The shared supplier effect: How foreign firms benefit domestic firms

Hiau Looi Kee 21 November 2014

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The conventional thinking about the impact of foreign direct investment (FDI) in a developing country, is often that while FDI may create jobs, it crowds out and take away market opportunities from domestic enterprises and make the domestic firms less efficient.  These are the so-called negative spillovers of FDI and have been identified in Venezuela (Atkin and Harrison, 1999), the Czech Republic (Djankov and Hoekman, 2000) and Central and Eastern Europe (Konings, 2001).  In a recent study (Kee, forthcoming), I find that there could be a positive spillover of FDI to consider, i.e.

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Topics:  Development

Tags:  FDI, spillovers, Bangladesh

Policy uncertainty spillovers to emerging markets: Evidence from capital flows

Dennis Reinhardt, Cameron McLoughlin, Ludovic Gauvin 05 November 2014

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In the wake of the global financial crisis of 2007–2008, advanced economies experienced heightened levels of uncertainty in macroeconomic policymaking. Against this backdrop, policymakers debated the domestic and global spillover implications of advanced-country policy uncertainty (e.g. IMF 2013). At the same time, the potential for monetary policy settings in advanced countries to spill over to emerging market economies (EMEs) via capital flows was hotly contested in both academic and policymaker circles (e.g. Fratzscher et al. 2013).

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Topics:  International finance Macroeconomic policy Monetary policy

Tags:  capital flows, Capital inflows, emerging markets, policy uncertainty, spillovers, global crisis, monetary policy, macroeconomic policy, risk aversion, home bias

Wikipedia: The value of open content production

Aleksi Aaltonen, Stephan Seiler 31 October 2014

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Facebook, YouTube, Twitter, and Wikipedia are among the world’s most popular websites – and all of them are based on user-generated content. While some platforms of this kind are primarily used to share individually produced content, others are based on a more direct interaction between users in the production of content.

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Topics:  Frontiers of economic research Productivity and Innovation

Tags:  technology, information technology, internet, spillovers, user-generated content, content creation, Open source, Wikipedia, joint production

Taking a bite out of Apple? Fixing international corporate taxation

Ruud de Mooij, Michael Keen, Victoria Perry 14 September 2014

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It’s hard to pick up a newspaper these days (or, more likely for those reading this, do the digital equivalent) without reading about Apple, Amazon, Google, or a host of others managing, by some magic, to pay little corporate income tax – and the consequent outrage of duly shocked and horrified politicians. Entertaining though all this is, understanding the rules that make such tax avoidance possible is a dull task that many of us are happy to leave to the tax nerds – detail really matters (just ask an international tax lawyer).

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Topics:  Taxation

Tags:  tax, taxation, IMF, corporate taxation, corporate income tax, spillovers, tax treaties, tax avoidance, multinationals, tax competition, tax harmonisation

Why is financial stability essential for key currencies in the international monetary system?

Linda Goldberg, Signe Krogstrup, John Lipsky, Hélène Rey 26 July 2014

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Could the dollar lose its status as the key international currency for international trade and international financial transactions, and if so, what would be the principal contributing factors? Speculation about this issue has long been abundant, and views diverse. After the introduction of the euro, there was much public debate about the euro displacing the dollar (Frankel 2008). The monitoring and analysis included in the ECB’s reports on “The International Role of the Euro” (e.g.

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Topics:  Financial markets International finance

Tags:  reserve currency, financial stability, dollar, capital flows, spillovers, Currency, SIFIs

Do capital controls deflect capital flows?

Paolo Giordani, Michele Ruta, Hans Weisfeld, Ling Zhu 23 June 2014

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The size and volatility of capital flows to developing countries have increased significantly in recent years (Figure 1), leading many economists to argue that national policies and multilateral institutions are needed to govern these flows (Forbes and Klein 2013, Blanchard and Ostry 2012). The IMF itself has reviewed its position on the liberalisation and management of capital flows, while recognising that “much further work remains to be done to improve policy coordination in the financial sector” (IMF 2012, p. 28).

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Topics:  International finance

Tags:  China, capital flows, spillovers, South Africa, capital controls, Brazil, Capital inflows, international capital flows

Spillovers from systemic bank defaults

Mark Mink, Jakob de Haan 24 May 2014

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Financial-crisis management and prevention policies often focus on mitigating spillovers from the default of systemically important banks. During the recent crisis, governments avoided large bank failures by insuring and purchasing intermediaries’ troubled assets, by providing them with capital injections, and even by outright nationalisations. After the crisis, financial regulators designed additional requirements for those institutions that the Financial Stability Board designated as globally systemically important banks (G-SIBs).

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Topics:  Financial markets

Tags:  financial stability, spillovers, regulation, banking, banks, systemic risk

The economic impact of inward FDI on the US

Theodore H. Moran, Lindsay Oldenski 04 March 2014

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The US is the second-largest recipient of FDI in the world, behind China, and by far the largest target for FDI among OECD countries (OECD 2013). The numbers are large ($253 billion for the US), and the gap with the next-largest in the OECD is impressive ($63 billion for the UK and $62 billion for France in 2012).

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Topics:  Productivity and Innovation

Tags:  R&D, US, productivity, wages, multinationals, FDI, spillovers

Overcoming the obstacles to international macro policy coordination is hard

Olivier Blanchard, Jonathan D Ostry, Atish R Ghosh 20 December 2013

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International policy coordination is like the Loch Ness monster – much discussed but rarely seen. Going back over the decades, and even further in history to the period between the two world wars, coordination efforts have been episodic.

Coordination seems to occur spontaneously in turbulent periods, when the world faces the prospect of some calamitous outcome and the key players are seeking to avoid cascading negative spillovers. In quieter times coordination is rarer, though not unheard of – the Louvre and Plaza accords are examples. 

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Topics:  Macroeconomic policy

Tags:  spillovers, fiscal consolidation, financial regulation, policy coordination, unconventional monetary policy, currency war

Multinationals assist domestic suppliers? Perhaps think again

Olivier N. Godart, Holger Görg, Christiane Krieger-Boden 29 April 2013

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It is empirically well established that multinationals raise productivity levels of their local suppliers in their host countries. Firm-level data show that productivity of upstream industries is the higher the higher the importance of multinationals in downstream industries is (e.g. Javorcik 2004, Barrios et al. 2011).

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Topics:  Development International finance International trade

Tags:  multinationals, spillovers, backward linkages

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