small firms and the merger mania empirical research has found an average or even superior performance of small firms this seems to be at variance with the secular concentration process and the recurrent merger waves this paper tries to integrate size and merger research higher profitability of small firms is explained by their incentive structure and shorter decision lags but also by lower wages and higher individual risk premia their faster growth in the eighties was in addition fostered by diversification of demand miniaturization of technology and a need for flexibility under uncertainty the merger wave on the other hand does not necessarily prove that large firms are superior managers and shareholders may be seduced by stockmarket optimism a sizeable industry of banks agents and lawyers have their own interests in mergers mergers may be important in declining markets and for the acquisition of technology on average mergers do not improve efficiency profits or internal growth small and large firms serve different purposes performance depends on the market incentives and technology the establishment growth and closure of small firms as well as mergers are attempts to find the optimal organization for utility maximization in a world of severe uncertainty and diverse needs

lines in the sand price dispersion across iraq s intranational borders before during and after the surge abstractthis paper tests the impact of a change in security commitment on market development in a country embroiled in low intensity conflict we analyze weekly price data for approximately 250 goods from 18 iraqi cities between 2005 and 2008 our paper suggests four empirical regularities associated with price dispersion and market development in postwar iraq first the degree of intracountry price dispersion in iraq is higher than that reported for a typical industrialized nation second the degree of price dispersion decreased significantly during 2007 coincident with the change in u s security strategy known as the surge third the economic impact of the surge is geographically uneven but loosely follows patterns of u s deployment with price dispersion decreasing by roughly one third in areas targeted during the surge but remaining relatively static in other areas finally we find that internal ethnoreligious divisions have relatively modest effects on price dispersion

spatial variations in new firm formation in the republic of ireland 1980 1990 hart m and gudgin g 1994 spatial variations in new firm formation in the republic of ireland 1980 1990 reg studies 28 367 380 this paper presents results of an investigation into regional 26 county differences in the formation of new manufacturing firms in the republic of ireland over the period 1980 90 the results of a multivariate analysis of the determinants of new firm formation at the regional level reveal that the proportion of small manufacturing establishments in an area growth in local industrial demand the proportion of professional and managerial occupations in the population and the impact of government new and small firms policy are all positive influences on gross formation rates the paper concludes by arguing that the process of new firm formation should not be viewed as the sole means of generating local economic growth and that the growth of existing small firms should also form an integral part of any development strategy hart m et gudgin g 1994 les variations geograp

the effects of bilateral attitudes on imports research based on the gravity model has shown that non economic factors affect international trade and recent studies have shown that people s perception affects economic exchange in this study we explore the effects of attitudes on bilateral trade using survey data from the pew research center s global attitudes projects for 68 countries from 2002 to 2015 we find that a more favourable attitude of a country towards another country will increase the former country s imports from the latter the result is robust to an endogeneity check to different measures of attitudes and to different estimation methods however heterogeneity is observed across different types of goods and countries the result holds for trade in intermediate and consumer goods but the effects are not statistically significant for capital goods the effects are statistically significant for bilateral trade between different country groups except for high income countries imports from non high income countries

violence instability and trade evidence from kenya s cut flower sector summary we examine the implications of the violence and instability following the 2007 kenyan elections and how it affected cut flower trade between kenya and the eu using the rotterdam demand model we find that the post election violence had a negative impact on eu imports from kenya equivalent to 33 million which is significant given the importance of flowers to kenya s economy results show that even a short period of violence can have an effect on trade since instability in an exporting country causes importers to source from other countries perceived as less risky persisting even when order is restored

terrorism and international business a research agenda terrorism threatens international business ib through its direct and indirect effects as governments tighten security at public sites businesses have become more attractive terrorist targets with important implications for the operations and performance of multinational firms while terrorism has been substantially studied in other fields there has been little scholarly research to address terrorism and the distinctive challenges that it poses for ib in this article we conceptualize terrorism in relation to ib we provide background on the dimensions and effects of terrorism and develop a theoretical grounding for terrorism research by drawing on the literature from ib economics political science and other fields after discussing findings from the literature review we offer a comprehensive agenda for future research regarding the relationship between terrorism and ib our agenda emphasizes the effects of terrorism organizational preparedness company strategy and performance global supply chain and distribution channels and human resource issues our review helps establish a baseline for future empirical research consistent with the early stages of research ib scholars are encouraged to offer useful perspectives and effective solutions that shed needed light on terrorism and help reduce its destructive effects for ib and multinational firms

from lotka s biophysics to georgescu roegen s bioeconomics abstract alfred lotka was one of the founders of modern ecology this paper explores lotka s contribution to biophysical economics resulting from the marriage of the three disciplines biology physics and economics lotka founded the concept of exosomatic evolution to characterise the economic activities in their biophysical environment as a continuation of biological processes like vernadsky he adopted a holistic perspective of planet system the biosphere georgescu roegen was one of the founders of ecological economics he explained the entropic nature of evolution and adopted lotka s exosomatic evolution concept in his bioeconomic approach georgescu roegen had several warnings for economists about the irrevocability of the entropic degradation of matter energy and the pressure on natural resources that goes hand in hand with economic processes in general this article aims at drawing a parallel between lotka s contribution and georgescu roegen s bioeconomics by shedding light not only on their similarities but also on the divergences that testify the novelty of georgescu roegen s approach

civil wars and international trade this article analyzes empirically the relationship between civil wars and international trade we first show that trade destruction due to civil wars is very large and persistent and increases with the severity of the conflict we then identify two effects that trade can have on the risk of civil conflicts it may act as a deterrent if trade gains are put at risk during civil wars but it may also act as an insurance if international trade provides a substitute to internal trade during civil wars we find support for the presence of these two mechanisms and conclude that trade openness may deter the most severe civil wars those that destroy the largest amount of trade but may increase the risk of lower scale conflicts jel f10 f51 f52 f59

toward consilience between biology and economics the contribution of ecological economics abstract during its ten year history ecological economics has made a real difference in the way economists look at the natural world and in the way biologists look at the economy in this survey article we examine the contributions to the journal in terms of e o wilson s concept of consilience that is his argument that the methods and assumptions of any field of study should be consistent with the known and accepted facts in other disciplines in particular we examine the contributions of ecological economics to reconciling the economic theory of the consumer and producer with biophysical reality

trade variety and political conflict some international evidence growth in imported product variety is associated with lower internal external and overall political conflicts differentiated products reference priced products and organized exchange products display similar variety effects the significance of conflict reducing gains from variety is larger for poorer countries

the economics of degrowth economic degrowth is ecologically desirable and possibly inevitable but under what conditions can it become socially sustainable how can we have full employment and economic stability without growth what will happen to public spending and to public debt how would production be organised in a degrowing economy and under what plausible socio political conditions could such grand changes happen standard economic theories and models ignore these questions for them economic growth is an axiomatic necessity this article reviews recent contributions in the economics of degrowth and identifies research avenues for ecological economists

once an enemy forever an enemy the long run impact of the japanese invasion of china from 1937 to 1945 on trade and investment abstract in this study we exploit one of the most important conflicts of the 20th century between what are currently the world s second and third largest economies that is the japanese invasion of china from 1937 to 1945 to investigate the long term impact of conflicts between countries on cross border trade and investment we find that japanese multinationals are less likely to invest in chinese regions that suffered greater civilian casualties during the japanese invasion and these regions also trade less with japan our study shows that historical animosity still influences international trade and investment despite the trend toward an increasingly globalized world

political oil import diversification by financial and commercial traders abstract international politics affects the oil trade but do financial and commercial traders who participate in spot oil trading also respond to changes in international politics we construct a firm level dataset for all u s oil importing companies over 1986 2008 to examine how these firms respond to increases in political distance between the u s and her trading partners measured by divergence in their un general assembly voting patterns consistent with previous macro evidence we first show that individual firms diversify their oil imports politically even after controlling for unobserved firm heterogeneity however the political pattern of oil imports is not entirely driven by the concerns of hold up risks which exist when oil transactions via term contracts are associated with backward vertical fdi that is subject to expropriation in particular our results indicate that even financial and commercial traders significantly reduce their oil imports from u s political enemies interestingly while these traders diversify their oil imports politically immediately after changes in international politics other oil companies reduce their oil imports with a significant time lag our findings suggest that in designing regulations to avoid harmful repercussions on commodity and financial assets policymakers need to understand the nature of political risk

terrorism and the invisible hook this article investigates and compares the root causes of transnational terrorism and piracy in order to accomplish this we construct a novel data set that catalogues terrorist activity and piracy over the years 1992 2008 paying particular attention to the arabian sea and indian ocean since 1991 these data are then merged with other information detailing the economic political and security posture of each organization during the same period so that we can examine the relationship between economic prosperity security terrorism and piracy the main conclusion is that terrorism is mostly unrelated to economic conditions while piracy responds to both economic payoffs and military deterrents

war politics an economic rational voter framework the frequency of foreign conflict initiations in the united states is found to be significantly greater following the onset of recessions during a president s first term than in other periods the authors develop an economic theory of the political use of wars which links the election cycle war decisions and economic performance consistent with the observed relationships among these events an incumbent leader with an unfavorable economic performance record may initiate a war to force the learning of his war leadership abilities and thus salvage with some probability his reelection this obtains despite voter rationality and informational symmetry copyright 1995 by american economic association

georgescu roegen s flow fund theory of production in retrospect abstract this paper provides a synthetic account of georgescu roegen s flow fund theory as a contribution to the history of ecological economics it reconstitutes georgescu roegen s perspective on production and its relationships with other frameworks such as the neoclassical production function and input output tables the overall purpose is to clearly establish the foundations of the flow fund theory and to introduce the research perspectives it opens for ecological economics the paper puts particular emphasis on the relationships between the flow fund framework and two other aspects of georgescu roegen s thought first his methodological perspective on economics and the role of mathematical models allows for a better understanding of the foundations of the flow fund theory second this framework incorporates georgescu roegen s interest in the physical dimension of the economic process and the implications of the laws of thermodynamics overall the paper concludes that the flow fund theory has solid foundations and thus represents a credible alternative to standard theories of production however in order to show how this framework can shed light on contemporary issues in ecological economics more applications are needed especially at the theoretical level the main challenge for future research is to develop such applications while trying to be faithful to the foundations of the flow fund theory

how did wars dampen trade in the mena region abstractthe article investigates the impact of wars on trade in the middle east and north african region using an augmented gravity model that controls for the endogeneity problem in our estimation we introduce a war variable and distinguish between different types of conflicts the results show that wars have a significantly negative impact on exports imports and trade civil conflicts hinder exports imports and trade significantly the disaggregated version of the gravity model shows that non state conflicts have a detrimental effect on bilateral trade flows in manufacturing and that none of the conflicts do affect trade in services we also find that on average a conflict is equivalent to a tariff of 5 of the value of trade

how much does violence tax trade abstract we investigate the empirical effect of violence as compared to other trade impediments on trade flows our analysis is based on a panel data set with annual observations on 177 countries from 1968 to 1999 which brings together information from the rose data set the iterate data set for terrorist events and data sets of external and internal conflict we explore these data with traditional and theoretical gravity models we calculate that for a given country year the presence of terrorism together with internal and external conflict is equivalent to as much as a 30 tariff on trade this is larger than estimated tariff equivalent costs of border and language barriers and tariff equivalent reduction through generalized systems of preference and wto participation

new firm formation and regional development the italian case garofoli g 1994 new firm formation and regional development the italian case reg studies 28 381 393 the italian case appears to have had a very high firm birth rate mainly in manufacturing in comparison with the experience of other economically advanced countries regional differentiation in new firm formation has been very high in italy in the analysed period 1987 1991 the paper deals with the hypotheses to be tested for the interpretation of the regional differentiation in firm birth and analyses the problem of the choice of socio economic variables which must be examined the results of the regression analysis prove that production structure and mainly local productive specialization firms size social structure and professional employment structure are the most important explanatory variables for new firm formation and for its regional differentiation the level of local demand does not seem to be a significant factor and increases in unemployment appear to reduce firm births all t

war and democracy we present a general equilibrium model of conflict to investigate whether the prevalence of democracy is sufficient to foster the perpetual peace hypothesized by immanuel kant and whether the world would necessarily become more peaceful as more countries adopt democratic institutions our exploration suggests that neither hypothesis is true the desire of incumbent leaders with unfavorable economic performance to hold on to power generates an incentive to initiate conflict and salvage their position with some probability an equilibrium with positive war frequency is sustained even if all nations were to adopt representative democratic institutions and even in the absence of an appropriative motive for war

terror networks and trade does the neighbor hurt abstract this paper studies how network related terrorism redistributes trade flows across countries including those countries that are not a direct source of terror we first develop a game theoretical framework with imperfect information on the spatial location of transnational terrorism to show how the resulting security measures produce a non monotonic effect on the distribution of trade across countries neighbors adjacent to terror even when they do not source it have trade reduced through enhanced security measures while countries farther away benefit from those security measures second to empirically assess the distortional effects of terrorism on trade we first estimate the structural gravity equation derived from our theory then armed with the estimates of the partial effect of neighbor terror on bilateral trade we perform a counterfactual experiment and confirm the non monotonic general equilibrium effect of neighbor terror on trade

need entitlement and desert a distributive justice framework for consumption degrowth abstract post growth societies seek socio ecological transformations towards a just and sustainable redistribution and reduced consumption of natural capital there is no one universally just and ecologically sustainable way of fulfilling these redistribution and consumption objectives it depends on the criteria used and their underlying ethical teleology we suggest three distribution criteria borrowed from the foundations of the environmental justice ej movement need entitlement and desert by juxtaposing and problematising the needs entitlements and deserts of nature and society these criteria comprise an ethical framework for consumption degrowth praxis in communities we present arguments for how each distribution criterion fulfils the aims articulated in the degrowth corpus based on these arguments we propose seven justice based community action principles for redistribution under degrowth in our discussion of these derived principles we demonstrate that like ej degrowth seeks consequential as well as deontological justice underscoring their deep complementarity therefore our need entitlement desert framework may serve as a useful guiding frame to include ethical distribution considerations in societies pursuit of post growth futures

make trade not war this paper analyses theoretically and empirically the relationship between military conflicts and trade we show that the conventional wisdom that trade promotes peace is only partially true even in a model where trade is economically beneficial military conflicts reduce trade and leaders are rational when war can occur because of the presence of asymmetric information the probability of escalation is lower for countries that trade more bilaterally because of the opportunity cost associated with the loss of trade gains however countries more open to global trade have a higher probability of war because multilateral trade openness decreases bilateral dependence to any given country and the cost of a bilateral conflict we test our predictions on a large data set of military conflicts on the 1950 2000 period using different strategies to solve the endogeneity issues including instrumental variables we find robust evidence for the contrasting effects of bilateral and multilateral trade openness for proximate countries we find that trade has had a surprisingly large effect on their probability of military conflict

trade and empire we employ a new database of over 21 000 bilateral trade observations from 1870 1913 to assess the contemporaneous effects of empire on trade our analysis shows that belonging to an empire roughly doubled trade relative to those countries that were not part of an empire the use of a common language the establishment of currency unions the monetisation of recently acquired colonies and the establishment of preferential trade agreements and customs unions help to account for the observed increase in trade associated with empire

trade and thy neighbor s war abstract this paper is the first to examine the spillover effects of regional conflicts defined as internal or external armed conflicts in contiguous states on international trade our empirical findings based on different measures of regional conflict constructed using alternate definitions of contiguity and types of conflict for 145 countries over 1948 2006 reveal a significant negative effect of both intrastate and international conflicts on the bilateral trade of neighboring countries that may not be directly involved in any conflict the impact increases with conflict duration and is persistent on average it takes bilateral trade 3 5 years to recover after the end of a regional conflict

small firms business dynamics and differential development of economic well being in recent years a growing stream of research has examined the relationships between structural characteristics of regions and their levels of new firm formation this empirical study aims at supplementing such findings with analyses that include other forms of business dynamics and also the possible well being effects of such dynamics from a unique and comprehensive data set that tracks all births deaths expansions and contractions of commercial business establishments in sweden 1985 89 six groups of regions with different patterns of dynamics are extracted by means of cluster analysis the clusters structural characteristics and their development of economic well being are also compared the results suggesta that the patterns of business dynamics are contingent on the structural characteristics of regions b that high formation and turnover of establishments are associated with a relative increase in economic well being andc that small autonomous firms have a vital role in this process

the kantian peace the pacific benefits of democracy interdependence and international organizations 1885 1992 the authors test kantian and realist theories of interstate conflict using data extending over more than a century treating those theories as complementary rather than competing as the classical liberals believed democracy economic interdependence and international organizations have strong and statistically significant effects on reducing the probability that states will be involved in militarized disputes moreover the benefits are not limited to the cold war era some realist influences notably distance and power predominance also reduce the likelihood of interstate conflict the character of the international system too affects the probability of dyadic disputes the consequences of having a strong hegemonic power vary but high levels of democracy and interdependence in the international system reduce the probability of conflict for all dyads not just for those that are democratic or dependent on trade

the macroeconomic consequences of terrorism abstract we perform an empirical investigation of the macroeconomic consequences of international terrorism and interactions with alternative forms of collective violence our analysis is based on a rich unbalanced panel data set with annual observations on 177 countries from 1968 to 2000 which brings together information from the penn world table data set the iterate data set for terrorist events and data sets of external and internal conflict we explore these data with cross sectional and panel growth regression analysis and a structural var model we find that on average the incidence of terrorism may have an economically significant negative effect on growth albeit one that is considerably smaller and less persistent than that associated with either external wars or internal conflict as well terrorism is associated with a redirection of economic activity away from investment spending and towards government spending however our investigation also suggests important differences both regarding the incidence and the economic consequences of terrorism among different sets of countries in oecd economies in particular terrorist incidents are considerably more frequent than in other nations but the negative influence of these incidents on growth is smaller

elections and political risk new evidence from the 2008 taiwanese presidential election abstract we examine the effects of party platforms on the economic opportunities of firms using a unique data set from a political prediction market in taiwan a country with two dominant parties whose political cleavage derives mainly from a single issue the one china principle we find that during the 2008 presidential campaign the share price of taiwanese firms with investments in the mainland responded strongly and positively to a positive electoral outlook for the kmt the party which advocates lifting caps on cross strait investment in mainland china the response is strongest for those firms who have already hit their caps

economic conditions elections and the magnitude of foreign conflicts abstract this paper investigates the relationship between the business cycle the election cycle and the timing and magnitude of foreign conflict we propose a theoretical model which suggests that in the presence of a reelection motive the frequency of war will be greater following recessions than otherwise however if partially benevolent leaders can influence the size of conflicts then the consequences may be limited to conflicts of relatively small magnitude we test the predictions of the theory using data for the united states for the cold war period and obtain results consistent with the theory when leaders are partially benevolent

international terrorism causes consequences and cures a popular view is that international terrorism is on the increase that it is religiously motivated and that it has important adverse consequences this paper investigates this view it examines the empirical evidence on the causes of international terrorism from the late 1960s to the early 2000s and discovers that while religion has had a part to play explanations based on economics and politics appear to be consistent with the facts terrorists come from relatively poor and undemocratic countries and commit attacks in relatively rich and democratic ones the paper then examines the micro macro and global economic effects of international terrorism from both a theoretical and empirical angle and discovers that the negative effect on domestic aggregate demand is temporary and the effect on aggregate supply insignificant finally the paper explores policies to deal with international terrorism and demonstrates that this is complex analogies with conventional crime may be unhelpful

mars or mercury the geopolitics of international currency choice we assess the role of economic and security considerations in the currency composition of international reserves we contrast the mercury hypothesis that currency choice is governed by pecuniary factors familiar to the literature such as economic size and credibility of major reserve currency issuers against the mars hypothesis that this depends on geopolitical factors using data on foreign reserves of 19 countries before world war i for which the currency composition of reserves is known and security alliances proliferated our results lend support to both hypotheses we find that military alliances boost the share of a currency in the partner s foreign reserve holdings by 30 percentage points these findings speak to current discussions about the implications of possible u s disengagement from global geopolitical affairs in a hypothetical scenario where the u s withdraws from the world our estimates suggest that long term u s interest rates could rise by as much as 80 basis points assuming that the composition of global reserves changes but their level does not

international politics and import diversification abstractthis paper examines how international politics affects trade in the absence of empires or wars we first show that deterioration of relations between the united states and another country measured by divergence in their united nations general assembly voting patterns reduced u s imports from that country during 1962 2000 though statistically significant the magnitude of the effect of political distance on trade is small indeed we show that except for petroleum and some chemical products u s imports are not affected by international politics american firms however diversify their oil imports significantly away from political opponents of the united states oil trade is often associated with backward vertical foreign direct investment that is subject to the expropriation risk in contrast to the usual claim that oil is a strategic commodity we provide suggestive evidence that trade in products when rents are appropriable is more likely to be affected by international politics