Trade and Transfer
How Does Technology Progress and Trade Openness Affect Income Inequality?
Paper Presentation in a Themed Session Yih Luan Chyi
Since the 1990s many high-income countries facing trade liberalization have experienced rising within-country inequality and rapid technology progress. In recent literature, there has been an ongoing debate on interactions between technological changes, openness, and income inequality. To reconcile inconsistent empirical findings, this study investigates relationships between trade openness and income inequality across countries with different advancement in technology. Using a panel of sixty-one countries over a period from 1975 to 2005, this study examines openness-inequality relationships by estimating panel threshold regression models. The threshold effects of technological changes and an inverted-U relationship are identified when inspecting the impacts of trade on income inequality. On the one hand, countries with less-advanced technologies tend to have higher income inequality when they become further liberalized in trade. On the other hand, trade openness tends to ease income inequality in countries with more advanced technologies.
Socioeconomic Externalities of FDI in Host Countries : The Human Capital Case
Paper Presentation in a Themed Session Mouna Raji, Alberto A. López-Toro
Public policy designers make great efforts to create incentives and establish a propitious context for Foreign Direct Investment (FDI) attraction given its positive effects on the socioeconomic health and the role that it plays as an instrument for socioeconomic development and welfare. Transfers of technology, human capital development, knowledge transfers, employment creation and inequality and poverty reduction are some of these positive externalities of FDI that encourage policy makers to design more FDI attraction policies in host economies. Indeed, economic literature and experience have shown FDI's role in technology transfers thanks to the commercial relationships existing between local and foreign investors where foreign firms supply quality inputs and advanced technology to local ones. Moreover, foreign firms invest more than local ones in training and are, generally, up-to-date with tendencies in terms of training and competencies creation, what improves human capital in the host country. On the social level, FDI would contribute to the improvement of work conditions and unemployment reduction in host countries (foreign firms hire more employees compared to local firms, especially in the case of new investments called "Greenfields") and would decrease inequality and poverty thanks to the economic and social mobility generated when creating stable jobs, with higher salaries. Thus, on the one hand, the present work aims to pinpoint how FDI could be a development and welfare strategy by determining the externalities that it generates in some developing host countries (particularly in Africa) and the transfer channels of these externalities. The study also identifies some of the features to be developed in host countries in order to attract FDI projects, orientate them to strategic sectors and maximize the absorptive capacity of FDI’s positive externalities. On the other hand, the present paper proposes an econometric methodology to evaluate the role of FDI and other influent variables in the explanation of human capital variations in host countries, one of the welfare and development aspects that could be improved when receiving FDI projects.
Russia's Trade Policy in the Era of Sanctions: The Way Back or Economic Development?
Paper Presentation in a Themed Session Mariya Marchenko
For economic growth and development of countries in the world economy, foreign economic activity plays an essential role. Russia's trade policy is undergoing significant changes, due to a number of factors. This paper focuses on an analysis of the impact of sanction wars on Russia's trade policy. In the conditions of globalization, the movement of goods, works, and services through the international division of labor, specialization and co-production leads to an increase in the efficiency of social production and increases the country's competitiveness. However, Russia's integration into the World Trade Organization presents new requirements to state regulation of the national economy as compliance is an important part of trade cooperation. The introduction of sanctions makes it possible to consider this issue in a different way. This paper systematizes the characteristics of foreign economic activity of the Russian Federation in the context of sanctions policy. A discussion of consequences of sanctions for the economy of the Russian Federation is also presented.
