Nondestructive creation: Entrepreneurship and management research in the study of growth

Economists’ focus on institutions in explaining economic growth, while important, can obscure the significant role played by individual entrepreneurs and the process of entrepreneurship. The prevailing view of entrepreneurship in economics (which continues to shape prevailing public policies) centers on Schumpeter's famous concept of “creative destruction.” In the context of sustained high levels of economic growth, as in the recent American experience, I focus on a different feature of entrepreneurship—“nondestructive creation,” in which the uncoordinated contest of ideas and search for new applications of existing ideas generate growth. And this nondestructive creation should be analyzed and can be fostered.     

Judgments about the capabilities of city councillors and support for female representation on city council

Building on an earlier analysis of this data set, this study investigates the association between respondents' gender-stereotyping of city councillors with respect to work-related capabilities and their support for female representation on city council under conditions of low information. The earlier research found substantial gender-stereotypic bias in respondents' judgments about the office-related capabilities of male and female city council members. This analysis finds that the more positively women's capabilities to perform in office are evaluated, the more support there is for increased female representation on city council. In general, being “qualified” gets a candidate support but being female, for the most part, does not garner additional support. The double bind of this situation, however, is that female candidates are at a disadvantage because voters (in the sample) see men generically as being more able to meet the demands of serving on city council and increased female representation on city council can not occur unless individual female candidates are elected.     

A phased increase in the U.S. investment rate: Sacrifice times, T-year gains, and investment rate returns

We simulate a phased increase in the U.S. investment rate using a translog production function with technical progress (disembodied and/or embodied). We assume there will be an absorption lag implying that factors are underutilized during the transition to a higher investment rate. We find that the “sacrifice time” (the time that elapses until consumption surpasses the value it would have had under the initial investment rate) is roughly nine years. Across alternative specifications, phase-in periods, and absorption lags, the sacrifice time varies from seven to 13 years, and is insensitive to the percentage increase in the investment rate. With a three-year phase-in of a 20 percent increase in the investment rate with a one-year absorption lag, the average “ecade gain” in output (the percentage gain at the end of a decade) is roughly 4 percent; the decade gain in consumption, 0 percent; the five-decade gain, 10 percent in output and 6 percent in consumption; and the “investment rate return” (the internal rate of return on a permanent increase in the investment rate), 13 percent.     

A quantification of lobbying benefits with an application to the common agricultural policy

We employ an empirical general equilibrium model of the CAP to determine which factors and countries would be expected to be opposed to or support reform of the CAP. The objective is to determine who are the “friends” and “enemies” of the CAP. The analysis studies the extent to which lobbying activity by these interested parties could be expected to encourage or discourage internal EU reform of the CAP. Several alternative policies to reform the CAP are evaluated in this manner in order to determine if one or another set of policies has a greater chance of being accepted. Specifically, we study the Uruguay Round Agreement, as well as a number of stated negotiating positions presented during the Round. The result will be a summary assessment of the relative politico-economic acceptability of these reform proposals within the EU. Our results lead to a very simple policy conclusion. Given the set of policy packages considered here, there is little doubt that the EU was most inclined to adopt a proposal incorporating compensation payments. Without further disaggregation of the analysis to identify the United States or Japan, we can only note that such a proposal is also the best as far as overall welfare goes for the rest of the world. Our results confirm the importance of sidepayments in the implementation of the Uruguay Round Agreement.     

Governance structures of socially complex knowledge flows: Exchange, entitlement and gifts

The intangible aspects of knowledge transfer in multinational corporations (MNCs) continue to be a crucial area of research in social science research and raise the issue of knowledge governance structures. The purpose of this conceptual note is twofold. Firstly, we believe that there is more than one governance structure for successful knowledge transfers and flows. We provide a typology of three governance structures: “exchange,” “entitlement,” “gifts.” Secondly, most MNCs will need to take advantage of all three or a combination of these three socially complex governance structures.     

Economic globalization and violent civil conflict: Is openness a pathway to peace?

There has been little systematic assessment of the impact of globalization on armed conflict within states. Drawing from bargaining theories of conflict, we posit that the global marketplace functions as an “audience” that rewards or punishes the policy choices of states. Globalization, which connotes an increased exposure to this marketplace, increases the relevance of the “costs” that this “audience” may impose. These prospective costs thus encourage peace and stability, as states that are integrated into the global economy have more to lose by instigating and sustaining violent conflict within their borders. Employing a two-stage Heckman Model, we assess the impact of various facets of globalization, including access to information, trade, foreign investment and aid flows, on intrastate conflict within the developing countries for 1990–1996.     

Aspects of a new world development strategy II: Factors affecting the long-term prospects of developing nations

This paper explores some quantitative dimensions of the interdependence of rich and poor regions in the context of the United Nations World Model. It extends the original work on that model in three ways: (1) by updating some of the key parameters and exogenous variables in the light of recent data; (2) by developing a “control” solution to be used as a point of reference in policy simulations; and (3) by exploring the sensitivities of each of two groups of regions— developed and developing—to changes in one another's growth rates. Goals of closing the income gap between developed and developing regions and of increasing income levels in the latter are discussed.     

The Simplest Dynamic General-Equilibrium Model of an Open Economy

This paper presents the simplest possible general-equilibrium model of an open economy in which producer and consumer decisions are both intra- and intertemporally consistent. Consumers maximize the present value of the utility of consumption; producers maximize the present value of profits. The model solves for the set of intertemporally consistent prices. The parsimonious structure of the model is achieved by dividing the economy into two producing sectors—exports and domestic goods—and two consumed goods—imports and domestic goods. As a result, there is only one endogenous price per period to be solved for (the price of the domestic good), although “structural” questions, such as the evolution of the real exchange rate, can be posed with the model. Furthermore, with this structural breakdown, the model can be calibrated with national accounts data only. In the paper, we show how to calibrate such a model (including specification of an adjustment-cost function, to avoid “bang-bang” behavior) and use the model to examine various questions where intertemporal issues are important, including terms-of-trade shocks and tariff reform.     

Economic growth, poverty, and the international agencies

During the past few years, the international agencies have been playing down economic growth as the main road to the elimination of poverty and emphasizing the role of asset and income redistribution. The latest reflection of this attitude is the so-called “basic needs” approach. This essay attempts to demonstrate that where economic growth has been sufficiently high and sustained, it has been a powerful means of alleviating poverty. Growth has not “failed”; there is simply not enough International agencies should be cautious in advocating redistribution, for the results .     

Black portraits in African-American literature: A perpective from 1920–1996, including the midwest

What is the effect of sociocultural conditioning in creating black portraits in African-American literature? As twentieth century cultural attitudes change, stereotyped portraits have evolved to more individualized portraits. The question of how these changes have occurred caused me to research the “spirit or ethos” of selected black literature from 1920–1996. After screening various works, I selected authors representing the Harlem Renaissance 1920–1930; the Depression Era 1930–1940; World War II and the Post-War Period 1940–1960; Civil Rights/Black Power Movement 1960–1970; and Contemporary Literature 1970–1996. The results show these particular qualities in African-American Literature: use of explicit, distinctive language and folk idioms; protests against dehumanization and victimization; awakened moral and racial consciousness; emphasis on cultural nationalism; rebellion against racism, and a private search for self-realization by the characters.     

Assimilation and discriminatory perceptions and experiences: The case of Hispanics in the United States

This paper examines the relationship between assimilation and discriminatory practices encountered by Hispanic-Americans. Theories of intergroup relations have typically assumed that as members of minority ethnic groups assimilate to a dominant group, they perceive and experience lower degrees of discrimination directed against them. In reviewing theories of majority–minority relations, we have called this the “assimilationist” model. This view has been opposed by some scholars who argue that as minority ethnics assimilate and become more knowledgeable of the larger society, they perceive and experience higher levels of discrimination against them and their group. We have termed this the “conflict model” of interethnic relations. Using data from the 2002 National Survey of Latinos, conducted by the Pew Hispanic Center, we test opposing hypotheses based on these two models. Our findings, while exploratory, largely support the assimilationist model, with a few contradictory results. We discuss these findings and their implications for understanding the current situation of Hispanics in the United States.     

Equality of recruitment: Gender parity in French National Assembly elections

This research centers on the effects of the newly mandated gender parity on French electoral politics. We examine the results from the 2002 National Assembly elections. Our findings suggest that this Parity Law contributed to the modest increase in the number of female deputies elected to the National Assembly, but that the electoral success rate for female candidates declined from the previous elections in 1997. This result appears to have been affected by two factors: (1) a greater-than-average number of female candidates were affiliated with the Socialist party—the party that lost control of the government in this election and (2) many female candidates were running against male incumbents. Multivariate analysis suggests that, after these two factors are controlled for, female candidates were more likely to be elected in open seat contests than were male candidates. Preliminary analysis of roll call votes in the two most recent (1997–2004) legislative sessions suggests that party, not gender, is the main determinant of voting behavior.     

Logic, liberty, and anarchy: Mill and Feyerabend on scientific method

On the surface, J. S. Mill and Paul Feyerabend appear to hold differing views of scientific method. Mill attempts to frame a set of rules or canons for testing evidence based on rationality and inference, whereas Feyerabend, in his so-called “epistemological anarchism”, calls for abandoning any attempt to separate the good from the bad in science according to a fixed view of rationality. Yet, somewhat paradoxically, Feryerabend cites Mill as the originator of what he (Feyerabend) has to say in defense of epistemological anarchy. First, I argue that those aspects of Mill’s On Liberty that are suggestive of an anti-rationalist philosophy are entirely compatible with the theory of scientific method Mill offers in A System of Logic. Second, in the process of reconciling these two works of Mill, I hope to shed light on how we are to understand Feyerabend’s critique of methodological dogmatism.     

Local elected officials and environmental policy: Does rural matter anymore?

A survey was mailed to elected officials (mayors and city council) from a sample of 52 rural communities in Idaho and all 7 communities with populations above 20,000 to examine whether there is a relationship between environmental policy issues and various independent variables such as economic type, age, gender, rural/ urban, political ideology, and percentage of life lived in the current community. One-hundred and fifty-five (155) out of three hundred twenty seven (327) respondents returned the survey for a response rate of 47%. The findings reveal that while the rural/urban dichotomy consistently predicted for questions on “trust of information sources,” overall economic base was a better predictor of attitudes toward environmental issues and policy.     

The determinants of living wage rates

Several cities have recently adopted living wage ordinances which mandate that firms contracting with the city pay their workers an hourly wage at or above the legislated “living wage rate” set by the city. Following the literature on minimum wage rate determination, I explore factors influencing living wage rates. Using a sample of 39 cities, the results show that living wage rates are particularly sensitive to per capita income, fair-market rent, the minimum wage rate, the proximity of the city to other living wage cities, and the year that the city adopted the living wage ordinance.     

Multicountry dynamic multipliers under fixed and floating exchange rates: An econometric analysis

The present paper attempts to analyze the dynamic multiplier effects of fiscal monetary policies for developed countries in a consistent framework of a global econometric model under both fixed and flexible exchange rate regimes. The paper first discusses the estimation of exchange rate functions for eight developed countries with special reference to “fundamentals” in economic performance such as international gaps in inflation, productivity, expected real rate of return, and so on. The results are then incorporated into the global model to derive and compare dynamic multipliers under both fixed and flexible exchange rate regimes. “Insulation effects” are observed in most cases in terms of both output and inflation, though this differs according to the country. Policy implications are discussed at the end.     

Portfolio stock adjustment and the real exchange rate: The Dollar-Mark (DM) and Mark-Sterling

The advent of “freely floating” exchange rates in the 1970's coincided with the emergence of what is known as “monetary” or “asset” models of exchange rate behavior where exchange ratesmove to equilibrate demand for stocks of monies. The fundamental monetary model assumes purchasing power parity holds in the long-run, and therefore exchange rates are determined by the same factors that determine relative prices, to wit, money stocks, real incomes, and nominal interest rates. Though early proponents of the monetary view clearly emphasized its long-run nature, empirical testing has by and large neglected this caveat. Thus a model developed for long-run equilibrium exchange rates has instead been tested many times over on short-run equilibrium rates. The latter require a distinct model of their own. This paper develops a short-run equilibrium exchange rate model based on deviations of the short-run exchange rate from its long-run equilibrium. The model differs in that all variables are cast in real terms. It also differs in that the monetary and current account exchange rate versions are shown to be subsets of the more general wealth/portfolio framework used here. The present model considers, in addition to stocks of monies, stocks of foreign assets, and stocks of domestic wealth.     

Money, real output, and deficit effects of coffee booms in Colombia

This paper develops a Vector Error Correction (VEC) model and uses the recently developed technique of ‘generalized’ impulse response analysis to test the empirical relationships in the Colombian economy between coffee revenues and a set of macro variables. We find that coffee price (revenue) shocks have exerted an important influence on money growth, inflation, and real exchange rates, and the direction of these effects are in line with some of the predictions of traditional Dutch Disease type models. The major difference between our results and the results of Dutch Disease type models arise in the effects of coffee booms on real output. We find that in the time horizon of 5 years after the boom, real output has increased in response to the effects of the coffee boom. The finding that coffee booms can result in positive long-run output effects is an important finding since it contradicts the traditional conclusion of Dutch Disease type models which envision an adverse long-run effect on output. We also find that the long-run effect of coffee booms is to reduce both current account and government deficits. These results illustrate strikingly that the term “Dutch Disease” is an unfortunately pejorative term that obscures the fact that coffee booms need not be viewed as a “disease” but as an extraordinary opportunity to strengthen internal and external balances.     

Welfare effects of demand management policies: Impact multipliers under alternative model structures

This paper explores the sensitivity of multiplier estimates under three alternative assumptions about factor supply. For this purpose, we have used a general equilibrium model of Malaysia which allows endogenous determination of factor and output prices and which permits substitution in both production and demand in response to price. The structure of the model and three alternative factor supply assumptions under which the model can be solved are described. These alternative assumptions amount to alternative “closure rules.” The results of a general increase in demand as estimated under each of the alternative closures are then presented. Finally, we examine the results of two specific types of demand increase under each of the closure rules, focusing especially upon welfare related variables such as real household consumption levels.