DSpace Collection: International Policy Center - Working Paper Series

Do Institutions, Ownership, Exporting and Competition Explain Firm Performance?

Fri, 15 Aug 2008 15:00:52 GMT

Title: Do Institutions, Ownership, Exporting and Competition Explain Firm Performance?

Authors: Commander, Simon; Svejnar, Jan

Abstract: We analyse a large stratified random sample of firms that provide measures of each firm’s top manager’s perception of the severity of business environment constraints. Specifically, we use the 2005 and 2002 Business Environment and Enterprise Performance Survey (BEEPS) to assess the effect on performance of ownership, competition, export orientation and the business environment of the firm. We employ a variety of approaches to deal with the problem of omitted variables, errors in variables and endogeneity that plague studies in this area. We find that foreign ownership and competition have an impact on performance – measured as the level of sales controlling for inputs. Export orientation of the firm does not have an effect on performance once ownership is taken into account. The centrepiece of our analysis is to understand the impact of perceived constraints. Here we find that few constraints retain explanatory power once introduced jointly rather than one at a time, or when country, industry and year fixed effects are included. Country fixed effects largely absorb the explanatory power of the constraints faced by firms. Replicating the analysis with commonly used country-level indicators of the business environment (Heritage Foundation or Doing Business), or another large data base of firms (Amadeus), also does not yield a robust relationship between constraints and performance. Our analysis indicates that country fixed effects, reflecting time-invariant differences in the business environment but also other factors such as the extent of education or GDP per capita of a country, matter for firm performance, but differences in the business environment observed across firms within countries do not. Moreover, the limited variations in the business environment over time do not affect performance either. The analyst’s ability to identify the effects of business environment on performance, and perhaps the effects themselves, are hence more limited than has been widely argued.

Computational Analysis of APEC Trade Liberalization

Fri, 27 Jun 2008 20:54:50 GMT

Title: Computational Analysis of APEC Trade Liberalization

Authors: Kiyota, Kozo; Stern, Robert M

Abstract: In this study, we use the Michigan Model of World Production and Trade to analyze the economic welfare effects of APEC free trade, unilateral free trade for individual APEC members, and global free trade for all countries/regions covered in the Michigan Model. The Michigan Model is a multi-country, multi-sectoral computational general equilibrium (CGE) model of the global trading system. The version of the model used includes 31 countries/regions plus the rest-of-world and 27 sectors in each country/region. Nineteen APEC members are covered. The computational results suggest that APEC free trade would result in sizable increases in the economic welfare of the individual APEC members in both absolute terms and as a percentage of GDP. There would be trade diversion effects for non-APEC countries, except for the Rest of Middle East. Unilateral free trade for the APEC members would result in larger welfare gains as compared to APEC free trade for 7 of the 19 APEC members. The welfare benefits of APEC free trade are thus larger for more APEC members than unilateral free trade. Finally, global (multilateral) free trade by all of the countries/regions covered in the Michigan Model suggests much larger benefits for all APEC members compared to APEC free trade and APEC unilateral free trade. While global free trade is a limiting case, the computational results presented are testimony to the significant welfare benefits that could be realized from successful pursuit of future multilateral trade liberalization.

Issues of Fairness in Dispute Settlement

Fri, 27 Jun 2008 20:48:49 GMT

Title: Issues of Fairness in Dispute Settlement

Authors: Brown, Andrew G.; Stern, Robert M.

Abstract: We first discuss what fairness may mean in the context of the dispute settlement process, noting the crucial relation between fairness in dispute settlement and the functioning of the trading system as a whole. We explore this relation further through an analysis of three main groups of dispute settlement cases. These are: cases that turn around the question of defining fair competition; cases that arise from the use of contingency measures; and cases that draw the boundaries between domestic regulatory measures and the trade-related norms and rules of the WTO. There follows an analysis of experience with compliance and with the use of counter measures in various cases. Finally, taking together the rulings of the Dispute Settlement Body and the procedures for compliance and the use of counter measures, we conclude that while the present dispute settlement process serves to protect the fairness of the trading system as a whole, there are some aspects of dispute settlement that remain problematic from the standpoint of fairness.

Issues of Fairness in Dispute Settlement

Mon, 09 Jun 2008 20:03:57 GMT

Title: Issues of Fairness in Dispute Settlement

Authors: Brown, Andrew G; Stern, Robert M

Abstract: We first discuss what fairness may mean in the context of the dispute settlement process, noting the crucial relation between fairness in dispute settlement and the functioning of the trading system as a whole. We explore this relation further through an analysis of three main groups of dispute settlement cases. These are: cases that turn around the question of defining fair competition; cases that arise from the use of contingency measures; and cases that draw the boundaries between domestic regulatory measures and the trade-related norms and rules of the WTO. There follows an analysis of experience with compliance and with the use of counter measures in various cases. Finally, taking together the rulings of the Dispute Settlement Body and the procedures for compliance and the use of counter measures, we conclude that while the present dispute settlement process serves to protect the fairness of the trading system as a whole, there are some aspects of dispute settlement that remain problematic from the standpoint of fairness.