the growth and distributional consequences of international trade in natural resources and capital goods a neo austrian analysis abstract the problem explored is the role of natural resources in economic growth a neo austrian model is constructed which can represent either a single autarchic country or a pair of trading countries one of which can export natural resources and the other can export manufactured capital it is shown that under autarchy the price of the natural resource has no effect on economic growth while under conditions of trade it has a significant influence falling natural resource prices slow the growth in the resource exporting country and stimulate it in the capital exporting country some policy implications of this finding are explored

natural resource rents economic dynamics and structural change a capital theoretic approach abstract this paper concerns the effects of natural resource rents on the dynamics and structural change of an economy which is accumulating capital the concept of rent is developed and the determinants of natural resource rents in the real world are discussed to examine the long run effects of rents on the price system and economic structural change a neo austrian capital theoretic model is developed this is presented in input output form and the corresponding prices for the model are derived so that a consistent set of national accounts for the model can be found natural resource use is introduced into the model with natural resource rents forming a further element of value added the model is then further generalised with the dynamics of capital accumulation being determined through a savings function which itself varies with the rate of return on capital this model is used to simulate the effect on economic dynamics and structural change of two natural resource rent profiles both of which follow the hotelling rule the effects of these two cases on the model are examined through the corresponding sets of national accounts

on the equilibrium properties of locational sorting models abstract important to many models of location choice is the role of local interactions or spillovers whereby the payoffs from choosing a location depend in part on the number or attributes of other individuals or firms that choose the same or nearby locations in equilibrium this paper develops the equilibrium properties of a broadly applicable and readily estimable class of sorting models that allow location decisions to depend on both fixed local attributes including unobserved attributes and local interactions describes the conditions under which equilibria exist and are unique and provides a test for uniqueness in empirical analyses of sorting equilibrium

international migration the brain drain and poverty a cross country analysis the aim of the paper is threefold first it empirically investigates the effect of international migration on poverty in origin countries using data from a cross country analysis second it explores the specific part of the income distribution from which migrants are drawn by comparing the effect of international migration on different income quintiles of the population finally given that the selection of migrants depends not only on the income level of their households but also on the skill levels of movers the paper casts some light on the implications of the emigration of skilled workers on poverty this article shows that the stock of international migrants have a positive effect on the income of the poor while it does not have a significant impact on the income of the middle and top quintiles of the population in particular a 10 per cent increase in the per capita stock of migrants resident in oecd nations augments the income of the poor by 1 per cent on average and ceteris paribus finally the poverty reducing effect of migration holds even when the emigration process selects the best and the brightest

learning by doing and the introduction of new goods a dynamic general equilibrium model is developed in which goods are valued according to the characteristics they contain the set of goods produced in any period is endogenously determined and learning by doing is the force behind sustained growth it is shown that the set of produced goods changes in a systematic way over time with goods of higher quality entering each period and those of lower quality dropping out the model is then used to study the effect of introducing a traditional sector in which there is no learning

estimating the general equilibrium benefits of large changes in spatially delineated public goods the purpose of this article is to report a new approach for measuring the general equilibrium willingness to pay for large changes in spatially delineated public goods such as air quality we estimate the parameters of a locational equilibrium model and compute equilibria for alternative scenarios characterizing the availability of public goods within a system of communities welfare measures take into consideration the adjustments of households in equilibrium to nonmarginal changes in public goods the framework is used to analyze willingness to pay for reductions in ozone concentrations in southern california between 1990 and 1995

trade environment and development the issues in perspective abstract this special issue on trade and the environment brings together a number of papers that are constructively critical of the conventional economic wisdom on the topic we think that this criticism is warranted because of the decidely uncritical way in which free trade has been advocated in much of the literature and especially in policy the papers analyse the validity of the underlying assumptions on which the conventional wisdom is based and provide suggestions for ways to facilitate trade that is also adequately protective of the environment sustainability and other social values in this introductory piece we discuss trade the environment and sustainability summarizing arguments in the papers included in this issue and adding a few additional points not covered by them

free trade and the environment development system abstract we develop a simulation model to analyze the trade environment development system that contains a number of important advances over the earlier and current theoretical models our model like other models has an income induced pollution policy allows country factor endowments to influence trade patterns and allows production factors to be mobile intersectorally unlike other theoretical models our model treats pollution stemming from both production and consumption in a way that does justice to empirical observations we model pollution policy explicitly as an abatement investment thus effectively allowing for differences in pollution intensive technology across countries in addition we allow for an internationally traded intermediate good a natural resource as a result of this novel approach we find that 1 the benefits of trade i can be either positive or negative and ii depend on country endowments and 2 the pollution effects of trade are closely tied to the benefits of trade our model generally shows higher pollution levels under free trade than autarky however our results do not support the pollution haven hypothesis i e trade causes less pollution in developed countries and more pollution in developing ones some developing countries produce more of the pollution intensive good but ultimately consume less pollution under autarky because they have higher per capita income and thus invest more heavily in environmental upgrading under autarky

foreign direct investment and country specific human capital i introduction the past three decades have witnessed an unprecedented increase in foreign direct investment fdi in the world annual fdi flows from and to organisation for economic cooperation and development oecd countries have increased more than 30 fold from 1982 to 2005 while the world trade merely quadrupled during the same period the ratio of gross private capital flows to gross domestic product gdp has risen from 10 3 in 1990 to 32 4 in 2005 the ratio of fdi flows to gdp has climbed up from 2 2 in the early 1990s to 4 4 in 2005 1 as fdi gained importance in the international movement of capital a variety of theoretical and empirical studies have investigated the factors that determine fdi 2 in this article we offer an important but under studied determinant of fdi foreign educated labor in fdi host countries specifically using international bilateral data on fdi and foreign education we present empirical evidence on the role of country specific foreign educated labor in an fdi host country as a determinant of foreign direct investments production involves the process of combining physical capital and the human capital of employees human capital includes the general skills of workers but it also includes their knowledge of firm specific technology managerial skills specific to the organization and efficient communication skills with co workers consequently the labor that possesses these firm specific skills which can be readily used by a firm can be more productive in that firm than in other firms when a firm invests in a foreign country through a subsidiary that shares the technology of the parent firm the labor force that has acquired various types of human capital specific to the parent firm and thus to the subsidiary can be more productive in the foreign subsidiary for instance the local managers of a foreign subsidiary who are able to speak the same language of the managers of their parent firm or who know thoroughly well how the parent firm and its subsidiaries are organized and operated can be more productively utilized in the subsidiary firm since human capital specific to a firm and its foreign subsidiaries can be acquired through education provided in the country of the parent firm the availability of workers in a potential fdi host country who studied in the parent firm country can be an important deciding factor for a firm in investing abroad through its foreign subsidiary 3 foreign training can provide various types of country specific human capital that would increase labor productivity more in the host country of training than in other countries country specific human capital includes language capital which has been shown by numerous papers such as chiswick and miller 1993 and lazear 1999 to have considerable importance in labor market performances knowledge on firm organization and social system is another example of country specific human capital that can be acquired through foreign training foreign education can also enhance the productivity of students in firms of the host country because it provides information about the ability and potential of students in a form that can be more easily processed by firms in the host country greater knowledge regarding employees allows firms to utilize manpower more efficiently and enhance workers productivity as pointed out by becker 1993 who discusses low worker mobility across countries as evidence of the importance of country specific training earlier theoretical models in international trade such as macdougall 1960 attribute international capital movement to the difference in factor endowment measured by physical capital per worker 4 empirical findings however show that the actual capital flows fall short of the theoretical prediction that capital moves from developed economies to developing economies to take advantage of the higher rates of returns to capital

crime and social interactions the high variance of crime rates across time and space is one of the oldest puzzles in the social sciences this variance appears too high to be explained by changes in the exogenous costs and benefits of crime we present a model where social interactions create enough covariance across individuals to explain the high cross city variance of crime rates this model provides an index of social interactions which suggests that the amount of social interactions is highest in petty crimes moderate in more serious crimes and almost negligible in murder and rape

knowledge based growth abstract this paper presents a model displaying sustained growth in output resulting from the accumulation of knowledge the accumulation of knowledge is endogenous determined by a level of study chosen by optimizing agents although knowledge can be owned and sold its equilibrium price is below its value to future production implying that the equilibrium suffers from a paretononoptimal underaccumulation of knowledge these features of the equilibrium result from two special properties of knowledge i an agent s stock of knowledge is undiminished by the transmission of that knowledge to someone else and ii the transmission of knowledge cannot be fully observed

competition between networks a study of the market for yellow pages this paper estimates the importance of network effects in the market for yellow pages i estimate three simultaneous equations consumer demand for usage of a directory advertiser demand for advertising and a publisher s first order condition derived from profit maximizing behaviour estimation shows that advertisers value consumer usage and that consumers value advertising implying a network effect i find that internalizing network effects would significantly increase surplus as an application i consider whether the market benefits from monopoly which takes advantage of network effects or oligopoly which reduces market power i find that a more competitive market is preferable copyright 2004 wiley blackwell

finite lifetimes and growth abstract in this paper we study the long run growth property of overlapping generations models it is shown that in one sector models with convex technologies the asymptotic growth rate must be zero this results because the young do not have sufficient income to purchase a large capital stock thus a policy of income redistribution to the young can generate growth even if financed by income taxation additionaly it is shown that two sector models and one sector models with nonconvex technologies are consistent with growth

a theory of on the job learning in this paper the author assumes that a junior worker learns on the job from senior workers the worker s earnings are equal to his value of marginal product minus the tuition to his senior workers plus the teaching reward from his junior workers the slope of the experience earnings profile decreases with the employment growth rate the earnings of an inexperienced worker of an unusually large cohort tend to be higher than the normal level finally the author shows that his model generates an age earnings profile which is increasing concave in age and declining near to retirement copyright 1997 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

discrete choice with social interactions this paper provides an analysis of aggregate behavioural outcomes when individual utility exhibits social interaction effects we study generalized logistic models of individual choice which incorporate terms reflecting the desire of individuals to conform to the behaviour of others in an environment of noncooperative decisionmaking laws of large numbers are generated in such environments multiplicity of equilibria in these models which are equivalent to the existence of multiple self consistent means for average choice behaviour will exist when the social interactions exceed a particular threshold local stability of these multiple equilibria is also studied the properties of the noncooperative economy are contrasted with the properties of an economy in which a social planner determines the set of individual choices finally a likelihood function based on the theoretical model is given and conditions for the econometric identifiability of the model are established

democracy and foreign education despite the large amount of private and public resources spent on foreign edu cation there is no systematic evidence that foreign educated individuals foster democracy in their home countries using a unique panel dataset on foreign stu dents starting in the 1950s i show that foreign educated individuals promote democracy in their home country but only if the foreign education is acquired in democratic countries the results are robust to several estimation techniques to different definitions of democracy and to the inclusion of a variety of control variables including democracy in trading partners neighboring countries level of income and level and stock of education jel d72 121 015 do foreign educated individuals play a role in fostering democracy in their home countries despite the large amount of resources spent on financing foreign education there is no systematic study on the effects of foreign education on democracy this paper fills this gap using a dataset on foreign students that includes almost all host and sending countries and spans over 50 years numerous policy initiatives and large investment in the united states are based on the notion that foreign educated students promote democracy in their countries of origin through the fulbright program the us government has financed more than 158 000 foreigners studying in the united states 1 the us government not only finances the education of foreign students but also annually issues more than 250 000 nonimmigrant visas for foreign students more than five million individuals have received visas to study in the united states since 1971 2 us efforts to educate foreign students have produced impressive results 46 current and 165 former heads of governments are products of us higher education foreign leaders educated in the united

network effects and welfare cultures we empirically examine the role of social networks in welfare participation using data on language spoken at home to better infer networks within an area our empirical strategy asks whether being surrounded by others who speak the same language increases welfare use more for those from high welfare using language groups this methodology allows us to include local area and language group fixed effects and to control for the direct effect of being surrounded by one s language group these controls eliminate many of the problems in previous studies the results strongly confirm the importance of networks in welfare participation

economic analysis of foreign education and students abroad abstract the role of knowledge accumulation in economic growth has been well discussed in the literature by assuming the possibility of knowledge import by study abroad this paper presents a growth model of knowledge creation and import this paper also derives testable implications in three aspects of foreign education the choice of host countries by foreign students the number of students abroad from one origin country and the growth effect of foreign education in all these aspects empirical observations agree well with the predictions of the model

estimating equilibrium models of sorting across locations while there is growing interest in measuring the size and scope of local spillovers it is well understood that such spillovers cannot be distinguished from unobservable local attributes using solely the observed location decisions of individuals or firms we propose an empirical strategy for recovering estimates of spillovers in the presence of unobserved local attributes for a broadly applicable class of equilibrium sorting models our approach relies on an iv strategy derived from the internal logic of the sorting model itself we show practically how the strategy is implemented provide intuition for our instruments discuss the role of effective choice set variation in identifying the model and carry out a series of monte carlo simulations to demonstrate performance in small samples

the origins of american industrial success 1879 1940 the united states became the world s preeminent manufacturing nation at the turn of the twentieth century this study considers the bases for this success by examining the factor content of trade in manufactured goods surprisingly the most distinctive characteristic of u s manufacturing exports was intensity in nonreproducible natural resources furthermnore this relative intensity was increasing between 1880 and 1920 the study then asks whether resource abundance reflected geological endowment or greater exploitation of geological potential it was mainly the latter jel 042 recent thinking about american economic performance has been marked by alarm over the country s loss of its competitive edge most of this discussion is not rooted in an understanding of the historical origins of the economic leadership now thought to be in jeopardy modern economists tend to assume that the american advantage has been technological and

the division of labor coordination costs and knowledge this paper considers specialization and the division of labor a more extensive division of labor raises productivity because returns to the time spent on tasks are usually greater to workers who concentrate on a narrower range of skills the traditional discussion of the division of labor emphasizes the limitations to specialization imposed by the extent of the market we claim that the degree of specialization is more often determined by other considerations especially emphasized are various costs of coordinating specialized workers who perform complementary tasks and the amount of general knowledge available