Effects of Economic Factors on Adoption of Robotics and Consequences of Automation for Productivity Growth of Dairy Farms. Factor Markets Working Paper No. 32, December 2012

In the long term, productivity and especially productivity growth are necessary conditions for the survival of a farm. This paper focuses on the technology choice of a dairy farm, i.e. the choice between a conventional and an automatic milking system. Its aim is to reveal the extent to which economic rationality explains investing in new technology. The adoption of robotics is further linked to farm productivity to show how capital-intensive technology has affected the overall productivity of milk production. The empirical analysis applies a probit model and an extended Cobb-Douglas-type production function to a Finnish farm-level dataset for the years 2000–10. The results show that very few economic factors on a dairy farm or in its economic environment can be identified to affect the switch to automatic milking. Existing machinery capital and investment allowances are among the significant factors. The results also indicate that the probability of investing in robotics responds elastically to a change in investment aids: an increase of 1% in aid would generate an increase of 2% in the probability of investing. Despite the presence of non-economic incentives, the switch to robotic milking is proven to promote productivity development on dairy farms. No productivity growth is observed on farms that keep conventional milking systems, whereas farms with robotic milking have a growth rate of 8.1% per year. The mean rate for farms that switch to robotic milking is 7.0% per year. The results show great progress in productivity growth, with the average of the sector at around 2% per year during the past two decades. In conclusion, investments in new technology as well as investment aids to boost investments are needed in low-productivity areas where investments in new technology still have great potential to increase productivity, and thus profitability and competitiveness, in the long run.

Comparison of PRC and Vietnam's Responses to the Elimination of U.S. Textile and Apparel Quotas: Economic and Cultural Perspectives. ACES Working Paper No. 1, 2007

International trade in textiles and apparel has, as of January 1, 2005, been set free from the very intricate Multi-Fiber textile and apparel quota Arrangement (MFA). This event has raised many uncertainties about the new international trade climate and has placed enormous pressure on China as the expected clear cut beneficiary of this liberalization.' Other countries considered to be major contenders include Vietnam which also has a large population employed in the textile and apparel (T&A) sector. Since the old quota system had provided a certain degree of market certainty to competing T&A producers, will the new free trade environment lead to a shake out where mass producers with large economies of scale dominate the new reality? The removal of T&A quotas will create opportunities for Vietnam and China along with other developing countries, but it will also expose them to additional competition from each other. The outcome of this competition will depend on the demand in the US, the ability of the exporting countries to differentiate their exports and on their ability to transfer additional resources to expand domestic output in the direction of the new 'free market signals' and away from rent seeking objectives. Obviously, exporting countries that adjust to this new environment quickly will improve their competitiveness, and will be the new beneficiaries of a quota free international trade in textiles and apparel. This paper attempts to shed some light on the differences and similarities in the responses of Chinese and Vietnamese T&A sectors to this new environment. It first focuses on the demand side attempting to determine whether or not Chinese and Vietnamese T&A items, formally under quota control, are substitutes or compliments. On the supply side, the paper focuses on institutional differences between each country's T&A sectors, the different domestic government policies that have contributed to their growth and the unique cultural differences which will determine the future progress in each country's T&A sectors.

Progress on the “Juncker Plan” continues – but are Member States behind it? EPC Commentary, 18 March 2015

Introduction. The draft regulation on the Juncker Investment Plan was presented by the European Commission in January and has been discussed by the Ecofin Council on 10 March. This leaves sufficient time for the European Parliament to express its views and to make the Plan operational by the summer, as aimed for by President Juncker. But while governments agreed swiftly, ministers did not decide on two issues that are of importance: the eligibility of projects that have benefited from the Connecting Europe Facility (CEF) and the Horizon 2020 programmes and the contributions of the national promotional banks (NPBs) to the investment plan. This commentary argues that the foreseeable engagement of NPBs remains unsatisfactory.