investment and coordination in oligopolistic industries we examine investment by firms in 24 chemical product industries to determine whether firms invest preemptively to achieve persistent increases in market share or whether there is evidence of behavior to maintain market share the data indicate that investment reduces the probability that rival firms will expand capacity but the effect is temporary large firms tend to maintain market share while smaller firms tend to invest simultaneously with rivals the role of preemptive investment is limited to that of permitting a firm to invest with a lower probability of redundant investment by rivals preemption does not allow a persistent increase in market share but instead acts as a means by which firms may coordinate capacity investment to help avoid episodes of industry overcapacity

a dual definition for the factor content of trade and its effect on factor rewards in us manufacturing sector we introduce a dual definition of the factor content of trade fct using the concept of the equivalent autarky equilibrium estimating a symmetric normalized quadratic revenue function for the u s manufacturing sector between 1965 and 1991 we find that the fct for capital is positive while the fct for skilled and unskilled labor is negative suggesting that the leontief paradox is not present then the growth rate of the factor rewards is decomposed to the fct endowments and technological change effects we find that technological change is the most important determinant in explaining wage inequality between skilled and unskilled labor

modeling economies of scale the case of us electric power companies modeling and validating the existence of technical progress within the neoclassical production function specification has been facilitated through the translog functional form however attempts to separate out the effects of technical progress and returns to scale has been limited this study develops and presents a model for testing the existence of these two separate effects using data from a sample of us electric power companies the analysis found that for these electric utilities there existed increasing returns to scale and technical progress that was energy using but capital neutral however scale effects were found to be a dominant factor in lessening the impact of declining average productivity

capital quality improvement and the sources of economic growth in the euro area sources of growth europe s growth slowed in the 1990s reinforcing the overall impression of a need to catch up with the us regarding standards of living in reaction eu leaders adopted the famous lisbon agenda in 2000 the agenda is now under review the aim being to determine why progress on its pro growth goals has been unsatisfactory and what can be done about it the first crucial step in this process is to understand the true sources of the european growth slowdown sources of growth calculations have always been imprecise but evidence from the us suggests that quality upgrading especially in capital goods has substantially worsened the precision problem since the 1990s unfortunately quality adjusted sources of growth calculations however have not performed satisfactorily for europe so europe s leaders are working with potentially misleading accounts of europe s growth slowdown redressing this omission is the goal of this paper failure to account properly for capital quality improvements leads to two mistakes first overall gdp is underestimated our calculations for example show that euro area gdp growth was underestimated on average by 0 7 percentage points annually in the late 1990s however similar quality adjustment figures raise us growth figures in the same period by even more so quality adjusting suggests that the us eu growth gap was even more pronounced than previously believed secondly the sources of growth calculations used to prioritize europe s pro growth policies are skewed our calculations show that the contribution of the slowdown in disembodied technical progress to the overall slowdown is more pronounced after quality adjustment our findings point to the need for adoption of microeconomic measures aimed at enhancing overall efficiency and boosting innovation activity such measures would aim at a better business environment e g by easing regulatory and administrative burden and liberalizing energy and telecommunications markets plutarchos sakellaris and focco vijselaar

optimal capacity expansion over an infinite horizon the problem of choosing an optimal initial capacity expansion from a finite number of durable facility sizes is affected by potential future expansion decisions as we consider such expansions over longer and longer study horizons the optimal initial facility choice can fluctuate due to end of study effects we discuss an algorithm that will determine for arbitrary deterministic demand profiles how long a horizon is sufficient to reach stability in the first facility choice moreover it is shown that this first choice is the optimal first choice for the infinite horizon problem we also establish an explicit analytical formula for a study horizon guaranteed to provide a first facility size that followed by an infinite horizon expansion strategy will attain a discounted cost within a predetermined maximal error of the optimal infinite horizon cost

is the co2 emissions reduction from scale change structural change or technology change evidence from non metallic sector of 11 major economies in 1995 2009 the contribution of non metallic sector to global co2 emissions is increasing however there are very few studies on non metallic sector co2 emissions from international comparative perspective this paper proposes an integrated model employing lmdi logarithmic mean divisia index decomposition technique and topsis the technique for order preference by similarity to ideal solution method to contribute to the existing literature by filling the gap that the drivers of aggregate and national level non metallic sector co2 emissions and its impacts on co2 emissions reduction have not been estimated by relevant models first we analyze drivers of non metallic sector co2 emissions in bric countries and g7 countries using lmdi decomposition method second we evaluate the low carbon development of non metallic sector in the 11 major economies from a comprehensive viewpoint of main drivers using topsis assessment model finally based on the results of the model this paper presents some implications for the non metallic sector co2 emissions reduction and low carbon development

the regional dimension of competitiveness in manufacturing productivity employment and wages in northern ireland and the united kingdom borooah v k and lee k c 1991 the regional dimension of competitiveness in manufacturing productivity employment and wages in northern ireland and the united kingdom reg studies 25 219 229 the regional dimension of competitiveness in manufacturing industry is examined by comparing the uk with one of its poorest regions northern ireland an overview is provided of total factor productivity and real wage developments in northern ireland and the uk over the last two decades these developments are then investigated econometrically through the estimation of labour demand and wage equations the paper identifies a number of factors which may have eroded the competitiveness and hence the employment prospects of the region relative to the uk as a whole over the period borooah v k et lee k c 1991 la competitivite de l industrie manufacturiere sous un optique regional productivite emploi et salaires en irlande du nord et au royaume uni reg studies 25 219 229 on examine les aspects region

sectoral shocks and aggregate fluctuations abstract this paper presents a multisector dynamic general equilibrium model of business cycles with a distinctive feature aggregate fluctuations are driven by independent sectoral shocks the model hypothesizes that trade among sectors provides a strong synchronization mechanism for these shocks due to the limited but locally intense interaction that is characteristic of such input trade flows limited interaction characterized by a sparse intermediate input use matrix reduces substitution possibilities among intermediate inputs which strengthens comovement in sectoral value added and leads to a postponement of the law of large numbers in the variance of aggregate value added the chief virtue of this model is that reliance on implausible aggregate shocks is not necessary to capture the qualitative features of macroeconomic fluctuations building on horvath 1998 review of economic dynamics 1 781 808 which establishes the theoretical foundation for the relevance of limited interaction in the context of a stylized multisector model this paper specifies a more general multisector model calibrated to the us 2 digit standard industrial code economy simulations prove the model is able to match empirical reality as closely as standard one sector business cycle models without relying on aggregate shocks

the biodiversity supergame this paper considers the ability of developed countries to sustain a cooperative agreement to compensate developing countries for the incremental costs of biodiversity conservation it is shown that depending on certain parameter values and the model specification such an agreement could only codify the non cooperative outcome or achieve the full cooperative outcome where global net benefits are maximized however where the agreement can sustain the full cooperative outcome net benefits will be only slightly larger than in the noncooperative outcome

optimal control of a dual service rate m m 1 production inventory model we analyse a dual source production inventory model in which the processing times at a primary manufacturing resource and a second contingent resource are exponentially distributed we interpret the contingent source to be a subcontractor although it could also be overtime production we treat the inventory and contingent sourcing policies as decision variables in an analytical study and additionally allow the primary manufacturing capacity to be a decision variable in a subsequent numerical study our goal is to gain insight into the use of subcontracting as a contingent source of goods and whether it can fulfill real world managers expectations for improved performance we prove that a stationary non randomised inventory and subcontracting policy is optimal for our m m 1 dual source model and moreover that a dual base stock policy is optimal we then derive an exact closed form expression for one of the optimal base stocks which to our knowledge is the first closed form solution for a dual source model we use that closed form result to advantage in a numerical study from which we gain insight into how optimal capacity subcontracting and inventory policies are set and how effectively a contingent source can reduce total cost capacity cost and inventory cost we find that i the contingent source can reduce total cost effectively even when contingent sourcing is expensive and ii contingent sourcing reduces capacity cost more effectively than it does inventory cost

a real options approach to labour shifts planning under different service level targets abstract firms that experience uncertainty in demand as well as challenging service levels face among other things the problem of managing employee shift numbers decisions regarding shift numbers often involve significant expansions or reductions in capacity in response to changes in demand in this paper we quantify the impact of treating shifts in workforce expansion as investments while considering required service level improvements the decision to increase shifts whether by employing temporary workers or hiring permanent employees is one that involves significant risks traditional theories typically consider reversible investments and thus do not capture the idiosyncrasies involved in shift management in which costs are not fully reversible in our study by using real options theory we quantify managers ability to consider this irreversibility aiming to enable them to make shift decisions under conditions of uncertainty with the maximum level of flexibility our model aims to help managers make more accurate decisions with regard to shift expansion under service level targets and to defer commitment until future uncertainties can be at least partially resolved overall our investigation contributes to studies on the time required to introduce labour shift changes while keeping the value of service level improvements in mind

excess capacity as a barrier to entry an empirical appraisal this paper examines excess capacity barriers to entry and investment dynamics in a sample of thirty eight chemical product industries logit and log linear models of investment behavior are estimated and specific case examples are considered the results show that incumbents rarely built excess capacity pre emptively in an effort to deter entry in general entrants and incumbents exhibited similar investment behavior

assessing energy price induced improvements in efficiency of capital in oecd manufacturing industries to assess how capital stocks adapt to energy price changes it is necessary to account for the impacts on different vintages of capital and to account separately for price induced and autonomous improvements in the energy efficiency of capital stock the results of econometric analysis for five manufacturing industries in 19 oecd countries between 1990 and 2005 indicate that higher energy prices resulted in smaller energy use due to both improved energy efficiency of capital stock and reduced demand for the energy input the investment response to energy prices varied considerably across manufacturing industries being more significant in energy intensive sectors the results of policy simulations indicate that a carbon tax can deliver significant reductions in energy consumption in the medium run with modest declines in energy using capital stock

multinational investment under uncertainty in the chemical processing industries this study uses a sample of chemical processing industries to evaluate the effect of two types of uncertainty on the decision to invest in an industry it analyzes the effects of relative price uncertainty through exchange rates and input prices and demand uncertainty on the probability of expansion in a particular country the study then focuses on the behavior of individual companies and distinguishes companies by whether or not they are multinationals in the production of the product the results confirm previous evidence that exchange rate uncertainty has a negative effect on capacity expansions by domestic corporations and no effect on investment by multinational corporations finally the study also shows that expansions of production capacity in this industry are more likely to occur in those countries where capacity utilization is higher

technical change and the demand for skills by us industries a good match between the demand for skills and their supply is a prerequisite for any well functioning economy this is no simple matter particularly in the current period of rapid changes in the technology and organisation of production since new skills and capabilities usually require both considerable time to develop and costly personal and institutional adjustments the widely perceived inadequacy of education and job training in the us has become an increasing source of concern for policy makers but before better training processes can be designed a necessary first step is to anticipate future demands for skills in the workplace whether this can be done very well depends in part on our ability to describe and explain recent trends in skill composition previous econometric studies of inter industry differences in skills and skill growth have focused on the effects of factor prices and capital intensity on indices of schooling attainment the results of these tests have been interpreted to provide strong support for the standard factor substitution model and the capital skill complementarity hypothesis hammermesh 1986 but these studies rarely considered the effects of technical change and other structural characteristics on the demand for skills in another strand of the

buyer intermediation in supplier finance small suppliers often face challenges to obtain financing for their operations especially in developing economies traditional financing methods can be very costly or unavailable to such suppliers to reduce channel costs large buyers have recently begun implementing their own financing methods that intermediate between suppliers and financing institutions in this paper we analyze the role and efficiency of buyer intermediation in supplier financing building a game theoretical model we show that buyer intermediated financing can significantly improve channel performance and can simultaneously benefit both supply chain participants using data from a large chinese online retailer and through structural regression estimation we demonstrate that buyer intermediation lowers interest rates and wholesale prices increases order fill rates and boosts supplier borrowing based on counterfactual analysis on the data we predict that the implementation of buyer intermediated financing will improve channel

the great diversification and its undoing we investigate the hypothesis that macroeconomic fluctuations are primitively the results of many microeconomic shocks we define fundamental volatility as the volatility that would arise from an economy made entirely of idiosyncratic sectoral or firm level shocks fundamental volatility accounts for the swings in macroeconomic volatility in the major world economies in the past half century it accounts for the great moderation and its undoing the initial great moderation is due to a decreasing share of manufacturing between 1975 and 1985 the recent rise of macroeconomic volatility is chiefly due to the growth of the financial sector jel e23 e32 e44 this article explores the hypothesis that changes in the microeconomic composition of the economy during the postwar period can account for the great moderation and its unraveling both in the united states and in the other major world economies we call fundamental volatility the volatility that would be derived only from microeconomic shocks if aggregate shocks come in large part from microeconomic shocks augmented by amplification mechanisms then aggregate volatility should track fundamental volatility to operationalize this idea the key quantity we consider which constitutes one departure from other studies is the following definition of fundamental volatility

the stationary distribution of a stochastic clearing process this research grew out of an investigation of utilization in capacity expansion the utilization at any time is the demand divided by the capacity when there is uncertainty about the evolution of demand it is appropriate to model the demand as a stochastic process and thus the utilization also becomes a stochastic process it was found that a utilization stochastic process associated with exponentially growing stochastic demand is closely related to the stochastic clearing processes introduced and investigated by stidham interest in the impact of uncertainty on utilization led to this study of the impact of uncertainty on the stationary distribution of a stochastic clearing process stidham showed for a large class of clearing processes that the stationary distribution is never the uniform distribution which is characteristic of deterministic models with continuous linear input here it is shown for a larger class of clearing processes that the stationary distribution is always stochastically less than or equal to the uniform distribution in the sense of second order stochastic dominance characterized by the expected value of all nondecreasing concave functions for various special cases stronger stochastic order relations are established for a related capacity expansion model it is shown that greater uncertainty lowers the expected utilization

on the heterogeneity of sectoral growth and structural dynamics evidence from austrian manufacturing industries this article studies the factors driving structural dynamics across austrian manufacturing industries using a structural vector autoregressive model svar framework we identify sectoral labour productivity and demand shocks that are orthogonal to aggregate shocks we analyse the sectoral impulse response patterns and find that the effect of industry labour productivity shocks on industry output growth is quite heterogeneous we devise a taxonomy that allows us to classify industries according to the effect productivity and demand shocks have on output growth we also show that productivity shocks are quite heterogeneous not just across industries but also over time whereas shocks to sectoral demand growth are more systematic we test the taxonomy in a panel regression and are able to confirm our sector specific findings industry demand shocks and aggregate productivity and demand shocks lead always to an increase in industry output and industry employment

productivity development in icelandic norwegian and swedish fisheries this article analyses the total factor productivity tfp performance of fisheries in iceland norway and sweden during the period 1973 to 2003 we measure tfp growth using real gross value added as output and capital input labour input and a stock input index based on the major fish stocks in developed neighbouring countries we expect rapid diffusion of fishing technology innovations contributing to productivity convergence in addition innovations in the public regulation and the industrial organization may also have influenced productivity growth during the period we find that iceland had the highest annual tfp growth accounting for stock changes it amounts to 3 while the corresponding figures for sweden and norway are 2 8 and 0 8 respectively despite best practice fishing technologies being widely available we find no evidence of productivity convergence among the three countries

sources of increased instability in indian and u s cereal production recent growth in indian and u s cereal production has been accompanied by a more than proportional increase in the standard deviation of production this study applies variance decomposition procedures to state data on crop production to analyze the sources of this increased instability it is found that production has become significantly more covariate between states and crops largely because of increased yield variability and a loss in offsetting patterns of variation between crop yields in different states these changes may be associated with more variable prices with higher yielding technologies and with a narrowing of the genetic base

market growth economies of scale and plant size in the chemical processing industries what factors determine the size of new industrial plants this study uses data on twenty tw o chemical products to test alternative models of capacity expansion including the manne model and a scale frontier model the empiri cal results strongly support the scale frontier model the size of n ew plants increased along a time trend that was unrelated to market c oncentration market growth or the magnitude of investment scale eco nomies entrants typically built smaller plants than incumbents but all firms built plants closer to the technological frontier when smal l plants carried a higher relative cost penalty copyright 1987 by blackwell publishing ltd

increasing returns and externalities in uk manufacturing myth or reality i apply the method of caballero and lyons to industry level data for uk manufacturing i find evidence for a positive external effect arising from the expansion of manufacturing as a whole but expansion at the sectoral level was found not to generate external effects nor was any evidence found for increasing returns which are internal to the industry here returns appear to be constant i argue that external effects at the level of aggregate manufacturing cannot be explained away as due to measurement error or cyclical effects however alternative explanations such as economy wide shocks cannot be totally excluded

farmer s rights and genetic conservation in traditional farming systems abstract crop genetic resources are concentrated in some of the world s poorest farming systems these resources have been used by industrial countries without compensating farmers concerns for equity and conservation have led to proposals to protect crop genetic resources as intellectual property this paper argues that conventional intellectual property regulations e g utility patents and plant variety protection should not be used to protect crop genetic resources it suggests that farmers rights as an alternate form of intellectual property rights be used to indirectly compensate farmers by supporting genetic conservation it examines methods of in situ conservation for crop genetic resources

capturing the pharmaceutical value of biodiversity in a developing country the conservation of biodiversity is increasingly being defined as a process made up of three components saving studying and sustainably using biodiversity if the conservation of process is expanded to incorporate the need for both the protection of biodiversity either in situ or ex situ and the generation of valuable information about biodiversity an important issue is the correct balance of investment in these two types of activities this paper explores this issue by focusing on efforts in a developing country to capture the pharmaceutical potential of biodiversity and species information a model of biodiversity investment choice is developed and an analysis of royalty returns to effort in biodiversity protection taxonomic information and the collection of biotic samples is conducted based on data from costa rica the results suggest that although a country can be adequately compensated for its investment in the generation of taxonomic information it is unlikely that pharmaceutical prospecting alone will cover the high opportunity costs of biodiversity protection

trade related intellectual property rights north south trade and biological diversity in the trade related intellectual property rights trips agreement of gatt 1 january 1995 it was agreed to harmonise intellectual property rights ipr on an international level and to include the option for patent protection for all life forms such as plants and animals article 27 3 b patenting however leads to considerable conflicts between international trade and protection of biological diversity which can be illustrated by the example of seed production we make use of a three stage game to show the strategic incentives for implementation of two different property rights regimes patents and farmers rights on competition and biodiversity we show that the southern government has no incentive to acknowledge international patents even if farmers rights do exist the northern producer will always dominate in the output market if patents are applied but without farmers rights biodiversity will not be maintained by the southern government thus total payoff of the northern firm is maximized if both ipr regimes are implemented however if only farmers rights are valid biodiversity will be maximal

scale effects time varying markups and the cyclical behaviour of primal and dual productivity this paper presents estimates of the degree of returns to scale using nonparametric measures of primal and dual productivity for 2 digit us manufacturing industries as part of the analysis the cyclical behaviour of primal and dual productivity measures are considered time varying markups are allowed for and the small sample properties of the instrumental variables estimator used to derive the estimates from the primal and dual relations examined both the primal and dual estimates indicate the existence of increasing returns to scale for the durable goods industries the simulation results indicate there is a slight tendency for the dual equation estimates to overestimate the degree of returns to scale however small sample bias appears to be most severe for the non durable goods industries

welfare effects of global patent protection this paper uses a simple model of invention and patent protection to examine the welfare effects of extending patent protection from the country where invention takes place to another country that is only a consumer of invented products it is shown that while the welfare of the inventing country certainly rises with the extension of patent protection that of the other country probably falls and may well fall by more than the increase in welfare of the inventing country in particular as patent protection is extended to a larger and larger portion of the world the effect on the welfare of the world as a whole of extending it to the rest of the world becomes negative

capacity utilization theoretical models and empirical tests abstract this paper examines the determinants of industry capacity utilization in 40 chemical product industries over a period of roughly two decades a series of testable hypotheses are developed based on three operations research models of capacity expansion the manne model the newsboy model and the whitt luss model the hypotheses are tested on the chemical industries sample using multiple regression analysis the empirical results are consistent with most predictions derived from the newsboy and whitt luss models which suggests that firms made expansion decisions in a manner roughly in accordance with these models capacity utilization was positively related to capital intensity and the trend rate of demand growth and was negatively related to demand variability geographic plant dispersion and plant lumpiness the magnitude of investment scale economies and the extent of multi plant operation had little effect on capacity utilization

investment specific technological change and growth accounting greenwood et al 1997 long run implications of investment specific technological change american economic review 87 3 342 362 and 2000 the role of investment specific technological change in the business cycle european economic review 44 91 115 and hercowitz 1998 the embodiment controversy a review essay journal of monetary economics 41 217 224 have claimed that the jorgenson form of growth accounting is conceptually flawed and severely understates the importance of technological progress embodied in new capital goods for explaining growth to the contrary this paper shows that in its technology aspects their model is a special case of the jorgensonian growth accounting model what they call investment specific technological change is shown to be closely related to the more familiar concept of total factor productivity tfp growth statements about the one can be translated into statements about the other empirically differences between their conclusions and those of growth accounting studies about the extent to which embodiment explains us economic growth are found to relate more to data than to methodology

postentry investment and market structure in the chemical processing industries this article analyzes the investment response of incumbents to new entry in 39 chemical product industries the behavior of incumbents in highly concentrated industries differed from that of incumbents in low concentration industries in concentrated industries incumbents increased their rate of investment following entry but reduced investment to accommodate capacity expansions made by other incumbents this asymmetric response did not arise in less concentrated industries significant excess capacity existed in concentrated industries following entry but there is little evidence that incumbents built such capacity as a deterrent before entry thus the results support mobility deterrence theories rather than the conventional excess capacity deterrence argument

the price of reverse factoring financing rates vs payment delays reverse factoring a financial arrangement where a corporation facilitates early payment of its trade credit obligations to suppliers is increasingly popular in industry many firms use the scheme to induce their suppliers to grant them more lenient payment terms by means of a periodic review base stock model that includes alternative sources of financing we explore the following question what extensions of payment terms allow the supplier to benefit from reverse factoring we obtain solutions by means of simulation optimisation we find that an extension of payment terms induces a non linear financing cost for the supplier beyond the opportunity cost of carrying additional receivables furthermore we find that the size of the payment term extension that a supplier can accommodate depends on demand uncertainty and the cost structure of the supplier overall our results show that the financial implications of an extension of payment terms need careful assessment in stochastic settings

quantifying the impact of ict capital on output growth a heterogeneous dynamic panel approach using industry data for the united states and the united kingdom we provide new evidence on the impact of information and communications technology ict capital on real output growth the traditional industry panel data analysis fails to find a positive contribution we argue that this is due to heterogeneity across industries particularly in the time dimension pooling the data for the two countries and using a dynamic panel data estimation method yield a positive and significant effect of ict on output growth individual country estimates suggest a strong impact in the united states while results are less conclusive in the united kingdom

capacity expansion for random exponential demand growth with lead times the combination of demand uncertainty and a lead time for adding capacity creates the risk of capacity shortage during the lead time we formulate a model of capacity expansion for uncertain exponential demand growth and deterministic expansion lead times when there is an obligation to provide a specified level of service the service level defined in terms of the ratio of expected lead time shortage to installed capacity is guaranteed by timing each expansion to begin when demand reaches a fixed proportion of the capacity position under this timing rule the optimal facilities to install can be determined by solving an equivalent deterministic problem without lead times numerical results show the effects of the demand parameters and lead time length on the expansion timing the interaction of timing with expansion size is explored for the case when continuous facility sizes are available with economies of scale

estimates of the costs of kyoto marrakesh versus the mckibbin wilcoxen blueprint in this paper we update our earlier estimates of the cost of the kyoto protocol using the g cubed model taking into account the new sink allowances from recent negotiations as well as allowing for multiple gases and new land clearing estimates we then compare the protocol to an alternative policy outlined in mckibbin et al brookings policy brief no 17 june the brookings institution washington 1997 climate change policy after kyoto a blueprint for a realistic approach the brookings institution washington 2002a j econom perspect 16 2 2002b 107 that does not impose rigid emissions targets we focus particular attention on the sensitivity of compliance costs under each policy to unexpected changes in future economic conditions to illustrate the issue we evaluate the policies under two plausible alternative assumptions about a single aspect of the future world economy the rate of productivity growth in russia we find that moderate growth in russia would raise the cost of the kyoto protocol by as much as 50 percent but would have little effect on the cost of the alternative policy we conclude that the kyoto protocol is inherently unstable because unexpected future events could raise compliance costs substantially and place enormous pressure on governments to abrogate the agreement the alternative policy would be far more stable because it does not subject future governments to adverse shocks in compliance costs

productivity growth of east asia economies manufacturing a decomposition analysis abstract applying a stochastic production frontier to sector level data within manufacturing this paper examines total factor productivity tfp growth for seven east asian economies during 1963 98 using both single country and cross country regressions the analysis focuses on the trend in technological progress tp and technical efficiency change tec and the role of productivity change in economic growth the empirical results reveal that although input factor accumulation is still the main source for east asian economies growth tfp growth is accounting for an increasing and important proportion of output growth among which the improved tec plays a crucial role in productivity growth

irreversible investments and volatile markets a study of the chemical processing industry this paper investigates the empirical effect of volatility on irreversible investments we use a sample of chemical products in the united states and the european union to test the impact of volatility on new investments in capacity we distinguish among three sources of volatility exchange rates input prices and product demand we find that the effects of volatility on the amount of capacity investment differ depending on the source of volatility input prices and product demand volatility do not appear to have a material and statistically significant effect in either the united states or the european union in contrast exchange rate volatility has a significant negative impact on investment by chemical manufacturers in the european union

the convention on biological diversity and agriculture implications and unresolved debates1 summary the convention on biological diversity addresses two controversies that surround plant genetic resources pgrs one debate has been over property rights governing pgrs and the distribution of benefits from their use the second has been over the adequacy of measures to maintain crop genetic diversity this paper examines how these two debates are linked and reviews previous multilateral attempts to address them the convention signals wider international acceptance of stricter property rights over pgrs and the need for multilateral assistance for pgr conservation however current proposals to implement the convention appear too limited in scope to achieve their stated conservation objectives while several areas of controversy remain these include debates over i intellectual property protection for biological inventions ii control over pgrs in international gene banks iii the international biosafety protocol regulating biotechnology iv mechanisms to finance pgr conservation and v the allocation of funds between in situ and ex situ conservation q 1998 elsevier science ltd all rights reserved

modeling inter sectoral growth linkages an application to u s agriculture abstract general equilibrium and open economy trade theory are used along with time series data on the u s agricultural sector to provide insights into the structure of agricultural supply factor returns and linkages to the rest of the economy output expansion and factor returns are found to vary depending on relative factor intensities which we refer to as rybczynski and stolper samuelson like effects the effect of the rest of the economy particularly the increase in price of services is found to have relatively large negative impacts on agriculture the short run effects of prices and factor endowments on growth in agricultural supply and factor returns are dominated by the long run effects of technological change

an analysis of multiple structural breaks in us relative farm prices the movement of farm prices relative to other commodity prices is analysed for the period 1913 01 to 2003 12 investigating the number and time of structural breaks and discussing likely causes of structural breaks in the relative farm prices bai and perron s 1998 2003 multiple structural change test with a dynamic programming algorithm is used this test makes it possible to have an efficient computation of the estimates of the break points as global minimizers of the sum of squared residuals we find six structural breaks when we consider only the mean process and two breaks when we consider the mean and autoregressive processes possible causes for these breaks are discussed

capacity expansion under stochastic demands we consider the problem of optimally meeting a stochastically growing demand for capacity over an infinite horizon under the assumption that demand for product follows either a nonlinear brownian motion or a non markovian birth and death process we show that this stochastic problem can be transformed into an equivalent deterministic problem consistent with earlier work by a manne the equivalent problem is formed by replacing the stochastic demand by its deterministic trend and discounting all costs by a new interest rate that is smaller than the original in approximate proportion to the uncertainty in the demand

structural change in advanced nations a new set of stylised facts we provide new evidence on patterns of structural change in advanced economies reconsidering the stylised facts put forward by kaldor 1963 kuznets 1971 and maddison 1980 since 1980 the services sector has overwhelmingly predominated in the economic activity of the european union japan and the us but there is substantial heterogeneity among services personal finance and business services have low productivity growth and increasing shares in employment and gdp by contrast shares of distribution services are constant and productivity growth is rapid we find that the labour share in value added is declining while the use of ict capital and skilled labour is increasing in all sectors and regions

training and retirement patterns life cycle theory predicts that employers enter into implicit contracts with newly hired employees to ensure rent sharing and to decrease turnover after firm specific training investments typically these implicit contracts would include both upward sloping earning profiles and mandatory retirement in this article we empirically test the prediction that workers with firm specific skills are restrained in their options to continue working therefore they are more likely to retire at common mandatory retirement dates than those with general skills using the us national longitudinal survey of older men we find that workers who participated in firm specific training in their early careers do indeed retire earlier than those with general skills the results show that compulsory retirement plans force these older workers to retire when they reach the common mandatory retirement age of 65 the results presented in this article are highly relevant for public policies in european and other industrialized cou

dynamic capacity expansion for a service firm with capacity deterioration and supply uncertainty motivated by the challenges faced by the telecom industry during the past decade in this paper we study a dynamic capacity expansion problem for service firms there is a random demand for the firm s capacity in each period the demand in excess of the capacity is lost and revenue is generated for the fulfilled demand at the beginning of each period the firm might increase its capacity through purchasing equipment for immediate delivery which is constrained by a random supply limit or it might sign a future contract for equipment delivery in the following period we assume that the firm s capacity might partially become obsolete due to natural deterioration or technology innovation we aim at characterizing optimal capacity expansion strategies and comparing the profit functions as well as the optimal control policies of different options specifically we show that the optimal capacity expansion policy for the current period is determined by a base stock policy compared with the case where no future contracts are available the optimal control parameters of capacity expansion are always smaller we further show that when the obsolescence rate is deterministic the optimal policy for capacity expansion through future contracts is also a base stock type the results are extended to the cases with stochastically dependent capacity supply limits and stochastically dependent demand processes which establish the robustness of the optimal policy in various market conditions

the world price of coal a significant increase in the seaborne trade for coal over the past 20 years has unified formerly separate coal markets into a world market in which prices move in tandem by virtue of its large domestic market the usa has become the residual supplier and price setter in the world coal market changes in multifactor productivity have been the primary cause of the long term fluctuations in coal prices that have been observed in the usa since the end of the second world war and in the world coal market

measurement of labour quality growth caused by unobservable characteristics the standard economy wide indices of labour quality or human capital largely ignore the role of unobservable worker characteristics in this article we develop a methodology for identifying the contributions of both observable and unobservable worker characteristics in the presence of the incidental parameter problem based on data for switzerland over the period 1991 to 2006 we find that a large part of growth in labour quality is caused by shifts in the distribution of unobservable worker characteristics the overall index differs little from the standard indices but contributions to growth attributed to education and age are corrected downwards

property rights genetic resources and biotechnological change it is well recognized that wild genetic resources the genetic constitutions of plants and animals have substantial social and economic value as repositories of genetic information today genetic information provides direct and indirect inputs into plant breeding programs the development of natural products including drugs and pharmaceuticals and increasingly sophisticated applications of biotechnology 2 recognition of the potential of wild genetic resources in the development of drugs has led the national cancer institute to initiate a massive plant collection project 3 which is a follow up to an earlier 1970s project that sought to identify drugs effective against a variety of cancers and to look at the immune system effects of various drugs it is estimated that 70 percent of the 3 000 species known to have anticancer properties are found in the tropical forests 4 in recent years a number of widely used drugs have been developed from plants including two important anticancer drugs derived from the rosy periwinkle found in tropical madagascar with the recent major breakthroughs in biotechnology the future potential of these resources seems limitless species that have no current commercial application have useful natural chemicals or are as yet undiscovered never

genetic improvements in major us crops the size and distribution of benefits the distribution of welfare gains of genetic improvements in major us crops is estimated using a world agricultural trade model multi market welfare estimates were 75 larger than estimates based on the price exogenous change in revenue method frequently used by plant breeders annual benefits of these genetic improvements range from us 400 600 million depending on the supply shift specification of this 44 60 accrues to the us 24 34 accrues to other developed countries developing and transitional economies capture 16 22 of the welfare gain the global benefits of a one time permanent increase in us yields are us 8 1 billion discounted at 10 and us 15 4 billion discounted at 5 gains to consumers in developing and transitional economies range from us 6 1 billion 10 discount rate to us 11 6 billion 5 discount rate

robust capacity planning under uncertainty the existence of uncertainty influences the investment production and pricing decision of firms therefore capacity expansion models need to take into account uncertainty this uncertainty may arise because of errors in the specification statistical estimation of relationships and in the assumptions of exogenous variables one such example is demand uncertainty in this paper a cautious capacity planning approach is described for solving problems in which robustness to likely errors is needed the aim is to cast the problem in a deterministic framework and thereby avoid the complexities inherent in nonlinear stochastic formulations we adopt a robust approach and minimize an augmented objective function that penalises the sensitivity of the objective function to various types of uncertainty the robust or sensitivity approach is compared with friedenfelds equivalent deterministic demand method using numerical results from a large nonlinear programming capacity planning model it is shown that as ca

should patent protection be extended to all developing countries he uruguay round has extended the scope of gatt multilateral trade negotiations well beyond the tariffs that had occupied most previous negotiations in addition to various non tariff barriers which had also been dealt with to a degree in the tokyo round as discussed in deardorff and stern 1983 and 1986 the uruguay round dealt with issues of trade in services international investment and intellectual property since these new issues have conceptually quite different characteristics than the tariffs of previous negotiations it is appropriate to examine them afresh to determine whether the objectives of the uruguay round negotiations can be considered economically sound this paper describes such an analysis for a particular aspect of the intellectual property negotiations patent rights and in the process voices some skepticism about this aspect of the uruguay round s objectives inclusion of trade related intellectual property issues or trips in the uruguay round agenda was done largely at the insistence of the united states firms in the united states have long been concerned that their position at the cutting edge of technological progress was being eroded by unauthorised copying of their intellectual property elsewhere in the world while export of such copied products back into the united states might be restricted under us law this would provide little help in competition with the pirate firms in third country markets

time to build option value and investment decisions abstract investment decisions and outlays are often made sequentially for example the rate at which construction proceeds is usually flexible and can be adjusted with the arrival of new information traditional discounted cash flow methods which treat the pattern of investment as fixed ignore this flexibility and understate the value of the project this paper uses contingent claims analysis to derive optimal decision rules and to value such investments we determine the effects of time to build opportunity cost and uncertainty on the investment decision for reasonable parameter values we show how a simple npv rule can lead to gross errors

does total factor productivity drive housing prices a growth accounting exercise for four countries abstract housing prices diverge from construction prices after 1997 in four major countries besides total factor productivity tfp differences between construction and the general economy account for the evolution of construction prices in the us and germany but not in the uk and spain