The literature on firm heterogeneity and trade has highlighted that most\ud trading firms tend to engage in both importing and exporting activities. This paper provides some evidence that helps understanding to what extent this is the result of a two-way relationship. Using firm-level data for a group of 27 Eastern European and\ud Central Asian countries from the World Bank Business Environment and Enterprise Performance Survey (BEEPS) over the period 2002–2008, we estimate a bivariate probit model of exporting and importing. After controlling for size (and other firm-level\ud characteristics) we find that firms’ exporting activity does not increase the probability of importing, while the latter has a positive effect on foreign sales. This effect is mainly channeled through an increase in firm productivity and product innovation

The aim of the article is to verify whether trade and inward foreign\ud direct investments (FDI) may affect income distribution in a sample of\ud 17 Transition Countries (TCs) over the period 1990–2006. In line with\ud most of the previous literature, FDI do not have significant effects on\ud income inequalities, whereas trade, especially when occurs with developed countries, seems to be more relevant. Different results are found when we take into consideration the educational system which represents an important channel through which FDI and trade may affect inequality

The aim of this paper is to investigate the effect of environmental regulatory stringency on innovation and productivity using a panel of 8 European countries for 13 manufacturing sectors over the years 2001–2007. This research topic falls under the heading of the Porter hypothesis (PH) of which different versions have been tested. We consider both the strong and the weak versions of the PH, while also adding some peculiar features to the analysis. Firstly, we assess the role played by environmental taxes, that is an instrument rarely tested as a factor which can support the PH. Secondly, we analyse not only the effect of environmental taxes within a given sector (within-sector), but also the role played by environmental taxes in upstream and downstream sectors in terms of input–output relationships. Thirdly, we test these relationships also ‘indirectly’ by verifying whether innovation is one of the channels through which higher sectoral productivity can be achieved by imposing tighter environmental regulations. Our main findings suggest that downstream stringency is the most relevant driver of innovation and productivity while within-sector regulations only affect productivity but not innovation. Moreover, the effect of regulations on productivity is mostly direct, while the part of the effect mediated by induced innovations, as measured by patents, is relevant only for what concerns downstream regulations

In this work it is contended the idea that, even though FDI has been at the center of the analysis for a long time, economic literature has not still adopted a unified framework for the investigation of the issue at stake. Indeed, despite some important exceptions, above all Dunning (1993), motivations have been highly disregarded from the current analysis. We put forward the idea that motives underlying what we have called a "cherry picking" activity must be considered essential cause they shape and direct the different alternatives available to the firm. Moreover, a well structured motive-based taxonomy concerning FDI decision is presented, composed by three main parts: (i) resource seeking, (ii) market seeking and (iii) non-marketable asset seeking. Finally, the effects of a set of factors on FDI decision are taken into account. We start by pointing out that empirical literature has found seemingly contradictory results on the effects of several variables on inward/outward FDI decisions. Indeed, it is shown that useful insights can be drawn from our taxonomy taking a closer look at the empirical literature dealing with factors affecting FDI decision.

We consider the role played by the European Union's Emissions Trading System (EU ETS) as a possible driver of outward foreign direct investment (FDI) for Italian manufacturing firms. Using a panel dataset of about 22,000 firms covering the first two phases of the EU ETS and the period before the EU ETS, we measure the patterns of FDI towards countries not covered by the EU ETS. The results show that the EU ETS had a weak effect on the number of new subsidiaries abroad (extensive margin), while it had a larger impact on production taking place in foreign subsidiaries (intensive margin), especially in trade‐intensive sectors.

No abstract

In this paper, we assess whether attracting higher amounts of FDI induces a greater level of economic complexity in a country. Using a panel of 117 countries and 22 years, from 1995 to 2016, we test for the causal relationship between inward FDI and economic complexity using a panel Granger causality approach. We also estimate the short-run relationship between these two factors using a panel vector autoregressive model and an impulse response function approach. We find that accumulating a higher stock of inward FDI per capita Granger-causes a greater economic complexity in a country, and not vice versa. This causal effect is very small, however, and occurs only in countries with above average levels of GDP per capita, tertiary education, tertiarization or financial development. Looking at the FDI entry mode, we find that only greenfield FDIs Granger-cause economic complexity in developed countries, whereas mergers and acquisitions have no such effect. Finally, we find that knowledge-intensive greenfield projects are the only form of inward FDI that Granger-cause complexity in a less developed country, but the estimated effect is near zero and disappears after two years.

We study the role of upstream product market regulation (PMR) in innovation efficiency. By estimating a knowledge production function on OECD industries through a stochastic frontier analysis, we find that service regulation reduces R&D efficiency in the manufacturing sector. These results are robust to controlling for the institutional setting of the technology, the labour and the financial market, and to various forms of heterogeneity. The marginal impact of PMR is higher in less regulated economies indicating that large improvements in R&D efficiency cannot be obtained at the earlier stages of deregulation. Potential efficiency gains for late reformers are however sizeable