price distortions in agriculture and their effects an international comparison the central thesis of this paper is that agricultural pricing policies pursued by developing countries produce effects which are diametrically opposite to those produced by the pricing policies of many developed countries and that the policies of both are costly in terms of global welfare in general the agricultural sector in developing countries is heavily taxed while that in the developed countries receives substantial price protection the effects of agricultural price distortions on output consumption trade and rural employment are estimated for nine countries in addition the effects of price distortions on the distribution of income between producers and consumers on government revenue and foreign exchange and the net social losses of the policies are calculated the results indicate that there are large income transfers and impacts on migration from the rural to the urban sector in developing countries and from the urban to the rural sector in developed economies

housing finance and urban infrastructure finance financing issues received major attention in the discussions of human settlement development policy through the preparatory process for habitat ii and at the conference itself this paper presents

urban bias the political economy of development and urban policies for developing countries theories of urban overdevelopment and urban bias have a long but discontinuous history dating from the 1920s when policy makers in the former soviet union considered urban rural sectoral balanc

guaranteeing employment to the rural poor social functions and class interests in the employment guarantee scheme in western india abstract numerous observers rightly term the landless rural population the most intractable development problem in poor societies given the extraordinary political and administrative obstacles to redistrubution of rural assets in india the widely recognized failture land reforms attention and finances have recently been focused on public rural employment programmes to alleviate rural distribution within india the state of maharashtra with a size and population of a large european nation has instituted a striking departure from traditional rural works programmes a guarantee of employment to rural adults on demand the employment guarantee scheme in one state has since become a significant policy model and the experience in that state provides something like a laboratory for its analysis based on analysis of previous studies and original field work in rural maharashtra the article argues that the scheme is something of a rare bird a programme which seems to be in the objective and subjective interests of the rural poor as well as consistent with the interests of the rural landed elite despite their early political objections the fiscal structure of the scheme is a direct contradiction of lipton s 1977 model of urban bias in third world development strategies the employment guarantee scheme is rather more a manifestation of kulak power though promulgated as an alternative to policies entailing redistribution of rural assets and clearly superior to doing nothing about rural distribution the scheme is inferior to genuine redistribution in terms of altering the rural political economy the functions if not the motivations of the scheme are profoundly conservative in a structural sense politically and economically the philosophical underpinnings and perhaps potentially the consequences for mobilization of the rural poor are quite the opposite

urban bias revisited in his book why poor people stay poor the author has argued that urban bias is the moving force behind needlessly slow and inequitable growth in contemporary developing countries this claim is defended against three main criticisms that the methods chosen to test it are not appropriate that the evidence tendered is not relevant or sufficient and that the rural urban polarity is not clear cut or does not represent the prime conflict within contemporary developing countries

hospital ownership and performance this study compares the performance of three ownership forms of hospitals for profit private nonprofit and public further classified according to whether or not the hospital is run by a hospital chain data come from a 1979 national survey of u s hospitals the authors find that hospital cost is quite similar among alternative ownership forms as is profitability the results do not provide much empirical support for standard property rights theory several reasons are suggested why this may be so

the value of squatter dwellings in developing countries the value of squatter dwellings for a sample in the philippines is estimated and the statistical relationship between value and housing characteristics is described the results of a survey approach indicate that while the discrepancies in the estimates are quite large for individual properties they are offset by using sufficiently large samples in addition when two estimates are highly correlated with one another they yield similar results when they are used as dependent variables in a hedonic price equation methodological considerations aside the determinants of the value of squatter dwellings tend to be similar to those of conventional formal sector dwellings the external appearance and quality of materials used in construction are among the most important variables water and sanitary facilities may not be valued as much as expected age may be positively correlated with value because housing services are improved more gradually in squatter communities and because longevity in a particular area is a sign of reduced risk overall squatter housing markets appear to behave as economically rational entities that valuate dwelling units similarly to conventional markets

nonbudgetary constraints in consumer demand for gasoline this paper develops a conceptual framework for taking into account nonbudgetary constraints in economic analysis of consumer demand for gasoline the individual s need for gasoline is defined and the process of satisfying the need is recognized thus nonbudgetary factors are used to restrict the consumption space to a relevant subset in the commodity space the restriction of the consumption space enables nonbudgetary factors to be included in a theoretical model of utility maximization this formulation implies the dependency of income and price elasticities on nonbudgetary factors in studies of the demand for gasoline as in many other empirical studies researchers are frequently confronted with the considerable gap existing between empirical relationships and economic theory this gap underlies the comment by henderson and quandt 1980 that theorists would provide examples that were of little aid for empirical work and econometricians would estimate relations that had little connection with utili

efficiency effect of privatization in the developing countries privatization gained considerable momentum in the developing world in the 1980s the motives were many but the hope for higher economic efficiency underlined the expectations of the implementing governments and agencies in the developing countries while the merits of a market based economic system are well established under certain theoretical conditions far less is known of its empirical relevance in the developing world yet to the best of the author s knowledge no empirical study has examined the macro efficiency effect of privatization in the developing countries studies concerned with this issue often limit themselves to the impact of privatization at the firm level for a small number of companies and countries thus the current study is an attempt to provide a systematic quantitative measure of the magnitude of the macroeconomic effect of privatization in 45 developing countries using the concept of frontier production function efficiency differences between developing countries with differ

financial fragility and the exchange rate regime abstract we study financial fragility exchange rate crises and monetary policy in a model of an open economy with diamond dybvig banks the banking system the exchange rate regime and central bank credit policy are seen as parts of a mechanism intended to maximize social welfare if the mechanism fails banking crises and speculative attacks on the currency become possible we compare currency boards fixed rates and flexible rates with and without a lender of last resort a currency board cannot implement a social optimum in addition it allows bank runs to occur a fixed exchange rate system may implement the social optimum but is more prone to bank runs and exchange rate crises than a currency board a flexible rate system implements the social optimum and eliminates runs provided that the exchange rate and credit policies of the central bank are appropriately designed journal of economic literature classification numbers f3 e5 g2

the economics of development a survey i the subject our definition of the subject will be the use of economic analysis to understand the economies of poor or developing countries this includes in particular how standards of living in the population are determined and how they change over time and further how policy can or should be used in the influence of these processes the definition contains in principle much or most of analytical methods in economics insofar as they can be put to use in the examination of the issues of interest this is as it should be but it poses a problem for a survey in a journal a comprehensive treatment is infeasible so we shall follow a different route the survey will focus on what i take to be the major themes and approaches which characterise the productive aspects of the subject there is therefore no pretence at being exhaustive the purpose is rather to highlight some of the advances many of these have been of real substance there are a number of possible purposes for a survey and it is important to be clear at the outset for whom it is intended what it is and what it is not this survey is addressed to economists and students of economics who know the tools of their trade but not necessarily how they have been applied to and fashioned for the analysis of the economics of developing countries it is a description of the ways in which problems can be productively formulated and approached in terms of examples chosen for their intrinsic importance and interest the vastness of the subject means that we have to be highly selective it does not seek to provide a summary evaluation of the current view of the appropriate response to immediate policy questions it is not a history of thought nor a research manifesto nor an attempt to adjudicate or settle the major debates where they arise naturally from the major purpose some judgements on these subjects will be offered but they do not themselves constitute the primary intent of this survey there are three lines of enquiry or sets of questions which have i suggest been distinctive of the most fruitful work in development economics they will

on prices and economic power explaining recent changes in intersectoral relations in the indian economy two contrasting views about the relationship between agriculture and industry and in particular about the optimal level of the terms of trade between these two sectors are identified and first set in the context of the political economy of contemporary india methodological issues relating to the correct measurement of intersectoral price shifts are taken up and it is shown that these have considerable bearing on current controversies it is argued in particular that single factor explanations of the behaviour of the terms of trade lack credibility and that these have to be analysed in the context of wider issues of growth and imbalance in developing economies

management turnover and product market competition empirical evidence from the u s newspaper industry we examine the relationship between management turnover and market structure for newspapers in 50 large cities from 1950 to 1993 we find that competitive markets display greater turnover rates than monopolistic markets and that turnover rates are increasing in the degree to which a newspaper trails its competition in market share we find no evidence that the turnover performance relationship varies with market structure we discuss the implications of these findings for theories concerning competition and managerial employment contracting the results appear most consistent with the hypothesis that the greater likelihood of liquidation in competitive markets leads to elevated turnover rates copyright 2000 by university of chicago press

testing the food first hypothesis a cross national study of dependency sectoral growth and food intake in less developed countries abstract previous cross national studies on dependency and economic growth in less developed countries ldcs seldom compare the impacts of different kinds of dependency their focus on economic growth also overlooks the fact that growth per se does not necessarily benefit the masses an alternative measure of the absolute living standard of the masses i e food intake is examined in this paper this study analyzes data from 73 ldcs after comparing the effects of manufacturing growth and cereal production growth on food intake this study supports the food first hypothesis derived from lappe and collins 1977 work since it demonstrates that in most ldcs even in middle income ldcs cereal production has a much stronger effect on food intake than does manufacturing growth

the new institutional economics and the theory of the firm abstract concepts of importance in the literature of the new institutional economics such as transaction costs and bounded rationality have been used to extend the standard neoclassical model of the firm but the hybrid models created have failed to provide adequate explanations of enterprise behavior an alternative neoinstitutional model of the firm is developed in the paper that differs from the pure neoclassical model and hybrid models in respect to both the nature of the solution it yields and the process by which it reaches a solution the neoinstitutional firm cannot be expected to achieve either the hypothetical allocative efficiency promised by the frictionless neoclassical model or the relatively efficient constrained pareto optimal solutions predicted by the largely frictionless hybrid models the orthodox marginal rules of neoclassicism can only be used to solve lower level problems that appear within the firm

consumption savings and investment by social class in bangladesh does the rural sector support the urban sector this article employs input output analysis and information from a social accounting matrix and the concept of net savings to examine savings consumption and investment behaviour by various social classes in bangladesh in urban and rural areas considerable differences between social classes can be identified in all three respects a majority of the social classes in the rural sector does not appear to generate enough savings to sustain its consumption whereas the urban social classes do there seems to be little difference in consumption pattern of the rural rich and the urban rich there is considerable urban rural difference in the import intensities of consumption the findings of this study based on the hazari model do not establish the existence of urban bias but the problem seems to be one of rich bias rather than urban bias per se however the hazari model cannot capture all possible sources of urban bias and circumstantial evidence indicates concentration of advantages in the urban areas

aggregation in a model of price competition abstract in a model of price competition single product firms compete for consumers consumers purchase a variable quantity of one of the differentiated goods the paper provides results on equilibrium existence when consumers are heterogeneous in their evaluation of the differentiated goods among each other their evaluation of the differentiated goods relative to the outside good and heterogeneous in income furthermore i provide sufficient conditions for dominance solvability and monotone comparative statics journal of economic literature classification numbers d43 d11

international structural adjustment and its sectoral and spatial impacts structural economic adjustment has relevance and significance in oecd countries among the countries in transition from socialism to capitalism and in the developing countries of asia africa and latin america its impacts are multi institutional being in firms government agencies non government organisations and households institutions are having to innovate to adapt and to reorganise to meet rapidly changing economic conditions in an increasingly competitive environment this article evaluates the structural adjustment process it will establish general principles for interpretation and for a newly emerging dominant political economy the new political economy npe in which adjustment is being articulated the npe is evolving being influenced by the post 1990 enhanced relevance of social and environmental issues adding to the neoliberalism characteristics of the early origins of the npe also the npe is being infused with intellectual institutionalism especially the new institutional econom

development and the elimination of poverty this essay argues that the drive toward a middle class style of life in developing countries has resulted over the past 30 odd years of conscious development effort in a series of negative consequences in diverse spheres persistence of inequality expansion of government neglect of agriculture and urban bias of education and research the class context of development the role of the middle class the characteristics and components of the middle class life style and the american contribution to its development are assessed after which the methodology and results of measuring the poor and the middle class in the us and elsewhere are considered measurement of the middle class can be attempted through ownership of articles such as automobiles through energy consumption or through income one estimate is that the global middle class increased from 200 million in 1950 to 800 million by 1980 through the addition of japan europe and some increase in the 3rd world the nature of middle class work and the consequences of the preference for middle class work on the part of national elites for local development efforts is described along with the related theme of the conflict between alleviation of poverty and development of an indigenous middle class in 3rd world countries china and brazil are viewed as the 2 extremes in this trade off the incentives to massive urban migration that occur in conjunction with development policies favoring the middle class are outlined finally it is argued that reaching for middle class status is an explanatory rather than a policy variable the social mechanisms that cause the spread of the middle class to take precedence over the alleviation of poverty need to be more closely examined

land tenure issues in economic development land property and construction are reckoned to account for around 20 per cent of the gross domestic product of many nations the relationship between people and the land is complex and differs between nations depending on their history culture and legal system many countries especially those in transition from command to market driven economies are re engineering their cadastral and land registration systems in order to provide cheaper faster and more secure ways of transacting land this paper focuses on the importance of land tenure arrangements and the need to manage information about land and property in support of land markets and sustainable development

aftermath of banking crises effects on real and monetary variables abstract this paper models the effects of a banking crisis and in particular distinguishes between a short term crisis such as a banking panic and a longer term crisis such as a banking insolvency using an optimizing framework it shows that depositors shift from deposits into cash in both types of crises which results in an increase in the interest rates on deposits and loans and a contraction in output and consumption however when the crisis is resolved in a finite time period there is an intertemporal substitution of consumption and consumption is postponed until the crisis is resolved this in turn results in a further decline in the demand for money availability of credit and output

what s different about banks abstract negotiable certificates of deposit cd s trade in the capital market in competition with other securities like commercial paper and bankers acceptances if cd s must pay lenders competitive monetary interest the reserve tax on cd s is borne by bank borrowers viability of the tax means there must be something special about bank loans that makes some borrowers willing to pay higher interest rates than those on other securities of equivalent risk moreover there must be something special about banks that prevents other intermediaries from competing to assure that it never pays to finance loans with cd s

pandemics of the poor and banking stability we first develop a theoretical model that shows that the likelihood of a collapse of the banking industry of a developing country increases as the joint prevalence of large pandemics such as aids and malaria increases we also show that the optimal bank reserves increase as the prevalence increases in the empirical part of the paper we consider a large dataset of developing countries and we exhibit a causality effect from combined prevalence to deposit turnover as well as causality effect from an increase of combined prevalence to an increase in bank reserves those empirical facts therefore support our theoretical findings

the corporation competition and the invisible hand few would disagree that adam smith s invisible hand theorem is the heart of the economist s weltanschauung ask whether trade barriers should be lowered the spread of multinational corporations restrained oil prices deregulated cartels dissolved or more fundamentally whether a market based capitalist system is economically superior to a state run socialist system and economists almost certainly will begin to answer the question by trying to apply the theorem every student knows that the theorem depends on the assumption of atomistic competition which in turn assumes that the system is decentralized and that no competitor is large relatively to others there is another crucial assumption however that is often ignored and usually underemphasized namely that all competition is price competition in reality one of the most distinctive features of capitalism one that is most often raised in lay discussions of its merits and demerits is the prevalence of other forms of competition such as competition in research development and advertising competition to obtain and hold monopoly and competition for corporate growth these various forms of non price competition we shall aim to show are not clearly analogous with the theory of price competition more non price competition rather than less is not necessarily pareto optimal self evidently the production side of a market economy is decentralized only to a limited degree i e to the level of a decision making unit composed of more than one human such a unit playing neuron to the invisible hand is typically called a firm it is in fact a team rather than remaining small firms are in practice composed of any number of individuals from a handful on to half a million some

farm price responsiveness and the choice of functional form abstract the estimated responsiveness of farmers to changes in the prices of output or inputs is in general very sensitive to the econometric model used using cross section survey data for farms in marginal rice growing districts in west malaysia price elasticities based on estimated input demand equations derived from a quadratic restricted profit function were found to be superior to those derived from translog or cobb douglas production functions or from a translog restricted profit function the cobb douglas production function is restrictive and should be used sparingly restricted profit functions are only believable if the available price data are of high quality

what explains the speed of recovery from banking crises abstract while a large body of research has explored the causes and effects of banking crises less is known about what determines recovery from banking crises despite large variations in post crisis performances across countries in order to identify local and global factors that determine the length of recovery i e the time it takes until countries reach their pre crisis level of per capita gdp this exploratory paper employs event history analysis on 138 incidents of banking crises between 1970 and 2012 regarding domestic factors the simultaneous occurrence of currency crises large financial sectors overvalued currencies and large primary deficits are associated with later recovery whereas higher debt to gdp ratios or inflation levels do not exhibit a negative effect on post crisis performances regarding external factors a low growth of world trade as well as indicators of uncertainty in financial markets are correlated with later recovery global interest rate shocks are particularly harmful for the speed of recovery among middle income countries with a strong reliance on external capital the results are similar when using the length of recessions as an alternative indicator of post crisis performances

theories of non profit institutions abstract as thoughtful modelling and empirical research of non profit enterprises continues to grow two general views of non profit organizations are emerging one view is that non profit firms are inefficient and wasteful another view is that non profit firms are a response to market failure and thus may improve efficiency the purpose of this paper is to explore the theoretical and empirical work that represents the current divided state of thinking in this area

metropolitan development in a transitional socialist economy spatial restructuring in the pearl river delta china the dynamic of globalisation and urban change in europe and north america has been extensively documented relatively little is known about the processes and consequences of spatial restructuring in metropolitan regions within the context of a transitional socialist economy this study investigates economic restructuring and spatial transformation in one of the most dynamic metropolitan regions in china deregulation of the post reform socialist central state has allowed chinese peasants to diversify agricultural production and to industrialise the rural economy according to various personal strengths and the changing market demand despite the rapid commercialisation and industrialisation of the regional economy there has been no growing concentration of population and production facilities in large cities the loci of accelerated economic growth increased population mobility and massive land use transformation have been in the intermediate zones surrounding and between metropolitan centres rapid expa

the impact of banking sector stability on the real economy this article studies the relationship between the degree of banking sector stability and the subsequent evolution of real output growth and in ation adopting a panel var methodology for a sample of 18 oecd countries we flnd a positive link between banking sector stability and real output growth this flnding is predominantly driven by periods of instability rather than by very stable periods in addition we show that an unstable banking sector increases uncertainty about future output growth no clear link between banking sector stability and in ation seems to exist we then argue that the link between banking stability and real output growth can be used to improve output growth forecasts using fed forecast errors we show that banking sector stability instability results in a signiflcant underestimation overestimation of gdp growth in the subsequent quarters

behavior of the firm under regulatory constraint a recent article by akira takayama discusses an earlier paper by harvey averch and leland l johnson on fair rate of return regulation of public utilities although takayama p 255 agrees with averch and johnson s general conclusions that a firm will tend to increase its investment with the introduction of an active constraint on its rate of return he criticizes the a j argument as being confusing ambiguous and in error takayama then attempts a clarification and presents a new formulation which leads to the a j result quoted above this comment will discuss several of takayama s criticisms in addition to showing that the so called a j effect cannot be derived from the basic assumptions made by both averch and johnson and takayama 1 we will show that the very assumptions used to prove the a j effect by defining the region of x require an assumption that the a j effect exists in the first place

might makes rights a theory of the formation and initial distribution of property rights this paper is a theoretical and empirical investigation into the formation and initial distribution of property rights violence is singled out as a major constraint on this formation process its role is explicitly modeled in a choice theoretic framework and some of the implications are tested using data collected from contracts written during the california gold rush of 1848

cooperative enterprise an alternative conceptual basis for analyzing a complex institution a recent review of the theoretical literature on cooperative enterprise in agriculture concludes the formal treatment of agricultural co operation is currently impoverished by a long period of neglect levay p 40 the years between the early 1940s and the early 1960s were a period of creative ferment among cooperative theorists the most durable products of which were several variants of the model of the profit seeking firm from neoclassical price theory with the profit maximization objective replaced by other simple maximizing criteria e g enke helmberger and hoos such models are capable of generating hypotheses about cooperative price and output levels but more comprehensive theoretical analogues are necessary to investigate other important aspects of the modern complex cooperative corporation in agriculture it is the development of these latter that has suffered neglect while the past two decades may have generated little progress in the futher development of cooperative theory they have been productive years for the development of more comprehensive alternatives to the simple profitmaximization model to explain the behavior of the modem complex investor owned corporation this development began with the ad hoc theorizing of the various managerial theories of the firm proceeded with the creation of a new institutional economics based on the concepts of transactions costs property rights and agency relationships and is currently at the stage of integrating these previous developments into a generalized neoclassical theory of organizations de alessi this paper is motivated by the belief that the evolving concepts of neoclassical organization theory hold considerable promise for the further productive development of cooperative theory the purpose of the paper is to apply some of these concepts in cursory fashion to cooperative organizations and thereby suggest a framework for the eventual development of a more comprehensive organization theory of cooperatives

food and freedom the links between food and freedom at first appear rather remote to policymaking and far from central and practical concerns the lecture discusses important connections between the two that need to be recognized more fully as background to practical food policy although ethics specifically freedom seems far less compelling a concept than concrete demands of food the contrast is artificial the provision of food is a central issue in general social ethics since so much in human life does depend on the ability to find enough to eat in particular the freedom that people enjoy to lead a decent life including freedom from hunger from avoidable morbidity from premature mortality etc is centrally connected with the provision of food and related necessities also the compulsion to acquire enough food may force vulnerable people to do things they resent doing and may make them accept lives with little freedom thus the role of food in fostering freedom can be extremely important on the other side freedom may also causally influence the success of the pursuit of food one consideration that has received a great deal of attention relates to the role of freedom to make profits by providing incentives for the expansion of food production this consideration has often cropped up in the critical evaluation of agricultural policies pursued in many countries in africa and asia the lecturer supplements the conceptual and theoretical discussions with practical illustrations

the institutional framework and economic development the compound growth rates of per capita output and farrell type efficiency measures for 115 market economies over the period 1960 80 were compared with measures of political civil and economic liberty it was found that the institutional framework has significant and large effects on the efficiency and growth rate of economies politically open societies which subscribe to the rule of law to private property and to the market allocation of resources grow at three times the rate and are two and one half times as efficient as societies in which these freedoms are abridged

banks and macroeconomic disturbances under predetermined exchange rates abstract as the recent mexican crisis vividly illustrates latin american countries often go through boom bust cycles caused by both domestic policies and external shocks such cycles are typically magnified by weak banking systems which intermediate large capital inflows this paper develops a simple optimizing model to analyze how the banking sector affects the propagation of shocks in particular we show how the world business cycle and shocks to the banking system affect output and employment through fluctuations in bank credit we also analyze the countercyclical use of reserve requirements econometric evidence for chile and mexico supports the main predictions of the model

household production in the philippines a non neoclassical approach the starting point of any economic analysis is a microeconomic theory of the decision making unit by providing a set of explicit assumptions regarding individual choices a microeconomic theory lays the necessary foundation for the explanation of economic behavior just as a theory of the firm underlies analyses of market production a theory of the family underlies analyses of household production explanations of long run trends such as fertility decline grow out of assumptions regarding the nature of household decision making developing what they term the economic approach to human behavior gary becker and other neoclassical economists forcefully argue that household behavior is motivated primarily by a collective concern for economic efficiency they assume that households seek to maximize exogenously given joint utility functions and they hypothesize that differences in household behavior represent efficient responses to differences in the prices and incomes which households face this approach provides the foundation for an explanation of fertility decline based on long run changes in relative prices associated with economic development simply stated the argument runs as follows as the rate of return to human capital rises and levels of education increase the cost of rearing children goes up as higher wages draw women out of the household into the labor force the opportunity cost of mothers time goes up further increasing the cost of children the demand for children decreases and fertility levels gradually adjust 2 the assumption that joint utility functions are exogenous constant over time and vary randomly if at all across households is crucial to this argument systematic differences in unobservable joint utility functions could seriously confound the interpretation of observed relationships between changes in household behavior and changes in rela

the system of administrative and political corruption canal irrigation in south india the paper describes how some irrigation engineers raise vast amounts of illicit revenue from the distribution of water and contracts and redistribute part to superior officers and politicians it argues that the corruption system which is centred on control of personnel transfers is an important supply side reason for poor performance of canal irrigated agriculture insofar as the same system operates in other government departments it may be more important for understanding indian politics and the political influences on economic development than has previously been realised

urban bias dependence and economic stagnation in noncore nations this paper contributes to the growing body of research that assesses the effects of patterns of urbanization on economic growth in less developed countries ldcs regression analysis of data for 65 80 nations including analyses of influential cases suggests that both urban bias and dependency have independent simultaneous and negative effects on economic growth further analyses reveal a strong positive relationship between dependency and urban bias these findings show that understanding urbanization and development in the third world requires the consideration of both external international and internal intranational factors and a combination of the insights gained from dependency world system human ecology and modernization theories

the role of institutions in transition growth the east asian newly industrializing countries abstract this paper rejects both the claims of those who see the east asian story as one of the application of pure laissez faire and the more recent revisionist view that it all resulted from the activity of a highly intrusive government instead this paper emphasizes the role of institutional organizational changes orchestrated by a government which was both sensitive to these systems initial conditions and to the importance of setting the stage for the fullest possible participation through markets of large numbers of dispersed private actors specifically the success or failure of government actions in the dimension of organizational institutional change is related to the three ingredients secularism egalitarianism and nationalism viewed by simon kuznets as essential for modern growth the paper concludes by demonstrating the applicability of these notions to the east asian case especially taiwan during its postwar period of spectacular development success

the structure of a contract and the theory of a non exclusive resource the process of arriving at a useful concept of analysis is not only slow and painful but also may go astray and attain nothing useful someone begins with one example or observation followed by a theory which is intuitively plausible a theoretical term associated with a vague concept is coined examples of a seemingly different type emerge which call for another theory the process goes on as examples and theories continue to accumulate the different categories under the same heading of analysis serve only to confuse and each associated theory becomes ad hoc such has been the fate of the concept of externality a more useful approach i think is via contractual conditions the example chosen for illustration is marine fisheries where the fishing right is taken

dominant firms and their alleged decline abstract by way of a survey of recent literature on the theory of strategic competition this paper focuses on the question of whether dominant firms decline the traditional argument suggesting decline is found to be based on a rather unsatisfactory modelling of dominance and more acceptable conceptualizations suggest that such privileged positions will persist

transaction costs risk aversion and the choice of contractual arrangements publisher summary this chapter discusses transaction costs risk aversion and the choice of contractual arrangements every transaction involves a contract and the transactions conducted in the marketplace entail outright or partial transfers of property rights among individual contracting parties the contractual arrangements through which these transfers are negotiated are several and varied the chapter presents a theory that states that economic efficiency is the same under various land tenure arrangements subject to the constraint of private property rights although transaction costs exist in the real world the theory enables the understanding of much of the farming behavior however the presence of a variety of contractual arrangements under the same constraint of competition poses the question of the choice of these arrangements if a firm can increase efficiency in production by employing productive resources of more than one resource owner a contract to combine the resources will be obtained the formation of the contract involves partial transfers of property rights in one form or another such as leasing hiring or mortgaging

anticipated devaluations currency flight and direct trade controls in a monetary economy mendation for a country facing a balance of payments deficit this advice is often resisted by country governments instead direct trade controls such as tariffs quotas and subsidies are frequently used in this paper i propose an economic explanation for the reluctance to devalue and the use of trade controls namely the currency flight that can be expected to occur if the devaluation is anticipated in an effort to avoid or offset the effects of this currency flight countries may use direct controls i shall analyze the properties of using import tariffs and export subsidies with or without an anticipated devaluation to affect the balance of payments and obtain the social optimum

urban bias of consequences classes and causality choice theoretic accounts of urban bias ub in ldcs are popular because they also explain rural bias in richer countries such misguided elegance notwithstanding class theoretic not simply marxist productionist accounts are preferable why 1 ub alleges persistently inefficient and or unfair i anti rural outcomes ii intra rurally biases towards rural elites who in return deliver surpluses townwards 2 if ub declines for one outcome it must increase for others unless pro urban classes weaken relative to pro rural thus farm price ub fell in 1975 90 in many ldcs but with urban rural class power balances little changed public expenditure ub rose to compensate 3 yet long term development transforms such balances shifting many outcomes from ub to rural bias 4 explaining 2 and 3 involves understanding urban rural class relations when and to obtain which outcomes do rural elites seek rural rather than urban alliances choice game coalition theories help but only within i

the new institutional economics and development theory a brief critical assessment abstract in this paper we discuss strengths and weaknesses of transaction cost and imperfect information approaches to the economic theory of institutions particularly with reference to problems relevant to economic development

a branch of economics is missing micro micro theory jn the life history of most sciences there are movements toward the study of larger aggregates or toward the detailed study of smaller and more fundamental units my impression is that in most fields the movement toward the study of more micro units has predominated yet in economics in the 1930 s the movement was in the macro direction both physics and biology in the last three decades have made great strides by studying smaller and smaller entitiesphysics by studying more minute fundamental particles and biology by studying the fundamental elements determining genetics in a general sense economics has not been moving in this direction although some work of this nature exists the purpose of this paper is to review some samples of the work that exists and to argue that this area must become a major field of economic research and study the question of how individuals in multiperson firms influence firm decisions seems like such a natural question to ask that it is amazing that it is not part of the formal agenda of economists as a profession of course it has been asked but not by present day economists in their professional capacity in other words micromicroeconomics has never become an established field for the most part theorists have not only not raised this question but they have continued to develop micro theory in such a way as to discourage economists from raising this question part of the reason for this lies in the maximizing and optimizing biases of conventional micro theory and part can be ascribed to the consequences of the long period required to refine the theory so that elements that did not fit the basic model were discarded

property rights and x efficiency reply recently 1983 i assessed the relative merits of x efficiency and of neoclassical economic theory generalized to include the constraints imposed by transaction costs and the structure of property rights on both theoretical and empirical grounds i concluded that such a generalization encompassed whatever limited explanatory power x efficiency had to offer harvey leibenstein s comment 1983 sharpens his presentation of x efficiency and in my view highlights the limitations of that construct because the main points he raises were already addressed in my original article further discussion would be repetitive leibenstein however seems to misinterpret several key aspects of my analysis accordingly it is useful to restate these points to avoid misunderstanding by other readers and to facilitate assessment of the positions at issue neoclassical economic theory defined as the utility maximization theory of the consumer and the wealth maximization theory of the firm assumed inter alia that all rights to the use of resources were fully allocated privately held and exchanged at zero information and transaction costs by the late 1950 s empirical studies began to reveal some serious limitations of this framework and stimulated a variety of proposed reforms different lines of research eventually led to the generalization of neoclassical theory to include the explicit consideration of transaction costs and the structure of property rights this approach has turned out to be extremely fruitful not only has it reconciled the theory with broad classes of previously unexplained phenomena but it has opened the way for important new applications in particular it has allowed extension of the utility maximization hypothesis to all choices i e by household business and government decision makers subject to constraints this advance has ended the dichotomy between the theory of consumer choice and the theory of the firm and has established a more powerful framework for investigating the organization of economic activity thus for example analysis of the shirking information problem of team production is offering new insights into why firms exist indeed it is providing a new perspective on vertical integration occasioning a major reappraisal of antitrust policies on the circumstances affecting the choice of business organization including single proprietorships partnerships and other profit sharing arrangements corporations nonprofits and government owned firms and on the economic consequences of alternative ownership arrangements both theory and evidence indicate that the choice of organizational form and the rules adopted within it depend crucially not only on transaction costs but also on the formal legal system as well as on the work ethic customs conventions and other components of a society s system of property rights transaction costs and the system of property rights simply belong to the group of variables that determine the opportunity set faced by a utility maximizing decision maker it follows that property rights like transaction costs is not a theory it is a variable that enters economic theory it is not a motivational force other than in the sense that it affects the opportunity set it does not imply that individuals act to fully maximize wealth given the limits of their property rights its most distinguishing feature is the insistence upon the universal applicability of law and economics center university of miami p o box 248000 coral gables fl 33124 i am indebted to roger e meiners and robert j staaf for helpful comments leibenstein s statement that i should have considered other alternative approaches including williamson s is mystifying first i was not writing a review of the literature second williamson s work is a major keystone of the analysis i presented my paper contained several statements to that effect plus repeated references to his writings

larger crises cost more impact of banking sector instability on output growth we propose a method for calculating the macroeconomic costs of banking crises that controls for the downward impact of recessions on banking activity in contrast to earlier research we estimate the cost of crises based on the size of banking crises the extent of a crisis is measured using banking sector aggregates the results based on our method and data from over 100 banking crises suggest that the size of a crisis matters for economic growth lower credit deposit and money growth during crises cause gdp growth to decline

after the decision implementing policy reforms in developing countries abstract implicit in many reform proposals is a model of the policy process that is roughly linear a proposed reform gets on the agenda for government action a decision is made on the proposal and the new policy or institutional arangement is implemented either successfully or unsuccessfully this article presents an alternative interactive model of implementation that focuses on the conflict and reactions that are evoked by efforts to bring about changed policy or institutional contexts for development and the resources that policy makers and managers are likely to require to sustain a reform in the face of such reactions central to the analysis is the assertion that characteristics of the reform being implemented will largely determine the kind of conflict it engenders where such reaction is likely to become manifest and what resources are needed for sustainability the analysis suggests a framework for the strategic management of reform initiatives

heterogeneous firms and the organization of production firms in the same industry exhibit systematic differences in the organization of production and the structure of employment entrepreneurial ability is the specific scarce input that limits the size of a firm this input must be allocated to two activities coordinating production and monitoring workers able entrepreneurs can convert calendar time into larger supplies of coordinating effort that enable them to assemble large firms greater ability implies a higher shadow price of time which increases the implicit costs of monitoring a dispersion of entrepreneurial abilities generates an equilibrium size distribution of firms differences in monitoring costs affect the choice of worker productivities the design of products and the organization of production the monitoring cost hypothesis advanced in this paper goes a long way in explaining the equilibrium of an industry containing heterogeneous firms that differ in size and behavior

poverty and progress reflections on housing and urban policies in developing countries 1976 96 the habitat ii conference in june 1996 was more determined by retrospect and prospect than by the discussions during the several days in istanbul the policy outcomes were fashioned by reforms and

the new institutional economics and the theory of behaviour under uncertainty the new institutional economics nie is diverse in terms of the theory of behaviour under uncertainty some views are close to neoclassical economics but others are similar to those held by heterodox economists distinctions between procedural and substantive uncertainty weak and strong uncertainty and ambiguity and fundamental uncertainty help to identify different approaches to uncertainty in nie regarding the influence of institutions on economics behaviour not all nie focuses on institutions as constraints and takes individuals as given the dominant views of rationality in nie are standard neoclassical maximization and bounded rationality but alternative notions have also been defended