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Market Structure and Integration - Essays on Trade, Specialisation and Foreign Direct Investment

Olofsdotter, Karin LU (1999) In Lund Economic Studies 85.
Abstract (Swedish)
Popular Abstract in Swedish

Avhandlingen studerar olika aspekter av internationell ekonomi knutna till utländska direktinvesteringar, produktionsmönster och handelsflöden. Dessa behandlas i ljuset av en globalt tilltagande internationalisering såväl som fördjupad ekonomisk integration på regional nivå. I kapitel två studeras effekten av utländska direktinvesteringar av multinationella företag på värdländers ekonomiska utveckling och tillväxt. För att kunna dra nytta av den kunskap som direktinvesteringar för med sig betonas vissa institutionella faktorer i värdländerna såsom väldefinierade äganderätter och en välfungerande byråkrati. Kapitel tre modellerar effekterna av regional integration på såväl medlemsländers som... (More)
Popular Abstract in Swedish

Avhandlingen studerar olika aspekter av internationell ekonomi knutna till utländska direktinvesteringar, produktionsmönster och handelsflöden. Dessa behandlas i ljuset av en globalt tilltagande internationalisering såväl som fördjupad ekonomisk integration på regional nivå. I kapitel två studeras effekten av utländska direktinvesteringar av multinationella företag på värdländers ekonomiska utveckling och tillväxt. För att kunna dra nytta av den kunskap som direktinvesteringar för med sig betonas vissa institutionella faktorer i värdländerna såsom väldefinierade äganderätter och en välfungerande byråkrati. Kapitel tre modellerar effekterna av regional integration på såväl medlemsländers som utomstående länders välfärd. Analysen tar hänsyn till integration mellan länder av olika storlek och jämför effekterna av bildandet av tullunioner (tex EU) och frihandelsområden (tex NAFTA, EFTA). Slutsatsen är att regional integration ökar medlemsländernas välfärd men leder till lägre välfärd i länder utanför integrationsområdet. Dock är de negativa effekterna för utomstående förmodligen mindre av frihandelsområden. I kapitel fyra, slutligen, analyserars hur stordriftsfördelar i produktion påverkar handelsflöden och länders produktionstruktur. Studien finner stöd för hypotesen att större länder är bättre på att utnyttja stordriftsfördelar än små länder. Stordriftsfördelarnas roll verkar dock avta över tiden vilket kan bero på införandet av nya, mer flexibla teknologier. (Less)
Abstract
The study analyses various aspects of international economics related to foreign direct investment, trade and specialisation. These issues are considered in view of the increased internationalisation - through trade and foreign direct investment - in recent decades. Special interest is devoted to the effects of economic integration. Chapter two examines the importance of FDI and country capabilities for economic growth. In a cross-country analysis, FDI is allowed to interact with openness, human capital, property rights protection and the efficiency of the bureaucracy. The results suggest that countries that have experienced an increase in their stock of FDI also have higher growth rates. Moreover, countries with an efficient bureaucracy... (More)
The study analyses various aspects of international economics related to foreign direct investment, trade and specialisation. These issues are considered in view of the increased internationalisation - through trade and foreign direct investment - in recent decades. Special interest is devoted to the effects of economic integration. Chapter two examines the importance of FDI and country capabilities for economic growth. In a cross-country analysis, FDI is allowed to interact with openness, human capital, property rights protection and the efficiency of the bureaucracy. The results suggest that countries that have experienced an increase in their stock of FDI also have higher growth rates. Moreover, countries with an efficient bureaucracy and sufficient level of property rights protection are more likely to benefit from a given amount of FDI. On the other hand, we find no support for the results in previous studies emphasising the importance of openness and human capital. In chapter three, the welfare effects of regional and global integration are analysed in a model where market size matters. Regional integration leads to higher welfare in the countries of a preferential trading arrangement (PTA), but to lower welfare outside. In case the countries also decide to form a customs union (CU), both countries will experience further gains if the creation of the CU means that the average external trade barriers are raised. The outside country will in this case experience further welfare losses. If it retaliates and creates a trade war, this will lower welfare in all three countries. In contrast, global integration will, in most cases, benefit both PTA and outside countries. Finally, chapter four investigates the empirical importance of increasing returns to scale (IRS) as a determinant of specialisation and international trade. In contrast to earlier studies, this paper focuses on how the impact of IRS varies over time and across industries. We test the hypothesis that the impact of scale economies is determined by the relative market size of the trading countries, using data on production and trade in 17 OECD countries over the period 1970-93. We find support in favour of the hypothesis that economies of scale have a significant effect on trade patterns, specifically a positive effect on net exports from large countries and a negative effect in small countries. Furthermore, the results indicate that the role of scale economies is declining over time. Finally, the importance of IRS as a determinant of trade differs widely across industries and the results suggest that scale economies, to some extent, have a larger effect on trade in industries at a medium technology level. (Less)
Please use this url to cite or link to this publication:
author
opponent
  • Professor Haaland, Jan I, Norwegian School of Economics
organization
publishing date
type
Thesis
publication status
published
subject
keywords
econometrics, Economics, Economic Integration, Market Size, Scale Economies, Welfare, Specialisation, Country Capabilities, Trade, Economic Growth, Foreign Direct Investment, economic theory, economic systems, economic policy, Nationalekonomi, ekonometri, ekonomisk teori, ekonomiska system, ekonomisk politik
in
Lund Economic Studies
volume
85
pages
126 pages
publisher
Department of Economics, Lund Universtiy
defense location
Craafordsalen, Holger Craafords Ekonomicentrum
defense date
1999-11-12 14:00
ISSN
0460-0029
language
English
LU publication?
yes
id
88e82a58-e288-44a7-9c02-1873d1470cc4 (old id 39984)
date added to LUP
2007-08-01 08:23:20
date last changed
2016-09-19 08:44:57
@phdthesis{88e82a58-e288-44a7-9c02-1873d1470cc4,
  abstract     = {The study analyses various aspects of international economics related to foreign direct investment, trade and specialisation. These issues are considered in view of the increased internationalisation - through trade and foreign direct investment - in recent decades. Special interest is devoted to the effects of economic integration. Chapter two examines the importance of FDI and country capabilities for economic growth. In a cross-country analysis, FDI is allowed to interact with openness, human capital, property rights protection and the efficiency of the bureaucracy. The results suggest that countries that have experienced an increase in their stock of FDI also have higher growth rates. Moreover, countries with an efficient bureaucracy and sufficient level of property rights protection are more likely to benefit from a given amount of FDI. On the other hand, we find no support for the results in previous studies emphasising the importance of openness and human capital. In chapter three, the welfare effects of regional and global integration are analysed in a model where market size matters. Regional integration leads to higher welfare in the countries of a preferential trading arrangement (PTA), but to lower welfare outside. In case the countries also decide to form a customs union (CU), both countries will experience further gains if the creation of the CU means that the average external trade barriers are raised. The outside country will in this case experience further welfare losses. If it retaliates and creates a trade war, this will lower welfare in all three countries. In contrast, global integration will, in most cases, benefit both PTA and outside countries. Finally, chapter four investigates the empirical importance of increasing returns to scale (IRS) as a determinant of specialisation and international trade. In contrast to earlier studies, this paper focuses on how the impact of IRS varies over time and across industries. We test the hypothesis that the impact of scale economies is determined by the relative market size of the trading countries, using data on production and trade in 17 OECD countries over the period 1970-93. We find support in favour of the hypothesis that economies of scale have a significant effect on trade patterns, specifically a positive effect on net exports from large countries and a negative effect in small countries. Furthermore, the results indicate that the role of scale economies is declining over time. Finally, the importance of IRS as a determinant of trade differs widely across industries and the results suggest that scale economies, to some extent, have a larger effect on trade in industries at a medium technology level.},
  author       = {Olofsdotter, Karin},
  issn         = {0460-0029},
  keyword      = {econometrics,Economics,Economic Integration,Market Size,Scale Economies,Welfare,Specialisation,Country Capabilities,Trade,Economic Growth,Foreign Direct Investment,economic theory,economic systems,economic policy,Nationalekonomi,ekonometri,ekonomisk teori,ekonomiska system,ekonomisk politik},
  language     = {eng},
  pages        = {126},
  publisher    = {Department of Economics, Lund Universtiy},
  school       = {Lund University},
  series       = {Lund Economic Studies},
  title        = {Market Structure and Integration - Essays on Trade, Specialisation and Foreign Direct Investment},
  volume       = {85},
  year         = {1999},
}