trade openness tax reform and tax revenue in developing countries this article investigates empirically whether the effect of tax reform involving the progressive replacement of trade tax revenue with domestic tax revenue in developing countries tax revenue performance measured by tax revenue to gdp ratio depends on the degree of trade openness of these countries the analysis has used an unbalanced panel data set of 95 developing countries over the period 1981 2015 and the two system gmm approach results suggest that tax reform is positively and significantly associated with tax revenue performance in developing countries with the magnitude of this positive effect increasing as countries experience a higher development level additionally and more importantly countries that further open up their economies to international trade enjoy a higher positive effect of tax reform on tax revenue than countries that experience a lower degree of trade openness therefore these findings should help dissipate the concerns of policymakers in developing countries that greater openness to international trade would further erode their tax revenue including by lowering their international trade tax revenue in fact the implementation of an appropriate tax reform in the context of greater trade openness would generate higher tax revenue while concurrently allowing countries to reap the well known benefits of international trade

the international monetary fund and developing countries a review of the evidence and policy options as its systemic role evaporated with the collapse of the bretton woods system so the international monetary fund imf became drawn into a much more specific role in the context of the balance of payments bop problems that developing countries were encountering at its inception the imf had been seen as having no specific role in developing countries but now it became exclusively these countries that formed its clientele while during the 1970s the imf had continued to make a few relatively large loans to a limited number of industrial countries italy and the united kingdom beyond the mid 1970s industrial countries ceased to draw any resources from it

the multi item single period problem with an initial stock of convertible units abstract this paper deals with the situation of a number of end items each facing uncertain demand in a single period of interest besides being able to purchase units of the end items there is also available a stock of units that can be converted into end items but at unit costs that depend on the specific end item efficient solution procedures are presented for two situations i where the end item demand distributions are assumed known illustrated for the case of normally distributed demand and ii a distribution free approach where only the first two moments of the distributions are assumed known computational results for a set of problems are presented

the control of technology alliances an empirical analysis of the biotechnology industry we examine the determinants of control rights in biotechnology alliances through three case studies and a quantitative analysis aghion and tirole 1994 argue that control rights will be assigned so as to maximize the value of the final output as long as the r d firm has sufficient financial resources consistent with this framework the allocation of control rights to the r d firm increases with the firm s financial resources the empirical evidence regarding the relationship between control rights and the stage of the project at the time the alliance is signed is more ambiguous

financial contracting theory meets the real world an empirical analysis of venture capital contracts we compare the characteristics of real world financial contracts to their counterparts in financial contracting theory we do so by studying the actual contracts between venture capitalists vcs and entrepreneurs the distinguishing characteristic of vc financings is that they allow vcs to separately allocate cash flow rights board rights voting rights liquidation rights and other control rights we describe and measure these rights we then interpret our results in relation to existing financial contracting theories we also describe the interrelation and the evolution across financing rounds of the different rights query 1 query 2

strategic alliances venture capital and exit decisions in early stage high tech firms abstract we study the trade offs that biotech start ups face in the private equity market when they choose between raising firm level capital from venture capitalists or project level capital from strategic alliance partners increased alliance activity makes future alliances more likely but future vc activity less likely in contrast venture capital vc activity makes both future alliance and future vc activity more likely both types of private capital raise the hazard of going public acquisition as an alternative to initial public offering is made more likely by increased vc activity but the link between acquisition probabilities and alliance activity is less clear cut these results highlight both the importance of alliance partners in resolving asymmetric information problems in the capital acquisition process and the potential conflict of interest between different sources of private equity

modeling growth and liberalization using smooth transitions analysis i introduction there is a large and growing literature on liberalization and its effects stimulated initially by the very extensive trade reform programs promoted in developing countries over the last fifteen years or so and sustained by the attempts to understand what is happening in the eastern and central european economies the latter do not feature in this paper though the techniques demonstrated here may in time prove to be useful for gaining insight into the effects of regime changes underway liberalization in the sense of trade reforms which reduce anti export bias in one way or another while improving the information content of relative price changes has been promoted in some eighty or so developing countries in the 1980s and 1990s some of these liberalizations are unilateral most are policy conditioned under the aegis of world bank structural adjustment loans sals 1 all have been undertaken on the assumption that liberalization will ultimately improve export and growth performance the evidence on liberalization and growth however is at best somewhat mixed on the one hand one has the exhaustive study of papageorgiou michaely and choksi 1991 which claims a close and direct association on the other hand greenaway and sapsford 1994 find only a limited role for liberalization and a range of studies of sals associate adjustment with a deterioration in growth performance 2 these studies generally rely either on crude data inspection simple correlation analysis or multivariate regression this paper takes a new approach to the question it starts from the presumption that any changes in economic performance following a liberalization may be more appropriately modeled as a steady transition rather than a discrete change to model the change in this way we make use of the recent work of granger and terasvirta 1994 who explore the properties of a variety of nonlinear specifications that facilitate modeling structural change as a smooth transition between states we estimate and test the adequacy of a number of such specifications our analysis is in two stages first we take a novel approach to the modeling of growth which allows us to model deterministic change without as other analysts have done imposing discrete changes not only does this help clarify the statistical properties of the time series it also challenges the assumptions that underpin much growth modeling having identified the transitions in the growth series we are investigating we then explore the coincidence of these transitions with well documented episodes of liberalization we do not formally test whether liberalization results in growth our results are however informative in two respects firstly they place a question mark against the widely held presumption that liberalization is a panacea for growth secondly they also point the way to the appropriate econometric modeling of these processes the remainder of the paper is structured as follows section ii briefly describes the context against which our analysis is set section iii sets out the details of our methodology and the models to be tested section iv reports our results contrasts them with those of previous work and evaluates the implications for policy section v concludes and identifies possible extensions ii liberalization exports and growth previous evidence there are essentially two strands of the literature which provide relevant background one which relates exports and growth a second which relates liberalization to exports and growth the exports and growth literature is an extensive one which goes back some years 3 it starts from the presumption that exports and growth are directly related with causality running from changes in exports to changes in growth 4 analysts have deployed a variety of empirical methods usually of growth accounting type models and covering a range of countries and time periods

aid and exchange rate adjustment in african trade liberalisations most african governments must except for short periods of time set macroeconomic policies which are compatible that is trade restrictions the exchange rate and budgetary cum monetary policy must be coordinated in such a way as to avoid depletion of foreign exchange reserves often the potential for departure from compatibility is minimal for example for some years the tanzanian economy was run with reserve cover of only a few days of imports 2 trade liberalisation must therefore involve continuous coordination with other policies so as to maintain compatibility one theoretical possibility is for a gradual creep towards liberalisation with coordination achieved by ex post fine tuning however recent surveys of numerous non african trade liberalisations papageorgiou et al i99i conclude that large abrupt liberalisations have proved more sustainable apart from economic considerations it is quite possible that for political reasons gradual trade liberalisation is not feasible in africa transient political windows of opportunity are either seized with an abrupt liberalisation or missed altogether further donors may insist on liberalisation being abrupt such a liberalisation starkly poses the coordination problem and this paper uses a simple computable general equilibrium model cge to explore alternative compatible strategies in an africa type economy the essence of the compatibility problem can be seen by considering the consequence of a liberalisation in which no other policies are changed the reduction of tariffs or more commonly the relaxation of quotas will lower the domestic price of importable goods and thereby reduce the demand for money 3 being a stock effect in the short term this will dominate any changes in the money supply brought about by the fiscal implications of liberalisation since these are flow effects hence there will be an excess supply of money and so a payments deficit the paper investigates three alternative strategies which prevent such an outcome each maintaining compatibility the first section 2 is to achieve an offsetting increase in the demand for money through devaluation the second section 3 is to use programme aid to finance a deficit until the money supply is sufficiently depleted these two extremes respectively characterise the post i986 nigerian trade liberalisation and all

what do entrepreneurs pay for venture capital affiliation this study empirically evaluates the certification and value added roles of reputable venture capitalists vcs using a novel sample of entrepreneurial start ups with multiple financing offers i analyze financing offers made by competing vcs at the first professional round of start up funding holding characteristics of the start up fixed offers made by vcs with a high reputation are three times more likely to be accepted and high reputation vcs acquire start up equity at a 10 14 discount the evidence suggests that vcs extra financial value may be more distinctive than their functionally equivalent financial capital these extra financial services can have financial consequences a central issue for early stage high tech entrepreneurs is obtaining external resources when the assets of their start up are intangible and knowledge based particularly for entrepreneurs without an established reputation convincing external resource providers such as venture capitalists vcs to provide financial capital may be challenging the literature contains two main lines of research for overcoming this problem one research stream has concentrated on designing institutional structures to permit financing early stage ventures this contractual and monitoring based approach is aimed at solving potential agency problems between investors and entrepreneurs e g admati and pfleiderer 1994 lerner 1995 hellmann 1998 and kaplan and str omberg 2001 2002 2003 a second research stream has suggested that when the quality of a start up cannot be directly observed external actors rely on the quality of the start up s affiliates as a signal of the start up s own quality

retail pricing and clearance sales sellers of new products are faced with having to guess demand conditions to set price appropriately but sellers are able to adjustprice over time and to learn from past mistakes additionally it is not necessary that all goods be sold with certainty it is sometimes better to set a high price and to risk no sale this process is modeledto explain retail pricing behavior and the time distribution of transactions prices start high and fall as a function of time on theshelf the initial price and rate of decline can be predicted and depends on thinness of the market the proportion of customers who are window shoppers and other observable characteristics copyright 1986 by american economic association

adjustment trade policy and investment slumps evidence from africa abstract this paper presents a model of investment in six african economies over the 1970s and 80s paying particular attention to the impact of the policy reforms which have accompanied structural adjustment programmes a priori the impact of trade reform on investment can be positive or negative in practise there is some evidence that it might be negative

does foreign aid increase private investment evidence from panel cointegration this article uses panel cointegration and causality techniques to examine the long run relationship between foreign aid and private investment our main result is that aid has a statistically significant negative effect on private investment this result is robust to outliers different measures and forms of aid sample selection and the sample period in addition we find that long run causality runs in both directions suggesting that an increase in aid reduces private investment and that in turn higher private investment leads to lower aid inflows

pricing and the news vendor problem a review with extensions in the newsvendor problem a decision maker facing random demand for a perishable product decides how much of it to stock for a single selling period this simple problem with its intuitively appealing solution is a crucial building block of stochastic inventory theory which comprises a vast literature focusing on operational efficiency typically in this literature market parameters such as demand and selling price are exogenous however incorporating these factors into the mode l can provide an excellent vehicle for examining how operational problems interact with marketing issues to influence decision making at the firm level in this paper we examine an extension of the newsvendor problem in which stocking quantity and selling price are set simultaneously we provide a comprehensive review that synthesizes existing results for the single period problem and develop additional results to enrich the existing knowledge base we also review and develop insight into a dynamic inventory extension of this problem and motivate the applicability of such models

price and order postponement in a decentralized newsvendor model with multiplicative and price dependent demand we analyze the effect of price and order postponement in a decentralized newsvendor model with multiplicative and price dependent demand wherein the manufacturer sets the wholesale price and possibly offers a buyback rate and the retailer determines the order quantity and retail price such postponement strategies can be used by the retailer by delaying his operational decisions order quantity and retail price until after demand uncertainty is observed we show how the equilibrium values of the contract parameters and profits are affected by i vertical competition ii type of contract wholesale price only or buyback iii demand distribution iv form of the expected demand function and v the timing of the retailer s operational decisions although in most cases postponement is quite beneficial for the channel members we show that for some model parameters due to vertical competition the expected value of perfect information about demand for price postponement and order postponement may be negative for the channel and even surprisingly for both members we also show that when a buyback option is offered neither order postponement nor price postponement has an effect on the equilibrium wholesale price profit allocation ratio between the manufacturer and the retailer and channel efficiency and that the equilibrium wholesale price expected retail price profit allocation ratio between the manufacturer and the retailer and channel efficiency in the model with buyback options under either order or price postponement further coincide with their counterparts in the corresponding deterministic model

uncertainty economic reforms and private investment in the middle east and north africa during the 1980s and the 1990s private investment in the middle east and north africa mena has on average shown a decreasing or stagnant trend this contrasts with the situation of the asian economies where private investment has always been more dynamic in this paper it is empirically shown for a panel of 39 developing economies among which four mena countries that in addition to the traditional determinants of investment such as the growth anticipations and the real interest rate government policies explain mena s low investment rate insufficient structural reforms which have most of the time led to poor financial development and deficient trade openness have been a crucial factor for the deficit in private capital formation the economic uncertainties of the region have represented another factor of the firm s decisions not to invest these uncertainties have consisted of the external debt burden and various measures of volatility

the impact of terms of trade and real exchange rate volatility on investment and growth in sub saharan africa abstract specialization in primary product exports reduces growth but why adverse trends in and the high variance of primary product prices are possible explanations the impact on investment and growth of the level and volatility of the terms of trade and the real effective exchange rate is estimated for a panel of 14 sub saharan african countries over 1980 1995 growth is negatively affected by terms of trade instability and investment by real exchange rate instability both growth and investment increase when the terms of trade improve and real exchange rate overvaluation is eliminated

interorganizational alliances and the performance of firms a study of growth and innovation rates in a high technology industry this paper investigates the relationship between intercorporate technology alliances and firm performance it argues that alliances are access relationships and therefore that the advantages which a focal firm derives from a portfolio of strategic coalitions depend upon the resource profiles of its alliance partners in particular large firms and those that possess leading edge technological resources are posited to be the most valuable associates the paper also argues that alliances are both pathways for the exchange of resources and signals that convey social status and recognition particularly when one of the firms in an alliance is a young or small organization or more generally an organization of equivocal quality alliances can act as endorsements they build public confidence in the value of an organization s products and services and thereby facilitate the firm s efforts to attract customers and other corporate partners the findings from models of sales growth and innovation rates in a large sample of semiconductor producers confirm that organizations with large and innovative alliance partners perform better than otherwise comparable firms that lack such partners consistent with the status transfer arguments the findings also demonstrate that young and small firms benefit more from large and innovative strategic alliance partners than do old and large organizations copyright 2000 john wiley sons ltd

the participation of new technology based firms in eu funded r d partnerships the role of venture capital this paper investigates the participation of new technology based firms ntbfs in eu funded r d partnerships we examine whether venture capital vc backed firms are more likely to enter these partnerships than their non vc backed peers and the role of the ownership and governance of the vc investor we resort to a mixed method approach we use qualitative information collected through interviews with managers of ntbfs and vc firms to better illustrate our deductively derived theoretical hypotheses that are then tested through a large scale econometric analysis the econometric analysis takes advantage of the vico dataset which includes longitudinal data on 8346 ntbfs from seven european countries observed from 1995 to 2008 out of which 758 were vc backed the econometric results show that vc backing has a strong positive impact on ntbfs participation in eu funded r d partnerships but the magnitude of this effect rapidly decreases with ntbfs prior experience of this type of partnership moreover the magnitude of the impact of vc backing considerably differs depending on the type of investor with bank and government vc exhibiting the strongest positive effects

evaluating the impact of world bank structural adjustment lending 1980 87 this article attempts to evaluate the world bank s programme aid in the form of structural adjustment loans with emphasis on the distinction between the influence of programme finance and the influence of the policy conditions attached to this finance the rate of return on world bank programme aid measured in terms of the impact of gdp growth rates is found to have been disappointing the study also identifies a negative correlation between structural adjustment loans and investment it was also found that the bank programme aid s strongest beneficial effect has been on the balance of payments current account both via the stimulation of exports and via the curbing of imports

reducing the cost of demand uncertainty through accurate response to early sales traditionally fashion products have incurred high losses due to stockouts and inventory obsolence because long lead times coupled with a concentrated selling season force all or at least most production to be committed before demand information is available under a quick response system lead times are shortened sufficiently to allow a greater portion of production to be scheduled in response to initial demand we model and analyze the decisions required under quick response and give a method for estimating the demand probability distributions needed in our model we applied these procedures with a major fashion skiwear firm and found that cost relative to the current informal response system was reduced by enough to increase profits by 60 relative to the cost that would have been incurred if no response were used optimized response reduces cost by enough to roughly quadruple profits

note the newsvendor model with endogenous demand this paper considers a firm s price and inventory policy when it faces uncertain demand that depends on both price and inventory level the authors extend the classic newsvendor model by assuming that expected utility maximizing consumers choose between visiting the firm and consuming an exogenous outside option the outside option represents the utility the consumer forgoes when she chooses to visit the firm before knowing whether or not the product will be available the authors investigate both the case in which the firm s price is exogenous and the case in which price is chosen optimally the paper makes two contributions first the authors show that the firm holds more inventories provides a higher fill rate attracts more customers and earns higher profits when it internalizes the effect of its inventory on demand second the authors show that in the endogenous price case the firm s two dimensional decision problem can be reduced to two sequential single variable optimizations as a result the endogenous price case is as easy to solve as the exogenous price case

venture capital investment cycles the impact of public markets abstract it is well documented that the venture capital industry is highly volatile and that much of this volatility is associated with shifting valuations and activity in public equity markets this paper examines how changes in public market signals affected venture capital investing between 1975 and 1998 we find that venture capitalists with the most industry experience increase their investments the most when public market signals become more favorable their reaction to an increase is greater than the reaction of venture capital organizations with relatively little industry experience and those with considerable experience but in other industries the increase in investment rates does not affect the success of these transactions adversely to a significant extent these findings are consistent with the view that venture capitalists rationally respond to attractive investment opportunities signaled by public market shifts

low investment and large ldc debt in the 1980s this paper aims at disentangling the correlation between ldc debt and investment in the 1980s the author shows that a large debt was not an unconditional predictor of low investment in the 1980s nor was investment abnormally low when compared to a financial autarky rate calculated in the text he does find however that the actual service of the debt crowded out investment for the rescheduling countries he shows that 1 percent of gdp paid abroad reduced domestic investment by 0 3 percent of gdp this is identical to the correlation between investment and foreign finance observed in the 1960s copyright 1993 by american economic association

modelling the impact of world bank policy based lending the case of malawi s agricultural sector this article uses a multi market agricultural pricing model to analyse the impact of the world bank s three structural adjustment loans sals to malawi on the smallholder agricultural sector three price policy scenarios are simulated on the model representing zero partial and full compliance with the bank s sal price policy conditionality these scenarios are analysed in terms of their impact on the government budget smallholder real incomes maize production exportable cash crop production and the balance of payments critiques of the bank s programme and the government and bank bargaining strategies are assessed in the light of the modelling results

robust price setting newsvendor model with interval market size and consumer willingness to pay we consider a price setting newsvendor problem with partial information the newsvendor does not know the price dependent probability distribution of demand but is able to estimate lower and upper limits of the market size and consumer willingness to pay the objective is to minimize the maximum loss in expected profit or minimax regret we derive closed form expressions for optimal quantity and price and identify managerial insights

the effectiveness of structural adjustment lending initial evidence from malawi abstract the world bank s new programs of structural adjustment lending are likely to prove most effective with those governments which demonstrate shared ideals in their approach to economic adjustment and policy reform malawi has long been regarded as a country placing great reliance on the market in resource allocation showing restraint in public sector expansion and retaining a strong export orientation the balance of payments difficulties and the deterioration in economic circumstances which began in 1980 did not arise solely from external shocks but the structural adjustment lending programs introduced in 1981 as a means of easing the painful reform process found root in a fertile and responsive policy environment this paper chronicles the first two sals to malawi reviewing in particular the specific policy reforms advocated and required by the bank the extent of their implementation and the provisional effects on the malawi economy

a note on the effect of optimal advertising on the distribution free newsboy problem abstract recently lee and hsu 2011 study the advertising effect on the distribution free newsboy problem in one of their results they show that the optimal expenditure on advertising the optimal order quantity and the optimal lower bound on the expected profit increase with the advertising effect parameters although this result holds in general it requires additional assumptions in this note we provide the necessary and sufficient conditions under which the statements of lee and hsu 2011 hold these conditions are shown to be violated if the advertising expenditure is too low or there is a very small difference between the optimal profit and the profit without advertising

the effect of advertising on the distribution free newsboy problem abstract advertising is very important for the newsboy problem because the shelf life of the newsboy product is short and advertising may increase sales to avoid overstocking in this paper models to study the effect of advertising are developed for the distribution free newsboy problem where only the mean and variance of the demand are known as in khouja and robbins 2003 it is assumed that the mean demand is an increasing and concave function of advertising expenditure three cases are considered 1 demand has constant variance 2 demand has constant coefficient of variation and 3 demand has an increasing coefficient of variation this paper provides closed form solutions or steps to solve the problem numerical results of the model are also compared with those from other papers the effects of model parameters on optimal expenditure on advertising optimal order quantity and the lower bound on expected profit are derived or discussed

cambodia rapid growth in an open post conflict economy this study provides an analytical review of world trade organization trade policy review cambodia the first such report undertaken for the country the report highlights cambodia s rapid economic growth after one of the world s worst cases of genocide in the second half of the twentieth century this growth has been underpinned by open trade and investment policies in the context of dynamic neighbourhood growth effects the trade regime is mainly tariff based with modest intersectoral variations in rates cambodia has limited trade policy space it is a signatory to the 10 nation asean free trade agreement soon to become the asean economic community moreover given its long and porous borders with the much larger dynamic economies of thailand and vietnam any major cross border price differences will quickly result in informal trade with these economies and nearby china most of the country s trade policy challenges are to do with behind the border issues a legacy of its generation of civil war and conflict these include weak bureaucratic capacity high levels of corruption poor infrastructure and limited human capital

trade policy in burundi reform without political stability this paper evaluates burundi s progress with trade policy reform by comparing earlier analyses of burundi s trade policies undertaken in the 1980s with that of the wto s recent trade policy review since the mid 1980s burundi has been trying to reform its trade and macroeconomic policies against the background of continuous socio political tensions and periodic outbreaks of violent tribal conflict a then and now comparison allows us to assess both the extent of the trade reforms and of the economic return to those reforms it is evident that there has been a significant rationalisation and simplification of trade policy burundi has eliminated most quantitative import restrictions and reduced the average level and range of its tariffs the scope for allocative distortions undesirable redistributive effects and for impediments to investment and growth has been substantially reduced however a return to reform in terms of export growth or diversification and of overall economic growth is not discernible yet this is unsurprising given the scale of the economic disruption sustained socio political stability among other things will be required to induce the investment in human and physical capital needed for a positive return to trade policy reform

the investment decision a re examination of competing theories using panel data in the united states gross business fixed investments constitute about 10 percent of the gross national product gnp such investments may represent gnp s most important component because a plant and equipment have a long term effect on the economy s productive capacity b changes in investment spending directly affect employment levels and workers incomes in durable goods industries and c supply and demand are sensitive to investment changes economists have long been concerned about what determines capital spending investments using data for us manufacturing firms for 1972 90 the author compares five investment theories accelerator theory cash flow theory neoclassical theory modified neoclassical theory and q theory if the results for cross section regressions can be viewed as representing the long term equilibrium the single most important determinant of capital spending appears to be cash flow apparently managers care more about cash flow and cost of capital than about stock market signals and the level of output and at the firm level managerial perceptions about fundamentals are more important that market perceptions for managers the stock market may be a side show to capital spending decisions to generalize in a way useful for developing countries firm level financial decisions are closely linked to real decisions in the economy internal finance is the most important use of funds so there is a close relationship between real and financial decisions

joint pricing production decisions in supply chains of complementary products with uncertain demand consider n manufacturers each producing a different product and selling it to a market either directly or through a common retailer the n products are perfectly complementary in the sense that they are always sold and consumed jointly or in sets of one unit of each demand for the products during a selling season is both price sensitive and uncertain each of the n manufacturers faces the problem of choosing a production quantity and a selling price for his product two settings are considered regarding the decision sequence of the n manufacturers they are either simultaneous or sequential the retailer when present employs a consignment sales contract with revenue sharing to bind her relationship with the manufacturers and to extract profit for herself using a multiplicative demand model in this paper we fully characterize individual firms decisions in equilibria under each of the two game settings and derive closed form performance measures both for the channel and for individual channel members these closed form solutions allow us to explore the effects of channel structure and parameters on firms decisions and performance that lead to conclusions of managerial interest

fiscal composition and aid effectiveness a political economy model summary in the long run tax effort we argue determines the effectiveness of aid and this relationship operates simultaneously with the negative link in the opposite direction observed by brautigam and knack 2004 and others tax effort and the ability of the state to diversify its taxation structure we find are significantly linked to growth and poverty indicators the key message for policy is that a broadening of the tax structure in low income countries is crucial in order to enable those countries to escape from the weak state low tax trap and to make aid effective

technical note robust newsvendor competition under asymmetric information we generalize analysis of competition among newsvendors to a setting in which competitors possess asymmetric information about future demand realizations and this information is limited to knowledge of the support of demand distribution in such a setting traditional expectation based optimization criteria are not adequate and therefore we focus on the alternative criterion used in the robust optimization literature the absolute regret minimization we show existence and derive closed form expressions for the robust optimization nash equilibrium solution for a game with an arbitrary number of players this solution allows us to gain insight into the nature of robust asymmetric newsvendor competition we show that the competitive solution in the presence of information asymmetry is an intuitive extension of the robust solution for the monopolistic newsvendor problem which allows us to distill the impact of both competition and information asymmetry in addition we show that contrary to the intuition a competing newsvendor does not necessarily benefit from having better information about its own demand distribution than its competitor has

tax revenue performance and vulnerability in developing countries this paper addresses vulnerability of revenue to external shocks using export composition to capture economic structure and differentiating countries according to income levels resource endowments and political regimes this gives a richer characterization than previous studies lower income countries are vulnerable to shocks especially in terms of trade associated with the greatest revenue loss democratic regimes seem to be less vulnerable to revenue losses due to shocks than non democracies whereas revenue in resource rich is more vulnerable to shocks except natural disasters than non resource rich countries we find a negative relationship between manufacturing exports and revenue in lower income countries

the link between increased trade openness and the terms of trade an empirical investigation abstract despite the fairly widespread move towards more open trade policies in developing countries relatively little attention has been paid to the effect of these policies on the terms of trade using a large sample of countries this paper tries to assess empirically the validity of the small country assumption which underlies the washington consensus on development strategies our evidence suggests that there is a sizable group of countries ldcs and non ldcs for which the assumption of exogenous traded goods prices can be rejected one implication is that terms of trade considerations should be included in the assessment of trade liberalization policies these effects might rise considerably when several countries liberalize simultaneously

revenue management with limited demand information in this paper we consider the classical multifare single resource leg problem in revenue management for the case where demand information is limited our approach employs a competitive analysis which guarantees a certain performance level under all possible demand scenarios the only information required about the demand for each fare class is lower and upper bounds we consider both competitive ratio and absolute regret performance criteria for both performance criteria we derive the best possible static policies which employ booking limits that remain constant throughout the booking horizon the optimal policies have the form of nested booking limits dynamic policies which employ booking limits that may be adjusted at any time based on the history of bookings are also obtained we provide extensive computational experiments and compare our methods to existing ones the results of the experiments demonstrate the effectiveness of these new robust methods

asian growth and trade poles india china and east and southeast asia summary using a global general equilibrium trade model this study analyzes the impact on developing countries of 1 the dramatic expansion of trade by india china and an integrated east and southeast e se asia trade bloc and 2 productivity growth in the region china is an integral member of the e se asia bloc with strong links through value chains and trade in intermediate inputs while india is not a part of any trade bloc the analyses consider the importance of their different degrees of integration into regional and global economies focusing on potential complementarities and competition with other developing countries

evidence of public spending crowding out from a panel of oecd countries the empirical relationship between government spending and private investment is examined using a panel of 14 oecd countries the evidence suggests the existence of a significant crowding in effect of private investment by public investment through the positive impact of infrastructure on private investment productivity moreover government consumption appears to crowd out private investment the implications of these results are of foremost importance when it comes to fiscal consolidation deficit reductions engineered through cuts in public investment could severely impinge on private capital accumulation and growth prospects

trade policy issues in a small african economy the trade policy review of the gambia 2004 the gambia displays many of the classic characteristics of a small open economy with the vulnerabilities that implies the sum of its imports and exports are around 100 per cent of gdp with a limited number of export commodities and a wide variety of imports including some key staple foods the trade policy review of the gambia 2004 provides a very helpful review and assessment of current trade patterns and policies the latter rely predominantly on import and export taxes while quite substantial trade reform measures have been implemented recently these have led to only a very small reduction in the average tariff rate and trade policy displays a substantial anti export bias other important issues highlighted by the trade policy review include serious capacity constraints relating to trade policy and a failure to discuss connections between trade policy and growth and poverty reduction again common characteristics of many small economies

investment trade liberalisation and structural adjustment the disappointing investment response in developing countries to world bank structural adjustment lending sals is considered in the light of a theoretical model of the impact of trade liberalisation and tightening balance of payments constraints on investment the policy reforms under sals are not as conducive to increased investment as they may appear to be at first sight the tendency of countries to apply for sals when confronted with serious balance of payments disequilibrium is also an important factor however there is no evidence that sals are associated with a downward shift in the investment function

has recovery begun africa s adjustment in the 1980s revisited this article reviews the 1989 debate between the world bank and the economic commission for africa over africa s adjustment and on the basis of most recent statistics concludes that there is little evidence that the region is in throes of a recovery some countries however did relatively better than others in the 1980s and an attempt is made to account for differences in performance it is concluded that success in adjustment results not from world bank international monetary fund programs as such but rather from policy coherence accompanied by healthy movement in key variables namely the real exchange rate and public development expenditure

trade policy adjustment in ldcs a short run view the article deals with the role of tariff protection and exchange rate policies in ldcs after a terms of trade shock has occurred and a new equilibrium is to be attained constraints concerning the domestic foreign and public sectors are specified it is shown that the optimal response to the shock depends on the domestic features of the economy as well as on its trade openness in particular protectionist attitudes may well be justified and anti trade policies may be helpful to ease adjustment

governance and real estate markets performance in nigeria are they related governance has been identified as a key determining variable capable of influencing the performance of any economy activity on this note the study undertakes to investigate the relationship between governance and the real estate markets performance in nigeria the study employs ardl methodology of bound testing approach for the quarterly series spanning 1996q1 to 2010q4 of the variables considered the prominent role of real gdp and governance index were clearly brought to fore both in the short and long run while that of inflation and interest rates were less pronounced statistically the result of ecm further accentuates connection between governance and the real estate market through the establishment a stable long run relationship between them in the final analysis a few policy prescriptions are advice for the attention of all stakeholders in the built environment

liberalization and the terms of trade in turkey a causal analysis there has been extensive trade liberalization in developing countries in recent decades several liberalization episodes have been completed in turkey in this paper we evaluate the relationship between trade liberalization in turkey and the terms of trade has liberalization preceded changes in the terms of trade or vice versa using causality analysis we investigate several hypotheses and conclude that in this case trade liberalization follows a terms of trade change a finding which is consistent with the trade shocks hypothesis

assessing indirect tax reform in a tourism dependent developing country summary the paper investigates the effects of reform of the current structure of indirect taxes in mauritius a relatively tourism dependent economy it uses a computable general equilibrium model to explore the relative efficiency of changing sales tax rates on tourism and nontourism related sectors and allowing for equity considerations the efficiency of tax reforms are also distinguished for cases where tourist arrivals are exogenously set and where they endogenously adjust to changes in relative prices the simulation results show that the tourism sectors are currently undertaxed additionally taxing tourism sectors is found to be the most socially efficient means of raising tax revenue

macroeconomic uncertainty and private investment abstract this paper provides empirical support for a link between macroeconomic uncertainty and private investment in developing countries cross section regressions with constructed measures of uncertainty confirm that for developing countries uncertainty is negatively correlated with private investment

the catalytic effect of lending by the international financial institutions for many less developed countries ldcs and countries in transition cits external financing is frequently an effective constraint on economic growth and development capital inflows may be used to overcome shortages of domestic saving thereby permitting higher levels of investment as well as shortages of foreign exchange thereby permitting larger quantities of imports

fiscal dependence on trade taxes and economic development additional results and a reconciliation of the empirical evidence using brazilian data spanning the period 1910 75 new evidence is presented on the hypothesis that a country s fiscal dependence on trade taxes is inversely related to her level of economic development at least once the latter passes a certain threshold unlike previous studies this study uses methods which highlight the dynamic and temporal nature of the underlying relationships the results indicate strong support for the hypothesis and also suggest that the conflicting time serious evidence can be reconciled

modeling private investment in egypt abstract this paper presents an empirical model of private investment that takes into account certain features of a developing economy such as the oligopolistic structure of markets putty clay technology the inelastic supply of non traded capital goods and financial repression the model is tested on egyptian data using error correction and cointegration the results for egypt indicate that at the macroeconomic level private investment depends on mark ups internal financing demand and the cost of investment goods defined not as the interest rate but as the outcome of the interaction of supply and demand in the market for capital goods the effects of government policy on private investment are mixed with some evidence of crowding out in credit markets and of crowding in as a result of government investment in infrastructure

fiscal dependence on trade taxes and the level of economic development a comment 1993 fiscal dependence on trade taxes and the level of economic development a comment applied economics vol 25 no 11 pp 1393 1397

determinants of private investment in developing countries this paper examines a modified version of the flexible accelerator theory of investment with particular reference to developing countries the empirical results for five countries tend to confirm that government investment the change in bank credit to the private sector and capital inflow to the private sector play important roles in determining private investment the contributory effect and the crowding out effect of government investment are assessed within the context of a recursive model

international and domestic collateral constraints in a model of emerging market crises abstract we build a model of emerging markets crises which features two types of collateral constraints firms in a domestic economy have limited borrowing capacity from international investors they also have limited borrowing capacity with respect to each other we study how the presence and changes in these collateral constraints affect financial and real variables a binding international constraint in the aggregate leads to a sharp rise in interest rates and fire sales of domestic assets while limited domestic collateral can lead to wasted international collateral these two collateral constraints can interact in important ways the first is disintermediation a fire sale of domestic assets causes banks to fail in their function of reallocating resources across the economy leading to wasted international collateral the second is a dynamic effect we show that firms in an economy with limited domestic collateral and a binding international collateral constraint will not adequately precaution against adverse shocks increasing the severity of these shocks

network prominence bargaining power and the allocation of value capturing rights in high tech alliance contracts we suggest and provide empirical evidence that the bargaining power of alliance partners stemming from their prominence in alliance networks influences the ex ante allocation of value capturing rights in high tech alliance contracts network prominence can enhance the availability of alternative partners for a firm and thereby elevates the firm s bargaining power and enables the firm to receive i more value capturing rights vis a vis its partner i e more net value capturing rights and ii more rights to the unexpected outcomes vis a vis its partner we empirically investigate the content of research and development r d collaboration contracts between biotech and pharmaceutical firms and show that as the prominence of the client i e pharmaceutical firm increases it is able to attain i more net value capturing rights to outcomes within the area of collaboration and ii more rights to unexpected outcomes by contrast increased prominence of the r d firm i e biotech firm decreases both t

sri lanka s trade policy reverting to dirigisme the paper surveys recent development in sri lankan trade policy with an emphasis on emerging protectionist tendencies using sri lanka s trade policy review 2010 by the world trade organisation as a reference point the sri lankan experience for over the three decades following the liberalisation reforms stated in 1977 has clearly demonstrated that an outward oriented policy regime can yield a superior development outcome compared to a closed economy regime even under severe strains of a protracted ethnic conflict and macroeconomic instability viewed against this backdrop recent developments in the sri lankan policy scene do not seem to augur well for the future of the sri lankan economy

the design of fiscal reforms in revenue constrained developing countries while generalisation is perilous there are many especially small developing countries for which sales taxes and turnover taxes are fairly negligible as revenue sources and for which import duties and export taxes particularly the former are leading revenue sources for evidence from the early i980s see tanzi i987 and greenaway and milner i990 this observation is unsurprising when account is taken of the administrative constraints to which many developing countries are subject sales taxes can be difficult to collect not to mention a complex tax like vat income tax is largely infeasible and often has to take a simple form such as a payroll tax confined in practice to public and large company employment some taxes which would be assumed to be eminently feasible in industrial economies may not generate as much revenue as might be supposed in a developing country for instance tax disks which the law may require heavy goods vehicles to carry may generate a flow of bribes to police and other officials if these are wise enough to set the bribe at a modest level making it cheaper to pay bribes than to buy a disk a cynic might say that the bribes are an unofficial source of revenue if their existence enables the state to get away with paying its officials absurdly low salaries one would have to hope if that argument is accepted that the officials do something socially useful apart from stopping heavy goods vehicles such considerations make it interesting to consider the design of public finance for a country severely constrained in its choice of what musgrave called tax handles that is types of tax instrument which it may practically employ the existing literature for which newbery and stern i987 provides an excellent review throws some light on this issue but the problem is seldom treated explicitly an exception would be dreze and stern i985 whose highly abstract and general treatment of cost benefit analysis theory can be seen to incorporate principles of public finance which fully cover the restricted policy choices which i have in mind because the approach of these authors is so general however it is not easy to extract conclusions for tax design in specific cases this is no criticism of the paper of course as the argument is addressed to cost benefit analysis generally speaking theory has developed in the direction of sophisticated and complex tax systems the next section discusses why this is so from the point of view of theory yet ideal tax systems would be difficult to implement in many developing countries as i shall treat tariffs as a highly feasible revenue

the distribution free newsboy problem extensions to the shortage penalty case abstract in the classical newsboy problem no cost is assumed if the ordered quantity is less than the demand however in reality failure to meet demand is always associated with a penalty the aim of this work is to extend the analysis of the distribution free newsboy problem to the case when shortage cost is taken into consideration the analysis is based on the assumption that only the mean and variance of demand are known but its particular probability distribution is not a model is presented for determining both an optimal order quantity and a lower bound on the profit under the worst possible distribution of the demand the following cases are considered the single product case the fixed ordering cost case the random yield case and the resource constrained multi product case

the distribution free newsboy problem with resalable returns we study the case of a catalogue internet mail order retailer selling style goods and receiving large numbers of commercial returns returned products arriving before the end of the selling season can be resold if there is sufficient demand a single order is placed before the season starts excess inventory at the end of the season is salvaged and all demands not met directly are lost since little historical information is available it is impossible to determine the shape of the distribution of demand therefore we analyze the distribution free newsboy problem with returns in which only the mean and variance of demand are assumed to be known we derive a simple closed form expression for the distribution free order quantity which we compare to the optimal order quantities when gross demand is assumed to be normal lognormal or uniform we find that the distribution free order rule performs well when the coefficient of variation cv is at most 0 5 but is far from optimal when the cv is large

supply and demand uncertainty reduction efforts and cost comparison abstract in industries like health care consumer goods and agriculture shortages are widely observed and the consequences can be costly one of the main drivers of such shortages is the uncertain nature of supply and demand to reduce uncertainties sufficient information about supply and demand can be obtained by gathering relevant data e g auditing suppliers and conducting market research in this paper we conduct an analysis to examine the impacts of supply uncertainty demand uncertainty and uncertainty reduction efforts on production quantity and total cost we show that in the absence of uncertainty reduction efforts when the financial consequences of shortages are large or when the unit benefit is large supply uncertainty is more costly than demand uncertainty in addition exerting supply uncertainty reduction effort always causes the firm to produce fewer units than exerting demand uncertainty reduction effort although supply uncertainty reduction effort delivers a larger degree of improvement to total cost and hence is more efficient reduced supply uncertainty still leads to a higher system cost than does reduced demand uncertainty

the gender dimensions of economic adjustment policies potential interactions and evidence to date abstract many developing countries have implemented stabilization and structural adjustment programs over the last 20 years the success of these programs depends critically on individual level responses to changing economic incentives access to control of and an ability to move productive economic resources between sectors is determined in part by gender if an individual s gender impedes their ability to fully participate in the economic adjustment process by inhibiting resource access control or movement adjustment will be impaired this paper discusses the potential gender dimensions of structural adjustment policies and examines the evidence to dale

expected value of distribution information for the newsvendor problem this paper extends previous work on the distribution free newsvendor problem where only partial information about the demand distribution is available more specifically the analysis assumes that the demand distribution f belongs to a class of probability distribution functions pdf f with mean and standard deviation while previous work has examined the expected value of distribution information evdi for a particular order quantity and a particular pdf f this paper aims at computing the maximum evdi over all f f for any order quantity in addition an optimization procedure is provided to calculate the order quantity that minimizes the maximum evdi

liberalising foreign trade through rose tinted glasses the foreign trade sector has a crucial role to play in economic development trade has variously been described as the engine or handmaiden of growth this key role has stimulated a great deal of interest in the links between trade and growth with the links between trade orientation and exports and exports and growth receiving particularly close attention alongside this time series work there have been a number of multi country studies of trade policy in developing countries those of krueger i 98 i and balassa i 982 are perhaps the best known most of this work has been directed at two questions first what does the structure of protection look like in a given developing country second are there clear links between the structure of protection trade orientation and economic performance it is widely believed in developing countries that the major lending agencies the world bank in particular perceive a clear link between trade orientation and economic performance and that this explains why around three quarters ofall conditions which attach to structural adjustment loans sals feature reform of trade policy the editors of liberalising foreign trade demetrious papageorgiou michael michaely and armeane choksi all of whom are on the world bank staff clearly believe this to be the case judging from their opening statement the benefits of open trading have by now been sufficiently demonstrated and described by economic historians and analysts in this study we take them for granted and turn our minds from the whether to the how vol i p vii in other words it is the timing phasing and sequencing involved in the design and implementation of a trade liberalisation policy that forms the subject matter of the present study vol 7 p i liberalising foreign trade is a world bank organised study which describes and evaluates 36 liberalisation episodes in i 9 countries during the period i950 i982 the study is ambitious in scale28 authors 3 editors 7 volumes and almost 3 ooo pages of text it is the most comprehensive cross country analysis of liberalisation episodes undertaken from a policy perspective a study of this scale is potentially of considerable interest given the liberalisations

robust multi item newsboy models with a budget constraint abstract in this paper we present robust newsboy models with uncertain demand the traditional approach to describing uncertainty is by means of probability density functions in this paper we present an alternative approach using deterministic optimization models we describe uncertainty using two types of demand scenarios namely interval and discrete scenarios for interval demand scenarios we only require a lower and an upper bound for the uncertain demand of each item while for discrete demand scenarios we require a set of likely demand outcomes for each item using the above scenarios to describe demand uncertainty we develop several minimax regret formulations for the multi item newsboy problem with a budget constraint for the problems involving interval demand scenarios we develop linear time optimal algorithms we show that the corresponding models with discrete demand scenarios are np hard and that they are solvable by dynamic programming finally we extend the above results to the case of mixed scenarios where the demand of some of the items is described by interval scenarios and the demand of the remaining items is described by discrete scenarios

fiscal dependence on trade taxes and trade policy reform the article focuses on fiscal implications of structural adjustment loans sals from an a priori standpoint and by reference to the experience of five countries three of these countries have had revenue enhancement after trade policy reforms and the other two cases experienced revenue depletion the central point which emerges from the study is that it is not clear that trade liberalisation leads to fiscal enhancement or fiscal depletion both a priori the orising and country analyses demonstrate that a range of outcomes is possible depending upon initial conditions and the components of any reform package

survival of businesses using collaborative relationships to commercialize complex goods authors with many theoretical and managerial perspectives argue that businesses commercializing technologically complex goods benefit when they collaborate closely with other businesses collaboration is viewed as a means for businesses to overcome competency limitations and to achieve the close configuration of components required for complex goods we predict that collaborative relationships often assist businesses to produce complex goods but that the relationships might also cause problems for the collaborating businesses we find that firms using development oriented and marketing oriented collaborative relationships in the hospital software systems industry are less likely to shut down than businesses that follow independent approaches when the environment changes gradually but businesses using collaborative relationships are sometimes susceptible to being acquired by other firms following a sudden environmental shock businesses with collaborative relationships for activities central to the shock became more likely to shut down while businesses with collaborative relationships for activities outside the focus of the shock became more likely to survive the study critically evaluates and tests the widely stated but little tested argument that interfirm collaboration is usually beneficial the results address the issue of whether organizational choices affect comparative business performance

venture capitalist certification in initial public offerings this paper provides support for the certification role of venture capitalists in initial public offerings consistent with the certification hypothesis a comparison of venture capital backed ipos with a control sample of nonventure capital backed ipos from 1983 through 1987 matched as closely as possible by industry and offering size indicates that venture capital backing results in significantly lower initial returns and gross spreads in effect the presence of venture capitalists in the issuing firms serves to lower the total costs of going public and to maximize the net proceeds to the offering firm in addition we document that venture capitalists retain a significant portion of their holdings in the firm after the ipo the ability of third party specialists to certify the value of securities issued by relatively unknown firms in capital markets that are characterized by asymmetric information between corporate insiders and public investors has attracted much academic interest in recent years several authors including james 1990 blackwell marr and spivey 1990 and barry muscarella peavy and vetsuypens 1991 have developed and tested models based at least in part on the formal certification hypothesis presented in booth and smith 1986 a related body of work represented by deangelo 1981 beatty and ritter 1986 titman and trueman 1986 johnson and miller 1988 carter 1990 simon 1990 and carter and manaster 1990 has examined how investment bankers and auditors help resolve the asymmetric information inherent in the initial public offering ipo process in this paper we examine whether the presence of venture capitalists as investors in a firm going public can certify that the offering price of the issue reflects all available and relevant inside information we hypothesize that venture capitalists can perform this function that it will be an economically

a life s work on trade and development this paper reflects on the career contributions of professor chris milner to the literature on international trade and economic development as such it not only provides an overview of a life s work but also sets the context for the nine papers which follow all of these were specially written for this special issue of the world economy and all relate to different areas that professor milner worked in

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

venture capitalists and cooperative start up commercialization strategy this paper examines the possible impact of venture capital vc backing on the commercialization direction of technology based start ups by asking to what extent if at all do vc funded start ups engage in cooperative commercialization strategies strategic alliances or technology licensing or both relative to a comparable set of start ups and with what consequences to address these questions i assemble a novel data set that matches firms receiving a federal research and development subsidy through the u s small business innovative research program to vc funded firms by observable characteristics in five technology intensive industries these data allow decoupling of cooperative activity resulting from start up development via the passage of calendar time from that due to association with vcs an analysis of the 696 start ups in the sample split by an external funding source suggests substantial boosts in both cooperative activity associated with vc backed firms and in the likelihood of an initial public offering

networks as the pipes and prisms of the market1 this article draws an analytical distinction between two types of market uncertainty egocentric which refers to a focal actor s uncertainty regarding the best way to convert a set of inputs to an output desired by a potential exchange partner and altercentric which denotes the uncertainty confronted by a focal actor s exchange partners regarding the quality of the output that the focal actor brings to the market given this distinction the article considers how the value of structural holes and market status vary with these two types of uncertainty the article proposes that the value of structural holes increases with egocentric uncertainty but not with altercentric uncertainty in contrast the value of status increases with altercentric uncertainty but declines with egocentric uncertainty thus actors with networks rich in structural holes should sort into markets or market segments that are high in egocentric uncertainty high status actors should sort into markets that are low in egocentric

volatility and investment interpreting evidence from developing countries we uncover a significant negative correlation between various volatility measures and private investment in developing countries even when adding the standard control variables no such correlation is uncovered when the investment measure is the sum of private and public investment spending indeed public investment spending is positively correlated with some ineasures of volatility these findings suggest that the detrimental impact of volatility on investment may be easier to detect using disaggregated data we provide several possible interpretations for our findings nonlinearities in preferences or budget constraints can cause volatility to have first order negative effects on private investment