Karolina Ekholm

In search of FDI-transmitted R&D spillovers: A study based on Swedish data

In Search of FDI-Transmitted R& D Spillovers: A Study Based on Swedish Data. — This paper analyzes empirically whether inward and outward foreign direct investment (FDI) work as channels for international R&D spillovers. The authors utilize firm-level and industry-level data for Swedish manufacturing. Hardly any evidence of FDI-related R&D spillovers is found. But while the results do not provide support for the hypothesis that the activity level of MNEs’ affiliates matters for the extent of FDI-transmitted international spillovers, they suggest that utilizing foreign affiliates’ employment as a weighting scheme may be too crude a measure. The authors’ analysis shows indeed that the type of activity — R&D or assembly — carried out in the affiliates matters significantly for technology sourcing.

Trade and Location with Horizontal and Vertical Multi-region Firms*

This paper analyses the effect on agglomeration tendencies of allowing firms to become multi-region firms in a standard model of trade and location. More specifically, we introduce horizontal and vertical multi-region firms into the core-periphery (CP) model developed by Krugman (1991). The introduction of horizontal multi-region firms dampens the strong agglomeration effects found in the CP model by making the range of trade costs for which the core-periphery equilibrium occurs smaller. The introduction of vertical multi-region firms that can separate the location of headquarter activities from the location of production has two counteracting effects. First, headquarters have a strong tendency to agglomerate, and, in this sence, agglomeration tendencies are strengthened. Second, actual production tends to be more spread out, and, in this sense, they are weakened.

Foreign Direct Investment in Central and Eastern Europe: Employment Effects in the EU

We use firm-level data on Swedish multinationals to analyze how the recent expansion of affiliate employment in Central and Eastern Europe (CEE) has affected affiliate employment elsewhere. According to our results, employment in affiliates located in other low-wage countries in Europe decreased substantially as a consequence of the expansion in CEE. Furthermore, affiliate activities in these countries have become more sensitive to changes in labor costs as firms have set up production in CEE. We find that employment in Sweden and other high-wage European countries has also been affected, but these effects seem to be much smaller.

Location of R&D and High-Tech Production by Vertically-Integrated Multinationals

We develop a two-country general equilibrium model where firms make separate choices about the location of R&D and high-tech production. There are two agglomeration forces: R&D spillovers and backward linkages associated with high-tech production. The latter tends to attract production to the larger economy. We show that, for relatively weak R&D spillovers and intermediate trade costs, the smaller economy tends to specialize in R&D. For certain parameterizations, both concentration and dispersion of R&D activities are possible outcomes. Hosting an agglomeration of R&D activities does not necessarily lead to welfare gains.

EVALUATION OF A MULTIPROFESSIONAL REHABILITATION PROGRAMME FOR PERSISTENT MUSCULOSKELETAL-RELATED PAIN: ECONOMIC BENEFITS OF RETURN TO WORK

OBJECTIVE The aim of this study was to evaluate the economic consequences of an 8-week multiprofessional rehabilitation programme for patients with persistent pain. SUBJECTS A group of 67 patients following the programme and a comparison group of 322 patients. METHODS The effect on return to work was estimated using 3 different methods: (i) a matched sample approach; (ii) regression analysis; and (iii) propensity score matching. The economic benefit of the programme was estimated as a reduction in production losses due to sick-leave. This benefit was compared with the actual cost of the programme. RESULTS The benefit of the programme was estimated to be euro3,799-7,515 per treated patient and year. The total cost of the programme was estimated to be euro5,406 per patient. Based on these figures the total cost of the programme, including costs for patients remaining on sick-leave, had been recovered when the successfully rehabilitated patients had worked for 9-17 months. Any additional work after that yielded net economic benefits. CONCLUSION Since other studies indicate that a large proportion of the patients working after one year also work after 3 and 6 years, we conclude that this multiprofessional rehabilitation programme for patients with persistent pain most likely generates substantial net economic gains.

Effects on work resumption of a co-operation project in vocational rehabilitation. : Systematic, multi-professional, client-centred and solution-oriented co-operation.

Purpose. The present aim was to evaluate the effect of systematic multi-professional co-ordinated rehabilitation (the Stockholm Co-operation Project) on the number of days’ sick leave during the first and second half-years after the rehabilitation co-ordination period, compared to the year before. Another aim was to evaluate the economic effects at national level. Method. A matched-pairs design was used. The study group was based on 64 rehabilitees employed by a public employer in Stockholm, who took part in a systematic multi-professional co-operation project. To obtain pairs, the 64 individuals were individually matched with 64 people who received conventionally organised rehabilitation. Thus, there were 128 subjects altogether. Results. The study group had substantially less sick leave days per month than the comparison group during the second half-year after the rehabilitation co-ordination period. The effect was even greater in a subgroup with more previous sick leave. During the first half-year after the intervention the comparison group had relatively more sick leave. No effect was found for a subgroup with less previous sick leave. The economic benefit of the intervention was estimated to €1,278 per month and person based on the whole group, and to €2,405 per month and person based on those with more sick leave. Conclusions. People who undergo co-ordinated rehabilitation have more working days after the intervention period than those with conventional rehabilitation. This way for rehabilitation actors to co-operate gives better outcomes for rehabilitation cases with long previous sick leave, but not for cases with less previous sick leave. It also generates economic gains at several levels.

International Production Networks in the Nordic/Baltic Region

The Nordic countries are characterized by relatively compressed wage structures, implying that the incentives to offshore activities intensive in low-skilled labour might be particularly strong in these countries. In this paper, we document the recent changes in measures of offshoring and find that there has been an overall increase since the mid 1990s but that the experience varies considerably across sectors. We also document the recent trends in wage-bill shares of workers with different levels of educational attainment. As in most industrialized countries, there has been an overall increase in the wage-bill share of highly educated workers, a development that is relatively uniform across sectors. In an econometric analysis we estimate the relationship between offshoring of intermediate input production and labour demand in Sweden, Finland and Norway, distinguishing between workers with different educational attainments. We only find weak relationships. In this sense, the results suggest that the gains from an increased specialisation due to fragmentation of production and the emergence of production networks involving low-wage countries are reaped without any large adverse effects on income distribution. For Sweden, we find that offshoring to low-income countries is associated with a shift in demand towards workers with a relatively high level of education. For Finland, however, it is rather offshoring to high-income countries that is associated with such a shift. Moreover, in the Swedish case the shift is away from workers with upper secondary education whereas in the Finnish case it is away from workers with lower secondary education.

Locating foreign affiliates in Germany: the case of Swedish MNEs

Sweden is an important home country for multinational enterprises (MNEs). In particular, relative to its size, Sweden is the country of origin of a large number of large and highly internationalized MNEs. The fact that Germany is the largest economy in Europe and lies geographically close to Sweden makes it an attractive location for Swedish firms. Therefore, Germany has consistently been one of the most important host countries for Swedish MNEs.