Euroframe 3 June FATS Frédéric Boccara Insee, IDHE-CNRS A statistical set about MNEs to analyse relations between BoP & Growth

Euroframe 3 June I. Method issues II. The size of the delocation phenomenon III. A new phases : Informational Revolution IV. Costs and Factors V. Economic Theory VI. Economic Policy

Euroframe 3 June Method Delocation: suppression of an activity in one place & displacement in another place Relative delocation (e.g. IBM-Infineon) Less and more than FDI FATS ==> a focalisation on MNEs

Euroframe 3 June Size of the phenomenon: Output (sales)

Euroframe 3 June Size of the phenomenon: Countries Outward Sales : Contribution to the total change

Euroframe 3 June Comparison Sales/Jobs/FDI/Trade

Euroframe 3 June Employment (1)

Euroframe 3 June Employment (2) Descriptive « rough » estimation

Euroframe 3 June Causes and Factors New phases ? -> services Importance of North / North ==> not only factor proportions Look to MNEs theories Empirical look to costs

Euroframe 3 June New phases and services: informational revolution (IR) Hand/MachineTool -> Brain/Information Machines Transversal to industries Sharing potential Distance control possibilities Key role of human capabilities, and expanses -> Taken by a reinforced role of financial assets

Euroframe 3 June Some recent theories of MNEs (antecedents: Leontief paradox, Vernon, IDPP) Dunning: eclectic paradigm (OLI, specific K) Brainard: complementarity N/S, substit S/S -> fixed cost at MNE level Krugman: agglomeration effects Markusen: specific K --> knowledge based, R&D

Euroframe 3 June Interpretation Central role of IR sharing of informational results access to informational resources R&D and Human resources expanses ==> quid other costs than wages ? Key role of MNEs as a sharing private perimeter (contradictory) take the enterprise group level (financial links) ==> affiliates and parent companies as a financial network global financing capacity & « domestic » (parent) cost

Euroframe 3 June Costs : three hypothesis To relativise wage costs Fixed global cost Global finance mobilising/parent cost ==> –see also « capital costs » –take costs at the MNE level

Euroframe 3 June Costs: definitions and notions Capital costs: aK labour costs: bL Intermediate input costs: cCI labour cost of affiliate (bL O ) ==>  (cCI) D for parent aK  Domestic: (aK) D ; Outward: (aK) O etc. ==> (aK) D >> (aK) O & cCI MNEs < others

Euroframe 3 June Costs: method Compare Parent Company costs/Sales to Other resident Company costs/Sales (companies without Affiliates abroad) ==>  Parent Cost to Total Cost Mean of Z ratio, by type j, given the size k, the industry l

Euroframe 3 June Costs: Average Costs of firms (2001)

Euroframe 3 June Internal Resources of national economies Interpretative Scheme  Process of located Activities Located Results  Globalisation of Results and Resources New Globalisable Resources  (re/de)Location of Activities Localised Activities Feedback leverage

Euroframe 3 June Economic Theory MNEs as institutions associating Transfers and Trade of international co-operative production association Transfers, Trade and Production  need to be treated not apart of « Trade Theory »

Euroframe 3 June Economic theory (2) HOS results (gain,..) to be revisited with possibility of transfers by productive and trading agents FDI  Trade ==> not WTO, but Central Banks fundamentally concerned by MNEs (transfers, financial activity supervision) RI & Employment role : (i) New bias (ii) Advances

Euroframe 3 June Economic Policy Employment policy goal to be revisited  New biases are necessary  Security of Employment or Training-Education Goals and instrument of monetary Policy  European Central Bank (ECB)  Towards a New kind of Selectivity

Euroframe 3 June Economic policy (2): ECB Policy and institutional Reform for New selective Refinancing of Firms Role of States (+Local..) in subsidised loans Role of ECB in financing of public deficits (selectivity) Mutual Funds: (i) for securing loans (ii) for reconverting Enterprise government