Blonigen, Bruce A., and Anca D. Cristea. "Air Service and Urban Growth: Evidence From a Quasi-Natural Policy Experiment," Journal of Urban Economics, Vol.86(March 2015), pp.128-146.
While significant work has been done to examine the determinants of regional development, there is little evidence on the role of air services. This paper exploits the large and swift changes to air traffic induced by the 1978 Airline Deregulation Act to identify the link between air traffic and local economic growth. Using data for 263 Metropolitan Statistical Areas (MSAs) over a two-decade time period, we estimate the effects of airline traffic on local population, income, and employment growth. Our most conservative estimates suggest that a 50-percent increase in an average city’s air traffic growth rate generates an additional stream of income over a 20-year period equal to 7.4 percent of real GDP, the equivalent of $523.3 million in 1978 dollars.
Blonigen, Bruce A. “Industrial Policy and Downstream Export Performance,” Economic Journal, forthcoming.
Blonigen, Bruce A., Lionel Fontagne, Nicholas Sly, and Farid Toubal. “Cherries for Sale: The Incidence and Timing of Cross-Border M&A,” Journal of International Economics, 2014, Vol.94(2014), pp.341-357.
This paper develops a model of cross-border M&A activity that features firm-level productivity shocks and endogenous export activity. We show that foreign firms will be relatively more attracted to targets in the domestic country that had high productivity levels that induced them to invest in large export networks several years prior to acquisition, but subsequently experienced a negative productivity shock (i.e., cherries for sale). From the theory we derive a dynamic panel binary choice empirical model to predict cross-border M&A activity, and find strong evidence for our hypotheses connecting the evolution of firm-level productivity to the ultimate targets of cross-border acquisitions using French firm-level data.
Blonigen, Bruce A., Jeremy Piger, and Nicholas Sly. “Comovement in GDP Trends and Cycles Among Trading Partners,” Journal of International Economics, forthcoming.
It has long been recognized that business cycle comovement is greater between countries that trade more intensively with one another. Surprisingly, no one has previously examined the relationship between trade intensity and comovement of shocks to the trend level of output. Contrary to the result for cyclical fluctuations, we find that comovement of shocks to trend levels of real GDP is significantly weaker among countries that trade more intensively with one another. We also find that this relationship has remained stable, or become stronger in recent decades, while the role of trade in generating cyclical comovement has diminished over time. By examining the impact of trade linkages on both cyclical and trend comovement, we can quantify the effect of trade on overall output growth comovement between countries. We simulate changes in ten-year output growth correlations corresponding to the estimated effects of trade and find that the impact on trend comovement is quantitatively more important than its effect on cyclical comovement.
Blonigen, Bruce A., and Jacob McGrew. "Task Routineness and Trade Policy Preferences," Economics and Politics, Wiley Blackwell, Vol. 26(November 2014), pp. 505-518.
Understanding the formation of individual trade policy preferences is a fundamental input into the modeling of trade policy outcomes. Surprisingly, past studies have found mixed evidence that various labor market and industry attributes of workers affect their trade policy preferences, even though recent studies have found that trade policy can have substantial impacts on workers’ incomes. This paper provides the first analysis of the extent to which task routineness affects trade policy preferences using survey data from the American National Election Studies. We find significant evidence that greater task routineness leads workers to be much more supportive of import restrictions, consistent with recent evidence on how trade openness puts downward pressure on employment and wages for workers whose occupations involve routine tasks. In fact, other than education levels, task routineness is the only labor market attribute that displays a robust correlation with individuals’ stated trade policy preferences. We also provide evidence that there are some interactions between the economic and non-economic factors in our study. For example, women’s trade policy views are much more invariant to their labor market attributes than men, suggesting that women’s views on this issue are driven more by personal and ideological beliefs than men.
Blonigen, Bruce A. and Jeremy Piger. “Determinants of Foreign Direct Investment,” Canadian Journal of Economics, forthcoming.
Empirical studies of bilateral foreign direct investment (FDI) activity show substantial differences in specifications with little agreement on the set of covariates that are (or should be) included. We use Bayesian statistical techniques that allow one to select from a large set of candidates those variables most likely to be determinants of FDI activity. The variables with consistently high inclusion probabilities include traditional gravity variables, cultural distance factors, relative labor endowments, and trade agreements. Variables with little support for inclusion include multilateral trade openness, most host-country business costs, host-country infrastructure (including credit markets), and host-country institutions. Of particular note, our results suggest that many covariates found significant by previous studies are not robust.
Blonigen, Bruce A., Lindsay Oldenski, and Nicholas Sly. “The Differential Effects of Bilateral Tax Treaties,” American Economic Journal: Economic Policy, Vol. 6 (May 2014), pp. 1-18. (Lead article)
Bilateral tax treaties (BTTs) are intended to promote foreign direct investment through double-taxation relief. Using BEA firm-level data, we find a positive effect of BTTs on FDI, which is larger for firms that use differentiated inputs. BTTs allow multinational firms to request assistance from treaty partners’ governments if they have a grievance about how tax liabilities are determined. These provisions disproportionately benefit firms that use inputs for which an arm’s-length price is difficult to observe, since allocation of earnings across countries is more complex. We find differential BTT effects for both sales by existing affiliates and entry of new affiliates.
Blonigen, Bruce A., and Wesley W. Wilson. “The Growth and Patterns of International Trade,” Maritime Policy & Management, Vol. 40 (December 2013), pp. 618-635.
Over the last 40 years, there has been an unprecedented growth in trade amongst countries, and the growth in trade shows no sign of slowing down. The increases in trade have put tremendous pressure on the maritime and port industries, and these industries have responded with innovations, investment, and greater productivity. International trade and maritime trade are synonyms, and an understanding of the determinants of international trade is central to understanding maritime trade. In this paper, we provide a review of the international trade literature with a focus on the determinants of trade and the evolution of trade modeling. We then present a broad overview of the extent and growth of trade in the context of primary determinants. The basic results are: 1. Trade is growing at a phenomenal rate; 2. Trade is dominated by relatively few countries who tend to remain dominant; 3. While trade of all products is growing, there are large differences in the growth rates, but yet, there is stability in the relative sizes of product markets; and 4. Over the last 40 years, trade has changed from major flows between the US and Europe to major flows between Asia and the US.
Blonigen, Bruce A., and Anca Cristea. “Did the Interstate Commerce Act Lower Transport Costs? Evidence from Wheat Prices,” Review of Industrial Organization, Vol. 43(August 2013 – Special Issue), pp. 41-62.
There is significant debate over the effect of the Interstate Commerce Act (ICA) on the cost of rail transport to shippers. Taking price differences across locations as proxy for transport costs, we use data on wheat prices before and after the implementation of the ICA to see if the Act led to smaller differences in wheat prices across American cities relative to a control group of European cities. We find that the ICA had no effect on US transport costs; however, it reduced their volatility substantially. This evidence supports the view that the ICA helped stabilize cartel prices after a period of significant price wars.
Blonigen, Bruce A., Benjamin H. Liebman, and Wesley W. Wilson. “Antidumping and Production-line Exit: The Case of the U.S. Steel Industry,” Review of Industrial Organization, Vol. 42(June 2013 – Special Issue), pp. 395-413.
We present and examine a novel data set that contains production line information inside US steel plants. We exploit this highly disaggregated data to perform the first study of entry and exit behavior at the level of the production line within individual plants. Our empirical analysis reveals a number of interesting results. First, smaller production lines are more likely to shut down, as are lines that are owned by larger firms. Younger production lines and lines that have undergone modernization are more likely to survive. Our results indicate that lines that are operated by integrated producers are more likely to exit. We find no evidence, however, that antidumping decreases the likelihood of exit, despite the steel industry’s frequent use of antidumping protection.
Blonigen, Bruce A., Benjamin H. Liebman, Justin R. Pierce, and Wesley W. Wilson. “Are All Trade Protection Policies Created Equal? Empirical Evidence for Nonequivalent Market Power Effects of Tariffs and Quotas,” Journal of International Economics, Vol. 89(March 2013), pp. 369-378.
Over the past 50 years, the steel industry has been protected by a wide variety of trade policies, both tariff- and quota-based. We exploit this extensive heterogeneity in trade protection to examine the well-established theoretical literature predicting nonequivalent effects of tariffs and quotas on domestic firms' market power. Using plant-level Census Bureau data for steel plants from 1967 to 2002, we find evidence for significant market power effects for binding quota-based protection, but not tariff-based protection, particularly with respect to integrated and minimill steel producers. Our results are robust to calculation with two standard measures of market power and controlling for potential endogeneity of trade policies.
Blonigen, Bruce A. “Revisiting the Evidence on Trade Policy Preferences,” Journal of International Economics, Vol. 85(September 2011), pp. 129-135.
Past literature has found evidence that labor market attributes affect individuals' trade policy preferences in a manner consistent with theories of international trade. This paper shows that, with the exception of education, the relationships between labor market attributes and trade policy preferences are not robust in US survey data. This suggests that either our proxies of labor market attributes are poor or our theories for what drives trade policy preferences need to be revisited.
Blonigen, Bruce A., and Anson Soderbery. “Measuring the Benefits of Foreign Product Variety with an Accurate Variety Set,” Journal of International Economics, Vol. 82(November 2010), pp. 168-180.
Recent studies have used import data to assess the impact of foreign varieties on domestic prices and welfare. We employ a market-based data set on the U.S. automobile market that allows us to define goods varieties at a more precise level, as well as discern location of production and ownership of varieties. Our estimates of price and welfare changes from new varieties in the U.S. automobile sector are twice as large as standard estimates when using our detailed market-based data. We also show that new varieties introduced by foreign-owned affiliates provided an additional 70% welfare gain during our sample.
Blonigen, Bruce A., and Wesley W. Wilson. “Foreign Subsidization and Excess Capacity.” Journal of International Economics, Vol. 80(March 2010), pp. 200-211.
The U.S. steel industry has long held that foreign subsidization and excess capacity has led to its long-run demise, yet no one has formally examined this hypothesis. In this paper, we incorporate foreign subsidization considerations into a model based on Staiger and Wolak's (1992) cyclical dumping framework and illustrate testable implications of both cyclical excess capacity and structural excess capacity stemming from foreign subsidization. We then use detailed product- and foreign country-level data on steel exports to the U.S. market to estimate these excess capacity effects. While the full sample results provide evidence of both cyclical and structural excess capacity effects for exports to the U.S. market, these effects are confined to such a narrow range of country–product combinations that it is unlikely that such effects were a significant factor in the fortunes of U.S. steel firms over the past decades.
Blonigen, Bruce A., and Wesley W. Wilson. “Port Efficiency and Trade Flows.” Review of International Economics, Vol. 16(February 2008), pp. 21-36.
Growing international trade and increasing congestion focus attention on trade facilitation. Ocean ports are a central and necessary component in facilitating trade. Yet, there is only limited comprehensive information available on the efficiency of ports or evidence of the effect of port efficiency on trade. We develop and apply a straightforward approach to estimate port efficiency. The approach uses detailed data on US imports and associated import costs, yielding estimates across ports, products, and time. These measures are incorporated into a gravity trade model where we estimate that improved port efficiency significantly increases trade volumes.
Blonigen, Bruce A. and Van Kolpin. “Technology, Agglomeration, and Regional Competition for Investment.” Canadian Journal of Economics, Vol. 40(November 2007): 1149-1167.
Competition for firms by region has a long-standing history, and the academic literature has debated whether such competition is efficient. We develop a model that explores technology development by firms facing regional competition for their investment and examine the endogenous determination of region policy, firm technology, and agglomeration externalities. We find a new source of inefficiency--regional competition leads firms to inefficiently distort their development and selection of production technology to improve their standing in the regional competition for their investment. We show that these inefficient firm decisions on technology and location can also weaken agglomeration externalities.
Blonigen, Bruce A., Ronald B. Davies, Glen R. Waddell and Helen Naughton. “FDI in Space: Spatial Autoregressive Relationships in Foreign Direct Investment.” European Economic Review, Vol. 51(July 2007): 1303-1325.
There are a number of theoretical reasons why foreign direct investment (FDI) into a host country may depend on the FDI in proximate countries. Such spatial interdependence has been largely ignored by the empirical FDI literature, with only a couple recent papers accounting for such issues in their estimation. This paper conducts a general examination of spatial interactions in empirical FDI models using data on US outbound FDI activity. We find that estimated relationships of traditional determinants of FDI are surprisingly robust to inclusion of terms to capture spatial interdependence, even though such interdependence is estimated to be significant. However, we find that both the traditional determinants of FDI and the estimated spatial interdependence are quite sensitive to the sample of countries one examines.
Blonigen, Bruce A. “Working the System: Firm Learning and the Antidumping Process.” European Journal of Political Economy, Vol. 22(September 2006): 715-731. (Invited Paper – Special Issue)
This paper takes the first systematic look at how prior experience by US firms in filing US AD petitions affects future AD filing activity and outcomes. Such prior experience may affect both the cost of filing petitions, as well as the likelihood of successful outcomes and dumping margin magnitudes. Statistical analysis of data on US AD cases finds that prior AD experience leads to greater filing activity and likelihood of affirmative decisions or suspension agreements, but significantly lower dumping margins. The latter result suggests that experience does not affect dumping margins as much as it lowers filing costs, leading to petitioning of weaker cases.
Blonigen, Bruce A. “Evolving Discretionary Practices of U.S. Antidumping Activity.” Canadian Journal of Economics, Vol. 39(August 2006): 874-900.
Using data on U.S. dumping margin calculations by the U.S. Department of Commerce (USDOC), we first document the rapid rise in U.S. dumping margins from around 15% in the early 1980s to over 60% by 2000. Second, statistical analysis finds that USDOC discretionary practices have played the major role in rising U.S. dumping margins over this period. Importantly, the evolving effect of discretionary practices is due not only to increasing use of these practices over time, but to apparent changes in implementation of these practices that mean a higher increase in the dumping margin whenever they are applied.
Blonigen, Bruce A. “The Effects of NAFTA on Antidumping and Countervailing Duty Activity.” World Bank Economic Review, Vol. 19(December 2005): 407-424. (Invited Paper – Special Issue)
Treatment of unfair trade laws has become an important topic in negotiations on preferential trading areas. Recent preferential trading areas involving the United States, one of the most significant users of these laws, have established special binational dispute settlement panels to arbitrate disagreements. Using a panel database of U.S. antidumping and countervailing duty activity from 1980 through 2000, the article examines whether the use of dispute settlement panels has reduced such activity between the United States and its North American Free Trade Agreement partners. The analysis finds little evidence for any effect, calling into question the effectiveness of dispute settlement panels in reducing unfair trade law activity.
Blonigen, Bruce A. “A Review of the Empirical Literature on FDI Determinants.” Atlantic Economic Journal, Vol. 33(December 2005): 383-403. (Invited Paper – Special Issue)
This paper surveys the recent burgeoning literature that empirically examines the foreign direct investment (FDI) decisions of multinational enterprises (MNEs) and the resulting aggregate location of FDI across the world. The contribution of the paper is to evaluate what we can say with relative confidence about FDI as a profession, given the evidence, and what we cannot have much confidence in at this point. Suggestions are made for future research directions.
Blonigen, Bruce A., Christopher J. Ellis, and Dietrich Fausten. “Strategic FDI and Industrial Groupings.” Japan and the World Economy, Vol. 17(April 2005): 125-50. (Lead article)
We show that industrial ownership structures, such as keiretsu groupings in Japan, may significantly impact firms’ incentives to engage in FDI. While the previous literature has mainly focused on the cost of capital advantages enjoyed by keiretsu firms, this paper examines two relatively unexplored channels by which ownership structure matters for FDI incentives. The first channel involves the direct incentives generated via standard product and factor market interactions whereby keiretsu firms with cross-ownership consider more directly the congestion effects of further FDI into a market. The second channel involves the indirect incentives generated by sharing of information across keiretsu firms which reduces entry costs of subsequent FDI. We find that keiretsu firms are more agressive than non-keiretsu firms in their FDI strategies, that is, for any given parameter values they undertake FDI with a higher probability than independent firms. Furthermore, keiretsu firms adopt a more agressive investment strategy against independent rivals than amongst themselves.
Blonigen, Bruce A., Christopher J. Ellis, and Dietrich Fausten. “Industrial Groupings and Foreign Direct Investment.” Journal of International Economics, Vol. 65(January 2005): 75-91.
We explore worldwide foreign direct investment (FDI) location decisions by Japanese manufacturing firms from 1985 through 1991. Our conditional logit estimates provide evidence that firms' location decisions are affected by membership in either vertical or horizontal keiretsu. Consistent with previous studies that stress agglomeration effects on firms' location decisions, we find that the stock of investment in a region by a firm's vertical keiretsu partners increases the probability of location. Further, we find that the recent flow of investment into a region by a firm's horizontal keiretsu partners increases the probability of investment to the region, providing evidence of networking effects.
Blonigen, Bruce A., and Ronald B. Davies. “The Effects of Bilateral Tax Treaties on U.S. FDI Activity.” International Tax and Public Finance, Vol. 11(September 2004): 601-22. (Reprinted in: The Effect of Treaties on Foreign Direct Investment: Bilateral Investment Treaties, Double Taxation Treaties, and Investment Flows, eds. K. Sauvant and L. Sachs. Oxford, U.K: Oxford University Press, 2009, 485-511.)
The effects of bilateral tax treaties on FDI activity have been unexplored, despite significant ongoing activities by countries to negotiate and ratify these treaties. This paper estimates the impact of bilateral tax treaties using both U.S. inbound and outbound FDI over the period 1980–1999. Robust to a wide variety of alternative specifications, we find little evidence that bilateral tax treaties increase FDI activity, contrary to OECD-stated goals for such treaties.
Blonigen, Bruce A., KaSaundra Tomlin, and Wesley W. Wilson. “Tariff-jumping FDI and Domestic Firms’ Profits.” Canadian Journal of Economics, Vol. 37(August 2004): 656-77.
Studies of trade policy welfare effects often ignore the potential for tariff-jumping foreign direct investment (FDI) to mitigate positive gains to domestic producers. Using event study methodology we find that affirmative U.S. antidumping decisions are associated with average abnormal gains of over 3% to a firm in the petitioning industry in the absence of tariff-jumping FDI, but much smaller and statistically insignificant abnormal gains if there is tariff-jumping FDI. We also find evidence that tariff jumping in the form of new plants or plant expansion has significantly larger negative effects on U.S. domestic firms' profits than other types of tariff-jumping FDI.
Blonigen, Bruce A. and Jee-Hyeong Park. “Dynamic Pricing in the Presence of Antidumping Policy: Theory and Evidence.” American Economic Review, Vol. 94(March 2004): pp. 134-154.
Antidumping (AD) trade protection policies allow government agencies to recalculate AD duties based on foreign firms' most recent pricing behavior. We examine the resulting dynamic pricing problem of a foreign firm facing such policy. We show that the expected pattern of AD duty recalculations over time crucially depends on the foreign firm's ex ante expectations of possible outcomes of AD policy enforcement. Our empirical analysis then confirms the role of ex ante expectations in explaining observed patterns of AD recalculations. Many of our model's results are applicable to other situations where enforcement of policy is tied to the subject's behavior.
Blonigen, Bruce A. and Thomas J. Prusa. “The Cost of Antidumping: The Devil is in the Details.” Journal of Policy Reform, Vol. 6(December 2003): pp. 233-245.
We argue that the costs of antidumping (AD) protection are substantially higher than standard tariff analysis would suggest. First, since AD duties are often adjusted during administrative reviews, the welfare cost of AD duties increases over time. These adjustments effectively transfer heavily distorted AD revenue to foreign firms. Second, AD duties are more costly than simply the visible costs of AD protection. There are significant additional costs associated with the prospect of protection imposed when foreign and domestic firms alter their profit maximizing behavior in order to influence the outcome of potential AD investigations. These costs may exceed the direct cost of AD duties.
Blonigen, Bruce A. and Chad Bown. “Antidumping and Retaliation Threats.” Journal of International Economics, Vol. 60(August 2003), pp. 249-273. (Reprinted in: The WTO, Economic Interdependence, and Conflict. Critical Perspectives on the Global Trading System and the WTO, eds. K. Anderson and B. Hoekman. Northampton, MA: Elgar, forthcoming)
We propose and test two ways in which retaliation threats may dampen the antidumping (AD) activity we observe. First, the threat of retaliatory AD actions may make a domestic industry less likely to name a foreign import source in an AD petition. Second, the prospect of a GATT/WTO trade dispute may make government agencies less likely to rule positive in their AD decision. Using a nested logit framework, we find evidence that both retaliation threats substantially affect US AD activity from 1980 through 1998.
Blonigen, Bruce A., Ronald B. Davies, and Keith Head. “Estimating the Knowledge-Capital Model of the Multinational Enterprise: Comment.” American Economic Review, Vol. 93(June 2003), pp. 980-994.
Blonigen, Bruce A., and Stephen E. Haynes. “Antidumping Investigations and the Pass-Through of Exchange Rates and Antidumping Duties.” American Economic Review, Vol. 92(September 2002), pp. 1044-1061.
Blonigen, Bruce A., and Stephen E. Haynes. “Antidumping Investigations and the Pass-Through of Exchange Rates and Antidumping Duties: Reply” American Economic Review, forthcoming 2010.
This reply responds to a comment that correctly identifies an invalid assumption in our original article that antidumping (AD) duties are subtracted from the US price when calculating AD duties in administrative reviews. While this point invalidates our theoretical explanation and empirical evidence on the magnitude of AD duty pass-through, it does not affect our original article's theory or empirical evidence on the magnitude of exchange rate pass-through, or the presence of structural breaks in both the AD duty and exchange-rate pass-through coefficients stemming from AD investigations and orders.
Blonigen, Bruce A. “Tariff-Jumping Antidumping Duties.” Journal of International Economics, Vol. 57(June 2002), pp. 31-50.
This paper examines the tariff-jumping response of all firm and product combinations subject to US antidumping investigations from 1980 to 1990 using a newly constructed database. Previous studies have focused only on Japanese FDI responses to antidumping protection and found large tariff-jumping responses. In contrast, this paper finds quite modest tariff-jumping responses and the evidence suggests that tariff-jumping is only a realistic option for multinational firms from industrialized countries. This may partially explain developing countries’ concerns about addressing AD protection in the WTO. Despite high tariff-jumping responses, there is no evidence of a Japanese-specific propensity to tariff-jump, holding other economic factors constant.
Blonigen, Bruce A. and Matthew J. Slaughter. “Foreign Affiliate Activity and U.S. Skill Upgrading.” Review of Economics and Statistics, Vol. 83(May 2001), pp. 362-376.
There has been little analysis of the impact of inward foreign direct investment (FDI) on U.S. wage inequality, even though the presence of foreign-owned affiliates in the United States has arguably grown more rapidly in significance for the U.S. economy than trade flows. Using U.S. manufacturing data from 1977 to 1994, we find that inward FDI has not contributed to U.S. within-industry skill upgrading. In fact, the 1980s wave of Japanese greenfield investments was significantly correlated with lower, not higher, relative demand for skilled labor. This casts doubt upon one possible channel of skill-biased technological change that was previously unexplored.
Blonigen, Bruce A., and KaSaundra Tomlin. “Size and Growth of Japanese Plants in the United States.” International Journal of Industrial Organization, Vol. 19(May 2001), pp. 931-952.
Using a unique database on Japanese manufacturing plants in the United States, we examine for the first time the relationship between plant size and growth for foreign-owned affiliate plants. Japanese manufacturing affiliates are three times larger on average than comparable US plants and experienced 30% growth from 1987 through 1990. Despite this, our estimates strongly reject Gibrat’s Law for these plants and suggest smaller plants grow faster. We also find younger plants grow quicker and previous investments by the parent firm mean slower growth, particularly for automobile-related plants. Both are consistent with inexperienced firms growing faster as they learn.
Blonigen, Bruce A. “In Search of Substitution Between Foreign Production and Exports.” Journal of International Economics, Vol. 53(February 2001), pp. 81-104.
Are foreign production and exports substitutes or complements? Standard theory of the multinational corporation (MNC) assumes substitution, while previous empirical work examining the relationship has generally found strong evidence of complementarity. This study examines product-level data, which more closely fits the assumption of a single-product firm often used in MNC theory, and finds substantial evidence for both a substitution and a complementarity effect between affiliate production and exports with Japanese automobile parts for the US market. I also test for and find evidence of substitution using product-level data on a set of Japanese-produced final consumer goods.
Gallaway, Michael P., Bruce A. Blonigen, and Joseph E. Flynn. “Erratum to ‘Welfare Costs of the U.S. Antidumping and Countervailing Duty Laws.’” Journal of International Economics, Vol. 52(October 2000), p. 205.
In the above article, it should have been explicitly noted that Appendix A, which describes the U.S. International Trade Commission (USITC) computable general equilibrium model used for the paper’s analysis, closely follows the descriptions contained in two USITC publications: (i) USITC (1995) and (ii) USITC (1991).
Figlio, David N. and Bruce A. Blonigen. “The Effects of Foreign Direct Investment on Local Communities.” Journal of Urban Economics, Vol. 48(September 2000), pp. 338-363.
Little evidence exists on the effects of foreign direct investment (FDI) on local communities in the United States, despite evidence that U.S. communities actively bid against each other for FDI. We use detailed county-level panel data from South Carolina across 5-year intervals from 1980 through 1995 to investigate the effect of foreign manufacturing plants on local labor markets and on the level and distribution of local government budgets. We find that foreign investment raises local real wages much more than does domestic investment, but lowers per capita county-government expenditures and redistributes monies away from public school expenditures.
Blonigen, Bruce A., and Christopher T. Taylor. “R&D Intensity and Acquisitions in High-Technology Industries: Evidence from the US Electronic and Electrical Equipment Industries.” Journal of Industrial Economics, Vol. 48(March 2000), pp. 47-70.
Theory suggests R&D intensity and acquisition activity may be either directly or inversely related. However, we know relatively little about which firms are responsible for acquisition activity in high-technology industries, which are not only R&D-intensive, but also have substantial acquisition activity in the United States. Using a panel of 217 US electronic and electrical equipment firms from 1985-93 and limited dependent variable estimation techniques, we find a substantial negative correlation between R&D-intensity and a firm's propensity to acquire. This result is surprisingly robust to numerous sensitivity tests and is significant in both the "within" and "between" dimensions of our data.
Gallaway, Michael P., Bruce A. Blonigen, and Joseph E. Flynn. “Welfare Costs of the U.S. Antidumping and Countervailing Duty Laws.” Journal of International Economics, Vol. 49(December1999), p. 211-244 (Lead article). (Reprinted in: The WTO and Antidumping. Critical Perspectives on the Global Trading System and the WTO, eds. K. Anderson and B. Hoekman. Northampton, MA: Elgar, 2005, 428-61.)
The antidumping (AD) and countervailing duty (CVD) laws in the United States have become the most pervasive form of import relief sought by domestic producers. This paper estimates the collective economic effect of the hundreds of active U.S. AD/CVD orders. Using a computable general equilibrium model, we estimate that the collective net economic welfare cost in 1993 of these orders to be $4 billion. This welfare estimate is sensitive to various modeling assumptions, which are explored in the paper. With the implementation of the Uruguay Round Agreements, the AD/CVD laws remain one of the costliest programs restraining U.S. trade.
Blonigen, Bruce A., and Wesley W. Wilson. “Explaining Armington: What Determines Substitutability Between Home and Foreign Goods?” Canadian Journal of Economics, Vol. 32(February 1999), pp. 1-21 (Lead article).
For decades trade economists have modelled imperfect substitution between home and foreign goods in consumption (often called the Armington assumption) with little analysis of what explains the wide variation in these substitutions elasticities across sectors. Using a varying coefficients model, we estimate Armington elasticities between U.S. domestic and foreign goods across over 100 industrial sectors from 1980-1988 and examine the role of product, industry, political, and 'home bias' factors as determinants. We find strong support that the presence of foreign-owned affiliates affects Armington elasticities in important ways, and some support that entry barriers and union presence have an effect.
Blonigen, Bruce A., and Yuka Ohno. “Endogenous Protection, Foreign Direct Investment, and Protectionbuilding Trade.” Journal of International Economics, Vol. 46(December 1998), pp. 205-227. (Reprinted in: The WTO and Antidumping. Critical Perspectives on the Global Trading System and the WTO, eds. K. Anderson and B. Hoekman. Northampton, MA: Elgar, 2005, 39-61.)
We introduce the possibility of foreign direct investment (FDI) in a strategic, oligopolistic setting with endogenous protection and find that a number of unique subgame-perfect equilibria may arise, including a new result we call ‘‘protection-building trade.’’ This phenomenon occurs in our model when foreign firms locating production in the home country try to increase protectionist pressures in the home country (through increased exports) to provide larger barriers against other foreign competitors in future periods. We discuss how the foreign firm behavior surrounding significant U.S. protectionist actions, including the VERs on Japanese automobiles, may be consistent with protection-building trade behavior.
Blonigen, Bruce A., and David N. Figlio. “Voting for Protection: Does Direct Foreign Investment Influence Legislator Behavior?” American Economic Review, Vol. 88(September 1998), pp. 1002-1014.
Blonigen, Bruce A. “Firm-Specific Assets and the Link Between Exchange Rates and Foreign Direct Investment.” American Economic Review, Vol. 87(June 1997), pp. 447-465.
Foreign direct investment (FDI) theory and empirical studies have generated mixed support for a link between exchange rates and FDI. This paper argues that exchange rate movements may affect acquisition FDI because acquisitions involve firm-specific assets which can generate retums in currencies other than that used for purchase. Using data on Japanese acquisitions in the United States across 3-digit SIC industries from 1975-1992, maximum-likelihood estimates from discrete dependent variable models support the hypothesis that real dollar depreciations make Japanese acquisitions more likely in U.S. industries, particularly those which more likely have firm-specific assets.
Blonigen, Bruce A., and Cheyney O’Fallon. “Foreign Firms and Local Communities,” in Sjoerd Beugelsdijk, Steven Brakman, Hans van Ees, and Harry Garretson (Eds), Firms in the International Economy: Closing the Gap Between International Economics and International Business. Cambridge: MIT Press, 2013, pp. 127-151.
The literature on the effects of foreign direct investment and activities of multinational enterprises (MNEs) on host-countries economies has been almost exclusively focused on issues of productivity, growth and wages. We argue that this leaves quite a bit of important unexplored areas of inquiry, particularly those connected with the interactions of local communities and governments with MNEs. Both the international economics and international business literatures have surprisingly overlooked many topics in these areas. As an example, we provide a novel analysis of local corporate philanthropy, which shows significant systematic differences between local- and foreign-owned corporations.
Blonigen, Bruce A., and Alyson Ma. “Please Pass the Catch-up: The Relative Performance of Chinese and Foreign Firms in Chinese Exports,” in Robert C. Feenstra and Shang-Jin Wei (Eds), China’s Growing Role in World Trade. Chicago: University of Chicago Press for the National Bureau of Economic Research, 2010, pp.475-512.
Blonigen, Bruce A., editor. (2008) Monitoring International Trade Policy: A New Agenda for Reviving the Doha Round. London, UK: Centre for Economic Policy Research.
This report analyses the problems of the current Doha Round and discusses an agenda for reviving the Round. The authors identify a number of important longrun trends that the WTO must simply come to grips with before meaningful progress can be made. The Kiel Institute for the World Economy and CEPR are delighted to provide this vehicle through which some of the most prestigious scholars in trade policy present their analysis to policy-makers, academics and the informed public.
Blonigen, Bruce A., William T. Harbaugh, Robert H. Horner, Larry K. Irvin, Larry D. Singell, Jr., and Keith Smolkowski. “Application of Economic Analysis to School-Wide Positive Behavior Support (SW-PBS) Programs.” Journal of Positive Behavior Interventions, Vol. 10 (January 2008), pp. 5-19. (lead article)
The authors discuss how to use economic techniques to evaluate educational programs and show how to apply basic cost analysis to implementation of school-wide positive behavior support (SWPBS). A description of cost analysis concepts used for economic program evaluation is provided, emphasizing the suitability of these concepts for evaluating educational programs. The authors also describe the specific data and measurement and analytic procedures that cost analysis evaluation requires. The concepts are then applied in a case study showing a cost analysis of SWPBS. Implications are provided for extending the cost analysis case study into evaluation of cost-effectiveness and/or cost–benefit economic analyses of program success.
Blonigen, Bruce A., Ronald B. Davies, Helen Naughton, and Glen R. Waddell. “Spacey Parents: Spatial Autoregressive Patterns in Inbound FDI,” in S. Brakman and H. Garretsen (Eds.), Foreign Direct Investment and the Multinational Enterprise. Cambridge, MA: The MIT Press, 2008, pp.173-198.
Blonigen, Bruce A. and Thomas J. Prusa. “Antidumping,” in S. N. Durlauf and L.E. Blume (Eds.), The New Palgrave Dictionary of Economics, Second Edition. Palgrave MacMillan, 2008.
Blonigen, Bruce A. “Foreign Direct Investment,” in S. N. Durlauf and L.E. Blume (Eds.), The New Palgrave Dictionary of Economics, Second Edition. Palgrave MacMillan, 2008.
Foreign direct investment (FDI) occurs when an individual or firm acquires controlling interest in productive assets of another country. We review the literature on FDI which can be divided into two broad categories. The first is the inquiry into why multinational production occurs and the factors that determine the patterns of worldwide FDI. The second is the impact that FDI and MNEs have on the parent and host countries, including economic growth, returns to factors of production, and externalities.
Blonigen, Bruce A. “Foreign Direct Investment Behavior of Multinational Corporations.” NBER Reporter, Winter 2005/6: 11-14.
Blonigen, Bruce A. “Review of Multinational Firms in the World Economy,” by Giorgio Barba Navaretti and Anthony J. Venables, Journal of International Economics, Vol. 67(December 2005), pp. 520-524.
Blonigen, Bruce A. and Miao Wang, “Inappropriate Pooling of Wealthy and Poor Countries in Empirical FDI Studies,” in T. Moran, E. Graham and M. Blomstrom (Eds.), Does Foreign Direct Investment Promote Development? Washington, DC: Institute for International Economics, 2005, pp. 221-243.
This paper examines the question of whether less-developed countries’ (LDCs’) experiences with foreign direct investment (FDI) systematically different from those of developed countries (DCs). We do this by examining three types of empirical FDI studies that typically do not distinguish between LDCs and DCs in their analysis. First, we find that the underlying factors that determine the location of FDI activity across countries vary systematically across LDCs and DCs in a way that is not captured by current empirical models of FDI. Second, the effect of FDI on economic growth is one that is only supported for LDCs in the aggregate data, not DCs. Third, the evidence suggests that FDI is much less likely to crowd out (more likely to crowd in) domestic investment for LDCs than DCs.
Blonigen, Bruce A. and Ronald B. Davies, “Do Bilateral Tax Treaties Promote Foreign Direct Investment?” in J. Hartigan (ed.), Handbook of International Trade, Volume II: Economic and Legal Analysis of Laws and Institutions. Oxford, U.K. and Cambridge, MA: Blackwell Publishers, 2005, pp. 526- 546. (Reprinted in: The Effect of Treaties on Foreign Direct Investment: Bilateral Investment Treaties, Double Taxation Treaties, and Investment Flows, eds. K. Sauvant and L. Sachs. Oxford, U.K: Oxford University Press, 2009, 461-484.)
We explore the impact of bilateral tax treaties on foreign direct investment using data from OECD countries over the period 1982-1992. We find that recent treaty formation does not appear to promote new investment, contrary to the common expectation. For certain specifications we find that treaty formation may actually reduce investment as predicted by arguments suggesting treaties are intended to reduce tax evasion rather than promote foreign investment.
Blonigen, Bruce A. “Food Fight: Antidumping Activity in Agricultural Goods,” in G. Anania, M. Bohman, C. Carter, and A. McCalla (Eds.), Agricultural Policy Reform and the WTO: Where Are We Heading? Cheltenham, UK, and Northampton, MA: Edward Elgar Publishing Ltd., 2004, pp. 568-592.
Blonigen, Bruce A. and Thomas J. Prusa, “Antidumping,” in E.K. Choi and J. Harrigan (Eds.), Handbook of International Trade. Oxford, U.K. and Cambridge, MA: Blackwell Publishers, 2003, pp. 251-284.
We review the growing literature on the effects of antidumping, a trade policy that has emerged as the most serious impediment to international trade. Over the past 25 years countries have increasingly turned to antidumping in order to offer protection to import-competing industries. Antidumping is a trade policy where the institutional process surrounding the investigation and determinations has significant impacts beyond the antidumping duty we observe, and where the filing decision, the legal determination, and the protective impact are all endogenous with firms’ decisions in the market, leading to a wealth of potential strategic actions and distorted market outcomes. This theme underlies our discussion as we review the literature in three broad areas connected with different phases of the antidumping trade policy process: 1) pre-investigation, 2) investigation, and 3) post-investigation.
Blonigen, Bruce A. “Review of Fighting the Wrong Enemy: Antiglobal Activists and Multinational Enterprises,” by Edward M. Graham, Journal of Economic Literature, Vol. 40(March 2002), pp. 177-178.
Blonigen, Bruce A., “Comment on ‘Determinants and Effects of Multinational Growth: The Swedish Case Revisited,’” by Birgitta Swedenborg in Magnus Blomstrom and Linda Goldberg (Eds), Topics in Empirical International Economics: A Festshrift in Honor of Robert E. Lipsey. Chicago: University of Chicago Press for National Bureau of Economic Research, 2001, pp. 131-135.
Blonigen, Bruce A. “Review of Geography and Ownership as Bases for Economic Accounting,” edited by Robert E. Baldwin, Robert E. Lipsey, and J. David Richardson, Journal of Economic Literature, Vol. 37(December 1999): 1716-1718.
Blonigen, Bruce A. and Pei-Wen Hsieh. “The Multinational Enterprise's Choice of Technology in LDCs with Potential Imitators,” in H. Singer, N. Hatti, and R. Tandon (Eds.), New World Order Series, Volume Sixteen: Technology Diffusion in Third World. New Delhi, India: B.R. Publishing, 1999, 51-80.
This paper analyzes a multinational enterprise’s (MNE’s) choice of technology in a less-developed country (LDC) when it has a range of available technologies that it can incorporate into the production process. When the MNE faces potential imitators in the LDC, we show that the MNE may choose a technology that is either less advanced or more advanced than it would in the absence of potential imitation. A MNE may pick a more advanced technology in our model because imitation costs rise with the level of technology with the possibility of choosing a technology that makes local imitation prohibitive. This is a potential explanation for empirical findings that MNEs often employ much more capital-intensive processes in LDCs that appear inconsistent with the countries relative factor endowments. Importantly, we also explore the role of government policy and find that optimal policies are quite sensitive to parameters in our model, suggesting the difficulty of choosing an optimal policy in reality.
Blonigen, Bruce A. and Robert C. Feenstra. “Protectionist Threats and Foreign Direct Investment,” in R.C. Feenstra (Ed.), Effects of U.S. Trade Protection and Promotion Policies. Chicago: University of Chicago Press for the National Bureau of Economic Research (NBER), 1997, pp. 55-80.
Blonigen, Bruce A., Joseph E. Flynn, and Kenneth A. Reinert. “Sector-focused General Equilibrium Modeling,” in J.F. Francois and K.A. Reinert (Eds.), Applied Methods for Trade Policy Analysis: A Handbook. Cambridge: Cambridge University Press, 1997, pp.189-230.
U.S. International Trade Commission. The Economic Effects of Antidumping and Countervailing Duty Orders and Suspension Agreements. Washington, DC: U.S. International Trade Commission, June, 1995. (Co-authored with many).
U.S. International Trade Commission. The Economic Effects of Significant Import Restraints. Washington, DC: U.S. International Trade Commission, October, 1993. (Co-authored with many).
Department of Economics
1285 University of Oregon
Eugene, OR 97403