Global integration, disarticulation and competitiveness in Mexico’s electromechanical sector: A structural analysis

This article analyses the dual functioning of the Mexican electromechanical sector between 1994 and 2008, as distinct from other globalized activities. An estimation of labour productivity in 52 industrial classes finds that structural heterogeneity increased particularly in the 1994-2001 subperiod, alongside technical and organizational improvements that were increasingly concentrated in a small number of subsidiary companies of transnational automotive-assembly enterprises. The application of a shift-share technique also revealed the absence of any significant structural change. Lastly, an extension of the methodology to evaluate competitiveness —developed by the Economic Commission for Latin America and the Caribbean (eclac)— and its application to a second database that reclassifies 1,345 foreign trade products, makes it possible to contrast these changes with the dynamism of the global production networks in which the leading firms of the sector in Mexico are engaged.

Essays on Wage and Price Formation in Sweden

Study IReal Wage Determination in the Swedish Engineering Industry This study uses the monopoly union model to examine the determination of real wages and in particular the effects of active labour market programmes (ALMPs) on real wages in the engineering industry. Quarterly data for the period 1970:1 to 1996:4 are used in a cointegration framework, utilising the Johansen's maximum likelihood procedure. On a basis of the Johansen (trace) test results, vector error correction (VEC) models are created in order to model the determination of real wages in the engineering industry. The estimation results support the presence of a long-run wage-raising effect to rises in the labour productivity, in the tax wedge, in the alternative real consumer wage and in real UI benefits. The estimation results also support the presence of a long-run wage-raising effect due to positive changes in the participation rates regarding ALMPs, relief jobs and labour market training. This could be interpreted as meaning that the possibility of being a participant in an ALMP increases the utility for workers of not being employed in the industry, which in turn could increase real wages in the industry in the long run. Finally, the estimation results show evidence of a long-run wage-reducing effect due to positive changes in the unemployment rate. Study IIIntersectoral Wage Linkages in Sweden The purpose of this study is to investigate whether the wage-setting in certain sectors of the Swedish economy affects the wage-setting in other sectors. The theoretical background is the Scandinavian model of inflation, which states that the wage-setting in the sectors exposed to international competition affects the wage-setting in the sheltered sectors of the economy. The Johansen maximum likelihood cointegration approach is applied to quarterly data on Swedish sector wages for the period 1980:1–2002:2. Different vector error correction (VEC) models are created, based on assumptions as to which sectors are exposed to international competition and which are not. The adaptability of wages between sectors is then tested by imposing restrictions on the estimated VEC models. Finally, Granger causality tests are performed in the different restricted/unrestricted VEC models to test for sector wage leadership. The empirical results indicate considerable adaptability in wages as between manufacturing, construction, the wholesale and retail trade, the central government sector and the municipalities and county councils sector. This is consistent with the assumptions of the Scandinavian model. Further, the empirical results indicate a low level of adaptability in wages as between the financial sector and manufacturing, and between the financial sector and the two public sectors. The Granger causality tests provide strong evidence for the presence of intersectoral wage causality, but no evidence of a wage-leading role in line with the assumptions of the Scandinavian model for any of the sectors. Study IIIWage and Price Determination in the Private Sector in Sweden The purpose of this study is to analyse wage and price determination in the private sector in Sweden during the period 1980–2003. The theoretical background is a variant of the “Imperfect competition model of inflation”, which assumes imperfect competition in the labour and product markets. According to the model wages and prices are determined as a result of a “battle of mark-ups” between trade unions and firms. The Johansen maximum likelihood cointegration approach is applied to quarterly Swedish data on consumer prices, import prices, private-sector nominal wages, private-sector labour productivity and the total unemployment rate for the period 1980:1–2003:3. The chosen cointegration rank of the estimated vector error correction (VEC) model is two. Thus, two cointegration relations are assumed: one for private-sector nominal wage determination and one for consumer price determination. The estimation results indicate that an increase of consumer prices by one per cent lifts private-sector nominal wages by 0.8 per cent. Furthermore, an increase of private-sector nominal wages by one per cent increases consumer prices by one per cent. An increase of one percentage point in the total unemployment rate reduces private-sector nominal wages by about 4.5 per cent. The long-run effects of private-sector labour productivity and import prices on consumer prices are about –1.2 and 0.3 per cent, respectively. The Rehnberg agreement during 1991–92 and the monetary policy shift in 1993 affected the determination of private-sector nominal wages, private-sector labour productivity, import prices and the total unemployment rate. The “offensive” devaluation of the Swedish krona by 16 per cent in 1982:4, and the start of a floating Swedish krona and the substantial depreciation of the krona at this time affected the determination of import prices.

Comparative Analysis of Firms’ Participation in National and International Programmes to Support Innovation

Innovation is a process that faces several market failure situations. For this reason and for being considered one of the main drivers of economic growth, a large number of governmental and supranational policies are designed to foster technological progress. Along with these policies, there is an increasing concern with their continuous evaluation aiming at providing valuable feedback for these program?s adaptation and adequacy to the firm?s needs. The paper develops an evaluation of the influence of innovation-focused programs in firm¿s innovation and economic performance by means of a comparative analysis of the results obtained by Spanish firms that have participated in R&D national programmes and those achieved by Spanish firms participating in EUREKA international program. Findings show that the programmes were effective in achieving their objective of promoting technological innovation but, as regards the economic effects, the results were less conclusive since some differences were observed depending on the programme. The EUREKA companies displayed better behaviour, with positive differences in their returns on assets and labour productivity. The results also confirm the importance of designing more detailed and rigorous evaluation processes, taking into account the risk variable, in order to draw a more realistic picture of the impact of national and international programmes.

Family firms and the great crisis: evidence from the italian case

Few studies have analyzed how family firms have acted during the global great crisis in comparison to their nonfamily counterparts. This paper tries to fill this gap on the basis of the Italian experience using a sample of almost 4,500 for 2007 and 2010. We study whether family control affects labour productivity, labour costs and competitiveness and if the adoption of performance related pay (PRP) reveals an efficacious strategy to mitigate the effects of the crisis and reduce the gap in competitiveness with respect to nonfamily firms. We use quantile regression techniques to test the heterogeneous role of PRP and pay attention for its possible endogeneity. We have observed that after the outburst of the crisis, the distance in terms of competitiveness of family firms with respect to their nonfamily counterparts has been amplified. We also find that family firms may take advantage from the adoption of incentive schemes, such as PRP, to encourage commitment and motivation from their employees more than nonfamily firms. The positive role of PRP on labour productivity, coupled with a moderate influence of these schemes on wage premiums, enable them to regain competitiveness also under hostile pressures, as those featuring the strong global crisis.

Portugal. In economics, we call it conflict of interest! CEPS Commentary, 12 April 2013

Faced with limited options for coming up with the funds needed to pay off the next instalment on its bailout loan, Portugal is advised in this Commentary by economist Leonor Coutinho to trim the number of public sector employees, in combination with an increase in public sector working hours, among the lowest in Europe. In her view, these measures will have the best long-term implications both in terms of fiscal sustainability and of labour productivity, and may finally allow the country to resume the catching-up process that has been stalled since the start of EMU.

An Italian job: the need for collective wage bargaining reform. Bruegel Policy Brief ISSUE 2016/11 - JULY 2016

Highlights: Since the mid-1990s, Italy has been characterised by a lack of labour productivity growth, combinedwith a 60 percent growth in labour costs, 20 percentage points above euro-area average consumer price growth. As a consequence, Italy has become less competitive compared to its euro-area partners, the profitability of its firms has dropped and real GDP-per-capita has flatlined. • At the root of the substantial discrepancy between wages and productivity is Italy’s system of centralised wage bargaining which, in many ways, is designed without regard for the underlying industrial structure and geographical heterogeneity of the Italian economy.This has fostered perverse incentives and imbalances within Italy. • Collective wage bargaining, and in particular the determination of base salaries, should be moved from the national to the regional level for all contracts, in the public and private sectors.The Mezzogiorno,which might superficially be seen as losing out from this policy, would actually gain the most in competitiveness terms. • Furthermore, measures should be taken so that, in the long run, the Italian industrial structure evolves into a less fragmented small-company-based economy. This firm consolidation would likely expand the use of firm-level agreements and performance payments, and would improve Italy’s productivity and competitiveness overall.

Premature deindustrialization in Latin America

Defining deindustrialization as a situation of falling share of manufacturing employment and value added in total employment and GDP, respectively, and a rising specialization in primary goods, this paper provides an empirical analysis of the recent (and in some cases historical) path of four Latin American countries (Argentina, Brazil, Chile and Mexico), contributing to the debate on the matter of premature deindustrialization. We argue that Argentina, Brazil and Chile face premature deindustrialization, increasing their specialization in commodities, resource-based manufactures and low productivity services, while Mexico urges a deeper analyze of its structure.

A Neglected Aspect of Business: Human and Social Capital in the Sri Lankan Tea Plantations

This paper examines idiosyncrasies of tea plantation culture and politics in relation to Sri Lankan national and popular cultural typologies, with special reference to female tea plantation workers. Tea production in Sri Lanka is heavily based on manual labour, and it is the largest industry that provides accommodation for employees and their families. In this paper, it is argued that politico-cultural production relations have dominated labour productivity in tea plantations. Ways in which female workers have been marginalized, through patriarchal politics, ethnicity, religion, education, elitism, and employment are explained. This culture of the plantation community operates negatively with respect to the management agenda. It is also argued that social capital development in tea plantations is important not only for productivity improvement, but also for reasons of political and social obligation for the nation, because migrant plantation workers have been working and living in plantations over 150 years.

The impact of foreign direct investment on UK manufacturing: is there a profit squeeze in domestic firms?

This paper examines the extent to which foreign direct investment (FDI) in selected UK manufacturing sectors has an impact on reported profits in domestic firms. Foreign manufacturing firms are characterized by relatively high labour productivity and low wage shares. Entry by foreign firms not only impacts on domestic market shares, but also on domestic cost conditions. As a result, profitability in the indigenous sector may be reduced. There are a number of policy implications of this analysis which are explored.

Modelling the innovation value chain

Innovation events – the introduction of new products or processes – represent the end of a process of knowledge sourcing and transformation. They also represent the beginning of a process of exploitation which may result in an improvement in the performance of the innovating business. This recursive process of knowledge sourcing, transformation and exploitation comprises the innovation value chain. Modelling the innovation value chain for a large group of manufacturing firms in Ireland and Northern Ireland highlights the drivers of innovation, productivity and firm growth. In terms of knowledge sourcing,we find strong complementarity between horizontal, forwards, backwards, public and internal knowledge sourcing activities. Each of these forms of knowledge sourcing also makes a positive contribution to innovation in both products and processes although public knowledge sources have only an indirect effect on innovation outputs. In the exploitation phase, innovation in both products and processes contribute positively tocompany growth, with product innovation having a short-term ‘disruption’ effect on labour productivity. Modelling the complete innovation value chain highlights the structure and complexity of the process of translating knowledge into business value and emphasises the role of skills, capital investment and firms’ other resources in the value creation process.

The innovation value chain

Innovation events - the introduction of new products or processes - represent the end of a process of knowledge sourcing and transformation. They also represent the beginning of a process of exploitation which may result in an improvement in the performance of the innovating business. This recursive process of knowledge sourcing, transformation and exploitation we call the innovation value chain. Modelling the innovation value chain for a large group of manufacturing firms in Ireland and Northern Ireland highlights the drivers of innovation, productivity and firm growth. In terms of knowledge sourcing, we find strong complementarity between horizontal, forwards, backwards, public and internal knowledge sourcing activities. Each of these forms of knowledge sourcing also makes a positive contribution to innovation in both products and processes although public knowledge sources have only an indirect effect on innovation outputs. In the exploitation phase, innovation in both products and processes contribute positively to company growth, with product innovation having a short-term ‘disruption’ effect on labour productivity. Modelling the complete innovation value chain highlights the structure and complexity of the process of translating knowledge into business value and emphasises the role of skills, capital investment and firms’ other resources in the value creation process.

A study of performance and regulation in telecommunications in the European Union

This thesis looks at two issues. Firstly, statistical work was undertaken examining profit margins, labour productivity and total factor productivity in telecommunications in ten member states of the EU over a 21-year period (not all member states of the EU could be included due to data inadequacy). Also, three non-members, namely Switzerland, Japan and US, were included for comparison. This research was to provide an understanding of how telecoms in the European Union (EU) have developed. There are two propositions in this part of the thesis: (i) privatisation and market liberalisation improve performance; (ii) countries that liberalised their telecoms sectors first show a better productivity growth than countries that liberalised later. In sum, a mixed picture is revealed. Some countries performed better than others over time, but there is no apparent relationship between productivity performance and the two propositions. Some of the results from this part of the thesis were published in Dabler et al. (2002). Secondly, the remainder of the tests the proposition that the telecoms directives of the European Commission created harmonised regulatory systems in the member states of the EU. By undertaking explanatory research, this thesis not only seeks to establish whether harmonisation has been achieved, but also tries to find an explanation as to why this is so. To accomplish this, as a first stage to questionnaire survey was administered to the fifteen telecoms regulators in the EU. The purpose of the survey was to provide knowledge of methods, rationales and approaches adopted by the regulatory offices across the EU. This allowed for the decision as to whether harmonisation in telecoms regulation has been achieved. Stemming from the results of the questionnaire analysis, follow-up case studies with four telecoms regulators were undertaken, in a second stage of this research. The objective of these case studies was to take into account the country-specific circumstances of telecoms regulation in the EU. To undertake the case studies, several sources of evidence were combined. More specifically, the annual Implementation Reports of the European Commission were reviewed, alongside the findings from the questionnaire. Then, interviews with senior members of staff in the four regulatory authorities were conducted. Finally, the evidence from the questionnaire survey and from the case studies was corroborated to provide an explanation as to why telecoms regulation in the EU has reached or has not reached a state of harmonisation. In addition to testing whether harmonisation has been achieved and why, this research has found evidence of different approaches to control over telecoms regulators and to market intervention administered by telecoms regulators within the EU. Regarding regulatory control, it was found that some member states have adopted mainly a proceduralist model, some have implemented more of a substantive model, and others have adopted a mix between both. Some findings from the second stage of the research were published in Dabler and Parker (2004). Similarly, regarding market intervention by regulatory authorities, different member states treat market intervention differently, namely according to market-driven or non-market-driven models, or a mix between both approaches.

Technical innovation in industrial production

New techniques in manufacturing, popularly referred to as mechanization and automation, have been a preoccupation of social and economic theorists since the industrial revolution. A selection of relevant literature is reviewed, including the neoclassical economic treatment of technical change. This incorporates alterations to the mathematical production function and an associated increase in the efficiency with which the factors of production are converted into output. Other work emphasises the role of research and development and the process of diffusion, whereby new production techniques are propagated throughout industry. Some sociological writings attach importance to the type of production technology and its effect on the organisational structure and social relations within the factory. Nine detailed case studies are undertaken of examples of industrial innovation in the rubber, automobile, vehicle components, confectionery and clothing industries. The old and new techniques are compared for a range of variables, including capital equipment, labour employed, raw materials used, space requirements and energy consumption, which in most cases exhibit significant change with the innovation. The rate of output, labour productivity, product quality, maintenance requirements and other aspects are also examined. The process by which the change in production method was achieved is documented, including the development of new equipment and the strategy of its introduction into the factory, where appropriate. The firm, its environment, and the attitude of different sectors of the workforce are all seen to play a part in determining the motives for and consequences which flow from the innovations. The traditional association of technical progress with its labour-saving aspect, though an accurate enough description of the cases investigated, is clearly seen to afford an inadequate perspective for the proper understanding of this complex phenomenon, which also induces change in a wide range of other social, economic and technical variables.

Entry, reforms complementarity and performance:a tale of two Indian manufacturing sectors

In this paper, we use plant-level data from two Indian industries, namely, electrical machinery and textiles, to examine the empirical relationship between structural reforms like abandonment of entry restrictions to the product market, competition and firm-level productivity and efficiency. These industries have faced different sets of policies since Independence but both were restricted in the adoption of technology and in the development of optimal scales of production. They also belonged to the first set of industries that benefited from the liberalization process started in the 1980s. Our results suggest that both the industries have improved their efficiency and scales of operation by the turn of the century. However, the process of adjustment seems to have been worked out more fully for electrical machinery. We also find evidence of spatial fragmentation of the market as late as 2000–2001. Gains in labour productivity were much more evident in states that either have a strong history of industrial activity or those that have experienced significant improvements in business environment since 1991.

Making the construction industry resilient to extreme weather:lessons from construction in hot weather conditions

The construction industry is susceptible to extreme weather events (EWEs) due to most of its activities being conducted by manual workers outdoors. Although research has been conducted on the effects of EWEs, such as flooding and snowfall, limited research has been conducted on the effects of heatwaves and hot weather conditions. Heatwaves present a somewhat different risk profile to construction, unlike EWEs such as flooding and heavy snowfall that present physical obstacles to work onsite. However, heatwaves have affected the construction industry in the UK, and construction claims have been made due to adverse weather conditions. With heatwaves being expected to occur more frequently in the coming years, the construction industry may suffer unlike any other industry during the summer months. This creates the need to investigate methods that would allow construction activities to progress during hot summer months with minimal effect on construction projects. Hence, the purpose of this paper. Regions such as the Middle East and the UAE in particular flourish with mega projects, although temperatures soar to above 40̊C in the summer months. Lessons could be learnt from such countries and adapted in the UK. Interviews have been conducted with a lead representative of a client, a consultant and a contractor, all of which currently operate on UAE projects. The key findings include one of the preliminary steps taken by international construction companies operating in the UAE. This involves restructuring their entire regional team by employing management staff from countries such as Lebanon, Palestine, Iraq, and their labour force from the sub-continent such as India and Pakistan. This is not only due to the cheap wage rate but also to the ability to cope and work in such extreme hot weather conditions. The experience of individuals working in the region allows for future planning, where the difference in labour productivity during the extreme hot weather conditions is known, allowing precautionary measures to be put in place.