time. Third, crosssectional heterogeneity in the evolution of relative income volatilities is substantial. If anything, the labor incomes of high- and low-skilled workers have become more volatile in relative terms. Fourth, income volatility is related to variables measuring the bargaining power of workers. Trade openness has no significant impact.
Read article
Globalisation and the Competitiveness of the Euro Area
Filippo di Mauro, Katrin Forster
ECB Occasional Paper Series,
No. 97,
2008
Abstract
Against the background of increasing competition and other significant structural changes implied by globalisation, maintaining and enhancing competitiveness has evolved into one of the prime concerns in most countries. Following up on previous work (see in particular ECB Occasional Papers No. 30 and No. 55), this Occasional Paper examines the latest developments and prospects for the competitiveness and trade performance of the euro area and the euro area countries. Starting from an analysis of most commonly used, traditional competitiveness indicators, the paper largely confirms the findings of previous studies that there have been substantial adjustments in euro area trade. Euro area firms have taken advantage of the new opportunities offered by globalisation, and have at the same time been increasingly challenged by emerging economies. This is primarily reflected in the loss of export market shares which have been recorded over the last decade. While these can partly be related to the losses in the euro area's price competitiveness, further adjustment also seems warranted with regard to the export specialisation. Compared with other advanced competitors, the euro area remains relatively more specialised in labour intensive categories of goods and has shown only a few signs of a stronger specialisation in research-intensive goods. Nevertheless, the paper generally calls for a more cautious approach when assessing the prospects for euro area competitiveness, as globalisation has made it increasingly difficult to define and measure competitiveness. Stressing the need to take a broader view on competitiveness, specifically with a stronger emphasis on productivity performance, the paper also introduces a more elaborate framework that takes into account the interactions between country-specific factors and firm-level productivity. It thus makes it possible to construct more broadly defined competitiveness measures. Pointing to four key factors determining the global competitiveness of euro area countries - market accessibility, market size, technological leadership of firms and institutional set-up - the analysis provides further arguments for continuing efforts to increase market integration and strengthen the competitive environment within Europe as a mean of enhancing resource allocation and coping with the challenges globalisation creates.
Read article
Foreign Subsidiaries in the East German Innovation System – Evidence from manufacturing industries
Jutta Günther, Johannes Stephan, Björn Jindra
Applied Economics Quarterly Supplement,
No. 59,
2008
Abstract
This paper analyses the extent of technological capability of foreign subsidiaries located in East Germany, and looks at the determinants of foreign subsidiaries’ technological sourcing behaviour. The theory of international production underlines the importance of strategic and regional level variables. However, existing empirical approaches omit by and large regional level factors. We employ survey evidence from the “FDI micro database” of the IWH, that was only recently made available, to conduct our analyses. We find that foreign subsidiaries are above average technologically active in comparison to the whole East German manufacturing. This can be partially explained by the industrial structure of foreign direct investment. However, only a limited share of foreign subsidiaries with R&D and/or innovation activity source technological knowledge from the East German innovation system. If a subsidiary follows a competence augmenting strategy or does local trade, it is more likely to source technological knowledge locally. The endowment of a region with human capital and a scientific infrastructure has a positive effect too. The findings suggest that foreign subsidiaries in East Germany are only partially linked with the regional innovation system. Policy implications are discussed.
Read article