Showing papers on "Spillover effect published in 1970"

Openness and Economic Growth: Empirical Evidence on the Relationship between Output, Inward FDI, and Trade

Abstract: The relationship between openness and economic growth in developed and developing countries has been of continuing interest in both the theoretical and empirical literature. In this paper, we employ a vector autoregressive (VAR) model and error correction techniques to test for the existence and nature of the causal relationship between output level, inward FDI and exports across a cross-section of both developed and developing countries using data from 1960-2001. Our main objective is to analyze the extent and sources of international linkages between openness and economic performance. The evidence supports bi-directional causality between exports growth and economic growth; the economic growth and FDI relationship has mixed results. Introduction The relationship between export growth, foreign direct investment (FDI), and economic growth in both developed and developing countries is a question that continues to be of considerable theoretical and empirical interest. Cross-country trade and capital flows, and interpreting the importance of these activities towards economic growth lie at the heart of the debate on economic development policy since the early literature on import-substitution to the current literature on openness and economic growth. Recent literature has highlighted the role of both exports and FDI on economic growth. On the one hand, the export led growth (ELG) hypothesis states that exports are the main determinants of overall growth. At the heart of the ELG model are beliefs that (a) the export sector generates positive externalities on non-export sectors in the economy through more efficient management and production techniques (Feder, 1983); (b) export expansion increases productivity by creating scale economies (Helpman and Krugman, 1985; Krugman 1997); (c) exports help to alleviate foreign exchange constraints and thus provide greater access to international markets (Esfahani, 1991). Endogenous growth theory extends this analysis by emphasizing the role of exports on technological innovation and dynamic learning (Romer, 1986; Lucas, 1988; Grossman and Helpmann, 1995; Alisana and Rodrick, 1999). On the other hand, empirical evidence in the last few decades indicates that FDI flows have been growing at a pace far exceeding the volume of international trade. Between 1975 and 1995, the aggregate stock of FDI rose from 4.5% to 9.7% of world GDP, with sales of foreign affiliates of multinational enterprises substantially exceeding the value of world exports (Barrell and Pain, 1997). The effect of FDI on economic growth appears to have become quite explicit with multinational enterprises acting as the primary vehicle for the international transfer of technology (OECD, 1991). Blomstrom and Persson (1983) and Blomstrom (1986) find that FDI has created significant positive spillover effects on the labor productivity of domestic firms. It is argued that FDI plays a central role in the technological progress of recipient countries through the generation of productivity spillovers (Borensztein, De Gregorio, and Lee, 1998; Lim 2001). However, empirical work from both the ELG literature and the FDI and growth literature when studied in isolation show mixed results. This is mainly, due to the omission of a relevant mechanism through which openness or the re-structuring of an economy promotes growth. Liberalization, in particular, is expected to increase not only trade but also FDI. If a complementary relationship between FDI and exports exists, then foreign investment may increase the volume of exports in specific and international trade in general. Direct investment may encourage export promotion, import substitution, or greater trade in intermediate inputs, especially between parent and affiliate producers (Goldberg and Klein, 1998). Along the same lines, Blomstrom, Globerman and Kokko (2000) argue that the beneficial impact of FDI is only enhanced in an environment characterized by an open trade and investment regime and macroeconomic stability. …

Public Goods, Externalities, and International Relations

Abstract: Television and radio programs, works of art, medical innovations, and military defense share a basic similarity: their production for the enjoyment of residents of one country causes, in many instances, external benefit or harm to residents of other countries. For instance, British television programs are received in Ireland, French programs in Switzerland, and American programs in Canada; and infants the world over benefit from the Salk and Sabine polio inoculations. These are examples of positive externalities. But negative ones exist also. Americans, for example, are alarmed at increases in Soviet armaments production, and the Soviets despair at increases in American armaments production. In short, there occurs a spillover effect, the spillover itself usually not entailing a corresponding loss to the home country. The broad purpose of this paper is to sketch briefly a general theory which captures the essential nature of such externalities. The setting of our discussion is the kingdoms of Helvetia and Franconia, each of which produces a good not subject to spillover, bread, and a good subject to spillover, television programs. A similar discussion in a setting of a system of local governments is related by Williams (1966), who reaches the conclusion that overproduction of spillover goods is possible. Brainard and Dolbear (1967) demonstrate that this conclusion does not follow the premises set forth by Williams, and, in particular, score the faulty benchmark of optimality adopted by him. Both contributions, however, fail to derive conditions of optimality, thus obscuring somewhat

Pseudonoise guidance system with spillover rejection

Abstract: A device for rejecting spillover from a pseudonoise, continuous wave radar transmitting antenna. Spillover is the energy transmitted directly from transmitter to receiver. It is undesirable and must be suppressed in order to be able to sense the desired reflected wave from a target. Suppression is accomplished by decoding the spillover at the receiver antenna range from the transmitting antenna. The desired signal is not decoded because the desired signal has a code corresponding to target range. The target signal, thus, remains broadband whereas the spillover is reduced simply to a single frequency larger than zero or equal to zero (direct current). A notch filter or a high pass filter or direct current blocking capacitor may then be used to pass the target signal and block the spillover.

Encapsulated Integrative Patterns vs. Spillover: The Cases of Agricultural and Transport Integration in the European Economic Community

Abstract: The purpose of this paper is to examine developments in t-he agricultural and transport sectors of the European Economic Community (EEC) against the backdrop of Functionalist theory.' Specifically, I will address myself to the concept of spill-over as a mechanism for bringing about integration. It will be convenient to proceed in the following manner: First, I will speak in general terms of the treatment of spillover in the Functionalist literature; second, I will pay some attention to the development of integration in the transport and agricultural sectors of the EEC with an eye toward discerning how events here can aid us in generating testable propositions; third, I will evaluate my notion of spillover in light of the case material; and fourth, I hope to test several propositions derived from my understanding of the case material.