Heterogeneous multinational firms and productivity gains from falling FDI barriers

During the past decade of declining FDI barriers, small domestic firms disproportionately contracted while large multinational firms experienced a substantial growth in Japan’s manufacturing sector. This paper quantitatively assesses the impact of FDI globalization on intra-industry reallocations and aggregate productivity. We calibrate the firm-heterogeneity model of Eaton, Kortum, and Kramarz (2011) to micro-level data on Japanese multinational firms. Estimating the structural parameters of the model, we demonstrate that the model can strongly replicate the entry and sales patterns of Japanese multinationals. Counterfactual simulations show that declining FDI barriers lead to a disproportionate expansion of foreign production by more efficient firms relative to less efficient firms. A hypothetical 20% reduction in FDI barriers is found to generate a 30.7% improvement in aggregate productivity through market-share reallocation.

Spatial spillovers from FDI agglomeration : evidence from the Yangtze River Delta in China

Foreign firms have clustered together in the Yangtze River Delta, and their impact on domestic firms is an important policy issue. This paper studies the spatial effect of FDI agglomeration on the regional productivity of domestic firms, using Chinese firm-level data. To identify local FDI spillovers, we estimate the causal impact of foreign firms on domestic firms in the same county and similar industries. We then estimate a spatial-autoregressive model to examine spatial spillovers from FDI clusters to other domestic firms in distant counties. Our results show that FDI agglomeration generates positive spillovers for domestic firms, which are stronger in nearby areas than in distant areas.

Outward FDI from developing countries : a case of Chinese firms in South Africa

Outward foreign direct investment (FDI) from developing countries is increasing. In the research on FDI, it has been considered that only competitive and productive firms can invest in foreign countries. However, since the differences in competitiveness and productivity between multinational enterprises (MNEs) from developed and developing countries have not been explicitly investigated, we cannot say whether MNEs from developing countries can or cannot survive in competition with MNEs from developed countries as well as against competitive and productive indigenous firms in host countries. To examine the activities of MNEs from developing countries, this study investigates Chinese firms in South Africa. It reveals that in order to compensate for the weak brand recognition of Chinese products and to expand sales, Chinese firms have mainly been making products that are sold under the brand names of indigenous South African firms. Chinese firms have expanded their business in South Africa relying on the business resources of indigenous firms in the host country. This indicates that business with indigenous firms is significant for MNEs from developing countries in boosting competitiveness.

FDI and investment barriers in developing economies

Does investment liberalization in developing economies affect FDI decisions differently across individual firms? To address this question, we simulate the response of individual firms to reductions in investment costs across developing economies. We explore two policy experiments: elimination of setup-procedure requirements for foreign investors and a reduction in corporate tax rates on foreign-owned multinationals. We find that a relaxing of discriminatory foreign investment procedures induces middle productive firms to increase their entry and production in developing economies substantially, but the most productive firms to expand moderately. Multinationals expand their entry and production in developing economies more substantially following a decline in entry barriers than following a decrease in corporate tax rates.

FDI inflows and outflows, intellectual property rights, and productivity growth

Using panel data of 57 countries during the period of 1995-2012, this study investigates the impact of intellectual property rights (IPR) processes on productivity growth. The IPR processes are decomposed into three stages, innovation process, commercialization process, and IPR protection process. Our results suggest that better IPR protection is directly associated with productivity improvement only in developed economies. In addition, the contribution of IPR processes on growth through foreign direct investment (FDI) appears to be very limited. Only FDI inflows in developed countries which help to create a better innovative capability lead to a higher growth. And in connection with FDI outflows, only IPR protection and commercialization processes are proven to improve productivity in the case of developing countries, particularly when the country acts as the investing country.

Firm-level impacts of natural disasters on production networks : evidence from a flood in Thailand

In this paper, we explore the firm-level impacts of flooding in Thailand in 2011, specifically those on the procurement patterns at Japanese affiliates in Thailand. Our findings are as follow. First, the damaged small firms are more likely to lower their local procurement share, particularly the share of procurement from other Japanese-owned firms in Thailand. Second, damaged young firms and damaged old firms are more likely to raise the shares of imports from Japan and China, respectively. Third, there are no impacts on imports from ASEAN and other countries. These findings are useful for uncovering how multinational firms adjust their production networks before and after natural disasters.

Competition between firms in developing and developed countries

We analyze competition in emerging markets between firms in developing and developed countries from the viewpoint of the boundaries of the firm. Although indigenous firms generally face a disadvantage in technology compared with foreign firms, they have an advantage in marketing as local firms. Moreover, they have opportunities to leave weaker fields to independent specialized firms and use lower wages. On the other hand, foreign firms also have their own advantages and disadvantages for growth. Therefore, entry conditions for indigenous firms can vary greatly depending on the situation. We classify these conditions into eight cases by developing a model and showing each boundary choice for indigenous firms.

The innovation process of a privately-owned enterprise and a state-owned enterprise in China

This study compares the innovation process of a privately-owned enterprise and a state-owned enterprise in China using their patent data. Huawei and ZTE were selected for this study because they experienced the same historical environment in the same industry from the same region in China leaving their owner types as their critical difference. This study investigates the difference in the innovation process in R&D between a privately-owned and a state-owned enterprise by analyzing (1) domestic and international patent application pattern, (2) co-application and co-applicants, (3) knowledge accumulation inside Huawei and ZTE, and (4) knowledge spillover to domestic and foreign firms.

Trade obstacles, inventory level of inputs, and internationalization of enterprise activities : a comparison between Southeast Asia and Latin America

This paper investigates the impact of trade barriers such as customs clearance, subjective trade obstacles (customs and trade regulations), and inventory of inputs on the internationalization of enterprises in Southeast Asia and Latin America, using the World Bank's enterprise surveys. Empirical results show a negative association between the internationalization of enterprises and subjective trade obstacles, while the impact of subjective trade obstacles is not significant on enterprises already internationalized. An international comparison between Southeast Asia and Latin America suggests that enterprises in Latin America face unfavorable conditions that discourage them from becoming more closely inserted into international production networks.

Boundaries of firms and catching up by latecomers in global production networks : the case of a Mexican auto-parts manufacturer

For manufacturing firms in developing countries, there are high barriers to entry and to catching up with competitors in their global production networks (GPNs). This paper examines the case of a Mexican auto-parts manufacturer that succeeded in catching up in the automotive GPN. The author proposes that the door to GPNs is open thanks to frequent changes in the boundaries of firms, and also stresses the importance of the necessary conditions that generate opportunities, including institutional settings that facilitate market entry and catching up, and capability building by firms hopeful of entry.

Adoption of ISO9001 through supply chain in Vietnam : impacts of FDI and product-related environmental regulation

The objective of the present study is to examine the determinants of ISO 9001 certification, focusing on the effect of Product-related Environmental Regulations on Chemicals (PRERCs) and FDI using the answers to several questions in our Vietnam survey conducted from December 2011 to January 2012. Our findings suggest that PRERCs may help with the improvement in quality control of Vietnamese firms. If Vietnamese manufacturing firms with ISO 9001 certification are more likely to adopt ISO 14001, as well as firms in developed countries, our results indicate that the European chemical regulations may assist in the reduction of various environmental impacts in Vietnam. In addition, we found that FDI promotes the adoption of ISO 9001. If FDI firms in Vietnam certify ISO 14001 after the adoption of ISO 9001, as in the case of Malaysia and the developed economies, FDI firms may also be able to improve environmental performance as a result of ISO 14001.

Theory and empirics of Markusen type multinationals

Research on multinational firms’ activity has been conducted widely since late 1980s. The literature is differentiated into three types: horizontal FDI, vertical FDI, and three-country FDI, represented by export platform FDI. There are other methods of differentiation of the literature by approach, for example, the pure theory approach represented by Krugman and Melitz and the numerical simulation approach represented by Markusen. This paper surveys Markusen type literature by firm type. There is little literature focused on intermediate goods trade, although intermediate goods trade is considered to be strongly related to the production patterns of MNEs. In this paper, we introduce a model to explicitly treat intermediate goods trade and present simulation analysis for empirical estimation.

Allocation efficiency in China : an extension of the dynamic Olley-Pakes productivity decomposition

This paper develops a quantitative measure of allocation efficiency, which is an extension of the dynamic Olley-Pakes productivity decomposition proposed by Melitz and Polanec (2015). The extended measure enables the simultaneous capture of the degree of misallocation within a group and between groups and parallel to capturing the contribution of entering and exiting firms to aggregate productivity growth. This measure empirically assesses the degree of misallocation in China using manufacturing firm-level data from 2004 to 2007. Misallocation among industrial sectors has been found to increase over time, and allocation efficiency within an industry has been found to worsen in industries that use more capital and have firms with relatively higher state-owned market shares. Allocation efficiency among three ownership sectors (state-owned, domestic private, and foreign sectors) tends to improve in industries wherein the market share moves from a less-productive state-owned sector to a more productive private sector.

Heterogeneous firms and cost sharing in China's marketplaces

This study extends Melitz's model with heterogeneous firms by introducing shared fixed costs in a marketplace. It aims to explain heterogeneous firms' choice between traditional marketplaces and modern distribution channels on the basis of their productivities. The results reveal that the co-existence of a traditional marketplace and modern distribution channels improves social welfare. In addition, a deregulation policy for firm entry outside a marketplace and accumulation of human capital are factors that contribute to improve the social welfare.

Definición de un nuevo modelo de negocio sostenible y aplicable a la nueva realidad de negocios y social para la convergencia de operadores de telecomunicación e Internet

La presente tesis analiza la integración del sector de las telecomunicaciones con los de TI y medios que conforman el actual hiper-sector de las TIC, para abordar una propuesta de valor que se plantea a dos niveles. Se expone de un lado, la iniciativa WIMS 2.0, que aborda los aspectos tecnológicos y estratégicos de la convergencia telco e Internet para, posteriormente, definir un nuevo modelo de negocio, que adaptado al nuevo sector integrado y siguiendo paradigmas inéditos como los que plantea la innovación abierta, permita generar nuevos flujos de ingresos en áreas no habituales para los operadores de telecomunicaciones. A lo largo del capítulo 2, el lector encontrará la contextualización del entorno de las comunicaciones de banda ancha desde tres vertientes: los aspectos tecnológicos, los económicos y el mercado actual, todo ello enfocado en una dimensión nacional, europea y mundial. Se establece de esta manera las bases para el desarrollo de los siguientes capítulos al demostrar cómo la penetración de la banda ancha ha potenciado el desarrollo de un nuevo sistema de valor en el sector integrado de las TIC, alrededor del cual surgen propuestas de modelos de negocio originales que se catalogan en una taxonomía propia. En el tercer capítulo se detalla la propuesta de valor de la iniciativa WIMS 2.0, fundada y liderada por el autor de esta tesis. WIMS 2.0, como iniciativa abierta, se dirige a la comunidad como una propuesta de un nuevo ecosistema y como un modelo de referencia integrado sobre el que desplegar servicios convergentes. Adicionalmente, sobre el planteamiento teórico definido se aporta el enfoque práctico que supone el despliegue del modelo de referencia dentro de la arquitectura de un operador como Telefónica. El capítulo 4 muestra el modelo de negocio Innovación 2.0, basado en la innovación abierta con el objetivo de capturar nuevos flujos de ingresos incrementando el portfolio de servicios innovadores gracias a las ideas frescas y brillantes de start-ups. Innovación 2.0 lejos de quedarse en una mera propuesta teórica, muestra sus bondades en el éxito práctico en el mercado que ha validado las hipótesis planteadas. El último capítulo plantea las líneas futuras de investigación tanto en el ámbito de la iniciativa WIMS 2.0 como en el modelo de Innovación 2.0, algunas de las cuales se están comenzando a abordar. 3 Abstract This thesis examines the integration of telecommunications sector with IT and media that make up the current hyper-ICT sector, to address a value proposition that arises at two levels. On one side, WIMS 2.0 initiative, which addresses the technological and strategic aspects of the telco and Internet convergence to later define a new business model, adapted to the new integrated sector and following original paradigms such as those posed by open innovation, which generates new revenue streams in areas not typical for telecom operators. Throughout Chapter 2, the reader will find the contextualization of the broadband communications environment from three aspects: technological, economic and the current market all focused on a national, European and world scale. Thus it establishes the basis for the development of the following chapters by demonstrating how the penetration of broadband has led to the development of a new value system in the integrated sector of the ICT, around which arise proposals of originals business models, which are categorized in a own taxonomy. The third chapter outlines the value proposition of the WIMS 2.0 initiative, founded and led by the author of this thesis. WIMS 2.0, as open initiative, presents to the community a proposal for a new ecosystem and an integrated reference model on which to deploy converged services. Additionally, above the theoretical approach defined, WIMS 2.0 provides the practical approach is provided which is the deployment of the reference model into the architecture of an operator such as Telefónica. Chapter 4 shows the Innovation 2.0 business model, based on open innovation with the goal of capturing new revenue streams by increasing the portfolio of innovative services thanks to the fresh and brilliant ideas from start-ups. Innovation 2.0, far from being a mere theoretical proposition, shows its benefits in the successful deployment in the market, which has validated the hypotheses. The last chapter sets out the future research at both the WIMS 2.0 initiative and Innovation 2.0 model, some of which are beginning to be addressed.