government deficits the real interest rate and ldc debt on global crowding out abstract the paper uses a three regions model of global saving investment balance to present a global crowding out interpretation of present economic trends the model builds on data which point to a possible shortage of savings explosive growth of social expenditures structural public sector deficit in north and south changes of the age pyramid real wage rigidity in many industrial countries

upper and lower bounds of put and call option value stochastic dominance approach applying stochastic dominance rules with borrowing and lending at the risk free interest rate we derive upper and lower values for an option price for all unconstrained utility functions and alternatively for concave utility functions the derivation of these bounds is quite general and fits any kind of stock price distribution as long as it is characterized by a nonnegative beta transaction costs and taxes can be easily incorporated in the model presented here since investors are not required to revise their portfolios continuously the price that is paid for this generalization is that a range of values rather than a unique value is obtained in the last decade there has been an increasing interest in the options market by both academicians and practitioners the most well known valuation models are the black scholes 4 model the jump stochastic process model see cox and ross 6 the binomial model see cox ross and rubinstein 7 rendleman and bartler 19 and sharpe 22 and rubinstein s discrete model 21 recently perrakis and ryan 18 using rubinstein s approach have derived upper and lower bounds for option prices the relative pricing theory of contingent claims differs in the continuous time and discrete time models in a continuous time framework the instantaneous expected rate of return of the option and that of the underlying stock must follow a certain market equilibrium condition in this case the equilibrium condition is easily determined by a continuous hedging strategy in the discrete time case there is no hedging strategy to provide a simple relationship between the option and the stock price however for a given value distribution of the stock the value distribution of the option is uniquely determined by the option exercise price and this suggests some possible relationships between the stock and option values

import price elasticities reconsidering the evidence recent economic geography and trade empirical studies based on monopolistic competition suggest high levels of trade price elasticities between 3 and 1 1 however price elasticity estimations in trade equations using unit values as price proxies usually lead to lower values of around unity we show that those inconclusive results may be due to some misspecification in these equations as well as measurement errors in prices when suit able instrumental variables are used within a panel of industrialized countries we obtain high price elasticities the majority ranging from i to 13 the highest estimates correspond to industries producing homogeneous goods jel classification c2 c3 and f 1

learning and the time interdependence of costa rican exports abstract exports may enhance learning through production induced learning by doing learning to export by doing and flows of information from customers we provide evidence on the learning effects of export destination for costa rica for 1955 through 1980 we examine granger causality results and export trends to determine relationships between exports to the central american common market cacm the rest of the south and the north increasing exports to the cacm appear to promote learning in machinery leather and intermediate manufactures we also find that the cacm redirects some exports away from northern markets probably with damaging consequences

how could the south respond to secular stagnation in the north developed countries face the risk of a sustained lack of aggregate demand i e secular stagnation demand oriented growth models emphasizing the balance of payments constraint raise concerns about attendant adverse growth impacts on developing countries from reduced export growth these concerns are well founded albeit less serious than the simplest version of these models would imply relaxing their assumptions and emphasizing cumulative causation forces from domestic demand growth and relative price effects indicates how changed policies can maintain rapid growth while reducing the import content of demand crucial is investment that reduces gaps between the composition of domestic production and domestic demand and emphasizes sectors with cumulative causation effects combined with incomes policy and capital account management drawing down excessive foreign exchange reserves and obtaining concessionary loans from development banks can finance required capital goods imports enhanced south south integration may be an important complement for small countries

manufactured exports from developing countries and their terms of trade a reexamination of the sarkar singer results abstract sarkar and singer 1991 argue that the terms of trade for exports of manufactures from developing countries dcs like that for their primary commodity exports have manifested a long term trend favoring the importing developed countries we contend here that the authors have not paid adequate attention to appropriately adjusting the data and that they have misinterpreted the results when these limitations are taken into account a sound basis exists for the conclusion that through rapid expansion of manufactured exports dcs as a group have achieved significant gains in import purchasing power without generating adverse impact on the net barter terms of trade

a stochastic dominance comparison of water conserving irrigation strategies stochastic dominance and stochastic dominance with respect to a function are used to compare water conserving irrigation strategies in an area of declining ground water supplies a computerized grain sorghum plant growth model using daily weather observations provides the basis for stochastic dominance comparisons six irrigation strategies dominate contemporary intensive irrigation practices by first degree stochastic dominance and two additional strategies exhibit second degree stochastic dominance over contemporary practices dominant strategies involve irrigating based on a 45 percent soil water criterion and eliminating early season irrigations some dominant strategies reduce water use by as much as 40 percent while increasing expected net returns

the empirical modelling of nie exports an evaluation of different approaches this article investigates the current debate regarding the robustness of estimates of export demand and supply elasticities for ldcs and nies obtained by recent empirical studies the empirical findings reported in the article suggest that price elasticities of demand are indeed low and that there are strong and significant income effects on export demand furthermore using a variety of modelling approaches we demonstrate that the choice of estimation method and normalisation need not lead to drastically different conclusions regarding the size of the price elasticity of demand for nie exports whilst this points against the small country assumption usually made regarding ldc nie exports we argue that the preferred development strategy for ldcs need not necessarily be an inward oriented one this is because the large estimated income market growth elasticities in the demand equations may be due to the presence of supply side influences which have been the focus of attention of the new theories of i

stochastic dominance in an ordinal world abstract existing stochastic dominance rules apply to variables such as income wealth and rates of return all of which are measured on cardinal scales this study develops and applies stochastic dominance rules for ordinal data it is shown that the new rules are consistent with the traditional von neumann morgenstern expected utility approach and that they are applicable and relevant in a wide variety of managerial decision making situations where existing stochastic dominance rules fail to apply we apply ordinal sd rules to the transformation of random variables

have north south growth linkages changed abstract this paper provides econometric evidence suggesting that the traditional tradebased business cycle linkages between the north and the south have changed many countries in the south particularly in asia appear to have become more resilient to cyclical movements in the north and play a more significant role in sustaining global activity a number of factors may have contributed to these changes improved domestic policies and more open trade and exchange regimes closer financial linkages with the north and a substantial increase in capital flows a marked rise in intraregional trade and greater diversification of the exports of the south

intraindustry trade sources and effects on protection this paper provides an empirical analysis of the determinants of intraindustry trade we demonstrate that two way trade flows occur where conditions are favorable to international specialization consistent with the stigler williamson analysis of the division of labor the results are inconsistent with the prevailing product differentiationcum scale economies model of intraindustry trade in addition we show that intraindustry trade has a significant impact on protectionist pressures exports of closely related products have the effect of mitigating the tariff raising effects that imports would otherwise exert

do spinoff dynamics or agglomeration externalities drive industry clustering a reappraisal of steven klepper s work steven klepper s theory of industry clustering based on organizational reproduction and inheritance through spinoffs challenged the marshallian view on industry clustering this article provides an assessment of klepper s theoretical and empirical work on industry clustering we explore how new his spinoff theory on industry clustering was and we investigate the impact of klepper s theory on the economic geography community klepper s work has inspired especially recent literature on regional branching that argues that new industries grow out of and recombine capabilities from local related industries finally the article discusses what questions on industry location are still left open or in need of more evidence in the context of klepper s theory less

the place of entrepreneurship in the economics that might have been it is a familiar observation that entrepreneurship is not easily accommodated within the framework of neoclassical economic theory drawing inspiration from an ancient critique of neoclassicism by veblen q j econ 12 4 373 397 1898 this paper attributes the difficulty to the tension between normative accounts of decision making as in mainstream theory and ideas of causation that are standard in the sciences normative theories naturally privilege the conjectured future over the experienced past in the quest for explanatory factors evolutionary theories elucidate instead the mechanisms of cumulative causation veblen that perpetually produce the present from the past entrepreneurship of the innovative schumpeterian kind seizes opportunities that emerge in complex evolving contexts of technological and institutional change a theory that gives due weight to cumulative causation sheds greater light on these processes than prevailing mainstream theory can and that is a key advantage of an evolutionary theory

nano economics spinoffs and the wealth of regions the historical evolution of four prominent industry clusters is compared automobiles in detroit michigan tires in akron ohio semiconductors in silicon valley california and cotton garments in dhaka bangladesh detailed data are collected concerning the intellectual and geographic origins of entrants into the clusters and other regions to probe the mechanisms underlying geographic clustering the main mechanism at work in the four clusters involves employees leaving established firms to found their own firms or shape new entrants in their industry questions and policy implications related to the spinoff mechanism and the mobility of employees are discussed

effects of restraining steel exports from the republic of korea and other countries to the united states and the european economic community in this article a model is developed to evaluate the impact on an exporting country of a restraint imposed on its export by an importing economy in the context of a three region model of world trade in a single product the welfare changes in any of the three regions in the model and in the global economy can be evaluated the model is applied to the restraints imposed on steel exports from the republic of korea to the united states and the european economic community eec the united states and the eec are found to have incurred significant losses as a result of the restraints the largest part of these losses are quota rents transferred to korea and the rest of the world under reasonable parameter assumptions korea and the rest of the world obtain net gains from the quotas because the resource misallocation costs are smaller than the quota rents the model is modified to analyze a tariff barrier rather than a quantitative restraint it is found that an equivalent tariff on steel transforms korea and the rest of the world from net gainers to net losers as a result of a restraint

trade as the engine of growth in developing countries revisited economic growth in developed countries since the mid 1970s the only way to keep the engine of ldc growth beating at a satisfactory rate so the argument goes is to turn to an alternative source of fuel this lewis argues lies in trade among the developing countries which he asserts can take up the slack left by mdcs more developed countries as mdcs slow down 1980 p 560 pessimism about demand for ldc exports in developed countries markets is a recurrent theme in the development literature also familiar is the approach taken by lewis to dismiss past successes of ldcs in world trade by declaring the alleged engine of past growth to be no longer operating satisfactorily the intellectual foundations of the import substitution strategy laid in the 1950s by prebisch myrdal and most importantly nurkse rested on similar grounds arguing that the demand for periphery countries exports in the 20th century is far weaker than it was in the 19th century trade was dismissed as an engine of growth a function nurkse alleged it had served in the 19th century the solution prescribed in the 1950s was to look inward in effect to scrap the trade engine altogether lewis remedy coming two decades later when most importsubstitution possibilities in many ldcs have been all but exhausted retains the trade engine but seeks an alternative source of fuel to drive it the classic critique by irving kravis 1970 of nurkse s thesis of trade as a faltering engine of growth showed that export expansion did not serve in the nineteenth century to differentiate successful from unsuccessful countries p 850 this followed from two findings first that successful 19th century countries showed few signs of export dominated growth second that unsuccessful periphery countries enjoyed export expansion in the second half of the 19th century of the same order of magnitude as the temperate regions of recent settlement this led kravis to conclude that a more warranted metaphor

an interpretive history of challenges to neoclassical microeconomics and how they have fared contemporary microeconomics has witnessed a resurgence of behavioral institutional and evolutionary critiques of the neoclassical mainstream that came to dominate the field during the 1980s today s critiques and proposals for reform have a long tradition in economics while synthesizing the intellectual history of these challenges this article explores the reasons why such critical strands of microeconomics fared poorly in the past and in contrast what factors may account for their partial acceptance into the mainstream in recent times

growth and trade with asymmetric returns to scale a model for nicholas kaldor manufacturing activities are subject of increasing returns to scale both of a static and a dynamic kind and under these conditions the presumption derived from ricardo s doctrine of comparative costs the presumption that free trade secures the best allocation of resources to each and every participant and that there must be net gain from trade all round no longer holds for under these conditions it can be demonstrated that free trade may lead to stunted growth or even impoverishment of some regions or countries to the greater benefit of others

the perversity of preferences gsp and developing country trade policies 1976 2000 industrial countries maintain special tariff preferences namely the generalized system of preferences gsp for imports from developing countries critics have highlighted the underachieving nature of such preferences but developing countries continue to place the gsp at the heart of their agenda in multilateral negotiations what effect do such preferences have on a recipient s own trade policies the authors develop and test a simple theoretical model of a small country s trade policy choice using a dataset of 154 developing countries from 1976 through 2000 they find that countries removed from the gsp adopt more liberal trade policies than those remaining eligible the results corrected for endogeneity and robust to numerous alternative measures of trade policy suggest that developing countries may be best served by full integration into the reciprocity based world trade regime rather than continued gsp style special preferences

the indirect approach to trade liberalization dynamic consideration on liberalization cum stabilization policies in latin america abstract recent experience of some latin american countries has shown that a switch to an outward oriented development strategy involves difficult adjustment problems these problems may overburden the economy s adjustment capacity when the heritage of an extended period of import substitution has to be overcome together with severe macroeconomic imbalances when these conditions apply priority should be given to the elimination of the anti export bias even at the expense of new temporary export subsidies and of the macroeconomic disturbances before trade liberalization in the proper meaning of the word would have to be realized

the dynamo and the computer an historical perspective on the modern productivity paradox the dynamo and the computer an historical perspective on the modern productivity paradox author s paul a david source the american economic review vol 80 no 2 papers and proceedings of the hundred and second annual meeting of the american economic association may 1990 pp 355 361 published by american economic association stable url http www jstor org stable 2006600 accessed 08 12 2010 01 40

third degree stochastic dominance here f x and g x are less than cumulative probability distributionis where x is a continuous or discrete random variable representing the outcome of a prospect the closed interval a b is the sample space of both prospects the integral shown in rule 2 and those shown throughout the paper are stieltjes integrals recall that the stieltjes integral fb f x dg x exists if one of the functions f and g is continuous and the other has finite variation in a b let d1 d2 and d3 be three sets of utility functions x d1 is the set containing all utility functions with 4 x and 1 x continuous and 41 x 0 for all xe a b d2 is the set with x 1 x 2 x continuous and q j x 0 02 x o for all xc a b d3 is the set with x 1 x 2 x 3 x continuous and 1 x 04 2 x o o for all xc a b here 1 x denotes the ith derivative of x hadar and russell proved that rule 1 is valid for all cd1 and rutle 2 is valid for all ed2 the authors point out that the set of probability distributions that can be ordered by means of second degree stochastic dominance is in general larger than that which can be ordered by means of first degree stochastic dominance note that in rule 2 they assume that x is not only an increasing function of x but also exhibits weak global risk aversion a condition guaranteed by requiring the second derivative of x to be nonpositive in this paper a condition which will be called third degree stochastic dominance is considered it is based on the following assumption about the form of the utility function x from a normative point of view one expects the risk premium associated with an uncertain prospect to become smaller the greater is the individual s wealth the plausibility and implications of this assumption h ave been explored by john pratt as well as others the risk premium of an uncertain prospect is that amount by which the certainty equivalent of the prospect differs from its expected value in mathematical terms given the prospect f x with expected value a the corresponding risk premium t is obtained by solving the following equation rb

effects of income growth and tariffs on the world salmon market the effects of income growth and tariffs on salmon prices production and trade flows are analysed using total elasticities derived from an equilibrium displacement model of the world salmon market results suggest the total income elasticity in world trade for salmon is about one which means imports worldwide will grow at about the same pace as world income however owing in part to policies that restrict supply response not all exporters will share evenly in this growth with uk producers benefiting the most and norwegian producers the least within importing countries imports are more responsive to income growth than is domestic production which means protectionist pressures are apt to increase with affluence us tariffs on imports from norway and chile are counterproductive in that they reduce world imports with little effect on the us price norway s feed quota reduces the efficacy of us tariffs makes imports less responsive to income and increases price volatility hence quota elimination m

the fallacy of composition argument is it relevant for ldcs manufactures exports abstract the constraints imposed upon ldcs export growth by international demand have been the subject of a long standing controversy in this paper we present estimates of manufactures export demand functions for 23 ldcs we focus first on the constraints that the international environment imposes upon export growth for an individual ldc to this purpose the small country hypothesis of an infinitely elastic export demand is tested and the claim that supply factors play a determinant role in affecting export performances is then assessed we turn next to the constraints on global ldc growth and ask whether exports from ldcs complete mostly with northern products or are better substitutes with exports from other ldcs this allows us to assess the heuristic value of cline s 1982 remark that a generalized outward shift in the ldcs export supply schedule would be associated with an important decline in prices and would undermine the success of a widespread export led strategy we find that for a representative ldc a large share almost 80 percent of the benefits of devaluation on export revenues are made to vanish when other ldcs competitors pursue similar policies

stochastic dominance and expected utility survey and analysis while stochastic dominance has been employed in various forms as early as 1932 it has only been since 1969 1970 that the notion has been developed and extensively employed in the area of economics finance agriculture statistics marketing and operations research in this survey the first second and third order stochastic dominance rules are discussed with an emphasis on the development in the area since the 1980s

the making of an oligopoly firm survival and technological change in the evolution of the u s tire industry the number of producers in the u s tire industry grew for 25 years and then declined sharply and the industry evolved to be an oligopoly the role of technological change in shaping the industry s market structure is explored a model of industry evolution featuring technological change is used to derive predictions that are tested using a novel data set on firm entry exit size location distribution networks and technological choices prior to the shakeout of producers consistent with the model earlier entering and larger firms survived longer principally because of the influence of age and size on technological change

optimization as constraint a comment on mazzoleni and nelson this comment is an in depth exploration of the neoclassical commitment to the idea that economic actors are appropriately modeled as optimizers of profit utility or whatever the robustness of this commitment is a major feature of the intellectual landscape surveyed by mazzoleni and nelson 2013 industrial and corporate change 22 6 and the challengers inability to overthrow it is clearly a key rubric for an answer to the basic mazzoleni and nelson question about explanations for the failures of the successive challenges to neoclassicism the principal thesis here is that the neoclassical commitment to optimizing actors has exacted a high opportunity cost because of its distorting effect on the discipline s priorities the commitment encourages theorists to engage primarily in the construction and analysis of models that are viewed as parables and valued primarily on esthetic grounds and not for the insight into reality that they provide thus the contemporary esthetics of neoclassical theorizing push the economics discipline away from serious engagement with the complexity of economic reality

intra nie competition in exports of manufactures this paper provides empirical evidence on the extent to which the asian newly industrialised economies nies compete in world export markets our results support existing studies which emphasise the importance of allowing for intra ldc competition in modelling an individual developing country s exports whilst the asian nies are regarded as a model for other developing countries to emulate one has to consider whether such an expansion in export supply would be at the expense of oecd economies or whether it will lead to a deterioration in the terms of trade of the developing countries as a group

the effects of trade preferences for developing countries at the 1964 and 1968 united nations conferences on trade and development the developing countries pressed for and the developed countries finally agreed to the granting of preferential tariff treatment on the formers manufactured exports such a discriminatory measure runs counter to the non discrimination or most favored nation mfn principle set out in the first article of the general agreement on tariffs and trade and a gatt waiver was necessary before the developed countries could introduce their individual schemes under the generalized system of preferences gsp since their introduction between 1971 and 1976 these schemes have aroused opposition not only from protectionist forces in the donor countries and from supporters of the non discrimination principle but also from economists arguing that the gsp yields little benefit to the developing countries who would do better to seek mfn tariff cuts on goods in whose production they possess a comparative advantage the developing countries have however been if anything more skeptical of mfn tariff cuts since the introduction of gsp because such cuts would erode the value of their preference margins the relative merits of gsp versus mfn tariff cuts from the developing countries perspective is partly an empirical matter which could be settled by estimates of the trade creating and trade diverting impact of gsp such estimates require values for gsp beneficiaries parameters about which our knowledge is limited in this paper i contend that the most influential estimates of gsp effects sidestep this requirement in a manner which guarantees the predominance of trade creation whereas consideration of plausible parameter values and of the design of actual gsp schemes suggests trade diversion to be more significant the standard partial equilibrium model with infinitely elastic supply figure 1 has proven popular for estimating the effect of non preferential tariff changes largely because of its meager data requirements it is however inappropriate for preferential tariff changes because all imports come from the same source and all or nothing diversion of nonbeneficiaries trade is predicted this difficulty can be circumvented while remaining within the

income and price elasticities for exports of developing countries income and price elasticities for non oil exports of non opec developing countries play an imp ortant role in the development of policy responses to the debt crisis these elasticities are estimated for the major standard internation al trade classification commodity groups based on two stage least sq uares and quarterly data for 1973 to 1984 the income elasticity for non oil exports ranges between 1 4 and 1 9 the analysis also tests t he properties of the error term the dynamic specification and para metric stability the sensitivity of the results is assessed using sh iller s lags and band spectrum estimation copyright 1988 by mit press

the role of entrepreneurship in us job creation and economic dynamism the united states has long been viewed as having among the world s most entrepreneurial dynamic and flexible economies it is often argued that this dynamism and flexibility has enabled the us economy to adapt to changing economic circumstances and recover from recessions in a robust manner while the evidence provides broad support for this view the outcomes of entrepreneurship are more heterogeneous than commonly appreciated and appear to be evolving in ways that could raise concern evidence along a number of dimensions and a variety of sources points to a us economy that is becoming less dynamic of particular interest are declining business startup rates and the resulting diminished role for dynamic young businesses in the economy we begin by describing how the concept of entrepreneurship is reflected in existing data on firm age and size the recent addition of firm age to official statistics represents a dramatic improvement in the information available to entrepreneurship researchers we then turn to a discussion of the role of startup firms in job creation business startups account for about 20 percent of us gross total job creation while high growth businesses which are disproportionately young

an analysis of the disaggregated manufacturing exports of the asian nies to eec usa and japan this paper examines the export performance of the four asian newly industrialized economics nies by modelling their bilateral export flows to three main oecd blocks the usa japan and the european community our estimated export demand models reveal interesting asymmetries between these three areas of destination which do not emerge from previous aggregate empirical studies of nie export performance

exchange rates and south korean exports to oecd countries 1991 exchange rates and south korean exports to oecd countries applied economics vol 23 no 7 pp 1227 1236

errors in import demand estimates based upon unit value indexes disaggregated import demand elasticity estimates based on import unit value indexes are used in virtually all trade policy simulation models however unit value indexes have been criticized especially by kravis and lipsey 1974 to examine the effect of using unit value indexes on estimates of disaggregated import demand elasticities this paper compares regression results using unit value indexes with results using u s bureau of labor statistics import price indexes for several detailed trade categories based on quarterly data for 1978 88 results show that using unit value indexes does not greatly affect estimated import demand elasticities

demand and supply factors in the determination of nie exports a simultaneous error correction model for hong kong this paper considers the issue of whether a small developing economy such as hong kong faces a perfectly elastic demand for its exports of manufactured goods we construct a simultaneous demand and supply system which is estimated using full information maximum likelihood methods and which allows us to clearly identify demand and supply factors in determining export volumes and prices our empirical findings differ from previous studies conducted with this data set in that they suggest that even a small dynamic newly industrialized economy such as hong kong may not face infinitely elastic demand for its manufactured goods we also advance some reasons to explain why the small country assumption may not be applicable in the case of most industrialized economies

the capabilities of new firms and the evolution of the us automobile industry firms that diversify into new and existing industries typically outperform de novo entrants but in some new industries diversifying firms are displaced by later entering de novo firms little is known about when and how new firms can overcome the advantages of diversifying firms this is investigated for one industry automobiles where new firms had considerable success all the entrants into the industry from its inception in 1895 through 1966 are identified the heritage of every entrant into the industry is traced including the founders of de novo entrants to explore how time of entry and pre entry experience affected firm survival while diversifying firms on average outperformed de novo entrants de novo entrants founded by individuals that worked for the leading automobile firms outperformed all firms and dominated the industry this is attributed to the novel organizational challenges faced by automobile firms which made the leading firms ideal training grounds for new entrants the implications of these findings for firm capabilities industry competition and regional economic development are discussed copyright 2002 oxford university press

an ex ante model for estimating the impact on trade flows of a country s accession to a customs union this paper presents a structural ex ante model to study the trade creation and trade diversion effects associated with a country s accession to a customs union the model extends previous studies by introducing explicitly product differentiation and exports in the determination of trade creation and trade diversion unlike the traditional vinerian analysis where the role of exports is neglected the model handles the effects of the elimination of the common external tariff facing home exports the model is then applied to portugal s accession to the european community and estimates of trade substitution elasticities are presented for 26 sectors finally these elasticities are used along with other parameter estimates to classify sectors according to whether they would give rise to trade creation or trade diversion

trade and structural change nics and next tier nics as transitional economies abstract the paper finds a strong association between rapid change in the sectoral composition of output and exports structural change and rapid export growth in the newly industrializing countries capital formation appears to be encouraged in dynamic economies by the underpricing of investment goods vis a vis consumption and government goods within these economies also the underpricing of investment goods in dynamic economies is relatively greater than in less dynamic economies whereas other research has found low price distortion to be associated with high growth and an outward rather than an inward looking orientation these associations are seriously challenged and more caution is urged in reaching generalized conclusions

does the central american common marke1 benefit its members does the central american common market benefit its members i introduction the members of the central american common market cacm have recently taken measures to revitalize their union they have formally pledged to improve regional economic integration and they have reinforced the common external tariff they took these measures in the belief that a stronger union would improve their economic welfare a belief that has also led both the united states and the european community to support a stronger union the idea that a regional trading group would improve economic welfare of the central american countries originated in the early 1950s when raul prebisch and other economists in the united nations economic commission for latin america ecla argued persuasively that such a union would help these countries develop their economies to many the views of the ecla economists were vindicated when the inceptionof the cacm in 1960 was followed shortly by accelerated economic growth in the region further support for their views came from quantitative studies cline and delgado 1978 willmore 1976 yotopoulos and nugent 1976 nugent 1974 and wilford 1970 which all concluded that the union provides static welfare gains for its members there is however room for skepticism about the benefits of the cacm much of the argument of the ecla economists is based on the notion that import substitution is a good way to promote economic development a notion that has since fallen into disrepute nor does the accelerated growth that followed the union s formation provide strong evidence that the cacm provides benefits the volume of trade between members is too small for the union to have had more than a minor effect on the region s economy so even if this effect were negative the region would presumably still have grown rapidly in the mid 1960s the evidence from the quantitative studies is also faulty these studies did not estimate directly the effects of the cacm but merely imputed these effects by assuming either that market shares or income elasticities would have remained constant without the union furthermore they assumed that supplies of different countries are perfect substitutes for each other whereas recent studies by collier 1979 grossman 1982 and anderson 1985 have shown that the degree of substitutability in demand between these supplies is important in determining how customs unions and other discriminatory tariff changes affect welfare it is particularly important to allow for less than perfect substitutability when analyzing the cacm because member imports from developed countries often have no close substitutes among locally produced goods in this paper the static welfare consequences of the cacm are reexamined with two important advances over the previous studies first direct estimates are made of the effects of the union second the shortcomings of the perfect substitutes assumption are overcome by allowing imports from different countries to be imperfect substitutes for each other and for domestic output the model which is partial equilibrium in nature also enjoys two advantages over the computable general equilibrium models such as those whalley 1985 and hamilton and whalley 1985 used to examine the effects of various economic integration schemes it requires fewer data and its operation is more transparent so it shows more clearly how introducing imperfect substitutes alters the traditional analysis of a customs union the model s main limitation is that it applies only to customs unions among small countries ii the model geometric presentation figures 1 2 and 3 show the home market and figure 4 the export market for country a a representative member of the cacm a s residents distinguish between four goods imports from other members imports from nonmembers domestic output for home consumption and exports

the welfare effects of repealing the u s offshore assembly provision abstract this paper develops new estimates of the welfare and domestic production effects of repealing the us offshore assembly provision oap although the controversy surrounding the oap has recently intensified the only such estimates of repealing the oap weredeveloped by finger 1976 the estimates are developed by applying a partial equilibrium trade model of a two stage production process to nineteen productct categories in which oap trade was important in 1986 the paper find that repael of the oap reduces domestic welfare however the effects are small and almost negligible in percentage terms the important effects of repeal are distributional

import competition from developed and developing countries separate demand equations for imports from less developed countries ldcs and imports from developed countries dcs were estimated for each of eleven representative product groups imports were found to compete quite readily with domestically produced goods with plausible own price and cross price elasticities whereas the quantity of each type of import was found to be quite responsive to changes in the price of us home goods each appears to be less sensitive to the price of the alternative import an explanation that is consistent with this observation and that finds support from detailed industry information is that dcs and ldcs supply goods that are at different stages in the product or technology cycle whereas us producers compete in all submarkets this suggests that trade creation rather than trade diversion provides the predominant inroad for ldcs into the us market 25 references 3 tables

knowledge and competitive advantage the coevolution of firms technology and national institutions this issue of jibs offers reviews of two books that analyse the dynamic interaction between the business environments and business strategies in very different ways the institutional underpinnings for business strategies are a major research topic for comparative management aiming to explain why in different contexts firms pursue different strategies and with different implications for performance j peter murman in knowledge and competitive advantage takes a historical perspective focusing on the co evolutionary processes between national innovation systems business strategies and performance this books thus adds to the industry level longitudinal research reviewed in jibs no 4 2003 tom murtha et al s managing new industry creation and david mckendrick et al s from silicon valley to singapore

tax revenue instability with particular reference to sub saharan africa this article examines the temporal instability of tax revenues across a sample of developed and less developed countries it is shown that instability is especially high in ldcs and is highest in open economies with low per capita income high output variance and inflationary problems even allowing for these factors revenue instability appears to be particularly high in sub saharan africa revenue instability can be expected via the government budget constraint to be associated with expenditure instability and or instability in the sources of deficit finance cross section evidence for ldcs confirms that countries with high tax revenue instability tend also to have high expenditure instability time series evidence for six african countries however suggests that revenues and expenditures do not move together in a uniform manner and the direction of causality is generally ambiguous there is some evidence however that foreign borrowing is used more to finance expenditure increases than to counteract

new developments in trade theory and ldcs abstract this paper surveys the new literature on international trade relevant to the north south controversy in the first part two types of north south models are considered the unequal exchange theory of lewis and emmanuel and the models of dynamic interaction of findlay taylor and others the analysis focuses on the determinants of growth the terms of trade and relative employment in the world economy in the second part the paper reviews the empirical literature on south north and south south trade and the theories of north south technological gaps intra industry trade and external economies finally we analyze the literature on exports and economic growth and the neo classical keynesian and disequilibrium approaches to the theory of import controls

principles of economics 8th ed there are few books that have been discussed as intensively as alfred marshall s seminal textbook on economics despite this however there continues to be intriguing debate and disagreement about

growth of manufactured exports primary commodity dependence and net export earnings sri lanka abstract commodity composition and growth of exports from a second tier exporting country sri lanka are examined in terms of net export earnings series derived using the input output technique the findings show that in view of the high import intensity of the emerging export pattern the conventional practice of using gross export data to analyze export performance leads to rather misleading conclusions as to the reduced importance of primary exports in the export structure and overall export growth

the impact of imports on the demand for labor in australia abstract in this paper we examine the impact of imports disaggregated by origin on the australian demand for labor contrary to widely accepted stylized facts we find evidence that imports from east asia and the pacific stimulate labor demand