political competition and the politicization of the state in east central europe the expansion and politicization of the postcommunist state even among the reform leaders of czech republic hungary poland and slovakia has confounded early expectations that the state would s

quantitative restrictions and the welfare effects of capital inflows abstract this paper explores the welfare effects of capital inflows when some imports are subject to quantitative restrictions it is shown that in a heckscher ohlin model where all imports are restricted by quotas and some fraction of the initial domestic capital stock is foreign owned a capital inflow is welfare improving regardless of the ranking of sectoral factor intensities with sector specific capital stocks and both tariff ridden and quota restricted imports the consequences of direct foreign investment in any sector are uncertain and depend upon whether the two imports are compensated substitutes or complements as well as the characteristics of production

political competition and policy adoption market reforms in latin american public utilities on y docencia econ omicas this article shows that political competition generates incentives that affect the pace of adoption of market reforms in the context of policy convergence previous work shows the effect of financial and technological pressures in promoting policy convergence and the impact of institutional constraints on shaping the pace of policymaking controlling for these effects this article demonstrates the policy effects of political competition and ideological polarization even at a time when ideological policy differences seem to be fading due to policy convergence this article studies policy adoption using duration analysis for the 18 countries of latin america during the 1985 2000 period when most of the market reforms in public utilities were adopted s tudies of market reforms in latin america have typically emphasized the common financial and technological pressures that limited the ability of incumbents to impose their ideological preferences on policy adoption during the 1980s and 1990s this article shows that although it is true that the ideology of incumbents cannot fully explain policy adoption political competition and the relative ideology of challengers did shape the incentives of policymakers and thus played a significant role in the adoption of market reforms the article shows these effects on the market reforms of latin american public utilities which have been widely regarded as an example of policy convergence market oriented reforms in telecoms and electricity including the privatization of assets the liberalization of markets and the separation of regulatory authority from operations spread rapidly around the globe and especially through latin america

international investment and immiserizing growth abstract a country with significant foreign investment can be immiserized by growth of its labor force because this increases the payments that have to be made to foreign investors we show that this occurs when the elasticity of supply of foreign capital and the elasticity of substitution between labor and capital in the host country are low we relate this phenomenon to bhagwati s general analysis of immiserizing growth and identify several new sources of immiserization that can arise from the interaction of the bhagwati johnson mechanisms and international investment

protection and the harmful effects of endogenous capital flows abstract assume a country has in place a binding tariff and is a price taker on world markets in which capital is internationally mobile and unimpeded regardless of trade patterns possible specificity of capital or factor intensities an increase in the tariff harms the country if capital is frozen and harms the country even more when capital mobility brings rates of return into line among countries

the design of multidimensional auctions procurement auctions usually require the bid to specify several characteristics of the contract to be fulfilled in this article i study the design of such mechanisms allowing for a special case of correlation of the firm s costs i describe the properties of optimal mechanisms and study the design of multidimensional auctions contrary to the independent costs model to implement the optimal outcome the procurer will need to use a two stage auction in the first stage the procurer selects one firm in the second stage he bargains to readjust the level of quality to be provided

asymmetric effects of endowment changes on foreign investment source and host countries this paper explores the asymmetric impact of factor endowment changes on foreign investment source and host countries using a ricardo wilson multifactor continuum of goods model where there is a technological basis for trade even if the countries are equivalent in all respects except for capital endowments it is discovered that host country capital growth must be immiserizing in the source country provided that the two countries are initially alike in all respects except for capital endowments while a stringent single good macdougall kemp restriction suffices to guarantee that source country labor growth is immiserizing in the host country initial equivalence between countries is insufficient

industrial structure and capital flows this paper provides a new theory of international capital flows in a framework that integrates factor proportions based trade and financial capital flows a novel force emerges capital tends to flow toward countries that become more specialized in capital intensive industries this composition effect competes with the standard force that channels capital toward the location where it is scarcer if the composition effect dominates capital flows away from the country hit by a positive labor force productivity shock a flow reversal extended to a quantitative framework the model generates sizable current account imbalances between developing and developed countries broadly consistent with the data

welfare gains from capital inflows under import quotas abstract the presence of tariffs was assumed in the literature which examined the effect of additional foreign investment on the welfare of the host country in the small country setting however this paper analyzes the case of import quotas and shows that additional inflows of foreign capital improve the host country s welfare when import quotas are kept constant

tariff induced capital inflow and welfare under variable returns to scale abstract this paper extends recent studies on tariff immiserization in the presence of internationally mobile sector specific capital to include the possibility of non constant returns to scale it is shown that brecher and diaz alejandro s 1977 proposition does not necessarily hold that is under certain conditions tariff induced capital inflow improves the host country s welfare even if the foreign capital receives the full untaxed value of its marginal product

large is beautiful the welfare effect of technology transfer reconsidered abstract this paper demonstrates that a technology transfer via foreign owned firms always reduces the host country s national income if the new technology is localized in the atkinson stiglitz sense at a capital labor ratio higher than prevails locally although developing countries can mitigate this negative impact of technology transfer by restricting the activities of foreign firms we argue that complete capital market liberalization yields even higher national income

design competition through multidimensional auctions this article studies design competition in government procurement by developing a model of two dimensional auctions wherefirms bid on both price and quality and bids are evaluated by a scoring rule designed by a buyer three auction schemes first score second score and second preferred offer are introduced and related to actual practices if the buyer can commit to a scoring rule in his best interest the resulting optimal scoring rule underrewards quality relative to the buyer s utility function and implements the optimal outcome for the buyer underfirst and second score auctions absent the commitment power the onlyfeasible scoring rule is the buyer s utility function under which 1 all three schemes yield the same expected utility to the buyer and 2 first and second score auctions induce the first best level of quality which turns out to be excessive from the buyer s point of view

international capital mobility shadow prices and the cost of protection this paper studies the welfare losses from tariff protection in a small open economy when some factors are internationally mobile our principal result is that international fictor mobility must raise the cost of protection more specifically the welfare loss resulting from a uniform increase in tariffs in a competitive small open economy is greater when tariff induced international factor movements take place than when factors are internationally immobile by contrast an exogen1ous inflow of factors in the presence of tariffs may increase or reduce the welfare loss associated with protection depending on whether or not the protected commodities use the foreign owned factors intensively relative to domestically owned factors these results are proven for a very general specification of the economy s technology in particular no restrictions are placed on the degree of vertical integration in production on the sectors into which factors are internationally mobile or on the number of goods and factors our main result holds whether or not an increase in tariff rates leads the economy to specialise in addition we show how our results relate to earlier work on immiserising capital inflows and on negative shadow prices for factors of production thus synthesizing a number of recent results within a common framework the paper is organised as follows in section 2 we explain our framework and derive expressions for the welfare effects of tariffs when all factors are domestically owned and when some factors are foreign owned but not internationally

international equity markets and trade policy abstract this paper derives optimal trade policies for exporting and importing countries when a market is imperfectly competitive and firms are internationally owned it is shown that an increase in foreign ownership of firms lowers both the optimal export subsidy of the exporting country and the optimal import tariff of the importing country at the same rate foreign ownership also affects the distribution of world welfare between countries however it does not affect trade patterns and firm values

africa s overgrown state reconsidered bureaucracy and economic growth how close is the link between outsized states and economic stagnation in africa this article shows that african public bureaucracies are not as large as often portrayed that they have been getting smaller and that reducing their size alone has not bee n a prescription for economic revival to the contrary the countries with higher levels of public employment such as botswana and mauritius are apt to have the better economic records these findings suggest that a superabundance of public personnel is not in itself a major impediment to growth in africa too much attention has been paid to quantitative or first generation bureaucratic problems and too little attention has been given the second generation issues of bureaucratic quality

exiting a lawless state an earlier paper showed that an economy could be trapped in an equilibrium state in which the absence of the rule of law led to asset stripping and the prevalence of asset stripping led to the absence of a demand for the rule of law highlighting a coordination failure this paper looks more carefully at the dynamics of transition from a non rule of law state the paper identifies a commitment problem as the critical feature inhibiting the transition the inability under a rule of law to forgive theft this can lead to the perpetuation of the non rule of law state even when it might seem that the alternative is pareto improving

the growth and welfare consequences of differential tariffs this paper analyzes the impact of differential tariffs on consumption and investment in a specific factors model of a small open economy in which capital is accumulated over time particular attention is devoted to the welfare aspects highlighting the cost of the intertemporal distortions produced by protective trade policies several specific welfare propositions are obtained first tariff protection is shown to create short run benefits but long run costs in welfare second the second best policy for the two tariffs is characterized finally several propositions summarizing the implications of our analysis for tariff reform are derived

strategic trade policy and welfare foreign equity ownership is shown empirically to weaken significantly and occasionally reverse common strategic trade policy results existing levels of u s cross ownership for example reduce the average optimal export subsidy by 47 relative to the brander and spencer journal of international economics 1985 18 83 100 value in industries with particularly high cross ownership and relatively small imputed labor rents optimal subsidies fall to less than one seventh of their former level previous studies which overlook high rates of cross ownership overstate the effectiveness of strategic policies most sharply in sectors with above average expected profitability scope for strategic investments and barriers to rent dissipation

the welfare effects of foreign investment in tariff distorted economies abstract the welfare effects of foreign investment in the presence of large tariffs are examined in models where capital is endogenously mobile capital flows induced by large tariffs may be welfare improving a numerical example is provided

sealed bid auction of netherlands mussels statistical analysis this article presents an econometric analysis of the many data on the sealed bid auction that sells mussels in yerseke town the netherlands the goals of this analysis are obtaining insight into the important factors that determine the price of these mussels and quantifying the performance of an individual purchase manager besides a case study the article is a general study on the role of auctions in supply chains and on hedonic price factors

foreign ownership non traded goods and the effects of terms of trade changes on national welfare abstract this paper extends the theory of international trade in the presence of foreign ownership to incorporate non traded goods it is shown that with non traded goods national and aggregate welfare might move in opposite directions in response to a terms of trade deterioration even when national and aggregate trade specialization patterns coincide

quid pro quo foreign investment and welfare a political economy theoretic model abstract the classic paper by brecher and diaz alejandro 1977 analyzed the implications of tariff jumping direct foreign investment dfi induced by the imposition of an import tariff we analyze a new type of dfi where it occurs with a view to defusing not circumventing protection or rather the threat of protection by the host country an example is the dfi by japan in the united states the decision about the level of foreign investment is taken in the first of a two period horizon period this together with the level of exports in the first period determines the probability of a quota on exports being imposed in the second period policy makers aware of the effects of the first period decisions on the second period will impose an optimal tariff and an optimal tax subsidy on capital exports

competing for transparency political competition and institutional reform in mexican states why do political actors undertake reforms that constrain their own discretion we argue that uncertainty generated by political competition is a major driver of such reforms and test this argument using subnational data on mexican states adoption of state level access to information ati laws examining data from 31 mexican states plus the federal district we find that more politically competitive states passed ati laws more rapidly even taking into account the party in power levels of corruption civil society and other factors the fine grained nature of our data reflecting the staggered timing of elections inauguration dates and dates of passage allows us to distinguish between different theoretical mechanisms we find the greatest evidence in favor of an insurance mechanism by which incumbent parties who face uncertainty over future political control seek to ensure access to government information and means of monitoring incumbents in the future in case they lose power

the shadow pricing of factors in a multicommodity specific factors model this paper derives the shadow prices of specific and mobile factors in a multicommodity specific factors small economy subject to product market or factor market distortions the shadow price of the mobile factor labour is shown to be positive except under conditions of unemployment the shadow prices of the specific factors can exceed or fall short of their market prices and can even be negative the higher the tariff rate in a given sector or the lower its wage rate given an intersectoral wage differential the lower the shadow price of the factor specific to it compared to its market price les prix fictifs des facteurs de production dans un modele a plusieurs biens ou certains facteurs de production sont spc ils peuvent meme etre negatifs plus le droit de douane est eleve dans un secteur donne ou plus le niveau de salaire y est bas quand il existe un differentiel de salaire entre secteurs plus le prix fictif d un facteur specifique est bas par rapport a son prix de marche

welfare consequence of capital inflow for a small tariff protected economy abstract capital inflow is generally immiserizing when the capital intensive import competing sector is tariff protected and profits are repatriated in full in this paper we construct a model with increasing returns embedded in a monopolistically competitive market to show that capital inflow might lead to higher factor income and interestingly enough growth of import competing sector might lead to still higher imports thus two distinct possible channels are identified through which welfare might improve

the discreet charm of formal institutions postcommunist party competition and state oversight why do some new democratic political politicians constrain themselves and reduce their discretion to extract resources from the state and the processes of privatization postcommunist democracies show surprising variation in the adoption of formal institutions of monitoring and oversight these institutions regulate markets empower citizen oversight and police the use and distribution of state assets these have arisen rapidly in some countries and with considerable delays in others accounts that link institutional creation to european union imposition initial bargaining and parliamentary divisions do not fully explain the variation instead in the nine consolidated democracies and free markets examined here robust political competition triggered mechanisms of anticipatory institution building and moderation of government behavior

tariffs foreign capital and national welfare with sector specific factors abstract this paper examines the effect on national welfare of an endogenously determined inflow of foreign capital in the context of a well known model with sector specific inputs both for the case of unrestricted international trade and investment and in the presence of a tariff the second best problem of the optimal tax on foreign investment for a given tariff level is also investigated by application of the concept of shadow prices for primary factors in distorted open economies the results obtained are then related to analogous propositions derived previously for the standard heckscher ohlin model

trade and capital flows a financial frictions perspective the classical heckscher ohlin mundell paradigm states that trade and capital mobility are substitutes in the sense that trade integration reduces the incentives for capital to ow to capital scarce countries in this paper we show that in a world with heterogeneous nancial development the classic conclusion does not hold in particular in less nancially developed economies south trade and capital mobility are complements within a dynamic framework the complementarity carries over to nancial capital ows this interaction implies that deepening trade integration in south raises net capital in ows or reduces net capital out ows it also implies that at the global level protectionism may back re if the goal is to rebalance capital ows when these are already heading from south to north our perspective also has

protection and the gainful effects of foreign capital abstract an increased foreign capital inflow into a protected sector is generally immiserizing we show that if the protected sector produces an intermediate input positive welfare effects may emerge a striking result is that it might lead to an increased import demand for the intermediate input which is a substitute for the product of the import competing sector

do multinationals deteriorate developing countries export prices the impact of fdi on net barter terms of trade this paper explores the economic relationship between foreign direct investment fdi to developing countries and the export prices of the latter measured by terms of trade it is rst shown that economic theory suggests such a relationship for various reasons but is inconclusive about the direction of the eect to address this open issue empirically i analyze data on more than 50 developing countries throughout the period 1980 2008 using robust dynamic panel data methods the results show that fdi had an economically relevant and statistically signicant positive impact on developing countries net barter terms of trade a higher level of education in the developing country fosters this eect

effective response to rfqs and supplier development a supplier s perspective abstract considering multiple attributes while evaluating request for quotes rfqs responses from suppliers is gaining significant importance in industrial procurement while price has traditionally been the most important factor in evaluating rfq responses incorporation of non price attributes such as quality and delivery performance is becoming essential and critical research on multi attribute rfqs has received significant attention in an auction format with models addressing issues relating to auction mechanism design winner determination and auction dynamics primarily from a buyer s perspective there have been few approaches if any that have investigated the issue of response to multi attribute rfqs from a supplier s perspective which is the focus of this paper such an approach will assist a supplier in effectively responding to rfqs thereby maximizing the likelihood of winning future contracts it also indirectly assists in supplier development and helps foster competition among suppliers which benefits both the buyers and the suppliers we develop mathematical models that address this important issue and demonstrate their usefulness through an illustrative dataset

labor market distortions the structure of protection and direct foreign investment abstract this paper analyzes the welfare effects of direct foreign investment in a general model that allows for labor market distortions trade in both intermediate inputs and final goods export subsidies and protection in the form of either tariffs or quotas it is shown that contrary to the conventional wisdom there is not in general any strong connection between the orientation of the trade regime sectoral capital intensity rankings and the desirability of attracting foreign investment

runaway state building how political parties shape states in postcommunist eastern europe why has the rate of expansion of postcommunist state administrations varied so widely among countries that are at comparable stages of economic transition have similar formal institutions and have been equally exposed to the dynamics of eu integration based on a close comparison of poland the czech republic and slovakia the author argues that the critical factor in postcommunist state building is the robustness of party competition the legacy of communism creates strong pressures for patronage politics which swells the administration but it is party competition that determines whether the predisposition to patronage politics in fact becomes the practice of patronage politics the number of state administrative personnel has expanded significantly more in countries where party system development has stalled and party competition has failed to constrain the party ies of government

a multi attribute e auction mechanism for procurement theoretical foundations abstract we describe a multi attribute e auction mechanism with a focus on its theoretical foundations our mechanism is designed for auctioning multiple units of a good primarily in b2b transactions it can be used in various types of forward and reverse auctions rfqs request for quote although the emphasis in this paper is on procurement to incorporate the auction owner s preferences across issues attributes in an auction negotiation setting we adopt a novel application of the pricing out technique another key feature of our mechanism is the optimization based suggested price decision support component which momentarily gives the best price acceptable to the buyer

international capital mobility and commercial policy in an economic region abstract if two small countries are linked by capital movements then at low tariff levels any increase in capital flows induced by the commercial policy of either country will harm that country and benefit the other country while at low levels of international investment a tariff increase always harms the country levying the tariff nevertheless an increase in one country s tariff could benefit both countries by alleviating regional distortions in factor allocation if the countries liberalize factor movements within a customs union then conflicts must arise in choosing the level of the common external tariff

factor intensity conditions for welfare improving foreign investment in tariff distorted economies a comment on neary and ruane earlier work in the foreign investment literature shows that the immiserizing effect of capital mobility in the presence of small tariff distortions is immune to capital intensity considerations this is not so in the context of large tariffs a capital intensity reversal is sufficient to rescue tariff ridden economies from the usually damaging effects of capital mobility on the other hand a strengthening of the pre tariff factor intensity pattern ensures that the small tariff immiserizing capital flow results are robust in the large capital movements in the second best optimum are also predicted copyright 1989 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

reevaluating the role of trade agreements does investment globalization make the wto obsolete abstract international ownership alters the role of multilateral trade institutions by redefining pecuniary externalities among countries regardless of the underlying cause whether foreign direct investment international portfolio diversification cross country mergers or multinational firms international ownership can mitigate incentives that lead large countries to set inefficiently high tariffs at the same time however foreign ownership introduces the potential for expropriation by investment host countries which can extract rent from foreign owners by manipulating local prices the basic principle of reciprocity continues to serve as an important guide to efficiency though its application must account for the pattern of international ownership in addition to traditional measures of market access

a smart market for industrial procurement with capacity constraints we address the problem of designing multi item procurement auctions for a monopsonistic buyer in capacity constrained environments using insights from classical auction theory we construct an optimization based auction mechanism smart market relying on the dynamic resolution of a linear program minimizing the buyer s cost under the suppliers capacity constraints suppliers can modify their offers in response to the optimal allocation corresponding to each set of bids giving rise to a dynamic competitive bidding process to assist suppliers we also develop a bidding suggestion device based on a myopic best response mbr calculation that solves an associated optimization problem assuming linear costs for the suppliers we study within a game theoretic framework the sequence of bids arising in this smart market under a weak behavioral assumption and some symmetry requirements an explicit upper bound for the winning bids is established we then formulate a complete behavioral model and solution methodology based on the mbr rationale and show that the bounds derived earlier continue to hold we analytically derive some structural and convergence properties of the mbr dynamics in the simplest nontrivial market environment which suggests further possible design improvements and investigate bidding dynamics and incentive compatibility issues via numerical simulations