productivity in swedish electricity retail distribution this paper examines productivity growth in electricity retail distribution in sweden in a multiple output multiple input framework the approach used is nonparametric data envelopment analysis dea productivity is measured by means of the malmquist index productivity comparisons are made between different types of ownership and between different service areas the study indicates a high rate of productivity growth due to economies of density when measured over a period of 17 years the results show no significant differences in productivity growth between different types of ownership or economic organization

credible commitment and success with public enterprise reform abstract this paper studies why some efforts at public enterprise reform fail and why others succeed economic reforms are intended to increase efficiency and thus help sustain long term growth yet many governments have had difficulty sustaining the reforms they initiated and have reintroduced rigid controls over markets and enterprises this is because either in the process of implementation the government discovers that the costs of carrying the reform further are greater than the expected efficiency gains or the public is skeptical that the new policies can be sustained and does not take the actions necessary for the gains to be realized this paper develops a new institutionalist framework and employs various measures of policy commitment and net gain from continued reform to analyze these issues the paper suggests ways in which the potential success or failure of a reform can be assessed with implications for the steps that reformers might take to increase the chances of success

why haven t developing countries privatized deeper and faster abstract despite a decade of privatization in the developing world the vast majority of state owned enterprise soe assets continue to be in government hands bureaucrats in business world bank 1995 correctly identifies politics as one reason for the slow pace of privatization but it underestimates the role of institutional and economic constraints success stories of privitization are rare in low income countries and the long term promise of privatization in sectors posing regulatory complications remains to be established countries in crisis may reform soes quickly and deeply despite these uncertainties but others may opt for gradual reform which need not be altogether bad if speedy privatization results in poorly conceived schemes the cure can be worse than the illness finally bureaucrats are likely to stay in business for years to come and therefore it is important to improve their effectiveness in the roles they are unlikely to shed in the future a market friendly approach to soe reform need not be government un friendly

a model of efficiency wages as a signal of firm value we consider performance contracts with firm private information the verifiable components of the contract an up front wage and employment may serve both as a signal and a performance incentive job rent may be necessary for signaling and since efficient signaling is multidimensional there is an inextricable link between job rent and underemployment signaling can explain the lack of explicit bonding in actuality though our basic model is static our underemployment result is not a consequence of firm myopia when the firm is farsighted it will not maximize the joint future surplus if it cannot extract the worker s share at present copyright 1993 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

unforeseen contingencies and incomplete contracts we scrutinize the conceptual framework commonly used in the incomplete contract literature this literature usually assumes that contractual incompleteness is due to the transaction costs of describing or of even foreseeing the possible states of nature in advance we argue however that such transaction costs need not interfere with optimal contracting i e transaction costs need not be relevant provided that agents can probabilistically forecast their possible future payoffs even if other aspects of the state of the nature cannot be forecast in other words all that is required for optimality is that agents be able to perform dynamic programming an assumption always invoked by the incomplete contract literature the foregoing optimality result holds very generally provided that parties can commit themselves not to renegotiate moreover we point out that renegotiation may be hard to reconcile with a framework that otherwise presumes perfect rationality however even if renegotiation is allowed the result still remains valid provided that parties are risk averse

the price of wealth business and state in labor remittance and oil economies this article contrasts the effects of state controlled oil revenues and privately controlled labor remittances on institutional development state capacity and businessgovernment relations in saudi arabia and the yemen arab republic these two countries represent extreme cases of dependence on external capital in deeply divided societies presided over by fragile emerging bureaucracies by tracing the two cases through a pattern of economic boom 1973 83 and recession 1983 87 the study demonstrates that the type volume and control of capital inflows decisively influence the relative development of the bureaucracy s extractive distributive and regulatory capacities and affect the ability of the state to respond to economic crisis in both cases external capital inflows precipitated the decline of extractive institutions however oil revenues and labor remittances had divergent effects on businessgovernment relations and this circumscribed the state s ability to implement austerity programs during the recession during the crisis the saudi government s efforts to cut subsidies to the private sector and to implement extractive policies were blocked by the state sponsored merchant class in contrast the yemeni government instituted a thoroughgoing austerity package that targeted the independent merchant class in both cases external capital inflows did not augment the efficacy of those that controlled them these paradoxical outcomes are explained by tracing the different effects of oil revenues and labor remittances on the distribution of economic opportunity in the public and private sectors and the resulting effects on the regional tribal and sectarian composition of the bureaucracy and the commercial class

the irony of state strength comparative responses to the oil shocks in the 1970s like two gigantic waves the oil shocks crested over the advanced industrial world during the 1970s the relatively stable postwar petroleum regime managed by the large oil firms and protected by american diplomatic and military strength collapsed in seven years crude oil prices adjusted for inflation increased more than 500 percent a multitude of national security economic and political challenges confronted the advanced industrial states but unlike war where the threat is observable and lines of conflict quickly become apparent the oil shocks cast up problems that were more insidious problems of energy security economic adjustment and industrial competitiveness these international dilemmas could be defined in various ways and a host of policy responses could be brought to bear upon them

privatization and employment a study of the jute industry in bangladesh this paper analyzes the effect of privatization upon employment in the bangladeshi jute textile industry privatization was partia and the selection of mills which were privatized was not based on current economic performance this provides us with a panel data set which permits reliable estimates of the effects of ownership on employment and output privatization has reduced employment of all categories of permanent workers significantly but the extent of employment reduction has been substantially greater among clerical workers and managers as compared to manual workers this implies that public sector excess employment benefited white collar workers who were both better off and better educated and suggests that public sector behaviour was clientelist rather than welfarist

institutions and government controls abstract this paper develops a model of government policy toward industrial control and regulation that sheds light on the determinants of differential country experiences in terms of organizational arrangement and enterprise performance in contrast to the model developed by shleifer and vishny shleifer a vishny r w 1994 politicians and firms quarterly journal of economics 109 995 1025 shleifer a vishny r w 1998 the grabbing hand government pathologies and their cures harvard univ press cambridge ma which suggests that government controls over firms come about when politicians can use public funds to buyoff the managers and solicit their cooperation in politically motivated redistribution of rents the present shows that it may be the ability to use the government s regulatory powers at discretion that encourages politicians to impose controls on firms and redistribute their rents the model implies that the politicians appetite for intervention tends to be greater when the cost of collecting and using public funds is higher which is the opposite of what the shleifer vishny model predicts the present model helps explain the puzzling observation that countries with poor institutions are more likely to impose extensive controls on production and maintain large and inefficient public sectors the model also sheds light on a variety of other stylized facts and puzzles and offers new hypotheses to be tested

recent experience with commercial bank debt reduction has the menu outdone the market abstract debt reduction at market terms has been criticized as too expensive from the point of view of the debtor the recent reduction agreements following the menu approach are partially concerted but they also possess some elements of voluntariness this raises two issues a what is the conceptual justification for such financial arrangements and b based on recent evidence to what extent have these arrangements reduced the cost of debt reduction in a review of six recent menu driven debt reduction agreements we find that the debtors achieved a far better financial result than would have been feasible with simple market buybacks

privatization in africa an appraisal abstract in spite of spirited efforts over a decade only a few african countries can boast of any appreciable success in the privatization and or reform of state owned enterprises soes this paper argues that previous studies have not paid adequate attention to identifying and addressing the factors that affect the outcome of privatization and or soe reforms in africa after highlighting some flaws in these studies the paper focuses on the absence of the prerequisites for successful soe reform it then suggests policy issues that need to be addressed first and the role of interested parties including the multilateral and bilateral financial institutions in enhancing the success of soe reform efforts in africa

the financial and operating performance of newly privatized firms an international empirical analysis this study compares the pre and postprivatization financial and operating performance of 61 companies from 18 countries and 32 industries that experience full or partial privatization through public share offerings during the period 1961 to 1990 our results document strong performance improvements achieved surprisingly without sacrificing employment security specifically after being privatized firms increase real sales become more profitable increase their capital investment spending improve their operating efficiency and increase their work forces furthermore these companies significantly lower their debt levels and increase dividend payout finally we document significant changes in the size and composition of corporate boards of directors after privatization the last fifteen years have witnessed a significant global shift away from state socialism towards entrepreneurial capitalism one of the most important and visible aspects of this trend has been the enthusiasm with which governments of all political persuasions have sold their state owned enterprises soes to private investors in hopes that the generally unsatisfactory economic performance of these firms can be improved by the discipline of private ownership this denationalization process given its current title of privatization by the conservative government of margaret thatcher in

the coming sustainable energy transition history strategies and outlook abstract facing global climate change and scarce petroleum supplies the world must switch to sustainable energy systems while historical transitions between major energy sources have occurred most of these shifts lasted over a century or longer and were stimulated by resource scarcity high labor costs and technological innovations the energy transition of the 21st century will need to be more rapid unfortunately little is known about how to accelerate energy transitions this article reviews past transitions and factors behind them along with their time frames three modern case studies are discussed brazil which shifted from an oil based transportation system to one based on sugarcane ethanol success france which shifted from oil fired electric power to nuclear power success and the united states which attempted to shift from foreign oil to a mix of domestic energy resources failure lessons from these attempts to govern energy transitions are discussed several policy instruments to accelerate a transition are identified though even under ideal circumstances a global energy supply transition will be very slow given the need to simultaneously implement programs in countries with different political economies a greater focus on energy efficiency promotion of smart grids and possibly a new treaty should yield more timely results

export orientation and domestic electricity generation effects on energy efficiency innovation in select sectors abstract why are some countries developing many energy efficiency innovations while others are lagging behind i argue that export orientation and electricity at low variable cost from nuclear and hydropower plants have an interactive effect on energy efficiency innovation export oriented countries have strong incentives to invest in energy efficiency innovation as they are in a position to export these technology innovations for global markets but if inexpensive electricity is supplied in a country the domestic demand for energy efficiency innovation is missing and so the home market cannot serve as a springboard for international commercialization i test this theory against international patent data on energy efficiency innovation in insulation heating and lighting for 22 oecd countries 1991 2007 the statistical analysis indicates that export orientation has large positive effects on energy efficiency innovation in countries that do not rely on nuclear and hydroelectricity

property rights versus public spirit ownership and efficiency of u s electric utilities prior to rate of return regulation for over a century american economists have been engaged in a vigorous theoretical and empirical debate over the economic performance of publicly owned versus privately owned electric utilities the authors review the historical debate and use micro data collected by the u s commissioner of labor in 1897 98 to construct efficiency measures based on a nonparametric frontier production function since this is prior to state rate of return regulation regulatory effects do not confound the analysis the authors find that publicly owned electric utilities were significantly more efficient than their privately owned counterparts copyright 1991 by mit press

a theory of privatization or why bureaucrats are still in business abstract privatization is a dynamic phenomenon and changes in ownership arrangements require explanations based upon changes in background variables without movements in these variables bureaucrats are likely to stay in business even if reform would increase efficiency it is argued that changes in one such variable the cost of government finance have played a particularly significant role in trigerring privatizations and related reforms the increasing cost of government finance resulting from higher levels of general public expenditure and taxation also explains the policy sequence observed in many countries in which comprehensive ownership reform is preceded by a period of increased financial stringency for state owned enterprises soes

the international economy as a constraint on u s macroeconomic policymaking international economic factors increasingly influence american trade and exchange policy and interdependence also circumscribes the autonomous choice of domestic policies but the growing concern of organization for economic cooperation and development oecd policymakers over the potential for macroeconomic policy coordination to enhance national as well as world welfare implies that international economic relations present opportunities rather than constraints under some circumstances this suggests that understanding domestic economic policy choice within its international context involves not only how policy choices are made within the bounds of international constraints but also when countries might cooperate to modify the constraints themselves this research looks to four important historical cases for information on these questions the first three are the series of cumulating crises in the international monetary system during the 1960s and early 1970s the fourth is the energy supply shock of 1973 and the recession that followed the article describes the process of policy selection in each of these cases contrasting domestic versus international premises for policy choice the economics literature has emphasized the magnitude of domestic welfare gains available from coordinated national economic policies although the cases considered here do not contradict the importance of payoffs they underline the corresponding role of political economic and strategic uncertainty in conditioning elites policy choices

identifying the elements of state power where do we begin many measures of state power are defined in terms of the material capabilities of states but ignore important differentials in the state s capacity to convert material resources into political power this paper presents a theoretical rationale for a measure of government performance that takes into account differentials in a political system s susceptibility to external shocks from the global environment and its ability to respond to these through domestic policy adjustment this approach differs from other empirical definitions of power in that it taps a government s strength with respect to its own society and to the international environment the paper s main contribution is to describe and to operationalize a way of evaluating state power with respect to both the global environment and to society based on the twin functions of penetration and extraction

disciplining trade finance the oecd export credit arrangement the salience of tariffs quotas and other import restrictions in current discussions of trade policy obscures what may well become a more significant form of government intervention subsidized export promotion over the past two decades subsidized trade finance has been one of the most widely used instruments of export promotion this article offers an historical description and a theoretical explanation for the success of the organization for economic cooperation and development oecd export credit arrangement an international regime restricting the provision of subsidized trade finance the explanation emphasizes three factors the structure of government institutions the relative power of states and the functional value of information more generally the analysis demonstrates the inherent weaknesses of monocausal explanations of international cooperation and the advantages of explanations based on a conception of international cooperation as a multistage process each stage of which may be explained by a separate theory

post fukushima japan the continuing nuclear controversy abstract the fukushima disaster was a wake up call for the nuclear industry as well as a shocking revelation of the inner workings of the japanese power sector the political fallout from the event was far reaching pushing governments into abandoning nuclear expansion turning instead to fossil fuels and renewable energy alternatives while the move away from nuclear energy was deemed a move critical to political survival in europe we find that political candidates running on anti nuclear platforms did not win elections while the pro nuclear liberal democratic party won government in the 2012 elections against this backdrop we analyse the energy conflict in japan using a framework of values versus interests and consider the regulatory and cultural conditions that contributed to the disaster a number of considerations lie in the way of an organised phase out of nuclear power in japan we also consider the possible policy paths japan may take

state structure and economic adjustment of the east asian newly industrializing countries an analysis of the economic adjustment policies of hong kong singapore south korea and taiwan during the 1970s and 1980s shows that these east asian newly industrializing countries nics which faced common problems in sustaining their recent industrial growth responded to the challenge with industrial adjustment strategies that differed in their degree of intensity of state involvement and emphasis on national control to explain this divergence in adjustment strategies the article explores the variations in the national political structures of the four nics and focuses particularly on three aspects of state structure the organization of the economic bureaucracy the institutional links between the state and private sector and the larger state society relations the article demonstrates the usefulness of moving beyond the generalizations of the developmental state view by carefully disaggregating these aspects of state structure and by exploring the ordering logic that gives coherence to them

breaking with orthodoxy the politics of economic policy responses to the depression of the 1930s under the same systemic shock the collapse of the international economy in 1929 different countries formulated different policy responses britain germany the united states france and sweden all began by attempting the orthodoxy of deflation soon after they abandoned deflation devalued their currencies erected tariff barriers and set up corporatistic production and marketing arrangements a few countries went further and began experimenting with demand stimulus fiscal policy the most successful was nazi germany the swedish and u s efforts were much more limited and less effective the french attempt crumbled in less than a year and britain never tried demand stimulus why this divergence in policy the politics of policy response the societal basis of different policy coalitions and the way in which they were expressed through different political formulations suggests an answer in all countries labor agriculture and certain elements of business became available for revolts against policy orthodoxy what differed across countries was the specific balance of forces among these interest groups and the political factors that shaped their combinations the effect of political leadership institutions and other variables on outcomes depended critically on the way specific social forces in each society used and worked through them

domestic adjustment to international shocks in japan and the united states economic interdependence complicates domestic policymaking by interposing the decisions of foreigners in the loop that links policy instrument settings to economic outcomes nowhere was this vulnerability to external decisions demonstrated more forcefully even for the world s major economies than by the energy supply shocks of 1973 and 1979 the oil shocks posed challenges that offer unusual insight into the way nations choose policies their severity forced a policy response their unpredictable timing and at least in 1973 unprecedented nature ruled out conventional formulas and brought to the fore explicit policy trade offs this article seeks to explain how policymakers in the world s two major economies responded to these external shocks the analysis successively employs three vantage points system society and state in tracing the sources of domestic adjustment policies it focuses specifically on the extent to which policies accommodated or extinguished each shock s inflationary impulses and on the coherence and consistency with which the executive in each government formulated and pursued particular policy goals a comparison of these four cases illustrates the strengths and weaknesses of increasingly detailed theoretical frameworks for explaining policy choice although the research does not contradict the depiction of the united states and japan in terms of state strength it does underscore the importance of looking beyond formal institutional arrangements to consider how elite policy preferences ambitions and capacities can define the way constraints influence policy

limits of state strength toward an institutionalist view of economic development nomic development attempted to explain why growth did not occur occurred slowly or occurred in a distorted dependent form the impressive economic performances of the east asian newly industrialized countries nics have changed this many noneconomists as well as some economists are now focusing on the political bases of development rather than underdevelopment there are differences among these analysts some distance themselves from neoclassical economics by emphasizing the importance of getting the prices wrong others acknowledge the utility of market conforming policies but common to recent studies of nics is the belief that growthpromoting economic policies require certain types of domestic political institutions analysts have emphasized the utility of strong states in this regard 2 through an analysis of efforts to promote local auto manufacturing in southeast as well as east asia this article argues for an institutionalist approach to development that goes beyond statism the resolution of collective action problems is central to statist writings development requires that private returns to individual activities be brought in line with the broader needs of national development 3 two factors are presumed to obstruct such harmonization in developing

the state and capitalist transformation in sub saharan africa a development model declining performance of the postcolonial african states suggest the inefficiency of centralization and or socialist strategy that currently dominates the region the solution however is not a return to the largely unrestrained liberal economic models of the 1960s such as import substitution industrialization or commodity export specialization whether from the left or right the inability of all three models to define precise development roles for africa state elites suggest their insensitivity to and inadequacy for the needs of these politically dynamic young states of africa an alternative model presented in this article would involve state elites in grass roots capitalist development the model fosters decentralization and economic development without sacrificing rule legitimization and national integration as equal objectives in many respects the model is an attempt to adapt to african realities the norms of embedded liberalism that properly describe current western liberalism

market concentration and competition in oecd mobile telecommunications markets this study analyses the progress of market concentration in oecd member states mobile telecommunications markets and evaluates the relationship between market concentration and performance using annual panel data from 24 oecd member states for the 1998 2011 period the study estimates regression equations for market concentration mobile prices and profits the empirical results indicate that the more concentrated the mobile market the higher the prices and profits providing support for the market power hypothesis if this hypothesis holds then market concentration can be a useful indicator of market performance on the other hand the applicability of the hypothesis is unclear for the second half of the sample period the results provide evidence that regulatory policies influence the structure and performance of mobile markets

the korean system of innovation and the semiconductor industry a governance perspective1 this paper explores in detail the political institutional processes and governance aspects of the korean system of innovation it shows i how the specific form of corporate governance chaebol evolved out of korea s national political institutional arrangements such as the state firm relationship based on reciprocal subsidy and ii how the dramatic emergence of korean semiconductor firms in world memory chip markets resulted from the subtle and changing interactions of state world market conditions and chaebol governance copyright 1998 by oxford university press

the relative efficiency of public and private firms in a regulated environment the case of u s electric utilities abstract the relative efficiency of privately owned and publicly owned electric utilities is investigated using theoretical and econometric models that allow for the effects of both ownership type and regulation the estimation results indicate that the two types of firms are equally cost inefficient in the united states the average effect of inefficiency is to increase the cost of production by 2 4 percent holding output constant inefficiency increases the average quantities demanded of capital and labor and decreases the average quantity demanded of fuel