Whereas there is substantial evidence that economic freedom generates positive growth effects, much less is known about how social values impact the institutional framework underlying economic freedom. We address this gap in the literature, using panel data for a heterogeneous group of countries for the period 1980-2010 to examine whether post materialism influences the growth effect of economic freedom. Using instrumental variable estimation techniques within a three stages least square framework, we find that Fraser’s economic freedom index and several of its components generate positive direct growth effects. Post materialism generates a negative direct growth effect. We also identify a positive indirect effect from post materialism that runs via economic freedom and its underlying components onto economic growth. These findings indicate that post materialism influences the institutional framework underlying economic freedom and that economic freedom acts as a transmission channel of economic effects of social values.
Recent empirical research on externalities from foreign direct investment (FDI) is engaged with the identification of externalities along the dimensions of industry and geographical space. In this paper I explore these externality dimensions in the context of estimating FDI externalities in regional Mexican manufacturing industries. The main findings indicate that the presence of FDI creates a variety of externality effects. Intraregional foreign participation creates negative intraindustry and positive interindustry externalities. Furthermore, the estimations identify negative intraindustry externalities across regions and positive spatial interindustry FDI externalities. In addition, the estimations identify three different regional characteristics that have a negative or positive effect on spatial externalities from FDI.
Brazil is an upper middle income economy, with a GDP per capita of close to 12,000 (constant) dollars in 2014. Nonetheless, Brazil has a significant amount of people living under poverty. 7.6% of the population was poor in 2014 (Poverty headcount ratio at $3.10 a day, 2011 PPP), making Brazil one of the most unequal countries in the world. Concomitantly, Brazil's different regions and states are highly heterogeneous with respect to income levels, inequality, and prevalence of poverty. Moreover, in the last past decades, the dispersion of inequality between states has increased. This paper shows that Brazilian states are also heterogenous in terms of economic complexity; and analyzes how economic complexity affects income inequality. To test the relationship between economic complexity and income inequality we employ panel data analysis for the 27 Brazilian states over the period 2002-2014. Our main proposition is that economic complexity affects regional wage differentials in a nonlinear way. Our findings confirm this proposition and point to an inverted U-shaped relationship, whereby higher economic complexity is initially associated with higher, and subsequently lower, inequality levels.
In this chapter we use firm-level data from the Greek manufacturing sector to identify how three features of economic geography – spatial heterogeneity, spatial proximity and spatial concentration – influence the size and sign of intra- and inter-industry FDI spillovers. We find that FDI spillovers predominantly materialise at the sub-national level, with horizontal spillovers being more prominent at the regional level and vertical spillovers being highly localised. Furthermore, we find important synergies between spillovers from FDI and industry- and region-specific agglomeration. Also, our findings show that FDI spillovers are conditional on regional characteristics related to a region’s manufacturing base, FDI concentration, urban agglomeration and aggregate productivity. These results highlight the important role played by geography for the materialisation of FDI productivity spillovers and suggest that these key geographical features ought to be taken into account both in the study of FDI spillovers and in the design of FDI-promotion and regional development policies.
The motivation for this paper is to inform the selection of future policy directions for tackling HIV/AIDS in Russia. The Russian Federation has more people living with HIV/AIDS than any other country in Europe, and nearly 70% of the known infections in Eastern Europe and Central Asia. The epidemic is particularly young, with 80% of those infected aged less than thirty, and no Russian region has escaped the detection of infections. However, measures to address the epidemic in Russia have been hampered by late recognition of the scale of the problem, poor data on HIV prevalence, potentially counterproductive narcotics legislation, and competing health priorities. An additional complication has been the relative lack of research into the spatial heterogeneity of the Russian HIV/AIDS epidemic, investigating the variety of prevalence rates in the constituent regions and questioning assumptions about the links between the epidemic and the circumstances of post-Soviet transformation. In the light of these recent developments, this paper presents research into the determinants of regional HIV prevalence levels in Russia. Statistical empirical research on HIV and other infectious diseases has identified a variety of factors that influence the spread and development of these diseases. In our empirical analysis of determinants of HIV prevalence in Russia at the regional level, we identify factors that are statistically related to the level of HIV prevalence in Russian regions, and obtain some indication of the relative importance of these factors. We estimate an empirical model that includes factors which describe economic and socio-cultural characteristics. Our analysis statistically identifies four main factors that influence HIV prevalence in Russian regions. Given the different nature of the factors that we identify to be of importance, we conclude that successful HIV intervention policies will need to be multidisciplinary in nature. Finally, we stress that further research is needed to obtain a better understanding of the statistical relations that we have identified; our empirical findings can serve as an important guide in these future research efforts, as they indicate which processes play an important role in regional HIV/AIDS prevalence rates in contemporary Russia.
In this paper, I present novel microeconomic evidence on the effects of firm heterogeneity on the creation and impact of technology transfers from foreign direct investment (FDI) to local suppliers in a developing country setting. The main findings are threefold. First, FDI firms are significantly more involved in knowledge transfer activities than domestic producer firms. In particular, FDI firms offer more technological support, support with a direct positive impact on production processes of local suppliers. Second, the type of ownership also influences the effect of the technology gap on technology transfers. A large technology gap between a producer firm and its suppliers lowers the provision of support; however, FDI firms offer more technological support to their suppliers of material inputs when the technology gap is large. Independent of the support that the suppliers receive, foreign ownership of client firms and a large technology gap make it more likely that suppliers experience large positive impacts. Third, the level of absorptive capacity of local suppliers is also important for the impact of the technology transfers, confirming the notion that heterogeneity among both producer firms and local suppliers affect the level, nature and impact of local technology transfers.
Recent research on productivity spillovers from affiliates of multinational corporations in developing and emerging economies finds that backward linkages from affiliates of foreign-owned firms to local suppliers constitute the main channel transmitting productivity spillovers. This finding has important policy implications, given that host economy governments often spend considerable resources on attracting multinational corporation investments and promoting their impact on technological development and economic growth. This paper conducts a new and comprehensive survey of recent empirical studies that focus on the drivers and impacts of backward linkages between multinational corporation affiliates and their local suppliers. The literature survey reveals that several characteristics of multinational corporation affiliates and domestic firms, host economy conditions, and various mediating factors influence the level of use of local suppliers, the nature and degree of technology dissemination, and the materialization of productivity spillovers among domestic firms. These findings are used to identify the main areas where policy making can be effective. The paper discusses various types of soft or light-handed industrial policies that host economy governments can design and implement to foster the extent of linkages between multinational corporations and local suppliers, facilitate technology dissemination, and enhance productivity spillovers among domestic firms.
I present novel direct evidence on the static and dynamic impact of producer firms on local suppliers based on several firm level surveys that I conducted among producer firms and suppliers in Nuevo León, Mexico. I find that the level of use of suppliers does not differ between foreign direct investment (FDI) and Mexican producer firms. Next, I find substantial evidence that FDI firms generate a larger local dynamic impact; foreign-owned firms apply more pressure on their suppliers to improve and are also significantly more involved in the provision of several types of technological and organisational support. In extension of these findings, I use multivariate analysis to identify characteristics of suppliers and supply linkages that influence the dynamic impact among suppliers. I find that the level of absorptive capacity of suppliers, the size of the technology gap between producer firms and suppliers, and the provision of support by producer firms all enhance the likelihood that suppliers experience a large positive dynamic impact. Importantly, even when I control for the effects of these factors, suppliers of FDI firms are still significantly more likely to experience a large positive impact.
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