Centre d'Économie de la Sorbonne

In this paper, we contribute to the literature on the determinants of foreign direct investment in developing countries and re‐evaluate the role of the quality of institutions on FDI independently of the general level of development. We implement cross‐section estimations based on a newly available database with unprecedented detail on institutions for a set of 52 countries, as well as panel data estimations based on Fraser Institute's data. Furthermore, we control for the correlation between institutions and GDP per capita and for endogeneity of institutions. Finally, we evaluate whether the similarity of institutions between the host and the origin country raises bilateral FDI. We find that a wide range of institutions, including bureaucracy, corruption, but also information, banking sector and legal institutions, do matter for inward FDI independently of GDP per capita. Interestingly, weak capital concentration and strong employment protection tend to reduce inward FDI. Institutional proximity between the origin and the host country also matters, but we find little impact of institutions in the origin country. These results are encouraging in the sense that efforts towards raising the quality of institutions and making them converge towards those of source countries may help developing countries to receive more FDI, independently of the indirect impact of higher GDP per capita. The orders of magnitude found in the paper are large, meaning that moving from a low level to a high level of institutional quality could have as much impact as suddenly becoming a neighbour of a source country.

Louis Martin, Benjamin Muller, Pedro Javier Ortiz Suárez, Yoann Dupont, Laurent Romary, Éric de la Clergerie, Djamé Seddah, Benoît Sagot. Proceedings of the 58th Annual Meeting of the Association for Computational Linguistics. 2020.

This article analyzes the heterogeneous reaction of exporters to real exchange rate changes using a very rich French firm-level data set with destination-specific export values and volumes on the period 1995–2005. We find that high–performance firms react to a depreciation by increasing significantly more their markup and by increasing less their export volume. This heterogeneity in pricing-to-market is robust to different measures of performance, samples, and econometric specifications. It is consistent with models where the demand elasticity decreases with firm performance. Since aggregate exports are concentrated on high-productivity firms, precisely those that absorb more exchange rate movements in their markups, heterogeneous pricing-to-market may partly explain the weak impact of exchange rate movements on aggregate exports.

This paper investigates the relationship between economic growth and pollutant emissions for a small and open developing country, Tunisia, during the period 1961–2004. The investigation is made on the basis of the environmental Kuznets curve hypothesis, using time series data and cointegration analysis. Carbon dioxide (CO2) and sulfur dioxide (SO2) are used as the environmental indicators, and GDP as the economic indicator. Our results show that there is a long-run cointegrating relationship between the per capita emissions of two pollutants and the per capita GDP. An inverted U relationship between SO2 emissions and GDP has been found, with income turning point approximately equals to $1200 (constant 2000 prices) or to $3700 (in PPP, constant 2000 prices). However, a monotonically increasing relationship with GDP is found more appropriate for CO2 emissions. Furthermore, the causality results show that the relationship between income and pollution in Tunisia is one of unidirectional causality with income causing environmental changes and not vice versa, both in the short-run and long-run. This implies that an emission reduction policies and more investment in pollution abatement expense will not hurt economic growth. It could be a feasible policy tool for Tunisia to achieve its sustainable growth in the long-run.

International audience

Is maximum likelihood suitable for factor models in large cross-sections of time series? We answer this question from both an asymptotic and an empirical perspective. We show that estimates of the common factors based on maximum likelihood are consistent for the size of the cross-section (n) and the sample size (T), going to infinity along any path, and that maximum likelihood is viable for n large. The estimator is robust to misspecification of cross-sectional and time series correlation of the idiosyncratic components. In practice, the estimator can be easily implemented using the Kalman smoother and the EM algorithm as in traditional factor analysis.

International audience

This volume grows out of the research on the United States summarized in Low-Wage America: How Employers Are Reshaping Opportunities in the Workplace, which sought to understand how U.S. firms were responding to economic globalization, deregulation, and technological progress, and how such responses were affecting typically low-wage front-line workers. The focus is placed here on five industries --retail, hotels, hospitals, food processing, and call centers-- in each of five European countries --Denmark, France, Germany, the Netherlands, and the United Kingdom. The varied experience of European firms offers a rich source of insights into the interaction of firm strategies, labor-market institutions, and economic outcomes for low-wage workers. Relative to the United States, the generally higher degrees of government regulation of product and labor markets and the substantially higher rates of unionization and coverage by collective bargaining agreements in Europe mean that European firms typically face greater constraints on the business strategies than similar firms in the United States. The volume consists of two parts. The first (Chapters 1 through 4) reviews key features of the six national economies, their labor-market institutions, and low-wage work. Chapter 2 presents our main findings on the level and trends in low-wage work, and the principal characteristics of the low-wage labor markets in each country. Chapter 3 analyzes the national pay-setting institutions, broadly defined, that are the primary determinants of wages in each of the six economies. Chapter 4 reviews the effect of national institutions on the supply side of the low-wage labor market. The second half of the volume (Chapters 5 through 10) presents the five industry case studies. Chapter 5 is an overview of the main industry-level findings. Chapter 6 examines retail; Chapter 7, hotels; Chapter 8, hospitals; Chapter 9, food processing; and Chapter 10, call centers.

Empirical investigation of the quality interpretation of the Melitz (2003) model of firm heterogeneity and trade has been limited by the lack of direct data on quality. This paper matches firm-level export data with expert assessments of the quality of champagne producers to estimate the key parameters of that model. Quality monotonically increases firm-level prices, the probability of market entry, and export values. The estimated model—which calibrates the relative importance of firm-level quality and idiosyncratic demand—accurately predicts the average quality exported to each country. Simulations show that the data reject the polar alternatives where outcomes are based entirely on either quality or randomness.

This paper analyses the role of intangibles in global value chains (GVCs). We find that the intensification of the use of intangible assets within these chains has created new sources of market power. The analysis builds the notion of Intellectual Monopoly Capitalism, where government protections of intellectual property have the effect of locking in the monopoly power from intangible asset creation. We extend it to ‘information rents’ arising from the presence of scale economies and network externalities associated with the production of intangible assets. GVC integration requires a dense circulation of information flows to communicate specifications, standards, technical know-how in addition to costs and other operational details. The expansion of GVC trade is thus linked to a rising mobilization and circulation of intangibles and the monopoly dynamics arising from intangibles need to be assessed in this context.

L'impératif délibératif Loïc Blondiaux, Yves Sintomer Un changement idéologique accompagne les transformations actuelles des pratiques politiques dans les démocraties contemporaines. Il passe par la valorisation de certaines notions : la discussion, le débat, la concertation, la consultation, la participation, le partenariat, la gouvernance. Deux phénomènes sont à l'œuvre. Dans la sphère de l'action politique se multiplient les dispositifs qui visent à intégrer une pluralité d'acteurs et à mettre la décision en débat. Dans la sphère académique la référence à la démocratie délibérative connaît aujourd'hui un succès croissant, en particulier dans le monde anglo-saxon. Existe-t-il un lien entre ces deux mouvements ? Assiste-t-on, avec la montée de cet impératif délibératif, à l'émergence d'un nouvel idéal de gouvernement ? Quelles sont les effets réels induits par la multiplication des dispositifs de participation et des procédures de délibération sur les acteurs, les mobilisations et les décisions collectives ? Cet article tente de répondre à ces différentes questions.

Abstract We review recent advances in the field of decision making under uncertainty or ambiguity. We start with a presentation of the general approach to a decision problem under uncertainty, as well as the ‘standard’ Bayesian treatment and issues with this treatment. We present more general approaches (Choquet expected utility, maximin expected utility, smooth ambiguity and so forth) that have been developed in the literature under the name of models of ambiguity sensitive preferences. We draw a distinction between fully subjective models and models incorporating explicitly some information. We review definitions and characterizations of ambiguity aversion in these models. We mention the challenges posed by some of the models presented. We end with a review of part of the experimental literature and applications of these models to economic settings.

The literature on the growth effects of European integration remains inconclusive. This is due to severe methodological difficulties mostly driven by country heterogeneity. This paper addresses these concerns using the synthetic control method. It constructs counterfactuals for countries that joined the European Union (EU) from 1973 to 2004. We find that growth effects from EU membership are large and positive, with Greece as the exception. Despite substantial variation across countries and over time, we estimate that without European integration, per capita incomes would have been, on average, approximately 10% lower in the first ten years after joining the EU.

Longer lives and fertility far below the replacement level of 2.1 births per woman are leading to rapid population aging in many countries. Many observers are concerned that aging will adversely affect public finances and standards of living. Analysis of newly available National Transfer Accounts data for 40 countries shows that fertility well above replacement would typically be most beneficial for government budgets. However, fertility near replacement would be most beneficial for standards of living when the analysis includes the effects of age structure on families as well as governments. And fertility below replacement would maximize per capita consumption when the cost of providing capital for a growing labor force is taken into account. Although low fertility will indeed challenge government programs and very low fertility undermines living standards, we find that moderately low fertility and population decline favor the broader material standard of living.

In this paper, we use online search engines and archive collections to examine the popularity of socially responsible investing ( SRI ) in newspapers and academic journals. A simple content analysis suggests that most of the papers on SRI focus on financial performance. This profusion of research is somewhat puzzling as most of the studies used roughly the same methodology and obtained very similar results. So, why are there so many studies on SRI financial performance? We argue that the academic literature on SRI is mostly data driven: the famous ‘looking for the keys under the lamppost’ syndrome. The question of the financial performance of the SRI funds is certainly relevant but maybe too much attention has been paid to this issue, whereas more research is needed on a conceptual and theoretical ground, in particular the aspirations of SRI investors, the relationship between regulation and SRI as well as the assessment of extra‐financial performances.

We analyze the Rosenblatt process which is a selfsimilar process with stationary increments and which appears as limit in the so-called Non Central Limit Theorem (Dobrushin and Majòr (1979), Taqqu (1979)). This process is non-Gaussian and it lives in the second Wiener chaos. We give its representation as a Wiener-Itô multiple integral with respect to the Brownian motion on a finite interval and we develop a stochastic calculus with respect to it by using both pathwise type calculus and Malliavin calculus.

From the beginning of the 1990s up until 2007, leading retailers experienced a slowdown of their growth in domestic markets and yet generated an opposite upward trend in return on equity (ROE). This apparent paradox is examined through an analysis of the 10 main retailers' accounts. Focusing on the links between financialization and globalization processes, this article examines a variety of complementary ways of making profits implemented within the industry to satisfy impatient shareholders: foreign expansion, financialization of assets, deterioration of suppliers' and workers' positions and the use of working capital management to transform market power into financial gains.

This work explores basic properties of the size and growth rates distributions of firms at the aggregate and disaggregate levels. Using an extensive dataset on French manufacturing firms, we investigate which properties of firm size distributions and growth dynamics characterize the aggregate dynamics and are, at the same time, robust under disaggregation. Our analysis is based on nonlinear robust regression methods which have never been applied before to this kind of data. The growth rates distributions we observe are well described by a Subbotin distribution with a shape parameter significantly lower than 1, suggesting a noticeable departure from the Laplace behaviour reported in previous works on Italian and the US data. At the same time, the variance of growth rates depends negatively on size and the relationship does not seem to be linear, with larger firms possibly displaying lower variability in their growth dynamics. At the disaggregate level, we observe significant heterogeneity in the firm size distributions across sectors, while the shape of the sectoral growth rates density displays a surprising degree of homogeneity.

This paper offers a reappraisal of the impact of migration on economic growth for 22 OECD countries between 1986–2006, and relies on a unique data set we compiled that allows us to distinguish net migration of the native- and foreign-born populations by skill level. Specifically, after introducing migration in an augmented Solow-Swan model, we estimate a dynamic panel model using a system of generalized method of moments (SYS-GMM) to address the risk of endogeneity bias in the migration variables. Two important findings emerge from our analysis. First, there exists a positive impact of migrants’ human capital on GDP <it>per capita</it>, and second, a permanent increase in migration flows has a positive effect on GDP per worker. Moreover, the growth impact of immigration is high even in countries that have non-selective migration policies.

We consider the effect of geography on wages using individual data from 56 Chinese cities. We present a simple new economic geography model that links wages to individual characteristics and market access. The latter is calculated as a transport cost weighted sum of surrounding locations' market capacity. After controlling for individual skills and local factor endowments, we find that a significant fraction of the interindividual differences in returns to labor can be explained by the geography of market access. We further find greater wage sensitivity to market access for highly skilled workers and for workers in private and, particularly, foreign-owned firms.