more shock than therapy market transition employment and income in russia 1991 1995 sixteen predictions from market transition theory are assessed using survey data on employment earnings and income in russia during the first five years of market reform although the private sector has grown self employment is still rare incomes are down and unemployment is up a distended income distribution reflects unprecedented income inequality distinctive features of late soviet era stratification persist low returns to education a gender gap in earnings and low earnings among professionals the russian market transition offers more opportunity in trade consumer services and speculation and less in manufacturing than do other emerging makets this corresponds to merchat capitalism and contradicts the predictions of market transition theory everything the communists told us about communism was a lie everything they told us about capitalism turns out to be true popular russian joke circa 1996

adverse selection commitment and renegotiation extension to and evidence from insurance markets with asymmetric information full commitment to long term contracts may permit markets to approach first best allocations however commitment can be undermined by opportunistic behavior notably renegotiation we reexamine commitment in insurance markets we present an alternative model which extends laffont and tirole s procurement model to address uncertainty and competition which involves semipooling in the first period followed by separation this and competing models e g single period models and no commitment models have different predictions concerning temporal patterns of insurer profitability a test using california data suggests that some automobile insurers use commitment to attract selective portfolios comprising disproportionate numbers of low risks

mass privatization state capacity and economic growth in post communist countries why did the transition from socialism to capitalism result in improved growth in some countries and significant economic decline in others scholars have advanced three main arguments 1 successful countries rapidly implemented neoliberal policies 2 failures were not due to poli cies but to poor institutional environments and 3 policies were counterproductive because they damaged the state we present a state centered theory and empirically demonstrate for the first time one of several possible mechanisms linking neoliberal policies to poor economic performance mass privatization programs where implemented created a massive fiscal shock for post communist governments thereby undermining the development of private sector gover nance institutions and severely exacerbating the transformational recession we performed cross national panel regressions for a sample of 25 post communist countries between 1990 and 2000 and found that mass privatization programs negatively affected economic growth state capacity and property rights protection we further tested these findings with firm level data from a rep resentative survey of managers in 3 550 companies operating in 24 post communist countries within countries that implemented mass privatized programs newly privatized firms were sub stantially less likely to engage in industrial restructuring but considerably more likely to use bar ter and accumulate tax arrears than their state owned counterparts

welfare improving asymmetric information in dynamic insurance markets this article presents a two period asymmetric learning model of insurance markets when information about past accidents is not shared by insurers asymmetries of information develop through time equilibrium contracts exist are payoff unique and display a realistic bonus malus pattern eliminating asymmetries through information sharing is welfare decreasing in contrast with past contributions on insurance and adverse selection when second period contract offers cannot be contingent on initial contract choice a strict increase in welfare is obtained through menus of contracts although initial contract choice is in itself worthless information

between markets and politics organizational responses to reform in china in china s economic transition firms diversify assets through investments in the rapidly expanding service sector in response to organizational uncertainty using data from a random sample of firms in shanghai the author shows that there are two situations that cause this uncertainty economic instability where weak firms struggle to survive in the rapidly changing market system and administrative instability where large firms that were the most protected are now being forced to handle the responsibilities that were previously handled by the state the result is that both types of firm seek stability by spreading out risk through investment in low risk fast return markets revealing much about the economic reforms the overall strategy of a firm reflects at any given point in time important organizational facts any decision to fundamentally alter the deployment of internal resources represents a major structural change these kinds of changes do not occur often when they do they provide us wit

jockeying for position what it means and why it matters to regional development policy when places compete malecki e j 2004 jockeying for position what it means and why it matters to regional development policy when places compete regional studies38 1093 1112 the realization that places compete for investment has expanded in recent years to encompass competition among places for the attention of migrants tourists and media glow as well as investment the most competitive places have been multidimensional in their attractions and have made the transition to the knowledge based economy the latest priority is being placed on attracting mobile workers and mobile investment creative workers are the core of the knowledge economy and of its geographies such as intelligent places and learning regions knowledge metrics innovation indices and report cards are increasingly common each seemingly developed to sort the list of places in a different order lists or league tables of the best places for business to live retire and visit are key features of economies and societies whose factors of success

information revelation and market incompleteness this paper introduces a theory of market incompleteness based on the information transmission role of prices and its adverse impact on the provision of insurance in financial markets we analyse a simple security design model in which the number and payoff of securities are endogenous agents have rational expectations and differ in information endowments and attitudes toward risk when markets are incomplete equilibrium prices are typically partially revealing while full relevation is attained with complete markets the optimality of complete or incomplete markets depends on whether the adverse selection effect the unwillingness of agents to trade risks when they are informationally disadvantaged is stronger or weaker than the hirshleifer effect the impossibility of trading risks that have already been resolved as new securities are issued and prices reveal more information when the hirshleifer effect dominates an incomplete set of securities is preferred by all agents and generates a higher volume of trade hirshleifer 1971 was the first to point out that revelation of information can reduce risksharing opportunities in insurance markets resulting in a welfare loss in this paper we build on hirshleifer s insight to develop a theory of endogenous market incompleteness we show that in an economy with asymmetric information in which agents learn from prices an incomplete financial structure may be optimal the reason is that less information is revealed by prices when markets are incomplete than in an otherwise identical economy with complete markets 1 paradoxically a greater degree of incompleteness may result in better risk sharing since the only risks that can be traded are those whose resolution is not common knowledge at the time of trade for the same reason incompleteness of markets may also foster a higher volume of trade the connection between security design asymmetric information trading volume and welfare in financial markets is a subtle one and it is important to isolate its various facets the efficacy of security markets in aggregating and transmitting private information depends on the characteristics of the financial structure and especially on the number of tradeable assets indeed within the rational expectations paradigm informational differences disappear in equilibrium generically when the price vector has

institutional environment public private hybrid forms and entrepreneurial reinvestment in a transition economy abstract many less developed and especially transition economies have had high levels of entrepreneurial reinvestment for relatively long periods despite the absence of developed government institutions to resolve this puzzle this study proposes that many entrepreneurial firms in these economies have been actively engaged in political activities through which organizational arrangements are created to co opt government agencies into their organizational structures to manipulate and even control unfavorable institutional environments it empirically evaluates the role of one such organizational arrangement public private hybrid forms in china s gradual reform period it suggests that through protecting property rights and facilitating access to key resources and opportunities public private hybrid forms may act as a substitute for deficient market and legal institutions thus facilitating entrepreneurial reinvestment the findings from a national sample of chinese entrepreneurial firms support our propositions in general entrepreneurial firms adopting public private hybrid forms enjoy higher entrepreneurial reinvestment rates than pure private firms during gradual reform and this may be the case because such forms help to both protect private property rights and access key resources and opportunities in addition the association between the forms and reinvestment rate is found higher under less developed government institutions

china s transition and its implications for international business this paper focuses on institutional change as the central and most consequential contextual aspect of china s transition identification of key characteristics of china s emergent institutions leads to propositions on their relevance for international business practice china s transition also raises issues for theory development including the way that transition is modeled the need to draw upon multiple perspectives and the concomitants of a contextual approach

the impact of order and mode of market entry on profitability and market share market share performance and profitability of overseas business activities has long been an important issue in international business in this study we explore the impact of order and mode of market entry into an overseas market we find that early entrants have significantly higher market shares and profitability than late followers we also find that equity joint ventures have a higher profitability than either wholly owned operations or contractual joint ventures a significant interaction exists between order and mode of market entry as expected firm efficiency and size affect the performance of firms these results are based on the business activities of a sample of 14 466 foreign firms in china in 1995

dynamics of china s provincial level specialization in strategic emerging industries this paper examines the dynamics of technological specialization in strategic emerging industries seis within each of mainland china s 31 provinces and the likely effectiveness based on the experiences of taiwan and south korea of the provinces strategies for developing these industries grounded in economic decentralization theories the empirical method employed includes analyzing the scores on an sei specialization promotion index per each province alongside several analytics of invention patent data from each province in the seven seis newly designated by the central level government as of 2010 the data is quantitatively analyzed according to four groups of indicators based on the following specialization relevant concepts comparative advantages and technological capabilities economy size and income technological uncertainty and lifecycles and latecomer entry into complex technologies where knowledge is most cumulative the analysis finds that china s system of economic decentralization has partially worked to ensure provincial industrial policymaking is effective whereby a notable number of provinces are seemingly pursuing sei development strategies in terms of sei selection and promotion that may enable catch up however paradoxically at the same time the system appears to sometimes facilitate provincial sei development strategies that are quite risky or even likely ineffective

the soviet transition from socialism to capitalism worker control and economic bargaining in the wood industry analyses oftlze transition from state socialisnz to capitalism pically focus on political impedimerlrs and underesritnate tlle economic obsracles to economic rransformatior1 based or1 a c ase srudy c f the soviet o o d indusrr y we argue tlzur there hill he no economic tr ansition so long as enterprises rerain two hisroric features nanzely anarchy in pr oduction and barqainit g in exrernal r elarions far jtom consrituting a re olution tlze witllerirlg away of the party srate has esaggerared rlle parhologies of rhe old econotnic order barrer has hecome nzo1 e inzpor tant conglonzerates ha1 e strengrhened their monopoly and wrkers 1la1 e greater conrr ol of tlze shop floor if there is a nzolbemenr to sar d a nzar ket economy at all it is to sar da jb1 m ofmerchant capitalisnz rlzut deepens economic under de elol nzet t and lz arts tlze rise of nzodern bourgeois capiralism

one pool to insure them all age risk and the price s of medical insurance asymmetric information can lead to adverse selection and market failure in a dynamic setting asymmetric information also limits reclassification risk this certainty offsets the costs of adverse selection using a dynamic model of endogenous insurance choice and price calibrated to the u s medical insurance market i find that asymmetric information is pareto improving when information is fully asymmetric however when insurers can discriminate by age group but not within age groups the young benefit by paying less for insurance the insurance market for the near elderly collapses because it is no longer implicitly subsidized by the participation of the young

a theory of wage dynamics a dynamic equilibrium model of long term implicit labour contracts under incomplete but symmetric information is developed workers are assumed to be risk averse and of unknown ability or productivity risk neutral firms learn as do workers about each worker s productivity by observing the worker s output over time it is shown that equilibrium contracts provide for wages which never decline with age and increase only when the worker s market value increases above his current wage in addition to characterizing the equilibrium wage contract we also derive some of its implications for the behaviour of aggregate wages across various groups of workers these implications explain some findings in the recent empirical literature on ageearnings profiles in particular our model can explain why earnings may be positively related to experience even after controlling for productivity as some empirical studies have indicated

dynamic implications of absence behaviour this paper analyses the absence behaviour of workers in the context of a two period model the theoretical results that emerge highlight the potential benefits of analysing absenteeism within a multi time period model as opposed to a single time period model which has generally been adopted by the theoretical models of absenteeism to date workers are employed under a two period contract which is characterized by an experience rated sick pay scheme the theoretical results of the model indicate that if a worker faces such a sick pay scheme the theoretical results of the model indicate that if a worker faces such a sick pay scheme then the probability of absence in the current period is reduced the empirical analysis explores the absence rates observed from a set of workers who face an experience rated sick pay scheme the empirical results present some support in favour of the predictions which arise from the theoretical model

managerial task assignment and promotions a two period model of managerial task assignment is developed where the current employer has the advantage of observing the actual performanc e of the manager while outside employers can observe only the assign ments optimal contracts are rigid but the market value of managers is below actual productivity and they are promoted less than is effic ient the author introduces the idea of managers explo iting their information to separate themselves out in the market plac e as a consequence the model has the appealing property of small ab ility based wage differentials within a task as well as large ones b etween tasks copyright 1988 by the econometric society

women and absenteeism health or economics full time workers in the united states lost 3 5 percent of scheduled work time due to unscheduled work absences in 1978 nearly 7 out of 100 workers experience at least one spell of absence a week however u s absentee rates have remained fairly constant over the past several years and are generally well below the rates of western europe for example west germany lost 11 percent of scheduled work time to unscheduled work absences holland lost 10 percent and italy lost 15 percent in 1972 73 part of the higher absentee rates in western europe is thought to be caused by the high prevalence of sick leave availability in these countries work loss from unscheduled absences is substantially higher among female workers than among male workers in the united states in may 1978 women lost 4 3 percent of scheduled work time compared to 3 1 percent for men absence incidence rates are also higher for women 8 6 percent of women workers experience a spell of absence during a typical work week compared to 5 4 percent of men workers the large majority of unscheduled work absences are due to illness and injury the average female worker lost 5 4 days from work for health reasons compared to 4 7 days for the average male worker in 1979 there have been several recent research efforts on the causes and consequences of worker absenteeism steve allen 1981 found evidence that observed differences in absentee rates between the sexes could be accounted for by differences in marginal earnings and the flexibility of the work schedule my 1978 study found that women generally lost fewer days from work than men for most common illnesses there has been little research to date on gender differences in work loss due to illness that takes into account differences in the occupational distribution of workers and differences in marginal earnings as well as variations in health status this paper reports on an empirical investigation of the determinants of gender differences in illness related absentee rates in this investigation labor market characteristics such as differences in earnings and occupational mix between men and women differences in health status and the impact of family are analyzed using a regression framework

separating moral hazard from adverse selection and learning in automobile insurance longitudinal evidence from france the identification of information problems in different markets is a challenging issue in the economic literature this paper performs tests of residual asymmetric information in the french automobile insurance market for the 1995 1997 period this market is characterized by the presence of a regulated experiencerating scheme bonus malus contract choices are strongly associated with the bonus malus of policyholders we have access to longitudinal survey data with dynamic information both on claims and accidents we propose a causality test to distinguish pathways through which a positive correlation arises between contract choice and accidents we find evidence of moral hazard among a sub group of policyholders with significant driving experience 5 15 years we distinguish this moral hazard estimate from adverse selection and learning policyholders with less experience have a combination of learning and moral hazard whereas no residual information problem is found for policyholders with more than 15 years of experience

repeated insurance contracts and learning this article considers a repeated insurance model with incomplete information in which the insurer and the consumer both learn over time about the unknown risk category of the consumer care choices by young consumers affect the informational value of the accident history under an optimal scheme of long term insurance contracts young consumers will always be subsidized by old consumers and consumers who are reassessed as low risk types are always subsidizers i e reverse experience ratings we compare this optimal scheme with the set of contracts that would emerge in a competitive market if only short term contracting were possible these sequentially competitive contracts can lead to over investment in care by both young and old consumers relative to the optimum in contrast to the underinvestment problem associated with moral hazard in insurance

the effects of social capital and organizational innovativeness in different institutional contexts this paper examines how social capital and organizational innovativeness influence business performance through their separate indirect or interactive effects and how these effects differ across the institutional contexts of a transition economy and a market economy in line with institutional theory our findings show that the effects of social capital are more extensive and probably more malignant in a transition economy than in a market economy furthermore different types of organizational innovativeness as corporate culture can be cultivated by different forms of social capital in different institutional contexts the implications for institutional theory and social capital theory and the managerial implications are discussed

moral hazard and sickness insurance abstract we study if the replacement level in the swedish national sickness insurance which replaces foregone earnings due to temporary illnesses affects work absence behavior we use micro data and estimate the effects of a major reform whereby the replacement level during the first 90 days in each absence spell was reduced on work attendance to separate out the effect of the reform from any trend in work absence we distinguish between the implications on the incidence of work absence i e the frequency of spells and the duration of the spells we also use a regression discontinuity approach to estimate the effects on the prevalence of work absence finally we estimate elasticities with respect to the replacement level in the sickness insurance

economic development in shanghai and the role of the state this article examines the economic development process underlying shanghai s rapid urban transformation in the 1990s it analyses the key factors that have contributed to the economic development there and assesses critically the role of the state in this process it concludes that the sheer scale of investment and the national contexts rather than far sighted economic management at the local level are the keys to its economic success the article further argues that the prevailing views regarding the local state market relationship in shanghai need to be revised beneath the facade of a proactive and omnipotent state are numerous instances of failure and ineffectiveness moreover the market is much more than a tool in the state s decision making it is a growing force that the state is trying hard to control but with increasing difficulties

territorial competition in china and the west chien s s and gordon i territorial competition in china and the west regional studies in modern western societies and most other economies to which it has spread territorial economic competition is associated with a combination of competitive electoral politics and private land ownership in mainland china however a very strong form of this competition has emerged without either of these supports in general the development of such local collective action and its particular effects reflect an interaction between materially interested local agents and structural pressures the difference in china is that these agents are principally local government leaders whose career prospects within a still centralized system depend upon performance in terms of economic criteria set from above chien s s et gordon i la competition territoriale en chine et dans l ouest regional studies dans les societes occidentales d aujourd hui et dans la plupart des autres economies auxquelles elle s est etendue la

reform in eastern europe how can the new governments of eastern europe succeed in moving from centrally planned to freemarket economies this incisive report identifies and describes the major policy choices to be made and discusses what will work and what will not reform in eastern europe provides a comprehensive easily read statement of reform policy that stands in the mainstream of modern western economics based on their experience with stabilization policies in other countries the authors show how eastern europe can reduce unemployment during the painful adjustment process create effective and socially acceptable mechanisms to subject enterprises to market discipline and replace barter trade under cmea with market based international trade

the power of instability unraveling the microfoundations of bargained authoritarianism in china this article develops an interactive and relational conception of infrastructural state power for studying the capacity of authoritarian regimes to absorb popular protests based on an ethnography of the grassroots state in moments of unrest in china the authors identify three microfoundations of chinese authoritarianism protest bargaining legal bureaucratic absorption and patron clientelism adopting respectively the logics of market exchange rule bound games and interpersonal bonds these mechanisms have the effect of depoliticizing social unrest and constitute a lived experience of authoritarian domination as a non zero sum situation totalizing and transparent yet permissive of room for maneuvering and bargaining this heuristic framework calls for bringing the subjective experience of subordination back into the theorizing of state domination

absenteeism in a medium sized manufacturing plant 1991 absenteeism in a medium sized manufacturing plant applied economics vol 23 no 1 pp 161 166

estimating the performance effects of business groups in emerging markets business groups confederations of legally independent firms are ubiquitous in emerging economies yet very little is known about their effects on the performance of affiliated firms we conceive of business groups as responses to market failures and high transaction costs in doing so we develop hypotheses about the effects of group affiliation on firm profitability affiliation could either boost or depress firm profitability and members of a group are likely to earn rates of return similar to other members of the same group using a unique data set compiled largely from local sources we test for these effects in 14 emerging markets argentina brazil chile india indonesia israel mexico peru the philippines south africa south korea taiwan thailand and turkey we find evidence that business groups indeed affect the broad patterns of economic performance in 12 of the markets we examine group affiliation appears to have as profound an effect on profitability as does industry membership yet strategy scholars have a much clearer grasp of industries than of groups moreover membership in a group raises the profitability of the average group member in several of the markets we examine this runs contrary to the wisdom conventional in advanced economies that unrelated diversification depresses profitability overall our findings suggest that the roots of sustained differences in profitability may vary across institutional contexts conclusions drawn in one context may well not apply to another copyright 2001 john wiley sons ltd

chinese multinationals fast internationalization financial performance advantage in one region disadvantage in another our study reveals the financial performance implications of the speed at which chinese multinational enterprises cmnes expand into intra regional versus inter regional host countries in doing so we propose a framework that integrates internationalization speed and home regionalization literatures using data from 767 publicly listed cmnes from the years 2002 to 2014 we discover that the faster the intra regional internationalization the better the firm s financial performance whereas faster inter regional internationalization demonstrates a poorer financial performance we also find that fast mover cmnes technological and marketing resources are valuable in intra regional host countries but vulnerable in inter regional host countries we discuss the implications of these findings for studies of the uppsala internationalization process model and regional mnes

repeated moral hazard the role of memory commitment and the access to credit markets abstract the dynamic dimension introduces new questions in moral hazard models thus the roles of memory and commitment have recently raised a marked interest the goal of this paper is to discuss and clarify the issues at hand and to present some new results we show that two conditions are necessary for the optimal long term contract to be implementable via spot contracts first the long term optimum should be renegotiation proof second spot contracts should provide efficient consumption smoothing we discuss how the availability of credit to the agent affects these two prerequisites we also study the hitherto neglected case in which the repetition of the moral hazard problem generates hidden information at recontracting dates the optimal renegotiation proof contract then implements the minimum effort level unless it involves randomized savings

2 the institutional structure of production 1 prize lecture to the memory of alfred nobel december 9 1991 this abstract was borrowed from another version of this item

the insurance effect of groups many people belong to groups which partially identify their characteristics this paper argues that when agents are risk averse and where only group characteristics are visible rather than individual characteristics the pareto optimal construction of groups differs in systematic ways from standard notions of how groups should be formed two applications are considered the assignment of workers to jobs where it is shown the optimal contract does not involve maximizing output and accident insurance where the optimal contract does not involve complete insurance many people belong to groups which serve to partially identify otherwise hidden talents or characteristics for example it is possible to find out that certain authors have written an article but their individual contributions are much more difficult to ascertain similarly it may be easy to determine that a worker is a foreman but much more difficult to tell how much better he is than other foremen or that somebody is employed which tells us something about his talents but not whether he is more talented than the average employed person each of these examples illustrates cases where we can see the group to which an agent belongs author foreman employed rather than an individual s characteristics standard notions of efficiency tell us how these groups should be formed academics should write papers together only if their joint product is greater than if they operated separately a worker should be employer as a foreman only if his productivity is higher as a foreman than elsewhere in the organization and so on the principal result of this paper is that when agents are risk averse and where only groups of the type above are visible to some agents rather than individual characteristics these assignment rules may not be pareto optimal instead for example someone who is less competent as a foreman than as an operative may still be employed as a foreman and this yields higher welfare than employing that worker as an operative let me explain the intuition by a simple example assume that workers who join a firm are uncertain of their ability they are risk averse and seek insurance over that uncertainty untalented workers should be fired on standard efficiency grounds as they have higher productivity elsewhere assume that after a period of production information on ability becomes available to the employer and the employee but that other employers must infer this information from whether the

time consistent health insurance currently available health insurance contracts often fail to insure long term illnesses sick people can suffer large increases in premiums or denial of coverage i describe insurance contracts that solve this problem their key feature is a severance payment a person who is diagnosed with a long term illness and whose premiums are increased receives a lump sum equal to the increased present value of premiums this lump sum allows him or her to pay the higher premiums required by any insurer people are not tied to a particular insurer or a group and the improvement is free insurance companies can operate at zero economic profits and consumers can pay exactly the same premium they do with standard contracts

property rights and stratification in socialist redistributive economies in socialist economies work organizations differ widely in the compensation they provide employees despite the absence of key product and labor market processes thought to ex plain such inequalities in market economies existing theories of stratification in socialist economies focus on the power and privilege of elites but inequalities among organizations are not created by political particularism or elite power in this paper i sketch elements of an institutional theory of stratification anchored in a conception of property rights the right to derive income from productive assets two aspects of property rights guide the analysis 1 the dispersion of property rights across a hierarchy of governmentjurisdictions and 2 the exercise of these rights by government jurisdictions as they extract revenues primarily through taxation extraction of revenues from a work organization varies with the budgetary resources of a government jurisdiction and the dependence of that jurisdiction on the out puts of the organization variation in revenue extraction in turn creates inequalities among work organizations in their abilities to provide benefits to employees an analysis of survey data on the provision of housing and benefits by work organizations in the large industrial city of tianjin china provides provisional support for these ideas s tudents of communist states have had little reason to dispute lenski s 1966 claim that the distribution of rewards in a society is a func tion of the distribution of power p 63 as ex emplified in szelenyi s wedding of elite theory to institutional economics this idea has been de veloped primarily in terms of the power of class es or occupational groups szelenyi 1978 be gan with the observation that planned economies operate according to redistributive rather than market principles however the process of re

decoding urban land governance state reconstruction in contemporary chinese cities in the rapidly growing literature on urban development in china many authors have emphasised the salient features of economic decentralisation and the increasingly significant role of the local state however such arguments neglect a counter trend in which the central state has deterritorialised and rehierarchised some key functions using the case of land governance this paper argues that facing the complication of changing urban conditions there is a resurgence of the state s regulatory power the decentralisation of economic governance is now counter balanced by the rise of state strategies to control the articulation of scales through which a more centrally consolidated power can be achieved the central government still serves as an important level of economic regulation in this sense new interpretations of commoditised urban transformation especially commoditised production of the built environment should be understood by underscoring the interplay between trends of decentralisation and terr

the isomorphism of local development policy a case study of the formation and transformation of national development zones in post mao jiangsu china it is often the case although it has not been well documented that local governments aiming for economic growth tend to formulate and implement very similar or even identical policies this phe

chinese industrial reform accomplishments prospects and implications why has china grown so fast when conditions thought to be necessary for growth were absent nowhere is this dissonance greater than in china s industrial sector which has recorded big gains in output employment and exports in the absence of privatization effective bankruptcy legislation and other policy innovations widely seen as prerequisites for successful reform this essay reviews the accomplishments of chinese industry since the start of reform in 1978 focusing on the internal dynamics of the development process considers the future of partial reform and discusses the implications of china s industrial reform experience

the m form hierarchy and china s economic reform for 13 years from 1979 to 1991 economic reforms in china have generated a significant growth its gnp grew at an average annual rate of 8 7 or at 7 37 for per capita gnp 1 the chinese economic performance is in contrast to that of eastern europe and the former ussr the average growth rate of gdp in hungary was 1 8 between 1981 and 1985 and almost zero in 1988 and 1989 in poland the average gdp growth rate was less than 2 between 1981 and 1989 from both theoretical and policy perspectives china s outstanding reform performances and associated differ ent reform strategies from those of eastern europe and the ussr are particularly interesting and puzzling there are two popular views in explaining the differences between china and eastern europe the first view states that china was at a much lower development stage than eastern europe and the ussr 3 the second view argues that china has followed a gradual and piecemeal approach as

the development of china s solar photovoltaic industry why industrial policy failed this article studies china s central local government relations in the formation and implementation of an industry policy in china the central government is responsible for policy formation and the local governments are responsible for policy implementation where local governments are allowed ample flexibility in the ways to achieve the policy mandate this arrangement is conducive to local competition but there is no built in mechanism in the system to regulate such competition the system is defective in the execution of an industrial policy in that it fails to discipline the recipients of policy favours and to make efficient exit selections because local competition involves policy resources as well as economic resources the outcome of competition is not necessarily consistent with the comparative advantage of the region the more that policy is emphasised in industrial development the more that competition tends to favour large and rich cities after a certain period of hands off local competition the timing of which is unpredictable but will come when the industry runs into troubles the central government holds the ultimate power to determine the winners the central government typically picks the large and strong firms as the winners which are crowned as a national team and became eligible for further policy support this institutional set up produces a rapidly growing industry which often results in over capacity but not necessarily a competitive industry i use the case of china s solar photovoltaic industry to illustrate these points

governing china s transition to the market institutional incentives politicians choices and unintended outcomes this essay reviews two books that seek to account for china s success in making economic reforms and sustaining rapid growth one perspective explains china s reformist approach in terms of politicians making choices under certain institutional rules the other sees an economic logic of market transition and emphasizes policymakers limited abilities in governing the economy the essay assesses the merits of these competing claims it calls for better specification of the causal linkages between institutional rules and politicians choices and concludes that both the dynamics and dilemmas of china s political economy are explained in terms of increasing market competition finally the essay evaluates the argument that decentralization leads to market segmentation and points to the chinese government s evolving role in dealing with the economy

a social institutional approach to identifying generation cohorts in china with a comparison with american consumers identifying distinctive target segments is a fundamental challenge faced by international marketers this paper describes an approach to understanding consumer market structures in an important international market china and to segmenting chinese consumers by integrating insights from generational cohort and social institutional theories we conduct two empirical studies to verify how china s recent momentous ideological events could give rise to and affect the life experiences of different generation cohorts in the country the results of study 1 support the conceptual framework and establish three distinct cohorts in china red guards modern realists and global materialists study 2 builds on the findings of study 1 it links cohort differences to differences in consumer values materialism and choice behaviors foreign vs local brands and then compares them with parallel consumers in the united states this paper outlines and tests an approach to segmentation that can help international firms identify distinct segments in and design effective marketing strategies for china

china s changing urban governance in the transition towards a more market oriented economy china s changing urban development processes and urban landscapes in the transition towards a more market oriented economy have received extensive research attention in recent years relatively the governing of chinese cities is still underresearched this article aims to analyse the forces released both inside and outside the formal socialist state system and the impacts on phenomenal restructuring of urban governance especially at local levels marketisation has created new elements beyond the reach of state work units that represent the state s hierarchical control the pillars of the socialist governing structure the party state the work units system and household registration are shaken by these forces the changes in the organisation of people capital production materials infrastructure and space fundamentally demand new urban governance territorial organisations such as the municipality urban districts street office and residents committees are reinvented and consolidated to restore a governable society the devolution towards the base level and the reinvention of local communities reflect the state s attempt to reconsolidate its power to create a governable society as well as to cope with practical pressures such as the provision of social assistance to poor and aged residents re employment of laid off workers and the management of floating immigrants the combination of new market elements and decentralised state apparatus has given rise to the entrepreneurial endeavour of china s governance this research highlights the micro foundation of the new urban governance in addition to the globalisation capital mobility city competitiveness thesis

capital structure in transition the transformation of financial strategies in china s emerging economy during economic transition firms must dramatically reduce their financial dependence on the state and begin to borrow from nonstate capital sources this paper draws on institutional and resource dependence theories to examine this fundamental transformation of firm capital structure during china s transition i propose that managers borrowed from external sources even when internal funds were available because retained earnings were considered state assets firms used retained earnings to signal financial health but borrowed externally to reduce dependence on the state uncertainty during transformation produced interfirm imitation of borrowing strategies particularly imitation of local and high status others i argue that the dynamics of market development shaped firm borrowing strategies and that these strategies are best viewed as trajectories over time analysis of survey data on the 1980 1989 capital structure of formerly state owned firms provides support for these arguments and highlights the importance of institutional context in understanding corporate borrowing and strategic decision making

gone fishing reported sickness absenteeism and the weather i introduction the principal agent problem of contracting employee work effort that is imperfectly monitored arises in a number of areas of economic theory including models of remuneration by seniority lazear 1979 involuntary unemployment e g shapiro and stiglitz 1984 performance based pay macleod and malcomson 1998 and labor hoarding depken redmount and snow 2001 given the importance of this mechanism in the theoretical work the empirical research on the agency problem is remarkably scant in part this reflects the limited availability of personnel data as baker and holmstrom argue in their review article internal labour markets too many theories too few facts 1995 but more fundamentally it reflects the inherent difficulty of empirically capturing the employee effort levels that underlie the models using direct measures of employee or firm level productivity is unquestionably the preferred approach but these measures are notoriously problematic and the studies that use them tend to be case studies introducing external validity issues it is also unlikely to isolate the type of malfeasant shirking behavior that concerns variants of the models where the employee effort decision entails disciplinary risk to inform employee incentives to engage in malfeasant behavior economists have relied on two measures employee disciplinary rates e g cappelli and chauvin 1991 ichino and maggi 2000 and absenteeism rates e g arai and thoursie 2005 bradley green and leeves 2007 ichino and riphahn 2005 the difficulty is that disciplinary rates capture only shirking activity that is identified by employers not that which goes undetected while reported absenteeism particularly sickness absenteeism rates may be entirely legitimate one can therefore never be sure whether differences in these rates across workers facing different shirking costs reflect actual shirking activity as opposed to differences in employers willingness or ability to detect and punish shirkers or differences in employee health that may be correlated with these costs in this paper we identify a different type of shirking activity that potentially addresses both of these shortcomings employees misreporting health in order to exploit weather conditions favorable to high utility outdoor recreation 1 we begin by considering a shirking model of sickness absenteeism in which employees marginal utility of outdoor leisure is increasing in the interaction of two state dependent parameters health and outdoor weather quality the intuition being that ideal weather conditions for engaging in outdoor recreation are valued more when one is physically and perhaps also mentally healthy this assumption leads to two main propositions first increases in sickness absenteeism associated with marginal improvements in weather quality reflect the decisions of the inframarginal workers those workers who in the absence of the weather improvement would be present at work who are the healthiest implying an increase in absenteeism that is unambiguously illegitimate second comparing across workers marginal weather improvements should have the largest impact on sickness absenteeism where shirking costs are highest the reason is that where existing incentives to misreport health are the weakest such as where sick pay is not offered or job protection is weak existing sickness absenteeism levels will be lowest and the inframarginal workers will be the healthiest thereby benefitting most from the weather improvement we examine the empirical relevance of these propositions using a two step approach first we construct an index of weather preferences by linking temperature relative humidity precipitation wind speed and cloud cover data to time use data identifying the weekend and weekday evening outdoor recreational activities of employees with regular daytime work schedules we then examine the empirical relation between the resulting index of the recreational quality of the weather hereafter referred to simply as weather quality and the incidence of short term spells of sickness absenteeism reported in survey data comparing the magnitude of this relation across workers facing different levels of sick pay job protection and job finding rates

the efficiency effects of categorical discrimination in the insurance industry recent public policy debate has focused concern on the equity dimensions of categorical discrimination based on sex age or race in insurance and similar markets we consider the efficiency effects of such discrimination and establish that costless imperfect categorization always enhances efficiency when categorization entails a nonnegligible resource cost however no unambiguous efficiency ranking of informational regimes is possible when categorization is costless we demonstrate that government having no better information than market participants can effect redistribution without assuming dictatorial control of the market implying that a market equilibrium with costless categorization is potentially pareto superior to one without it when categorization is costly however the market may categorize when pareto improvements are not possible

the structure of ownership and the theory of the firm the separation of ownership from control produces a condition where the interests of owner and of ultimate manager may and often do diverge and where many of the checks which formerly operated to limit the use of power disappear in creating these new relationships the quasi public corporation may fairly be said to work a revolution it has divided ownership into nominal ownership and the power formerly joined to it thereby the corporation has changed the nature of profit seeking enterprise 1

local governments as industrial firms an organizational analysis of china s transitional economy despite widespread skepticism about government ownership in transitional economies china s rapid industrial growth has been led by public enterprises kornai s theory of soft budbet constraints born of the failure of earlier hungarian reforms fosters such skepticism but it assumes as fixed organizational characteristics that in fact vary widely across government jurisdictions local governments with smaller industrial bases have clearer financial incentives and constraints fewer nonfinancial interests in enterprises and a greater capacity to monitor them in china s vast public sector the fastest growth in output and productivity has occurred where government ownership rights are clearest and most easily enforced which enables officials to manage public industry as a diversified market oriented firm

leaders managers and the organization of township and village enterprises in china abstract the managerial contractual form in china s township and village enterprise tve sector has evolved rapidly during the past 10 years our paper uses descriptive data and a theoretical model to demonstrate that these changes may be occurring in response to the rapid development of markets in transitional rural china we econometrically test the model s main hypotheses showing that the driving force behind the movement from a leader run fixed wage contract to a fixed payment contract with better incentives for the manager is the relative value of non marketed inputs owned by local leaders and firm managers firm technical structure and local market setting also plays a role in the determination of firm contractual form

elite opportunity in transitional economies command economies gave communist era elites administrative control and material privilege but severely restricted money income and private wealth markets and privatization have injected new value into public assets and create unprecedented opportunities for elite insiders these opportunities depend on the extent of regime change and barriers to asset appropriation regime change varies from the survival of the entire party hierarchy to its rapid collapse and defeat in competitive elections barriers to asset appropriation vary with the extent pace and form of privatization and the concentration and liquidity of assets different combinations of such circumstances jointly affect the extent to which prior elites obtain ownership or control of privatized assets use political office to extract larger incomes move into salaried elite occupations or fall out of the elite altogether regime change and barriers to asset appropriation affect change at the national level but outcomes vary across economic sectors because of characteristics of organizations elite positions and assets this elementary theory serves to integrate varied findings from recent research on central europe china and russia and yields predictions for other regions

federalism chinese style the political basis for economic success in china china s remarkable economic success rests on a foundation of political reform providing a considerable degree of credible commitment to markets this reform reflects a special type of institutionalized decentralization that the authors call federalism chinese style this form of decentralization has three consequences first it fosters competition not only in product markets but also among local governments for labor and foreign capital this competition in turn encourages local government experimentation and learning with new forms of enterprises regulation and economic relationships second it provides incentives for local governments to promote local economic prosperity finally it provides a significant amount of protection to local governments and their enterprises from political intrusion by the central government

consumer lock in with asymmetric information abstract a two period version of the rothschild and stiglitz 1976 model of competitive screening in an insurance market is presented its features include repeat purchase of insurance among consumers no commitment among insurers or consumers asymmetric information among insurers about a consumer s accident history and state contingent contracts an equilibrium may exist in this model with full pooling in period one and consumer lock in in period two in such an equilibrium high risk consumers are experience rated and firms earn negative profits in period one and positive profits in period two