Finance and the Sources of Growth at Various Stages of Economic Development

This article studies the effects of financial development on the sources of growth in different groups of countries. Recent theoretical work shows that financial development may affect productivity and capital accumulation in different ways in industrial versus developing countries. This hypothesis is tested with panel data from 74 countries using GMM dynamic panel techniques. Results are consistent with the hypothesis: finance has a strong positive influence on productivity growth primarily in more developed economies. In less developed economies, the effect of finance on output growth occurs primarily through capital accumulation.     

Construction productivity

Constraints impeding the growth of construction productivity, originating largely from the fragmented structure of the construction industry are reviewed. Technological advances in design and construction have always contributed to significant increases in productivity at all levels. However, recent trends with regard to total industrial productivity (TIP) are disturbing and may reflect the dominant but adverse influence of external economic factors and their interference with the construction process; there seems a definite connection between low productivity and low industrial output. There is always a potential conflict between enhancing TIP and efforts to improve productivity in the various segments of the industry. Stagnation or further decline in TIP will lead to still higher construction costs and reduced demand on the industry in the future. The need is for an integrated management approach to strengthen the total industrial framework, especially to resist the unfavourable effects of fragmentation and unpredictable economic conditions. An example of such an approach from Japan's sector is described. Managerial efforts aiming solely at greater efficiency on job sites or in firms will produce only marginal benefits, especially if contemporary economic conditions continue.     

INDUSTRIAL OUTPUT VARIABILITY AND REAL WAGE FLUCTUATIONS: DETERMINANTS AND IMPLICATIONS

The cyclical behavior of the real wage differentiates between the empirical validity of major new Keynesian sticky-wage and sticky-price explanations of business cycles. Across industries of the United States, an increase in price flexibility relative to wage flexibility correlates with a reduction in output fluctuations in the face of demand shocks. Further, industrial real output variability does not vary significantly with nominal wage flexibility. In contrast, an increase in price flexibility moderates industrial real output variability. Consistently, an increase in the real wage response to demand shocks correlates with an increase in industrial output variability. ( JEL E32, E31)     

PRODUCTIVITY PERFORMANCE OF U.S. TRUNK AND LOCAL SERVCE AIRLINES IN THE ERA OF DEREGULATION

The transition to deregulation of the U.S. air transport industry began in 1976. In this paper we measure total factor productivity growth of the airlines for the first five years of the transition (1976–1980) and compare the performance with that of the preceding years. We find that productivity growth accelerated from 2.8% per year to 5.1% per year. An analysis of covariance model with individual airlines as observations leads to the conclusion that for the trunk airlines nearly all of the acceleration can be explained by increases in output and load factor and decreases in the growth of capacity. For the local service airlines, however, less than half of the acceleration may be so-explained.     

MONEY,OUTPUT, AND INFLATION IN THE LONGER TERM: MAJOR INDUSTRIAL COUNTRIES, 1880–2001

We study how fluctuations in money growth correlate with fluctuations in real output growth and inflation. Using band‐pass filters, we extract cycles from each time series that last 2–8 (business cycles) and 8–40 (longer‐term cycles) years. We employ annual data, 1880–2001 without gaps, for 11 industrial countries. Fluctuations in money growth do not play a systematic role at business cycle frequencies. However, money growth leads or affects contemporaneously inflation, but not real output growth, in the longer run. Also, formal break tests indicate no structural changes for the longer‐term money growth and inflation relationship, despite changes in policy regimes.(JEL E3)     

Bonuses,unions, and labor productivity in South Korea

Using a set of time-series (1972–1989) and cross-sectional data on eight two-digit Korean manufacturing industries, we examine the variability of South Korea’s employee bonus system and the effect of the employee bonus on productivity. A test of the variability of the bonus showed that the bonus rate (ratio of the bonus to the wage) was positively influenced by industrial output, so the bonus is not merely a disguised wage. An augmented Cobb-Douglas production function estimation shows that the bonus has a positive and significant productivity effect. Capital-intensive and laborintensive industries did not have significantly different productivity effects due to the bonus. Lastly, Korean unions reduced labor productivity and negatively affected the productivity effect of the bonus. Also, compared with the previous period, the productivity effect of the bonus has become negative since the1987 Great Labor Offensive.     

Financial Variables and the Simulated Out-of-Sample Forecastability of U.S. Output Growth Since 1985: An Encompassing Approach

We reconsider the out-of-sample forecasting ability of a large number of financial variables with respect to real output growth over the 1985:1–1999:4 period. We show that models including financial variables display almost no forecasting ability relative to an autoregressive benchmark model over this period according to a mean squared forecast error metric. However, tests based on forecast encompassing indicate that many financial variables do, in fact, contain information that is useful for forecasting real output growth over the 1985:1–1999:4 out-of-sample period. Our results suggest that the extant literature exaggerates the demise of the forecasting power of financial variables with respect to real activity since the mid-1980s.     

Small business development in remote rural areas: The example of mature manufacturing firms in Northern England

There is a growing interest in the potential contribution of small and medium sized enterprises (SMEs) to rural economic development, as reflected in the Rural Development Commission's strategy for the 1990s. Using some evidence on the development of mature manufacturing SMEs in remoter rural areas during the 1980s and comparing them with similar urban based firms, the paper shows that whilst there was little difference between the rural and urban SMEs in terms of their growth performance when measured by sales turnover, the rural firms generated significantly more jobs. This indicates a different relationship between SME growth and employment generation in different geographical environments. SMEs in remote rural areas are shown to pursue rather different development paths than their urban counterparts resulting from the way in which they adjust to the opportunities and constraints afforded by their local operating environments. The main section of the paper focuses on three particular kinds of adaptation: (i) to local market conditions, and in particular on the ability of SMEs to make the transition into national and international markets; (ii) to local labour market conditions, including various qualitative characteristics of rural labour such as skill levels and functional flexibility; and (iii) to the lack of an industrial milieu, especially the limited opportunities for externalising production. The paper concludes by raising some concerns about the longer term competitiveness of SMEs in remote rural areas including low levels of labour productivity, technological backwardness and skill levels within the workforce.     

INDUSTRIAL DYNAMICS AND THE NEOCLASSICAL GROWTH MODEL

This paper studies industry-level dynamics and demonstrates the ability of a modified neoclassical growth model to capture a range of empirical facts. The paper begins by using U.S. data to document skilled and unskilled labor trends within industry sector classifications as well as industry sector output trends. Using Current Population Survey data from 1968 to 2004, it is shown that the ratio of skilled workers to unskilled workers employed has risen in all industries. The absolute increase in this ratio was larger in the more skilled industries, while the growth rate was larger in the less skilled industries. Furthermore, using national income account data, it is shown that relatively high-skilled industries have accounted for an increasing share of output over time. A version of the neoclassical growth model is then constructed to match these observations. One important feature of this model is a structure that introduces new goods into the economy at each moment of time. The model is able to capture a rich set of labor market movements between sectors and between skill levels as well as changes in the relative output shares across industries, yet preserves many nice features of the neoclassical growth model. ( JEL E13, J20, 030)     

上海“高技术不高”的现状及根源分析

上海的科技创新能力在国内处于相对较高的水平,上海高技术产业的产值规模和增长速度均在国内居于前列,但领先的科技创新能力并没有很好地转化为现实的生产力,“高技术不高”的特征非常明显。这主要在于创新链与产业链的相互割裂,具体表现为政府科技创新计划的引领与整合作用不强,政府创新资金和社会资金存在“两张皮”现象,投融资体制机制与高技术产业化的需求不适应,缺乏技术创新链的整合,因此难以突破高技术产业中跨国公司构建的网络权力与战略性隔绝机制。     

COMPUTERS, PRODUCTIVITY, AND INPUT SUBSTITUTION

This paper examines the relationship between computers and economic growth using U.S. sectoral data from 1947 to 1991. The computer-producing sector shows strong multi-factor productivity growth that reflects the fundamental technological progress behind the computer revolution. Although aggregate multi-factor productivity remains low, the computer-producing sector made a substantial contribution to its modest revival in the 1980s. In sharp contrast, computer-using sectors show little multi-factor productivity growth since 1973. For these sectors, the computer revolution is largely a story of traditional input substitution, investment and rapid capital accumulation with little evidence that computer investment affects multifactor productivity. (JEL O30, O47)     

Do Legacy Industrial Sites Produce Legacy Effects in Ethnic and Racial Residential Settlement? Environmental Inequality Formation in Rhode Island’s Industrial Core1

This study advances understanding of environmental inequality by examining its production through the interaction of two ubiquitous and ongoing urban-ecological processes: industrial land-use changes and changing patterns of residential segregation. We employ longitudinal data from the Rhode Island Directory of Manufacturers (1953–2012) and tract-level US Census data measured at four panel-years (1980, 1990, 2000, and 2010) to study the effects of these interactions in Rhode Island’s historical industrial cities of Providence, Pawtucket, and Central Falls. Spatial patterning analysis and hybrid spatial panel modeling of residential exposure to active and legacy industrial sites in relation to ongoing racial and industrial change reveal two novel findings. First, we find a “legacy effect,” suggesting that the spatial organization of industrial activities prior to the study period has measurable impacts on patterns of residential segregation in later decades. Our results also indicate that over the study period Latinx and African-American residents have become increasingly less likely to bear disproportionate impacts of active manufacturing sites, despite very different spatial patterns of population growth. This is strong evidence that environmental inequality formation is a variable process in which historically distinct pathways can lead to similarly disproportionate exposure to environmental risk.     

THE TRANSFORMATION AND SURVIVAL OF FORTUNE 500 INDUSTRIAL CORPORATIONS THROUGH MERGERS AND ACQUISITIONS, 1981–1995

The 1980s leveraged buyouts followed by the 1990s stock swap mergers represent the most dynamic period in U.S. business history. Using Cox regression with time-varying covariates, we examine the relationships among changes in corporate mergers and acquisitions, changes in corporate diversification strategies, and the transition from the multidivisional form (MDF) to the multisubsidiary form (MSF) of the largest Fortune 500 U.S. parent corporations. Consistent with the political economy contingency theory of accumulation (PECTA), our findings show that acquisition risk is reduced as a function of size, product and industry diversification, and percentages of shares held by institutional investors. Acquisition risk is increased by holding units in a multidivisional rather than a multisubsidiary form, higher returns to shareholders, higher divestitures, higher production to administrative imensity, and surviving previous takeover attempts. The political-legal institutions of the state have increasingly engaged in activities that are supportive and profitable for industrial and financial corporations. The actions of the state are increasingly aligned with the interests of capital.     

WHY CANNOT POOR COUNTRIES UTILIZE EXISTING KNOWLEDGE? EXPANSION OF FIRMS AND HUMAN CAPITAL ACCUMULATION BY TRAINING

Current growth literature does not explain the inability of poor countries to utilize existing knowledge. This study presents a stylized development model based on firms' expansion through on‐the‐job training. Since trained workers can supervise and train more workers, a development process in which output and productivity increase up to a full utilization of existing technology is generated. Unlike schooling‐based models, which require an assumption regarding a smaller local stock of knowledge, this study relies on the size of the industrial sector and the limited supply of training opportunities, therefore highlights barriers to development, even when technology and capital are available. (JEL O1, O4, J2)     

CYCLICAL COMOVEMENTS IN INDUSTRIAL LABOR AND PRODUCT MARKETS: THEORY AND EVIDENCE

We establish the theoretical connection between industrial labor and product markets within the contractual wage-rigidity new Keynesian explanation of business cycles. We estimate time-series and cross-sectional regressions for 28 private two-digit (S.I.C.) industries and find: (i) greater uncertainty is associated with upward flexibility of the nominal wage and moderates the countercyclical response of the real wage to aggregate demand shocks; (ii) an upwardly rigid nominal wage response to energy price shocks reduces the real contractionary effects of these shocks; (Hi) downwardly inflexible nominal wages are associated with downwardly rigid prices in response to productivity shocks.     

What Do Unions in China Do? Provincial-Level Evidence on Wages,Employment, Productivity,and Economic Output

Utilizing provincial-level data from the period of 1994–2008, this article studies the relationship between union density and wages, employment, productivity, and economic output in China. The findings indicate that union density does not affect average wage levels, but is positively associated with aggregate productivity and output. We discuss if and to what extent these findings are consistent with the familiar two faces of unions model and alternative explanations relevant in the context of Chinese labor and union institutions.     

PRODUCTIVITY GROWTH IN GOODS AND SERVICES ACROSS THE HETEROGENEOUS STATES OF AMERICA

In this study, we examine the importance of multifactor productivity (MFP) growth in goods and services for U.S. States during 1980–2007 by applying the dual growth accounting framework. We find that MFP growth was relatively high and converged in the goods sector, but was low and did not converge in services. Although low growth in MFP in services was due to declining real user cost, particularly in real estate services, the lack of convergence itself was due to variation in wage growth. We also document that while the gap between productivity and wage growth was higher in goods, the two series were more strongly correlated in services. Finally, states with higher initial human capital experienced higher growth in both sectors. (JEL O47, R11)     

Mass Migration and the Mass Society: Fordism,Immigration Policy and the Post‐war Long Boom in Canada and Australia, 1947–1970

The immediate post‐war period was defined by shifts in capitalism's socioeconomic and institutional underpinnings. Commonly known as Fordism, until the early‐1970s models of standardized industrial mass‐production and robust state planning and intervention were relatively successful in maintaining secular growth in employment, productivity and demand as well as establishing the national economy and society as unified, governable fields. This paper considers how migration controls in Canada and Australia enhanced and extended such arrangements. In simultaneously boosting production and demand, diversifying and integrating industrial activities and assimilating European migrants into a mass consumer culture while excluding non‐Europeans perceived as disruptive of material and sociocultural homogeneity, such policies provided central vectors of economic and cultural nationalism that complemented other monopolistic and redistributive interventions.     

The manufacturing–services dynamic in economic development

This article addresses the debate on services‐led growth in which services are variously portrayed as a substitute for or as a leading or lagging complement to manufacturing. Following a survey of related empirical studies, it applies growth decomposition methods to data for 18 countries in Asia and Latin America for 1980–2005, focusing on manufacturing and services that make intensive use of information and communication technology. By grouping the countries into four categories according to aggregate labour productivity and employment growth, the authors seek to identify common structural characteristics of better and worse performing countries. They also consider the viability of the services‐led growth path in India in particular.     

THE SHIFTS IN LEAD-LAG PROPERTIES OF THE U.S. BUSINESS CYCLE

We document shifts in the lead-lag properties of the U.S. business cycle since the mid-1980s. Specifically, (1) the well-known inverted leading indicator property of real interest rates has completely vanished; (2) labor productivity switched from positively leading to negatively lagging output and labor inputs over the cycle; and (3) the unemployment rate shifted from lagging productivity negatively to leading positively. Many contemporary business cycle models produce counterfactual cross-correlations revealing that popular frictions and shocks provide an incomplete account of business cycle comovement. Determining the underlying sources of these shifts in the lead-lag properties and their consequences for macroeconomic forecasts is therefore a promising direction for future research. (JEL E24, E32, E43)