Pub Date : 2023-09-22DOI: 10.1080/10168737.2023.2261005
Chul-Woo Kwon, Uk Hwang
AbstractThis theoretical study explores how a home country's policies influence where multinational companies choose to produce. The study models subsidy negotiations between firms and both the home and foreign countries, revealing that offering reshoring subsidies might lead to repatriation of the multinational firm. If the host country values job creation's welfare gain from reshoring, a large reshoring subsidy from the home government can be seen as socially acceptable and encourage reshoring. However, if the home governments prioritize job creation less and the foreign government aims to retain the firm, pushing for reshoring may increase costs for the foreign country and reduce its social welfare.KEYWORDS: MultinationalsreshoringoffshoringsubsidyJEL Classifications: F21H25 Disclosure statementNo potential conflict of interest was reported by the author(s).Notes1 Examples of government-level reshoring policy promotion or efforts can be found in ‘Bring Jobs Home Act’ (U.S.) and ‘Act on Assistance to Korean Off-shore Enterprises in Repatriation’ (South Korea) etc.2 Most studies related to the threat effect are related to wage negotiations, such as Kwon and Hwang (Citation2018), but some studies are also related to analyzing the threat effect of stringent tax audit policies on overseas relocation of firms (Kwon & Hwang, Citation2019) and of the burden of environmental regulations on overseas relocation (Kwon & Hwang, Citation2021).3 If the representative consumer in each country has the following diversity preference utility function, the demand function shown in the main text can be derived. Here, the following process of deriving the demand function is omitted. (Dixit & Stiglitz, Citation1977; Krugman, Citation1979):4 In a typical Concentration-Proximity framework (Brainard, Citation1997; Helpman et al., Citation2004), a firm's local production entails high fixed costs. However, since this paper considers the withdrawal of firms that already produce locally, fixed costs for local production are already sunk costs at the point of analysis. In real world, when firms repatriate to their home country and expand their existing production facilities, there may be incurred fixed costs. On the one hand, reshoring firms can recover fixed costs by selling production facilities located in foreign country. Thus, net change in fixed costs may be negligible comparing to other fixed costs, and, hence, we assume fixed costs to be zero upon repatriation.5 Fixed costs accompanying production activities are introduced to consider the equilibrium of monopolistic competition in later discussion.6 If the issue of reshoring is analyzed using an oligopoly model instead of a monopolistic competition model, the analytical results would differ due to the different market structures.7 The superscript ‘us’ denotes ‘under subsidy’.8 Firm h can be considered foreign production from the home country’s perspective or local production from the host country’s perspective. We us
{"title":"The Effect of Reshoring Policy on the Host and Home Countries","authors":"Chul-Woo Kwon, Uk Hwang","doi":"10.1080/10168737.2023.2261005","DOIUrl":"https://doi.org/10.1080/10168737.2023.2261005","url":null,"abstract":"AbstractThis theoretical study explores how a home country's policies influence where multinational companies choose to produce. The study models subsidy negotiations between firms and both the home and foreign countries, revealing that offering reshoring subsidies might lead to repatriation of the multinational firm. If the host country values job creation's welfare gain from reshoring, a large reshoring subsidy from the home government can be seen as socially acceptable and encourage reshoring. However, if the home governments prioritize job creation less and the foreign government aims to retain the firm, pushing for reshoring may increase costs for the foreign country and reduce its social welfare.KEYWORDS: MultinationalsreshoringoffshoringsubsidyJEL Classifications: F21H25 Disclosure statementNo potential conflict of interest was reported by the author(s).Notes1 Examples of government-level reshoring policy promotion or efforts can be found in ‘Bring Jobs Home Act’ (U.S.) and ‘Act on Assistance to Korean Off-shore Enterprises in Repatriation’ (South Korea) etc.2 Most studies related to the threat effect are related to wage negotiations, such as Kwon and Hwang (Citation2018), but some studies are also related to analyzing the threat effect of stringent tax audit policies on overseas relocation of firms (Kwon & Hwang, Citation2019) and of the burden of environmental regulations on overseas relocation (Kwon & Hwang, Citation2021).3 If the representative consumer in each country has the following diversity preference utility function, the demand function shown in the main text can be derived. Here, the following process of deriving the demand function is omitted. (Dixit & Stiglitz, Citation1977; Krugman, Citation1979):4 In a typical Concentration-Proximity framework (Brainard, Citation1997; Helpman et al., Citation2004), a firm's local production entails high fixed costs. However, since this paper considers the withdrawal of firms that already produce locally, fixed costs for local production are already sunk costs at the point of analysis. In real world, when firms repatriate to their home country and expand their existing production facilities, there may be incurred fixed costs. On the one hand, reshoring firms can recover fixed costs by selling production facilities located in foreign country. Thus, net change in fixed costs may be negligible comparing to other fixed costs, and, hence, we assume fixed costs to be zero upon repatriation.5 Fixed costs accompanying production activities are introduced to consider the equilibrium of monopolistic competition in later discussion.6 If the issue of reshoring is analyzed using an oligopoly model instead of a monopolistic competition model, the analytical results would differ due to the different market structures.7 The superscript ‘us’ denotes ‘under subsidy’.8 Firm h can be considered foreign production from the home country’s perspective or local production from the host country’s perspective. We us","PeriodicalId":35933,"journal":{"name":"INTERNATIONAL ECONOMIC JOURNAL","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-09-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136059322","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-09-18DOI: 10.1080/10168737.2023.2255581
Admasu Asfaw Maruta
AbstractGenerally, the literature on aid focuses on the potential growth effects of aggregate aid. Due to the fact that donors have consistently asserted the multidimensionality of their purposes, it is necessary to conduct a much more disaggregated analysis of aid effectiveness. In this study, the effect of women education aid on 72 developing countries is examined empirically over the period 1990–2016. Using cross-country regression, this study examines the effectiveness of aid targeted at women’s education. Based on the fact that donors provide a large amount of women’s education aid to countries whose voting positions in the UN General Assembly are similar, this analysis exploits an instrumental variable. This study shows that women’s education aid has a significantly positive effect on women’s education. The results of this study are robust when different sensitivity checks are performed. The findings have significant policy implications for donor countries and international aid organizations, as they assist in identifying the most effective types of foreign aid flow to the various sectors of the recipient country’s economy.KEYWORDS: Women’s education aidwomen’s educationpanel datadeveloping countries Disclosure statementNo potential conflict of interest was reported by the author(s).Notes1 Source AidData database. Link: http://aiddata.org/.2 This analysis considers only bilaterally committed aid provided for educating women rather than the disbursed amount. Theoretically, examining the effect of the disbursed aid on recipients’ outcome variables might give compelling findings since the recipient countries have already received the aid capital. However, the aid literature shows some limitations in the use of disbursed aid. First, in many cases, the data for disbursed aid is missing as it is ‘spotty’ in most of the aid data sources. Second, aid disbursement is unpredictable compared to commitments because the amount of aid could be disbursed mainly in periods when output or domestic revenue are high and held back when domestic economic activity is shrinking (see Bulíř & Hamann, Citation2008). Hence, the analysis incorporates recipient and time-fixed effects in all models to consider any bias from systematic divergences between commitments and disbursements.3 I only use bilaterally committed aid because the instruments of women's education aid (i.e. donor and recipient countries voting similarity in the United Nations General Assembly) directly affect bilateral aid but not multilateral aid. However, in other unreported results, I regress overall women's education aid (i.e. bilaterally plus multilaterally committed aids) on measures of women's education using OLS and GMM estimations. Nevertheless, the qualitative nature of the results stays similar to the baseline findings (the results are available upon request).4 It is common to use this scaling procedure in the aid literature (see, e.g. Wilson, Citation2011; d’Aiglepierre & Wagner, Citation2
{"title":"Do Women Benefit from Women Education Aid? <i>Evidence from Panel Data</i>","authors":"Admasu Asfaw Maruta","doi":"10.1080/10168737.2023.2255581","DOIUrl":"https://doi.org/10.1080/10168737.2023.2255581","url":null,"abstract":"AbstractGenerally, the literature on aid focuses on the potential growth effects of aggregate aid. Due to the fact that donors have consistently asserted the multidimensionality of their purposes, it is necessary to conduct a much more disaggregated analysis of aid effectiveness. In this study, the effect of women education aid on 72 developing countries is examined empirically over the period 1990–2016. Using cross-country regression, this study examines the effectiveness of aid targeted at women’s education. Based on the fact that donors provide a large amount of women’s education aid to countries whose voting positions in the UN General Assembly are similar, this analysis exploits an instrumental variable. This study shows that women’s education aid has a significantly positive effect on women’s education. The results of this study are robust when different sensitivity checks are performed. The findings have significant policy implications for donor countries and international aid organizations, as they assist in identifying the most effective types of foreign aid flow to the various sectors of the recipient country’s economy.KEYWORDS: Women’s education aidwomen’s educationpanel datadeveloping countries Disclosure statementNo potential conflict of interest was reported by the author(s).Notes1 Source AidData database. Link: http://aiddata.org/.2 This analysis considers only bilaterally committed aid provided for educating women rather than the disbursed amount. Theoretically, examining the effect of the disbursed aid on recipients’ outcome variables might give compelling findings since the recipient countries have already received the aid capital. However, the aid literature shows some limitations in the use of disbursed aid. First, in many cases, the data for disbursed aid is missing as it is ‘spotty’ in most of the aid data sources. Second, aid disbursement is unpredictable compared to commitments because the amount of aid could be disbursed mainly in periods when output or domestic revenue are high and held back when domestic economic activity is shrinking (see Bulíř & Hamann, Citation2008). Hence, the analysis incorporates recipient and time-fixed effects in all models to consider any bias from systematic divergences between commitments and disbursements.3 I only use bilaterally committed aid because the instruments of women's education aid (i.e. donor and recipient countries voting similarity in the United Nations General Assembly) directly affect bilateral aid but not multilateral aid. However, in other unreported results, I regress overall women's education aid (i.e. bilaterally plus multilaterally committed aids) on measures of women's education using OLS and GMM estimations. Nevertheless, the qualitative nature of the results stays similar to the baseline findings (the results are available upon request).4 It is common to use this scaling procedure in the aid literature (see, e.g. Wilson, Citation2011; d’Aiglepierre & Wagner, Citation2","PeriodicalId":35933,"journal":{"name":"INTERNATIONAL ECONOMIC JOURNAL","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-09-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135149743","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The COVID-19 pandemic significantly disrupted international economic activities. This study examines its impact on the world economy, analyzing different regions and income groups separately. The empirical findings reveal that COVID-19 had a negative and substantial impact on global trade performance. Surprisingly, high-income countries experienced a positive impact on trade due to COVID-19, showing greater adaptability and, in some cases, emerging as exporters of medicines and COVID-19-related products. In contrast, middle-income and low-income countries did not observe any significant impact on trade performance from COVID-19. This finding implies that trade deterioration during the pandemic might be attributed to mediating factors rather than the direct influence of COVID-19 itself. Furthermore, when examining the effects by region, the results are mixed, reflecting the diverse characteristics of different regions. Consequently, it becomes evident that the COVID-19 pandemic has exacerbated existing inequalities, with the trade performance of affluent and advanced countries being the least negatively affected. In conclusion, the COVID-19 pandemic had far-reaching consequences on global trade, impacting various regions and income groups differently. The study highlights the need for targeted policies to address the disparities in trade performance and foster a more resilient and equitable global economy.
{"title":"The Impact of COVID-19 on Trade Performance in the World Economy","authors":"Mui-Yin Chin, Sheue-Li Ong, Lee-Peng Foo, Simba Mutsvangwa","doi":"10.1080/10168737.2023.2255852","DOIUrl":"https://doi.org/10.1080/10168737.2023.2255852","url":null,"abstract":"The COVID-19 pandemic significantly disrupted international economic activities. This study examines its impact on the world economy, analyzing different regions and income groups separately. The empirical findings reveal that COVID-19 had a negative and substantial impact on global trade performance. Surprisingly, high-income countries experienced a positive impact on trade due to COVID-19, showing greater adaptability and, in some cases, emerging as exporters of medicines and COVID-19-related products. In contrast, middle-income and low-income countries did not observe any significant impact on trade performance from COVID-19. This finding implies that trade deterioration during the pandemic might be attributed to mediating factors rather than the direct influence of COVID-19 itself. Furthermore, when examining the effects by region, the results are mixed, reflecting the diverse characteristics of different regions. Consequently, it becomes evident that the COVID-19 pandemic has exacerbated existing inequalities, with the trade performance of affluent and advanced countries being the least negatively affected. In conclusion, the COVID-19 pandemic had far-reaching consequences on global trade, impacting various regions and income groups differently. The study highlights the need for targeted policies to address the disparities in trade performance and foster a more resilient and equitable global economy.","PeriodicalId":35933,"journal":{"name":"INTERNATIONAL ECONOMIC JOURNAL","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-09-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135982020","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-08-28DOI: 10.1080/10168737.2023.2251027
Sylvester Senyo Horvey, D. B. Osei, I. Alagidede
This study contributes to the emerging literature on the insurance industry in sub-Saharan Africa by investigating both the linear and nonlinear relationship between insurance penetration and inclusive growth. We employ a panel dataset in a system generalised method of moments approach and a dynamic panel threshold to account for endogeneity and turning points in the insurance-inclusive growth nexus. The linear evidence suggests a significant positive impact of insurance penetration (life, nonlife and total) on inclusive growth. Further, there exists a significant threshold level of nonlife and total insurance penetration, which countries must surpass to realise the positive impact of insurance on inclusive growth. The paper argues that below this threshold value, the relationship tends to be negative, suggesting a U-shaped relationship. We found no significant threshold for the life insurance industry. Important policy implications for fine-tuning the insurance industry to deliver the intended effects of managing risk in the wider economy are discussed.
{"title":"Insurance Penetration and Inclusive Growth in Sub-Saharan Africa: Evidence from Panel Linear and Nonlinear Analysis","authors":"Sylvester Senyo Horvey, D. B. Osei, I. Alagidede","doi":"10.1080/10168737.2023.2251027","DOIUrl":"https://doi.org/10.1080/10168737.2023.2251027","url":null,"abstract":"This study contributes to the emerging literature on the insurance industry in sub-Saharan Africa by investigating both the linear and nonlinear relationship between insurance penetration and inclusive growth. We employ a panel dataset in a system generalised method of moments approach and a dynamic panel threshold to account for endogeneity and turning points in the insurance-inclusive growth nexus. The linear evidence suggests a significant positive impact of insurance penetration (life, nonlife and total) on inclusive growth. Further, there exists a significant threshold level of nonlife and total insurance penetration, which countries must surpass to realise the positive impact of insurance on inclusive growth. The paper argues that below this threshold value, the relationship tends to be negative, suggesting a U-shaped relationship. We found no significant threshold for the life insurance industry. Important policy implications for fine-tuning the insurance industry to deliver the intended effects of managing risk in the wider economy are discussed.","PeriodicalId":35933,"journal":{"name":"INTERNATIONAL ECONOMIC JOURNAL","volume":null,"pages":null},"PeriodicalIF":1.1,"publicationDate":"2023-08-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45763429","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-07-03DOI: 10.1080/10168737.2023.2239205
Kyung-hyun Kim, Soohyung Lee
We examine recent trends of South Korea’s outward foreign direct investment from 2001 to 2021, which shows substantial change in terms of the total amount and compositions. Using gravity models, we test whether these differential time trends across the industries and destination countries survive after incorporating economic factors. Controlling for economic conditions, we find that the FDI to China has been declining much earlier than the China–South Korea political dispute, while the FDI to USA shows a steady increase, making it the top FDI destination throughout the sample period. Investment in tax haven shows rapid increase across all sizes of South Korean investors and therefore, further research is needed on its implications for tax evasion.
{"title":"Cayman Over China: Trends and Accounting Factors of South Korea’s Outward Foreign Direct Investment","authors":"Kyung-hyun Kim, Soohyung Lee","doi":"10.1080/10168737.2023.2239205","DOIUrl":"https://doi.org/10.1080/10168737.2023.2239205","url":null,"abstract":"We examine recent trends of South Korea’s outward foreign direct investment from 2001 to 2021, which shows substantial change in terms of the total amount and compositions. Using gravity models, we test whether these differential time trends across the industries and destination countries survive after incorporating economic factors. Controlling for economic conditions, we find that the FDI to China has been declining much earlier than the China–South Korea political dispute, while the FDI to USA shows a steady increase, making it the top FDI destination throughout the sample period. Investment in tax haven shows rapid increase across all sizes of South Korean investors and therefore, further research is needed on its implications for tax evasion.","PeriodicalId":35933,"journal":{"name":"INTERNATIONAL ECONOMIC JOURNAL","volume":null,"pages":null},"PeriodicalIF":1.1,"publicationDate":"2023-07-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48801605","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-07-03DOI: 10.1080/10168737.2023.2239204
Hyun-Gil Lee, Junsang Lee
This study investigates the relationship between market power, as measured by aggregate markups, and income inequality across 34 countries between 1991 and 2016. We find that market power is positively associated with income inequality in developing countries, while the relationship between markups and income inequality in advanced economies is more nuanced and statistically insignificant. Our study reveals that a higher collective bargaining rights mitigate the impact of market power on income inequality, emphasizing the importance of robust worker protection systems for fostering a more equitable labor market environment.
{"title":"Aggregate Markup and Its Impact on Income Inequality: Country Panel Evidence","authors":"Hyun-Gil Lee, Junsang Lee","doi":"10.1080/10168737.2023.2239204","DOIUrl":"https://doi.org/10.1080/10168737.2023.2239204","url":null,"abstract":"This study investigates the relationship between market power, as measured by aggregate markups, and income inequality across 34 countries between 1991 and 2016. We find that market power is positively associated with income inequality in developing countries, while the relationship between markups and income inequality in advanced economies is more nuanced and statistically insignificant. Our study reveals that a higher collective bargaining rights mitigate the impact of market power on income inequality, emphasizing the importance of robust worker protection systems for fostering a more equitable labor market environment.","PeriodicalId":35933,"journal":{"name":"INTERNATIONAL ECONOMIC JOURNAL","volume":null,"pages":null},"PeriodicalIF":1.1,"publicationDate":"2023-07-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42844501","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-07-03DOI: 10.1080/10168737.2023.2229282
Yanliang Miao, Xu Fei, Jingyi Sun, Hao‐Yen Yang
We study the effects of the US-China trade war on Chinese firms' investment using the detailed quarterly financial data of Chinese listed firms merged with firm-level Chinese customs data. We construct the firm-level measures of direct trade exposure and the financial measures of indirect exposures to the US-China trade tension using firms' equity responses during the trade war escalation periods. We document that the trade war reduced Chinese firms' investment by two percent. In particular, we find significant heterogeneous firms' responses to the trade war, depending on their firm characteristics. Chinese firms that are more dependent on exports to the US have lower stock returns; large firms and state-owned firms suffer more compared to small firms and private-owned ones.
{"title":"The Impact of the US-China Trade War on Chinese Firms' Investment","authors":"Yanliang Miao, Xu Fei, Jingyi Sun, Hao‐Yen Yang","doi":"10.1080/10168737.2023.2229282","DOIUrl":"https://doi.org/10.1080/10168737.2023.2229282","url":null,"abstract":"We study the effects of the US-China trade war on Chinese firms' investment using the detailed quarterly financial data of Chinese listed firms merged with firm-level Chinese customs data. We construct the firm-level measures of direct trade exposure and the financial measures of indirect exposures to the US-China trade tension using firms' equity responses during the trade war escalation periods. We document that the trade war reduced Chinese firms' investment by two percent. In particular, we find significant heterogeneous firms' responses to the trade war, depending on their firm characteristics. Chinese firms that are more dependent on exports to the US have lower stock returns; large firms and state-owned firms suffer more compared to small firms and private-owned ones.","PeriodicalId":35933,"journal":{"name":"INTERNATIONAL ECONOMIC JOURNAL","volume":null,"pages":null},"PeriodicalIF":1.1,"publicationDate":"2023-07-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49040522","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-07-03DOI: 10.1080/10168737.2023.2242844
JaeBin Ahn, Jee-Hyeong Park
An exploration of Korean MNCs' foreign affiliate-level data reveals that a significant portion of manufacturing foreign affiliates sell both to related and unrelated firms at the same time. We refer to this as hybrid vertical FDI. We rationalize the presence of hybrid vertical FDI by modifying the otherwise standard property-rights model of global sourcing with the subsidiary-level option of supplying inputs to unrelated customers in addition to related firms. Given the positive production externality from serving additional customers (that is proportional to the MNC's productivity) and the costs of getting such benefit (that are increasing in relationship-specificity of the outsourced inputs), the model generates following testable hypotheses: Both MNCs' likelihood of choosing hybrid over pure vertical FDI and their foreign affiliate firms' related-firm sales ratio over unrelated-firm go up when the productivity of foreign affiliates increases (but such tendencies weaken when contractual complexity goes up), which our subsequent empirical analysis robustly confirms.
{"title":"Contracting with Enemies? Vertical FDI with Outsourcing Contracts","authors":"JaeBin Ahn, Jee-Hyeong Park","doi":"10.1080/10168737.2023.2242844","DOIUrl":"https://doi.org/10.1080/10168737.2023.2242844","url":null,"abstract":"An exploration of Korean MNCs' foreign affiliate-level data reveals that a significant portion of manufacturing foreign affiliates sell both to related and unrelated firms at the same time. We refer to this as hybrid vertical FDI. We rationalize the presence of hybrid vertical FDI by modifying the otherwise standard property-rights model of global sourcing with the subsidiary-level option of supplying inputs to unrelated customers in addition to related firms. Given the positive production externality from serving additional customers (that is proportional to the MNC's productivity) and the costs of getting such benefit (that are increasing in relationship-specificity of the outsourced inputs), the model generates following testable hypotheses: Both MNCs' likelihood of choosing hybrid over pure vertical FDI and their foreign affiliate firms' related-firm sales ratio over unrelated-firm go up when the productivity of foreign affiliates increases (but such tendencies weaken when contractual complexity goes up), which our subsequent empirical analysis robustly confirms.","PeriodicalId":35933,"journal":{"name":"INTERNATIONAL ECONOMIC JOURNAL","volume":null,"pages":null},"PeriodicalIF":1.1,"publicationDate":"2023-07-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47172276","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-06-28DOI: 10.1080/10168737.2023.2229287
Honsoo Kim, S. Kim, Wonshik Kim, Kyung Hoon Yang
Long-term care expenses pose a large financial risk to the elderly. In 2008, South Korea introduced a public long-term care insurance (LTCI) program for individuals older than 65. We study the dynamic effects of the LTCI on various healthcare expenditures. We find that after the implementation of the LTCI, average prescription drug and outpatient expenditures of the elderly increased. Dynamically, we observe that the growth in these expenditures moderates. We also find suggestive evidence that after the introduction of the LTCI, the elderly may utilize LTC hospitals instead of inpatient hospital services. These findings underscore the importance of understanding the long-term effects of LTCI on health and healthcare expenditures of the elderly and the need to account for interactions between LTC and other types of healthcare services in policy design.
{"title":"Dynamic Effects of Long-Term Care Insurance on Healthcare Expenditures: Evidence from South Korea","authors":"Honsoo Kim, S. Kim, Wonshik Kim, Kyung Hoon Yang","doi":"10.1080/10168737.2023.2229287","DOIUrl":"https://doi.org/10.1080/10168737.2023.2229287","url":null,"abstract":"Long-term care expenses pose a large financial risk to the elderly. In 2008, South Korea introduced a public long-term care insurance (LTCI) program for individuals older than 65. We study the dynamic effects of the LTCI on various healthcare expenditures. We find that after the implementation of the LTCI, average prescription drug and outpatient expenditures of the elderly increased. Dynamically, we observe that the growth in these expenditures moderates. We also find suggestive evidence that after the introduction of the LTCI, the elderly may utilize LTC hospitals instead of inpatient hospital services. These findings underscore the importance of understanding the long-term effects of LTCI on health and healthcare expenditures of the elderly and the need to account for interactions between LTC and other types of healthcare services in policy design.","PeriodicalId":35933,"journal":{"name":"INTERNATIONAL ECONOMIC JOURNAL","volume":null,"pages":null},"PeriodicalIF":1.1,"publicationDate":"2023-06-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49642381","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-06-28DOI: 10.1080/10168737.2023.2227161
Aomar Ibourk, Zakaria Elouaourti
ABSTRACT This paper explores new pathways to women's empowerment, including household structure, family support, satisfaction and self-esteem, and trust in institutions and politicians, and their impact on labor market participation, with a specific focus on gender differences. Using a microeconomic database of 7,860 individuals from North Africa and employing a Probit model, we find that gender significantly influences labor market participation. Surprisingly, our results reveal that education operates in an unexpected direction in the North African region, confirming the “MENA paradox”. Moreover, household structure's impact on labor decisions varies by gender, as gender norms prevalent in male-dominated societies hinder women's labor market participation, leading to a “marriage penalty.” In a similar vein, our estimations reveal a significant positive correlation between men's belief that “men should have greater job rights than women during scarce work periods” and their labor force participation, shedding light on the influential role of gender norms in North Africa. Our study emphasizes the critical role of networking, social capital, and how North Africans' perception of political life impedes their labor force participation. As for policy implications, our contribution illuminates new pathways for women's empowerment, advocating for comprehensive legislative reforms to promote gender equality and foster inclusive development.
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