I develop a factor content of trade prediction for the Heckscher-Ohlin-Vanek model (HOV) that relates bilateral differences in country endowments to bilateral differences in factor contents. The results are striking. In comparisons of North-South factor contents or factor contents of countries with very different endowments (e.g., with very different capital-labor ratios), there is clear support for an HOV sign prediction. Thus countries with dissimilar endowment ratios also have very different factor content of trade differences as predicted by the HOV model.
Human consumption of freshwater is now approaching or surpassing the rate at which water sources are being naturally replenished in many regions, creating water shortage risks for people and ecosystems. Here we assess the impact of human water uses and their connection to water scarcity and ecological damage across the United States, identify primary causes of river dewatering and explore ways to ameliorate them. We find irrigation of cattle-feed crops to be the greatest consumer of river water in the western United States, implicating beef and dairy consumption as the leading driver of water shortages and fish imperilment in the region. We assess opportunities for alleviating water scarcity by reducing cattle-feed production, finding that temporary, rotational fallowing of irrigated feed crops can markedly reduce water shortage risks and improve ecological sustainability. Long-term water security and river ecosystem health will ultimately require Americans to consume less beef that depends on irrigated feed crops.
T he recent severe drought in key US farming states has focused attention on water issues. While some observers worry primarily about rising food prices in the wake of droughts, others see the drought as evidence that freshwater scarcity is bound to be a major challenge of the twenty-first century. Almost one-fifth of the world's population currently suffers the consequences of water scarcity, and this number is expected to increase (World Water Assessment Programme 2009). Population growth, rising standards of living, and the diet and lifestyle changes they imply will continue to increase the demand for water and strain available water resources. Pollution may also challenge the fresh water that can be used. In addition, discussions of climate change and the implied disruptions of the hydrologic cycle have only heightened concerns about water scarcity. In spite of the reports about an impending water crisis, it is important to realize that major concerns about water availability stem especially from the very uneven global distribution of water. The world as a whole is not running out of water. For one, the hydrologic cycle of evaporation, condensation, and precipitation makes fresh water a finite, but renewable, global resource. In addition, there are enormous quantities of water available, on the order of trillions of gallons of water per capita.1 However, while many countries 1 See Young and Haveman (1985). Even though only a very small fraction of this amount is not salty and accessible, there is more than enough fresh water on earth to satisfy the growing demand, especially since water desalination is always an option, See Gleick (2009) and Richter (2012).
Existing water governance systems are proving to be quite ineffective in managing water scarcity, creating severe risk for many aspects of our societies and economies. Water markets are a relatively new and increasingly popular tool in the fight against growing water scarcity. They make a voluntary exchange possible between interested buyers and sellers of water rights. This paper presents direct evidence from seven water markets around the globe to document key economic and ecological challenges and achievements of water markets with respect to water scarcity. We specifically approach water markets as localized cap-and-trade systems, similar to those for carbon emissions. We examine whether water use remains within the set limits on use of water rights (i.e., under the cap), the degree to which water markets help protect the health of ecosystems and species, and whether (as predicted by economic theory) the explicit pricing of water is accompanied by improving efficiency, as less productive water users decide to sell water to more productive water users.
With a firm-level data set, we study the location decision of South Korean multinationals across China's regions. Our conditional logit estimates confirm agglomeration effects along industry and along national lines. We add an upstream and downstream (backward and forward) linkage effect. We find that the presence of upstream and downstream South Korean affiliates significantly increases the likelihood that a South Korean multinational invests in a particular region. However, linkages that do not differentiate by nationality do not seem to matter much. As such, our analysis of investors' location choice brings together two perspectives: linkages and agglomeration along national lines. JEL classification: F21, F23, R12Agglomération, liens en amont et liens en aval : résultats pour l'investissement sud coréen en Chine. A partir d'une base de données au niveau de l'entreprise, onétudie la localisation de firmes plurinationales sud-coréennes dans les régions de la Chine. Les résultats d'une analyse de type logit confirment qu'il existe des effets d'agglomération tant dans l'axe industriel que national. Quand on ajoute les effets en amont et en aval, on découvre que la présence d'affiliés sud-coréens en amont et en aval accroît de manière significative la probabilité qu'une firme plurinationale sud-coréenne investisse dans une région particulière. Cependant les liens qui ne discriminent pas selon l'axe de la nationalité ne semblent pas avoir grande importance. L'analyse des décisions de localisation d'investissement synthétise deux perspectives : liens et agglomération selon l'axe de la nationalité.
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