Production Of Final Goods Research Articles

THE ROLE OF RENEWABLE ENERGY IN ENSURING ENERGY SECURITY OF SUPPLY AND REDUCING ENERGY-RELATED IMPORT

After the industrial revolution, energy and its raw materials became vital for the economic growth and national security. Energy, which is essential in the production process as intermediate asset, plays a role in all stages from transportation to the production of final goods. Energy, which determines the international competitive power of the countries, must be available in a long-term way in an affordable and accessible manner for the economic growth of countries in micro- and macro-scale. The aim of this study, which adopts analytical method in this way, is to emphasize that the inclination of energy poor countries to renewable energy sources within the context of energy security of supply will reduce the dependence on outer sources and thus the potential added value of this transformation to these countries should not be ignored. Importing energy, which is one of the biggest expenditure items of energy poor countries, often emerge as large budget expenditure or current account deficit for these countries. In this context, it was emphasized that in addition to the economic losses caused by energy imports in a country's budget, outer risks for energy security of supply have the potential to negatively affect the sustainability of economic activities. Furthermore, the study looks at renewable energy sources differently from the studies in the literature which mainly examine renewable energy within the context of climate change and its contributions to the climate change mitigation activities. Thus, it is argued that, with the renewable energy, countries will increase their energy diversity and prevent risks that threaten energy security of supply and income losses caused by energy imports and reduce their dependence on imported energy.

Productive Integration, Economic Recession and Employment in Europe: An Assessment Based on Vertically Integrated Sectors

The COVID-19 crisis has revamped the discussion about the redefinition of GVC. This paper contributes to the debate, analysing the productive relationships between European countries in four key manufacturing activities. In particular, the paper addresses two objectives. First, it maps the degree of productive integration in Europe, focusing on the generation of employment in the production of exported intermediate inputs and final goods. Second, it provides a preliminary assessment of the potential impact on employment that the current economic crisis will have on some manufacturing activities across Europe. The analysis is realised employing the concept of vertically integrated labour (Pasinetti, 1973) which allows to account for the employment directly and indirectly involved in the production of final goods. The estimations are derived from Multi-Regional Input-Output tables to map the supply chain and to differentiate between the employment involved in the production of exported intermediate inputs and final goods. The results show that most of the employment involved in the production of final output of the activities studied in the paper is linked to international trade. Although Europe shows a high degree of productive links, there are important differences in the modality of insertion in the productive structure of European countries. Moreover, the impact on the level of employment due to the current economic crisis can be significant, affecting more than 1.3 million of people in Europe. These results are relevant to policy makers, who should consider carefully the high degree of linkages of the European economies when designing measure of support to the economy.

Oferta y demanda de empleo para la producción internacional de bienes y servicios finales: México y China, 1996-2011

Based on the Trade in eMployment (TiM) Database, the objectives of this document are: to map the supply/demand of employment for the international production of final goods and services and quantify the relative importance of Mexico and China. The results suggest that the employment of China and Mexico is dependent on international demand for final goods and services, but independent of foreign employment to satisfy their final demand. However, compared to other countries, the rest of the world requires more chinese employment to satisfy its total final demand; also, the proportion of employed people in the production of final goods and services for the United States in China was the highest.

Made and Created in China: Super Processors and Two-way Heterogeneity

In this paper, we show that there exists a special breed of firms that are active in both ordinary and processing exports. Contrary to the existing literature that describes processing firms as inferior, these mixed firms are superior to other firms in multiple dimensions, and hence we call them “super processors.” We build on Antras et al. (2017) and Bernard et al. (2019) to develop a model in which firms are heterogeneous in multiple stages of production. Firms endogenously choose to become suppliers or final good producers, and those that excel in both manufacturing ability and blueprint quality choose to engage in both activities. We test our model’s central prediction by exploiting China’s pilot “paperless” processing trade supervision program that lowered the cost of processing trade but left ordinary trade costs unchanged. We find that facilitating processing exports induces productive domestic downstream firms to establish their own trademarks. Our results highlight that processing trade not only leads goods to be “Made in China,” but also “Created in China.”

Data in Growth Model

We build an endogenous growth model with consumer-generated data as a new key factor for knowledge accumulation. Consumers balance between providing data for profit and potential privacy infringement. Intermediate good producers use data to innovate and contribute to the final good production, which fuels economic growth. Data are dynamically non-rival with flexible ownership while their production is endogenous and policy-dependent. Although a decentralized economy can grow at the same rate as the social optimum on the Balanced Growth Path, the R&D sector underemploys labor and overuses data---an inefficiency mitigated by subsidizing innovators instead of direct data regulation. As the data economy emerges and matures, consumers' data provision endogenously declines after a transitional acceleration, allaying long-run privacy concerns but portending initial growth traps that call for interventions.

Green tax reforms with promotion of renewable energy sources and carbon capture and sequestration: Comparison of different alternatives

The need to decarbonize economic production processes is undeniable and has been considered by most countries worldwide. Renewable Energy Sources (RES) and Carbon Capture and Sequestration (CCS) technologies appear among the most promising routes to the decarbonization process. We propose an equilibrium model where final-goods production uses labor and energy, and energy is generated using non-polluting RES and polluting fossil fuels. The government implements a Green Tax Reform (GTR), where it imposes a tax on emissions and uses revenues to finance subsidies to RES and support to CCS technologies. We test how results change according to the priority given to RES or to CCS support. Our results show that prioritizing RES support achieves better economic results and potentially also better environmental results. Overall, our empirical simulation demonstrates that resource substitution has a stronger benefit than decarbonizing fossil fuels.

Global supply chain, vertical and horizontal agglomerations, and location of final and intermediate goods production sites for Japanese MNFs in East Asia: evidence from the Japanese Electronics and Automotive Industries

This paper conducted an empirical analysis using an NEG model to investigate the factors in choosing overseas locations for the relevant MNFs’ production sites for both final and intermediate goods by looking at these companies’ final and intermediate production sites separately. Therefore, we focused on two major Japanese industries: the Japanese global-type electronics and the pyramid-type automotive industries. After construction of the three hypotheses; the first hypothesis that the agglomeration of the final goods production sites for Japanese MNFs in a particular country can occur because of the concentration of the intermediate goods production sites for Japanese MNFs in that countries; the second hypothesis that the agglomeration of the final goods production sites for Japanese MNFs in a particular country can occur because of the market potential of the final goods production sites in that countries or neighboring countries; and the third hypothesis that the agglomeration of the final goods production sites for Japanese MNFs in a particular country can occur because of the supplier access of the intermediate goods production sites in that countries or neighboring countries, we estimated this location choice model. In first and third hypotheses, we found that the agglomeration of the final goods production sites for Japanese electronics firms in a particular country can occur because of the total supplier access of the intermediate goods production sites (vertical supply linkage) and supplier access in neighboring countries (global vertical supply linkage) as well as vertical and horizontal Japanese industrial agglomerations, whereas the agglomeration of the intermediate goods production sites for Japanese electronics firms in a particular country can occur because of the total supplier access of the intermediate goods production sites and supplier access in neighboring countries as well as vertical Japanese industrial agglomeration. In the second hypothesis, we found that the agglomeration of the final goods production sites for Japanese MNFs in a particular country can occur because of the market potential of the final goods production sites in that countries, whereas the agglomeration of the intermediate goods production sites for Japanese MNFs in a particular country can occur because of the domestic market potential of the intermediate goods production sites in that countries.

Incomplete contracts and allocation of residual claim along the global value chains: evidence from Japan

ABSTRACT The seminal work by Antràs and Chor in 2013 predicted that, under incomplete-contracting environments, the optimal allocation of residual claim for firms participating in global production depends on the relative position at which the supplier enters the sequential production and on the demand elasticity faced by the final-good producer. Using data of Japanese value-added exports, this study empirically verifies this theoretical prediction through supportive evidence.

Profit raising entry in a vertical structure

In contrast to the usual belief, we show that entry in the final goods market increases profits of the incumbent final goods producers if there is free entry in the input market and the final goods are sufficiently differentiated. Thus, we extend Matsushima (2006).

Trade liberalization and Firms’ export performance in China: Theory and evidence

The focus of the literature surrounding trade liberalization has recently shifted from trade liberalization in imported final goods to studying the effects of trade liberalization in imported intermediate inputs. This emphasis fits very well the trade liberalization experience of China following its accession to the WTO in 2001. In this paper, we build a multi-sector heterogenous-firm model with trade in both intermediate goods and final goods, and we ask: How do final-goods producers respond to trade liberalization in imported inputs? Do they respond differently across sectors? How do firms respond differently to trade liberalization in imported-outputs instead? We separate the total effect of trade liberalization into those caused by inter-sectoral resource allocation (IRA) and by within-sector selection of firms according to productivity (which we call Melitz selection effect). It is the IRA effect that gives rise to differential impacts of trade liberalization in different sectors. These impacts include changes in the probability of entry into the export market, the fraction of firms that export and the share of export revenue. To test our hypotheses, we carry out both quantitative analysis and empirical analysis by using Chinese firm-level data. The results are consistent with our theoretical predictions.

The role of intermediate inputs in a multisectoral balance-of-payments-constrained growth model: the case of Mexico

We focus on the effects of the imports of intermediate inputs over the growth performance. Such an analysis is essential insofar as some countries import large amounts of intermediate inputs to be used in the production of final goods to export. Then it arises the question of whether such a strategy is harmful to the growth performance in a balance-of-payments-constrained growth (BPCG) setup. To address this point, the paper blends the multisectoral BPCG model incorporating structural change (MSTL), by Araujo and Lima (Camb J Econ 31(5):755–774, 2007), and the BPCG model including intermediate goods by Blecker and Ibarra (Struct Change Econ Dyn 25(C):33–47, 2013), and applies the resulting framework to the Mexican economy from 1962 to 2014. The most important result is that the MSTL growth rate in the presence of foreign content of exports is lower than the ‘standard’ MSTL growth rate calculated in the usual fashion (ignoring intermediate imports). That shows the importance of considering imports of intermediate goods in a BPCG model, at least for countries such as Mexico that rely massively on them. It especially helps to explain the reduction both in the ratio of the income elasticities and the growth rate of the Mexican economy, a result also found by Ibarra (Econ Change Restruct 44:357–368, 2011).

Global Circular Economy Scenario in a Multiregional Input-Output Framework.

In a resource-constrained world of an estimated 10 billion people in 2050 with the same material aspirations of today's high-income nations, there is no question: The future economy will need to be circular. From a policy perspective, the question is whether averting catastrophic environmental impacts through an accelerated transition to a global circular economy can also deliver sustained growth and jobs. The adoption of circular economy measures will have a range of effects on both domestic and foreign supply chains. Multiregional input-output (MRIO) analysis models the interdependencies between industries and within and between countries as well as between intermediate and final goods producers and consumers. It provides a useful toolbox for assessing social, environmental, and economy-wide impacts of the adoption of the circular economy. We project the MRIO database EXIOBASE to 2030 on the basis of the exogenously given parameters of the International Energy Agency's Energy Technology Perspective (IEA ETP) 6-degree scenario. We compare this business-as-usual (BAU) scenario and an alternative circular economy scenario. The circular economy scenario considers more recycling, reducing (material efficiency increase), repair, and reuse in relation to the BAU scenario. The adoption of circular economy measures has diverse impacts on the economy and environmental pressures. Global material extraction is reduced by about 10% compared to the baseline, while the impact on employment is small but positive. In particular, the shift from resource extracting sectors to the service sector will provide more opportunities for high-skilled and female workers.

International trade with sequential production

We develop a tractable general equilibrium model of international trade with firm heterogeneity and sequential production, based on the partial equilibrium model of Antras and Chor (Econometrica 81:2127–2204, 2013). The length of supply chains is endogenous, and in the autarky equilibrium more productive final-good producers are served by longer supply chains. International trade in final goods magnifies the differences in the length of supply chains between firms, with exporting firms being served by longer supply chains, and non-exporting firms being served by shorter supply chains than in autarky. We show that, for given model parameters, the gains from trade are larger than in the canonical Melitz model with Pareto-distributed productivities, since production along a sequential supply chain in the Antras–Chor model is subject to external increasing returns to scale.

Labor supply and gender differences in occupational choice

This paper uses data on the task content of occupations to study the role of labor supply in occupational choice. In 1970, married women were less likely to choose occupations characterized by analytically intensive tasks than were men. By 2010, gender differences in occupational choice had narrowed significantly. I use the Dictionary of Occupational Titles to measure the value of skill in an occupation and find an increase in this value with the analytical intensity of occupational tasks. I argue that, as a significant part of skill is accumulated on the job, sources that encourage women to commit to market work contributed to the gender convergence in occupational choice. A quantitative exercise measures that labor-saving technical change in the household sector, occupation-biased technical change in final good production, declining gender gaps in wages and schooling account for 58% of the gender convergence in occupational choice, via the labor supply channel.

Optimal Organizational Choice in a Sequential Supply Chain

We study the optimal organizational structure of a firm in a sequential supply chain when investments are relationship specific and contracts are incomplete. The market structure for the final product is monopolistic competition. Production follows a preordered sequence and exhibits high complementarity between stages. There are three types of actors: upstream suppliers, downstream suppliers and final-good producers (firms). In designing their organizational structure, firms in each stage choose not only the ownership structure, i.e., vertical integration versus outsourcing, but also the input-procurement strategy, i.e., delegation versus control. The separation of asset ownership and input-procurement rights leads to a novel organizational mode, which we call `outsourcing with delegation.' We determine the conditions under which this new organizational mode emerges as an equilibrium outcome.

ТЕНДЕНЦІЇ ТА СТРУКТУРА ІМПОРТУ АГРАРНО-ПРОДОВОЛЬЧОЇ ПРОДУКЦІЇ

ТЕНДЕНЦІЇ ТА СТРУКТУРА ІМПОРТУ АГРАРНО-ПРОДОВОЛЬЧОЇ ПРОДУКЦІЇ

The Gravity of Intermediate Goods

One of the puzzles of the gravity literature is the persistent effect of on trade flows, despite the dramatic fall in trade costs during the last few decades (Disdier and Head, 2008). A possible reason for the distance puzzle is that trade in intermediate goods, which has risen dramatically during this period due to the emergence of global value chains, may be more sensitive to than trade in final goods. Using a dataset of bilateral import flows covering 5000 products and more than 200 countries over the 1998-2011 period, we show that intermediate goods are indeed more sensitive to than final goods, with differentiated inputs exhibiting the highest elasticity. The results are robust to including different sets of controls, and using different samples and econometric methodologies. They suggest that sourcing inputs from nearby countries helps final good producers to better coordinate with their suppliers, monitor their production, and insure the timely delivery of inputs that need to be tailored to their needs.

The Distributional Impact of Labour Market Reforms: A Model-Based Assessment

This paper studies the effects of labour market reforms on the functional distribution of income in a DSGE model (Roeger et al., 2008) with skill differentiation, in which households supply three types of labour: low-, medium- and high-skilled. The households receive income from labour, tangible capital, intangible capital, financial wealth and transfers. We trace how structural reforms in the labour market affect these different types of income. The quantification of labour market reforms is based on changes in structural indicators that significantly reduce the gap of the EU average income towards the best-performing EU countries. We find a general trade-off between an increase in employment for a particular group and the income of the average group member relative to income per capita. Reforms that increase employment of low- and medium-skilled workers imply a trade-off between employment and wages in the low- and medium-skilled group, due to the increase in the skill-specific supply of labour. Capital owners generally benefit from labour market reforms, with an increasing share in total income. This can be attributed to limited entry into the final goods production sector, underlining the importance of product market reforms in addition to labour market reforms.

Global Value Chains and Business Cycle

I investigate the effect of industries and countries position in global value chains on the transmission of final demand shocks and the cyclicality and volatility of trade. Relying on a production network model with propagation via procyclical inventory adjustment, I show how shocks can magnify or dissipate upstream. I test the theoretical results empirically using input-output data. I find that industries far from consumers respond to final demand shocks up to twice as much as final goods producers. I also document the critical role of the position in the global value chain for countries' cyclical macroeconomic response: i) controlling for bilateral similarity in global value chain position eliminates the standard correlation between similarity in industrial structure and bilateral output comovement; ii) two indicators, measuring the number of steps of production embedded in the trade balance and the degree of mismatch between exports and imports, explain between 10% and 50% of the volatility and the cyclicality of net exports.

Sectoral intermediate goods and redistributive effects of economic policies

We study the redistributive effects of monetary and fiscal policies in a limited-heterogeneity model. It features two types of households and two types of intermediate firms, with savers being employed exclusively by capital-intensive producers and spenders by labor-intensive producers. Following a monetary or a fiscal expansion, consumption inequality decreases temporary: policy shocks generate higher benefits for hand-to-mouth households through increases in their labor income, outweighing the direct savings–consumption substitution effects for the optimizing households. The reduction in consumption inequality is higher the more complementary sectoral intermediate goods are, that is when a more balanced composition of the two sectoral goods is required for final good production. As compared to a single-firm model, in our two-firm, two-household model the effects on relative consumption are attenuated; this suggests a potential overestimation of redistributive effects in homogeneous-firm models.