Global governance

Andrew B. Bernard, Andreas Moxnes, Yukiko Umeno Saito, 24 September 2014

Investment in high-speed rail accounts for billions in investment worldwide, but little research has been done on its effect on firm performance. This column introduces  a model of firm supply networks, and presents evidence from the opening of an extension to the Shinkansen railway in Japan. The authors show that input-intensive industries benefit relatively more. In addition, their model provides a microfoundation for differential productivity across regions.

Arik Levinson, 24 September 2014

Pollution emitted by manufacturers has been falling in Europe and the US. A concern with this clean-up is that developed countries have been offshoring the production of pollution-intensive parts and products. This column presents evidence refuting this concern. Using a new approach, the author calculates that almost all of the clean-up in US manufacturing can be explained by technological changes.

Fergal McCann, Tara McIndoe-Calder, 23 September 2014

The role of credit-fuelled property booms in the Global Crisis has received much high-profile attention in recent years. Using data on Irish small and medium enterprises, this column highlights an additional channel through which such booms can impact post-crisis growth. Firms having difficulty repaying their property-related debts divert resources away from hiring and investment. Property booms thereby induce misallocation of resources in both the boom and the bust.

Claire Célérier, Adrien Matray, 23 September 2014

There is an urgent need to understand why many households in the US do not hold a bank account. This column argues that supply-side factors – standard bank practices that ration certain households – play a role in this. The evidence comes from the staggered interstate branching deregulation after 1994 that provides an exogenous shock on bank competition. Further findings suggest that access to bank accounts improves access to credit without translating into higher ratios of debt to income.

Heiwai Tang, Wenjie Chen, 22 September 2014

Using a new, unique, and comprehensive data set that covers close to 19,000 Chinese ODI deals from 1998 to 2011, we find that in contrast to the common perception, over half of the ODI deals are in service sectors, with many of them appearing to be related to export promotion. Ex ante larger, more productive, and more export-intensive firms are more likely to start investing abroad. Ex post, ODI appears to enhance firm performance (i.e., total factor productivity, employment, export intensity, and product innovation). Empirical analysis based on firms’ trade transaction data shows a significantly positive effect of ODI on firms’ trade performance, but little technology transfer.

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