euroframe 3 june 2005 1 fats frédéric boccara insee, idhe-cnrs a statistical set about mnes to...

Euroframe 3 June 2005 1

FATS

Frédéric BoccaraInsee, IDHE-CNRS

A statistical set about MNEs to analyse relations between BoP & Growth


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


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


Size of the phenomenon: Output (sales)

1995-2002Change

Exports Goods 53 % Goods and Services (excl. travels) 52 %Sales (turnover) All resident Companies 35 %

Outward Affiliates 65 %Contribution

Of which Existing (in 1995 and 2002)

46 % + 18 %

Creations (after 1995) + 107 %Disapearings (after 1995) - 60%


Size of the phenomenon: Countries

-10%

-5%

0%

5%

10%

15%

20%

25%Outward Sales 1995-2002: Contribution to the total change


Comparison Sales/Jobs/FDI/Trade

-30,0 -10,0 10,0 30,0 50,0 70,0 90,0

USA Industrialized (excl. US & CEEC)

CEEC

4Drag +China

Total South

Sales of Affiliatessource: BdF (FATS)

Employmentsource: DREE

Capital (FDI Stock)source: BdF (IIP)

Exports (Goods+Services)

source: Customs + BdF (BoP)


Employment (1)

0

5 000

10 000

15 000

20 000

25 000

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2000 2001 2002

Nu

mb

er

of

Aff

ilia

tes

0

1 000 000

2 000 000

3 000 000

4 000 000

5 000 000

6 000 000

Nu

mb

er

of

Pers

on

s

Affiliates

PersonsAll countries

Of which Emerging and "South" Countries

Of which "North" countries

(left scale <----)


Employment (2)

Nbr Outwardform delocs

Change ofOutward

Jobs(number)

2000 - 2002

% Fromdelocat. 2000-2002 /year

Labour Prod

Compared toFrance

French « delocated » Jobs

LowHyp

450 000 50% 225 000 112 500 0,5 56 250South

+Emerging High

450 000 75% 337 500 168 750 0,5 84 375

LowHyp

960 000 5% 48 000 24 000 1 24 000

North

High

960 000 30% 192 000 144 000 1 144 000

LowHyp 1 410 000 20%* 273 000 80 250

Total

High 1 410 000 38%* 529 500 228 375

Descriptive « rough » estimation


Causes and Factors

• New phases ? -> services

• Importance of North / North

==> not only factor proportions

• Look to MNEs theories

• Empirical look to costs


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


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


InterpretationCentral role of IR

• sharing of informational results

• access to informational resourcesR&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


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


Costs: definitions and notions

• Capital costs: aK

• labour costs: bL

• Intermediate input costs: cCIlabour cost of affiliate (bLO) ==> (cCI)D for parent

• aK Domestic: (aK)D ; Outward: (aK)O

etc.

==> (aK)D >> (aK)O & cCIMNEs < others


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


Company level, econometric estimates (proc GLM), control variables: industry and size of the company

Wage and Social Costs Capital CostsStatut as

MNE or notGrossWages

/ Resources

PurchaseCosts

/ ResourcesTaxes

/ ResourcesInterests costs

/ Resources

Current andFinancial*/ Resources

Exceptionnal*/ Resources

Firm Without anOutward Affiliate

(neither 1998 nor2001) [A]

18 % 60 % 2 % 2 % 2 % 1 %

Firm WithOutward Affiliate

in 1998 and 2001 [B] 15 % 50 % 4 % 6 % 4 % 2 %

Difference incosts[A] – [B](in points %)

- 3 - 10 + 2 + 4 +2 +1

- 11 points + 7 points* Amortisation + ProvisionsRessources = Sales + Financial Products

Costs: Average Costs of firms (2001)


Internal Resources of

national economies

Interpretative Scheme

Process of located Activities

Located Results

Globalisation of Results and

ResourcesNew

Globalisable Resources

(re/de)Location of Activities

Localised Activities

Feedback

leverage


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 »


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


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


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

euroframe 3 june 2005 1 fats frédéric boccara insee, idhe-cnrs a statistical set about mnes to...

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