Browsing by Subject "Globalization"

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Degree of Openness and the Choice of Exchange Rate Regimes: A Re-Evaluation with Value-Added Based Openness Measures
(2005) Wang, Lars; Belke, Ansgar
The concept of trade openness is broadly applied as a potential predictor in numerous empirical studies, despite the fact that no commonly accepted approach of measuring openness has been developed. The most widely applied (?traditional?) openness indices are not able to accurately calculate the degree of trade openness. Many openness concepts try to adjust the traditional measures of openness with aim to increase the quality of assessment, but most of these attempts show a poor correlation with the traditional concept. This might indicate that the alternative approaches capture different aspects of trade openness. This study presents the development of innovative value-added based (?actual?) measures of openness towards international and bilateral trade, respectively. They are based on a multi-regional input-output analysis of income effects due to trade. In clear contrast to the mainstream view, the actual openness concept corrects the traditional concept by expressing trade in value-added terms instead of gross terms. Traditional openness measures do not take the international redistribution of income generated by trade into account. This means, for example, that the export ratio overstates the potency of a country to build a surplus in output at home because imported intermediate commodities that are employed in the process of production of exported commodities generate income abroad. The import ratio which expresses imports as a share of the gross domestic product overstates the dependency on imports since residents have to spend a lower portion of their income to purchase imports from abroad. Imports are partly produced with intermediate commodities delivered by the country that creates income for its production factors. The innovative actual openness concept is able to reflect the different structures of production among countries since the value-added created by trade is forecasted based on a sound theory of production. This makes it possible to quantify the effects of the interactions between industries within an economy. Open economies consist of more firms that import intermediate of final commodities for the purpose of their re-export than closed economies. These firms, which redistribute final commodities or process the finishing of imported intermediate commodities, employ less domestic factors of production and thus contribute less to national income than other firms which produce exports primarily with national intermediate commodities in all processing stages. This means that the more open economies are, the smaller the proportion of domestic production factors in the production process of exports is and the additional income earned from the selling of exports is again transferred abroad by means of imported intermediate commodities employed in exports. There are only a limited number of degrees of trade openness data bases based on concepts of openness measurement that differ to the traditional approach. They only include data for a few countries, which mainly consist of industrialized economies, and/or only for a small number of years. Consequently, the outcome of empirical tests of potential associations between the degree of openness and other variables might be, in some cases, hampered. In clear contrast to this, the new data base of the degrees of openness to international trade based on the actual openness concept consists of roughly 20,000 entries. The data base represents the degrees of trade openness of 66 countries, which range from developing to highly industrialized economies, for a period of 14 years (1989 to 2002). This feature of the study is a strong contribution to economic research since it makes the improved adequacy in the indication of trade openness available to many different empirical analyses. The empirical re-evaluation of the association between the degree of openness and the choice of exchange rate regimes in this contribution is based on regression analysis which contains up to 525 observations of 54 countries between the years 1989 and 2000. The test results indicate a positive and statistically significant correlation between trade openness and the likelihood of choosing a fixed exchange rate regime. This is clearly in line with the findings of the mainstream in the empirical research. Subsequently, the analysis of the relationship between the degree of trade openness and the selection of exchange rate regimes is extended to adhere to the ongoing debate in economic research as to when the Central and Eastern European countries (CEECs), which became member countries of the Economic and Monetary Union in May 1, 2004, are able to adopt the euro as their national currency. The results of a computable general equilibrium analysis suggest that if the Central and Eastern European countries meet the Maastricht criteria and the non-devaluation condition in the Exchange Rate Mechanism II, they could gain net benefits from the abolishment of their national currencies in the year 2008.
Perspectives of workers with low qualifications in Germany under the pressures of globalization and technical progress
(2007) Rukwid, Ralf; Hagemann, Harald
This paper gives a detailed analysis of the perspectives of workers with low qualifications in Germany under the twofold pressures of globalization and technological change. First, alternative explanations for the skill-bias in the development of labour demand are discussed, with particular emphasis on the ?trade versus technology? debate. The consequences of the demand shift away from low-skilled labour in Germany are examined in a detailed empirical analysis of the development of (un)employment problems differentiated for qualification groups. Compared to other advanced economies, Germany shows a higher unemployment rate among less-qualified workers which is generally associated with a lack of flexibility in the German wage structure. However, an analysis of German, U.S. and British wage data based on the Cross National Equivalent File (CNEF) does not confirm the assumption of a simple monocausal relationship between wage disparity and the intensity of group-specific unemployment. Finally, some political approaches for an improvement of the job prospects of less-qualified persons in Germany are outlined briefly and evaluated against the background of the empirical results.
Service offshoring and the demand for less-skilled labor : evidence from Germany
(2007) Schöller, Deborah
Besides material offshoring, economists have started to analyze the impact of service offshoring on domestic employment. Services are of particular interest since their significance has grown in terms of both quantity and quality. One decade ago, most services were considered non-tradable, but the emergence of new information and communication technologies has contributed to overcoming geographical distance. The move towards the liberalization of international service trade has further accelerated this process. The empirical part of this paper first calculates German service offshoring intensities on a sectoral basis using input-output data. This measurement represents the proportion of imported service inputs used in home production. Germany?s average service offshoring intensity more than doubled from 1991 to 2003. In a next step, the impact of service offshoring on the demand for heterogeneous labor in Germany is estimated at a sectoral level including 28 manufacturing sectors. The partial static equilibrium model is based on a variable unit cost function in the general translog form allowing for quasi-fixed input factors. Two different skill-levels are taken into account. The estimation results indicate that service offshoring reduced the relative demand for less-skilled labor in the German manufacturing sectors by on average -0.06 to -0.16% per year between 1991 and 2000.
Service offshoring: a challenge for employment? : evidence from Germany
(2006) Schöller, Deborah
Besides material offshoring, economists have started to analyze the impact of service offshoring on domestic employment. Services are of particular interest since their significance has grown not only in terms of quantity, but also of qualitative understanding. One decade ago, most services were considered non-tradable, but the appearance of new information and communication technologies has contributed to overcoming geographical distance. The introduction of the paper aims at giving an appropriate definition of service offshoring also taking into account the different motives behind offshoring. The theoretical part gives a brief literature overview of the predicted effects of offshoring on domestic employment. The empirical part first compares import data of computing and information as well as other business services and states that service offshoring is more relevant in Germany than in most other countries. Secondly, German service offshoring intensities are calculated on a sectoral basis using input-output data. This measurement represents the proportion of imported service inputs used in home production. Germany?s average service offshoring intensity more than doubled from 1991 to 2002. Besides this, indications for a possible negative correlation between German service offshoring and manufacturing employment are given. Thirdly, the impact of service offshoring on German domestic manufacturing employment is estimated at a sectoral level. The author refers to the labor demand specification of Hamermesh using sectoral wages, output and other input prices as exogenous variables. The estimation results indicate that service offshoring was negatively related to manufacturing employment in Germany between 1991 and 2000.