The 6th Prize Emilio Fontela on Input-Output Analysis 2019 has been awarded to Ángela García Alaminos, Mateo Felipe Ortiz Moreno, Guadalupe Arce González y Jorge Enrique Zafrilla Rodríguez for their paper The Social Footprint of the U.S. Multinationals’ Foreign Affiliates. The jury has also awarded special accesit to Fahd Boundi Chraki for his paper Absolute cost advantage and sectoral competitiveness: Empirical evidence from NAFTA and the European Union.
Abstract of the paper awarded with the Prize: The Social Footprint of the U.S. Multinationals’ Foreign Affiliates
The success of the Sustainable Development Goals (SDG) requires the rethinking of some of our ethical principles as consumers and producers. There is a growing consumer consciousness-raising related to the transition towards a more socially inclusive economy. Since consumers are becoming citizens again, the more sustainable choices from the side of the consumer can enforce firms to comply with their corporate social responsibility targets. Specifically, multinational corporations, as one of the most powerful global institutions, have the chance to lead the transnational transition, it is time to walk the walk.
In this paper, we motivate a novel assessment of the social footprint of multinationals enterprises in the last years. Concretely, and considering that the United States (U.S.) is the country with the most and biggest multinational corporations around the world, this paper assesses the social footprint from the hosting country and consumer perspective of the U.S. multinational foreign affiliates in the period 2009-2013. The footprint is estimated using a socially-extended MRIO model based on the use of WIOD tables, combined with data of U.S. multinationals foreign affiliates activity provided by the Bureau of Economic Analysis (BEA) in terms of value added generated by U.S. majority-owned affiliates by sector and hosting country. The social extensions rely on an own elaboration social database which comprises modern slavery indicators such as forced labor figures and bad labor indicators such as fatal and non-fatal injuries.
The U.S. multinational activity generates in 2013 a huge amount of undesirable social footprints. The mentioned activity generated represents 1.33% of global fatal injuries, 1.12% of non-fatal injuries and 1.30% of forced labor cases. For the period 2009-2013, this activity differs from the global pattern. While global indicators show reductions in the period, U.S. activity figures are lower, and vice versa, while global indicators increase, U.S. results are even higher. The findings suggest that the U.S. multinationals activities, located mainly in emerging countries, are performed not only under relatively worse labor conditions, but also in productive sectors or stages with the lower generation of value added.
The dimension of the problem is such that If we make up a hypothetical country of U.S. multinationals affiliates operating beyond the U.S. borders, it would be ranked within the top 10 countries with the highest impacts associated with production on all three social indicators; it would hold 7th, 6th and 9th places in the ranking of countries with most fatal injuries, non-fatal injuries and forced labor, respectively.
Moreover, a concentration of bad labor conditions in developing countries is observed. Such concentration is more evident in fatal injuries and forced labor cases, the two indicators that represent the most severe consequences of bad labor conditions; while in non-fatal injuries we see that responsibility of developed countries is greater. From the point of view of the consumer, India, ROW, and China are the three host countries with higher impacts in terms of fatal and non-fatal injuries. Forced labor US-MNE footprint presents ROW in the top, followed by India, Brazil, and China.
Abstract of the paper awarded with the accesit: Absolute cost advantage and sectoral competitiveness: Empirical evidence from NAFTA and the European Union
In this research we seek to answer the following question: What are the factors explaining the real terms of trade between the countries belonging to both the North American Free Trade Agreement (NAFTA) and the European Union (EU-28)? More specifically, based on Anwar Shaikh’s theory of the absolute cost advantage, our aim is to verify the hypothesis that, during 2000-2014, the real exchange rates (REERs) of the German and the US manufacturing sectors vis-à-vis their EU-28 and NAFTA partners, respectively, have been governed by the relative vertically integrated unit labour costs (RVIULCs) and the intrasectoral gap of the rate of profit (Rs). Using panel cointegration techniques, we elaborated three econometric models. The first corresponds to the NAFTA countries, where the United States (US) is taken as the reference (national) country. The second corresponds to EU-28 with Germany as the national country. The third agglutinates NAFTA and EU-28, where we consider US as the national country.
We verify the existence of a unit root with Im, Pesaran and Shin (IPS), Maddala and Wu (MW), Choi, and Hadri tests. Secondly, we apply Pedroni, Kao and Fisher-Johansen tests to corroborate that our series are cointegrated. Subsequently, we obtain cointegration vectors through Dynamic OLS (DOLS) and Fully Modified OLS (FMOLS) estimators. Finally, we employ an error correction model vector (VECM) to analyse short-run and long-run causal relationships. The data used to calculate our variables were collected from the national input-output tables (NTIOs) and from the social accounting matrices (SAMs) of The World Input-Output Database Release 2016 (WIOD). The novelty of the research, representing the original contribution to the field, has to do with its being the first empirical test (using the WIOD database) of the theory of absolute cost advantage for the two main economic areas of the world economy.