Download Free Essays On Firm Dynamics Endogenous Growth And International Trade Book in PDF and EPUB Free Download. You can read online Essays On Firm Dynamics Endogenous Growth And International Trade and write the review.

Recent empirical firm level studies reveal the structural heterogeneity of firms in process and product innovation, as well as the central role of product quality in determining world trade patterns and intensities. This calls for a better understanding of the link between firm heterogeneity and the innovation and export decisions of firms which are at the base of productivity growth and, hence, economic growth and development. My dissertation contributes to this debate focusing on the supply side. I propose a novel way to model the production technology of firms by introducing two attributes of firm heterogeneity: cost efficiency and product quality. The goal of the first thesis chapter is to study the effects of process and product innovation on firm dynamics, productivity and endogenous long run growth. In the second chapter an open economy framework with trade between symmetric countries is analyzed. Here the focus is on quantifying the impact of trade as well as trade liberalization on firm innovation dynamics and productivity- and aggregate growth. The third chapter abstracts from endogenous growth and examines the role of the two attributes of firm heterogeneity in shaping the trade patterns and intensities within and across developed and developing countries.
"This dissertation consists of essays studying how macroeconomic outcomes, particularly aggregate productivity growth, are affected by the change in market environment or market frictions in the presence of heterogeneous firms from an international perspective. Each chapter employs both empirical and quantitative macroeconomic methods. The first chapter studies how globalization contributes to uneven firm growth and its implications for industrial concentration and productivity growth in OECD countries. I document new facts showing that industry leaders grow faster in sales and patenting than followers, particularly in industries with increasing export intensities; sales divergence is mainly driven by exports rather than domestic sales. To rationalize these facts, I develop a two-country endogenous growth model with strategic domestic and international competition and an 'innovation disadvantage of backwardness' that captures how firms innovate less when left behind. Globalization, modelled as decreasing trade iceberg costs and increasing international knowledge spillovers, triggers a stronger innovation response among leaders than followers via the market size effect, inducing an increase in domestic concentration that depresses firm innovation via weaker domestic competition: followers and leaders reduce innovation due to the innovation dis-advantage of backwardness and decreasing returns to innovation, respectively. The globalization-induced harsher foreign competition also reduces innovation via lower profits. In the calibrated model, globalization explains 80% of the rise in industrial concentration and 50% of the productivity growth slowdown in the data, mainly due to weaker domestic competition. The increasing international knowledge spillover force of globalization dominates. The second chapter studies how the less-developed financial market in Southern European countries contributes to their slower aggregate productivity growth than developed European countries since the information and communications technology revolution. I document that Southern European firms have lower productivity growth, lower intangible capital growth, and lower leverage than developed European firms. The disparity is larger among smaller firms. To rationalize these findings, I build a model featuring endogenous firm productivity growth through innovation investment and size-dependent financial frictions. Financial frictions lower productivity growth via two channels: innovation investment and misallocation. The model finds that financial frictions account for at least 11% of the aggregate productivity growth difference in the data, mainly via the innovation investment channel. The model also highlights that fast capital and output growth may coexist with slow productivity growth due to firms' tradeoffs in allocating a constrained amount of investment between capital and productivity."--Pages viii-ix.
Economic Theory, Dynamics, and Markets. The collection of essays in honor of Ryuzo Sato, written by his colleagues and students, covers the many fields of economic theory and policy to which he has contributed. The first section pays tribute to his contributions to mathematical economics and economic theory. Ryuzo Sato is known for his work in growth theory and technical progress, and the second section has a number of papers on macroeconomics and dynamics. The third section has a number of papers on financial markets and their functioning in Japan and the United States. The next section examines various aspects of the economics of firms and industry. Ryuzo Sato has been very involved in analyzing the economic and business relations between Japan and the United States, and the last section is devoted to comparative analysis of economic systems.
As firms increasingly rely on knowledge as a key factor for innovation, the ability to innovate is increasingly perceived as a key asset for being competitive in international markets. This new volume argues that innovation, knowledge and internationalisation should be viewed as tightly related concepts. It provides a stimulating and comprehensive framework for understanding key tendencies in modern economics, as well as an overview of the state of the art in the three fields covered. The first section explores in detail the relationship between knowledge and the innovative capability of firms, focussing on key topics such as social capital, intentional knowledge diffusion and unintentional knowledge spillovers. Section two examines the drivers and the impact of innovation strategies, assessing the role of technological advantage, networking and R & D investments in innovation, as well as the impact on innovation on the labour market. The third and final section examines the ongoing internationalisation process faced by ‘global’ economies. The topics explored in each section are tightly linked, ensuring that a strong thematic thread runs through the collection.
In this dissertation, I focus on studying three questions about international trade including the interactions between trade and immigration, how trade liberalization influences skill upgrading decisions and the linkages between health investment and trade openness. In the first chapter, I develop a two-country dynamic stochastic general equilibrium model featuring endogenous firm entry, heterogeneous firms and endogenous labor migration to study whether trade and immigration are substitutes or complements and investigate the macroeconomic consequences of low barriers to labor mobility with emphasizing the roles of the extensive margins of production and trade in shaping immigration dynamics. First, the model predicts that trade and immigration potentially act as substitutes, which is consistent with the derivation from the Heckscher-Ohlin model of trade. Second, high-skilled labor migration makes the labor-sending country worse off due to less output and firm entry, and changes in migration costs create asymmetric welfare effects on high-skilled and low-skilled households. Third, the firm entry channel provides new insights into immigration dynamics: (i) more firm establishments demand more immigrants, and (ii) inflows of immigrants induce firm entry and result in higher labor costs in the long run. The second chapter is a joint work with Castiel Chen Zhuang and Qiliang Chen. We observe that India’s average applied effective tariff declines by about 15 percentage points and exports to the Indian market by Chinese manufacturing firms increase a lot from 2004 to 2007, but the change in the average tariff in the rest of the world is nearly zero during the same period. Motivated by this fact, we examine the impact of an Asian trade agreement, APTA, on skill upgrading by Chinese manufacturers. First, we develop a general equilibrium model of trade with heterogeneous firms and endogenous export and employee training decisions to explain firm performance following trade liberalization. Second, we test the theoretical model based on general difference-in-differences estimations, showing that firms facing higher reductions in India’s tariffs increase investment in on-the-job training faster. The effects of trade openness on export participation and training spending of firms are the largest in the middle range of productivity, which is consistent to our model prediction. In the third chapter, my co-author, Qiliang Chen, and I study the interactive effects of trade openness and health investment. There is a positive correlation between trade and health outcomes, and increased exports or imports encourage more healthcare spending. However, there are only few theoretical studies addressing the questions that if trade integration is good for health and if health improvement encourages more trade. We develop a two- country dynamic stochastic general equilibrium model with heterogeneous firms, health capital accumulation and endogenous firm entry and labor supply to analyze what channels affect the interconnection between trade and health. Three main results emerge. First, there is positive association between trade openness and health investment. An increase in health investment boosts both the number of exporters and export values as health improvement stimulates economic growth and increases income. Trade openness increases healthcare spending and the stock of health capital because of the income and product variety effects. Second, the dynamic impacts of changes in aggregate productivity on key variables could be underestimated if workers’ health status and health investment decisions are neglected. Third, health investment could crowd out physical capital investment and new firm entrants.
The book’s 30 chapters are divided into three sections – international trade, economic development, macroeconomics and finance – and focus on the frontier issues in each. Section I addresses analytical issues relating to trade-environment linkage, capital accumulation for pollution abatement, possibility of technology diffusion by multinational corporations, nature of innovation inducing tariff protection, effects of import restriction and child labour, the links between exchange rate, direction of trade and financial crisis—the implications for India and global economic crisis, financial institutions and global capital flows and balance of payments imbalances. Section II consists of discussions on the causes of widespread poverty persisting in South Asia, development dividend associated with peace in South Asia, issues of well-being and human development, implications for endogenous growth through human capital accumulation on environmental quality and taxation, the rationale for a labour supply schedule for the poor, switching as an investment strategy, the role of government and strategic interaction in the presence of information asymmetry, government’s role in controlling food inflation, inter-state variations in levels and growth of industry in India, structural breaks in India’s service sector development, and the phenomenon of wasted votes in India’s parliamentary elections. Section III deals with the effectiveness of monetary policy in tackling economic crisis, the effective demand model of corporate leverages and recession, the empirical link between stock market development and economic growth in cross-country experience in Asia, an empirical verification of the Mckinnon-Shaw hypothesis for financial development in India, the dynamics of the behaviour of the Indian stock market, efficiency of non-life insurance companies, econometric study of the causal linkage between FDI and current account balance in India and the implications of contagious crises for the Indian economy.
This ground-breaking new book builds upon the Schumpeterian creative response. The author shows that firms, in out-of-equilibrium conditions, try and react by means of introducing innovations. The success of their reaction is contingent upon their access conditions to knowledge, which are shaped by the system in which they operate. The emergence of new innovations can, in turn, knock firms further out-of-equilibrium and cause changes in the system properties that govern their access to external knowledge. This path dependent loop of interactions between the system properties and the individual actions of firms, accounts for endogenous innovation and the dynamics of the system.
Economic and social progress requires a diverse ecosystem of firms that play complementary roles. Making It Big: Why Developing Countries Need More Large Firms constitutes one of the most up-to-date assessments of how large firms are created in low- and middle-income countries and their role in development. It argues that large firms advance a range of development objectives in ways that other firms do not: large firms are more likely to innovate, export, and offer training and are more likely to adopt international standards of quality, among other contributions. Their particularities are closely associated with productivity advantages and translate into improved outcomes not only for their owners but also for their workers and for smaller enterprises in their value chains. The challenge for economic development, however, is that production does not reach economic scale in low- and middle-income countries. Why are large firms scarcer in developing countries? Drawing on a rare set of data from public and private sources, as well as proprietary data from the International Finance Corporation and case studies, this book shows that large firms are often born large—or with the attributes of largeness. In other words, what is distinct about them is often in place from day one of their operations. To fill the “missing top†? of the firm-size distribution with additional large firms, governments should support the creation of such firms by opening markets to greater competition. In low-income countries, this objective can be achieved through simple policy reorientation, such as breaking oligopolies, removing unnecessary restrictions to international trade and investment, and establishing strong rules to prevent the abuse of market power. Governments should also strive to ensure that private actors have the skills, technology, intelligence, infrastructure, and finance they need to create large ventures. Additionally, they should actively work to spread the benefits from production at scale across the largest possible number of market participants. This book seeks to bring frontier thinking and evidence on the role and origins of large firms to a wide range of readers, including academics, development practitioners and policy makers.