Are production activities sustainable along Global Value Chains? A new article, which considers the empirical evidence on social and environmental sustainability, gives ambiguous results. On the one hand, GVCs can lead to sizeable amounts of carbon leakage, as they allow firms to offshore polluting production activities. On the other hand, GVCs make firms more energy and emission efficient than domestic peers, thus dampening overall emission growth. In terms of social sustainability, GVCs are linked to an income premium for workers and producers alike, although these benefits are not equally distributed.
Do research and development investments in countries with weak Intellectual Property Rights destroy market value? A new article says that a firm’s market value is indeed likely to be negatively affected, but that firms with internal linkage strategies are able to limit local knowledge outflows.
These are just two questions tackled by our researchers in May 2021 — in one book, six book chapters, ten journal articles, and six working papers, among many others. Click here for the full list of our most recent publications.
‘Crisis and Politicisation. The Framing and Re-framing of Europe’s Permanent Crisis’ explores the political process through which certain events come to be framed as constitutive of a moment that requires a decisive intervention. The book shows that crises require a double framing: a situation needs to be identified as one of crisis in the first place and, subsequently, the nature and character of the crisis need to be specified. By examining a wide range of policy areas, the authors demonstrate that framing of crises, i.e., identifying one situation both as a crisis and a crisis of a particular kind, contributes to the politicisation (or depoliticisation) of the process of European integration. By Dr. Michal Natorski et al.
‘Structuralist Contributions to Development Thinking’ reviews the structuralist contributions to thinking about economic growth and development. The chapter begins by tracing the roots of structuralism back to classical economists such as Smith, Ricardo, and Quesnay. The authors analyse the major drivers of structural change. These include technology that changes the structure and composition of demand, productivity trends within sectors and the role of demand and income elasticity. By Prof. Ludovico Alcorta et al.
‘Walls and Fences: A Journey Through History and Economics’ argues that contemporary border fences are built for much of the same set of reasons as ancient walls. Like ancient walls, modern “security walls” are only partially successful in accomplishing their goals. More than ever before, walls today are politically motivated, reflecting signalling behaviour by governments who wish to appear tough on immigration, and serving the interests of defence industries that stand to benefit from the projects. Economic literature overwhelmingly suggests that policies of more open borders, with less restrictive migration and trade, benefit domestic citizens more than walls. Economic policies are also more effective than walls in dealing with illegal trade and trafficking, while diplomacy is more effective than walls in addressing security. The chapter argues that ignoring rational economic thinking over populist politics comes at a price, a loss in well-being. By Prof. Klaus F. Zimmermann et al.
‘Innovation for Inclusive Structural Change’ proposes the foundations of an analytical framework that unpacks the theoretical blocks behind innovation, structural change, and inclusion, and supports testable hypotheses to understand how innovation leads to inclusive or exclusionary structural change in low- and medium-income countries. The authors propose a research agenda to direct innovation toward inclusive structural change, with the aim of responding to the recently increasing demand coming from international institutions, inter-departmental research funds, NGOs, and national ministries, for better knowledge to shape a more effective innovation policy for inclusive development to meet the Sustainable Development Goals (SDGs) in LMICs. By Dr. Tommaso Ciarli et al.
‘Structural Transformations and Cumulative Causation Towards an Evolutionary Micro-foundation of the Kaldorian Growth Model’ examines the evolutionary micro-foundations to Kaldor’s principle of cumulative causation, and stresses the interplay between structural change and economic growth. The study aims to derive the Kaldorian cumulative causation mechanism as an emergent property of the dynamics generated by micro-behaviours. Here the authors define structural change in terms of changes in the organisation and composition of production, income distribution and patterns of consumption. The study investigates whether and how these aspects of structural change affect the long-term patterns of economic growth and technological progress, looking in particular at their inter-linkages and codynamics. By Dr. Tommaso Ciarli et al.
‘Sustainability and Industrial Change: The Hindering Role of Complexity’ shows that the interactions between the populations of consumers, producers and technologies, when product components are interdependent, generate complexity, as a result of which changing consumer preferences may be insufficient to achieve sustainability objectives. Complexity may influence negatively the rate and direction of innovations towards the production of greener goods, causing a vicious cycle. Firms tend to remain stuck in the local optima of the existing technological landscape, if most consumers are satisfied with the non-green characteristics of goods. As a result, firms are less likely to explore innovation possibilities to improve the environmental performance of their products, which in turn reduces consumer expectations with respect to the environmental quality of future goods. As pro-environment consumers also imitate the higher preferences for non-green characteristics, firms have even higher incentives to improve those characteristics in the current technological paradigm than to explore new greener paradigms. The toy model proposed in this chapter can be applied to study the diffusion of ‘green’ products in a number of industries and to study environmental policies that can reduce complexity. By Dr. Tommaso Ciarli et al.
‘FDI, multinationals and structural change in developing countries‘ first reviews the extant knowledge about the relationship between MNE activity and economic development in developing countries and then addresses the relationship between FDI and structural change more directly, in a cross-country context, using a two-step estimation approach that is consistent with both theoretical arguments and previous empirical findings which suggest that the FDI-development nexus is highly country-specific. The results confirm such heterogeneity and suggest that the interaction between the sectoral concentration of FDI and the development stage of the country plays a role in determining the development impact of FDI. By Prof. Rajneesh Narula, Prof. René Belderbos et al.
‘Chinese official finance and political participation in Africa‘ investigates the influence of Chinese official projects on political participation in 54 African countries between 2000 and 2014. The analysis suggests that citizens’ heightened perception of China’s rising influence on the domestic economy and lowered trust in the local government are two channels through which projects might motivate local protests. By Francesco Iacoella, Dr. Bruno Martorano et al.
‘Is production in global value chains (GVCs) sustainable? A review of the empirical evidence on social and environmental sustainability in GVCs’ suggests that the sustainability impacts of GVCs are ambiguous. By allowing firms to specialise through the offshoring of relatively more polluting production activities, GVCs are associated with sizeable amounts of carbon leakage. Insofar as firms expand following entry in foreign markets, environmental impacts may also increase. Yet at the same time, participation in GVCs makes firms more energy and emission efficient than their domestic peers through a variety of mechanisms. Thus, GVCs also contribute to dampening emission growth. In terms of social sustainability, GVCs are associated with an income premium for workers and producers alike, although these benefits are not equally distributed. By PhD fellow Michele Delera.
‘Democracy and COVID-19 Outcomes‘ shows that while the infection rates of COVID-19 appear to be higher for more democratic countries so far, their observed case fatality rates are lower. There is also a negative association between case fatality rates and government attempts to censor media. However, such censorship relates positively to the infection rate. The article suggests that democratic countries may react slowly to the pandemic in the short term but place a higher value on human life and health. By Prof. Klaus F. Zimmermann et al.
‘The organizational choice of technology transfer mode: Theory and application to the genetically modified plant industry’ seeks to identify the determinants of the form of collaboration initiated between an upstream innovator and a downstream producer in order to incorporate a new input and commercialise an innovation consisting of a quality enhanced final product, with an empirical application to the genetically modified (GM) plant industry. The choice of upstream firm between license, joint venture, merger, or a subsidiary is modelled as a function of three parameters: degree of quality improvement engendered by the new input, the market share of the downstream producer, and the capability of the downstream producer to incorporate the new input and commercialise it successfully. By Prof. Shyama V. Ramani et al.
‘Effects of HIV on gender gaps in school attendance of children in Zimbabwe: a non-linear multivariate decomposition analysis’ finds gaps in school attendance between HIV-positive boys and girls and between HIV-negative and positive girls. About 44 per cent of the attendance gap in both cohorts is attributed to differences in observable characteristics. About 56 per cent of this gap is attributed to differences in the effects of these characteristics. The results indicate that HIV mainly affects girls’ school attendance. By PhD fellow Tatenda Zinyemba, Prof. Wim Groot et al.
‘The Impact of Brexit on International Students’ Return Intentions’ studies the causal impact of Brexit on the post-graduation mobility decisions of EU students in the UK. Using data from a survey of graduating international students administered before and after the triggering of Article 50, the authors find that EU students are significantly more likely than non-EU students to plan on leaving the UK upon graduation immediately after the announcement. Results are driven by students from the new EU countries and students from the EU14 countries who do not have firm migration plans. By Prof. Jackline Wahba et al.
‘Do R&D investments in weak IPR countries destroy market value? The role of internal linkages’ examines the consequences of internal linkage strategies for the performance effects of firms’ investments in weak Intellectual Property Rights countries. Based on an analysis of 1763 cross-border R&D investments by 117 leading multinational firms, the authors find that a firm’s market value is negatively affected by new R&D investments in weak IPR countries, but that such a negative influence can indeed be mitigated if the firm’s R&D organization embeds internal linkages. Consistent with this observation, the article demonstrates that firms with an internal linkage strategy are able to limit local knowledge outflows in weak IPR environments. However, if an internal linkage strategy is applied in strong, rather than weak, IPR environments, it bears substantial costs and negatively affects performance. By Prof. René Belderbos, Dr. Jinhyuck (Joseph) Park et al.
‘Does trade participation limit domestic firms’ productivity gains from inward foreign direct investment?’ examines to what extent domestic firms reap differential productivity gains from the presence of manufacturing affiliates of multinational firms in the home country (FDI spillovers), in the context of simultaneous participation in international trade through exporting and importing. FDI spillovers can occur within the industry (horizontal) and across industries due to client (forward) or supplier (backward) linkages of multinational firms, but the mechanisms underlying spillover effects may be attenuated if local firms are less reliant on inputs, clients, and competition in the domestic market. Fixed effects panel analyses on a sample of 4594 domestic Belgian firms during 2000–2007 reveal positive effects from horizontal, backward, and forward FDI spillovers on the productivity levels of domestic firms, as long as these firms do not engage in international trade. Horizontal spillovers from FDI are weaker for firms engaging in trade, while forward FDI spillovers do not benefit importing firms. Two-way traders benefit least from FDI spillovers. Forward and backward spillovers, are enhanced by human capital levels in local firms, while horizontal spillovers are reduced. The findings are broadly consistent with the notion that trade engagement and inward FDI can be substitutes in their effects on domestic firms’ productivity. By Prof. René Belderbos.
‘Whither Geographic Proximity? Bypassing Local R&D Units in Foreign University Collaboration’ hypothesises that the choice between distant and local collaboration systematically relates to the knowledge capabilities of the firms’ R&D units, the characteristics of the focal knowledge, and local knowledge leakage risks. Analysis of close to 13,000 research collaborations with foreign universities by the world’s major biopharmaceutical firms (1995–2015) confirms that collaboration at distance occurs if this allows the firm to benefit from scale and knowledge diversity advantages, if the central unit has strong basic research capabilities, and if collaboration is in a core research domain of the MNC while rival firms are locally present. The maturity of the focal research domain is associated with local collaboration. The findings qualify the common arguments in favour of collaboration in proximity and suggest that (distant) central R&D units are important orchestrators of research collaboration with universities around the globe. By Prof. René Belderbos, Dr. Jojo Jacob et al.
‘The La Marca model revisited: Structuralist goodwin cycles with evolutionary supply side and balance of payments constraints’ investigates the causes of volatility that affect middle-income countries by studying the La Marca model. Drawing from the open-economy Goodwin tradition, this model demonstrates that economic activity, income distribution and accumulation of foreign assets dynamically interact, resulting in a pattern of dampened cycles. By Dr. Danilo Spinola.
Belderbos, René, F. Benoit, S. Edet, G. Ho Lee & M. Riccaboni, 2021, Global Cities’ Cross-Border Innovation Networks, in: Davide Castellani, Alessandra Perri, Antonello Zanfei, and Vittoria G. Scalera (eds), Cross-border Innovation in a Changing World, Oxford University Press, UK
‘Knowledge transfer activities and conditions for impact in Bulgarian public research institutions: A survey-based diagnostic’ explores the nature and development of research competences, engagement in research collaboration, and technology transfer activities at public research institutions in Bulgaria and aims to identify the factors that enable or constrain these activities. The paper shows important gaps in institutional governance linking research with industry demand, misalignments in academic incentives, and constraints related to lack of funding and capacity. The authors highlight the importance of the mobility of researchers as a catalyser of collaborative research and technology transfer linkages in both types of institutions. By Dr. Pluvia Zuniga et al.
‘The effectiveness of innovation policy and the moderating role of market competition: Evidence from Latin American firms’ evaluates whether market competition matters for the effectiveness of innovation policies. Using data for Chilean and Peruvian manufacturing firms, the paper shows that market competition plays a moderating role in the effectiveness of innovation policies to stimulate firm innovation investment. The results suggest that market contexts should be considered in the design of innovation policies. By Dr. Pluvia Zuniga et al.
‘How does market competition affect firm innovation incentives in emerging countries? Evidence from Latin American firms’ presents new empirical evidence about the impact of market competition on firm innovation engagement in Colombian and Chilean manufacturing industries. The paper indicates that market competition increases firm propensity to invest in innovation in manufacturing enterprises and this relationship is linear in Chilean industries while in Colombian industries it takes the form of an inversed-U shape relationship. The impact of competition decreases with the level of sector asymmetry, while the impact of firm distance to the frontier affects firm innovation engagement differently in the two countries. By Dr. Pluvia Zuniga et al.
‘A map of the fractal structure of high-tech dynamics across EU regions’ provides a novel, theoretically driven map of EU regional asymmetries, based on the shares and dynamics of high-tech employment and wages, as well as the structure of inter-regional Input-Output relations at the EU NUTS1 regional level. The paper shows that EU regions present a fractal structure of asymmetries, i.e. the emergence of core-periphery relations at progressively smaller scales, in relation to both spatial and trade dimensions. The authors identify regional clusters labelled ‘consolidated core’, ‘declining core’, ‘emerging cities’, ‘declining peripheries’ and ‘CEE factories’, and show that there are polarising dynamics between driving and follower clusters, drawing implications for EU cohesion policy. By Dr. Tommaso Ciarli et al.
‘Powering structural transformation and productivity gains in Africa: The role of global value chains and resource endowments’ investigates how participation in GVCs affects aggregate labour productivity growth and its two sub-components: within and structural change. The paper further examines how this relationship differs with the extent of a country’s natural resource endowments. The results show that participation in GVCs has a significant positive effect on productivity growth in Africa. This gain is largely through backward participation and is stronger for countries that are further from the productivity frontier. The analysis using the sub-components of productivity growth also shows that GVC participation has a positive and significant effect on productivity growth by inducing an efficient reallocation of resources within sectors (intra-sector reallocation) but not across sectors (inter-sector reallocation). Moreover, these benefits arise mostly in non-resource intensive and non-oil resource-intensive countries. Overall, the results indicate that GVC participation matters for productivity growth in Africa but highlights differences in the channel of impact across countries with different natural resource endowments. By PhD fellow Solomon Owusu.
‘Supporting academic advising through self-directed, blended learning’ argues that helping students sample the experience of upcoming education units can support traditional academic advising and assist students in critical reflection when picking electives. The paper examines how online previews of upcoming courses offered in addition to information and advising supports students in making smart choices. The study indicates that students used the material to test initial plans and assumptions and became more critical in making their track selection. By Dr. Mindel van de Laar, Katerina Triantos and Dr. Lutz Krebs.
The opinions expressed here are the authors’ own; they do not necessarily reflect the views of UNU.
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