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The publication of a book devoted to economic and firm internationalization is especially timely because several challenges are affecting the world economy and shaping the debate about economic policies. Some facets of the internationalisation process have deepened in last decades, with an acceleration of the integration in global value chains from the 90s, the digitization of the economy, the move to a larger weight of services in high income economies, and the delocalization of services and labour markets. However, the Great Recession of 2008 refrained hyper globalisation and exacerbated debates about the effect of these processes on employment. This leaded to additional difficulties in the European integration process, the upsurge of protectionist policies under the Trump’s administration and, more generally, a fragility of multilateral institutions. All in all, these changes have implied or call for the reorganisation of companies, institutions and labour markets. The Spanish economy is not immune to these changes.

This book gathers the contributions of 16 specialists in the area of globalization and the internationalization of firms. From different perspectives and methodologies, the authors offer a rigorous and complementary vision on a battery of timely issues. Chapter 1 offers an overview of the main challenges that workers and entrepreneurs are encountering in a globalized world. The benefits of training and educational investment are widely documented in the specialized literature. Human capital is an engine of collective growth, with broad macroeconomic effects in the medium and long term. However, the development of artificial intelligence, robotics, digitization, automation and big data –some of the phenomena included in the so-called 4th industrial revolution– are altering the demand for skills and human capital demanded by companies. Technological advances are inevitably associated to aspects that influence labor costs, inequality and polarization in global markets. In this context, the authors argue –and we must agree– that managing an increasingly diverse talented, less gender-biased and more multicultural workforce within organizations will be crucial to succeed in the new economy.

Digitization and its consequences on labour markets is, precisely, the object of analysis in Chapter 2. The ongoing process of digitization is lowering search costs and frictions, reducing geographical barriers and easing the interaction between international firms and employees at the labour market. Digital labour platforms are an illustrative example. By connecting external employers and workers, easing the flow of information and reducing bargaining costs, these platforms are a source of economic value. Still, online labour markets –the so-called “gig-economy”– is leading to a workforce more oriented towards single projects, short-term contracts and freelance work. This chapter shows and discusses the threats and challenges associated to this process, putting the focus on the global reallocation of tasks and its impact upon firms and workers.

Chapter 3 addresses the phenomenon of internationalization in a very specific sector, the high education sector. The European integration created a common framework that encouraged the internationalisation of universities within and beyond continental borders. This process took place at four fundamental levels: students, faculty, research and international branch campuses. In this chapter, the authors examine the consequences, common patterns and determinants of such process, putting special emphasis on the Spanish case.

An important strand of the literature on international economics in the last decade has focused on the exporting behaviour of firms, putting special emphasis on the role of firm heterogeneity. Another timely topic is the relationship between the insertion in global value chains and the decline of employment in developed countries. Chapter 4 is a contribution to these two strands of the literature. Using Spanish data, the chapter investigates the employment growth rate of exporting firms relative to importing firms and non-traders. The results are suggestive of the importance of taking into account not only the direct contribution to employment growth, but also the survival rate of these firms while performing this kind of analysis. While employment growth is slower among exporters, these firms face a higher survivability rate, leading to a net positive contribution of these firms on employment growth. Similarly, firms importing inputs have lower job expansion rates than firms that buy domestic inputs. Still, since the former register lower death probability, the contribution to employment growth of importing firms is overall positive. Part of the interest of this chapter relies on its ability to show that firms participating in international markets, especially by importing or by both exporting and importing, contribute positively to employment growth.

Chapter 5 is devoted to the methodological discussion of the measurement of Total Factor Productivity (TFP). Exporter firms are systematically found to be more productive than non-exporters. Two different hypotheses could support these facts: the learning by exporting scenario and the existence of sunk costs at exporting. Both hypotheses have important policy implications. The latter would explain that the most productive firms self select into the export markets because they are more likely to cope with the sunk costs of entry and survive in the international market. In contrast, the learning by exporting hypothesis suggests that exporting activities are a channel of productivity growth. In Chapter 5, the authors provide a rigorous analysis of the alternative measures of TFP using both industry and firm-level deflator and how this choice affects the test of the learning by exporting hypothesis. Their results give support to the validity of the learning by exporting channel and show that the magnitude of this effect varies considerably depending on the TFP estimate employed in the analysis

When analyzing processes of firm internationalization in an increasingly globalized world the notion of Corporate Social Responsibility (CSR) rapidly emerges as a key for success. CSR helps companies to stand out from competitors and signal commitment with the environment, the society and the economy. Chapter 6 addresses a promising avenue of research by examining whether corporate internationalization can influence CSR activities of firms. Internationalization expands the range and diversity of stakeholders while CSR activities intent to meet stakeholder demands. Thus, the chapter hypothesises a three-baseline link among internationalization, CSR and financial performance. If internationalization and CSR are positively related, and both corporate strategies can positively affect financial performance, one could expect internationalized companies with high CSR standards to be in potentially optimal conditions to obtain higher returns. Readers interested in promising research questions and a preliminary exploration of ideas that have been scarcely tested in the literature will find this chapter particularly enjoyable.

The internationalization of firms and economic transactions has also affected the banking sector in multiple ways. Chapter 7 draws on an interesting puzzle, the fact that the rise in Spain’s debt is only partially justified by the registered trade deficits, to explore the interplay between trade balances and central banking. The analysis of international payments indicates that such finding is due to the current architecture of the inter-national monetary system and, in particular, to the lack of international central banking or a multilateral system of settlement and clearing. The chapter advocates that, unlike what happens at the national level where monetary stability is guaranteed by the intermediary function of central banks and the domestic settlement and clearing system, capital flows among countries are not managed by any intermediary bank. Absence of intermediation in international payments and a proper system of payments settlement and clearing lead to unjustified indebtedness of net importing countries.

Finally, decisions involving agents (government, companies, and workers) from different countries have a strong strategic component. Chapter 8 points out the relevance of game theory as a tool to better understand and anticipate patterns in international economics. In a very didactic way, the authors provide a typology of the games: static and dynamic games, with perfect and imperfect information, and the evaluation of the cost of the Nash equilibrium compared with the Pareto solution in each case. In a second step, the authors review several games that may fit realistic frameworks in the international arena, such as investment in advertising, the entry of a company into a market, trade policies and multilateral negotiations. An interesting conclusion is that, in contrast to static games, repeated games foster cooperation and more efficient solutions.

Finally, although we discuss important aspects of the global economy, we have tried to write a book that has a distinctively Spanish focus. We very much hope readers will find the book enlightening.

Santiago Budría Rodríguez

(Departamento de Economía y Empresa,

Universidad Antonio de Nebrija)

Juliette Milgram Baleix

(Universidad de Granada)