social networks and technology adoption in northern mozambique despite their potentially strong impact on poverty agricultural innovations are often adopted slowly using a unique household dataset on sunflower adoption in mozambique we analyse whether and how individual adoption decisions depend upon the choices of others in the same social networks since farmers anticipate that they will share information with others we expect farmers to be more likely to adopt when they know many other adopters dynamic considerations however suggest that farmers who know many adopters might strategically delay adoption to free ride on the information gathered by others we present empirical evidence that shows that the relationship between the probability of adoption and the number of known adopters is shaped as an inverse u in line with information sharing the network effect is stronger for farmers who report discussing agriculture with others the data contains information which is needed to ameliorate the identification issues that commonly arise in this context in particular social networks are precisely identified and in addition we can control for village heterogeneity and endogenous group formation

informal firms in developing countries entrepreneurial stepping stone or consolation prize the potential dynamic benefits of a firm having the option to adopt informal status are analysed informality may be a stepping stone without which formality may never be achieved this result is obtained for a broad range of realistic parameter values suggesting a potential dynamic case for government support of informal firms informality may alternatively play a converse role as a consolation prize with a firm only entering an industry formally because it recognizes that if profitability is disappointing it can switch to informality however this result is obtained for a range of parameter values so narrow as to be of no practical significance

stochastic optimization model to study the operational impacts of high wind penetrations in ireland a stochastic mixed integer linear optimization scheduling model minimizing system operation costs and treating load and wind power production as stochastic inputs is presented the schedules are updated in a rolling manner as more up to date information becomes available this is a fundamental change relative to day ahead unit commitment approaches the need for reserves dependent on forecast horizon and share of wind power has been estimated with a statistical model combining load and wind power forecast errors with scenarios of forced outages the model is used to study operational impacts of future high wind penetrations for the island of ireland results show that at least 6000 mw of wind 34 of energy demand can be integrated into the island of ireland without significant curtailment and reliability problems

if diversification is good why don t countries diversify more the political economy of diversification in resource rich countries abstract for resource rich countries diversification is claimed to represent a strategy for reducing resource curse problems this however depends on whether diversification has a positive effect on the country s institutions while there is a lot of evidence that exports of oil have a negative impact on institutions we know much less about the extent to which diversification leads to better institutions this article applies recent political economy theory to the phenomenon of diversification theoretical arguments suggest that it is the pattern of industrial activity rather than diversification per se which affects institutions like democracy in other words not all forms of diversification lead to better institutions furthermore where diversification has a positive impact on institutions diversification may be difficult to attain when it threatens the power base of the ruling elite a possible implication of these arguments is that policies for diversification should focus on international regulation affecting elite incentives rather than domestic industrial policy

responsible leadership for multinational enterprises in bottom of pyramid countries the knowledge of local managers the gulf between multinational enterprises focus on high income countries and the reality of 80 of the world living in developing bottom of pyramid hahn j bus ethics 84 313 324 2009 economies could magnify the anti globalisation movement and political backlashes in the twenty first century the global financial crisis of 2008 and 2009 has increased such social tensions throughout the world and creates greater challenges for responsible leadership in this conceptual article the authors analyse the value and identity of local managers and the liability of foreignness caused by over reliance on expatriate managers and under reliance on local managers in bottom of pyramid countries hahn 2009 it is argued that multinational enterprises need to assess local managers knowledge and contributions as having not only operational and market value but also institutional value such as access to local knowledge and local social capital such a holistic approach will ensure fairer equal treatment of all managers in the multinational enterprise responsible leadership in the twenty first century requires a greater appreciation of local managers institutional value and the overcoming of any psychological distance towards local managers of bottom of pyramid countries

an international multilevel analysis of product innovation this paper studies multilevel determinants of product innovation by incumbent firms with data from 68 countries covering over 25 000 firms in eight manufacturing sectors the author assesses the predictions of interdisciplinary research on firm behavior in different contexts which have emphasized that product innovation is affected by three sets of factors the extent of global engagement information spillovers and market structure the empirical model of the probability of observing a product innovation a probit model by a firm considers three levels of analysis firm characteristics industry characteristics and the national context the econometric evidence supports the global engagement and information spillovers hypotheses but the evidence on the role of market structure is mixed regarding global engagement the evidence suggests that product innovation by incumbent firms is positively correlated with the act of investing in r d and licensing of foreign technologies and country level average import tariffs reduce the probability of product innovation regarding information spillovers the evidence also shows that a country s patent density is positively correlated with product innovation in contrast concerning the market structure hypotheses country level indicators of business density and of policy induced costs of entry are not robustly correlated with product innovation

what happens to gazelles the importance of dynamic management strategy the starting point of this study is gibrat s law which is contrasted with strategic management this logic is subsequently applied to a group of remarkably dynamic high growth firms gazelles strategic management theory emphasises the importance of firms adjusting strategies in response to changes in the external environment in our study it is used to explain several key empirical findings using a novel british data set containing information on more than 100 gazelles these findings help explain 1 why gibrat s law of random firm growth processes does not generally hold 2 which strategy and environmental variables have a predictable influence on firm performance and 3 why routine application of best practice strategies is unlikely to foster firm growth in a changing economic environment in so doing this paper contributes to the large body of literature on small firm growth

bayesian learning in an infant industry model abstract most analyses of the infant industry argument assume that production early on benefits subsequent production in deterministic fashion this paper presents an alternative framework for evaluating the infant industry argument that focuses on imperfect information as a barrier to entry initial entrants provide information of social value by reducing uncertainty for potential followers about the suitability of local conditions in contrast to earlier work i show that factors that increase the informational barrier to entry may lower the optimal subsidy to the infant industry and that the standard test of the success of infant industry policy is not always valid 1997 elsevier science b v

investment as a process of search this paper analyzes optimal capital accumulation in the face of structural uncertainty in which the firm does not fully know its own profit function and can discover it only through further investment it is shown that under structural uncertainty capital accumulation is gradual even when adjustment costs are linear and not convex it is further shown that structural uncertainty creates an incentive to market research the paper also presents an example of structural uncertainty in which an additional price uncertainty has a negative effect on investment contrary to the standard models

spurred to upgrade a review of triggers and consequences of industrial upgrading in the global value chain literature summary the global value chains gvc literature intervenes in today s challenging development context by focusing on the means by which developing country industries can upgrade their market positions and outcomes for workers yet while this literature has produced hundreds of rich empirical case studies there has to date been no attempt to systematically analyze this case literature for lessons regarding the antecedents and consequences of the key outcome of upgrading this paper undertakes a systematic analysis of a representative sample of 45 case studies of primary product and light manufacturing industries in developing countries these studies were coded for factors involved in initiating and sustaining upgrading processes the results of upgrading and the role of local institutions in these processes we find that contrary to the major assumptions of the literature advanced country buyers are not the main force in the initiation of industrial upgrading rather in most cases developing country firms initiate upgrades when pushed by shocks of market vulnerability usually produced by state policies that force them to seek to change their status quo operations once initiated upgrading processes can produce a wide spectrum of results from little to no advancement in market position treadmilling to vaulting to the forefront of a global industry leaps forward on the basis of the sources of learning present in the local institutional environment such as state agencies and business associations we also identify conditions under which state participation in upgrading processes can lead to increased local institutional capacity together these findings suggest a framework for upgrading that we refer to as an induced search model this model has important implications for future research on the dynamics of industrial upgrading in developing countries techniques of state intervention and processes of mutually supportive learning between actors in the public and private sector

the role of alliances in the early development of high growth firms rapid growth is sought after but may overstretch a firm s resources can alliances supply compensating support for rapidly growing firms longitudinal data on firms in a technology cluster are used to investigate rapid growth in relation to alliances and other factors known to be associated with firm growth rapid firm growth appears beneficial in terms of higher survival rates and earlier attainment of mid size but is rarely sustained alliances are predictors of rapid growth as are international operations venture capital is not directly associated with firm growth in the findings but there is a high incidence of alliances among venture capital backed firms copyright 2014 the author 2013 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

optimal self scheduling of a thermal producer in short term electricity markets by milp this paper addresses the problem of the self scheduling of a thermal electricity producer in day ahead energy and reserves markets a 0 1 mixed integer linear formulation of the producer self scheduling problem is provided which allows a realistic and accurate modeling of the unit s operating phases a novel unit start up modeling is presented in which three different start up types are modeled hot warm and cold each with distinct start up cost synchronization time soak time and predefined start up power output trajectories all dependent on the unit s prior reservation time test results address the effect of the energy and reserves market clearing prices on the producer units day ahead commitment status and profits

brain drain or brain gain technology diffusion and learning on the job this paper studies technology transfer when technology is embodied in human capital and learning requires on the job communication between managers and workers patterns of technology diffusion depend on where high knowledge managers work and how much time they allocate to training workers managers appropriate the surplus training creates and in the open economy managers face a cross country trade off between labor costs and the value of knowledge transfer complementarity between country level efficiency and managerial knowledge makes learning more valuable in the north meaning that high knowledge managers choose to work in the north and globalization precipitates a brain drain of high knowledge southern agents to the north the brain drain reduces learning opportunities in the south and exacerbates cross country technology differences

what are the drivers of business demography and employment in the countries of the european union the aim of this contribution is to establish a typology of european entrepreneurship countries with respect to variables related to entrepreneurial activity and economic development using a combin

a survey of frequency and voltage control ancillary services part i technical features this two part paper surveys the frequency and voltage control ancillary services in power systems from various parts of the world in this second part essential economic features that must be taken into account when designing markets for ancillary services are first discussed the methods adopted in eight different systems australia france germany great britain new zealand pjm spain and sweden for trading frequency and voltage control ancillary services are then compared lastly new indicators for comparing volumes and costs of ancillary services across systems are proposed and calculated for the systems included in this survey the companion paper surveys the technical features of these ancillary services

managing technological development lessons from the newly industrializing countries this survey looks at the technological development of the newly industrializing countries to draw some important lessons for firms and governments in other developing countries first inventing products and processes is not at the center of the technological development needed for successful industrialization it is at the fringe what is at the center is acquiring the capabilities needed for efficient production and investment second some countries have overemphasized the drive for technological self sufficiency and paid a high price in poor productivity what makes the best economic sense is to combine foreign and local technological elements and to do this in a way that progressively develops local capabilities in areas where they can be more efficient third the acquisition of technological capability does not come merely from experience though experience is important fourth the economic environment through its influence on the technological efforts of firms is very important in determining the productivity of a country s resources

developing technological capabilities in agro industry ghana s experience with fresh pineapple exports abstract this article examines the emergence and trajectory of a new agro industry in ghana the pineapple export industry using the technological capabilities approach it explains the limited expansion of the industry and its declining competitiveness in the face of new competition by looking at how ghanaian exporters developed technological capabilities initially and the incentives and disincentives to building on those capabilities the article argues that at the heart of the industry s crisis was an inability to further develop technological capabilities the crisis had systemic features that have broader implications for developing new agro industries in ghana as well as other african countries

are high growth firms one hit wonders evidence from sweden most firms do not grow and a small number of high growth firms seem to create most new jobs these firms have therefore received increasing attention among policymakers the question is whether high growth tends to persist we investigate this question using firm level data from sweden during 1997 2008 we find that high growth firms had declining growth rates in the previous 3 year period and their probability of repeating high growth rates was very low thus these are essentially one hit wonders and it is doubtful whether policymakers can improve economic outcomes by targeting them

industrial policy in an imperfect world theoretical analyses of industrial policy normally restrict the range of possible outcomes by abstracting from either market or government failures this paper thus studies industrial policy and its effectiveness in a model that includes both market and government imperfections we introduce a public agency responsible for industrial policy into the model of hausmann and rodrik 2003 and assume that this agency has limited information and is partly politically motivated we further extend the model to allow the public agency to communicate with entrepreneurs and the entrepreneurs to engage in rent seeking we find that industrial policies are ineffective if the public agency is poorly informed but that they are not necessarily ineffective if the public agency is highly politically motivated given a highly politically motivated public agency industrial policies are effective if and only if the institutional setting ensures that such policies are modest e g by restricting the public agency s budget moreover our model helps us to understand why the same industrial policies that have failed elsewhere have been relatively successful in south korea and taiwan

spillovers from high growth firms evidence from hungary how do high growth firms hgfs affect the rest of the economy we explore this question using hungarian administrative microdata relying on the birch definition of hgfs we find evidence for stronger productivity growth for firms operating in industries with more hgfs and for firms supplying industries with more hgfs knowledge spillovers or the surge of hgfs demand for intermediate inputs could explain these positive associations firms with intermediate productivity levels seem most likely to benefit from this effect while we find no differences by age or export status the results hold irrespective of the level of spatial aggregation and are robust to alternative definitions of hgfs as well as different measures of productivity or spillover

does economic diplomacy work a meta analysis of its impact on trade and investment we review the literature on economic diplomacy and provide a meta analysis of 32 empirical studies published in 1986 2011 that deal with the trade and investment impact of economic diplomacy embassies consulates other diplomatic facilities investment and export promotion offices trade and state visits controlling for differences in research design methodology time frame and manner of data we find a positive and significant effect of economic diplomacy on international economic flows with the exception of state visits and that this is true in a sample of 627 t statistics analysed with ols and for a larger sample of 963 reported significance levels analysed with logit thus illustrating robustness with respect to sample and estimation technique our analyses show that reported effects of economic diplomacy on trade and investment in individual studies are sensitive to model specification the primary studies that investigate only one source country are less likely to report significant positive effects compared to other sciences economic studies are less likely to report significantly positive effects of economic diplomacy primary studies lump embassies and consulates general into one indicator miss that these instruments differ significantly embassies consulates and agencies should thus be included as separate instruments in future research

on the economics of renewable energy sources abstract with the global expansion of renewable energy re technologies the provision of optimal re policy packages becomes an important task we review pivotal aspects regarding the economics of renewables that are relevant to the design of an optimal re policy many of which are to date unresolved we do so from three interrelated perspectives that a meaningful public policy framework for inquiry must take into account first we explore different social objectives justifying the deployment of re technologies and review model based estimates of the economic potential of re technologies i e their socially optimal deployment level second we address pivotal market failures that arise in the course of implementing the economic potential of re sources in decentralized markets third we discuss multiple policy instruments curing these market failures our framework reveals the requirements for an assessment of the relevant options for real world decision makers in the field of re policies this review makes it clear that there are remaining white areas on the knowledge map concerning consistent and socially optimal re policies

the long run volatility puzzle of the real exchange rate abstract this paper documents large cross country differences in the long run volatility of the real exchange rate it shows that the real exchange rate of developing countries is approximately three times more volatile than the real exchange rate in industrial countries the paper shows that this difference in volatility cannot be explained by the fact that developing countries face larger shocks both real and nominal recurrent currency crises or by different elasticities to these shocks arch estimations find a much higher persistence of deviations of the variance of the rer from its long run value when the economy suffers shocks of various kinds

the real exchange rate structural change and female labor force participation abstract while a large literature examines the role of fiscal policy in reducing gender gaps in labor market outcomes scant evidence exists for the role of monetary and exchange rate policies in doing so recent studies have shown that targeting an undervalued real exchange rate stimulates economic growth by expanding tradable sector output we examine whether such growth reduces gender gaps in labor force participation by improving labor market opportunities for women using a comprehensive cross country dataset from 1960 to 2015 for a maximum of 103 countries we test whether there is a robust relationship between currency undervaluation and female labor force participation we find that countries that maintain an undervalued real exchange rate realize an increase in female labor force participation and a corresponding decline in the difference between male and female labor force participation rates this finding is particularly pertinent for developing countries and is robust to various specification checks as well as different estimation techniques we also provide suggestive evidence that the operative channel is an expansion of female employment in manufacturing and industrial sectors our findings have important policy implications particularly for countries in earlier stages of their development our results indicate that the positive effect of undervaluation on female labor force participation is stronger in developing countries implying that there may be opportunities for interventions to target a more undervalued real exchange rate in these countries hence competitive exchange rate policies matter not only for raising long term growth potential but also for reducing longstanding gender disparities in labor force participation

towards full integration of demand side resources in joint forward energy reserve electricity markets this paper proposes a security constrained forward market clearing algorithm within which the inherent characteristics of demand flexibility are acknowledged when the provision of reserve from the demand side is considered in the proposed formulation we co optimize the cost of scheduling the appropriate resources to guarantee the security of the system and the expected cost of operating under any credible system state in addition we consider that consumers can offer to provide spinning reserve capacity deployable by voluntary load reductions in response to contingencies due to the load recovery effect i e since energy usage is essentially postponed when demand side reserve is deployed in post contingency states any voluntary reduction in the load has to be accompanied by a subsequent increase in demand from the initial forecast we demonstrate that the marginal value of the reserve provided by the demand can only be calculated taking into account the cost of supplying the recovery consumption flexible consumers can reduce their payments on average if energy is settled through real time prices

assessing policy strategies for the promotion of environmental technologies a review of india s national solar mission abstract there is widespread consensus that no individual policy instrument but rather a policy mix is needed to effectively drive the development and diffusion of environmental technologies however what exactly constitutes such a policy mix remains largely undefined this paper takes this discussion a step further by developing a comprehensive framework for assessing and comparing policy approaches for the promotion of environmental technologies it begins with a critical review of existing policy mix concepts pointing out key shortcomings to address the identified challenges it proposes the concept of a policy strategy as an alternative framework for policy assessment and comparison this serves as the basis for integrating findings from the literature on environmental innovation and technological change in a comprehensive framework for assessing policy strategies for the promotion of environmental technologies the framework is then applied for the assessment of india s national solar mission the country s strategy for promoting solar energy technologies based on the resulting findings the potential and limitations of the proposed framework are discussed

growth processes of high growth firms as a four dimensional chicken and egg this article investigates whether high growth firms grow in different ways from other firms specifically we analyze how firms grow along several dimensions growth of sales employment assets and operating profits using structural vector autoregressions causal relations are identified by using information contained in the non gaussian growth rate distributions for most firms the growth process starts with employment growth which is then followed by sales growth then growth of operating profits and finally growth of assets in contrast high growth firms put more emphasis on growth of operating profits driving other dimensions of growth with employment growth occurring at the end

the catalyst model of development lessons from bangladesh s success with garment exports abstract this paper identifies on a preliminary basis the major elements that have contributed to bangladesh s resounding success with garment exports the lessons to be learned from bangladesh s success with garment exports as they apply to the search for a workable development strategy in low income developing countries with very unfavorable initial conditions are profound enough to warrant further in depth research designed to generalize the preliminary findings the paper sketches a catalyst model of development based on the experience of bangladesh s success with garment exports the model can be considered as a foreword to as well as a hypothesis for this future research first the catalyst model of development is a model for initiating development in an outward oriented direction based on the pioneering efforts of foreign and local catalysts second the catalyst model of development is a model for transmitting throughout the entire economy the development initiated by catalysts third the catalyst model of development is a model for sequencing realistic policy reforms starting from equal footing export incentives i e equal footing with foreign competitors parallel to the increasing industrial competence gained through world market competition initiated and transmitted throughout the economy by the catalysts

the value of intra day markets in power systems with high wind power penetration in this paper the value of intra day markets in managing wind power uncertainty in competitive electricity markets is analyzed a competitive electricity market model consisting of a day ahead market and a number of intra day markets is considered real time operation adjustment is also taken into account stochastic programming is used to model decision making under wind power uncertainty numerical simulations based on two test systems are presented

disagreement and learning about reforms when it comes to economic reforms in developing countries many economists agree on broad objectives broad objectives however can be pursued in different ways and policy experimentation is often indispensable for learning which alternative works locally we propose a theoretical model to study this societal learning process the model explores the role of disagreeing beliefs about what works it suggests that such disagreement can stall the societal learning process and cause economic stagnation although everyone knows that growth promoting reforms do exist our analysis is motivated by the observation of a negative relationship between disagreement and economic growth among poorer countries

economic development as self discovery in the presence of uncertainty about what a country can be good at producing there can be great social value to discovering costs of domestic activities because such discoveries can be easily imitated we develop a general equilibrium framework for a small open economy to clarify the analytical and normative issues we highlight two failures of the laissez faire outcome there is too little investment and entrepreneurship ex ante and too much production diversification ex post optimal policy consists of counteracting these distortions to encourage investments in the modern sector ex ante but to rationalize production ex post we provide some informal evidence on the building blocks of our model

economic valuation of reserves in power systems with high penetration of wind power this paper proposes a methodology to determine the required level of spinning and nonspinning reserves in a power system with a high penetration of wind power the computation of the required reserve levels and their costs is achieved through a stochastic programming market clearing model spanning a daily time horizon this model considers the network constraints and takes into account the cost of both the load shedding and the wind spillage the methodology proposed is illustrated using an example and a realistic case study some conclusions are finally drawn

exploring the processes of firm growth evidence from a vector auto regression this article offers many new insights into the processes of firm growth by applying a vector autoregression model to longitudinal panel data on french manufacturing firms we observe the coevolution of key variables such as growth of employment sales gross operating surplus and labor productivity growth preliminary results suggest that employment growth is succeeded by the growth of sales which in turn is followed by growth of profits generally speaking however growth of profits is not followed by much employment growth or sales growth quantile regressions highlight some asymmetries between negative growth and fast growth firms

state and development the need for a reappraisal of the current literature this essay tries to bring out some of the complexities that are overlooked in the usual treatment of the state in the institutional economics literature and supplement the latter with a discussion of some alternative approaches to looking at the possible developmental role of the state it refers to a broader range of development goals including the structural transformation of the economy and focuses on problems like the resolution of coordination failures and collective action problems the conflicting issues of commitment and accountability and the need for balancing the trade offs they generate some ingredients of state capacity and political coalition building usually missed in the literature the possible importance of rent sharing in a political equilibrium the advantages and problems of political centralization and decentralization and the multidimensionality of state functions that may not be addressed by markets or private firms

the short run macroeconomic impact of foreign aid to small states an agnostic time series analysis abstract this paper investigates the short run macroeconomic impact of aid in small developing countries sdcs by using a vector auto regression var model to study the impact of aid on net import absorption and domestic demand spending we focus on average country effects within two country sub groups and find substantial differences between aid dependent sdcs and other sdcs that are more dependent on natural resources tourism or financial services in aid dependent sdcs aid absorption more or less equals spending although only half of the aid flow is absorbed and spent in the non aid dependent group aid does not seem to be absorbed or spent in any systematic fashion

minimum wage and tax evasion theory and evidence the paper investigates the role of the minimum wage in a competitive economy in which there is underreporting of earnings by employed labour the minimum wage induces higher compliance by some lowproductivity workers and transforms a nominally neutral scal system into a regressive one a spike in the wage distribution at the minimum wage level appears and a positive correlation between the size of the spike and the size of the informal economy is predicted and documented using cross country data for europe a further result is that employees whose o cially declared earnings appear to be boosted by a minimum wage hike actually experience a decline in their true income this prediction nds support in an empirical test using the massive increase in the minimum wage that took place in hungary in 2001 as a quasi natural experiment

the high growth in new metal based manufacturing and business service firms in finland this study examined the effects of the factors involved in the start up situation and the first seven years development on the subsequent high growth of firms the criterion of success used in this study was high growth in business during the first seven years the subjects were finnish metal products manufacturing firms and business service firms established in 1990 the results indicated firstly that it is the internal networks of firms that bring about competitive advantage innovations and efficiency in these entrepreneurial team driven firms a group of people participate in the strategic management of the firm it was also found that co operation between firms and changes in external personal networks contributed to a high rate of growth the empirical results showed that new firms had equal chances for growth irrespective of their locality on the other hand growth was affected by changes in a new firm s competitive situation and by changes in strategic factors the results also clearly indicated that high growth firms were characterised by rising productivity of labour at the same time as they were generating new jobs

retaining winners can policy boost high growth entrepreneurship abstract we analysed the growth impact delivered by a high growth entrepreneurship policy initiative over a six year period using an eight year panel that started two years before the initiative was launched and propensity score matching to control selection bias we found that the initiative had more than doubled the growth rates of treated firms the initiative had delivered a strong impact also on value for money basis in addition to producing the first robust evidence on the growth impact delivered by a high growth entrepreneurship initiative we contribute to public sponsorship theory with the notion of capacity boosting activities to complement previously discussed buffering and bridging activities

persistence survival and growth a closer look at 20 years of fast growing firms in austria for survival persistence and growth hifs show a much higher persistence than hgfs the average growth rate after the high growth episode is quite modest for both hifs and hgfs policy implications of the ndings are discussed

creating good public policy to support high growth firms writing in small business economics scott shane argues that policy makers should stop subsidising start ups and instead focus on supporting the small subset of new businesses with high growth potential however both shane and other scholars who have made the same argument only offer broad brush proposals to achieve this objective the aim of this article in contrast is to engage in a detailed discussion of how to create appropriate policies for high growth firms hgfs drawing on research in scotland we argue that policy makers are looking for hgfs in the wrong places the heterogeneous nature of hgfs in terms of sector age size and origins makes in impractical to target support on particular sectors technologies or types of firms e g new or r d intensive the article proposes a reorientation of hgfs both in terms of appropriate targeting and forms of support public policy also needs to focus on the retention of hgfs which are acquired by non local businesses finally policy makers need to properly reflect upon the specificities of their entrepreneurial environment when devising appropriate policy interventions

linking economic complexity institutions and income inequality summary a country s mix of products predicts its subsequent pattern of diversification and economic growth but does this product mix also predict income inequality here we combine methods from econometrics network science and economic complexity to show that countries exporting complex products as measured by the economic complexity index have lower levels of income inequality than countries exporting simpler products using multivariate regression analysis we show that economic complexity is a significant and negative predictor of income inequality and that this relationship is robust to controlling for aggregate measures of income institutions export concentration and human capital moreover we introduce a measure that associates a product to a level of income inequality equal to the average gini of the countries exporting that product weighted by the share the product represents in that country s export basket we use this measure together with the network of related products or product space to illustrate how the development of new products is associated with changes in income inequality these findings show that economic complexity captures information about an economy s level of development that is relevant to the ways an economy generates and distributes its income moreover these findings suggest that a country s productive structure may limit its range of income inequality finally we make our results available through an online resource that allows for its users to visualize the structural transformation of over 150 countries and their associated changes in income inequality during 1963 2008

disentangling market access effects of preferential trading arrangements with an application for asean members under an asean eu fta the paper develops two synthetic measures at the hs 10 level to depict effective market access for a country receiving preferential access and applies these to the market access asean members would receive following the implementation of an fta with the eu first the measures show that current effective market access for asean eba members is cut in half by the preferences granted by the eu to countries that compete with these countries in the eu markets second the measures show that about one quarter of the preferential margin under the proposed fta for eba members would be lost as a result of preferential access granted to asean gsp members third disaggregated estimates of the restrictiveness of rules of origin confirm that rules are more restrictive for products with higher preferential margins and that asean countries usually face tougher rules of origin in the eu because of the composition of their exports

whom do high growth firms hire we study employment and new hires among high growth firms hgfs in the swedish knowledge intensive sectors 1999 2002 using matched employer employee data we find that hgfs are more likely to emp

economic transformation population growth and the long run world income distribution abstract we present and calibrate a model where trade with advanced economies spurs development and trade opportunities depend on the relative population in advanced and developing countries as developing countries become advanced prospects improve for the remaining developing countries if population growth differentials between developing and advanced economies are small economic development accelerates over time otherwise long run global prosperity requires a sufficiently large initial population in advanced countries more open countries develop faster but more openness by all developing countries may only modestly increase their aggregate growth china s development may hurt developing countries in the short run but improves their long run prospects

the role of relative price volatility in the efficiency of investment allocation abstract this paper estimates the impact of relative price volatility on sector level investment allocation using a panel of 65 countries with data for 26 manufacturing industries over the period 1985 2003 results indicate that volatility distorts efficient investment allocation in that investment is not necessarily devoted to relatively more productive sectors especially in emerging market economies that are highly exposed and may lack the necessary institutions to deal with it successfully this is evidence in support of theories suggesting that relative price volatility provides incentives for entrepreneurs to adopt more malleable but less productive production technologies enabling them to accommodate more easily abrupt and frequent changes in relative prices but at the cost of using less productive technologies

high growth firms introduction to the special section high growth firms hgfs have attracted considerable attention recently as academics and policymakers have increasingly recognized the highly skewed nature of many metrics of firm performance a small number of hgfs drives a disproportionately large amount of job creation while the average firm has a limited impact on the economy this article explores the reasons for this increased interest summarizes the existing literature and highlights the methodological considerations that constrain and bias research this special section draws attention to the importance of hgfs for future industrial performance explores their unusual growth trajectories and strategies and highlights the lack of persistence of high growth consequently while hgfs are important for understanding the economy and developing public policy they are unlikely to be useful vehicles for public policy given the difficulties involved in predicting which firms will grow the lack of persistence in high growth levels and the complex and often indirect relationship between firm capability high growth and macro economic performance

the development of china s solar photovoltaic industry why industrial policy failed this article studies china s central local government relations in the formation and implementation of an industry policy in china the central government is responsible for policy formation and the local governments are responsible for policy implementation where local governments are allowed ample flexibility in the ways to achieve the policy mandate this arrangement is conducive to local competition but there is no built in mechanism in the system to regulate such competition the system is defective in the execution of an industrial policy in that it fails to discipline the recipients of policy favours and to make efficient exit selections because local competition involves policy resources as well as economic resources the outcome of competition is not necessarily consistent with the comparative advantage of the region the more that policy is emphasised in industrial development the more that competition tends to favour large and rich cities after a certain period of hands off local competition the timing of which is unpredictable but will come when the industry runs into troubles the central government holds the ultimate power to determine the winners the central government typically picks the large and strong firms as the winners which are crowned as a national team and became eligible for further policy support this institutional set up produces a rapidly growing industry which often results in over capacity but not necessarily a competitive industry i use the case of china s solar photovoltaic industry to illustrate these points

elements of a schumpeterian catalytic research and innovation policy in this article we take a fresh look at research and innovation r i hereinafter policy and define a new notion schumpeterian catalytic r i policy such policy style amends and enriches the new mission oriented framework for innovation policy by assigning more weight to the microeconomic dimension of private actors actions and by being more concerned with the temporary nature of interventions we relate our argument to recent empirical trends in productivity dynamics and innovative activities these suggest that an innovation slowdown is taking place and consequently that a renewed interest in the re direction rather than on the intensity of innovative activities is key to the design of r i policy capable to tackle current challenges we use the evidence to build a schematic theoretical framework to inform policy design and we outlined the defining features of our proposed policy style

load following reserves procurement considering flexible demand side resources under high wind power penetration the variable and uncertain nature of the leading renewable energy resources such as wind power generation imposes the development of a sophisticated balance mechanism between supply and demand to maintain the consistency of a power system in this study a two stage stochastic programming model is proposed to procure the required load following reserves from both generation and demand side resources under high wind power penetration besides a novel load model is introduced to procure flexible reserves from industrial clients load following reserves from load serving entities lse are also taken into account as well as network constraints load shedding and wind spillage the proposed methodology is applied to an illustrative test system as well as to a 24 node system

theory of constant proportion portfolio insurance abstract we study constant proportion portfolio insurance cppi a dynamic strategy that maintains the portfolio s risk exposure a constant multiple of the excess of wealth over a floor up to a borrowing limit we use this simple rule to investigate how transaction costs and borrowing constraints affect portfolio insurance type strategies absent transaction costs cppi is equivalent to investing in perpetual american call options and is optimal for a piecewise hara utility function with a minimum consumption constraint as the multiple increases the payoffs under cppi approach those of a stop loss strategy the expected holding period return is not monotonic in the multiple and a higher expected return can be obtained under cppi than with a stop loss strategy

dots to boxes do the size and shape of spatial units jeopardize economic geography estimations this paper evaluates in the context of economic geography estimates the magnitude of the distortions arising from the choice of zoning system which is also known as the modifiable areal unit problem maup we consider three standard economic geography exercises the analysis of spatial concentration agglomeration economies and trade determinants using various french zoning systems differentiated according to the size and shape of spatial units which are the two main determinants of the maup while size matters a little shape does so much less both dimensions seem to be of secondary importance compared to specification issues

is subsidizing entry an optimal policy public subsidies in support of new firm foundation are among the most frequently used instruments of industrial policy in the euro zone this paper analyses their effectiveness and efficiency vis a vis some features of the overall process of industry dynamics in italian manufacturing to this end the survival and growth patterns of new small firms are investigated using a unique dataset on electrical and electronic engineering in italy as regards survival our results confirm the findings of other studies namely that the hazard rates are particularly high in the early stages of firm s life cycle as far as growth is concerned the study s main finding is that gibrat s law fails to hold in the years immediately following start up when smaller firms must rush in order to achieve a size large enough to enhance their likelihood of survival conversely in later stages of firm s life cycle the law cannot be rejected these results radically question the use of subsidies as an optimal policy for the support of new entries since the subsidy brings about a major bias in the process of market selection including substitution and deadweight effects and hampers the post entry scale adjustment of newborn firms

competitiveness and industrial policy from rationalities of failure towards the ability to evolve this article elaborates a dynamic rationale of industrial policy focusing on how to strengthen the socio economic system s ability to evolve i e how to achieve high real income together with qualitative change it highlights that the ubiquitous rationalities of failure be it of markets governments or systems are rooted in a peculiar habit of accepting hypothetical perfect states as normative benchmarks in contrast a dynamic logic of intervention should start from the question what the system aims to accomplish combining the structuralist ontology of micro meso and macro with the functional principles of evolutionary change the paper proposes a general typology of economic policies based on their respective contributions to the system s ability to evolve

modeling approaches for computational cost reduction in stochastic unit commitment formulations although stochastic commitment policies provide robust and efficient solutions they have high computational costs this letter considers two modeling approaches for the reduction of their computational effort the relaxation of the integrality constraint of fast start units and the modeling of generation outages as load increments these approaches are shown to reduce the computational cost while maintaining the good properties of stochastic policies

stochastic multiobjective market clearing of joint energy and reserves auctions ensuring power system security in this paper a stochastic multiobjective framework is proposed for day ahead joint market clearing the proposed multiobjective framework can concurrently optimize competing objective functions including augmented generation offer cost and security indices overload index voltage drop index and voltage stability margin besides system uncertainties including generating units and branches contingencies and load uncertainty are explicitly considered in the stochastic market clearing scheme the solution methodology consists of two stages which firstly employs roulette wheel mechanism and monte carlo simulation mcs for random adaptive 24 h scenario generation wherein the stochastic multiobjective market clearing procedure is converted into its respective deterministic equivalents scenarios in the second stage for each deterministic scenario a multiobjective mathematical programming mmp formulation based on the epsiv constrained approach is implemented for provision of spinning reserve sr and nonspinning reserve nsr as well as energy the mmp formulation of the market clearing process is optimized while meeting ac power flow constraints and expected interruption cost eic the ieee 24 bus reliability test system rts 24 bus is used to demonstrate the performance of the proposed method

export diversification what s behind the hump hy should export diversification be taken as a policy objective per se there are two reasons that it should not first according to ricardo countries should specialize not diversify second the heckscher ohlin model implies that export patterns are largely determined by endowments so if anything we should worry about factor accumulation not diversification yet export diversification is a constant preoccupation of policymakers in developing countries as de ferranti et al 2002 note a recurrent preoccupation of latin american policymakers is that their natural riches produce a highly concentrated structure of export revenues which then leads to economic volatility and lower growth p 38 the notion that export patterns are fully determined by endowments is of course naive the relationship of endowments trade and growth is a complex and imperfectly understood one intra industry trade models showed long ago that many factors other than endowments including market failures and policies can affect trade patterns more recently hausmann hwang and rodrik 2007 argued that export patterns can display path dependence in the presence of externalities

economic growth convergence and agricultural economics after nearly two centuries of lagging behind the industrial countries growth in many developing countries has surged since the early 1990s this outperformance has major implications for almost all areas of agricultural economics and if continued will likely do so into the future this article aims to identify the key ways in which the changes in rich and poor country growth rates matter for agricultural economists as a basis for formulating better research agendas a key impact arises through sharp increases in demand for agricultural resources as demand for livestock products increases this changing structure of food demand has important implications for nutrition studies and policies with the emergence of a double burden of malnutrition on the supply side growth in developing countries tends to increase domestic food supply which is also boosted by increases in research and development spending growth in developing countries both stimulates and benefits from increases in infrastructure investment evaluation of which requires new analytical tools negative impacts include the contribution of increased demand for livestock products to global greenhouse gas emissions in terms of trade policy growth in developing country is tending to lead to convergence of agricultural policies with the pattern of assistance seen in today s developed countries raising concerns about the future need to deal with collective action problems particularly those that increase the volatility of world prices

liquidity risk and occupational choices we explore which financial constraints matter the most in the choice of becoming an entrepreneur we consider a randomly assigned welfare program in rural mexico and show that cash transfers signi cantly increase entry into entrepreneurship we then exploit the cross household variation in the timing of these transfers and find that current occupational choices are significantly more responsive to the transfers expected for the future than to those currently received guided by a simple occupational choice model we argue that the program has promoted entrepreneurship by enhancing the willingness to bear risk as opposed to simply relaxing current liquidity constraints

the politics of financial development evidence from trade liberalization incumbents in various industries have different incentives to promote or oppose financial development changes in the relative strength of promoter and opponent industries thus result in changes in the political equilibrium level of financial development we conduct an event study using a sample of 41 countries that liberalized trade during 1970 to 2000 and show that the strengthening of promoter relative to opponent industries resulting from liberalization is a good predictor of subsequent financial development the benefits of developing the financial system are insufficient for financial development and rents in particular hands appear to be necessary to achieve it copyright c 2008 by the american finance association

stochastic security for operations planning with significant wind power generation in their attempt to cut down on greenhouse gas emissions from electricity generation several countries are committed to install wind power generation up to and beyond the 10 20 penetration mark however the large scale integration of wind power represents a challenge for power system operations planning because wind power 1 cannot be dispatched in the classical sense and 2 its output varies as weather conditions change this warrants the investigation of alternative short term power system operations planning methods capable of better coping with the nature of wind generation while maintaining or even improving the current reliability and economic performance of power systems to this end this paper formulates a short term forward electricity market clearing problem with stochastic security capable of accounting for nondispatchable and variable wind power generation sources the principal benefit of this stochastic operation planning approach is that when compared to a deterministic worst case scenario planning philosophy it allows greater wind power penetration without sacrificing security

export promotion agencies do they work abstract the number of national export promotion agencies epas has tripled over the last two decades while more countries made them part of their export strategy studies criticized their efficacy in developing countries epas were retooled partly in response to these critiques this paper studies the impact of today s epas and their strategies based on new survey data covering 103 developing and developed countries results suggest that on average they have a statistically significant effect on exports our identification strategies highlight the importance of epa services for overcoming foreign trade barriers and solving asymmetric information problems associated with exports of heterogeneous goods there are also strong diminishing returns suggesting that as far as epas are concerned small is beautiful

market clearing with stochastic security part ii case studies this paper analyzes the market clearing formulation with stochastic security developed in its companion paper through two case studies solved using mixed integer linear programming techniques the generation and reserve schedules as well as the nodal prices of energy and security are assessed under various conditions such as a line flow limits b when nonspinning reserve is excluded from the formulation c demand side valuation of energy not served d generator ramping limits and e the set of pre selected contingencies

why has china succeeded and why it will continue to do so the key factor underlying china s fast development during the last 50 years is its ability to master and accumulate new and more complex capabilities reflected in the increase in diversification and sophistication of its export basket this accumulation was policy induced and not the result of the market and began before 1979 during the last 50 years china has acquired revealed comparative advantage in the export of both labour intensive products following its factor abundance and sophisticated products although the latter does not mean that there was leapfrogging china is exceptionally well positioned especially taking into account its income per capita to continue learning and gaining revealed comparative advantage in the export of more sophisticated products given adequate policies carefully thought out and implemented reforms and skilful management of constraints and risks china has the potential to continue thriving this does not mean however that high growth will continue indefinitely

africa s export structure in a comparative perspective cross country econometric analysis informed by heckscher ohlin trade theory suggests that the concentration of africa s exports on unprocessed primary products is caused largely by the region s combination of low levels of education and abundant natural resources in some african countries the share of manufactures in exports could be raised by improving infrastructure and policies for most of africa however the highest priority is to raise the absolute level of exports in all sectors and particularly in sectors based on natural resources following a development path more like that of land abundant america than that of land scarce asia

rethinking trade preferences how africa can diversify its exports this paper argues that the contribution of trade preferences to economic development needs to be reappraised in light of the growth of globalised trade in manufactures trade preferences may be able to act as a catalyst for manufacturing exports leading to rapid growth in exports and employment to do so preferences need to be designed to be consistent with international trade in fragmented tasks as opposed to complete products and need to be open to countries with sufficient levels of complementary inputs such as skills and infrastructure recent experience with the african growth and opportunities act shows that in the right conditions sub saharan african countries have had large manufacturing export supply response to trade preferences

can entrepreneurial activity be taught quasi experimental evidence from central america summary business training is a widely used development tool yet little is known about its impact we study the effects of such a business training program held in central america to deal with endogenous selection into the training program we use a regression discontinuity design exploiting the fact that a fixed number of applicants are taken into the training program based on a pre training score business training significantly increases the probability that an applicant to the workshop starts a business or expands an existing business results also suggest gender heterogeneity as well as the presence of financial constraints

what characterizes a fast growing firm this paper seeks to empirically identify factors that influence the probability of being a fast growing firm in eastern and western germany descriptive analyses have shown that most firms experience only small positive or negative employment growth or stagnate over time the job generation mechanism rests with a handful of firms that increase their employment significantly over time the empirical analysis shows that the probability of being a fast growing firm depends on different factors when separating eastern and western germany as well as using different definitions of fast growing firms moreover the analysis shows that technology intensive manufacturing branches and knowledge based business related services do not generate the majority of fast growing firms

effectiveness of cppi strategies under discrete time trading abstract the paper analyzes the effectiveness of the constant proportion portfolio insurance cppi method under trading restrictions if the cppi method is applied in continuous time the cppi strategies provide a value above a floor level unless the price dynamics of the risky asset permit jumps the risk of violating the floor protection is called gap risk in practice it is caused by liquidity constraints and price jumps both can be modelled in a setup where the price dynamics of the risky asset are described by a continuous time stochastic process but trading is restricted to discrete time we propose a discrete time version of the continuous time cppi strategies which satisfies three conditions the resulting strategies are self financing the asset exposure is non negative and the value process converges we determine risk measures such as the shortfall probability and the expected shortfall and discuss criteria which ensure that the gap risk does not increase to a level which contradicts the original intention of portfolio insurance in addition we introduce proportional transaction costs and analyze their effects on the risk profile

second best institutions the focus of reforms in the developing world has moved from getting prices right to getting institutions right this reflects the recognition that markets are unlikely to work well in the absence of a predictable and legitimate set of rules that support economic activity and dis pense its fruits governance reforms have become the buzzword for bilateral donors and multilateral institutions in much the same way that liberalization privatization and stabiliza tion were the mantras of the 1980s but what kind of institutions should reform ers strive to build it is easier to list the func tions that good institutions perform than it is to describe the shape they should take desirable institutions provide security of property rights enforce contracts stimulate entrepreneurship foster integration in the world economy maintain macroeconomic stability manage risk taking by financial intermediaries supply social insurance and safety nets and enhance voice and account ability but as the variety of institutional forms that prevail in the advanced countries themselves suggests richard freeman 2000 peter hall and david soskice 2001 each one of these ends can be achieved in a large number of different ways rodrik 2007a

explaining the distribution of firm growth rates empirical analyses on aggregated datasets have revealed a common exponential behavior in the shape of the probability density of corporate growth rates we present clear cut evidence on this topic using disaggregated data we explain the observed regularities proposing a model in which firms ability to take up new business opportunities increases with the number of opportunities already exploited a theoretical result is presented for the limiting case in which the number of firms and opportunities go to infinity moreover using simulations we show that even in a small industry the agreement with asymptotic results is almost complete

is there a risk of growing fast the relationship between organic employment growth and firm exit growing firms are the drivers of economic dynamics while the existing literature often focuses on the average effect of growth on firm survival we investigate how survival rates vary across the growth distribution using dutch longitudinal firm level data 1999 2012 we theorize and find a u shaped relationship between organic employment growth and subsequent exit due to firm death in various model specifications low positive growth increases survival too much growth could be harmful for some subgroups of firms and the steepness of the u shape depends on firm age size and industry

in search of the holy grail policy convergence experimentation and economic performance we consider a model of policy choice in which appropriate policies depend on a country s own circumstances but the presence of a successful leader generates an informational externality and results in too little policy experimentation corrupt governments are reined in while honest governments are disciplined inefficiently our model yields distinct predictions about the patterns of policy imitation corruption and economic performance as a function of a country s location vis aa vis successful leaders in particular it predicts a u shaped pattern in economic performance as we move away from the leader in the relevant space of characteristics close neighbors should do very well distant countries moderately well on average with considerable variance and intermediate countries worst of all an empirical test with the experience of post socialist countries provides supportive results

productivity market selection and corporate growth comparative evidence across us and europe this paper analyses the patterns of market selection in manufacturing industries of france germany uk and usa we first disentangle the contribution to industry level productivity growth of within firm productivity changes and between firm reallocation of shares the evidence corroborates the notion that within firm learning prevails over market selection forces with larger firms driving such innovation and learning processes second we address the strength of selection by exploring to what extent firm growth rates are shaped by relative productivity levels as compared to variation thereof our key finding is that although changes in relative efficiency have a greater impact on growth than relative efficiency levels there is an overall weak relationship between productivity and growth and therefore a weak power of selection forces in all countries the results hold across firms of different size but we also find that selection bites more on smes

public policies and the art of catching up matching the historical evidence with a multicountry agent based model in this paper we study the effects of industrial policies on international convergence using a multi country agent based model which builds upon dosi et al 2019b the model features a group of microfounded economies with evolving industries populated by heterogeneous firms that compete in international markets in each country technological change is driven by firms activities of search and innovation while aggregate demand formation and distribution follows keynesian dynamics interactions among countries take place via trade flows and international technological imitation we employ the model to assess the different strategies that laggard countries can adopt to catch up with leaders market friendly policies industrial policies targeting the development of firms capabilities and rd protectionist policies focusing on tariffs only we find that markets cannot do the magic in absence of government interventions laggards will continue to fall behind on the contrary industrial policies can successfully drive international convergence among leaders and laggards while protectionism alone is not necessary to support catching up and countries get stuck in a sort of middle income trap finally in a global trade war where developed economies impose retaliatory tariffs both laggards and leaders are worse off and world productivity growth slows down

perspectives on multinational enterprises in emerging economies multinational enterprises mnes play a pivotal role in the development of many emerging economies in consequence they became the focus of scholarly research by economists and policy analysts in contrast international business scholars have been comparatively uninterested in analysing this role of mnes yet they could make important contributions to these debates first studies taking the individual firms as starting point would enhance understanding of the interaction between mnes and the local environment second theories and research methodologies developed in international business research could provide new insights into the dynamics of mnes in emerging economies the objective of this paper is to motivate more international business scholars to engage in research on positive and negative spillovers from foreign direct investment fdi in emerging economy societies to advance this research agenda scholars need to analyse the specific activities and capabilities of the firms involved and the impact of fdi on the broader social and environmental context for management this agenda raises the ethical question to what extent ought businesses to care about their local stakeholders

model free cppi abstract we consider constant proportion portfolio insurance cppi and its dynamic extension which may be called dynamic proportion portfolio insurance dppi it is shown that these investment strategies work within the setting of follmer s pathwise ito calculus which makes no probabilistic assumptions whatsoever this shows on one hand that cppi and dppi are completely independent of any choice of a particular model for the dynamics of asset prices they even make sense beyond the class of semimartingale sample paths and can be successfully defined for models admitting arbitrage including some models based on fractional brownian motion on the other hand the result can be seen as a case study for the general issue of robustness in the face of model uncertainty in finance

has latin america s post reform growth been disappointing after years of poor economic performance many latin american countries undertook ambitious programs of macroeconomic stabilization and structural reform in recent years this change in policy created high expectations for the region and some observers have questioned whether actual growth outcomes have lived up to these expectations the authors offer evidence that the response of economic growth to reforms in latin america has not been disappointing because of their significant policy changes and despite a global slowdown latin america did well to return to its historic growth rate of 2 percent per capita in 1990 93 latin america has responded to changes in policy variables as would have been predicted by the experience of other times and places those earlier experiences are summarized by a panel regression spanning many countries and multi year periods from 1960 to 1993 to get consistent estimates of the parameters linking growth and policy variables the authors use a dynamic panel methodology that both controls for unobserved time and country specific effects and accounts for the likely internal dynamism of the explanatory variables