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Business and Economics > Public Finance

You are looking at 1 - 10 of 13 items for :

  • Type: Journal Issue x
  • Industry Studies: Services: General x
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Cover IMF Working Papers
Chasing the Dream: Industry-Level Productivity Developments in Europe
Serhan Cevik
,
Sadhna Naik
, and
Keyra Primus
European countries are lagging behind in productivity growth, with significant productivity gaps across industries. In this study, we use comparable industry-level data to explore the patterns and sources of total factor productivity (TFP) growth across 28 countries in Europe over the period 1995–2020. Our empirical results highlight four main points: (i) TFP growth is driven largely by the extent to which countries are involved in scientific and technological innovation as the leader country or benefiting from stronger knowledge spillovers; (ii) the technological gap is associated with TFP growth as countries move towards the technological frontier by adopting new innovations and technologies; (iii) increased investment in information and communications technology (ICT) capital and research and development (R&D) contributes significantly to higher TFP growth; and (iv)the impact of human capital tends to be stronger when a country is closer to the technological frontier. The core findings of this study call for policy measures and structural reforms to promote innovation and facilitate the diffusion of new and existing technologies across Europe.
Keywords:
Total factor productivity; technology; R&D; innovation; human capital; Europe; productivity development; developments in Europe; core finding; TFP slowdown; TFP difference; Productivity; Capital spending; Global
Cover IMF Working Papers
Firm-level Digitalization and Resilience to Shocks: Role of Fiscal Policy
Manabu Nose
and
Mr. Jiro Honda
Would digitalization at firm level strengthen firms’ resilience to shocks? And if so, could fiscal policy play any role to promote firm-level digitalization? This paper empirically explores answers to these questions. Based on a local projection method (using the Orbis data covering 1.8 million non-financial firms from 53 countries), we estimate the impacts of aggregate uncertainty shocks on firms’ sales, profit margin, and employment. The findings suggest that uncertainty shocks affect digitalized and less-digitalized firms very differently. Digitalized firms weather shocks better, with smaller drops in sales and profits, while less-digitalized ones are worse off, with long-lasting scars. Then we examine the impact of fiscal interventions to promote firms’ digitalization, using cross-country panel data (covering 64 countries). The result suggests that aligning the tax regime on digital services with general taxation principles and competitive procurement rules on digital products could effectively support the promotion of firm-level digitalization. Overall, our findings point that firm-level digitalization would help strengthen firms’ resilience to a shock, and fiscal interventions can play an important role to promote firm-level digitalization.
Keywords:
Digitalization; Digital divide; Fiscal policy; Global economy; digitalized firm; resilience to shock; firms' digitalization; COVID firm Dynamics; firm-level digitalization; COVID-19; Services sector; Global
Cover IMF Working Papers
Promoting Innovation: The Differential Impact of R&D Subsidies
Reda Cherif
,
Fuad Hasanov
,
Christoph Grimpe
, and
Wolfgang Sofka
We investigate the effect of R&D subsidies on firms’ innovation by ownership, industry, and firm size using German firm-level data. The impact of R&D subsidies is heterogeneous across industries for multinational corporations (MNCs) and domestic firms while it does not differ substantially by firm size. Domestic firms have a larger response in R&D spending in low-tech manufacturing, knowledge-intensive services, and technological services while the response of domestic and foreign MNCs is broadly similar and is greater in medium-tech and high-tech manufacturing. Foreign MNC subsidiaries’ response in terms of patents is greater than that of domestic MNCs in most industries.
Keywords:
Innovation; patents; research and development; R&D; subsidies; multinationals; investment; technology policy; R&D subsidy; high-tech manufacturing; subsidiaries' response; low-tech manufacturing; R&D spending; Transnational corporations; Manufacturing; Services sector; Government subsidies; Investment policy; Global
Cover IMF Working Papers
Deepening the EU’s Single Market for Services
Mr. Christian H Ebeke
,
Jan-Martin Frie
, and
Louise Rabier
The services sector is increasingly important for the euro area economy, but productivity growth in the sector has stalled over the past two decades. Remaining barriers to cross-border trade in services within the EU Single Market contribute to this weak performance. Our empirical analysis suggests that slow progress in tackling these barriers is associated with political economy factors such as weak government support in parliaments, low government efficiency and high markups. To remove the cross-border restrictions on services trade, we suggest combining incentives such as financial support, technical assistance and improved communication on barriers with more effective enforcement.
Keywords:
WP; government; service trade restrictiveness; EU KLEMS; EU work force; EU Services Directive; euro area services sector; STRI EU; Services sector; Trade in services; Legal support in revenue administration; Productivity; Trade liberalization; Global
Cover IMF Staff Country Reports
France: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper analyzes France’s fiscal stance using a structural stochastic model. The theoretical model features a forward-looking benevolent government that needs to decide the optimal fiscal stance given the level of public debt, the cyclical position of the economy, and expectations about future shocks. This paper shows that a fiscal consolidation can help build buffers that could help France confront the next downturn from a stronger fiscal position. The analysis highlights that, on average, fiscal policy in France exhibited a deficit bias over the past four decades, being unable to react to either rising debt levels, or cyclical conditions. A model-based analysis further confirms that fiscal policy was generally looser than warranted by cyclical and debt sustainability considerations, and this is only partly due to the fact policymakers need to take decisions based on real-time output gap measures that are subject to uncertainty.
Keywords:
ISCR; CR; regulation; deficit; fiscal policy stance; France; service market regulation; national fiscal policy; countercyclical fiscal policy response; voting right; Fiscal stance; Fiscal consolidation; Output gap; Global
Cover IMF Working Papers
Does Import Competition Induce R&D Reallocation? Evidence from the U.S.
Rui Xu
and
Kaiji Gong
We analyze the impact of rising import competition from China on U.S. innovative activities. Using Compustat data, we find that import competition induces R&D expenditures to be reallocated towards more productive and more profitable firms within each industry. Such reallocation effect has the potential to offset the average drop in firm-level R&D identified in the previous literature. Indeed, our quantitative analysis shows no adverse impact of import competition on aggregate R&D expenditures. Taking the analysis beyond manufacturing, we find that import competition has led to reallocation of researchers towards booming service industries, including business and repairs, personal services, and financial services.
Keywords:
WP; import competition; R&D expenditure; reallocation effect; Chinese Import Competition; R&D Expenditures; Reallocation; R&D investment; firm TFP; TFP deviation; Competition; Imports; Services sector; Manufacturing; North America
Cover IMF Working Papers
State-Owned Enterprises in Emerging Europe: The Good, the Bad, and the Ugly
Uwe Böwer
State-owned enterprises (SOEs) play an important role in Emerging Europe’s economies, notably in the energy and transport sectors. Based on a new firm-level dataset, this paper reviews the SOE landscape, assesses SOE performance across countries and vis-à-vis private firms, and evaluates recent SOE governance reform experience in 11 Emerging European countries, as well as Sweden as a benchmark. Profitability and efficiency of resource allocation of SOEs lag those of private firms in most sectors, with substantial cross-country variation. Poor SOE performance raises three main risks: large and risky contingent liabilities could stretch public finances; sizeable state ownership of banks coupled with poor governance could threaten financial stability; and negative productivity spillovers could affect the economy at large. SOE governance frameworks are partly weak and should be strengthened along three lines: fleshing out a consistent ownership policy; giving teeth to financial oversight; and making SOE boards more professional.
Keywords:
WP; SOE performance; output share; SOE governance challenge; governance reform; SOE profitability; State-Owned Enterprises; Emerging Europe Author’s; firm profitability; SOE landscape; oversight unit; ownership function; performance target; reform effort; professionalized SOE board; infrastructure sector; Public enterprises; Energy sector; Services sector; Contingent liabilities; Productivity; Europe
Cover IMF Working Papers
Innovation, Deregulation, and the Life Cycle of a Financial Service Industry
Fumiko Hayashi
,
Ms. Grace B Li
, and
Zhu Wang
This paper examines innovation, deregulation, and firm dynamics over the life cycle of the U.S. ATM and debit card industry. In doing so, we construct a dynamic equilibrium model to study how a major product innovation (introducing the new debit card function) interacted with banking deregulation drove the industry shakeout. Calibrating the model to a novel dataset on ATM network entry, exit, size, and product offerings shows that our theory fits the quantitative pattern of the industry well. The model also allows us to conduct counterfactual analyses to evaluate the respective roles that innovation and deregulation played in the industry evolution.
Keywords:
WP; automated teller machine; Innovation; Deregulation; Industry Dynamics; Shakeout; ATM-debit network; debit innovation; ATM network; ATM-debit card; ATM-debit service; Technological innovation; Services sector; Public expenditure review
Cover IMF Working Papers
Enhancing China’s Medium-Term Growth Prospects: The Path to a High-Income Economy
Mr. Malhar S Nabar
and
Mr. Papa M N'Diaye
China’s current growth model— which has delivered steady and robust growth for two decades and lifted some 500 million individuals out of poverty—has become too reliant on credit and investment, and has begun to experience diminishing returns. Delays in advancing the government’s reform agenda will mean that vulnerabilities continue to grow and the probability of stalled convergence increases. On the other hand, with reforms to accelerate TFP growth and shift the economy away from its continued reliance on capital accumulation, China can grow at a healthy pace and maintain its convergence toward the level of high income economies. Evidence from China’s provinces indicates that there is room to improve productivity and sustain such a convergence toward the level of more prosperous economies.
Keywords:
WP; China; TFP; economy; service sector
Cover IMF Working Papers
Enhancing China’s Medium-Term Growth Prospects: The Path to a High-Income Economy
Mr. Malhar S Nabar
and
Mr. Papa M N'Diaye
China’s current growth model—which has delivered steady and robust growth for two decades and lifted some 500 million individuals out of poverty—has become too reliant on credit and investment, and has begun to experience diminishing returns. Delays in advancing the government’s reform agenda will mean that vulnerabilities continue to grow and the probability of stalled convergence increases. On the other hand, with reforms to accelerate TFP growth and shift the economy away from its continued reliance on capital accumulation, China can grow at a healthy pace and maintain its convergence toward the level of high income economies. Evidence from China’s provinces indicates that there is room to improve productivity and sustain such a convergence toward the level of more prosperous economies.
Keywords:
WP; China; TFP; economy; service sector; convergence; capital accumulation; total factor productivity; TFP growth; employment share; convergence process; service sector share; China reform payoff; headline GDP; output gap show; share of employment; service sector reform; Public expenditure review; Services sector; Employment; Global