Gaetano Alfredo Minerva -- Working Papers

Working Papers

Bürker M., Franco C., Minerva G.A. (2011) Foreign ownership, firm performance, and the geography of civic capital. Working paper n. 782, Dipartimento di Scienze Economiche, Università di Bologna. Download pdf

Abstract: It is well established in the literature that foreign affiliates are subject to a series of governance and assimilation costs that deteriorate their performance. This is particularly relevant for firms which have been recently acquired by foreign investors. We employ the variation in civic capital across Italian provinces as an exogenous determinant of these governance costs. We derive the testable implication that there should be a clean evidence of a negative effect of foreign ownership on performance in areas where civic capital is low. As the level of local civic capital increases, this reduces the scope for internal transaction costs, and makes the governance of foreign affiliates easier, and their performance better. We take this prediction to the data and find confirmation of our conceptual framework. Our analysis underlines the importance of the geographic heterogeneity of informal institutions when analyzing the effect of foreign ownership on firm performance.

Bürker M., Minerva G.A. (2012) Civic capital and the size distribution of plants: Short-run dynamics and long-run equilibrium. Working paper n. 12-3, Department of Economics, University of California, Davis. Download pdf

Abstract: We characterize how the size distribution of plants, within narrowly defined industries, changed in Italy over a ten-year time span, and relate this to the stock of civic capital at the provincial level. Data on plant size come from the 1991 and 2001 Italian censuses. Civic capital turns out to have a positive effect on both the average and standard deviation of size. Looking at several precise points of the plant size distribution, we find that it shifts toward the right and becomes more dispersed where civic capital is high. The potential endogeneity of current civic capital is addressed by instrumenting it with historical variables. Our main conclusion is that the geographic variation in the stock of civic capital poses substantial constraints on plants' ability to expand. Understanding this is the key for the implementation of effective industrial policies.

Bürker M., Minerva G.A. (2011) Explaining the size distribution of plants: An approach based on civic capital. Working paper n. 755, Dipartimento di Scienze Economiche, Università di Bologna. Download pdf

Minerva G.A., Market shares and multinationals' investment: A microeconomic foundation for FDI stocks gravity equations.

Abstract: In a two countries model, I theoretically derive a partial equilibrium relation for home and foreign investment stocks by multiproduct multinational firms, each located separately in one of the two countries. I then address the existence of a Market Share Effect, that is the more than proportional growth in the stock of investment following an initial rise in the market share of a multinational firm. The explanation is that this rise originates a reciprocal adjustment in the worldwide market shares of the two multinationals, eventually feeding back in foreign investment stocks. In the empirical sections, working on data on Japan and US, I present some stylized evidence and estimate the theoretical predictions of the model.
Presented at the 9th European Trade Study Group Conference, Athens University of Economics and Business.

Minerva G.A., Integration versus outsourcing with vertical linkages.

Abstract: We modify the Grossman-Helpman (2002) model assuming that final goods producers (irrespective of whether they are vertically integrated with the upstream stage or specialized in the downstream stage only) need a basket of differentiated commodities as a fixed requirement for production, in addition to labor. The basket is a CES aggregate of the varieties provided by all firms in economy. The paper shows the existence of an interior equilibrium populated simultaneously by vertically integrated and disintegrated firms, and also discusses its stability properties.
Presented at the 55th Annual North American Meetings of the Regional Science Association International, New York.

Bürker M., Minerva G.A., Civic Capital and Purchased Service Intensity in Italy.

Abstract: In this paper we investigate whether civic capital is an effective restraint against opportunistic behavior in transactions. We achieve this by looking at the degree of vertical integration of service provision within firms in Italy. Our results show that firms tend to outsource more services to external suppliers where civic capital is higher. We estimate that a one standard deviation increase in civic capital, according to the measure employed, brings an increase in the share of purchased services over sales between 4% and 6%. The firms that are more heavily influenced are the smaller ones. We argue that this rise in the propensity to engage in transactions with outside service suppliers is evidence of a decrease in the opportunistic behavior between the parties involved in the transaction.
Presented at the 51st Annual Congress of the Italian Society of Economists, University of Catania.