Intermediate Inputs Research Articles

Rural public investment and wage inequality under small‐scale agriculture modernization

Increasing rural public investment is crucial for sustainable rural development and can be an effective approach for reducing inequality. However, wage inequality has increased in some developing countries (e.g., China) after increasing fiscal support. This study explores how rural public investment influences skilled‐unskilled wage inequality by incorporating agricultural modernization in small‐scale agriculture. Agricultural modernization refers to introducing modern non‐agricultural intermediate inputs in agriculture. Owing to the small scale of agriculture, an intermediate sector, the agricultural producer service sector, is required to facilitate this process. We establish a three‐sector general equilibrium model with a two‐layer vertical production structure and investigate the effects of increased public investment in rural areas on the wage inequality between skilled and unskilled labour. The theoretical results show that while more rural public investment raises the wages of both skilled and unskilled labour, it also increases wage inequality. Overall, this study explains why inequality widens as rural public investment increases.

How U.S. tariffs impact China’s domestic sourcing: Evidence from firm-to-firm transactions

This paper investigates how tariff shocks influence the domestic performance of Chinese firms, leveraging quarterly data on both international and domestic transactions from 2017 to 2018. Our analysis uncovers several key findings: (i) a one percent increase in export tariffs leads to a 0.235 percent increase in sales to domestic buyers, suggesting that higher export costs drive suppliers to prioritize domestic markets, primarily affecting the extensive margin; (ii) a similar increase in countervailing import tariffs results in a 0.995 percent decrease in domestic purchases, underscoring a complementary relationship between China’s imported intermediates and domestic products; (iii) larger firms exhibit smaller magnitudes of domestic sales and are more likely to reduce their domestic intermediate inputs in response to a negative external risk. These findings highlight that understanding the complementary relationship between imports and domestic inputs is crucial for developing strategies to mitigate the adverse effects of tariff policies on domestic production.

How do exchange rates affect environmental quality?

AbstractExchange rates are integral to explaining the environmental consequences of globalization because they govern the prices of imported inputs and the price competitiveness of exports and, consequently, firms' input use decisions, production levels and emissions. We study how exchange rates, foreign input sourcing and export orientation determine environmental outcomes across countries and industries in both theoretical and empirical contexts. For industries that rely intensively on imported intermediate inputs, a stronger domestic currency leads to higher emission intensities (emissions per unit of output), while the reverse holds for industries that export intensively. Our results thus show that exchange rates have implications for the environment that have heretofore remained unexplored.

The Economic Impact of Arms Spending in Germany, Italy, and Spain

Abstract In the last 10 years, military expenditures of NATO EU countries (according to NATO definitions and data) have increased by almost 50 %, from €145 billion in 2014 to €215 billion in 2023. In this context, it is important to assess the economic consequences that the current increase in military spending is likely to have on Europe’s economies. We focus on Germany, Italy and Spain, and we concentrate on arms acquisitions. The article investigates the economic effect of military expenditure on growth and employment and compares it to the impact that could emerge from a similar expenditure for education, health and the environment. We use an input–output methodology – already adopted by several studies – to assess the relevance of imports and of demand towards different sectors providing intermediate inputs. We assess the likely impact on output and jobs of one billion euros of extra spending in arms, and compare it to the outcomes of the same amount spent in education, health and the environment. Our findings show that for all countries non-military public expenditures have a greater impact on the economy and employment than spending for arms acquisition.

Imports and tourism expansion: A general equilibrium analysis

There is an ongoing debate within the literature about whether inbound tourism in developing countries contributes positively to national welfare. Most of the existing literature primarily relies on case studies and lacks theoretical frameworks essential for a comprehensive understanding of the role of imported intermediate inputs in tourism development. We aim to fill this gap by presenting a theoretical specific-factor general-equilibrium model of a tourism-exporting economy that incorporates both imported and non-traded intermediate goods. Our findings indicate that the extensive utilization of imported intermediate goods by the tourism industry, as well as other sectors, could potentially increase residents’ real income during a tourism boom. Additionally, our analysis reveals deviations from some standard results of the “beach disease” model. Lastly, we shed light on the complexity of the consequences of tourism expansion on income distribution, which prove to be more intricate than commonly believed. This underscores the need for a deeper understanding of the multifaceted dynamics involved in analyzing the connections between imports and tourism expansion.

Статистичний критерій перевірки незалежності внутрішніх станів та виходів криптопримітиву, що генерує (псевдо)випадкові послідовності

The article is devoted to creation and justification of new statistical criterion of pairwise independence of binary sequences from given set, which are considered as realization of random variables. The corresponding algorithm, which fulfills the checking of pairwise independence, is formulated in details. This algorithm is necessary tool for statistical veri-fication of cryptographic quality of different cryptoprimitives, which functioning is con-nected with random/ pseudorandom sequences generation — such as ran-dom/pseudorandom sequences generators or stream ciphers. Usage of the obtained criteri-on allows independence checking not only for output sequences, but also for its interme-diate state or inputs. Note that such independence is necessary for unpredictability of out-put sequences.

A Study of Virtual Water Trade among G20 Countries from a Value-Added Trade Perspective

Abstract: From a value-added trade perspective, this study utilizes the world input–output tables and the water footprint data of each industry in each country in the Eora database to explore the virtual water resources of 19 countries (the G20 countries excluding the European Union) in 2016. We calculated nine value chain decompositions and the pattern of virtual water flows and then explored the implied virtual water use due to the trade of intermediate goods and final goods, and we also analyzed the unequal trade of virtual water and added value among countries. The results indicate the following. Firstly, in most countries, the largest portion of virtual water is attributed to exports of intermediate inputs that are produced in the source country and fully utilized by the direct import countries, followed by the foreign value-added component of intermediate goods, while the smallest share of virtual water is returned to the country. Secondly, in value-added trade, excluding the rest of the world (ROW), China, France, Italy, Japan, Mexico, South Korea, South Africa, Saudi Arabia, and Germany are net importers in the virtual water trade between G20 countries, and the USA is the largest net exporter of virtual water. Thirdly, intermediate product trade is the dominant form of implied virtual water trade among countries, which leads to a net flow ratio of implied virtual water of about 80% to 90%. Lastly, the Virtual Water Inequality Index shows that thirteen country combinations, including Brazil and Argentina, exhibit significant inequality, and most countries are in a relatively equal state. In addition, the virtual water and added value of the relatively economically developed regions benefit more from the virtual water trade. Therefore, it is crucial for countries to reduce their consumption of virtual water when trading intermediate products to develop high-value-added and low-water-consumption industries and to choose appropriate virtual water trade targets.

Intermediate inputs in Dutch disease. Copper in Chile

PurposeBy means of a practical model, the paper discusses the role of intermediate inputs in the ability of a booming extractive sector to draw resources out of lagging sectors, giving rise to Dutch disease. MethodsThe model is for the Chilean economy and follows an ‘extended’ input-output structure, with 35 production sectors. Once calibrated and parameterized, the model can be solved numerically to estimate the resource movement effect and the spending effect of a copper boom. FindingsThe numerical exercises show that, when the use of intermediate inputs is taken into account, the resource movement effect is of similar magnitude to the spending effect in explaining deindustrialization in Dutch disease. The key mechanism here is that, when the copper sector expands, its effects on real wages and good prices can be significant, due to the use of intermediate inputs. ImplicationThis implies that the policies that are commonly recommended to avoid Dutch disease (fiscal rules, sovereign wealth funds, etc.) may not be very effective if they are not accompanied by others aimed at promoting greater provision or efficient use of scarce resources. OriginalityThe present study contributes to the literature on Dutch disease in two ways. On the one hand, it provides an estimate of the resource movement effect and the spending effect of a commodity boom. On the other hand, it provides evidence in favour of the hypothesis that extractive activities can lead to direct deindustrialization.

Producer services agglomeration and low-carbon economic transition: the role of economic growth target constraint

Abstract Objective. Producer services are an intermediate input factor that permeates every link in the industrial production chain and is essential to the growth of a low-carbon economy. This study aims to elucidate the connection between producer services agglomeration (PSA) and low-carbon economic transition. Methods. Based on China’s provincial panel data from 2004 to 2021, we empirically test the influence of PSA on low-carbon economic transition using a two-way fixed effects model, and utilize government work reports to construct an indicator of economic growth target constraints and its characteristics to further explore its moderating effect. Results. PSA contributes to enhancing low-carbon economic transition. The heterogeneity test finds that PSA significantly helps low-carbon economic transition in the east and west regions, but not in the central region. The quantile regression findings demonstrate that PSA is more effective at raising the level of low-carbon economic transition at the 10th and 90th quantiles, which indicates that the carbon reduction and efficiency enhancement effects of PSA play a greater role in regions with lower and higher low-carbon economic transition levels. Further research presents that the economic growth target constraint negatively moderates PSA’s impact on low-carbon economic transition, but this constraint characterized by soft constraints strengthens the positive effect of PSA on low-carbon economic transition. Implications. In view of this, the government can foster PSA in accordance with local conditions, optimize agglomeration area layout, and establish a scientific and reasonable government target management system to strengthen low-carbon and high-quality economic development.

Capital misallocation and economic development in a dynamic open economy

Some countries, such as Canada, Italy, and Mexico, have experienced a higher growth rate of capital per worker but a lower growth rate for GDP per worker compared to the United States. This paper explains these two facts through the lens of a dynamic multisector open economy model where capital flows across countries. In the model, firms face sector-specific distortions on capital and intermediate inputs that influence the actual rate of return on capital and the aggregate total factor productivity (TFP). We calibrate the model to Mexico for the period 2000-2014 and show that changes in sectoral distortions and productivities reduced the actual rate of return on capital, triggering capital accumulation and a reduction in TFP. The results show that aggregate output decreased by 7.3% and aggregate capital increased by 10.6%. From 33 sectors (out of 48) that suffered productivity losses, approximately 50% accumulated more capital. Furthermore, the capital-intensive sectors explain 82% of the capital-output ratio increase.

Does the digital economy really help reduce industrial carbon intensity? Empirical evidence from intermediate inputs of digital products in China.

The booming digital economy is promoting industrial upgrading and transformation, providing an opportunity for the industrial low-carbon development. Based on input-output analysis and panel data regression, the impact of the input of intermediate digital products on Chinese industrial carbon intensity from 1997 to 2017 has been evaluated. The results reveal that the input of China's intermediate digital products can significantly reduce industrial carbon intensity, and significantly reduce the carbon intensity of non-energy-intensive industries. It has also been discovered that the input of intermediate digital product manufacturing can significantly reduce the carbon intensity of different types of industries, while the input of the intermediate digital products services industry has no significant effect on the reduction of industrial carbon intensity. Channel analysis shows that the input of the intermediate digital products can reduce industrial carbon intensity by improving productive efficiency and promoting innovative technology. In the current climate, it is especially necessary to increase the input of the intermediate digital product manufacturing industry in industrial development.

A rapid-response soft end effector inspired by the hummingbird beak.

Biology is a wellspring of inspiration in engineering design. This paper delves into the application of elastic instabilities-commonly used in biological systems to facilitate swift movement-as a power-amplification mechanism for soft robots. Specifically, inspired by the nonlinear mechanics of the hummingbird beak-and shedding further light on it-we design, build and test a novel, rapid-response, soft end effector. The hummingbird beak embodies the capacity for swift movement, achieving closure in less than [Formula: see text]. Previous work demonstrated that rapid movement is achieved through snap-through deformations, induced by muscular actuation of the beak's root. Using nonlinear finite element simulations coupled with continuation algorithms, we unveil a representative portion of the equilibrium manifold of the beak-inspired structure. The exploration involves the application of a sequence of rotations as exerted by the hummingbird muscles. Specific emphasis is placed on pinpointing and tailoring the position along the manifold of the saddle-node bifurcation at which the onset of elastic instability triggers dynamic snap-through. We show the critical importance of the intermediate rotation input in the sequence, as it results in the accumulation of elastic energy that is then explosively released as kinetic energy upon snap-through. Informed by our numerical studies, we conduct experimental testing on a prototype end effector fabricated using a compliant material (thermoplastic polyurethane). The experimental results support the trends observed in the numerical simulations and demonstrate the effectiveness of the bio-inspired design. Specifically, we measure the energy transferred by the soft end effector to a pendulum, varying the input levels in the sequence of prescribed rotations. Additionally, we demonstrate a potential robotic application in scenarios demanding explosive action. From a mechanics perspective, our work sheds light on how pre-stress fields can enable swift movement in soft robotic systems with the potential to facilitate high input-to-output energy efficiency.

Imported inputs and productivity: Unraveling the dynamics in India's manufacturing sector

AbstractThis study investigates effects of imported intermediate inputs on firms' productivity in the Indian manufacturing. We use a panel data of manufacturing firms from 2001 to 2021 and adopt the production function approach for analysis. Our results confirm the crucial role of all three imported input types at aggregated and disaggregated levels. However, the productivity effect of imported raw materials is the largest, followed by finished goods and capital inputs. Results show the role of imports is marginally higher for high innovation, specialist‐suppliers and science‐based industries. We also show that spillover effects of foreign technology embodied in imported capital goods.

How does enterprise digitalization affect corporate carbon emission in China: A firm-level study

This paper develops a theoretical framework to examine the influence of enterprise digitalization on corporate carbon emissions. Then it empirically measures the extent of digitalization in Chinese enterprises through their share of intermediate inputs to their value added from information and communication technologies. Data from the China Enterprise Tax Surveys and Inter-Country Input-Output Tables from 2007 to 2016 are used for the empirical analysis. It is noted that digitalization in enterprise manufacturing leads to an increase in corporate carbon emissions (CCE). The impact from the service sector, however, is not significant. The exacerbation of CCE is observed primarily among low-leverage enterprises, downstream industries, and firms located in relatively lower-income regions. In accordance with the theoretical model, it is observed that enterprise digitalization intensifies CCE by crowding out investment in environmentally friendly green production and by altering production patterns towards mass production. However, an efficient market mechanism effectively mitigates this exacerbation effect. The findings reveal the misalignment of enterprise digitalization transformation modes with long-term “low carbon” objectives, thereby exposing the need for appropriate policy interventions.

On the positive economic impacts of port infrastructure development and seaborne trade efficiencies in Sub-Saharan Africa: the case of Senegal

AbstractInefficient port infrastructures is one of the challenges facing Sub-Saharan Africa, particularly as regards the West African region’s economic progress. Using a dynamic computable general equilibrium model, the paper examines how improving port infrastructure in Senegal can increase the potential of seaborne trade, and accelerate economic and social development in the country and the wider region. Despite Senegal's strategic location along the Trans-Saharan trade route in West Africa, infrastructural limitations pose challenges to port capacity. Our findings suggest that improving port infrastructure can increase port productivity, leading to a reduction in costs of imported food products and domestic inputs. As a result, the country's competitiveness in international markets would be enhanced and could stimulate the production of cash crops, industrial food, and chemical products. This would lead to increased food supply and improved purchasing power, supporting the country's food security. Results show that increased efficiencies in maritime exports and imports lead to an overall increase in economic activity, resulting in significant GDP growth, improved welfare, and a reduction in poverty incidence. This growth can be attributed to higher exports and greater availability of imported intermediate inputs at lower prices, making exports more competitive in the global market as export prices decrease.

Trade and energy efficiency: theory and evidence

PurposeSome existing studies have begun to discuss how trade will change the environment from a country or province perspective. However, so far, only a limited number of studies have provided evidence at the product level. This study aims to investigate the environmental impacts of trade at the product level.Design/methodology/approachThe effects of importing intermediates and capital inputs on energy performance are examined using theoretical analysis. Empirical analyses are conducted using data on product trade, and the effects of importing intermediate inputs and capital inputs on energy efficiency are identified using a Propensity Score Matching-Difference in Difference (PSM-DID) estimation.FindingsThe results demonstrate that importing intermediates and capital inputs effectively enhance energy efficiency. Importing these inputs from foreign markets leads to increased productivity and ultimately improves energy performance.Originality/valueThis research provides new evidence on the relationship between importing and energy use at the product trade level. It offers insights into enterprise behaviors regarding importing intermediates and capital inputs, contributing to a deeper understanding of the environmental effects of trade. Additionally, a micro-theoretical model is developed to examine the impacts of imports on energy efficiency, complementing existing literature with theoretical insights.

Environmental regulation and intermediate imports: Firm-product-level evidence

This study examines the effects of domestic environmental regulations on import activity. Using a panel of firm-product-level data and variations in regulatory stringency across products established by China’s Eleventh Five-Year Plan for Environmental Protection (covering 2006–2010), it reveals that tougher regulations on emission-intensive industries at home led to increases in downstream manufacturers’ imports of emission-intensive intermediate inputs. Specifically, a 1% increase in sulfur dioxide emission intensity resulted in a 0.026% increase in intermediate imports after the implementation of the regulation. A back-of-the-envelope calculation suggests that, although the regulation increased emissions in source countries, it reduced global emissions of sulfur oxides and carbon dioxide. This is because the increases in imports caused by the regulation mainly came from countries with lower emission intensity than China. The regulation did not disproportionately increase imports from or emissions in developing countries.

Agglomeration effects of high-tech industries: Is government intervention justified?

Government intervention in industrial development is prevalent across both developed and developing nations. This paper evaluates the efficacy of Chinese government intervention in high-tech industries in fostering economic development. Methodologically, we assess government intervention's effectiveness by examining the heterogeneity of agglomeration effects in high-tech industries across various locations before and after policy interventions. Our study reveals several key findings: (1) Overall, high-tech industry agglomeration yields positive intra-industry and local spillover effects. (2) Agglomeration effects exhibit significant spatial and temporal variations. Before 2013, government intervention was limited, and high-tech industries predominantly clustered in the eastern region due to market forces, resulting in significantly positive agglomeration effects. However, post-2013, government intervention became evident, particularly driven by competitive dynamics in less-developed regions and central government support for these areas. Consequently, high-tech industries in these regions generated positive intra-industry and local spillover effects, leading to a shift in the distribution of high-tech industry hubs towards the central and western regions. Nonetheless, agglomeration effects diminished in these regions, signaling distortions. (3) Not all high-tech industries exert positive impacts; for instance, the ICT manufacturing sector, characterized by general technology, demonstrates the most pronounced effects, whereas the aerospace manufacturing industry shows relatively weaker agglomeration effects. (4) High-tech industries primarily enhance industrial profitability by refining intermediate inputs and foster local total factor productivity and green total factor productivity through knowledge spillovers. Consequently, policy interventions should aim to effectively facilitate intermediary mechanisms. These findings offer valuable insights into how governments can judiciously intervene in high-tech industries to promote sustainable economic development.

Small-strain stiffness of selected anthropogenic aggregates from bender element tests

Abstract This article presents a study on the stiffness of mixtures of anthropogenic materials derived from construction or demolition waste, specifically fine recycled concrete aggregates (fRCAs) with different fine fraction (FF) contents. The study investigated small-strain shear moduli via various signal interpretation methods, examining, above all, the time domain approaches and considering the influence of FF content. However, the inconclusive results from the bender element (BE) tests highlight the complexity of factors affecting shear wave velocity, which requires further research to refine the methodology and assess long-term performance in geotechnical applications. Selecting the correct test frequency and interpretation method is crucial to obtain accurate results. The BE test method should consider all relevant factors. At low input frequencies (≤5 kHz), the near-field effect affected the received signal for fRCA mixtures. At higher frequencies (around 14 kHz), the noise levels increased, thereby interfering with the S-wave travel time determination. Intermediate input frequencies (10.0 and 12.5 kHz) provided the representative shear modulus (G) values. The small-strain shear modulus (G max) of the fRCA compounds from the resonant column and BE tests was found to be in good agreement, despite differences in the test procedures themselves.

Spillover effects of foreign and domestic exporting firms on export decisions of local manufacturing firms: Evidence from Vietnam

Our study examines the spillover effects that arise from foreign and domestic exporting firms on the export decisions of local manufacturing firms in Vietnam between 2010 and 2018. There are positive horizontal spillover effects from both foreign and domestic exporting firms, while negative spillover effects are detected through the backward channel. Domestic exporting firms are found to generate positive forward spillover effects, whereas foreign direct investment exporting firms have negative forward spillover effects. Moreover, we observe opposite spillover effects from foreign and domestic exporting firms on the export exit of domestic firms, with a negative impact under the horizontal channel and a positive impact under the backward channel. Our research also reveals the effects of firms’ characteristics on the export participation and exit of domestic firms. The study suggests that the Vietnamese government should focus on enabling the FDI sector to create positive spillover effects, attracting foreign firms with export potential as well as supporting domestic exporting firms using and providing local intermediate inputs, and improving the technological and absorptive capabilities of domestic firms.