Margherita Scoppola

Multinationals and agricultural policy in the EC and USA

Abstract Few multinationals have a considerable market share of grain and oilseed trade and processing industries in both the EC and USA. The reform of agricultural policy is likely to affect their trading and processing activities. The aim of the paper is to discuss to what extent current reform coincides with, or diverge from, their interests. Three main issues are considered: what are the effects of EC and USA ‘traditional’ policies on multinationals; how multinationals behave as a consequences of those agricultural policies; and how the present reform could affect companies and induce restructuring process.

The Impact of EU Preferential Trade Agreements on Foreign Direct Investment

Although North–South preferential trade agreements (PTAs) are expected to affect foreign direct investment (FDI), there is not much evidence to date on the impact of EU PTAs on the pattern of FDI. The aim of this study is to assess the impact of EU PTAs on the outward stocks of FDI of the EU. We estimate a model based on the knowledge‐capital theory of the multinational enterprise over the period 1995–2005 using a sample of 173 host countries. Explanatory variables include measures of the level of bilateral protection and a dummy to capture the impact of deep integration provisions of PTAs. A dynamic panel model with fixed effects is used in order to take into account the dynamic behaviour of FDI and the heterogeneity bias. Results show that EU FDI is both horizontal and vertical. The level of EU protection affects FDI negatively, while the impact of the tariffs applied by host countries varies across groups of partner countries. Deep integration provisions affect EU FDI positively.

Tariffs and EU countries foreign direct investment: Evidence from a dynamic panel model

According to the models of the multinational enterprise tariffs play a fundamental role in determining the pattern of foreign direct investment (FDI). The aim of this paper is to assess the impact of tariffs on the outward stocks of FDI of the European Union (EU). We estimate a model based on the knowledge–capital theory of the multinational enterprise over the period 1995–2008 by using a sample of five EU countries and 24 partner countries. We consider, first, manufacturing sector as a whole and, then, six manufacturing industries defined at the two-digit level of the Nomenclature statistique des activités économiques dans la Communauté européenne (NACE) classification. Explanatory variables include an index of applied bilateral tariffs and a dummy to capture the presence of bilateral investment treaties (BITs). A dynamic panel model is estimated through the generalized method of moments estimator, taking also into account the endogeneity of regressors. The results show that the pattern of EU outward FDI is a mix of vertical and horizontal FDI. BITs in force have a significant and positive impact on the outward FDI. The impact of tariffs varies across industries and countries, suggesting the predominance of horizontal FDI in some industries, and the existence of vertical FDI in others.

Trade policies and the strategies of multinationals in the international grain market

Multinationals exercise market power in international grain trading activities and affect the volume and direction of trade flows. A high degree of integration in the cereals and cereals substitutes sectors and diversification in other sectors allow companies to undertake a wide range of strategies, such as global strategic behaviour and transfer pricing, which influence the international grain trade and the effectiveness of trade polices. Such influences may be identified in a new framework of analysis, by taking into account different ways in which foreign direct investment occurs.

Trade Preference Through Tariff Rate Quotas and the Gravity Equation: Does the Tariff Equivalent Matter?

The 2003 reform of the Common Agricultural Policy in the rice sector has implied a drastic change of the level and instruments of the border protection. Because the European Union (EU) grants trade preferences to a considerable number of developing countries, the reform of the domestic policy also entailed erosion of preferences. This chapter addresses the impact of preference erosion on the rice exports of the countries which benefit from preferences by the EU, with the aim of contributing to the literature from two points of view: first, by proposing a new empirical approach to compute the preferential margin when tariff rate quotas are in force; second, by estimating the trade elasticities of preferences by means of a panel gravity equation to deal with the issue of endogeneity of the preferential margins. The results show that the way in which preferential margins are calculated matters significantly when assessing the existence and extent of preference erosion and estimating the values of the trade elasticities. Finally, our estimations highlight the fact that preferences still have a market trade impact for almost all countries involved.

Foreign Land Acquisitions and Institutional Distance

This paper investigates whether and how the distance in institutional quality between investing and target country affects the pattern of foreign land acquisitions. We estimate a panel gravity-like equation to assess the impact of the institutional distance on the amount of land acquired and the number of contracts signed. Our results show that the institutional distance significantly affects both the number of contracts and the amount of land, but that the direction of these effects varies according to the geographical region and the relative strength of institutions in the target countries, with Africa following a pattern of its own. (JEL Q15)