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FATS

A statistical set about MNEs to analyse relations between BoP & Growth. FATS. Frédéric Boccara Insee, IDHE-CNRS. I. Method issues II. The size of the delocation phenomenon III. A new phases : Informational Revolution IV. Costs and Factors V. Economic Theory VI. Economic Policy.

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FATS

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  1. A statistical set about MNEs to analyse relations between BoP & Growth FATS Frédéric Boccara Insee, IDHE-CNRS

  2. I.Method issues II. The size of the delocation phenomenon III. A new phases : Informational Revolution IV. Costs and Factors V. Economic Theory VI. Economic Policy

  3. Method • Delocation: suppression of an activity in one place & displacement in another place • Relative delocation (e.g. IBM-Infineon) • Less and more than FDI • FATS ==> a focalisation on MNEs

  4. Size of the phenomenon: Output (sales)

  5. Size of the phenomenon: Countries Outward Sales 1995-2002: Contribution to the total change

  6. Comparison Sales/Jobs/FDI/Trade

  7. Employment (1)

  8. Employment (2) Descriptive « rough » estimation

  9. Causes and Factors • New phases ? -> services • Importance of North / North ==> not only factor proportions • Look to MNEs theories • Empirical look to costs

  10. New phases and services: informational revolution (IR) • Hand/MachineTool -> Brain/Information Machines • Transversal to industries • Sharing potential • Distance control possibilities • Key role of human capabilities, and expanses -> Taken by a reinforced role of financial assets

  11. Some recent theories of MNEs • (antecedents: Leontief paradox, Vernon, IDPP) • Dunning: eclectic paradigm (OLI, specific K) • Brainard: complementarity N/S, substit S/S -> fixed cost at MNE level • Krugman: agglomeration effects • Markusen: specific K --> knowledge based, R&D

  12. Interpretation Central role of IR • sharing of informational results • access to informational resources R&D and Human resources expanses ==> quid other costs than wages ? Key role of MNEs • as a sharing private perimeter (contradictory) take the enterprise group level (financial links) ==> affiliates and parent companies • as a financial network • global financing capacity & « domestic » (parent) cost

  13. Costs : three hypothesis • To relativise wage costs • Fixed global cost • Global finance mobilising/parent cost ==> • see also « capital costs » • take costs at the MNE level

  14. Costs: definitions and notions • Capital costs: aK • labour costs: bL • Intermediate input costs: cCI labour cost of affiliate (bLO) ==> (cCI)D for parent • aK  Domestic: (aK)D ; Outward: (aK)O etc. ==> (aK)D >> (aK)O & cCIMNEs < others

  15. Costs: method • Compare Parent Company costs/Sales to • Other resident Company costs/Sales (companies without Affiliates abroad) ==>  Parent Cost to Total Cost • Mean of Z ratio, by type j, given the size k, the industry l

  16. Costs: Average Costs of firms (2001)

  17. Interpretative Scheme  Process of located Activities Localised Activities Located Results  Globalisation of Results and Resources Feedback  (re/de)Location of Activities New Globalisable Resources Internal Resources of national economies leverage

  18. Economic Theory MNEs as institutions • associating Transfers and Trade • of international co-operative production • association Transfers, Trade and Production  need to be treated not apart of « Trade Theory »

  19. Economic theory (2) • HOS results (gain, ..) to be revisited with possibility of transfers by productive and trading agents • FDI  Trade ==> not WTO, but Central Banks fundamentally concerned by MNEs (transfers, financial activity supervision) • RI & Employment role : (i) New bias (ii) Advances

  20. Economic Policy • Employment policy goal to be revisited  New biases are necessary  Security of Employment or Training-Education • Goals and instrument of monetary Policy  European Central Bank (ECB)  Towards a New kind of Selectivity

  21. Economic policy (2): • ECB Policy and institutional Reform for New selective Refinancing of Firms • Role of States (+Local..) in subsidised loans • Role of ECB in financing of public deficits (selectivity) • Mutual Funds: (i) for securing loans (ii) for reconverting • Enterprise government

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