analysing the determinants of environmental technology investments a panel data study of spanish industrial sectors abstract the aim of this paper is to empirically assess the determinants of environmental technology investments in the spanish industrial sectors with the help of panel data econometric techniques the paper confirms the relevance of the stringency of environmental regulation to explain overall investment patterns in environmental technologies these investments are also positively related to human and physical capital intensity and r d intensity and negatively related to the export intensity of sectors furthermore the study shows that the determinants for investments are likely to differ between environmental technology types i e end of pipe versus cleaner technologies

nonmonetary effects of the financial crisis in propagation of the great depression this paper examines the effects of the financial crisis of the 1930s onthe path of aggregate output during that period our approach is complementary to that of friedman and schwartz who emphasized the monetary impact of the bank failures we focus on non monetary primarily credit related aspects of the financial sector output link and consider the problems of debtors as well as those of the banking system we argue that the financial disruptions of 1930 33 reduced the efficiency of the credit allocation process and that the resulting higher cost and reduced availability of credit acted to depress aggregate demand evidence suggests that effects of this type can help explain the unusual length and depth of the great depression this abstract was borrowed from another version of this item

new issues in corporate finance flow of funds data are used to compare methods of finance in 5 countries over the period 1970 to 1985 many of the problems associated with previous studies are avoided by estimating net instead of gross financing proportions the degree of consolidation of accounts reciprocal arrangements between borrowers and lenders and compensating deposit requirements on borrowers no longer distort financing patterns corrections for inflation are provided by employing flow rather than stock figures and using own aggregation procedures to derive stock measures significant variations in financing emerge these are not readily explained by traditional descriptions of corporate finance in particular taxation as an alternative the paper suggests that relationships between borrowers and lenders establish forms of commitment that are conducive to the provision of long term finance the separation between investment and finance which has been the starting point of corporate finance theory is untenable in a multiperiod context in which terms of finance define future allocation of control

structural factors in the economic reforms of china eastern europe and the former soviet union reform in china and russia jeffrey sachs and wing thye woo china s experience does not show that gradual reform is superior to the shock therapy undertaken in eastern europe and the former soviet union eefsu differing performance primarily reflects different economic structures prior to reform china was a peasant agricultural society eefsu was urban and overindustrialized in both jobs in state enterprises were so heavily subsidized that workers refused to move to new industries elsewhere even when productivity in the latter was much higher in eefsu the large state sector impeded structural adjustment curtailing subsidies would have produced many losers who used their power to resist this outcome failure to curtail subsidies then cut off the potential supply of labour and other factors to new emerging firms china s state enterprises have not performed as well as the rest of the chinese economy and do not explain its success rapid growth was possible because the large agricultural sector contained vast surplus labour and did not enjoy subsidies and soft budget constraints once constraints on migration across regions and jobs were removed this labour was available to fuel expansion in new industries unlike the distributional conflict in eefsu in china reallocation of labour allowed all groups to gain in both partial liberalization also unleashed macroeconomic pressures manageable in china because of rapid growth and adequate monetary policy but explosive in much of eefsu because of deeper structural problems and gross monetary mismanagement

investor protection and equity markets we present a simple model of an entrepreneur going public in an environment with poor legal protection of outside shareholders the model incorporates elements of becker s j political econ 106 1968 172 crime and punishment framework into a corporate finance environment of jensen and meckling j financial econ 3 1976 305 we examine the entrepreneur s decision and the market equilibrium the model is consistent with a number of empirical regularities concerning the relation between investor protection and corporate finance it also sheds light on the patterns of capital flows between rich and poor countries and on the politics of reform of investor protection r 2002 elsevier science b v all rights reserved

the big push natural resource booms and growth a simple application of big push reasoning suggests that natural resource booms can be important catalysts for development in poorer countries in this paper we present evidence from seven latin american countries that natural resource booms are sometimes accompa nied by declining per capita gdp we present a model with natural resources increasing returns in the spirit of big push models and expectations to clarify some of the reasons this may happen q 1999 elsevier science b v all rights reserved

bank credit rationing and the customer relation abstract this paper investigates the theory that preference in situations of bank rationing is given to those customers with the strongest customer relation it has shown that within a certainty model where competitive pressure among banks requires full compensation for other bank relationships neither deposit levels nor intertemporal demand would produce the preferential treatment claimed it has also been shown that the prime borrowers would be unable to bargain effectively for credit line protection from such occasions of credit restriction

accounts receivable management policy theory and evidence this paper develops and tests hypotheses that explain the choice of accounts receivable management policies the tests focus on both cross sectional explanations of policy choice determinants as well as incentives to establish captives we find size concentration and credit standing of the firm s traded debt and commercial paper are each important in explaining the use of factoring accounts receivable secured debt captive finance subsidiaries and general corporate credit we also offer evidence that captive formation allows more flexible financial contracting however we find no evidence that captive formation expropriates bondholder wealth firms typically sell merchandise on credit rather than requiring immediate cash payment such credit sales generate accounts receivable although credit terms and credit collection procedures have been studied see smith 1980 there has been little systematic analysis of the organizational and financial structures employed to manage the firm s accounts receivable these decisions merit more careful attention for two reasons first receivables are a substantial fraction of corporate assets for example 1986 compustat data indicate that accounts receivable are 21 0 of u s manufacturing corporations total assets second we observe substantial diversity in firms use of specialized contracts and intermediaries in their accounts receivable management policies firms can 1 establish a captive finance subsidiary 2 issue accounts receivable secured debt 3 factor 4 employ a credit reporting firm 5 retain a credit collection agency or 6 purchase a credit insurance policy 1 in this paper we demonstrate that accounts receivable management policy offers opportunities for both the development of a robust theory as well as empirical testing of the theory s implications although the data necessary to

bankruptcy risk and optimal capital structure this study finds shortcomings in empirical tests of the capital structure irrelevance hypothesis the alternative hypothesis is that firms choose value maximizing mixes of debt and equity on account of bankruptcy costs and the tax deductibility of interest payments based upon the cross sectional implications of the tax shelter bankruptcy cost hypothesis an alternative test of the irrelevance hypothesis is performed the test examines the relationship between failure rates and leverage ratios for 36 lines of business the results are inconsistent with the irrelevance hypothesis in their landmark paper modigliani and miller 26 demonstrate that under certain assumptions the market value of a firm is independent of its capital structure these assumptions include the absence of taxes transactions costs and bankruptcy costs recently miller 24 has argued that the introduction of corporate and personal taxes does not alter the capital structure irrelevance result in the absence of bankruptcy costs 1 the inclusion of bankruptcy costs generally considered in conjunction with the tax deductibility of interest payments has led others to conclude that capital structure will affect the value of the firm 2 in this case value maximizing firms may choose optimal capital structures consisting of both debt and equity there have been numerous attempts to discriminate empirically between the miller irrelevance mi hypothesis and the tax shelter bankruptcy cost ts bc hypothesis several are discussed in section i of this paper there it is argued that studies attempting to measure directly the effect of changes in capital structure on firm values are subject to serious complications and are unable to discriminate between the mi and ts bc hypotheses other studies focus on cross sectional implications of the mi and ts bc hypotheses the cross sectional tests are based on the assertion that bankruptcy costs may tend to induce firms with greater business risk to include less debt in their capital structures whereas the mi hypothesis does not predict such a relationship unfortunately the existence of positive bankruptcy costs is not sufficient to ensure that the ts bc hypothesis will predict the inverse relation

firm size and the nature of innovation within industries the case of process and product r d the effect of firm size on the allocation of r d effort between process and product innovation is examined it is hypothesized that relative to product innovations process innovations are less saleable in disembodied form and spawn less growth this implies that the returns to process r d will depend more on the firm s output at the time it conducts its r d than the returns to product r d incorporating this distinction in a simple model the authors derive and test predictions about how the fraction of r d devoted to process innovation varies with firm size within industries

firm incentives to promote technological change in pollution control reply abstract the process of technological change in pollution control is broken into three basic steps innovation diffusion and optimal agency response firm incentives to promote these steps are then examined under five regulatory regimes direct controls emission subsidies emission taxes free marketable permits and auctioned marketable permits on a relative basis emission taxes and auctioned permits provide the highest firm incentives to promote technological change at times free permits generate lower incentives direct controls which are common regulatory tools usually provide the lowest relative firm incentives to promote technological change

equilibrium loan pricing under the bank client relationship abstract we determine the loan interest rate policy of a lender who is better informed about a client than other potential lenders the informational advantage possessed by the informed lender derives from the durability of information acquired as a result of an extant relationship given heterogeneous potential loan rate offers to the client by competitive lenders and client search costs the incumbent lender s policy of loan interest rate offers is examined we show that the optimal loan rate will exceed the incumbent lender s cost of funds and will exceed the average offer of competing lenders the potential lenders will offer loan rates that are exceeded by their cost of funds implying immediate losses in order to attract the client and to thereby earn expected profits in the future finally we show that the expected remaining duration of a lender client relationship is decreasing in the existing length of the relationship thus clients that have been with a particular lender longer will be more likely to leave and establish a relationship with another lender

diversification patterns and survival as firms mature we focus on the relationship between age and diversification patterns of german machine tool manufacturers in the post war era we distinguish between minor diversification adding a new product variation within a familiar submarket and major diversification expanding the product portfolio into new submarkets our analysis reveals four main insights first we observe that firms have lower diversification rates as they grow older and that eventually diversification rates even turn negative for old firms on average where negative diversification corresponds to exit from certain product lines second we find that product portfolios of larger firms tend to be more diversified third with respect to consecutive diversification activities quantile autoregression plots show that firms experiencing diversification in one period are unlikely to repeat this behavior in the following year fourth survival estimations reveal that diversification activities reduce the risk of exit in general and to a varying degree at different ages these results are interpreted using penrosean growth theory

law enforcement and firm financing theory and evidence this paper investigates the economic effects on firms policies of differences in law enforcement we find that in judicial districts where trials are longer bank financing is more costly and firms are smaller however we do not find any significant relation between law enforcement and firms leverage ratio we rationalize our results within a two region dynamic general equilibrium model with asymmetric information and collateralized credit contracts we find that a stronger enforcement of creditors rights not only improves credit conditions partial equilibrium effect but also fosters individual capital accumulation general equilibrium effect in line with this theoretical prediction we find a positive relation between individual savings and quality of legal enforcement

financial intermediation delegated monitoring and long term relationships abstract this paper considers the consequences of enduring relationships for bank structure and policy in an information based banking model adding a richer time dimension allows repeated lending between the intermediary and borrower this contract lets a bank produce information and enforce compliance more easily than direct monitoring of the borrower s organization this implies an asymmetric banking structure banks enter long term relationships with borrowers but not with depositors next it shows how enduring relationships solve problems with loan participations and security underwriting by commercial banks

trade credit and informational asymmetry commonly used trade credit terms implicitly define a high interest rate that operates as an efficient screening device where information about buyer default risk is asymmetrically held by offering trade credit a seller can identify prospective defaults more quickly than if financial institutions were the sole providers of short term financing the information is valuable in cases where the seller has made nonsalvageable investments in buyers since it enables the seller to take actions to protect such investments traditional explanations for the widespread use of trade credit fall into two categories the financing motive holds that capital market imperfections enable sellers to finance buyer purchases at lower cost than financial institutions ferris 4 argues that trade credit provides payment flexibility and thus reduces the overall need for buyers and sellers to maintain precautionary balances emery 3 contends that noncompetitive rents of financial institutions can be circumvented by sellers and buyers through provision of trade credit however the financing motive is not sufficient to explain why small suppliers offer trade credit the wide cross sectional variation in terms or why large buyers often take the prompt payment discount late a second set of explanations is best described as pricing motivations for trade credit provision nadiri 10 argues that availability of alternative payment terms can increase product demand but does not indicate why the offered terms could not be duplicated by financial institutions schwartz and whitcomb 14 argue that trade credit is used to circumvent robinson patman and similar prohibitions on price discrimination the correctness of this position depends on the charge to users of trade credit exceeding the cost of provision by the seller although the explanation is possible in principle an empirical question remains as to why variations in actual credit terms appear to be based on product market rather than buyer characteristics the literature also contains analyses of the impact of changing macroeconomic conditions on trade credit terms and aggregate credit flows schwartz 13 for example employs a financing motive for trade credit to conclude that restrictive monetary policy can be partly mitigated by liberalization of trade credit terms by firms with relatively easy access to capital markets however a microeconomic

finance firm size and growth the authors examine whether financial development boosts the growth of small firms more than large firms and hence provides information on the mechanisms through which financial development fosters aggregate economic growth they define an industry s technological firm size as the firm size implied by industrial specific production technologies including capital intensities and scale economies using cross industry cross country data the results indicate that financial development exerts a disproportionately large effect on the growth of industries that are technologically more dependent on small firms this suggests that financial development accelerates economic growth by removing growth constraints on small firms and also implies that financial development has sectoral as well as aggregate growth ramifications

what s different about banks abstract negotiable certificates of deposit cd s trade in the capital market in competition with other securities like commercial paper and bankers acceptances if cd s must pay lenders competitive monetary interest the reserve tax on cd s is borne by bank borrowers viability of the tax means there must be something special about bank loans that makes some borrowers willing to pay higher interest rates than those on other securities of equivalent risk moreover there must be something special about banks that prevents other intermediaries from competing to assure that it never pays to finance loans with cd s

repossession and the democratization of credit we exploit a 2004 credit reform in brazil that simplified the sale of repossessed cars used as collateral for auto loans we show that the reform expanded credit to riskier self employed borrowers who purchased newer more expensive cars the legal change has led to larger loans with lower spreads and longer maturities although the credit reform improved riskier borrowers access to credit it also led to increased incidences of delinquency and default our results shed light on the consequences of a credit reform and highlight the crucial role that collateral and repossession play in the liberalization and democratization of credit

designing organizations for trading pollution rights regulators and academicians have recently become interested in using a marketable permits program as a new way to control aggregate pollution emissions our research focuses on choosing a permit trading mechanism that is both economically efficient and politically viable we consider an organized trading process and a revenue neutral auction both of which involve an initial allocation of permits based on past history each is tested in a competitive and in a non competitive environment to determine which mechanism performs best the results of our research suggest that overall the organized trading process outperforms the revenue neutral auction

how do different drivers of r d investment in foreign locations affect domestic firm performance an analysis based on swiss panel micro data the aim of this article is to investigate the differences between specific motives of rd 2817 companies shows first that factors related to firm specific knowledge oriented advantages are more important for explaining the likelihood of foreign r d activities than factors reflecting disadvantages related to home location second knowledge oriented motives of foreign r d positively influence the innovation performance of domestic firms whereas market and resource oriented strategies have a positive impact on labor productivity copyright 2011 the author 2011 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

creditor concentration an empirical investigation most of the literature on multiple banking assumes equal financing shares however unequal asymmetric or concentrated bank borrowing is widespread and creditor concentration is only weakly correlated with the number of bank relationships this paper therefore investigates the determinants of creditor concentration for german firms using a comprehensive firm bank level dataset for the time period between 1993 and 2003 we document that corporate borrowing from banks is very often concentrated even for the largest firms in our sample leveraged firms and firms with more redeployable assets concentrate their borrowing from banks as are firms dealing with a relationship lender that is profitable that has lower monitoring costs or that operates in a concentrated regional lending market

the role of the public administrations in the promotion of the environmental activity in spanish industrial companies abstract an aim of this study is to analyse the managers opinions in relation to the environmental policy instruments that the public administrations promote in order to force firms to care for the natural environment in the same way we study the relation between the perceived importance of these instruments and the level of collaboration between the public administrations and firms in this area taking into consideration the fact that in spain firms are still in a relatively incipient stage from an environmental standpoint we analyse how these instruments are assessed by managers of spanish industrial firms besides we study whether several opinions are one of the causes of less collaboration in environmental public programs we show that the tightening of the legislation in the environmental area induces a deeper consciousness among companies about the environmental problem because of this and despite having other instruments the public administrations should legislate and enforce the legislation as a first measure of environmental control afterwards we were able to confirm that there does not exist any relation between the importance of the administrative instruments and the perception of the efficacy of these on the part of the managers as they are being implemented nowadays we also confirm that there are no significant differences in the judgement of the importance efficacy relation among those companies that maintain different type of relations with the public administrations in the environmental field this result allows us to arrive at the conclusion that in spite of the differences between the importance and the efficacy that the companies attach to the administrative instruments these differences do not influence the type of relations that the companies maintain with the public administrations in the environmental field therefore it seems that these relations depend on other factors perhaps the level of information of the companies about the public programs or about the necessary resources to have access to them

can africa catch up towards globalisation has been manifested in the sustained growth of world trade and flows of investment and technology as well as in the convergence of national economic and social systems for most regions this growing integration has led to rapidly increasing per capita incomes while africa has stagnated at the income level achieved about three decades ago the question posed in this paper is whether africa can link up with the rest of the world and start a catch up process or whether marginalisation is inevitable the paper is structured as follows the second section looks at whether africa has really been marginalised or in what sense this has happened this is done through a comparison with other regions the third section investigates to what extent africa has been open to the rest of the world the fourth section looks at structural adjustment policies introduced from the 1980s onwards to open up african economies and discusses the impacts of these reforms the fifth section looks at possible reasons as to why africa has not taken off while the final section discusses the way forward for africa the facts of african marginalisation after world war ii africa was a reasonably important trading partner and an interesting arena for foreign investment during the period up to the early 1960s the continent went through a process of decolonisation in terms of development strategy the liberation did initially not imply any

asymmetric valuations and the role of collateral in loan agreements loan contracts with provision for collateral are of two general types in one the collateral may be an existing asset of the borrowing firm which is pledged to a lender in the event of default in this case collateral does not increase the assets that the borrower would lose if there is default since all the borrower s assets are attachable therefore the expected marginal cost to the borrower of providing an additional unit of collateral includes principally transactions costs associated with the collateral l this describes the usual type of commercial loan arrangement with the collateral being either equipment real estate accounts receivable or inventories in the other type of loan contract the collateral is an additional asset that is given up by the borrower if there is default that is in addition to the usual assets that are available to its lenders the borrower assigns as collateral to a creditor an asset that would normally not be legally attachable this arrangement is more common in small business loans that are secured by a personal asset e g a house of the entrepreneur likewise debt issued by a legally separate subsidiary may be secured by an asset of the parent firrn in these cases the expected marginal cost to the borrower the owner manager of the small firm or the parent corporation in the latter example of providing an additional unit of collateral

law finance and firm growth we investigate how differences in legal and financial systems affect firms use of external financing to fund growth we show that in countries whose legal systems score high on an efficiency index a greater proportion of firms use long term external financing an active though not necessarily large stock market and a large banking sector are also associated with externally financed firm growth the increased reliance on external financing occurs in part because established firms in countries with well functioning institutions have lower profit rates government subsidies to industry do not increase the proportion of firms relying on external financing the corporate finance literature suggests that market imperfections caused by conflicts of interest and informational asymmetries between corporate insiders and investors constrain firms in their ability to fund investment projects the magnitude of these imperfections depends in part on the effectiveness of the legal and financial systems because these systems differ across countries the literature implies that there should exist systematic cross country differences in firms ability to obtain external capital to finance investment in this paper we examine whether the underdevelopment of legal and financial systems does prevent firms in some countries from investing in potentially profitable growth opportunities in particular we focus on the use of long term debt or external equity to fund growth see our earlier work demirgut kunt and maksimovic 1996a which compares firms financial structures in developed and developing countries and finds the greatest difference to be in the provision of long term credit we estimate a financial planning model to obtain the maximum growth rate that each firm in our thirty country sample could attain without access to long term financing we then compare these predicted growth rates to growth rates realized by firms in countries with differing degrees of development in their legal and financial systems our approach enables us to identify specific characteristics of the legal and financial systems that are associated with long term financing of firm growth thus we provide a micro level test of the hypoth

r d subsidies and productivity in smes this paper examines the effect of r d subsidies on labour productivity we use firm level data on finnish smes from 2000 to 2012 and apply a combined matching and difference in differences method to control for selection bias we find no significant positive effect on labour productivity over the five year period after a subsidy is granted however the results vary over time and indicate a 2 4 negative effect on smes annual productivity growth one to 2 years after the subsidy year nevertheless subsidies generate a positive employment effect and enhance firm survival additional scrutiny reveals that subsidies positively affect the human capital level of low skill firms

hard heads soft hearts tough minded economics for a just society introduction murphys law of economic policy needed hard heads and soft hearts striking a balance between unemployment and inflation do we know how to manage the national economy who will protect us from protectionism cleaning up the environment sometimes cheaper is better it can happen here the improbably saga of tax reform on breaking murphys law

a strategy for efficient debt reduction f or the past seven years the u s government has managed the debt crisis with the preeminent goal of sustaining the flow of debt servicing payments from the debtor countries to the commercial banks the focus on the banks especially in the first years of the crisis 1982 85 is easily explained several money center banks had exposure of nearly 200 percent of bank capital in latin america alone upon the outbreak of the crisis in 1982 a widespread suspension of debt service payments could well have sunk several major banks i have discussed the u s government s policy focus on the debt servicing to the commercial banks in sachs 1986b 1989c and sachs and huizinga 1987 but today those policies are being revised after years of steady decline in the exposure ratios of the most heavily exposed banks the risk of a u s banking crash as the result of the debt crisis is now virtually nonexistent in addition the burden of debt payments is contributing to profound economic crises and growing political instability in almost all of the democracies in latin america a wide range of analysts now concurs that the debt burden should be reduced not only for the sake of the debtors but also for the sake of the creditors who have an important long run stake in allowing the developing countries to surmount the current acute crisis the brady plan unveiled by secretary of treasury nicholas brady in march 1989 is based on the need for a reduction of the debt burden

economic prescriptions for environmental problems how the patient followed the doctor s orders o ne of the dangers with ivory tower theorizing is that it is easy to lose sight of the actual set of problems which need to be solved and the range of potential solutions as one who frequently engages in this exercise i can attest to this fact in my view this loss of sight has become increasingly evident in the theoretical structure underlying environmental economics which often emphasizes elegance at the expense of realism in this paper i will argue that both normative and positive theorizing could greatly benefit from a careful examination of the results of recent innovative approaches to environmental management the particular set of policies examined here involves two tools which have received widespread support from the economics community marketable permits and emission charges pigou 1932 dales 1968 kneese and schultze 1975 both tools represent ways to induce businesses to search for lower cost methods of achieving environmental standards they stand in stark contrast to the predominant command and control approach in which a regulator specifies the technology a firm must use to comply with regulations under highly restrictive conditions it can be shown that both of the economic approaches share the desirable feature that any gains in environmental quality will be obtained at the lowest possible cost baumol and oates 1975 until the 1960s these tools only existed on blackboards and in academic journals as products of the fertile imaginations of academics however some countries have recently begun to explore using these tools as part of a broader strategy for managing environmental problems

financial intermediation and delegated monitoring this paper develops a theory of financial intermediation based on minimizing the cost of monitoring information which is useful for resolving incentive problems between borrowers and lenders it presents a characterization of the costs of providing incentives for delegated monitoring by a financial intermediary diversification within an intermediary serves to reduce these costs even in a risk neutral economy the paper presents some more general analysis of the effect of diversification on resolving incentive problems in the environment assumed in the model debt contracts with costly bankruptcy are shown to be optimal the analysis has implications for the portfolio structure and capital structure of intermediaries

courts and banks effects of judicial enforcement on credit markets the cost of enforcing contracts is a key determinant of market performance we document this point with reference to the credit market in a model of opportunistic debtors and inefficient courts according to the model improvements in judicial efficiency should reduce credit constraints and increase lending with an ambiguous effect on interest rates that depends on banking competition and on the type of judicial reform these predictions are supported by panel data on italian provinces in provinces with longer trials or large backlogs of pending trials credit is less widely available

does history matter for the relationship between r d innovation and productivity this paper analyzes the relationship between r d expenditures innovation and productivity growth taking into account the possibility of persistence in firms behaviour we study this relationship for a sample of spanish manufacturing firms between 1990 and 2005 estimating a model with four equations participation in technological activities r d intensity the generation of innovations and the impact of these technological outputs on total factor productivity growth our results reflect the existence of true state dependence both in the decision of r d investment and in the production of innovations the omission of this persistence leads to an overestimation of the current impact of innovations on productivity growth however the presence of persistence in technological inputs and outputs entails current r d activities having long run effects on a firm s productivity

how does probability of innovation change with firm age this paper looks at the probability of introducing innovations by manufacturing firms at different stages of their lives once differences related to activity and size are controlled for we examine how the probability of innovation varies over entry post entry ages and advanced ages of mature firms we also measure the association between exit from the market and pre exit innovation results show that the probability of innovating widely varies by activity and that small size per se broadly reduces the probability of innovation but also that entrant firms tend to present the highest probability of innovation while the oldest firms tend to show lower innovative probabilities some sets of firms with intermediate ages also present a high probability of innovation and exiting firms are clearly associated to lower levels of introducing process innovations

the macroeconomic impact of development aid a critical survey the early literature explained aid s macroeconomic impact in the context of the dual gap model showing a clear link between aid and growth many now believe that the empirical evidence shows there to be no such relationship this paper critically reviews the different theoretical perspectives the dual gap model the savings debate recipient fiscal response and aid as dutch disease and the empirical debates on aid savings and growth the basis for denying a relationship between aid and growth is shown to be weak though more recent areas of research offer promising directions for future work

innovation and firm growth does firm age play a role this paper explores the relationship between innovation and firm growth for firms of different ages we hypothesize that young firms undertake riskier innovation activities which may have greater performance benefits if successful or greater losses if unsuccessful using an extensive spanish community innovation survey sample for the period 2004 2012 we apply panel quantile regressions to study the effect of r d activities on firm growth i e sales growth productivity growth and employment growth our results show that young firms face larger performance benefits from r d at the upper quantiles of the growth rate distribution but face larger decline at the lower quantiles r d investment by young firms therefore appears to significantly riskier than r d investment by more mature firms which suggests some policy implications

complementary resources and capabilities for an ethical and environmental management a qual quan study managers commitment to contribute to sustainable development holds the key to their long term business success and may be a source of competitive advantage the managerial perception of business ethics is influenced by the level of moral development and personal characteristics of managers these perceptions are also shaped by forces existing in the environment of the firm including available resources societal expectations sector and regulations the resource based perspective can thus contribute to the analysis of ethical issues offering important insights on how they can influence the environmental strategy of the firm the findings of this study show that firm resources have a strong influence on business managers ethical attitudes in addition the application of resource based rationales to ethical issues can be justified in the following several ways it influences a managerial perception of natural environment as a competitive opportunity it requires investments of financial and human resources flexibility and speed in the adaptation to environmental changes and it creates new resource based opportunities through changes in prevention pollution technology policy process and market forces

the regulation of labor author s botero juan djankov simeon la porta rafael lopez de silanes florencio shleifer andrei abstract we investigate the regulation of labor markets through employment collective relations and social security laws in 85 countries we find that the political power of the left is associated with more stringent labor regulations and more generous social security systems and that socialist french and scandinavian legal origin countries have sharply higher levels of labor regulation than do common law countries however the effects of legal origins are larger and explain more of the variation in regulations than those of politics heavier regulation of labor is associated with lower labor force participation and higher unemployment especially of the young these results are most naturally consistent with legal theories according to which countries have pervasive regulaory styles inherited from the transplantation of legal systems

relationships among circumstance pressure green technology selection and firm performance in their quest for greater sustainability firms need to deal with many variables that ultimately determine the selection of green technologies previous studies of the possible link between the application of green technology and firm performance have generally produced mixed results similarly studies of the relationship between environmentally friendly strategies and firm performance have also been inconclusive based on an extensive empirical study with 533 respondents from 98 firms in the chinese manufacturing industry we try to identify the essential factors and test the links among variables in the decision making process for green technology selection we use an integrated structure equation model to test the complexity of a firm s technology adoption the relationships among the various variables are tested based on empirical data from our questionnaire more specifically we measure the influences on green technology selection imposed by task oriented circumstances direct stakeholders market environment financial and social dynamics and macro circumstances legislation social and technological development phases etc the results show significant relationships between green technology selection and certain task oriented circumstances and macro circumstances which may facilitate proper action on the part of firms with regard to green practices based on our findings we present some managerial implications and insights that might be useful for adopters of green technologies and enhance environmental and overall performance we also discuss the limitations of our methodology at the end of the paper

long run versus short run decisions r d and market structure in spanish firms abstract i present new econometric evidence on the relation between market structure and r d using data on spanish firms i adopt a different approach from previous studies by distinguishing between long run and short run decisions of firms regarding r d i assume that the long run or strategic decision is whether to conduct r d or not and the short run choice is how much to invest once the firm decides to be innovative i argue that market structure affects long run r d decisions but does not affect short run ones a heckman type selection model is used to test such a relation the results are robust to several specifications and measures of monopoly power

borrowing relationships intermediation and the cost of issuing public securities abstract this paper investigates how an established borrowing relationship affects the costs associated with initial public offerings of equity our model illustrates how the existence of a borrowing relationship reduces the ex ante uncertainty about the value of the issuing firm s equity in the secondary market if underpricing is related to uncertainty a borrowing relationship can reduce underpricing empirically we find that other things equal ipos of firms with previously established borrowing relationships are underpriced substantially less than other ipos

explaining african economic performance africa has had slow growth and a massive exodus of capital in many respects it has been the most capital hostile region we review and interpret the aggregate level and microeconomic literatures to identify the key explanations for this performance there is a reasonable correspondence of the two sets of evidence pointing to four factors as being important these are a lack of openness to international trade a high risk environment a low level of social capital and poor infrastructure these problems are to a substantial extent attributable to government behaviour and the paper includes a review of the political economy literature which addresses that behaviour

the impact of the judiciary on entrepreneurship evaluation of pakistan s access to justice programme abstract in 2002 the pakistani government implemented a judicial reform that cost 350 million or 0 1 of pakistan s 2002 gdp this reform did not involve increased incentives for judges to improve efficiency but merely provided them with more training nonetheless the reform had dramatic effects on judicial efficiency and consequently on entrepreneurship judges disposed of a quarter more cases and entry rate of new firms increased by half due to the reform using data from the world bank group entrepreneurship database our estimates suggest that this translates into an increase of pakistan s gdp by 0 5

technological spillovers from multinational firms this paper aims to identify genuine technological spillovers from multinational firms mnes to this end we use data on r d from mnes to measure spillovers while most of the existing literature uses output to measure the foreign presence in an industry what we call output based spillovers in line with the existing literature we distinguish between horizontal spillovers i e intra industry linkages and vertical spillovers i e backward or downstream and forward or upstream inter industry linkages our results show that the three types of technological spillovers from mnes are positive with the horizontal spillovers the larger ones followed by backward spillovers the effect of forward spillovers is much smaller in magnitude moreover we find that not controlling for industry size i e technological spillovers from all firms in an industry leads to underestimating both horizontal and backward spillovers from mnes and to overestimating forward spillovers from mnes finally we find that the distinction between technological and output based spillovers is of great relevance the size of backward technological spillovers is approximately 44 of the size of output based backward spillovers while for horizontal spillovers both types of spillovers are quite similar importantly output based forward spillovers are negative while technological forward spillovers are positive

does average size matter court enforcement business demography and firm growth previous literature finds that the quality of judicial enforcement has a positive impact on average firm size but it has not disentangled its effect on the growth of incumbent firms from that on business demography this distinction is crucial as entrants are generally smaller than incumbents but both high entry rates and high firm growth are associated with better economic performance this paper fills this gap finding that judicial efficacy fosters the growth of incumbents and promotes entry in spain the paper also shows for the first time that the specific type of judicial procedure that companies face in case of a conflict rather than the overall functioning of courts is the relevant matter specifically judicial efficacy at the declaratory stage when a debt is verified by a judge has a positive impact on both firm growth and entry while it has no impact at the execution stage when the judge requires its payment

the impact of competitors firm power divergence on chinese smes environmental and financial performance competitor pressure is one of the major reasons that a sme engages in environmentally friendly or damaging activities extant research has argued that environmental strengths and concerns have mirror opposite relationships with stakeholder antecedents as well as with performance outcomes we suggest this argument does not reflect the reality building on stakeholder management and red queen theories we hypothesize that environmental strengths and concerns have differential relationships with competitors firm power exchange and financial performance for chinese smes results of ten interviews a pretest and a large scale field study indicate that competitors firm power divergence has a positive relationship with environmental strengths yet the link between this divergence and environmental concerns does not exist further environmental strengths mediate the relationship between competitors firm power divergence and financial performance of chinese smes

twentieth century political economy a brief history of global capitalism modern capitalism emerged in the early nineteenth century in western europe and the european offshoots of the americas and oceania recognizing the unparalleled dynamism of the new socio economic system marx and engels predicted in 1848 that capitalism would spread to the entire world by the end of the twentieth century that prediction was confirmed capitalism had indeed become global but only after a tortuous and violent course of institutional change in many parts of the world this paper provides a brief account of the emergence of global capitalism and discusses some of the reasons why the diffusion of capitalism has been so conflictual and violently contested copyright 1999 by oxford university press

building an incentive compatible safety net abstract bank safety nets originally proposed as a means of stabilizing financial systems have become an important destabilizing influence government protection of bank debts encourages banks to undertake excessive risk particularly in response to adverse shocks to asset values reforms that would remove the destabilizing moral hazard consequences of government protection are considered both from the perspective of economic desirability and political feasibility requiring banks to maintain a minimal proportion of subordinated debt finance and restricting the means by which government recapitalization of insolvent banks occurs are the central features of promising reforms to the safety net

competitiveness in a globalised world michael porter on the microeconomic foundations of the competitiveness of nations regions and firms in this paper we provide the text of an interview with professor michael porter discussing his research and ideas relating to the microeconomic foundations of global competitiveness the discussion provides a microeconomic perspective on some of the key issues relating to recent research on competitiveness productivity clusters us economic leadership economic growth and development

a global compact to end poverty brian snowdon presents the text of a two hour interview conducted with jeffrey d sachs of columbia university a wide ranging discussion relating to professor sachs s work over the past thirty years on macroeconomic stabilisation the economics of transition and several important issues in the field of international economic development first snowdon provides some background to the debate relating to professor sachs s most recent work that has helped focus international attention on the growth tragedy of sub saharan africa this key humanitarian issue has received enormous coverage in the media throughout 2005 and has been highlighted in particular at the g8 meetings in gleneagles and worldwide live 8 concerts in july 2005 and the un world summit in september

the potential of environmental regulation to change managerial perception environmental management competitiveness and financial performance abstract this research presents an overview of where the gaps in the literature exist in relation to the link between environmental regulation and proactive environmental management and competitiveness and incorporates them in a whole model different papers have highlighted only partial aspects of these relationships specifically this research evaluates the relationship between managerial perception and the different styles of environmental regulations command and control versus voluntary norms the mediator role of environmental management in the link between environmental regulations and competitiveness the effect of competitiveness on financial performance and the two way relationship between proactive environmental management and financial performance finally this paper uses statistical evidence to test and estimate causal relationships through a structural equation modelling of 208 firms affected by ippc law in spain there is a lack of systematic statistical evidence on this topic in the literature which mainly focuses on case studies the results show that when environmental regulation stems from command and control legislation its influence on managerial perception and proactive environmental management is not significant however when environmental regulation stems from voluntary norms its effects are positive moreover investment in proactive environmental management contributes to increasing the competitiveness of the firm cost and differentiation competitive advantage have a positive impact on financial performance finally the link between proactive environmental management and financial performance may follow different paths 1 neither direct nor single because it can depend on competitive advantage and 2 direct because there is a significant two way relationship between these variables proactive environmental management influences financial performance and financial performance influences proactive environmental management

the effect of technological knowledge assets on performance the innovative choice in spanish firms abstract the aim of this article is to examine the relationship between technological knowledge assets tkas and performance in the light of making the innovative choice that involves short term costs of acquiring or generating the assets but aims at longer term benefits through innovation to that end a study of 1267 industrial firms in spain was carried out over a period of 5 years 1998 2002 the results show that tkas have a positive indirect effect on financial performance mediated through innovation they also reveal that tkas have a negative direct effect on performance except licences thus the combined effect of tkas on performance urges the need for innovation to obtain a positive payoff

corporate structure liquidity and investment evidence from japanese industrial groups this paper presents evidence suggesting that information and incentive problems in the capital market affect investment we come to this conclusion by examining two sets of japanese firms the first set has close financial ties to large japanese banks that serve as their primary source of external finance and are likely to be well informed about the firm the second set of firms has weaker links to a main bank and presumably faces greater problems raising capital investment is more sensitive to liquidity for the second set of firms than for the first set the analysis also highlights the role of financial intermediaries in the investment process

how firms innovate through r d internationalization an s curve hypothesis abstract this article examines the effects of r d internationalization and organizational slack on innovation performance we suggest that there is an s shaped relationship between r d internationalization and innovation performance innovation performance increases in the decentralization stage decreases in the transition stage and increases again in the recentralization stage in addition organizational slack is hypothesized to have a negative moderating effect on the s shaped relationship longitudinal data on 210 taiwanese firms in the information technology sector during a 10 year period is collected to test the hypotheses the findings support our prediction managerial implications and future research directions are discussed

politics and the effectiveness of foreign aid abstract critics of foreign aid programs have long argued that poverty reflects government failure in this paper i test predictions for aid effectiveness based on an analytical framework that relates aid effectiveness to political regimes i find that aid does not significantly increase investment nor benefit the poor as measured by improvements in human development indicators but it does increase the size of government the impact of aid does not vary according to whether recipient governments are liberal democratic or highly repressive but liberal political regimes and democracies ceteris paribus have on average 30 lower infant mortality than the least free regimes this may be due to greater empowerment of the poor under liberal regimes even though the political elite continues to receive the benefits of aid programs an implication is that short term aid targeted to support new liberal regimes may be a more successful means of reducing poverty than current programs

the benefits of lending relationships evidence from small business data this paper empirically examines how ties between a firm and its creditors affect the availability and cost of funds to the firm we analyze data collected in a survey of small firms by the small business administration the primary benefit of building close ties with an institutional creditor is that the availability of financing increases we find smaller effects on the price of credit attempts to widen the circle of relationships by borrowing from multiple lenders increases the price and reduces the availability of credit in sum relationships are valuable and appear to operate more through quantities rather than prices

firms age process innovation and productivity growth abstract this paper looks directly at the impact of firms age and process innovations on productivity growth a model that specifies productivity growth as an unknown function of these variables is devised and estimated using semiparametric methods results show that firms enter the market experiencing high productivity growth and that above average growth rates tend to last for many years but also that productivity growth of surviving firms converges process innovations at some point then lead to extra productivity growth which also tends to persist somewhat attenuated for a number of years

institutions and firms adjustments measuring the impact of courts delays on job flows and productivity abstractnot only is labor market rigidity the result of legislative provisions but it is determined by the institutional framework at large we argue that courts delays in settling labor disputes affect the strictness of employment protection legislation by increasing the expected firing costs we exploit the variation in the length of labor trials across italian judicial districts and the fact that the italian legislation regarding firing prescribes different firing regimes for firms above the 15 employee threshold and provide evidence on the impact of courts delays on job reallocation and firms productivity we show that in judicial districts with longer trials the rate of job turnover is significantly lower this occurs through lower rates of job destruction and to a lesser extent job creation we also find a detrimental impact of courts delays on the labor productivity of firms above the 15 employee threshold the effect is stronger in sectors with higher flexibility requirements

investor protection optimal incentives and economic growth does investor protection foster economic growth to assess the widely held affirmative view we introduce investor protection into a standard overlapping generations model of capital accumulation better investor protection implies better risk sharing because of entrepreneurs risk aversion this results in a larger demand for capital this is the demand effect a second effect the supply effect follows from general equilibrium restrictions better protection i e higher demand increases the interest rate and lowers the income of entrepreneurs decreasing current savings and next period s supply of capital the supply effect is stronger the tighter are the restrictions on capital flows our model thus predicts that the positive effect of investor protection on growth is stronger for countries with lower restrictions cross country data provide support for this prediction as does the detailed examination of the growth experiences of south korea and india

r d determinants accounting for the differences between research and development the determinants of r d are an important topic of innovation studies the classical schumpeterian hypotheses about the influence of size and market power have been complemented with the role played by industry determinants such as demand pull technological opportunity and appropriability in determining r d investments however r d has always been considered as a whole even though research and development activities differ in many aspects we take advantage of a new panel database of innovative spanish firms pitec to distinguish between research and development efforts of firms we analyze the differentiated role played by traditional r d determinants in driving research and development results show that demand pull and appropriability have a higher effect on development while technological opportunity is more influential for research differences are statistically significant important in magnitude and robust to the use of different indicators for demand pull technological opportunity and appropriability and to several robustness checks

africa s economic performance limitations of the current consensus historical and micro survey evidence as well as the standard data from international organizations support less pessimistic conclusions on africa s development performance than those reached by many social scientists the changes that have benefited women over the last four decades are highlighted a discussion of growth in agricultural production follows however the complexity and the brutality of processes of social and economic change in sub saharan african economies are also stressed the theoretical implications of these complexities have not been adequately analyzed by world bank economists the bank s recent efforts to reassess its policies are therefore unlikely to achieve the results anticipated

the impact of environmental regulations on industry productivity direct and indirect effects abstract the paper develops an approach to measuring the impact of environmental regulations on total factor productivity growth which is less restrictive than a simple growth accounting approach environmental regulations have a direct impact on productivity growth due to the diversion of resources toward required abatement capital there can be a further indirect effect however as conventional inputs and production processes are changed in response to requirements to purchase abatement capital we estimate this indirect effect using a flexible functional form cost function total factor productivity and the direct and indirect productivity effects of environmental regulations are presented for five polluting industries we find that the indirect effect can be either positive or negative and in all industries is energy using the net impact of environmental regulations on total factor productivity growth is fairly small given that these are the most polluting industries they account for about 10 30 of the productivity decline of the 1970s in these industries

an optimal banking structure from the perspective of enterprise technological innovation empirical evidence from chinese industrial enterprises this paper applies the incomplete contracts model to study an optimal banking structure corresponding to different levels of technological development from the perspective of technological innovati