Shareholder Capitalism: Rising Market Concentration, Slower Productivity Growth, Rising Inequality, Rising Profits, and Rising Equities Markets

Shareholder Capitalism: Rising Market Concentration, Slower Productivity Growth, Rising Inequality, Rising Profits, and Rising Equities Markets

 

Public traded companies are always under pressure to show earnings growth and sales revenue growth to enhance shareholder value.

 

How do they do it when markets have matured and economy has slowed?

  • Lower Costs
  • Increase Market Share
  • Find New Markets
  • Diversify
  • Create New products and servicces

 

How do then companies lower their costs?

  • Vertical Mergers and Acquisitions
  • Outsourcing (Sourcing parts and components / Intermediate Goods / Inputs from cross border)
  • Offshoring (Shifting Production cross border)
  • Vertical Integration

 

How do then companies increase their market share?

  • Horizontal Mergers and Acquisitions
  • Cross Border Markets Share (Sales in other countries)

 

In the last thirty years, this is exactly what has happened in US economy.

Macro Trends of increase in Outsourcing/Offshoring, Increase in Market Concentration, Increase in Inequality, Increase in Corporate Profits, Rising Equity Prices, Slower Productivity Growth, Lower Interest Rates, Low Labor Share, and Capital Share.

Please see my other posts expanding on these issues.

Please note that these forces are continuing and trends will remain on current trajectory.

 

Key Terms:

  • Stakeholder vs Shareholder Capitalism
  • Short Termism
  • Slow Productivity Growth
  • Rising Market Concentration
  • Rising Profits
  • Rising Equities Market
  • Rising Inequality
  • Dupont Ratio Analysis
  • Financial Planning (Micro – Firm Level)
  • Economic Planning (Macro- Aggregate Level)
  • Quarterly Capitalism

 

From SHAREHOLDER CAPITALISM: A SYSTEM IN CRISIS

Our current, highly financialised, form of shareholder capitalism is not just failing to provide new capital for investment, it is actively undermining the ability of listed companies to reinvest their own profits. The stock market has become a vehicle for extracting value from companies, not for injecting it.

No wonder that Andy Haldane, Chief Economist of the Bank of England, recently suggested that shareholder capitalism is ‘eating itself.’1 Corporate governance has become dominated by the need to maximise short-term shareholder returns. At the same time, financial markets have grown more complex, highly intermediated, and similarly shorttermist, with shares increasingly seen as paper assets to be traded rather than long term investments in sound businesses.

This kind of trading is a zero-sum game with no new wealth, let alone social value, created. For one person to win, another must lose – and increasingly, the only real winners appear to be the army of financial intermediaries who control and perpetuate the merry-goround. There is nothing natural or inevitable about the shareholder-owned corporation as it currently exists. Like all economic institutions, it is a product of political and economic choices which can and should be remade if they no longer serve our economy, society, or environment.

Here’s the impact this shareholder model is currently having:
• Economy: Shareholder capitalism is holding back productive investment. Even the Chief Executive of BlackRock, the world’s largest asset manager, has admitted that pressure to keep the share price high means corporate leaders are ‘underinvesting in innovation, skilled workforces or essential capital expenditures.’ 2
• Society: Shareholder capitalism is driving inequality. There is growing evidence that attempts to align executive pay with shareholder value are largely responsible for the ballooning of salaries at the top. The prioritisation of shareholder interests has also contributed to a dramatic decline in UK wages relative to profits, helping to explain the failure of ordinary people’s living standards to rise in line with economic growth.
• Environment: Shareholder capitalism helps to drive environmental destruction. It does this by driving risky shortterm behaviour, such as fossil fuel extraction, which ignores long-term environmental risks.

The idea that shareholder capitalism is the most efficient way to mobilise large amounts of capital is no longer tenable.

We need both to create new models of companies, and implement new ways of organising investment that are fit for building an inclusive, equal, and sustainable economy.

Companies should be explicitly accountable to a mission and a set of interests beyond shareholder returns. Equally, investment must provide long-term capital for socially and environmentally useful projects, and damaging forms of speculation must be restricted.

For most people, our economy simply is not working, and the damaging aspects of shareholder capitalism are at least in part responsible. Reforming shareholder capitalism must not be dismissed as too difficult – the crisis is too urgent for that. We can take the first steps towards a better economic model right now. It’s time to act.

 

 

A Crash Course in Dupont Financial Ratio Analysis

 

  • What happens when economic growth slows ?
  • What happens when profit margins decline ?
  • What happens when Sales growth is limited ?
  • What does lead to Mergers and Acquisitions ?
  • What is the impact of Cost of Capital ?
  • What is EVA (Economic Value Added) ?
  • What is impact of Outsourcing/Offshoring on Financial Ratios ?
  • What is impact of Mergers and Acquisitions on Financial Ratios ?
  • What is impact of Stock Buy Backs on Financial Ratios ?
  • What is impact of Dividends on Financial Ratios ?
  • ROS (Return on Sales)
  • ROE (Return on Equities)
  • ROA (Return on Assets)
  • ROIC (Return on Invested Capital)
  • EVA (Economic Value Added)
  • MVA (Market Value Added)

From The DuPont Equation, ROE, ROA, and Growth

The DuPont Equation

The DuPont equation is an expression which breaks return on equity down into three parts: profit margin, asset turnover, and leverage.

Learning Objectives

Explain why splitting the return on equity calculation into its component parts may be helpful to an analyst

Key Takeaways

Key Points

  • By splitting ROE into three parts, companies can more easily understand changes in their returns on equity over time.
  • As profit margin increases, every sale will bring more money to a company’s bottom line, resulting in a higher overall return on equity.
  • As asset turnover increases, a company will generate more sales per asset owned, resulting in a higher overall return on equity.
  • Increased financial leverage will also lead to an increase in return on equity, since using more debt financing brings on higher interest payments, which are tax deductible.

Key Terms

  • competitive advantage: something that places a company or a person above the competition

The DuPont Equation

image

DuPont Model: A flow chart representation of the DuPont Model.

The DuPont equation is an expression which breaks return on equity down into three parts. The name comes from the DuPont Corporation, which created and implemented this formula into their business operations in the 1920s. This formula is known by many other names, including DuPont analysis, DuPont identity, the DuPont model, the DuPont method, or the strategic profit model.

The DuPont Equation: In the DuPont equation, ROE is equal to profit margin multiplied by asset turnover multiplied by financial leverage.

Under DuPont analysis, return on equity is equal to the profit margin multiplied by asset turnover multiplied by financial leverage. By splitting ROE (return on equity) into three parts, companies can more easily understand changes in their ROE over time.

Components of the DuPont Equation: Profit Margin

Profit margin is a measure of profitability. It is an indicator of a company’s pricing strategies and how well the company controls costs. Profit margin is calculated by finding the net profit as a percentage of the total revenue. As one feature of the DuPont equation, if the profit margin of a company increases, every sale will bring more money to a company’s bottom line, resulting in a higher overall return on equity.

Components of the DuPont Equation: Asset Turnover

Asset turnover is a financial ratio that measures how efficiently a company uses its assets to generate sales revenue or sales income for the company. Companies with low profit margins tend to have high asset turnover, while those with high profit margins tend to have low asset turnover. Similar to profit margin, if asset turnover increases, a company will generate more sales per asset owned, once again resulting in a higher overall return on equity.

Components of the DuPont Equation: Financial Leverage

Financial leverage refers to the amount of debt that a company utilizes to finance its operations, as compared with the amount of equity that the company utilizes. As was the case with asset turnover and profit margin, Increased financial leverage will also lead to an increase in return on equity. This is because the increased use of debt as financing will cause a company to have higher interest payments, which are tax deductible. Because dividend payments are not tax deductible, maintaining a high proportion of debt in a company’s capital structure leads to a higher return on equity.

The DuPont Equation in Relation to Industries

The DuPont equation is less useful for some industries, that do not use certain concepts or for which the concepts are less meaningful. On the other hand, some industries may rely on a single factor of the DuPont equation more than others. Thus, the equation allows analysts to determine which of the factors is dominant in relation to a company’s return on equity. For example, certain types of high turnover industries, such as retail stores, may have very low profit margins on sales and relatively low financial leverage. In industries such as these, the measure of asset turnover is much more important.

High margin industries, on the other hand, such as fashion, may derive a substantial portion of their competitive advantage from selling at a higher margin. For high end fashion and other luxury brands, increasing sales without sacrificing margin may be critical. Finally, some industries, such as those in the financial sector, chiefly rely on high leverage to generate an acceptable return on equity. While a high level of leverage could be seen as too risky from some perspectives, DuPont analysis enables third parties to compare that leverage with other financial elements that can determine a company’s return on equity.

ROE and Potential Limitations

Return on equity measures the rate of return on the ownership interest of a business and is irrelevant if earnings are not reinvested or distributed.

Learning Objectives

Calculate a company’s return on equity

Key Takeaways

Key Points

  • Return on equity is an indication of how well a company uses investment funds to generate earnings growth.
  • Returns on equity between 15% and 20% are generally considered to be acceptable.
  • Return on equity is equal to net income (after preferred stock dividends but before common stock dividends) divided by total shareholder equity (excluding preferred shares ).
  • Stock prices are most strongly determined by earnings per share (EPS) as opposed to return on equity.

Key Terms

  • fundamental analysis: An analysis of a business with the goal of financial projections in terms of income statement, financial statements and health, management and competitive advantages, and competitors and markets.

Return On Equity

Return on equity (ROE) measures the rate of return on the ownership interest or shareholders’ equity of the common stock owners. It is a measure of a company’s efficiency at generating profits using the shareholders’ stake of equity in the business. In other words, return on equity is an indication of how well a company uses investment funds to generate earnings growth. It is also commonly used as a target for executive compensation, since ratios such as ROE tend to give management an incentive to perform better. Returns on equity between 15% and 20% are generally considered to be acceptable.

The Formula

Return on equity is equal to net income, after preferred stock dividends but before common stock dividends, divided by total shareholder equity and excluding preferred shares.

Return On Equity: ROE is equal to after-tax net income divided by total shareholder equity.

Expressed as a percentage, return on equity is best used to compare companies in the same industry. The decomposition of return on equity into its various factors presents various ratios useful to companies in fundamental analysis.

ROE Broken Down: This is an expression of return on equity decomposed into its various factors.

The practice of decomposing return on equity is sometimes referred to as the “DuPont System. ”

Potential Limitations of ROE

Just because a high return on equity is calculated does not mean that a company will see immediate benefits. Stock prices are most strongly determined by earnings per share (EPS) as opposed to return on equity. Earnings per share is the amount of earnings per each outstanding share of a company’s stock. EPS is equal to profit divided by the weighted average of common shares.

Earnings Per Share: EPS is equal to profit divided by the weighted average of common shares.

The true benefit of a high return on equity comes from a company’s earnings being reinvested into the business or distributed as a dividend. In fact, return on equity is presumably irrelevant if earnings are not reinvested or distributed.

Assessing Internal Growth and Sustainability

Sustainable– as opposed to internal– growth gives a company a better idea of its growth rate while keeping in line with financial policy.

Learning Objectives

Calculate a company’s internal growth and sustainability ratios

Key Takeaways

Key Points

  • The internal growth rate is a formula for calculating the maximum growth rate a firm can achieve without resorting to external financing.
  • Sustainable growth is defined as the annual percentage of increase in sales that is consistent with a defined financial policy.
  • Another measure of growth, the optimal growth rate, assesses sustainable growth from a total shareholder return creation and profitability perspective, independent of a given financial strategy.

Key Terms

  • retention: The act of retaining; something retained
  • retention ratio: retained earnings divided by net income
  • sustainable growth rate: the optimal growth from a financial perspective assuming a given strategy with clear defined financial frame conditions/ limitations

Internal Growth and Sustainability

The true benefit of a high return on equity arises when retained earnings are reinvested into the company’s operations. Such reinvestment should, in turn, lead to a high rate of growth for the company. The internal growth rate is a formula for calculating maximum growth rate that a firm can achieve without resorting to external financing. It’s essentially the growth that a firm can supply by reinvesting its earnings. This can be described as (retained earnings)/(total assets ), or conceptually as the total amount of internal capital available compared to the current size of the organization.

We find the internal growth rate by dividing net income by the amount of total assets (or finding return on assets ) and subtracting the rate of earnings retention. However, growth is not necessarily favorable. Expansion may strain managers’ capacity to monitor and handle the company’s operations. Therefore, a more commonly used measure is the sustainable growth rate.

Sustainable growth is defined as the annual percentage of increase in sales that is consistent with a defined financial policy, such as target debt to equity ratio, target dividend payout ratio, target profit margin, or target ratio of total assets to net sales.

We find the sustainable growth rate by dividing net income by shareholder equity (or finding return on equity) and subtracting the rate of earnings retention. While the internal growth rate assumes no financing, the sustainable growth rate assumes you will make some use of outside financing that will be consistent with whatever financial policy being followed. In fact, in order to achieve a higher growth rate, the company would have to invest more equity capital, increase its financial leverage, or increase the target profit margin.

Optimal Growth Rate

Another measure of growth, the optimal growth rate, assesses sustainable growth from a total shareholder return creation and profitability perspective, independent of a given financial strategy. The concept of optimal growth rate was originally studied by Martin Handschuh, Hannes Lösch, and Björn Heyden. Their study was based on assessments on the performance of more than 3,500 stock-listed companies with an initial revenue of greater than 250 million Euro globally, across industries, over a period of 12 years from 1997 to 2009.

image

Revenue Growth and Profitability: ROA, ROS and ROE tend to rise with revenue growth to a certain extent.

Due to the span of time included in the study, the authors considered their findings to be, for the most part, independent of specific economic cycles. The study found that return on assets, return on sales and return on equity do in fact rise with increasing revenue growth of between 10% to 25%, and then fall with further increasing revenue growth rates. Furthermore, the authors attributed this profitability increase to the following facts:

  1. Companies with substantial profitability have the opportunity to invest more in additional growth, and
  2. Substantial growth may be a driver for additional profitability, whether by attracting high performing young professionals, providing motivation for current employees, attracting better business partners, or simply leading to more self-confidence.

However, according to the study, growth rates beyond the “profitability maximum” rate could bring about circumstances that reduce overall profitability because of the efforts necessary to handle additional growth (i.e., integrating new staff, controlling quality, etc).

Dividend Payments and Earnings Retention

The dividend payout and retention ratios offer insight into how much of a firm’s profit is distributed to shareholders versus retained.

Learning Objectives

Calculate a company’s dividend payout and retention ratios

Key Takeaways

Key Points

  • Many corporations retain a portion of their earnings and pay the remainder as a dividend.
  • Dividends are usually paid in the form of cash, store credits, or shares in the company.
  • Cash dividends are a form of investment income and are usually taxable to the recipient in the year that they are paid.
  • Dividend payout ratio is the fraction of net income a firm pays to its stockholders in dividends.
  • Retained earnings can be expressed in the retention ratio.

Key Terms

  • stock split: To issue a higher number of new shares to replace old shares. This effectively increases the number of shares outstanding without changing the market capitalization of the company.

Dividend Payments and Earnings Retention

Dividends are payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders. On the other hand, retained earnings refers to the portion of net income which is retained by the corporation rather than distributed to its owners as dividends. Similarly, if the corporation takes a loss, then that loss is retained and called variously retained losses, accumulated losses or accumulated deficit. Retained earnings and losses are cumulative from year to year with losses offsetting earnings. Many corporations retain a portion of their earnings and pay the remainder as a dividend.

A dividend is allocated as a fixed amount per share. Therefore, a shareholder receives a dividend in proportion to their shareholding. Retained earnings are shown in the shareholder equity section in the company’s balance sheet –the same as its issued share capital.

Public companies usually pay dividends on a fixed schedule, but may declare a dividend at any time, sometimes called a “special dividend” to distinguish it from the fixed schedule dividends. Dividends are usually paid in the form of cash, store credits (common among retail consumers’ cooperatives), or shares in the company (either newly created shares or existing shares bought in the market). Further, many public companies offer dividend reinvestment plans, which automatically use the cash dividend to purchase additional shares for the shareholder.

Cash dividends (most common) are those paid out in currency, usually via electronic funds transfer or a printed paper check. Such dividends are a form of investment income and are usually taxable to the recipient in the year they are paid. This is the most common method of sharing corporate profits with the shareholders of the company. For each share owned, a declared amount of money is distributed. Thus, if a person owns 100 shares and the cash dividend is $0.50 per share, the holder of the stock will be paid $50. Dividends paid are not classified as an expense but rather a deduction of retained earnings. Dividends paid do not show up on an income statement but do appear on the balance sheet.

image

Example Balance Sheet: Retained earnings can be found on the balance sheet, under the owners’ (or shareholders’) equity section.

Stock dividends are those paid out in the form of additional stock shares of the issuing corporation or another corporation (such as its subsidiary corporation). They are usually issued in proportion to shares owned (for example, for every 100 shares of stock owned, a 5% stock dividend will yield five extra shares). If the payment involves the issue of new shares, it is similar to a stock split in that it increases the total number of shares while lowering the price of each share without changing the market capitalization, or total value, of the shares held.

Dividend Payout and Retention Ratios

Dividend payout ratio is the fraction of net income a firm pays to its stockholders in dividends:

The part of the earnings not paid to investors is left for investment to provide for future earnings growth. These retained earnings can be expressed in the retention ratio. Retention ratio can be found by subtracting the dividend payout ratio from one, or by dividing retained earnings by net income.

Dividend Payout Ratio: The dividend payout ratio is equal to dividend payments divided by net income for the same period.

Relationships between ROA, ROE, and Growth

Return on assets is a component of return on equity, both of which can be used to calculate a company’s rate of growth.

Learning Objectives

Discuss the different uses of the Return on Assets and Return on Assets ratios

Key Takeaways

Key Points

  • Return on equity measures the rate of return on the shareholders ‘ equity of common stockholders.
  • Return on assets shows how profitable a company’s assets are in generating revenue.
  • In other words, return on assets makes up two-thirds of the DuPont equation measuring return on equity.
  • Capital intensity is the term for the amount of fixed or real capital present in relation to other factors of production. Rising capital intensity pushes up the productivity of labor.

Key Terms

  • return on common stockholders’ equity: a fiscal year’s net income (after preferred stock dividends but before common stock dividends) divided by total equity (excluding preferred shares), expressed as a percentage
  • quantitatively: With respect to quantity rather than quality.

Return On Assets Versus Return On Equity

In review, return on equity measures the rate of return on the ownership interest (shareholders’ equity) of common stockholders. Therefore, it shows how well a company uses investment funds to generate earnings growth. Return on assets shows how profitable a company’s assets are in generating revenue. Return on assets is equal to net income divided by total assets.

Return On Assets: Return on assets is equal to net income divided by total assets.

This percentage shows what the company can do with what it has (i.e., how many dollars of earnings they derive from each dollar of assets they control). This is in contrast to return on equity, which measures a firm’s efficiency at generating profits from every unit of shareholders’ equity. Return on assets is, however, a vital component of return on equity, being an indicator of how profitable a company is before leverage is considered. In other words, return on assets makes up two-thirds of the DuPont equation measuring return on equity.

ROA, ROE, and Growth

In terms of growth rates, we use the value known as return on assets to determine a company’s internal growth rate. This is the maximum growth rate a firm can achieve without resorting to external financing. We use the value for return on equity, however, in determining a company’s sustainable growth rate, which is the maximum growth rate a firm can achieve without issuing new equity or changing its debt-to-equity ratio.

Capital Intensity and Growth

Return on assets gives us an indication of the capital intensity of the company. “Capital intensity” is the term for the amount of fixed or real capital present in relation to other factors of production, especially labor. The underlying concept here is how much output can be procured from a given input (assets!). The formula for capital intensity is below:

Capital Intensity=Total AssetsSales

The use of tools and machinery makes labor more effective, so rising capital intensity pushes up the productivity of labor. While companies that require large initial investments will generally have lower return on assets, it is possible that increased productivity will provide a higher growth rate for the company. Capital intensity can be stated quantitatively as the ratio of the total money value of capital equipment to the total potential output. However, when we adjust capital intensity for real market situations, such as the discounting of future cash flows, we find that it is not independent of the distribution of income. In other words, changes in the retention or dividend payout ratios can lead to changes in measured capital intensity.

 

 

1280px-DuPontModelEng.svg

Please see my related posts:

Rising Market Concentration and Declining Business Investments in the USA – Update June 2018

Why do Firms buyback their Shares? Causes and Consequences.

FDI vs Outsourcing: Extending Boundaries or Extending Network Chains of Firms

Trading Down: NAFTA, TPP, TATIP and Economic Globalization

On Inequality of Wealth and Income – Causes and Consequences

Rising Profits, Rising Inequality, and Rising Industry Concentration in the USA

Low Interest Rates and Business Investments : Update August 2017

Low Interest Rates and Monetary Policy Effectiveness

Low Interest Rates and Banks’ Profitability : Update July 2017

Short term Thinking in Investment Decisions of Businesses and Financial Markets

Mergers and Acquisitions – Long Term Trends and Waves

Business Investments and Low Interest Rates

The Decline in Long Term Real Interest Rates

Low Interest Rates and Banks Profitability: Update – December 2016

 

 Key Sources of Research:

 

 

 

The DuPont Equation, ROE, ROA, and Growth

https://courses.lumenlearning.com/boundless-finance/chapter/the-dupont-equation-roe-roa-and-growth/

 

 

Short-Termism in business: causes, mechanisms and consequences

EY Poland Report

 

Click to access Short-termism_raport_EY.pdf

 

 

Shareholders vs Stakeholders Capitalism

Fabian Brandt

Goethe University

Konstantinos Georgiou

University of Pennsylvania

 

https://scholarship.law.upenn.edu/cgi/viewcontent.cgi?article=1002&context=fisch_2016

 

 

Hedrick Smith Speaks to the Community about Who Stole the American Dream.

 

http://nhlabornews.com/2013/10/hedrick-smith-speaks-to-the-community-about-who-stole-the-american-dream/

 

 

Let’s Talk About “Maximizing Shareholder Value”

https://www.pragcap.com/lets-talk-about-maximizing-shareholder-value/

 

 

SHAREHOLDER CAPITALISM: A SYSTEM IN CRISIS

 

New Economics Foundation

 

Click to access NEF_SHAREHOLDER-CAPITALISM_E_latest.pdf

 

 

 

THE HISTORICAL CONTEXT OF SHAREHOLDER VALUE CAPITALISM

 

Mark S. Mizruchi and Howard Kirneldorf

 

Click to access 191bbc2b82f351633c7379deea7b9ccad0e9.pdf

 

 

Shareholder capitalism on trial

 

By Robert J. Samuelson

 

Click to access 03-19-15_WashingtonPost.pdf

 

 

 

The real business of business

McKinsey

 

https://www.mckinsey.com/~/media/mckinsey/dotcom/client_service/Corporate%20Finance/MoF/Issue%2053/MoF53_The_real_business_of_business.ashx

 

 

 

Managers and Market Capitalism

 

Rebecca Henderson Karthik Ramanna

HBR

 

Click to access Henderson_Ramanna___Managers_and_Market_Capitalism___March_2013.pdf

 

 

The Embedded Firm: Corporate Governance, Labor, and Finance Capitalism

Peer Zumbansen

Cynthia A. Williams

 

http://digitalcommons.osgoode.yorku.ca/cgi/viewcontent.cgi?article=1056&context=clpe

 

 

 

 

Andrew G Haldane: Who owns a company?

Speech by Mr Andrew G Haldane,

Executive Director and Chief Economist of the Bank of England,

at the University of Edinburgh Corporate Finance Conference, Edinburgh,

22 May 2015.

 

Click to access r150811a.pdf

 

 

 

 

Capitalism for the Long Term

MARCH 2011
HBR

The Short Long

 

Speech by
Andrew G Haldane, Executive Director, Financial Stability, and Richard Davies

29th Societé Universitaire Europeene de Recherches Financieres Colloquium: New Paradigms in Money and Finance?

Brussels

May 2011

 

https://www.bankofengland.co.uk/-/media/boe/files/speech/2011/the-short-long-speech-by-andrew-haldane

 

 

 

 

Is short-termism wrecking the economy?

Redefining capitalism

By Eric Beinhocker and Nick Hanauer

Fast finance and slow growth

 

Andy Haldane

http://progressive-policy.net/2015/09/fast-finance-and-slow-growth/

 

Beyond Shareholder Value

The reasons and choices for corporate governance reform

Click to access BSV.pdf

 

 

AN ECONOMY FOR THE 99%

It’s time to build a human economy that benefits everyone, not just the privileged few

OXFAM

 

Click to access bp-economy-for-99-percent-160117-en.pdf

 

 

Short-Termism

By Douglas K. Chia

 

Click to access 01181_millstein_10th_anniversary_essay_2_chia_v2.pdf

 

 

 

The Future of Finance

THE LSE REPORT

 

Click to access future-of-finance-chapter-3.pdf

 

 

 

Is Short-Term Behavior Jeopardizing the Future Prosperity of Business?

 

Click to access IsShortTermBehaviorJeopardizingTheFutureProsperityOfBusiness_CEOStrategicImplications.pdf

 

 

 

 

How Effective Capital Regulation can Help Reduce the Too‐Big‐To‐Fail Problem

Anat Admati

Stanford University

 

Click to access Minn-Fed-combined.pdf

 

 

 

Business School’s Worst Idea: Why the “Maximize Shareholder Value” Theory Is Bogus

Yves Smith

http://evonomics.com/maximize-shareholder-value-theory-yves-smith/

 

 

 

When Shareholder Capitalism Came to Town

The American Prospect

http://prospect.org/article/when-shareholder-capitalism-came-town

 

 

 

Competition Conference 2018

What’s the Evidence for Strengthening Competition Policy?

Boston University

July 2018

http://sites.bu.edu/tpri/competition-conference-2018/

 

 

 

Market Concentration

Issues paper by the Secretariat
6-8 June 2018

This document was prepared by the OECD Secretariat to serve as an issues paper for the hearing on market concentration taking place at the 129th meeting of the OECD Competition Committee on 6-8 June 2018

https://one.oecd.org/document/DAF/COMP/WD(2018)46/en/pdf

 

 

 

 

Monopoly’s New Era

In today’s economy, many industries can’t be analyzed through the lens of competition.

Chazen Global Insights
May 13, 2016

 

https://www8.gsb.columbia.edu/articles/chazen-global-insights/monopoly-s-new-era

 

 

 

Market power in the U.S. economy today

Washington Center for Equitable Growth

http://equitablegrowth.org/research-analysis/market-power-in-the-u-s-economy-today/

 

 

 

Don’t Panic: A Guide to Claims of Increasing Concentration

Gregory J. Werden

Luke Froeb

 

Date Written: April 5, 2018

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3156912

 

 

 

Market concentration

OECD

http://www.oecd.org/daf/competition/market-concentration.htm

 

 

 

 

A Firm-Level Perspective on the Role of Rents in the Rise in Inequality

Jason Furman Peter Orszag1

October 16, 2015

Click to access FurmanOrszag15.pdf

 

 

 

Do the Productivity Slowdown and the Inequality Increase Have a Common Cause?

Jason Furman (joint work with Peter Orszag)

Peterson Institute for International Economics
Washington, DC
November 9, 2017

Click to access 4-1furman20171109ppt.pdf

 

 

 

Is There a Connection Between Market Concentration and the Rise in Inequality?

https://promarket.org/connection-market-concentration-rise-inequality/

 

 

 

Concentrating on the Fall of the Labor Share

David; Dorn, David; Katz, Lawrence F; Patterson, Christina; Reenen, John Van

Click to access b8d7a989cab4b76e7fe795bf4572dbcdd0bc.pdf

 

 

 

 

Business Investment Spending Slowdown

April 9, 2018

FAS Congressional Research Services

Marc Labonte

Click to access IN10882.pdf

 

 

 

 

Market Power and Inequality: The Antitrust Counterrevolution and Its Discontents

Lina Khan and Sandeep Vaheesan

Click to access HLP110.pdf

 

 

 

Five Myths about Economic Inequality in America

By Michael D. Tanner
September 7, 2016

 

Cato Institiute

https://www.cato.org/publications/policy-analysis/five-myths-about-economic-inequality-america

 

 

 

 

Is the US Public Corporation in Trouble?

Kathleen M. Kahle and René M. Stulz

https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.31.3.67

 

 

 

Declining Labor and Capital Shares

Simcha Barkai

Click to access FeijooOnBarkai17.pdf

 

 

 

Growing Productivity without Growing Wages: The Micro-Level Anatomy of the Aggregate Labor Share Decline

Kehrig, Matthias; Vincent, Nicolas

(2017)

Click to access cesifo1_wp6454.pdf

 

 

 

 

Declining Competition and Investment in the U.S.

Germán Gutiérrez† and Thomas Philippon‡

March 2017

Click to access IK_Comp_v1.pdf

 

 

 

ACCOUNTING FOR RISING CORPORATE PROFITS: INTANGIBLES OR REGULATORY
RENTS?

James Bessen

Boston University School of Law

November 9, 2016

Click to access Accounting-for-Rising-Corporate-Profits.pdf

 

 

 

 

Kaldor and Piketty’s facts: The rise of monopoly power in the United States

Gauti Eggertsson
Jacob A. Robbins
Ella Getz Wold

Feb 2018

Click to access 02052018-WP-kaldor-piketty-monopoly-power.pdf

 

 

 

 

Is There an Investment Gap in Advanced Economies? If So, Why?

Robin Döttling

German Gutierrez Gallardo

Thomas Philippon

 

Date Written: July 2017

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3002796

 

 

 

 

Antitrust in a Time of Populism

Professor Carl Shapiro

CRESSE 2017 Heraklion – Crete, Greece

2 July 2017

Click to access 2017_Key_SHAPIRO.pdf

 

 

 

The Incredible Shrinking Universe of Stocks

The Causes and Consequences of Fewer U.S. Equities

Credit Suisse

March 2917

Click to access document_1072753661.pdf

 

 

 

Declining Competition and Investment in the U.S

German Gutierrez Gallardo

Thomas Philippon

 

Date Written: December 2017

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3095586

 

 

 

 

The Fall and Rise of Market Power in Europe

John P. Weche and Achim Wambach

Click to access dp18003.pdf

Click to access 1011811367.pdf

 

 

 

 

On the Formation of Capital and Wealth: IT, Monopoly Power and Rising Inequality

Mordecai Kurz,

Stanford University

2018

Click to access e50bf8be5c75f1cca2e9e3d4afa4b8b8ac84.pdf

 

 

 

 

Appendix for \Investment-less Growth: An Empirical Investigation”

 

German Gutierrez and Thomas Philippony

March 2018

Click to access gutierrezappendixfa17bpea.pdf

 

 

 

 

WP 18-4 Slower Productivity and Higher Inequality: Are They Related?

Jason Furman and Peter Orszag

June 2018

PIIE

Click to access wp18-4.pdf

 

 

 

 

THE FUTURE OF PRODUCTIVITY

OECD

2015

 

Click to access OECD-2015-The-future-of-productivity-book.pdf

 

 

 

 

OECD Study on the Future of Productivity

Video

PIIE

 

 

 

 

 

A productivity perspective on the future of growth

By James Manyika, Jaana Remes, and Jonathan Woetzel
McKinsey
2014

https://www.mckinsey.com/featured-insights/employment-and-growth/a-productivity-perspective-on-the-future-of-growth

 

 

 

 

The future of productivity in manufacturing

Anne Green, Terence Hogarth, Erika Kispeter, David Owen

Peter Glover

February 2016

Click to access ier_2016_manufacturing_sector_productivity_report.pdf

 

 

 

 

THE PRODUCTIVITY OUTLOOK: PESSIMISTS VERSUS OPTIMISTS

August 2016

Zia Qureshi
at the Brookings Institution

Click to access productivity-outlook.pdf

 

 

 

The Slowdown in Productivity Growth: A View from International Trade

Development Issues No. 11

UN

April 2017

Click to access dsp_policy_11.pdf

 

 

 

 

Five Puzzles in the Behavior of Productivity, Investment, and Innovation

Robert J. Gordon

NBER

August 2004

http://www.nber.org/papers/w10660

 

 

 

 

AN OECD AGENDA ON ISSUES IN PRODUCTIVITY MEASUREMENT

Paul Schreyer

OECD Statistics Directorate
2016 World KLEMS Conference
Madrid, May 23-24 2016

Click to access worldklems2016_Schreyer_slides.pdf

 

 

 

THE FUTURE OF PRODUCTIVITY

Chiara Criscuolo
Directorate for Science, Technology and Innovation OECD

Understanding the Great recession: from micro to macro
Bank of England
London | 24 September 2015

Click to access CCriscuolo.pdf

 

 

 

 

 

Industry 4.0

The future of Productivity and Growth in Manufacturing Industries

BCG

Click to access media.media.72e472fb-1698-4a15-8858-344351c8902f.original.pdf

 

 

 

 

The waning of productivity growth

Raymond Van der Putten

http://economic-research.bnpparibas.com/Views/DisplayPublication.aspx?type=document&IdPdf=29178

 

 

The Impact of Robots on Productivity, Employment and Jobs

A positioning paper by the International Federation of Robotics

April 2017

Click to access IFR_The_Impact_of_Robots_on_Employment.pdf

 

 

 

 

The fall in productivity growth: causes and implications

Speech given by Silvana Tenreyro, External MPC Member, Bank of England

Peston Lecture Theatre, Queen Mary University of London

15 January 2018

https://www.bankofengland.co.uk/-/media/boe/files/speech/2018/the-fall-in-productivity-growth-causes-and-implications

 

 

 

Artificial Intelligence, Automation, and the Economy

Science and Technology Council

Executive Office of the President

December 2016

Click to access EMBARGOED%20AI%20Economy%20Report.pdf

 

 

 

 

Long-term growth and productivity projections in advanced countries

Gilbert Cette, Rémy Lecat & Carole Ly-Marin

Working Paper #617

December 2016

Bank of France

Click to access DT617.pdf

 

 

 

ARE WE APPROACHING AN ECONOMIC SINGULARITY?
INFORMATION TECHNOLOGY AND THE FUTURE OF ECONOMIC GROWTH

By
William D. Nordhaus

September 2015

Click to access d2021.pdf

 

 

 

Challenges for the Future of Chinese Economic Growth

Jane Haltmaier

Federal Reseve Bank USA

2013

Click to access ifdp1072.pdf

 

 

 

Innovation, research and the UK’s productivity crisis.

Richard Jones

SPERI Paper No. 28

Click to access SPERI-Paper-28-Innovation-research-and-the-UK-productivity-crisis.pdf

 

 

 

Think Like an Enterprise: Why Nations Need Comprehensive Productivity Strategies

BY ROBERT D. ATKINSON

MAY 2016

Click to access 2016-think-like-an-enterprise.pdf

 

 

 

Solving the productivity puzzle

By Jaana Remes, James Manyika, Jacques Bughin, Jonathan Woetzel, Jan Mischke, and Mekala Krishnan

McKinsey

Feb 2018

https://www.mckinsey.com/featured-insights/meeting-societys-expectations/solving-the-productivity-puzzle

 

 

 

Solving the productivity puzzle: the role of demand and the promise of digitization

DR. JAN MISCHKE

McKinsey Global Institute

May 2018

Click to access 20180523-MGI_Solving-the-productivity-puzzle_Bruegel.pdf

 

 

Worried about Concentration? Then Worry about Rent-Seeking

By Brink Lindsey and Steven Teles
This article appeared on ProMarket on April 18, 2017.

 

https://www.cato.org/publications/commentary/worried-about-concentration-then-worry-about-rent-seeking

 

 

 

Online platforms, distortion of markets, social impacts and freedom of expression

Oxford Centre for Competition law and policy

22 May 2017

Tim Cowen.

Click to access Tim_Cowen_Oxford_Centre_for_Competition_Law_and_Policy_speech_22May2017—updated-21.09.2017.pdf

 

 

 

What’s Behind the Increase in Inequality?

By Eileen Appelbaum*

September 2017

Click to access whats-behind-the-increase-in-inequality-2017-09.pdf

 

 

 

A NATIONAL COMPETITION POLICY: UNPACKING THE PROBLEM OF DECLINING COMPETITION AND SETTING PRIORITIES MOVING FORWARD

American Antitrust Institute

September 28, 2016

Click to access AAINatlCompPolicy.pdf

 

 

 

AI and the Economy

Jason Furman
Harvard Kennedy School
Cambridge, MA

Robert Seamans
NYU Stern School of Business
New York, NY

29 May 2018

Click to access c14099.pdf

 

 

 

The United States and Europe: Short-Run Divergence and Long-Run Challenges

Jason Furman
Chairman, Council of Economic Advisers

Remarks at Bruegel
Brussels, Belgium
May 11, 2016

Click to access The-United-States-and-Europe-Short-Run-Divergence-and-Long-Run-Challenges-Jason-Furman.pdf

 

 

 

 

Business Investment Spending Slowdown

April 9, 2018

Marc Labonte

CRS Insights

Click to access IN10882.pdf

 

 

 

 

ECONOMIC REPORT OF THE PRESIDENT

Together With
THE ANNUAL REPORT
of the
COUNCIL OF ECONOMIC ADVISERS

Feb 2016

Click to access ERP-2016.pdf

 

 

Keynote Remarks of Commissioner Terrell McSweeny

Washington Center for Equitable Growth

Making Antitrust Work for the 21st Century

Washington, DC

October 6, 2016

Click to access mcsweeny_-_keynote_remarks_at_equitable_growth_10-6-16.pdf

 

 

Wal-Mart: A Progressive Success Story

Jason Furman

November 28, 2005

Click to access walmart.pdf

 

 

“America Without Entrepreneurs: The Consequences of Dwindling Startup Activity”

Testimony before
The Committee on Small Business and Entrepreneurship
United States Senate
June 29, 2016

John W. Lettieri
Cofounder
& Senior Director for Policy and Strategy
Economic Innovation Group

Click to access 7F75741C1A2E6182E1A5D21B61D278F3.lettieri-testimony.pdf

 

 

 

 

A reading list on market power, superstar firms, and inequality

BLOG

http://www.beyondthetimes.com/2017/08/16/a-partial-reading-list-on-market-power-superstar-firms-and-inequality/

 

 

 

 

 

Productivity Growth in the Advanced Economies:The Past, the Present, and Lessons for the Futures

Jason Furman

Chairman, Council of Economic Advisers

July 2015

Click to access 20150709_productivity_advanced_economies_piie_slides.pdf

 

 

 

 

 

Forms and sources of inequality in the United States

Jason Furman

17 March 2016

VOXEU

 

https://voxeu.org/article/forms-and-sources-inequality-united-states

 

 

 

 

Business Investment in the United States: Facts, Explanations, Puzzles, and Policies

Jason Furman
Chairman, Council of Economic Advisers
Progressive Policy Ins9tute

September 30, 2015

Click to access 2015.09.30-Jason-Furman_Business-Investment-in-US-Facts-Explanations-Puzzles-Policies.pdf

 

 

 

 

Can Tax Reform Get Us to 3 Percent Growth?

Jason Furman
Harvard Kennedy School & Peterson Institute for International Economics

New York, NY
November 3, 2017

Click to access furman20171103ppt.pdf

 

 

 

 

Structural Challenges and Opportunities in the U.S. Economy

Jason Furman
Chairman, Council of Economic Advisers

London School of Economics
November 5, 2014

Click to access 20141105_1830_structuralOpportunitiesUSEconomy_tr.pdf

 

 

Is This Time Different? The Opportunities and Challenges of Artificial Intelligence

Jason Furman
Chairman, Council of Economic Advisers

Remarks at AI Now: The Social and Economic Implications of Artificial Intelligence Technologies in the Near Term
New York University
New York, NY

July 7, 2016

Click to access 20160707_cea_ai_furman.pdf

 

 

 

 

Rebalancing the U.S. Economy

Jason Furman

Click to access TIE_Sp15_Furman.pdf

 

 

 

 

Should Policymakers Care Whether Inequality Is Helpful or Harmful For Growth?

Jason Furman

Harvard Kennedy School & Peterson Institute for International Economics
Rethinking Macroeconomic Conference, October 11-12 2017

Preliminary Draft: October 5, 2017

Click to access furman20171012paper.pdf

 

 

 

 

 

A Political Economy of Oligarchy: Winner-take-all ideology, superstar norms, and the rise of the 1%

Yochai Benkler

September, 2017

Click to access Political%20economy%20of%20oligarchy%2001.pdf

 

 

 

 

Can Trump Overcome Secular Stagnation?
Part One: The Demand Side *

James K. Galbraith

Click to access can_trump_overcome_secular_stagnation.pdf

 

 

 

 

The macroeconomic effects of the 2017 tax reform

Robert J. Barro, Harvard University
Jason Furman, Harvard University

March 2018

Click to access 4_barrofurman.pdf

 

 

 

 

A FUTURE THAT WORKS: AUTOMATION, EMPLOYMENT, AND PRODUCTIVITY

McKinsey Global Institute

January 2017

https://www.mckinsey.com/~/media/mckinsey/featured%20insights/Digital%20Disruption/Harnessing%20automation%20for%20a%20future%20that%20works/A-future-that-works-Executive-summary-MGI-January-2017.ashx

 

 

 

A MISSING LINK: THE ROLE OF ANTITRUST LAW IN RECTIFYING EMPLOYER POWER IN OUR HIGH-PROFIT, LOW-WAGE ECONOMY

ISSUE BRIEF BY MARSHALL STEINBAUM

APRIL 2018

Click to access Monopsony-issue-brief.pdf

 

 

 

Inclusive Growth

For once, some good news

by jason furman

Click to access 16-29-MR64.pdf

 

 

 

 

The Outlook for the U.S. Economy and the Policies of the New President

Jason Furman
Senior Fellow, PIIE
Peterson Institute for International Economics |

SNS/SHOF Finance Panel

Stockholm

June 12, 2017

Click to access furman20170612ppt.pdf

 

 

 

 

The Role of Economists in Economic Policymaking

Jason Furman
Senior Fellow, Peterson Institute for International Economics

Arnold C. Harberger Distinguished Lecture on Economic Development
UCLA Burkle Center for International Relations
Los Angeles, CA

April 27, 2017

Click to access furman20170427.pdf

 

 

 

 

Market Concentration – Note by the United States

Hearing on Market Concentration
7 June 2018

OECD

Click to access market_concentration_united_states.pdf

http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=DAF/COMP/WD(2018)59&docLanguage=En

 

 

 

 

The fringe economic theory that might get traction in the 2016 campaign

 

https://www.washingtonpost.com/news/wonk/wp/2015/03/02/the-fringe-economic-theory-that-might-get-traction-in-the-2016-campaign/?noredirect=on&utm_term=.77c5e3479485

 

 

 

ACHIEVING INCLUSIVE GROWTH IN THE FACE OF DIGITAL TRANSFORMATION AND THE FUTURE OF WORK

OECD

Click to access achieving_inclusive_growth_in_the_face_of_digital_transformation_and_the_future_of_work_oecd_0.pdf

Rising Market Concentration and Declining Business Investments in the USA – Update June 2018

Rising Market Concentration and Declining Business Investments in the USA – Update June 2018

 

Since my last posts in August/September 2017 on the subject of

  • Market Concentration
  • Inequality
  • Market Power
  • Reduced Competition
  • Reduced Dynamism
  • Rising Profits
  • Declining Business Investments

several new studies have been published.  In addition, several important hearings and conferences have been organized by OECD, Brookings Institution, Boston University School of Law. Please see my list of references for details of each one of them.

This topic now is getting good attention in media also.

The Peterson Institute for International Economics (PIIE) held a major research conference on the “Policy Implications of Sustained Low Productivity Growth” on November 9, 2017. Jeromin Zettelmeyer, PIIE, moderates panel 4, “Wages and Inequality.” Presenters include Jason Furman, Harvard University and PIIE, and Lawrence H. Summers, Harvard University.  I have given the link to Video of the session 4 in the references.

OECD on June 7-8, 2018 held hearings on Market Concentration at Paris, France.  Several presentations were given by experts in the field.  I have given link to the conference webpage in the references.

The Hamilton Project/Brookings Institution had a Conference on June 13, 2018 in Washington DC on the subject of Market Concentration.  Please see the link to the conference video and papers in the references below.

 

 

From The State of Competition and Dynamism:
Facts about Concentration, Start-Ups, and Related Policies

concentration

From The State of Competition and Dynamism:
Facts about Concentration, Start-Ups, and Related Policies

 

concentration2concentration3concentration4concentration5

Please see my related posts:

Rising Profits, Rising Inequality, and Rising Industry Concentration in the USA

Low Interest Rates and Business Investments : Update August 2017

Increasing Returns, Path Dependence, Circular and Cumulative Causation in Economics

Increasing Returns and Path Dependence in Economics

Business Investments and Low Interest Rates

Mergers and Acquisitions – Long Term Trends and Waves

 

Key Sources of Research:

Building a More Dynamic and Competitive Economy

Hamilton Project

Brookings

June 13, 2018

http://www.hamiltonproject.org/events/building_a_more_dynamic_and_competitive_economy

Video of the Opening Remarks and Fireside Chat – Robert Rubin, Jason Furman, Steve Case

The State of Competition and Dynamism:
Facts about Concentration, Start-Ups, and Related Policies

 

Jay Shambaugh, Ryan Nunn, Audrey Breitwieser, and Patrick Liu

Brookings/Hamilton Project

June 2018

 

Click to access ES_THP_20180611_CompetitionFacts_20180611.pdf

 

 

 

Market Concentration

OECD Hearing on Market Concentration

June 7-8, 2018

http://www.oecd.org/daf/competition/market-concentration.htm

 

 

 

Market Concentration Issues paper by the Secretariat

6-8 June 2018

OECD

 

http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=DAF/COMP/WD(2018)46&docLanguage=En

http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=DAF/COMP/WD(2018)67&docLanguage=En

 

 

 

Presented by the Business at OECD (BIAC) Competition Committee to the OECD Competition Committee

Market Concentration

June 7, 2018

 

Click to access BIAC_CC_Market-Concentration_2018-05-22_FINAL1.pdf

 

 

 

 

 

Chapter VI

MARKET POWER AND INEQUALITY: THE REVENGE OF THE RENTIERS

Trade and Development Report 2017

UNCTAD

 

Click to access tdr2017ch6_en.pdf

 

 

The fall and rise of market power in Europe∗

John P. Wechea,b & Achim Wambacha

 

Click to access dp18003.pdf

 

 

 

A policy at peace with itself: Antitrust remedies for our concentrated, uncompetitive economy

William A. Galston and Clara Hendrickson

2018

https://www.brookings.edu/research/a-policy-at-peace-with-itself-antitrust-remedies-for-our-concentrated-uncompetitive-economy/

 

 

 

 

The Rise of Market Power and the Macroeconomic Implications

Jan De Loecker, Jan Eeckhout

Issued in August 2017

http://www.nber.org/papers/w23687

 

 

 

 

This chart highlights the rise of corporate giants

WEF

2018

https://www.weforum.org/agenda/2018/06/chart-of-the-week-the-rise-of-corporate-giants

 

 

 

Market power in the U.S. economy today

 

https://equitablegrowth.org/market-power-in-the-u-s-economy-today/

 

 

 

Is Lack of Competition Strangling the U.S. Economy?

David Wessel

https://hbr.org/2018/03/is-lack-of-competition-strangling-the-u-s-economy

 

 

 

Competition Conference 2018

What’s the Evidence for Strengthening Competition Policy?

Boston University

July 2018

http://sites.bu.edu/tpri/news-and-events/competition-conference-2018/

 

 

 

Declining Competition and Investment in the U.S.

Germán Gutiérrez† and Thomas Philippon‡

November 2017

https://www.aeaweb.org/conference/2018/preliminary/paper/iDeysKkh

 

 

Should We Really Care About Inequality?

https://www.project-syndicate.org/videos/should-we-really-care-about-inequality

 

 

 

 

Beyond Antitrust: The Role of Competition Policy in Promoting Inclusive Growth

Jason Furman

Chairman, Council of Economic Advisers

Searle Center Conference on Antitrust Economics and Competition Policy Chicago, IL

September 16, 2016

 

Click to access 20160916_searle_conference_competition_furman_cea.pdf

 

 

POWERLESS: How Lax Antitrust and Concentrated Market Power
Rig the Economy Against American Workers, Consumers, and Communities

Roosvelt Institute

Click to access Powerless.pdf

 

 

 

Is Government the Problem or the Solution to U.S. Labor Market Challenges?

Jason Furman

2018

 

https://minneapolisfed.org/~/media/files/institute/conferences/2018-05/furman-slides.pdf?la=en

 

 

 

With Competition in Tatters, the Rip of Inequality widens

 

 

 

THE 2018 JOINT ECONOMIC REPORT

REPORT OF THE JOINT ECONOMIC COMMITTEE CONGRESS OF THE UNITED STATES

ON THE 2018 ECONOMIC REPORT OF THE PRESIDENT

 

Click to access CRPT-115hrpt596.pdf

 

 

 

 

Concentration not competition: the state of UK consumer markets

2017

 

Click to access Concentration-not-competition.pdf

 

 

 

CORPORATE RENT-SEEKING, MARKET POWER AND INEQUALITY:
TIME FOR A MULTILATERAL TRUST BUSTER?

UNCTAD

May 2018

 

Click to access presspb2018d3_en.pdf

 

 

 

America’s Superstar Companies Are a Drag on Growth

Lack of competition lets them gouge consumers, underpay workers and invest too little.

 

https://www.bloomberg.com/view/articles/2017-09-01/america-s-superstar-companies-are-a-drag-on-growth

 

 

 

Big Companies Are Getting a Chokehold on the Economy

Even Goldman Sachs is worried that they’re stifling competition, holding down wages and weighing on growth.

https://www.bloomberg.com/view/articles/2018-02-22/big-companies-gaining-monopoly-power-pose-risk-to-u-s-economy

 

 

 

Monopolies May Be Worse for Workers Than for Consumers

There isn’t much evidence that they raise prices, but they do seem to hold down wages.

https://www.bloomberg.com/view/articles/2017-12-29/monopolies-may-be-worse-for-workers-than-for-consumers

 

 

 

 

LABOR MARKET CONCENTRATION

José Azar
Ioana Marinescu Marshall I. Steinbaum

2017 December

 

Click to access w24147.pdf

 

 

 

 

More and more companies have monopoly power over workers’ wages. That’s killing the economy.

The trend can explain slow growth, “missing” workers, and stagnant salaries.

 

https://www.vox.com/the-big-idea/2018/4/6/17204808/wages-employers-workers-monopsony-growth-stagnation-inequality

 

Antitrust Remedies for Labor Market Power

Suresh Naidu

Eric A. Posner

E. Glen Weyl

 

Date Written: February 23, 2018

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3129221

 

 

Policy Implications of Sustained Low Productivity Growth – Panel 4

Jason Furman / Larry Summers

Peterson Institute for International Economics

November 2017

https://piie.com/events/policy-implications-sustained-low-productivity-growth

Presentation by jason Furman

Click to access 4-1furman20171109ppt.pdf

Paper by Jason Furman – published June 2018

Click to access wp18-4.pdf

Panel 4 Video:

 

Understanding Trade in Intermediate Goods

Understanding Trade in Intermediate Goods

 

One of the key source of International Trade statistics is a document published by the UNCTAD since 2013:

Key Statistics and Trends in International Trade

Please see references below to access reports for 2015 and 2016.

 

In 2014, out of USD 18.5 trillion in global trade, about USD 8 trillion was in intermediate goods.

 

From TRADE IN INTERMEDIATE GOODS AND SERVICES

Introduction: the international dimension of the exchange of intermediate inputs

1. Trade in intermediate inputs has been steadily growing over the last decade. However, despite the internationalisation of production and the increasing importance of outsourcing and foreign investment, some studies have found little rise in intermediate goods trade as a share of total trade1. More than half of goods trade is however made up of intermediate inputs and trade in services is even more of an intermediate type with about three quarters of trade flows being comprised of intermediate services. Trade in intermediate goods and services thus deserves special attention from trade policymakers and so far few studies have investigated how it differs from trade in consumption goods or services.

2. An intermediate good can be defined as an input to the production process that has itself been produced and, unlike capital, is used up in production3. The difference between intermediate and capital goods lies in the latter entering as a fixed asset in the production process. Like any primary factor (such as labour, land, or natural resources) capital is used but not used up in the production process4. On the contrary, an intermediate good is used, often transformed, and incorporated in the final output. As an input, an intermediate good has itself been produced and is hence defined in contrast to a primary input. As an output, an intermediate good is used to produce other goods (or services) contrary to a final good which is consumed and can be referred to as a “consumption good”.

3. Intermediate inputs are not restricted to material goods; they can also consist of services. Thelatter can be potentially used as an input to any sector of the economy; that is for the production of the same, or other services, as well as manufacturing goods. Symmetrically, manufacturing goods can be potentially used to produce the same, or other manufacturing goods, as well as services.

4. An important question we can ask is how to identify inputs among all goods and services produced in an economy. Many types of goods can be easily distinguished as inputs, when their use excludes them from final consumption. Notable examples include chemical substances, construction materials, or business services. The exact same type of good used as an input to some production process can however be destined to consumption. For instance, oranges can be sold to households as a final good, as well as to a factory as an input for food preparation. Telecommunication services can be sold to individuals or to business services firms as an intermediate input for their output. The United Nations distinguish commodities in each basic heading on the basis of the main end-use (United Nations, 2007). It is however recognized that many commodities that are traded internationally may be put to a variety of uses. Other methodologies involve the use of input-output (I-O) tables to distinguish between intermediate and consumption goods.

5. The importance of intermediate goods and services in the economy and trade is associated with a number of developments in the last decades. Growth and increased sophistication of production has given birth to strategies involving fragmentation and reorganisation of firm’s activities, both in terms of ownership boundaries, as in terms of the location for production. In what follows, the international dimension of the exchange of intermediate goods and services is explored by clarifying terms and concepts as well as the links between trade in intermediate inputs and FDI.

From Key Statistics and Trends in International Trade 2015

inter8

 

From Key Statistics and Trends in International Trade 2015

inter2

 From Key Statistics and Trends in International Trade 2015

inter3

From Key Statistics and Trends in International Trade 2015

inter4

From Key Statistics and Trends in International Trade 2015

inter

From Key Statistics and Trends in International Trade 2015

inter5

From Key Statistics and Trends in International Trade 2015

inter6

From Key Statistics and Trends in International Trade 2015

inter7

From Key Statistics and Trends in International Trade 2015

Trade networks relating to global value chains have evolved during the last 10 years. In 2004, the East Asian production network was still in its infancy. Most trade flows of parts and components concerned the USA and the European Union, with a number of other countries loosely connected with these two main hubs. As of 2014 trade of parts and components was much more developed. The current state is characterized not only by the prominent role of China, but also by a much more tightly integrated network with a much larger number of countries many of which have multiple connections to different hubs.

From Mapping Global Value Chains: Intermediate Goods Trade and Structural Change in the World Economy

inter10inter11inter12

Key sources of Research:

 

TRADE IN INTERMEDIATE GOODS AND SERVICES

OECD Trade Policy Working Paper No. 93
by Sébastien Miroudot, Rainer Lanz and Alexandros Ragoussis

2009

Click to access 44056524.pdf

 

 

An Essay on Intra-Industry Trade in Intermediate Goods

Rosanna Pittiglio

2014

Click to access ME_2014051916452646.pdf

 

 

The Rise of International Supply Chains: Implications for Global Trade

Click to access GETR_Chapter1.2.pdf

 

 

 

Growing Trade in Intermediate Goods: Outsourcing, Global Sourcing or Increasing
Importance of MNE Networks?

by
Jörn Kleinert
October 2000

Click to access kap1006.pdf

 

 

 

Imported Inputs and the Gains from Trade

Ananth Ramanarayanan
University of Western Ontario
September, 2014

https://www.economics.utoronto.ca/index.php/index/research/downloadSeminarPaper/49816

 

 

 

Key Statistics and Trends in International Trade 2015

Division on International Trade in Goods and Services, and Commodities
United Nations Conference on Trade and Development

Click to access ditctab2015d1_en.pdf

 

 

 

Key Statistics and Trends in International Trade 2016

Division on International Trade in Goods and Services, and Commodities
United Nations Conference on Trade and Development

Click to access ditctab2016d3_en.pdf

 

 

Integration of Trade and Disintegration of Production in the Global Economy

Robert C. Feenstra
Revised, April 1998

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.39.7178&rep=rep1&type=pdf

 

 

 

GLOBAL VALUE CHAINS: CHALLENGES, OPPORTUNITIES, AND IMPLICATIONS FOR POLICY

OECD, WTO and World Bank Group
Report prepared for submission to the G20 Trade Ministers Meeting Sydney, Australia, 19 July 2014

Click to access gvc_report_g20_july_2014.pdf

 

 

Trade in Value Added: Concepts, Estimation and Analysis

Marko Javorsek* and Ignacio Camacho

20015

Click to access AWP150Trade%20in%20Value%20Added.pdf

 

 

The Similarities and Differences among Three Major Inter-Country Input-Output Databases and their Implications for Trade in Value-Added Estimates

Lin Jones and Zhi Wang, United States International Trade Commission Li Xin, Beijing Normal University and Peking University Christophe Degain, World Trade Organization

December, 2014

Click to access ec201412b.pdf

 

 

Advanced Topics in Trade
Lecture 9 – Multinational Firms and Foreign Direct Investment

Heiwai Tang – SAIS
April 8, 2015

Click to access lecture_8_new.pdf

 

 

Efforts to Measure Trade in Value-Added and Map Global Value Chains: A Guide

Andrew Reamer

May 29, 2014

Click to access Reamer_ISA_Trade_in_Value_Added_05-29-2014.pdf

 

 

 

Global Value Chains for Value Added and Intermediate Goods in Asia

N Shrestha

20015

Click to access CESSA%20WP%202015-07.pdf

 

 

 

Global Value Chains: The New Reality of International Trade

Sherry Stephenson
December 2013

Click to access E15-GVCs-Stephenson-Final.pdf

 

 

Asia and Global Production Networks Implications for Trade, Incomes and Economic Vulnerability

Benno Ferrarini

David Hummels

20014

Click to access asia-and-global-production-networks.pdf

 

 

Participation of Developing Countries in Global Value Chains:
Implications for Trade and Trade-Related Policies

by
Przemyslaw Kowalski, Javier Lopez Gonzalez, Alexandros Ragoussis
and Cristian Ugarte

Click to access OECD_Trade_Policy_Papers_179.pdf

 

 

GLOBAL VALUE CHAINS: SURVEYING DRIVERS, MEASURES AND IMPACTS

João Amador
Sónia Cabral

2014

Click to access wp20143.pdf

 

World Intermediate goods Exports By Country and Region

2014

WITS World International Trade Statistics

http://wits.worldbank.org/CountryProfile/en/Country/WLD/Year/2014/TradeFlow/Export/Partner/all/Product/UNCTAD-SoP2

 

 

Trade in global value chains

2013

WTO

Click to access its13_highlights4_e.pdf

 

 

The Rise of Trade in Intermediates: Policy Implications

  • February 10, 2011

http://carnegieendowment.org/2011/02/10/rise-of-trade-in-intermediates-policy-implications-pub-42578

 

 

International trade with intermediate and final goods under economic crisis

Elżbieta Czarny, Warsaw School of Economics
Paweł Folfas, Warsaw School of Economics
Katarzyna Śledziewska, Warsaw University

Click to access 375.pdf

 

 

 

Trade in Intermediate Goods: Implications for Productivity and Welfare in Korea

Young Gui Kim

Hak K. PYO

Date Written: December 30, 2016

 

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2929118

 

 

Growing Together: Economic Ties between the United States and Mexico

BY CHRISTOPHER WILSON

Click to access growing_together_economic_ties_between_the_united_states_and_mexico.pdf

 

 

Mapping Global Value Chains: Intermediate Goods Trade and Structural Change in the World Economy

Timothy J. Sturgeon
Olga Memedovic

Click to access WP%2005%20Mapping%20Glocal%20Value%20Chains.pdf

 

India’s Intermediate Goods Trade in the Inter Regional Value Chain:
An examination based on Trade data and Input Output Analysis

Simi Thambi

Click to access 10_2%20fp.pdf

 

Global Supply Chains

Click to access pub4253_2.pdf

 

 

Global value chains in a changing world

Edited by Deborah K. Elms and Patrick Low

Click to access aid4tradeglobalvalue13_e.pdf

 

Why are Macro-economic Growth Forecasts so wrong?

Why are Macro-economic Growth Forecasts so wrong?

 

There are several institutions which publish economic forecasts annually/quarterly.

  • IMF
  • OECD
  • EC

Central Banks of Nations also publish economic Forecasts.  For Example:

  • Federal Reserve Bank of USA
  • Bank of England
  • Bank of Canada
  • Riksbank of Sweden
  • European Central Bank

 

There are several surveys of professional forecasters which create consensus forecasts to improve the accuracy of forecasts.

  • US Fed Reserve Survey of Professional Forecasters
  • ECB Survey of Professional Forecasters
  • Consensus Forecasts by Consensus Forecasts
  • Federal Reserve Blue Book
  • Federal Reserve Livingston Survey
  • Blue Chip Economic Forecasts by Wolters Kluwers

 

International Forecasting organizations (Private and Government)

  • IMF, “World Economic Outlook”;
  • EC, “European Economic Forecast”;
  • OECD, “OECD Economic Outlook”;
  • Consensus Economics, “Consensus Forecasts”;
  • The Economist, “The Economist pool of forecasters”.

 

USA Private and Government Economic Forecasters

  • Fed Reserve Survey of Professional Forecasters
  • Blue Chip Economic Indicators ( Wolters Kluwer)
  • Green Book
  • Livingston Survey
  • CBO
  • FOMC
  • Office of Management and Budget (OMB)
  • Western Blue Chip Economic Forecast

 

From Swiss Re Report May 2017

imfforecast

From Gauging the Uncertainty of the Economic Outlook Using Historical Forecasting Errors: The Federal Reserve’s Approach

RMSE GDP

 

Surveys of Economic Forecasters:

list

 

USA Private Economic Forecasters

There are many private forecasters who also publish forecasts.  For Example:

  • The Conference Board
  • Wells Fargo Bank
  • Goldman Sachs
  • Citi Group
  • Haver Analytics
  • RSQE Forecasts at University of Michigan

 

See the lists below for almost all of professional forecasters.

private forecasters USA

 

From Blue Chip Economic Forecast:

bluechip2bluechip

From Social Learning, Strategic Incentives and Collective Wisdom: An Analysis of the Blue Chip Forecasting Group

forecastersforecasters2

 

There is also in UK:

  • NIESR ( National Institute of Economic and Social Research)

 

From time to time many of these organizations review quality of their forecasts.  Results of these studies are published in papers many of which are listed in references below.

After the global financial Crisis of 2008-2009, many institutions have taken another look at their models used for forecasting economic variables.

See recent papers by

  • Bank of Canada
  • IMF
  • OECD
  • Fed Reserve
  • Bank of England
  • Riksbank of Sweden
  • US CBO
  • Bank of Portugal
  • European Commission

 

From Gauging the Uncertainty of the Economic Outlook Using Historical Forecasting Errors: The Federal Reserve’s Approach

Since late 2007, the Federal Open Market Committee (FOMC) of the U.S. Federal Reserve has regularly published assessments of the uncertainty associated with the projections of key macroeconomic variables made by individual Committee participants.1 These assessments, which are reported in the Summary of Economic Projections (SEP) that accompanies the FOMC minutes once a quarter, provide two types of information about forecast uncertainty. The first is qualitative in nature and summarizes the answers of participants to two questions: Is the uncertainty associated with his or her own projections of real activity and inflation higher, lower or about the same as the historical average? And are the risks to his or her own projections weighted to the upside, broadly balanced, or weighted to the downside? The second type of information is quantitative and provides the historical basis for answering the first qualitative question. Specifically, the SEP reports the root mean squared errors (RMSEs) of real-time forecasts over the past 20 years made by a group of leading private and public sector forecasters.

 

Some have blamed the entire economics profession.  Several attempts are being made to improve economic analysis.  Examples include work being done at

  • INET ( Institute for New Economic Thinking)
  • NAEC  at OECD

Heterodox schools of economics are making claims to accuracy of their approach after failure of main stream orthodox New Classical economics in predicting the Global Financial Crisis.

I will create another post later for some of these issues.

  • GDP forecasts errors have been attributed to errors in GDP components of business investments and exports.
  • Variability of GDP forecasts from short term to long term
  • Variability of GDP forecasts between forecasters – private and governments

 

Key Sources of Research:

 

The Case of Serial Disappointment

Justin‐Damien Guénette, Nicholas Labelle St‐Pierre, Martin Leduc and
Lori Rennison

Bank of Canada Staff Analytical Note 2016-10
July 2016

The Case of Serial Disappointment

 

ToTEM: The Bank of Canada’s New Quarterly Projection Model

Stephen Murchison and Andrew Rennison

Research Department
Bank of Canada

2006

ToTEM: The Bank of Canada’s New Quarterly Projection Model

 

 

ToTEM II: An Updated Version of the Bank of Canada’s Quarterly Projection Model

José Dorich, Michael Johnston, Rhys Mendes, Stephen Murchison and Yang Zhang

Canadian Economic Analysis Department
Bank of Canada

2013

ToTEM II: An Updated Version of the Bank of Canada’s Quarterly Projection Model

 

 

Introducing the Bank of Canada’s Projection Model for the Global Economy

Jeannine Bailliu, Patrick Blagrave, and James Rossiter

International Economic Analysis Department
Bank of Canada

2010

Introducing the Bank of Canada’s Projection Model for the Global Economy

Introducing the Bank of Canada’s Projection Model for the Global Economy

 

 

BoC-GEM: Modelling the World Economy

René Lalonde, International Economic Analysis Department

Dirk Muir, International Monetary Fund

BANK OF CANADA REVIEW SUMMER 2009

BoC-GEM: Modelling the World Economy

 

 

MUSE: The Bank of Canada’s New Projection Model of the U.S. Economy

Marc-André Gosselin and René Lalonde
International Department
Bank of Canada

2005

MUSE: The Bank of Canada’s New Projection Model of the U.S. Economy

 

 

OECD FORECASTS DURING AND AFTER THE FINANCIAL CRISIS: A POST MORTEM

OECD Economics Department
Policy Note no. 23
February 2014

OECD FORECASTS DURING AND AFTER THE FINANCIAL CRISIS: A POST MORTEM

 

 

THE USE OF MODELS IN PRODUCING OECD MACROECONOMIC FORECASTS

OECD ECONOMICS DEPARTMENT WORKING PAPERS NO. 1336
By David Turner

2016

THE USE OF MODELS IN PRODUCING OECD MACROECONOMIC FORECASTS

 

 

Lessons from OECD forecasts during and after the financial crisis

Christine Lewis and Nigel Pain

OECD Journal: Economic Studies
Volume 2014

Lessons from OECD forecasts during and after the financial crisis

 

 

How accurate are OECD forecasts?

12 February 2014
by Brian Keeley

 

Home Glossary About Contact Disclaimer How accurate are OECD forecasts?

 

 

Debate the Issues: Complexity and Policy making

OECD

Edited By:Patrick Love, Julia Stockdale-Otárola

06 June 2017

Debate the Issues: Complexity and Policy making

 

 

We need an empowering narrative

OECD Insights
23 June 2017
Gabriela Ramos

 

 

Final NAEC Synthesis : New Approaches to Economic Challenges

OECD

2015

Final NAEC Synthesis New Approaches to Economic Challenges

 

Debate the Issues: New Approaches to Economic Challenges

OECD

2016

Debate the Issues: New Approaches to Economic Challenges

 

OECD Forecasts During and After the Financial Crisis

A Post Mortem

Nigel Pain, Christine Lewis, Thai-Thanh Dang, Yosuke Jin, Pete Richardson

17 Mar 2014

OECD Forecasts During and After the Financial Crisis A Post Mortem

 

 Outlook for the Budget and the Economy

CBO USA

Outlook for the Budget and the Economy

 

CBO’s Economic Forecasting Record: 2015 Update

US CBO

CBO’s Economic Forecasting Record: 2015 Update

 

“Gauging the Uncertainty of the Economic
Outlook Using Historical Forecasting Errors: The Federal Reserve’s Approach,”

Finance and Economics Discussion Series 2017-020.

Washington: Board of Governors of the Federal Reserve System

“Gauging the Uncertainty of the Economic Outlook Using Historical Forecasting Errors: The Federal Reserve’s Approach

 

 The FRB/US Model: A Tool for Macroeconomic Policy Analysis

lint Brayton, Thomas Laubach, and David Reifschneider

2014

The FRB/US Model: A Tool for Macroeconomic Policy Analysis

 

 

 Gauging the Uncertainty of the Economic Outlook from Historical Forecasting Errors

David Reifschneider and Peter Tulip

federal Reserve

2007-60

Gauging the Uncertainty of the Economic Outlook from Historical Forecasting Errors

 

The IMF/WEO Forecast Process

Hans Genberg, Andrew Martinez, and Michael Salemi

IMF

2014

The IMF/WEO Forecast Process

 

 

On the Accuracy and Efficiency of IMF Forecasts: A Survey and Some Extensions

Hans Genberg and Andrew Martinez

IMF

2014

On the Accuracy and Efficiency of IMF Forecasts: A Survey and Some Extensions

 

 

An Evaluation of Commissioned Studies : Assessing the Accuracy of IMF Forecasts

Prepared by Charles Freedman
February 12, 2014

IMF

An Evaluation of Commissioned Studies : Assessing the Accuracy of IMF Forecasts

 

 

An Assessment of IMF Medium-Term Forecasts of GDP Growth

Carlos de Resende

2014

IMF

An Assessment of IMF Medium-Term Forecasts of GDP Growth

 

 

THE POLITICS OF IMF FORECASTS

AXEL DREHER
SILVIA MARCHESI
JAMES RAYMOND VREELAND

CESIFO WORKING PAPER NO. 2129

OCTOBER 2007

THE POLITICS OF IMF FORECASTS

 

 

Macroeconomic Forecasting: A Survey

K Wallis

1989

Macroeconomic Forecasting: A Survey

 

 

INTERNATIONAL ORGANISATIONS’ VS. PRIVATE ANALYSTS’ FORECASTS:

AN EVALUATION

Ildeberta Abreu

Banco de Portugal
July 2011

International organisations’ vs. private analysts’ forecasts: an evaluation

Click to access ab201105_e.pdf

 

 

On Macroeconomic Forecasting

Simon Wren-Lewis

2014

On Macroeconomic Forecasting

 

Why central banks use models to forecast

Simon Wren-Lewis

2014

Why central banks use models to forecast

USA Survey of Economic Professional Forecasters

ECB Survey of Economic Professional Forecasters

 

Trading Economics

 

Oxford Economics

 

Consensus Economics

IHS Markit

 

Evaluating forecast performance

Bank of England

Independent Evaluation Office | November 2015

Evaluating forecast performance

 

 

 Does the FederaL Reserve Staff Still beat Private Forecasters?

Makram El-Shagi, Sebastian Giesen and Alexander Jung

2014

 

DoeS THe FeDeraL reSerVe STaFF STiLL beaT PriVaTe ForeCaSTerS?

 

 

Modern Forecasting Models in Action: Improving Macroeconomic Analyses at
Central Banks

Malin Adolfson, Michael K. Andersson, Jesper Lind´e,
Mattias Villani, and Anders Vredina

Sveriges Riksbank
CEPR
Stockholm University

Modern Forecasting Models in Action: Improving Macroeconomic Analyses at Central Banks

 

 

Updated Historical Forecast Errors (4/9/2014)

Federal Reserve

Updated Historical Forecast Errors (4/9/2014)

 

 

How good is the forecasting performance of major institutions?

Riksbank of Sweden

Monetary Policy Department.

How good is the forecasting performance of major institutions?

 

 

Best Economic Forecaster Awards

Focus Economics

Best Economic Forecaster Awards

 

Has Output Become More Predictable? Changes in Greenbook Forecast Accuracy

Federal Reserve

Has Output Become More Predictable? Changes in Greenbook Forecast Accuracy

 

Green Book

Federal Reserve Bank of Philadelphia

Green Book

 

US Federal Reserve Livingston Survey

Federal Reserve Bank of Philadelphia

Livingston Survey

 

 

The IMF and OECD versus Consensus Forecasts

by
Roy Batchelor
City University Business School, London
August 2000

The IMF and OECD versus Consensus Forecasts

 

 

CBO’s January 2017 Budget and Economic Outlook

CRFB

CBO’s January 2017 Budget and Economic Outlook

 

 

Growth Forecast Errors and Fiscal Multipliers

Prepared by Olivier Blanchard and Daniel Leigh

January 2013

IMF

http://www.nber.org/papers/w18779

Central Bank Macroeconomic Forecasting during the global Financial Crisis: the European Central Bank and Federal Reserve Bank of New York experiences

no 1688 / july 2014

 

 

Economic Forecasting and its Role in Making Monetary Policy

RB Australia

1999

 

https://www.rba.gov.au/publications/bulletin/1999/sep/pdf/bu-0999-1.pdf

 

Are Forecasting Models Usable for Policy Analysis?

1986

Chris Sims

Minneapolis Federal Reserve

 

https://www.minneapolisfed.org/research/QR/QR1011.pdf

 

Persistent Overoptimism about Economic Growth

BY KEVIN J. LANSING AND BENJAMIN PYLE

2015

 

http://www.frbsf.org/economic-research/files/el2015-03.pdf

 

 

Federal Reserve economic projections: What are they good for?

Ben S. Bernanke

Monday, November 28, 2016

https://www.brookings.edu/blog/ben-bernanke/2016/11/28/federal-reserve-economic-projections/

 

Reassessing Longer-Run U.S. Growth: How Low?

John G. Fernald
Federal Reserve Bank of San Francisco

August 2016

 

http://www.frbsf.org/economic-research/files/wp2016-18.pdf

 

 

Recent declines in the Fed’s longer-run economic projections

by Jonas D. M. Fisher,

Christopher Russo,

2017

https://www.chicagofed.org/publications/chicago-fed-letter/2017/375

 

 

“How Accurate Are Private Sector Forecasts? Cross-Country Evidence from Consensus Forecasts of Output Growth.”

Prakash Loungani

2000

IMF

https://www.imf.org/external/pubs/ft/wp/2000/wp0077.pdf

 

The Failure to Forecast the Great Recession

Simon Potter

 

Liberty Street Economics / New York Federal Reserve Bank

http://libertystreeteconomics.newyorkfed.org/2011/11/the-failure-to-forecast-the-great-recession.html

 

 

Social Learning, Strategic Incentives and Collective Wisdom: An Analysis of the Blue Chip Forecasting Group

J. Peter Ferderer Department of Economics Macalester College
St. Paul, MN 55105 ferderer@macalester.edu

Adam Freedman Chicago, IL 60601 freedman.adamj@gmail.com

July 22, 2015

 

http://muse.union.edu/lamacroworkshop2015/files/2015/01/34-Ferderer-Blue-Chip-Collective-Wisdom.pdf

 

 

CBO’s Economic Forecasting Record 2013 Update

 

https://www.cbo.gov/sites/default/files/113th-congress-2013-2014/reports/43846-ForecastingRecord.pdf

 

CBO’s Economic Forecasting Record 2015 Update

https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/49891-Forecasting_Record_2015.pdf

 

CBO Recurring reports

https://www.cbo.gov/about/products/major-recurring-reports#7

 

European Commission’s Forecasts Accuracy Revisited: Statistical Properties and Possible Causes of Forecast Errors

Marco Fioramanti, Laura González Cabanillas, Bjorn Roelstraete and Salvador Adrian Ferrandis Vallterra

2016

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2753854

 

 

Western Blue Chip Economic Forecast

Arizona State University

JPMorgan Chase Economic Outlook Center

https://research.wpcarey.asu.edu/economic-outlook/western-blue-chip/state-forecasts-archive-download?type=pdf&year=2017&month=08&state=Summary

Development of Global Trade and Production Accounts: UN SEIGA Initiative

Development of Global Trade and Production Accounts: UN SEIGA Initiative

 

UNSD is developing a handbook on

System of Extended International and Global Accounts (SEIGA)

Statistics to guide policy making has lagged behind dramatic changes in interconnectedness among nations.

  • Financial Globalization
  • Trade Globalization
  • Climate and Environmental Globalization
  • Economic Integration
  • Digital Globalization – Data and Information Flows
  • People Movements Globalization

Efforts are underway to correct data and statistics measurement and collection.

  • OECD/WTO Trade in Value Added
  • EU/EUROSTAT Multi Country Input-Output Tables
  • UN SEEA
  • UN SEIGA
  • UNECE Global Production
  • EUROSTAT FIGARO
  • EUROSTAT IGA

 

From 2014 International Conference on Measurement of Trade and Economic Globalization

Measurement of International Trade and Economic Globalization

Concept Note

In recent years, concerns were raised about the shortcomings of the existing official trade statistics for the purpose of reflecting bilateral economic relations. The high level of import content in exports makes gross bilateral trade statistics unsuitable for bilateral trade negotiations. Trade analysis requires new measures which better reflect the level of interdependencies among countries engaged in global value chains (GVCs). In order to understand the true nature of trade relationships, we need to know what each country along a global value chain contributes to the value of a final product. We also need to know how that contribution is linked to those of other suppliers in other countries coming before and after along the chain, and how much employment and income is generated through this value addition.

The statistical community responded to these concerns through a number of initiatives, such as the UN/Eurostat/WTO Global Forum on Trade Statistics in 2011, the OECD-WTO initiative on Trade in Value-Added launched in 2012, and the 2013 Eurostat report on Global Value Chains. An official response was delivered by bringing the measurement of international trade and economic globalization to the agenda of the UN Statistical Commission in 20131 and again in 20142. The corresponding decisions of the Commission stress the need for a measurement framework and a mechanism for coordination. Specifically, in Decision 44/1063 of its session in 2013, the Commission recognized the need for an overarching measurement framework for international trade and economic globalization, taking into account the existing frameworks and guidelines of the System of National Accounts, Balance of Payments, and the Guidelines on Integrated Economic Statistics, as well as the research and studies done by Eurostat, the OECD, the IMF and various working groups. The Commission also recognized the need for an appropriate mechanism for coordination of the work in this field, ensuring that the functions of the existing expert groups, working groups and task forces are accounted for at the international and regional levels. In the same decision, the Commission agreed to the creation of a “friends of the chair” (FOC) group tasked with preparing a concept paper on the scope and content of the framework, and on the appropriate mechanism for coordination of the work in this area.

The global economy is increasingly structured around GVCs that account for a rising share of international trade, global GDP and employment. GVCs link firms, workers and consumers around the world and often provide a stepping stone for firms and workers in developing countries to integrate into the global economy. A GVC describes the full range of activities that firms and workers perform to bring a product from its conception to end use. This includes activities such as design, production, marketing, distribution and support to the final consumer. The activities that comprise a value chain can be contained within a single firm or divided among different firms. In the context of globalization, the activities that constitute a value chain have generally been carried out in inter-firm networks on a global scale. The dependency structures of the firms in the GVC networks are of crucial importance in order to measure where income, knowledge and employment are generated, and to understand potential risk and vulnerabilities in case of a future financial crisis. Within this changed economic landscape, more complex measures of trade and production are necessary both on micro-and macro-economic level.

In other words, national economies relate to one another in a number of ways be it through trade in goods, trade in services, tourism, foreign direct investment, establishment of foreign affiliates, transfer of knowledge, creation of jobs, redistribution of income, migrant workers, emissions of CO2 or in other ways. A comprehensive way of charting those interdependencies is through a global Supply and Use table (SUT), in which countries connect through imports and exports of goods and services into and out of specific industries. Ideally, the global SUT contains for each international flow an export of a product from an industry of one country into an industry (or into final consumption) of another country, as the corresponding and matching import. In principle, only one global SUT should exist to be used by all national and international agencies for the analysis of trade and globalization. Besides the implicitly mentioned matching of bilateral trade flows (both for goods and services), further refinement may be necessary regarding the use of inputs by type of enterprise for either the domestic or the international market, including the special cases of multi-national enterprises and their foreign affiliates, goods for processing (manufacturing services) and re-exports. Further details on such global SUT were described in a recent paper of the OECD.

Compiling a global SUT requires a very close alignment and harmonization of national SUTs, price statistics and trade statistics. To achieve this in the short term, some practical decisions need to be taken and agreed upon internationally for the creation of a symmetrical and fully balanced bilateral trade matrix at the global level, which would have buy-in, cooperation and endorsement of all concerned countries. This matrix would be built strictly for the purpose of compiling an internationally recognized and accepted SUT. In the longer term, the existing recommendations for international trade statistics would need to be reviewed with the purpose of making them more symmetrical in terms of the reporting of exports and imports, and thus more suitable for the compilation of a global SUT.

A System of International Accounts.

The implications of building a global SUT [for the purpose of deriving, for instance, indicators for Trade in Value Added or Trade in Jobs] are farther reaching than just addressing asymmetries in trade and heterogeneity in firms. The underlying concepts and definitions as basis for measurement of these international statistics would need to be reviewed as well. In terms of the System of National Accounts, the Rest of the World Account would need to be more explicitly defined, especially since a global SUT implies a perfect alignment of international flows, and some international recommendations regarding heterogeneity of firms (where economically relevant). In the longer term, this set of new concepts and definitions could form a System of International Accounts, as the measurement framework for international trade and economic globalization.

 

From The relevance of multi-country input-output tables in measuring emissions trade balance of countries: the case of Spain

Background and statistical context

The latest meeting of the Group of Experts on National Accounts of the United Nations Economic Commission for Europe (UNECE, 7-9 July 2015), was devoted to data collection and compilation methods in respect to global production activities. It was jointly organized with Eurostat and the Organization for Economic Co-operation and Development (OECD). The meeting was attended by representatives from more than thirty countries worldwide and representatives from the European Commission (EC), International Monetary Fund (IMF), OECD, the United Nations Conference on Trade and Development (UNCTAD), United Nations Statistics Division (UNSD) and World Trade Organization (WTO), among others.

According to the experts at this UNECE meeting, in order to measure global production and global value chains it is no longer sufficient to look only at what a firm does, but to also to consider how the firm does its activities and with whom. For instance, linking business statistics and trade statistics on a micro level should provide new dimensions to the data as long as new balancing challenges at the macro level data (e.g. national accounts). Indeed, statisticians have not always been able to keep up to date with business practices and must find ways to be forward looking and provide the information that meets future policy needs. Traditional measures of trade in goods and services have to be progressively supplemented with information on income and financial flows. Foreign direct investment statistics (FDI) should be further developed and complemented with foreign affiliate statistics (FATS) in order to improve their clarity, usefulness and coverage, and to provide better insights into global value chains.

In this respect, the UNECE Report emanating from this meeting supported new global initiatives, such as the extensions to Trade in Value Added and Global Input- Output Tables (OECD), the construction of the European Multi-Country Input-Output Framework (EC and Eurostat) as well as the elaboration of a new Handbook on a System of Extended International and Global Accounts (UNSD).

Hence, there is no doubt that globalization is currently affecting the way statisticians are measuring national production of countries and international statistical organizations are indeed very busy working on it in order to meet the policy needs at the worldwide level. As national accounts and input-output tables became an integral part of the production activities of national statistical institutes in the past, very soon multi-country and international input-output tables will become a crucial statistical tool to measure global production, trade in value added, environmental footprints and/or employment effects of export activities with official statistics (e.g. carbon footprint estimated by Eurostat).

Bearing all this in mind, we would like to illustrate in this paper the usefulness of global/world input-output tables in measuring the greenhouse gas footprints of individual countries and its external emission trade balance with respect to others. Hopefully, these types of indicators will soon become regularly produced in the future by statisticians using official global input-output tables instead of using other databases produced as one-off projects (e.g. World Input-Output Database, WIOD – http://www.wiod.org).

 

From 2016 Meeting of the UN Expert Group on International Trade and Globalization Statistics

Concept Note

Following Decision 46/107 taken by the Statistical Commission at its 46th session in 2015, a handbook on a system of extended international and global accounts will be prepared, which will serve as the measurement framework for international trade and economic globalization. This handbook will build on existing work in this area, in particular by the UNECE, the OECD and Eurostat, and address issues of micro-data linking of business and trade statistics, as well as address the integration of economic, environmental and social dimensions of trade and globalization as an extension of the System of National Accounts 2008 (2008 SNA) and the System of Environmental-Economic Accounting 2012 (SEEA 2012).

The first meeting of the expert group is scheduled to take place on 26-28 January 2016 at the UN headquarters in New York. The Handbook is of course the main topic of discussion at this meeting.

The Handbook will refer to and build upon the work of the Friend of the Chair group, which concluded that improved statistics are necessary and should bring a better understanding of the role of the external sector in an economy, the openness of its domestic and foreign markets and the impact of openness on social, economic and environmental upgrading, including the level and quality of employment. More and better data is needed in developed, emerging and developing economies alike: interconnected economies require interconnected statistics and all economies can benefit from a better understanding of these relationships.

As stated in the 2015 FOC report, policymakers and trade negotiators need to understand the cross-country benefits and risks by being able to “look through” the global value chains and see the specific contributions other countries are making to production networks involving their domestic firms. The GVC approach was suggested by the international statistical community as the preferred way of measuring the interconnectedness of economies with respect to jobs, skills, international competitiveness and the creation of value added, income and jobs. The activities involved in GVCs can be grouped into broad stages of production from upstream research and design, through manufacturing, to downstream logistics, marketing and sales. In a GVC, many of the tasks are “offshored”, either through an enterprise’s own affiliates located in foreign countries or through independent contractors. It is this newly emerged international economic integration of production and trade and their governance that has to be better measured and analyzed, including in respect of the benefits, costs and risks associated with engaging in GVCs.

The Handbook can build upon the recommendations and guidelines provided in UNECE’s Guide to Measuring Global Production. This Guide was released at the end of 2015 and provides valuable insights in the functioning and measurement of global value chains. The Guide provides a typology of global production arrangements and describes the principles of ownership inside a multi-national enterprise, as well as ownership of intellectual property products inside global production. In addition, data source and compilation challenges are addressed with special attention to large and complex enterprises.

The Handbook can also build on work presented at the International Conference on Measurement of Trade and Economic Globalization in Mexico in 2014. For example, it could use the value chain reference model to establish alternative aggregations of basic ISIC categories. Those aggregations can be based on enterprise activities in the offshoring of business functions, the use of intermediate inputs, the kinds of basic classes of goods produced and the variety of end markets. The reason for making those distinctions is that it is not possible, in the current ISIC, to distinguish the significant differences between enterprises that operate domestically and those that operate globally. Harmonization of enterprises into groups of similar make-up could significantly improve the accounting structure of the supply and use tables for the analysis of global value chains; harmonization could be achieved in terms of industry, supply chain position, end markets and the extent of the use of business functions being outsourced.

The OECD expert group on extended Supply-Use Tables addresses the estimation methods of trade in value added. The terms of reference of the group states among others that globalization is rapidly changing long-standing assumptions about the relative homogeneity of the production functions (Input-Output technical coefficients) of units classified to a given industrial activity, which is, implicitly, an underlying assumption used in creating input-output based indicators. The increasing prevalence of new types of firms such as factoryless producers and contract processing firms, and the increasing tendency for horizontal, as opposed to vertical, specialization, particularly for multinational affiliates, has fundamentally challenged these assumptions. Therefore, the OECD expert group is looking for the best ways to breakdown firms by specific characteristics (such as involvement in GVCs) which will make the sub-groups more homogeneous.

A GVC approach seems appropriate for the Handbook on a system of extended international and global accounts, since GVCs cut across geographic borders and bring together those global economic activities, goods and services, which belong together. Measurement of economic interdependencies (involving investment, job creation, income and intellectual property) within and across countries — between upstream design and downstream assembly — requires measurement of GVCs. Similarly, if we want to understand the interdependencies within and across countries for global retailers, financial and nonfinancial service providers, as well as horizontally-integrated enterprises, the GVC is the appropriate organizing framework.

This focus on GVCs has important implications for the unit of measurement and related data collection and estimation procedures. Most of the key decisions made by global manufacturers and global service providers are made at the enterprise rather than the establishment, or plant, level. This implies that for multi-national enterprises data on profits, research and development, transfer pricing, final product pricing, design, financing, advertising, and the rest of the links in GVCs are only available at the global enterprise level.

 

How to Integrate National SUIOTS into Global MCIO tables

globalaccounts

 

Key Terms:

  • SUTs (Supply and Use Tables)
  • GVCs (Global Value Chains)
  • UN SEIGA (System of Extended International and Global Accounts)
  • UN SEEA (System of Environment Economic Accounts)
  • Bilateral Trade Matrix
  • TIVA ( Trade in Value Added)
  • MCIO (Multi Country Input Output Tables)
  • SUIOT ( Supply and Use Input Output Tables)
  • UN SNA (System of National Accounts)
  • UNSD ( United Nations Statistical Division)
  • UNECE ( United Nations Economic Commission for Europe)
  • EUROSTAT ( European Statistics Division)
  • IMF
  • UNCTAD (UN Conference on Trade and Development)
  • WTO ( World Trade Organization)
  • OECD
  • UN ITEGS (International Trade and Economic Globalization Statistics)
  • WIOD ( World Input Output Database)
  • FIGARO (Full International and Global Accounts for Research in

    Input-Output Analysis)

 

 

Key Sources of Research:

 

Global Forum on Trade Statistics
Measuring Global Trade — Do We Have the Right Numbers?

Geneva 2011

https://www.wto.org/english/res_e/statis_e/forum_feb11_e/forum_feb11_e.htm

 

 

Eurostat Seminar: Global value chains and economic globalization:

The Eurostat initiative

Dublin Ireland

Date: 18th April 2013

http://www.cso.ie/en/newsandevents/eventsconferencesseminars/eurostatseminarglobalvaluechainsandeconomicglobalizationtheeurostatinitiative/

 

 

International Conference on Measurement of Trade and Economic Globalization

Organized by UNSD and INEGI in cooperation with OECD, WTO and EUROSTAT

Mexico

2014

International Conference on Measurement of Trade and Economic Globalization

 

 

UN Economic Commission for Europe (UNECE) Conference

July 2015 

Geneva

Group of Experts on National Accounts: Measuring Global Production

 

 

UN Conference on developing System of Extended International and Global Accounts

January 2016

New York

System of Extended International and Global Accounts

 

 

 

UN Expert Group on International Trade and Economic Globalization Statistics

Conference November 2016

New York

UN Expert Group on International Trade and Economic Globalization Statistics

 

 

Global Forum on International Trade Statisticsand Economic Globalization

Global Forum on International Trade Statistics and Economic Globalization

 

 

Proposed Outline for a System of Extended International and Global Accounts

 

Click to access Outline%20for%20a%20System%20of%20Extended%20International%20and%20Global%20Accounts%20-%20Oct%202015.pdf

 

 

Meeting of the UN Expert Group on International Trade and Globalization Statistics

 

Click to access Concept%20Note.pdf

 

 

The relevance of multi-country input-output tables in measuring emissions trade balance of countries: the case of Spain

Teresa Sanz1,∗, Roc ́ıo Yn ̃iguez1 and Jose ́ Manuel Rueda-Cantuche

2016

 

Click to access 40.1.1.sanz-etal.pdf

 

 

Handbook for a System of Extended International and Global Accounts (SEIGA)

Overview of Major Issues

November 23, 2015 (Revised)

By J. Steven Landefel

 

Click to access Overview%20of%20Major%20of%20Issues%20for%20SEIGA%20-%20Nov%202015.pdf

 

 

Report of the first meeting of the Expert Group on international trade and economic globalization statistics

 

Click to access BG-2016-23-international-trade-and-economic-globalization-statisitcs-E.pdf

 

 

Background and context

First meeting of the UN Expert Group on international trade and economic globalization statistics,

26-28 January 2016, New York

 

Click to access UNSD%20-%20Background%20and%20context.pdf

 

 

Developing A System of Extended International and Global Accounts

Steve Landefeld

 

Click to access Item_5_SEIGA_Presentation_SEIGA_new.pdf

 

 

Measurement framework for international trade and economic globalization

Group of Experts on National Accounts

18-20 May 2016

Geneva, Switzerland

Herman Smith

 

Click to access Item_4d_UNSD_framework_for_international_trade_and_economic_globalization.pdf

 

 

Conference of European Statisticians

Group of Experts on National Accounts Fourteenth session
Geneva, 7-9 July 2015

 

Distr.: General 14 April 2015
Annotated provisional agenda for the fourteenth session

Click to access Agenda_ENG.pdf

 

 

Measuring International Trade and Economic Globalization

Muscat, Oman, Feb 2016

 

Click to access Pre-Session-UNSD-IT-EconomicGlobalisation.pdf

 

 

Overview of the Implementation of National Accounts at Global Level

United Nations Statistics Division

 

Click to access 2015-semcn-s2-unsd-ilaria-di-matteo.pdf

 

 

Guide to Measuring Global Production

 

Click to access UNECE%20-%202015%20-%20Draft%20Guide%20to%20Measuring%20Global%20Production%20-%20Sep%202015.pdf

 

 

GLOBAL MULTIREGIONAL INPUT–OUTPUT FRAMEWORKS: AN INTRODUCTION AND

OUTLOOK

Arnold Tukker a b & Erik Dietzenbacher

 

Click to access Tukker%20and%20Dietzenbacher%20-%202013%20-%20Overview%20on%20International%20IO%20Tables.pdf

 

 

TRADE IN VALUE-ADDED: CONCEPTS, METHODOLOGIES AND CHALLENGES (JOINT OECD-WTO NOTE)

 

Click to access OECD-WTO%20-%202012%20-%20Joint%20note%20on%20TiVA.pdf

 

 

OECD EXPERT GROUP ON EXTENDED SUPPLY-USE TABLES

TERMS OF REFERENCE

 

Click to access OECD%20-%202015%20-%20eSUTs_TOR.pdf

 

 

Mapping Global Value Chains

Koen De Backer, Sébastien Miroudot

Click to access OECD%20-%202013%20-%20GVC%20Mappings.pdf

 

 

 

GLOBAL VALUE CHAIN ANALYSIS: A PRIMER

Gary Gereffi
&
Karina Fernandez-Stark

Click to access Duke%20-%202011%20-%20GVC_analysis_a_primer.pdf

 

 

CONNECTING LOCAL PRODUCERS IN DEVELOPING COUNTRIES TO REGIONAL AND GLOBAL VALUE CHAINS – UPDATE

Penny Bamber, Karina Fernandez-Stark, Gary Gereffi and Andrew Guinn

Click to access Duke%20-%202013%20-%20Developing%20countries%20and%20GVCs.pdf

 

 

Global Value Chain Analysis on Samsung Electronics

 

Click to access Canada%20-%202012%20-%20GVC%20Analysis%20of%20Samsung%20Electronics.pdf

 

 

Global Value Chains in official business statistics

Martin Luppes, Statistics Netherlands

Peter Bøegh Nielsen, Statistics Danmark

Click to access Luppes%20and%20Nielsen%20-%202015%20-%20Global%20Value%20Chains%20in%20official%20business%20statistics.pdf

 

 

Global Value Chains and Economic Globalization – Towards a New Measurement Framework

Click to access Eurostat%20-%202013%20-%20GVCs%20and%20Economic%20Globalization%20-%20Sturgeon%20report.pdf

 

 

International Corporate Governance Spillovers: Evidence from Cross-Border Mergers and Acquisitions

Rui Albuquerque, Luis Brandao-Marques, Miguel A. Ferreira, Pedro Matos

 

Click to access IMF%20-%202013%20-%20International%20Corporate%20Governance%20Spillovers.pdf

 

 

Trade Linkages, Balance Sheets, and Spillovers: The Germany-Central European Supply Chain

Selim Elekdag and Dirk Muir

Click to access IMF%20-%202013%20-%20Trade%20Linkages,%20Balance%20Sheets,%20and%20Spillovers.pdf

 

 

THE PRODUCTIVITY ADVANTAGE AND GLOBAL SCOPE OF U.S. MULTINATIONAL FIRMS

Raymond Mataloni, Jr.

 

Click to access US%20Census%20-%202011%20-%20US%20Multinationals.pdf

 

 

Effects of the Crisis on the Automotive Industry in Developing Countries

A Global Value Chain Perspective

Timothy J. Sturgeon Johannes Van Biesebroeck

Click to access Automotive%20Industry%20and%20Crisis%20(Sturgeon%20-%20Jun%202010).pdf

 

 

Value chains, networks and clusters: reframing the global automotive industry

 

Timothy Sturgeon  Johannes Van Biesebroeck and Gary Gereffi

Click to access Automotive%20Industry%20(Sturgeon%20-%20Apr%202008).pdf

 

 

The PhiliPPines in the aUtoMotiVe global ValUe chain

2016

Click to access 2016_Philippines_Automotive_Global_Value_Chain.pdf

 

 

Upgrading and restructuring in the global apparel value chain: why China and Asia are outperforming Mexico and Central America

Stacey Frederick

Gary Gereffi

2011

http://dukespace.lib.duke.edu/dspace/bitstream/handle/10161/10701/2011-08-03_Frederick%20&%20GEREFFI_apparel%20article%20-%20China%20&%20Mexico.pdf;sequence=1

 

 

Combining the Global Value Chain and global I-O approaches

Discussion paper

Dr. Stacey Frederick

2014

 

Click to access 2014-09-29_Frederick,%20Stacey_Combining%20GVC%20and%20global%20I-O%20approaches.pdf

 

 

Sewing Success?

Employment, Wages, and Poverty following the End of the Multi-fibre Arrangement

Editors
Gladys Lopez-Acevedo Raymond Robertson

2012

 

Click to access SewingSuccess_FullReport.pdf

 

 

A measurement framework and a narrative on global value chains and economic globalization

Merja Hult and Pekka Alajääskö

Timothy J. Sturgeon

Click to access STS024-P1-S.pdf

 

 

TRADE INTERCONNECTEDNESS: THE WORLD WITH GLOBAL VALUE CHAINS

IMF

2013

 

Click to access 082613.pdf

 

 

Global Value Chains

https://www.oecd.org/sti/ind/global-value-chains.htm

 

 

Global value chains

http://ec.europa.eu/eurostat/statistics-explained/index.php/Global_value_chains

 

 

GLOBAL VALUE CHAINS AND Development

INVESTMENT AND VALUE ADDED TRADE IN THE GLOBAL ECONOMY

 

Click to access diae2013d1_en.pdf

 

 

 

Competing in Global Value Chains

EU Industrial Structure Report 2013

 

Click to access EKTHESEIS-6.pdf

 

 

Global Value Chains: Development Challenges and Policy Options

Proposals and Analysis

December 2013

Click to access E15-Global-Value-Chains-Compliation-Report-FINAL.pdf

 

 

Global Value Chains: The New Reality of International Trade

Sherry Stephenson

December 2013

Click to access E15-GVCs-Stephenson-Final.pdf

 

 

World Investment Report 2013: Global Value Chains: Investment and Trade for Development

2013

 

Click to access wir2013_en.pdf

 

 

Global Production Networks: Theorizing Economic Development in aninterconnected world

By Neil M. Coe, Henry Wai-Chung Yeung

 

 

TRADE IN VALUE ADDED (TIVA) INDICATORS GUIDE TO COUNTRY NOTES

Click to access TiVA_2015_Guide_to_Country_Notes.pdf

 

 

 

TRADE IN VALUE-ADDED: CONCEPTS, METHODOLOGIES AND CHALLENGES

(JOINT OECD-WTO NOTE)

 

Click to access 49894138.pdf

 

 

Global value chains in a changing world

Edited by Deborah K. Elms and Patrick Low

WTO 2013

 

Click to access aid4tradeglobalvalue13_e.pdf

 

 

GLOBAL VALUE CHAINS IN A POSTCRISIS WORLD

Olivier Cattaneo, Gary Gereffi, and Cornelia Staritz

2010

 

https://openknowledge.worldbank.org/bitstream/handle/10986/2509/569230PUB0glob1C0disclosed010151101.pdf?sequence=1&isAllowed=y

 

 

Making Global Value Chains Work for Development

Daria Taglioni

Deborah Winkler

Understanding Global Value Chains – G20/OECD/WB Initiative

Understanding Global Value Chains – G20/OECD/WB Initiative

 

There is lot of opacity in understanding of GVCs.  Efforts are underway since last few years to get better analytical and statistical tools to understand International Trade and Global Value Chains.

Globalization in Trade and Finance encouraged by International organizations such as IMF/WB/OECD/WTO/UNCTAD/UNIDO and others has changed the landscape of Trade.

There is still a long way to go to make better sense of issues and concerns for policy makers.

OECD/WB/WTO along with G20 Trade Ministers have initiated efforts since 2012.

 

From Global Value Chains 

Introduction to GVCs

International production, trade and investments are increasingly organised within so-called global value chains (GVCs) where the different stages of the production process are located across different countries. Globalisation motivates companies to restructure their operations internationally through outsourcing and offshoring of activities.

Firms try to optimise their production processes by locating the various stages across different sites. The past decades have witnessed a strong trend towards the international dispersion of value chain activities such as design, production, marketing, distribution, etc.

This emergence of GVCs challenges conventional wisdom on how we look at economic globalisation and in particular, the policies that we develop around it.

 

Trade in Value Added

The goods and services we buy are composed of inputs from various countries around the world. However, the flows of goods and services within these global production chains are not always reflected in conventional measures of international trade. The joint OECD – WTO Trade in Value-Added (TiVA) initiative addresses this issue by considering the value added by each country in the production of goods and services that are consumed worldwide. TiVA indicators are designed to better inform policy makers by providing new insights into the commercial relations between nations.

 

GVCs and Trade Policy

Global value chains (GVCs) have become a dominant feature of world trade, encompassing developing, emerging, and developed economies. The whole process of producing goods, from raw materials to finished products, is increasingly carried out wherever the necessary skills and materials are available at competitive cost and quality. Similarly, trade in services is essential for the efficient functioning of GVCs, not only because services link activities across countries but also because they help companies to increase the value of their products. This fragmentation highlights the importance of an ambitious complementary policy agenda to leverage engagement in GVCs into more inclusive growth and employment and the OECD is currently undertaking comprehensive statistical and analytical work that aims to shed light on the scale, nature and consequences of international production sharing.

 

From Global Value Chains/Global Production Networks: Organizing the Global Economy

The key organizational feature of the global economy?

  • “Global Value Chains are defined by fragmented supply chains, with internationally dispersed tasks and activities coordinated by a lead firm (a TNC)” (UNCTAD, 2013, p.125; original italics).
  • Data gathering exercises:UNCTAD,OECD,WTO,JETRO…
  • Now firmly on the agenda among leading international economic organizations
  • The international division of labour:imperial/colonialsystems and exchanges of raw materials and finished goods
  • The new international division of labour(NIDL):establishment of overseas production bases of core country TNCs
  • The global division of labour:much more complex global networks lying behind the production of different goods and services

The phenomenon

  • About 60% of global trade, which today amounts to more than $20 trillion, consists of trade in intermediate goods and services that are incorporated at various stages in the production process of goods and services for final consumption” (UNCTAD, 2013, p. 122)
  • Not new, but since 2000 trade and FDI have increased exponentially, and ahead of GDP growth, highlighting a growth in TNC coordinated global value chains
  • Double counting – approx. 25-30% of value of world trade, e.g. the iPhone example. Not just trade from China to US, but incorporates high value components from Japan, South Korea etc.
  • Beyond national economies and basic trade data, and beyond TNCs and FDI, to more complex organizational structures involving intra-firm trade, arm’s length trade and non-equity modes e.g. subcontracting

 

 

From GLOBAL VALUE CHAIN ANALYSIS: A PRIMER

gvc5

 

From Global Capitalism and Commodity Chains: Looking Back, Going Forward

gvc4

 

From Global Value Chains/Global Production Networks: Organizing the Global Economy

gvc1gvc-2gvc3

 

Key Terms

  • Global Commodities Chains (GCCs)
  • Global Production Networks (GPNs)
  • Global Value Chains (GVCs)
  • Strategic Coupling
  • Economic Deepening
  • Trans National Corporation (TNC)
  • Multi National Corporation (MNC)
  • Multi National Enterprises (MNE)
  • SMILE curve
  • Economic Clusters
  • UNIDO (United Nations Industrial Development Organization)
  • OECD (Organization for Economic Cooperation and Development)
  • WTO (World Trade Organization)
  • WB (World Bank)
  • UNESCAP (Economic and Social Commission for Asia and Pacific)
  • UNCTAD ( United Nations Commission for Trade and Development)
  • ILO ( International Labor Organization)
  • G20 ( Group of 20 Nations)
  • TIVA ( Trade in Value Added)
  • On shoring
  • Off shoring
  • Outsourcing

 

 

Key People

  • Gary Gereffi
  • Neil M Coe
  • Jennifer Bair
  • Henry Wai-chung Yeung
  • Timothy Sturgeon

 

 

Key Sources of Research:

 

Measuring Trade in Value Added: An OECD-WTO joint initiative

https://www.oecd.org/tad/measuringtradeinvalue-addedanoecd-wtojointinitiative.htm

 

 

Global Value Chains

https://www.oecd.org/about/g20-oecd-global-value-chains.htm

https://www.oecd.org/sti/ind/global-value-chains.htm

 

 

OECD Stocktaking Seminar on Global Value Chains 2014

https://www.oecd.org/g20/topics/trade-and-investment/g20-oecd-global-value-chains-2014.htm

 

 

IMPLICATIONS OF GLOBAL VALUE CHAINS
FOR TRADE, INVESTMENT, DEVELOPMENT AND JOBS

OECD, WTO, UNCTAD 6 August 2013

Prepared for the
G-20 Leaders Summit
Saint Petersburg (Russian Federation) September 2013

 

Click to access G20-Global-Value-Chains-2013.pdf

 

 

Inclusive Global Value Chains

Policy options in trade and complementary areas for GVC Integration by small and medium enterprises and low-income developing countries

OECD and World Bank Group

Report prepared for submission to G20 Trade Ministers Meeting Istanbul, Turkey, 6 October 2015

 

Click to access Participation-Developing-Countries-GVCs-Summary-Paper-April-2015.pdf

 

 

GLOBAL VALUE CHAINS: CHALLENGES, OPPORTUNITIES, AND IMPLICATIONS FOR POLICY

OECD, WTO and World Bank Group

Report prepared for submission to the G20 Trade Ministers Meeting Sydney, Australia, 19 July 2014

 

Click to access gvc_report_g20_july_2014.pdf

 

 

Making Global Value Chains (GVCs) Accessible to All

Progress Report
Meeting of the Council at Ministerial Level

6-7 May 2014

 

Click to access MCM-GVC-Progress-Report-May-2014.pdf

 

 

Inclusive Global Value Chains

Policy Options for Small and Medium Enterprises and Low-Income Countries

Ana Paula Cusolito, Raed Safadi, and Daria Taglioni

2016

Click to access 9781464808425.pdf

 

 

Global value chains in a changing world

Edited by Deborah K. Elms and Patrick Low

2013

 

Click to access aid4tradeglobalvalue13_e.pdf

 

 

The rise of global value chains

WORLD TRADE REPORT 2014

 

Click to access wtr14-2c_e.pdf

 

 

Who Captures the Value in the Global Value Chain? High Level Implications for the World Trade Organization

Peter Draper and Andreas Freytag

July 2014

 

Click to access E15-Global-Value-Chains-DraperFreytag-FINAL.pdf

 

 

Joining, Upgrading and Being Competitive in Global Value Chains: 

A Strategic Framework

 

O. Cattaneo G. Gereffi S. Miroudot D. Taglioni

 

Click to access 2013-04_WorldBank_wps6406_Cattaneo_Gereffi_Miroudot_Taglioni_Competitiveness_GVCs.pdf

 

 

Global value chains, development and emerging economies

Gary Gereffi

2015

Click to access WP_18.pdf

 

 

GLOBAL VALUE CHAINS IN A POSTCRISIS WORLD A DEVELOPMENT PERSPECTIVE

Olivier Cattaneo, Gary Gereffi, and Cornelia Staritz

2010

Click to access Gereffi_GVCs_in_the_Postcrisis_World_Book.pdf

 

 

 

Global value chains and global production networks in the changing international political economy: An introduction

Jeffrey Neilson1, Bill Pritchard1 and Henry Wai-chung Yeung

2014

http://www.tandfonline.com/doi/pdf/10.1080/09692290.2013.873369

 

 

Combining the Global Value Chain and global I-O approaches

 

 

 

Global value chains and world trade : Prospects and challenges for Latin America

René A. Hernández
Jorge Mario Martínez-Piva Nanno Mulder

 

http://repositorio.cepal.org/bitstream/handle/11362/37176/S2014061_en.pdf?sequence=1

 

 

 

Global value chains in a post-Washington Consensus world

Gary Gereffi

2014

 

https://dukespace.lib.duke.edu/dspace/bitstream/handle/10161/10696/2014%20Feb_RIPE_Gereffi,%20Gary_GVCs%20in%20a%20post-Washington%20Consensus%20world.pdf?sequence=1

 

 

GLOBAL VALUE CHAINS AND DEVELOPMENT: Governance, Upgrading & Emerging Economies

Gary Gereffi

Director, Duke CGGC Duke University

2016

Click to access 697_10587.pdf

 

 

 

MaPPing gLoBaL VaLUe CHainS

Koen De Backer and Sébastien Miroudot

2014

Click to access ecbwp1677.pdf

 

 

 

Global Value Chains/Global Production Networks: Organizing the Global Economy

Neil M. Coe

2013

Click to access DrCoe.pdf

 

 

 

GLOBAL VALUE CHAIN ANALYSIS: A PRIMER

Gary Gereffi
Karina Fernandez-Stark

July 2016

 

http://dukespace.lib.duke.edu/dspace/bitstream/handle/10161/12488/2016-07-28_GVC%20Primer%202016_2nd%20edition.pdf?sequence=1

 

 

 

WHY THE WORLD SUDDENLY CARES ABOUT GLOBAL SUPPLY CHAINS

GARY GEREFFI AND JOONKOO LEE

Duke University

http://dukespace.lib.duke.edu/dspace/bitstream/handle/10161/10699/2012-07_JSCM_Gereffi%20&%20Lee_Why%20the%20world%20suddenly%20cares%20about%20global%20supply%20chains.pdf?sequence=1

 

 

 

The Economic Crisis: A Global Value Chain Perspective

 

Gary Gereffi

 

Click to access a-global-value-chain-perspective.pdf

 

 

The governance of global value chains

Gary Gereffi John Humphrey Timothy Sturgeon

2005

 

Click to access sturgeon2005.pdf

 

 

Global production networks and the analysis of economic development

Jeffrey Henderson, Peter Dicken, Martin Hess, Neil Coe and Henry Wai-Chung Yeung

2002

Click to access 2002_RIPE.pdf

 

 

GLOBAL VALUE CHAINS: INVESTMENT AND TRADE FOR DEVELOPMENT

UNCTAD 2013

Click to access wir2013_en.pdf

 

 

Asia and Global Production Networks

Implications for Trade, Incomes and Economic Vulnerability

Benno Ferrarini David Hummels

2014

Click to access asia-and-global-production-networks.pdf

 

 

 

Global Production Networks: Theorizing Economic Development in an Interconnected World

By Neil M. Coe, Henry Wai-Chung Yeung

2015

 

 

Toward a Dynamic Theory of Global Production Networks

Henry Wai-chung Yeung

Neil M. Coe

 

Click to access 2015_GPN_theory_paper_EG%20Vol91(1)_29-58.pdf

 

 

Global Value Chains and deVelopment

unido’s support towards inclusive and sustainable industrial development

2015

Click to access GVC_REPORT_FINAL.PDF

 

 

Global Value Chains: The New Reality of International Trade

Sherry Stephenson

December 2013

Click to access E15_GVCs_BP_Stephenson_FINAL.pdf

 

 

GLOBAL VALUE CHAINS SURVEYING DRIVERS AND MEASURES

João Amador and Sónia Cabral

2014

Click to access ecbwp1739.en.pdf

 

 

GLOBAL VALUE CHAINS AND INTERCONNECTEDNESS OF ASIA-PACIFIC ECONOMIES

Asia Pacific Trade and Investment Report

2015

 

Click to access Chapter%207%20-%20GVCs%20in%20the%20Asia-Pacific.pdf

Click to access Full%20Report%20%20-%20APTIR%202015.pdf

 

 

Global Capitalism and Commodity Chains: Looking Back, Going Forward

JENNIFER BAIR

2005

COMPETITION & CHANGE, Vol. 9, No. 2, June 2005 153–180

 

 

Global Value Chains: Development Challenges and Policy Options

Proposals and Analysis

December 2013

Click to access E15-Global-Value-Chains-Compliation-Report-FINAL.pdf

 

 

Globalizing’ regional development: a global production networks perspective

Neil M Coe, Martin Hess, Henry Wai-chung Yeung, Peter Dicken and Jeffrey Henderson

Click to access 2004_TIBG.pdf

 

 

Multilateral approaches to Global Supply Chains

 

International Labour Office

2014

 

Click to access wcms_485351.pdf