Trade in intermediate inputs now accounts for as much as two-thirds of international trade. Firms must decide which segments of their production processes to own and which to outsource. Using global plant-level data, this column empirically examines firms’ organisational choices along value chains. Decisions to integrate or outsource upstream and downstream functions are found to depend on demand elasticity relative to the substitutability of inputs. These results provide strong evidence that integration decisions are driven by contractual frictions.
Laura Alfaro, Pol Antràs, Davin Chor, Paola Conconi, 14 November 2015
Nauro Campos, Fabrizio Coricelli, Luigi Moretti, 19 June 2015
The imminence of the British referendum lays the European integration project at a crossroads. One tabled policy proposal is to offer different membership options – shallow integration (economic only) and deep integration (economic and political). This column presents new evidence comparing these two options. Focusing on Norway, a country that is economically but not politically associated with the EU, deep integration is estimated to bring a 6% productivity gain in the first five years, compared with shallow integration. These findings bring new economic arguments to debates about EU integration and membership.
Pablo Fajgelbaum, Stephen Redding, 12 July 2014
External integration is often viewed as an important driver of economic development, but most existing studies use aggregate data. This column present evidence from a natural experiment provided by Argentina’s integration into the world markets in the late 19th century. The findings suggest that proximity to trade centres is associated with employment density, high lands rates relative to wages, and structural transformation away from agriculture.
Bruno Maçães, 09 July 2014
The debate on the future of the European Union is in full swing. In this column, Bruno Macaes – the Portuguese Minister for Europe – stresses the importance of policy coordination in achieving better integration. One way to do so is via a fiscal union, but this creates unity at the expense of diversity. A second way involves formal contracts and partnerships. But to make this approach less rigid, the political dialogue does not need to be formalised in actual contracts.
Pieter Bevelander, Ravi Pendakur, 10 January 2011
The Great Recession worsened the already-intractable unemployment problem of many immigrant communities in western countries. Can acquiring citizenship improve employment prospects for immigrants? CEPR Discussion Paper 8182 argues that recent liberalization of citizenship regulations in Sweden and Canada has increased employment probabilities for immigrant groups in both countries.
Gianmarco Ottaviano, Giovanni Peri, 17 April 2008
Immigration of less educated, younger Eastern Europeans and North Africans to Western Europe would economically benefit its educated and older population. This column, summarising research on immigration effects in Germany, suggests that, to fully reap the benefits from immigration, Western Europe should make its labour markets more competitive and accessible to outsiders (immigrants) and its welfare state more selective.
Alberto Bisin, Eleonora Patacchini , Thierry Verdier, Yves Zenou, 19 September 2007
Are Muslims successfully resisting integration in the UK? And are Muslims who belong to certain socio-economic or demographic groups more likely to integrate than others?