Industrial organisation

Michela Giorcelli, Bo Li, 10 January 2022

Understanding which industrial policies work is important to promote the development of poorer countries. This column examines the effects of technology and knowledge transfers on early industrial development, using evidence from the Sino-Soviet Alliance in the 1950s. The authors find that simultaneously receiving technologically advanced capital goods and know-how transfer had large, persistent effects on plant performance, while the effects of receiving capital only were short-lived. The know-how component was essential to generate horizontal and vertical spillovers and production reallocation from state-owned to privately owned companies since the late 1990s.

Louise Guillouet, Amit Khandelwal, Rocco Macchiavello, Matthieu Teachout, 07 January 2022

Developing countries regularly use financial incentives to attract multinational companies in the hope of stimulating knowledge transfers and positive spillovers. This column analyses the role of language frictions in impeding transfers of management knowledge within multinationals using survey and experimental evidence from Myanmar. It finds that potential employers value higher English efficiency and prior multinational experience, and an English language course treatment is shown to improve the English ability of domestic managers, increase their interactions with foreign managers, and increase their involvement in the management of company personnel. 

Enrico Nano, Victor Stolzenburg, 05 January 2022

The role of global value chains for development is often told from a manufacturing or agriculture perspective. This column discusses how the rise of global services value chains offers developing countries with new opportunities by providing jobs, revenue, and productivity growth. In addition, they do so in a more inclusive way than manufacturing. Policymakers need to invest in human capital and address regulatory barriers to services trade to make the most of this development.

Pavel Chakraborty, Devashish Mitra, Asha Sundaram, 07 December 2021

The global market size of outsourcing doubled between 2000 and 2019. While most studies look at foreign outsourcing, this column uses new data on Indian firms to analyse the effects of increased competition from Chinese imports on the domestic outsourcing of manufacturing jobs. It finds that greater import competition is associated with a significant increase in domestic outsourcing. Additionally, it shows that this effect is only present in Indian states with pro-worker labour regulations. Thus, it highlights the important role of domestic institutions in how firms adapt to globalisation. 

Jonas Hjort, Vinayak Iyer, Golvine de Rochambeau, 02 December 2021

Access to large buyers is increasingly believed to facilitate firm growth and job creation. This column uses an experiment with small and medium-sized firms in Liberia to analyse whether purely informational barriers exclude firms from accessing growth-conducive value chains. Exposing firms to a week-long ‘sellership’ programme helped them win more and better contracts, and the treatment had long-term effects. As the informational constraint is shown to bind for a quartile of firms, reducing informational barriers can help level the playing field and may also improve overall allocative efficiency.

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