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

competition between multiple asymmetric networks theory and applications this paper presents a tractable model of network competition with many firms elastic subscriber demand off net price discrimination call externalities and cost and market share asymmetries we characterize stability in expectations and equilibrium under firm and market level network effects the model is applied to simulate the effects of termination rates market maturity and retail pricing strategies we show that predictions based on duopoly models can be misleading in particular concerning the effects of termination rates

development of financial markets and the size distribution of manufacturing establishments international comparisons abstract institutional determinants have largely been neglected in explaining international differences in the size distribution of manufacturing establishments this paper draws on recent developments in institutional analysis to derive certain hypotheses concerning the way in which the size distribution within manufacturing is affected by the degree of development of the markets for debt and equity these hypotheses are tested on the basis of an international cross section of 54 countries the results are generally supportive of the hypotheses especially in the case of developing countries

imf programs do they work can they be made to work better abstract a central issue in the debate about a new international financial architecture has been whether programs of policy reform supported by the international monetary fund work the fund claims that on balance they do because of their positive effect on the balance of payments others claim that programs are ineffective and suggest that they should be discontinued this paper reviews the econometric evidence dealing with the macroeconomic effects of imf programs it goes on to provide additional evidence and judges success against alternative criteria although the record is not good the paper argues that it would be unwise for the fund to cease lending and to abandon conditionality altogether imf programs need to be redesigned and refocused the paper concludes by identifying a number of principles that should underpin reform

determinants of inter firm technology licensing in the eu this article investigates the determinants of technology licensing focusing on how country specific characteristics affect technology holders incentives to sell their proprietary technologies through licensing alliances an empirical examination of licensing is done using a unique panel data set of licensing transactions involving companies in the eu the strength of intellectual property rights ipr protection the degree of economic freedom the level of country risk and the number of patent granted in the country are found to be important determinants of inter firm technology licensing in addition firms with prior independent experience as a licensor and public companies tend to license technology more

bill and keep vs cost based access pricing revisited abstract we study network competition with two part tariffs and termination based price discrimination in the presence of call externalities we show that both the collusive and the welfare maximizing access charges fall below marginal cost moreover bill and keep arrangements are welfare improving compared with cost based access pricing

macroeconomic policy and the salvadoran peace accords abstract we analyze the relationship between macroeconomic policies and the implementation of the peace agreement that ended civil war in el salvador we review recent stabilization and adjustment policies and identify potential impediments to sustained growth we observe that the agreement mandated thorough going democratization of political institutions but its socioeconomic reforms promised little more than excombatants reintegration into civilian life the poverty and inequality impelling the war were not addressed we analyze the political bargaining governing the agreement s uneven implementation and conclude that the macroeconomic policy environment of austerity rather than resource constraints per se impeded its timely implementation

some theoretical and empirical issues relating to economic stabilization in developing countries abstract this paper surveys some issues relating to economic stabilization in developing countries section 2 examines the contributions of terms of trade deterioration and real exchange rate appreciation to payments imbalances in non oil developing countries during the 1970s section 3 distinguishes between demand side and supply side policies and discusses their respective roles in stabilization programmes the effects of exchange rate changes are considered within this framework in section 4 the effects of alternative stabilization policies on output prices and the balance of payments are illustrated using simulations of a model that incorporates the major relationships relevant to a typical programme section 5 summarizes the conclusions

subsistence response to market shocks microeconomic models posit that transaction costs isolate subsistence producers from output market shocks we integrate microeconomic models of many heterogeneous households into a general equilibrium model and show that supply on subsistence farms may respond in apparently perverse ways to changes in output market prices price shocks in markets for staple goods are transmitted to subsistence producers through interactions in factor markets in the case presented a decrease in the market price of maize reduces wages and land rents stimulating maize production by subsistence households however real incomes of subsistence households fall

the imf a bird s eye view of its role and operations the international monetary fund imf is the world s premier international financial institution with 184 member countries and active programmes in a significant number of them at any one time the fund attracts a great deal of attention much of it critical but the discussion is often polemic in style strongly held but frequently opposing views are expressed this survey attempts to examine in an objective way the theory and evidence relating to the fund s operations many aspects of the empirical research are relatively recent and a universal consensus is yet to emerge as a consequence there is scope for disagreement to persist however the research is also gradually clarifying many important issues the format for the survey is to examine the life cycle of imf arrangements what makes a country turn to the fund for assistance should the imf be lending what influences the outcome of negotiations and the design of programmes are imf programmes effective and why do some countries make prolonged use of imf resources for completeness there is also some discussion of the history of the imf the extent to which fund policies have been influenced by advances in economic theory and the fund s systemic role important organisational and governance issues are also covered briefly although primarily adopting an economist s perspective the survey reflects the growing recognition that in order to understand the imf s operations economics has to be combined with politics examining the imf is an exercise in applied political economy copyright 2007 the author journal compilation 2007 blackwell publishing ltd

technological capabilities and industrialization abstract this paper reviews the implications for industrial strategy of recent research on technological capabilities at the firm and national levels after exploring the nature and determinants of microlevel technological development a simple framework for explaining the growth of national capabilities is set out based on the interplay of incentives capabilities and institutions each may suffer market failure and so require corrective intervention the experience of some industrializing countries is described to assess the validity of this framework it is concluded that interventions carefully and selectively applied are necessary for industrial success

a structuralist perspective on the role of technology in economic growth and development abstract this paper presents an integrated view of what is termed a structuralist perspective to economic growth and development that stands in contrast to the mainstream orthodox or neoclassical view in the structuralist view structural changes are causes of growth rather than outcomes of a process of capital accumulation and of rising per capita incomes moreover the growth process may be punctuated by periods of discrete shifts in resource allocation creative destruction and growth acceleration rather than being smooth throughout structural changes need not be automatic they require a skill specific infrastructure of new capabilities which when established generate new comparative advantages market failures may be pervasive due to problems of human capital accumulation critical mass and discrete choice among alternative growth paths thus in addition to creating a favorable environment for business and assuring through macroeconomic policy adequate investment successful growth may require an adequate industrial and technological policy particularly at nodes of structural change the paper surveys the structuralist insights appearing in the literature starting with the early postwar economic development literature and including recently developed formal models it also proposes a kinked or scalloped aggregate production function as a simple tool for structuralist analysis

the government financial system and large private enterprises in the economic development of south korea abstract the paper investigates the main characteristics of the government business relationship in south korea in the past three decades to find out how it may have contributed to south korea s economic development it proposes that the government and large private enterprises in south korea should be viewed as constituting an internal organization namely a quasi internal organization as such extensive intervention by the government with south korea s financial system can be viewed as an internal capital market and consequently it could have led to a more efficient allocation of credit than possible in a free market financial system it also argues that the quasi internal organization has made it possible for the government to efficiently implement its developmental policies it is however pointed out that for the quasi internal organization to be successful in accelerating the pace of economic development the country must have a political leadership committed to the goal of economic development and must adopt an outward oriented development policy

political economy influences within the life cycle of imf programmes increasing attention is being paid to political economy dimensions of the imf s operations however up until now the literature has lacked a systematic overview of how politics and economics interact in this context this paper sets out to fill the gap its conceptual basis is that of the life cycle of an imf programme what determines the decision to turn to the fund for financial assistance what determines the outcome of negotiations what determines whether a country will come back to the fund answers to these questions cannot be satisfactorily given by examining economics alone the paper draws on existing evidence to provide an empirically based discussion of the issues involved it also points the direction in which future research needs to go some of the policy implications of the analysis are also examined

revisiting the effects of imf programs on poverty and inequality investigating how lending programs of the international monetary fund imf affect poverty and inequality we explicitly address model uncertainty we control for endogenous selection into imf programs using data on 86 low and middle income countries for the 1982 2009 period and analyze program effects on various poverty and inequality measures the results rely on averaging over 90 specifications of treatment effect models and indicate adverse short run effects of imf agreements on poverty and inequality for the whole sample while for a 2000 2009 subsample the results are reversed there is evidence that significant short run effects might disappear in the long run author s abstract

using bill and keep interconnect arrangements to soften network competition abstract this paper demonstrates that low below marginal cost interconnect or access charges can be used to sustain high subscription prices under network competition with two part tariffs and price discrimination this result stands in contrast to other results in the literature suggesting that high interconnect charges can play a collusive role

industrialisation as a structural determinant of inflation performance in imf stabilisation programmes in less developed countries this article considers the impact of imf stabilisation programmes on inflation performance in ldcs it is argued that the success of a programme in effecting a change in the inflationary process will be influenced by the structural characteristics of the economy and in particular by the stage of industrialisation reached the empirical analysis is based on a sample of ldcs which undertook adjustment programmes supported by fund resources during the 1970s and the results obtained are consistent with the hypothesis of an association between economic structure and inflation performance

the distributional effects of imf programs a cross country analysis abstract this paper measures the effects of 58 international monetary fund programs during 1975 91 on gini coefficients and income of the poorest quintile these variables are traced over the two to five years following program initiation this research also presents a new technique to control for differences in countries initial economic circumstances the study finds evidence of a significant deterioration in income distribution and the incomes of the poor in fund program countries relative to their nonprogram counterparts when pre program external imbalance is severe in cases where prior external imbalance is not as great countries participating in fund programs actually show relative improvements in distributional indicators

a true test do imf programs hurt the poor this article analyses the effect of imf programs on poverty with data from 82 countries during 1985 2000 two indicators of poverty infant mortality rates and the human development index hdi are utilized and the effects of the imf s concessionary and nonconcessionary programs are investigated as well as economic and institutional factors the results show that the imf s programs have no significant direct impact on poverty growth and good institutions however both have significant impacts lowering infant mortality and increasing the hdi the fund s concessionary programs increase the impact of growth on lowering infant mortality while the nonconcessionary programs lower the impact of growth on the hdi where a great proportion of the people are suffered to languish in helpless misery that country must be ill policed and wretchedly governed a decent provision for the poor is the true test of civilization samuel johnson 1791 once a country was in crisis imf funds and programs not onl

distributional implications of macroeconomic policy theory and applications to el salvador abstract this article offers a theoretical framework for designing macroeconomic strategy for el salvador that will both respect stabilization and structural adjustment needs and enhance social equity after outlining the largely negative distributional implications of the orthodox policies followed by el salvador in recent years we argue that stabilization and efficiency could actually be improved by increased equity and sketch out the elements of an alternative approach that would be distributionally sensitive and thereby help consolidate the peace

towards green growth how does green innovation affect employment abstract we examine the relationship between green innovation and employment from data taken from the spanish technological innovation panel pitec for period 2007 2011 the increasing relevance of environmental issues for the spanish economy its unemployment problem and the uniqueness in its innovation structure make it a proper and interesting context to investigate green innovation dynamics we find a positive relationship between green innovation and employment and the relationship is stronger for firms in the so called dirty industries in addition we show that the relationship is positive for firms that introduce green innovation voluntarily as compared to firms that introduce green innovation merely to comply with regulations a positive and significant relationship is also found between employment and firms that report an increase in the degree of importance paid to green innovation

banking reform and the financing of firm investment an empirical analysis of the chilean experience 1983 92 this article investigates whether the chilean banking reforms of the 1980s have contributed to reducing market imperfections in chilean financial markets in the late 1980 and early 1990s to analyse this issue patterns of investment and its finance for different types of firms are studied based on balance sheet information of a panel of 70 firms the most important conclusion is that those specific reforms aimed at reducing intra conglomerate lending seem to have been successful since access of non conglomerate firms has increased indicating a reduction of existing market imperfections for such firms

capital flight from latin america abstract this paper focuses on capital flight from latin america during the 1970s and 1980s after estimating the extent of such flight i suggest that capital flight imposes growth costs erodes the tax base and worsens income distribution i then use regression analysis to investigate the causes of capital flight as well as the role of capital controls and imf programs in slowing flight i conclude by criticizing the current policy approach to the capital flight problem and suggesting some new directions

mainstreaming green product innovation why and how companies integrate environmental sustainability green product innovation has been recognized as one of the key factors to achieve growth environmental sustainability and a better quality of life understanding green product innovation as a result of interaction between innovation and sustainability has become a strategic priority for theory and practice this article investigates green product innovation by means of a multiple case study analysis of 12 small to medium size manufacturing companies based in italy and canada first we propose a conceptual framework that presents three key environmental dimensions of green product innovation such as energy minimization materials reduction and pollution prevention as identified in the life cycle phases of products based on insights gained from in depth interviews we discuss firms motivations to develop green products environmental policies and targets for products different dimensions of green product innovation and challenges faced during developing and marketing of green products results from the study are then synthesized and integrated in a toolbox that sheds light on various aspects of green product innovation and provides solutions to challenges and risks that are faced by firms finally implications for managers academia and public policy makers are discussed

adoption of green chemistry an analysis based on us patents abstract green chemistry patents are an indicator of environmental innovation and r d over 3200 green chemistry patents were granted in the us patent system between 1983 and 2001 with most assigned to the chemical sector the university and government sectors place greater emphasis on green chemistry than most industrial sectors worldwide the emphasis on green chemistry technology relative to chemical plastic rubber and polymer technologies has increased since 1988 the united states appears to have a competitive advantage in green chemistry the most rapid growth in the emphasis on us green chemistry patents coincides with revisions to major us environmental laws in the late 1980s and early 1990s however the ratio of green chemistry patents to patents in other areas of chemical sciences in heavily regulated industries are low suggesting that these industries did not necessarily embrace green chemistry as a means to reduce their regulatory burden

the role of finance in environmental innovation diffusion an evolutionary modeling approach abstract the implementation of climate adaptation and mitigation policies depend on the development of green technologies whose diffusion is constrained by a number of barriers which prevent them to spread broadly and at a fast pace by means of an agent based computational model the paper investigates the macro and micro economic dynamics considering the role of a traditional commercial bank and a state investment bank that explicitly supports green investments simulation results emphasize that green finance matter and that the market diffusion of environmental innovation is more pronounced when the presence of the public investment bank is combined with strong consumers preferences oriented towards environmental quality the relevance of the paper is twofold besides contributing to the literature on the finance innovation nexus by considering the role of climate finance within a complex systems framework it provides a model that can be used as a tool to explore policies to foster environmental innovation diffusion

are foreign institutional investors good for emerging markets in den 1990er jahren waren die portfolio flows institutioneller investoren die dynamischsten kapitalstrome in die emerging markets in dieser arbeit leiten wir in einem rahmen asymmetrischer information funf aussagen ab stellen diese in einen zusammenhang mit der existierenden empirischen literatur und entwickeln daraus entsprechende wirtschaftspolitische implikationen die undurchsichtige informationslage auf den emerging markets behindert vor allem auslandische marktteilnehmer daruber hinaus konnen institutionelle investoren in folge finanzwirtschaftlicher offnung die position lokaler investoren unabsichtlich durch unausgewogene diversifikation und undurchsichtige risiken verschlechtern schlieslich verstarken institutionelle investoren aus dem ausland oft investitionsbooms oder finanzielle ansteckung deshalb sollten kapitalverkehrs und finanzielle liberalisierung stets von sorgfaltiger regulierung begleitet werden

a revised tobit procedure for mitigating bias in the presence of non zero censoring with an application to milk market participation in the ethiopian highlands fixed transactions costs that prohibit exchange engender bias in supply analysis due to censoring of the sample observations the associated bias in conventional regression procedures applied to censored data and the construction of robust methods for mitigating bias have been preoccupations of applied economists since tobin econometrica 26 1958 24 this literature assumes that the true point of censoring in the data is zero and when this is not the case imparts a bias to parameter estimates of the censored regression model we conjecture that this bias can be significant affirm this from experiments and suggest techniques for mitigating this bias using bayesian procedures the bias mitigating procedures are based on modifications of the key step that facilitates bayesian estimation of the censored regression model are easy to implement work well in both small and large samples and lead to significantly improved inference in the censored regression model these findings are important in light of the widespread use of the zero censored tobit regression and we investigate their consequences using data on milk market participation in the ethiopian highlands

a dynamic stochastic frontier model to evaluate regional financial efficiency evidence from chinese county level panel data abstract studies have widely used stochastic frontier models to assess financial efficiency however traditional static approaches do not take dynamic characteristics of financial systems into account this article develops a dynamic stochastic frontier model to evaluate regional financial efficiency and provides an empirical test of the model by using panel data of 62 chinese counties during the 2001 2010 period the model measures the dynamic impact of the input output variables and environmental variables on financial efficiency and allows for the separation of technical change from the change in technical efficiency the results show that the dynamic model provides a better fit to the data than the static model in addition a gradient difference emerges in the regional financial efficiency among the six major regions of china the results offer practical implications for the development of regional financial services in china as well as other developing countries and emerging economies

workers remittances and the real exchange rate a paradox of gifts abstract we test the impact of workers remittances on the real exchange rate using a panel of 13 latin american and caribbean countries the analysis reveals that workers remittances have the potential to inflict economic costs on the export sector of receiving countries by reducing its international competitiveness our findings raise concerns parallel to those raised by dutch disease or resource boom models where resource discoveries result in real exchange rate appreciation and shifting of resources from the traded to the nontraded sectors of the economy

the harm of symbolic actions and green washing corporate actions and communications on environmental performance and their financial implications we examine over 100 top performing canadian firms in visibly polluting industries as we seek to answer four research questions what specific environmental issues are firms addressing how do these issues differ between industries are both symbolic and substantive actions financially beneficial does green washing measured as the difference between symbolic and substantive action and or green highlighting measured as the combined effect of symbolic and substantive actions pay we find that substantive actions of environmental issues green walk neither harm nor benefit firms financially but symbolic actions green talk are negatively related to financial performance we also find that green washing discrepancy between green talk and green walk has a negative effect on financial performance and green highlighting concentrated efforts of the talk and walk has no effect on financial performance in this article we provide explanations of our findings and put forth future research directions

network competition ii price discrimination our companion article developed a clear conceptual framework of negotiated or regulated interconnection agreements between rival operators and studied competition between interconnected networks under the assumption of nondiscriminatory pricing this article relaxes this assumption and allows networks to charge different prices for calls terminating on the subscriber s network and those terminating on a rivals network this creates a price differential between services that are identical for the consumer and generates network externalities despite network interconnection we show that in both the mature and entry phases of the industry the nature of competition is substantially affected by such price discrimination

below the line poverty in latin america abstract despite gains in basic welfare indicators poverty remains prevalent in latin america this paper surveys existing data on poverty in the region and discusses the relationship between growth inequality and poverty given the inequality of income distribution in latin america and the slow growth of output policies to overcome poverty must involve more efficient allocation of government resources redistribution and foreign aid

imf conditionality threat perception and political repression a cross national analysis this article investigates the impact of international monetary fund imf conditionality on political repression conditionality refers to the conditions that borrowing countries must implement bef

social networks and factor markets panel data evidence from ethiopia we investigate the role of an indigenous social network in ethiopia the iddir in facilitating factor market transactions among smallholder farmers we use detailed longitudinal household survey data and employ fixed effects estimation approaches to identify the effect of iddir membership on factor market transactions among farmers we find that joining an iddir network improves households access to land labour and credit transactions our findings also hint that iddir networks may crowd out borrowing from local moneylenders locally referred as arata abedari a relatively expensive credit source these results suggest that non market institutions can play crucial roles in facilitating market transactions

fortune favors the prepared firm a critical factor in industrial competitiveness is the ability of firms to exploit new technological developments we term this ability a firm s absorptive capacity and argue that such a capability not only enables a firm to exploit new extramural knowledge but to predict more accurately the nature of future technological advances we develop a stylized model in which we focus exclusively on firms decisions to invest in their absorptive capacities we first examine a monopolist s investment decision analyzing the path dependence of its investment and the effect of uncertainty we then consider the effect of competition by modeling the impact of entry on an incumbent s investment behavior implications for management and public policy are then discussed

south korean and taiwanese development and the new institutional economics the publication of books by both alice amsden and robert wade provide an opportune moment to reflect on the study of east asian development after an initial surge of interest beginning in the 1970s the field has reached a plateau and scholars recently have cast a wide net in searching for ways to extend the field in assessing the state of the art regarding the economic development of the east asian newly industrialized countries nics this review will treat three themes first i will argue that the focus on states versus markets is becoming stale and that much of the scholarly interest lies in the politics behind the economics second i argue that political scientists have underexplored the historical origins of korean and taiwanese capitalism and that such attention promises to strengthen both theories and explanations of development third i argue that the international system has been more important in promoting development in east asia than accounts in the first wave have recognized the purpose of this review is to assess the field reveal

the effects of imf programs in the third world debate and evidence from latin america abstract this article reviews the debate about the effects of imf sponsored stabilization programs in the third world after examining recent studies by fund economists results of a new study on a latin american country set are presented in this research imf programs are associated with insignificant changes in the current account significant improvements in the overall balance of payments increases in inflation mixed effects on growth and a strong and consistent pattern of reduction in labor share of income the latter result is incorporated into a distribution oriented critique of fund policy

exports economic growth and the consolidation of peace in el salvador abstract the pillars of inclusive growth in el salvador have to be nontraditional export growth investment and government determination to reduce income inequality and poverty this article analyzes the key obstacles to the development of a competitive and dynamic export sector dutch disease driven by aid and remittances a significant decline in real wages and lack of productivity growth policies can and must focus on productivity growth rather than wage repression in the pursuit of peace consolidation and long term competitiveness

economic liberalization via imf structural adjustment sowing the seeds of civil war previous studies that have explored the effects of economic liberalization on civil war have employed aggregate measures of openness and have failed to account for potential endogeneity bias in this research note we suggest two improvements to the study of the relationship between liberalization and civil war first emphasizing that it is processes that systematically create new economic winners and losers rather than particular levels of economic openness that have the potential to generate conflict we consider the effects of one oft used means of liberalizing economies the adoption by countries of international monetary fund imf structural adjustment programs second we use a bivariate probit model to address issues of endogeneity bias analyzing all data available for the period between 1970 and 1999 we identify an association between the adoption of imf programs and the onset of civil war this finding suggests that imf programs to promote economic openness unintentionally may be creating an environment conducive to domestic conflict

international negotiations in the shadow of national elections this study examines the role elections play in negotiations between states and the international monetary fund imf although loans made by the imf often require countries to introduce painful austerity measures that provoke a backlash from angry citizens some governments are able to negotiate more favorable terms than others original data on the substantive content of imf loans show that governments leverage imminent elections to obtain more lenient loan terms conditions that require labor market reforms in exchange for imf financing are relatively less stringent in loans negotiated within six months before a pending democratic election all else equal the further away elections are from loan negotiations the more stringent the labor conditions included in countries loan programs elections give governments leverage in their international negotiations and this leverage is effective even when states negotiate with unelected bureaucrats during times of economic crisis

the high politics of imf lending analysts have long suspected that politics affects the lending patterns of the international monetary fund imf but none have adequately specified or systematically tested competing explanations this paper develops a political explanation of imf lending and tests it statistically on the developing countries between 1985 and 1994 it finds that political realignment toward the united states the largest power in the imf increases a country s probability of receiving an imf loan a country s static political alignment position has no significant impact during this period suggesting that these processes are best modeled dynamically an analysis of two subsamples rejects the hypothesis that the imf has become less politicized since the end of the cold war and suggests that the influence of politics has actually increased since 1990 the behavior of multilateral organizations is still driven by the political interests of their more powerful member states

scale economies wage differentials and north south trade abstract this paper attempts to isolate the effect of external economies of scale in production on the pattern of north south trade the results show that when the relative wage is higher in the north and only the north innovates the south produces and exports those goods with the lowest economies of scale while the remaining set of goods is produced and exported by the north production subsidies offered by the south raise southern income and welfare but if the north introduces a new set of goods the benefits of the subsidies to the south dissolve

effects of innovation on employment a dynamic panel analysis abstract this paper estimates the effect of innovation on employment at the firm level our uniquely long innovation panel data set of german manufacturing firms covers more than 20 years and allows us to use various innovation measures we can distinguish between product and process innovations as well as between innovation input and innovation output measures using dynamic panel gmm system estimation we find positive effects of innovation on employment this is true for innovation input as well as for innovation output variables innovations show their positive effect on employment with a time lag and process innovations have higher effects than product innovations

the state and industrial strategy abstract the debate about the role of the state in promoting industrial growth in developing economies is reviewed we begin with the ideas of the early development economists of the 1950s and 1960s then take up two waves of neoclassical criticism respectively emphasizing the primacy of the market and the lack of autonomy and competence of the developmentalist state and sketch the elements of a countercritique the fact that all successfully developing economies apply industrial strategies incorporating institutional change is emphasized and boundary conditions and lessons from experience which delimit sensible strategic choices are pointed out

externalities in economies with imperfect information and incomplete markets this paper presents a simple general framework for analyzing externalities in economies with incomplete markets and imperfect infonnation by identifying the pecuniary effects of these externalities that net out the paper simplifies the problem of determining when tax interventions are pareto improving the approach indicates that such tax interventions almost always exist and that equilibria in situations of imperfect information are rarely constrained pareto optima it can also lead to simple tests based on readily observable indicators of the efficacy of particular tax policies in situations involving adverse selection signaling moral hazard incomplete contingent claims markets and queue rationing equilibria traditional discussions of externalities have emphasized the distinction between technological externalities in which the action of one individual or firm directly affects the utility or profit ofanother and pecuniary externalities in which one individual s or firm s actions affect another only through effects on prices while the presence of technological externalities imply in general that a competitive equilibrium may not be pareto efficient pecuniary externalities hy themselves are not a source of inefficiency the fact that prices change has of course important consequences there are both distributional and allocational effects but the distribution effects net out gains for example hy firms whose prices increase are precisely offset by losses e g to individuals who must pay higher prices and there are no welfare losses from the allocation effects as long as the price changes involved are small if firms are maximizing profits and individuals are maximizing utility both facing prices that correctly refiect opportunity costs then standard envelope theorem arguments imply that changes in profits or utility induced by changes in allocations resulting from any small change in prices are negligible

international negotiations and domestic politics the case of imf labor market conditionality what is the role of international organizations ios in the formulation of domestic policy and how much influence do citizens have in countries negotia tions with ios we examine these questions through a study of labor related condi tionality in international monetary fund imf loans using new data from imf loan documents for programs from 1980 to 2000 we test to see if citizens economic interests influence imf conditionality we examine the substance of loan conditions and identify those that require liberalization in the country s domestic labor market or that have direct effects on employment wages and social benefits we find evi dence that democratic countries with stronger domestic labor receive less intrusive labor related conditions in their imf loan programs we argue that governments con cerned about workers opposition to labor related loan conditions negotiate with the imf to minimize labor conditionality we find that the imf is responsive to domes tic politics and citizens interests

when are sanctions effective a bargaining and enforcement framework although a considerable literature identifies the conditions under which sanctions are more likely to be successful few studies examine the question of when sanctioning states or senders are willing to enforce their sanctions laws against their firms using a game theoretic model we argue that imposing sanctions creates a strategic dilemma for senders we demonstrate that senders often have disincentives to enforce their sanctions policies given that the restriction on economic transactions with targeted states may undermine their firms competitiveness the model indicates that sanctions are more likely to succeed when the sender s firm retains a moderate share of the target s market relative to its foreign competitors however the model also demonstrates that sanctions are likely to be imposed only when the conditions do not favor their success the empirical implications of the model are tested using the threat and imposition of economic sanctions ties data set

risk attitudes and economic well being in latin america abstract a common conjecture in both the theoretical and policy literatures on development is that people remain poor because they are too impatient and risk averse to accumulate the resources needed to improve their well being the empirical literature however suggests that this conjecture is far from proven we sample more than 3000 participants drawn representatively from six latin american cities and find little correlation between baseline risk aversion and well being measured as an index of eight outcomes we do however find that measures of ambiguity aversion loss aversion and the willingness to take advantage of a risk pooling scheme all correlate with well being participants who are ambiguity averse loss averse and who react conservatively in the risk pooling condition all have significantly lower scores on our well being index these results are robust to the inclusion of a variety of important controls like human capital accumulation and access to credit

markets market failures and development a central question in development economics is how can we account for differences in the levels of income and the rates of growth between the developed and less developed economies in the 1950s and 1960s there was a standard answer to this question the poor are just like the rich except they are poorer they have less human and nonhuman capital there was an immediate prescription for this diagnosis increase the resources of ldcs either by transferring capital to them either direct aid or education or by encouraging them to save more today these answers seem less convincing that they did two decades ago if the problem were primarily a shortage of physical capital the return to capital should be much higher in ldcs than in developed countries and the natural avarice of capitalists would lead to a flow of capital from the more developed to the less developed economies see howard pack 1984 and my 1988 paper if the problem were primarily a shortage of human capital then the educated in ldcs should receive a higher absolute as well as relative income than the educated in more developed economies how then can we account for high levels of unemployment among the educated and the migration of the educated from ldcs to more developed economies moreover the predictions of the standard neoclassical growth model of a convergence of growth rates in per capita income with permanent differences in per capita consumption being explained by differences in savings rates and reproduction rates do not seem to have been borne out these observations suggest that the ldcs differ from the developed countries in at least some other important respects and this view is corroborated by those studies which have looked at the productivity of similar plants operating in developed and less developed economies see pack 1984 1987 the difference can be attributed perhaps tautologically to differences in economic organization to how individuals factors of production interact and to the institutions which mediate those interactions among the most important of these institutions are markets it is by now well recognized that there are many instances of market failures in more developed economies see bruce greenwald and myself 1986 in some cases market failures may be ameliorated by nonmarket institutions if for instance capital markets do not function well perfectly if only because of costly and imperfect information nonmarket institutions internal capital markets within large conglomerates may develop market failure is more prevalent in ldcs and the nonmarket institutions that ameliorate its consequences are at least in many instances less successful in doing so the objective of this paper is to explore the causes and consequences of these market failures and the failure of private nonmarket solutions and to suggest possible roles for government intervention tdiscussants anne 0 krueger duke university stanley fischer world bank

stabilization the political economy of overkill abstract this paper considers whether national and international aspects of the imf s stabilization programmes during the 1970s and early 1980s have resulted in a process of overkill or in other words a process of economic retrenchment which went much further than was strictly necessary in terms of what could have been regarded as reasonable objectives in the international context the author describes how the attack on inflation has become an end in itself at the expense of other stated objectives of the imf thus creating a distortion of its priorities the paper discusses errors of diagnosis which have led to this disorientation and explains why deflationary policies should not be regarded as a panacea the paper then considers the nead for equity and efficiency in the distribution of the political and economic costs of adjustment the next section of this paper discusses the assumptions underlying the imf s treatment of fund members and to what extent even handedness in the application of stabilization measures may result in inequality of burden sharing among borrowers problems related to monetarist theories and the consequent policies are examined followed by a consideration of the dangers involved in devising straightforward performance criteria in the form of precise monetary targets that can readily be monitored by the imf this means of evaluating the national adjustment policies success is seen to be unsatisfactory viz the frequency of stand by arrangement breakdowns and mistakes in forecasting the paper concludes that the concept of unilateral adjustment is not an acceptable basis for imf supervision of the international monetary system in addition care should be taken to avoid overkill in determining the degree and character of adjustment needed in stabilization programmes one possible solution to the extra burden imposed on the ldcs might be a liberalization of the compensatory financing facility with the objective of applying the same kind of regime to imports as to exports

welfare analysis of regulating mobile termination rates in the u k we develop a calibrated simulation model of the u k mobile telephony market and use it to analyze the effects of reducing mobile termination rates mtr s as recommended by the european commission we find that reducing mtr s is likely to increase both consumer surplus and networks profits depending on the strength of call externalities i e benefits to the recipient of a call social welfare may increase by as much as 1 billion to 4 6 billion per year we also use the model to estimate the welfare effects of the 2010 merger between orange and t mobile and find that the merger led to a substantial reduction in consumer surplus

export processing zones in the dominican republic transforming manufactures into commodities this paper examines the performance of export processing zones in the dominican republic it shows that in specializing in unskilled labor intensive export processing in the context of competitive devaluations between central american countries the dominican republic has experienced immiserizing employment growth in these circumstances the export of labor intensive manufactures is akin to that of primary commodities exporting countries which rely on unskilled labor and which fail to make the transition to higher value added production exports are thus likely to experience declining terms of trade the conclusions of this case study are considered to have wider relevance to world bank and international monetary fund inspired structural adjustment programs in the region

dynamic price competition with network effects i consider a dynamic model of competition between two proprietary networks consumers die and are replaced with a constant hazard rate and firms compete for new consumers to join their network by offering network entry prices i derive a series of results pertaining to a existence and uniqueness of symmetric equilibria b monotonicity of the pricing function e g larger networks set higher prices c network size dynamics increasing dominance vs reversion to the mean and d firm value how it varies with network effects finally i apply my general framework to the study of termination charges in wireless telecommunications i consider various forms of regulation and examine their impact on firm profits and market share dynamics

redefining innovation eco innovation research and the contribution from ecological economics while innovation processes toward sustainable development eco innovations have received increasing attention during the past years theoretical and methodological approaches to analyze these processes are poorly developed against this background the term eco innovation is introduced in this paper addressing explicitly three kinds of changes towards sustainable development technological social and institutional innovation secondly the potential contribution of neoclassical and co evolutionary approaches from environmental and innovation economics to eco innovation research is discussed three peculiarities of eco innovation are identified the double externality problem the regulatory push pull effect and the increasing importance of social and institutional innovation while the first two are widely ignored in innovation economics the third is at the least not elaborated appropriately the consideration of these peculiarities may help to overcome market failure by establishing a specific eco innovation policy and to avoid a technology bias through a broader understanding of innovation finally perspectives for a specific contribution of ecological economics to eco innovation research are drawn it is argued that methodological pluralism as established in ecological economics would be very beneficial for eco innovation research a theoretical framework integrating elements from both neoclassical and evolutionary approaches should be pursued in order to consider the complexity of factors influencing innovation decisions as well as the specific role of regulatory instruments and the experience gathered in ecological economics integrating ecological social and economic aspects of sustainable development is highly useful for opening up innovation research to social and institutional changes 2000 elsevier science b v all rights reserved

in search of complementarity in innovation strategy internal r d and external knowledge acquisition empirical research on complementarity between organizational design decisions has traditionally focused on the question of existence of complementarity in this paper we take a broader approach to the issue combining a productivity and an adoption approach while including a search for contextual variables in the firms strategy that affects complementarity analysis of contextual variables is not only interesting per se but also improves the productivity test for the existence of complementarity we use our empirical methodology to analyze complementarity between innovation activities internal research and development r d and external knowledge acquisition our results suggest that internal r d and external knowledge acquisition are complementary innovation activities but that the degree of complementarity is sensitive to other elements of the firms strategic environment we identify reliance on basic r dthe importance of universities and research centers as an information source for the innovation processas an important contextual variable affecting complementarity between internal and external innovation activities

employment and technological innovation evidence from u k manufacturing firms this article uses british firm level panel data on actual innovative activity drawn from different statistical sources to identify the effect of technical change on jobs previous work tends to find positive associations of proxies for technical change and employment but such studies suffer from various statistical drawbacks in this study even when one controls for fixed effects dynamics and endogeneity innovations have a positive and significant effect on employment which persists over several years there seems to be little direct role for spillover effects from industry innovations or any role for industry wages or union power

network competition and entry deterrence we develop a model of logit demand that extends to a multi firm industry the traditional duopoly framework of network competition firstly we show that incumbents establish inefficiently the reciprocal access charge below cost when they compete in prices but they behave efficiently if they compete in utilities secondly we study how incumbents determine the industry wide access charge under the threat of entry we show that incumbents may accommodate all possible entrants only a group of them or may completely deter entry when entry deterrence is the preferred option incumbents distort the access charge upwards

characterizing social networks and their effects on income diversification in rural kerala india summary income diversification continues to be a key strategy for poor rural households including those that are progressively developing and those operating under increasing distress the ability of a household to diversify has been shown to depend upon its demographic and economic characteristics and its physical and social context this paper considers the effects of intra village social networks on household income diversification in one of the poorest and most ethnically diverse areas of the indian state of kerala using techniques adapted from spatial econometrics we find that social connections within a village magnify the impacts of household characteristics such as education and number of adults by a factor of 3 6 times models with alternative measures of network centrality degree and eigenvector indicate that the number of network connections that a household has is more important than the centrality of those connections finally we use social contact information to calculate assortative mixing based on caste the results suggest social stratification in these villages with higher levels of stratification associated with lower levels of income diversification

economics imperialism and the new development economics as kuhnian paradigm shift abstract this paper addresses the evolving relationship between economics and other social sciences it sets the present intellectual scene as one in which economics imperialism is rampaging across other disciplines the designs of economics upon development studies are examined in terms of the kuhnian notion of paradigm shift thereby the conclusion is drawn of the potential prospect of open debate around the economy and development not least outside economics itself but there is danger of economics imperialism in the form of the post washington consensus foreclosing the analytical agenda at the expense of approaches based on the political economy of capitalism

environmental innovation and employment dynamics in different technology fields an analysis based on the german community innovation survey 2009 the employment effects of environmental technologies are in the focus of politicians but studies analyzing these effects for different environmental innovation fields are rare we use the 2009 wave of the community innovation survey cis allowing for such an analysis at the firm level our econometric analysis shows that innovative firms in general are characterized by a significantly more dynamic employment development especially the introduction of cleaner technologies as process innovations leads to a higher employment within the firm the theoretical background of this finding is that cost savings induced by this type of process innovation improve the competitiveness of firms this has positive effects on demand and thus also increases employment especially material and energy savings are positively correlated to employment because they help to increase the profitability and competitiveness of the firm on the other side air and water process innovations that are still dominated by end of pipe technologies have a negative impact on employment

informal credit markets and economic development in taiwan abstract taiwan is a case which shows how informal credit markets help to compensate for the limitations of the formal financial system especially in satisfying the needs of medium and small enterprises government regulations and policies affect the way participants in informal credit markets solve selection enforcement and incentive problems recent changes demonstrate the continued resilience and relevance of informal credit markets during a process of financial liberalization

private investment and democracy in latin america abstract this paper argues that the deterioration of latin american private investment in the 1980s may have been largely due to debt difficulties and not the concurrent wave of democratization after reviewing why more political systems may actually be conducive to investment we test an investment function for seven countries over 1973 1986 that includes traditional economic factors two debt measures and several political variables including measures of democracy worker power international monetary fund support and risk the results are quite congenial for our hypothesis under several reasonable alternative specifications for the economic determinants our democracy measure is positively signed and significant

privatization and economic growth an empirical investigation from a sample of developing market economies this paper explores the economic determinants of privatization programmes and the macroeconomic impact of this institutional reform on the growth rate of the gdp a sample of thirty five developing market economies is considered over the 1988 92 period probit and tobit models are used to identify the determinants of successful privatization programmes then regressions are run where probabilities probit and expected values tobit are successively included as additional regressors beside the potential influence of other economic policy variables a significant positive effect is highlighted giving evidence of the importance of divestiture the economic effect is found to be stronger when this institutional reform took place in industry or infrastructure

demand pull and technology push public support for eco innovation the case of the biofuels sector the purpose of this paper is to explore the differentiated impact of demand pull and technology push policies in shaping technological patterns in the biofuels sector the empirical analysis is based on a novel and original database biopat containing patents in the field of biofuels selected using appropriate keywords and classified according to the technological content of the invention our results generally show that technological capabilities and environmental regulation spur innovative activities in the biofuels sector both demand pull and technology push factors are found to be important drivers of innovation in the biofuels sector however technology exploitation activities in first generation technologies are found to be mainly driven by quantity and price based demand pull policies on the contrary the pace of technology exploration efforts in advanced generation biofuels is shown to react positively to price based demand pull incentives but also to technology push policy the clear diversity in the impact of different public support instruments provides new insights which fuel discussion on the optimal policy mix debate and offers new elements for the design of future policy strategies