Magnus Lodefalk

Servicification of manufacturing - evidence from Sweden

There are signs that manufacturing is becoming increasingly focused on services; this process is known as servicification. Despite suggestive evidence, large gaps remain in our knowledge regarding this process. This paper contributes to closing these gaps by discussing the phenomenon, arriving at some conjectures and examining them empirically. Comprehensive datasets at both the firm and enterprise group level are developed for Sweden. Changes in manufacturing during the period from 1997 to 2006 are analysed in depth. The results show that manufacturing has been servicifying substantially. On the input side, services and qualified services are increasingly characteristic of in-house activity. On the output side, manufacturing has been accounting for an increasing share of services in total sales and exports. Moreover, we show that diversification is much greater (almost 60% higher) when all activities in the manufacturing industrys constituent enterprise groups are considered. The results imply that the practice of treating services and manufacturing separately - e.g., in trade policymaking - may be out-of-date. Finally, the findings illustrate the value of enterprise group-level data when studying structural economic changes.

Trade, Migration and Integration – Evidence and Policy Implications

This paper takes as its point of departure the unique position recently adopted by Swedish policymakers emphasising migration as a tool to increase trade. We attempt to empirically scrutinise this position. Our results demonstrate that migrants stimulate exports, especially along the extensive product margin of trade and for differentiated products, but have no significant impact on imports. This finding suggests that for small open economies where numerous immigrants are refugees, the strategy of using migration to facilitate trade may only be effective with respect to exports. This paper also contributes to the literature on trade and migration by exploiting data on gender and age, which allow us to draw inferences on the underlying impact channels. We adopt an instrumental variable approach to address the endogeneity issue due to potential reverse causality. The pattern of results is consistent with the hypothesis that migration primarily reduces fixed trade costs resulting from information and trust friction across migrant host and source countries. Importantly, the results imply that policymakers may be able to promote trade by improving immigrants’ labour market integration instead of simply being restricted to promoting more liberal immigration policies, which is generally more controversial.

Servicification of Firms and Trade Policy Implications

In the OECD countries, the decline of manufacturing and its employment implications have long been matters of concern. Recently, policymakers in several countries have set out to achieve reindustrialization. The servicification of firms is related to these concerns and aspirations. However, servicification and particularly its role in trade policy have received limited attention. I review micro-level evidence and discuss implications. I find that imported, domestic and exported services are all important to contemporary firm competitiveness and participation in international value chains. Therefore, historic policymaking divides between trade in manufactures and services, between export and import interests, and among modes of supply are becoming less relevant. I conclude by suggesting potential steps forward.

The Effect of Hiring Top Workers on Productivity: What is the Role of Absorptive Capacity?

ABSTRACT We examine the heterogeneous productivity impacts of hiring top workers on small and medium-sized enterprises, exploiting matched employer–employee panel data and employing within-firm as well as matching and difference-in-difference estimators. The results provide robust evidence that the productivity impact is stronger for firms with higher absorptive capacity. Technological laggards within an industry benefit more strongly from hiring top workers if their workforce is more well-educated.

A global Baltic : potential gains from trade liberalisation in the Baltic sea states

Abstract Though the Baltic Sea countries have displayed substantial reform-facilitated growth and trading activity over the last decade, significant trade barriers still exist. We analyse their implications, using a CGEmodel. Besides the “usual suspects” (tariffs, subsidies, and service barriers) and trade facilitation, we address non-tariff-measures (NTM) in a separate scenario. We find that reforms would substantially boost national income and trade, especially for the group of emerging economies. Income gains are primarily due to elimination of dead-weight losses caused by rules and regulations and improved resource allocation. Jointly, the simulations indicate a move towards services and industrial production and exports.