different paths to free trade the gains from regionalism we compare free trade reached through expanding regional trading blocs to free trade accomplished by multilateral negotiation with sunk costs the outcomes are different trade in an imperfectly competitive good flows disproportionately more between the original members of a regional agreement even after free trade is reached they secure a higher welfare level from regionalism than from free trade achieved multilaterally nonmembers however reach a lower welfare level a surprising result is that world welfare during free trade is greater when it is achieved by the regional path we conclude with some empirical evidence from the european union that is consistent with the model

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

frontiers and sustainable economic development exploiting new resource frontiers such as agricultural land and mineral reserves is a fundamental feature of economic development in poor economies yet frontier based development is symptomatic of a pattern of economy wide resource exploitation in developing economies that a generates little additional economic rents and b what rents are generated are not being reinvested in other sectors such development is inherently unsustainable the following paper explains this phenomenon and provides evidence that long run expansion of agricultural land and oil and natural gas proved reserves across poor economies is associated with lower levels of real income per capita the paper proposes a frontier expansion hypothesis to explain why the structural economic dependence of these economies on frontier land expansion and resource exploitation is not conducive to sustained long run growth the key to sustainable economic development in poor economies will be improving the economic integration between frontier and other sectors of the economy targeting policies to improved resource management in frontier areas and overcoming problems of corruption and rent seeking in resource sectors

the long term consequences of resource based specialisation using geological variation in oil abundance in the southern us i examine the long term effects of resource based specialisation through economic channels in 1890 oil abundant counties were similar to other nearby counties but after oil was discovered they began to specialise in its production from 1940 90 oil abundance increased local employment per square kilometre especially in mining but also in manufacturing oil abundant counties had higher population growth higher per capita income and better infrastructure 2010 the author s the economic journal 2010 royal economic society

free trade agreements in the americas are the trade effects larger than anticipated this paper argues that the competitive liberalisation of national governments of the past several decades reflects national governments expectations of larger trade impacts from regional economic integration agreements eias than typical ex ante economic models have suggested moreover we show that previous typically cross section ex post empirical evaluations of the effects of eias on trade have seriously over or underestimated the effects partly due to ignoring the endogenous self selection bias of country pairs into eias accounting for this bias we find that economic integration agreements in the americas have had much larger impacts on trade over the period 1960 2000 than previously found and the ex post estimates are less fragile than those in earlier cross section analyses the results shed further light on understanding the causes and consequences of the growth of regionalism in the world

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

input trade and the location of production stanley engerman has been a presence in the department of economics at the university of rochester for over 37 years he was an early and eminent participant in the cliometric revolution that swept throughout the economichistory profession in the 1960 s and 1970 s we doubt that anyone could have anticipated the gathering storm that greeted the publication of time on the cross co authored with robert fogel in 1974 since that time stan has become the world s leading authority on slavery in the americas and the caribbean as well as an important contributor to a set of issues ranging from the 19th century american iron industry to the economics of british imperialism his own human capital as extensive as we know it to be is complemented by capital of the physical variety an enormous library of research material spilling over into bookshelves and floors in several offices in rochester and attracting a yearly stream of itinerant scholars anxious to pick his books as well as his brains in this short note we intend to honor stan by applying the tools of international trade theory to illustrate several episodes in the development of industries both in the united states and in world markets a colleague of stan s at rochester lionel mckenzie once commented that in 19th century britain lancashire would have been unlikely to produce cotton cloth if the cotton had to be grown in england mckenzie 1954 this remark expresses in utter brevity the importance to production and trading patterns of the domain of tradability of raw materials or intermediate products for example it is difficult to envisage the patterns of production and trade in modern day japan should it be denied access to world supplies of oil coal and iron ore local production of each of these items being negligible transport costs as well as man made impediments to trade are mainly responsible for variations in the degree of access countries possess to the inputs available in the markets of other countries simple competitive generalequilibrium models of production of the type intensively utilized in the theory of international trade can usefully be harnessed to shed light on several episodes in 19th century american economic history in which the nature of trading possibilities for raw materials heavily influenced the extent to which local american production of final commodities could withstand the pressures in world markets without the aid of protective devices the simplest model setting in which to investigate the importance of trade in raw materials is a ricardian model augmented by the necessity of using a produced input in addition to labor in at least one commodity denote the pair of final commodities by x and y where in order to produce y a certain quantity of intermediate good z is required the competitive profit conditions for the two final commodities are shown in equation 1

the evolution of the industrial organisation of the production of knowledge this work elaborates the notion of localised technological knowledge based upon the distinction between information competence and knowledge and analyses the emergence of the new knowledge industry the evolution of the organisation of knowledge production is analysed through four stylised modes scientific entrepreneurship institutional variety vertical integration and technological cooperation the new trends towards the growth of knowledge intensive business service industries are detected and underlined they are considered as the outcome of the institutional formation of a market for knowledge based upon a process of increasing appropriability of localised knowledge based on the blending of generic scientific information and competence and growing scope of applicability via computercommunication systems deverticalisation of research activities from the boundaries of corporations the specification of a demand for technological competence and the specialising of independent firms in the production of technological competence and knowledge

europe s tired poor huddled masses self selection and economic outcomes in the age of mass migration during the age of mass migration 1850 1913 one of the largest migration episodes in history the united states maintained a nearly open border allowing the study of migrant decisions unhindered by entry restrictions we estimate the return to migration while accounting for migrant selection by comparing norway to us migrants with their brothers who stayed in norway in the late nineteenth century we also compare fathers of migrants and nonmigrants by wealth and occupation we find that the return to migration was relatively low 70 percent and that migrants from urban areas were negatively selected from the sending population keep ancient lands your storied pomp cries she with silent lips give me your tired your poor your huddled masses yearning to breathe free the wretched refuse of your teeming shore send these the homeless tempest tost to me i lift my lamp beside the golden door emma lazarus 1883

factor price convergence in the late nineteenth century the authors examine a dramatic historical episode of factor price convergence in the late nineteenth century their focus is convergence between old world and new and the analysis centers on land and labor wage rental ratios boomed in the old world and collapsed in the new moving the resource rich labor scarce new world closer to the resource scarce labor abundant old world the authors use econometrics and simulations to identify proconvergence forces which include commodity price convergence factor accumulation and factor saving biases the results confirm that open economy characteristics and international market integration are important sources of convergence copyright 1996 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

are regional trading arrangements trade creating an application of extreme bounds analysis in this study we use extreme bounds analysis to test the robustness of the hypothesis that regional trading arrangements rtas are trade creating extreme bounds analysis provides a more rigorous test of specification uncertainty than traditional econometric theory by incorporating prior information and using a systematic approach to testing the fragility of coefficient estimates the results show that the trade creation effect of most rtas is fragile using a least squares estimator where all weight is attached to the sampling distribution eight or more of the twelve rtas considered are found to be trade creating when the relative weight in the estimation is shifted from the sampling to the prior distribution the number of rtas that are trade creating falls to six at the 95 percent likelihood ellipsoid moreover when we specify that not all rtas are trade creating four rtas increase trade at the 95 percent likelihood ellipsoid at the extreme bounds when all weight is attached to the prior distribution none of the rtas are found to be trade creating as a result we conclude that the pervasive trade creation effect found in the literature reflects not the information content of the data but rather the unacknowledged beliefs of the researchers

revisiting the effects of regional trade agreements on trade flows with proper specification of the gravity model this paper uses a gravity model to assess ex post regional trade agreements the model includes 130 countries and is estimated with panel data over the period 1962 1996 the introduction of the correct number of dummy variables allows for identification of vinerian trade creation and trade diversion effects while the estimation method takes into account the unobservable characteristics of each pairs of trade partner countries the endogeneity of some of the explanatory variables as well as a potential selection bias in contrast to previous estimates results show that regional agreements have generated a significant increase in trade between members often at the expense of the rest of the world

immigration and the diffusion of technology the huguenot diaspora in prussia abstract this paper analyzes long term effects of skilled worker immigration on productivity for the huguenot migration to prussia in 1685 religiously persecuted french huguenots settled in brandenburg prussia and compensated for population losses due to plagues during the thirty years war we combine huguenot immigration lists from 1700 with prussian firm level data on the value of inputs and outputs in 1802 in a unique database to analyze the effects of skilled immigration to places with underused economic potential exploiting this settlement pattern in an instrumental variable approach we find substantial long term effects of huguenot settlement on the productivity of textile manufactories jel j24 j61 l67 n33 n63 o33 o47

the effect of immigration on productivity evidence from us states abstract in this paper we analyze the long run impact of immigration on employment productivity and its skill bias we use the existence of immigrant communities across u s states before 1960 and the distance from the mexican border as instruments for immigration flows we find no evidence that immigrants crowded out employment at the same time we find that immigration had a strong positive association with total factor productivity and a negative association with the high skill bias of production technologies the results are consistent with the idea that immigrants promoted efficient task specialization thus increasing tfp and also promoted the adoption of unskilled efficient technologies

immigrants and the making of america we study the effects of european immigration to the u s during the age of mass migration 1850 1920 on economic prosperity exploiting cross county variation in immigration that arises from the interaction of fluctuations in aggregate immigrant flows and of the gradual expansion of the railway network we find that counties with more historical immigration have higher income less poverty less unemployment higher rates of urbanization and greater educational attainment today the long run effects seem to capture the persistence of short run benefits including greater industrialization increased agricultural productivity and more innovation

the cost of doing business in africa evidence from enterprise survey data summary data from the world bank enterprise surveys show that indirect costs related to infrastructure and services account for a relatively high share of firms costs in poor african countries and pose a competitive burden on african firms we estimate firm level revenue and value added functions for six industries in 17 developing countries demonstrating that firm performance is sensitive to the cost of indirect inputs as indirect inputs are not usually included in estimations of value added we argue that existing estimates understate the relative performance of african manufacturing firms

comment the elusive search for negative wage impacts of immigration labor demand curves slope down 1 from this statement it is a short leap to the malthusian proposition that an increase in the supply of workers reduces wages so short is the leap in fact that the title of george borjas s 2003 paper the labor demand curve is downward sloping reexamining the impact of immigration on the labor market seems to imply that as a theoretical matter immigration has to lower the wages of natives in a well functioning economy however increases in population do not necessarily cause falling wages the effect depends on the supply of capital on the characteristics of the added workers and on the structure of technology in fact the papers by ottaviano and peri op and manacorda manning and wadsworth mmw in this symposium argue that the impacts of immigration on native workers in the united states and the uk have been very small how can these papers arrive at such different conclusions than borjas 2003 who claimed that us immigration between 1980 and 2000 had lowered average native wages by about 3 and the wages of the least educated natives by 9 there are three crucial differences in the assumptions used by the different authors first borjas 2003 holds capital fixed in contrast op and mmw assume that in the longer run capital adjusts to keep the capital labor ratio on its long run path or equivalently that capital is perfectly elastically supplied as was illustrated in an earlier version of op e g ottaviano and peri 2008 table 8 and acknowledged by borjas and katz 2007 table 1 11 this matters a lot if immigration increases aggregate labor supply by 10 as it did in the united states between 1980 and 2000 and capital is fixed average wages would be expected to fall by about 3 if capital can adjust however the effect on average wages is approximately zero importantly op figure 2 show that the trend in the us capital labor ratio was similar in the 1980 2000 period as in earlier decades this and other evidence including the remarkable inflows of capital

proliferating regional trade arrangements why and whither this paper investigates why regional trade arrangements rtas are proliferating extensively and how the effects of multiple rtas by interacting with each other evolve over time our empirical analysis based on an extended gravity model utilising a large panel dataset of 175 countries from 1948 to 1999 shows that rtas on average increase global trade by raising intra bloc trade without damaging extra bloc trade the net trade effects however heavily depend on the types of rta strategic evolution over time which we categorise as expansionary rtas duplicate rtas or overlapping rtas we find that countries excluded from an rta can benefit more from duplicating a separate rta than from joining an existing rta this result explains why the number of bilateral trade blocs rather than the membership size of existing rtas is currently exploding we also find that the net trade creating effects of rtas are substantially lower for countries participating in overlapping rtas this result suggests that it is less likely that the currently proliferating rtas will completely merge and lead the world economy to global free trade our empirical results are robust to controlling for the characteristics of countries that may influence the impact of rtas

growth theory and industrial revolutions in britain and america abstract long run economic growth has again become a major focus of economic theory a perception of technological change as an economic process with externalities has motivated the development of aggregate models that generate different steady state growth paths economic history has also long been interested in long run economic growth here a dialogue is presented between growth theory and the historical literature on the industrial revolution in britain and america s surge to international economic leadership in the late nineteenth century in conclusion economists recent thinking about the microeconomics of technological change has provided fruitful material for the economic historian of growth unfortunately the models of endogenous growth on the other hand present too aggregated a view of the economy to prove helpful when confronted with the details of economic history jel classification n0 n1 1 theorie de la croissance et revolutions industrielles en grande bretagne et en amerique la croissance economique a long terme est redevenue un point d interet majeur pour la theorie economique une perception du changement technologique comme processus economique porteur d externalites a engendre le developpement de modeles agreges qui generent differents sentiers de croissance en regime permanent l histoire economique s interesse depuis longtemps a la croissance economique a long terme ce texte engage le dialogue entre la theorie de la croissance et la litterature historique a propos de la revolution industrielle en grande bretagne et de l emergence de l amerique au statut de leader international a la fin du dix neuvieme siecle on en arrive a la conclusion que les recents developpements dans la pensee economique a propos de la micro economie du changement technologique ont produit des resultats utiles pour l histoire economique de la croissance malheureusement d autre part les modeles de croissance endogene presente une vue trop agregee de l economie pour s averer utile dans l examen des details de l histoire economique

variable costs and the visible hand the re regulation of electricity supply 1932 37 national transmission grid and rationalize uk electricity generation a constrained cost model estimates the gains from this re regulation of the electricity generating industry the new regime reduced costs by one third radically improving the utilization of capital and boosting the average scale of operations it did so by persuading private and municipal enterprises to accept central direction of the extent and timing of their electricity generation this voluntarism saved on enforcement costs but perhaps one half of the industry cost reduction the ceb actually achieved by 1937 was apparently forgone

scarcity resource price uncertainty and economic growth over the course of the past decade significant steps have been taken to empirically link indicators of resource scarcity to changes in economic growth this paper extends this previous literature in two ways first rather than concentrating exclusively on energy we focus on the technological change embodied in the prices of an array of complementary natural resource inputs second we investigate using g arch methods the importance of resource price uncertainty as well as resource price levels on aggregate economic growth we find that output growth is significantly influenced by both resource price levels and resource price uncertainty

gifts of the immigrants woes of the natives lessons from the age of mass migration in this article i jointly investigate the political and the economic effects of immigration and study the causes of anti immigrant sentiments i exploit exogenous variation in european immigration to u s cities between 1910 and 1930 induced by world war i and the immigration acts of the 1920s and instrument immigrants location decision relying on pre existing settlement patterns i find that immigration triggered hostile political reactions such as the election of more conservative legislators higher support for anti immigration legislation and lower redistribution exploring the causes of natives backlash i document that immigration increased natives employment spurred industrial production and did not generate losses even among natives working in highly exposed sectors these findings suggest that opposition to immigration was unlikely to have economic roots instead i provide evidence that natives political discontent was increasing in the cultural differences between immigrants and natives results in this article indicate that even when diversity is economically beneficial it may nonetheless be socially hard to manage

an annual index of u s industrial production 1790 1915 as a remedy for the notorious deficiency of pre civil war u s macroeconomic data this study introduces an annual index of american industrial production consistently defined from 1790 until world war i the index incorporates 43 quantity based annual series most entirely new in the manufacturing and mining industries in a manner similar to the federal reserve board s monthly industrial production index the index changes our view of the growth and volatility of the u s economy before world war i a direct implication of the index is that antebellum postbellum differences in industrial volatility are statistically indistinguishable the index also demonstrates that the pernicious deflationary depressions that purportedly followed the financial panics in 1837 and 1873 were actually rather mild recessions when expressed in real output

how do patent laws influence innovation evidence from nineteenth century world fairs studies of innovation have focused on the effects of patent laws on the number of innovations but have ignored effects on the direction of technological change this paper introduces a new dataset of close to fifteen thousand innovations at the crystal palace world s fair in 1851 and at the centennial exhibition in 1876 to examine the effects of patent laws on the direction of innovation the paper tests the following argument if innovative activity is motivated by expected profits and if the effectiveness of patent protection varies across industries then innovation in countries without patent laws should focus on industries where alternative mechanisms to protect intellectual property are effective analyses of exhibition data for 12 countries in 1851 and 10 countries in 1876 indicate that inventors in countries without patent laws focused on a small set of industries where patents were less important while innovation in countries with patent laws appears to be much more diversified these findings suggest that patents help to determine the direction of technical change and that the adoption of patent laws in countries without such laws may alter existing patterns of comparative advantage across countries jel d2 k11 l51 no 014

production and environmental resources a prelude to an evolutionary framework the paper advances a framework to study the evolution of technology and institutions it is based on two simple tenets first the quality and quantity of environmental resources are defined and constrained by the regime of technology and institutions second the character and extent of innovations are informed and limited by the regime as well the framework is contrasted with neoclassical and ecological economics while the framework assimilates ideas from both paradigms it departs from them by stressing the importance of the technological institutional regime tir the two views ignore in different ways the significance of tir 46 the neoclassical program conceives the flow of innovations as tir independent while the ecological agenda regards the fund of resources as tir independent 1 consequently both camps fail to provide an endogenous account of the observed punctuated character of the evolution of tir neoclassical economists maintain that as a resource depletes its price rises which induces switching to a cheaper one encourages exploration or spurs invention harold barnett and chandler morse 7 11 state that nature imposes particular scarcities not an inescapable general scarcity the responses to environmental resource limitation are supposedly singular activities stripped from any underpinning regime the neoclassical disregard of tir heuristically resembles the fable of marie antoinette s folly in response to the scarcity of bread at the eve of the french revolution she advised according to legend buying cake instead ecological economists offer a different view of resource limits 48 for herman daly 21 8 nature really does impose an inescapable general scarcity while neoclassical economists emphasize relative limitation scarcity pricing ecological economists stress malthusian general limitation for ecological economists substitution can solve relative allocation but cannot solve general limitation general limitation can be avoided only if economic activity proceeded within certain boundaries or as put by martin o connor 69 within appropriate cyclical structure of resource transformations under the motto sustainable development a low pace production activity supposedly enables a population to replicate indefinitely ecological economists conceive

the theorems of international trade with factor mobility abstract this paper addresses the relation between goods trade and international factor mobility in general terms the basic theorems of international trade suitably interpreted are shown to hold in their strong versions if the number of international markets for goods and factors is at least as large as the number of factors the crucial dimensionality issue is hence not the relative number of goods and factors per se but the number of international markets relative to the number of factors only the price version of the heckscher ohlin theorem fails to be essentially preserved by this condition

economic integration among developed developing and centrally planned economies a comparative analysis we examine six integration schemes and decompose their ability to increase inter member trade into environmental policy and system effects environmental factors caused the greatest variation in trade creation with inter member distance the most important environmental variable the cacm and efta have followed more effective integration policies than the eec lafta and the andean pact although integration can thus benefit developed and developing countries alike for some such as those in latin america inter member distances severely limit its effectiveness while the combination of policy and system has kept the cmea fromrr achieving its full potential for increasing inter member trade its effectiveness does not differ from that of unions among market economies

cultural diversity and economic growth evidence from the us during the age of mass migration we exploit the large inflow of immigrants to the us during the 1870 1920 period to examine the effects that within county changes in the cultural composition of the us population had on output growth we construct measures of fractionalization and polarization to distinguish between the different effects of cultural diversity our main finding is that increases in cultural fractionalization significantly increased output while increases in cultural polarization significantly decreased output we address the issue of identifying the causal effects of cultural diversity by using the supply push component of immigrant inflows as an instrumental variable

german jewish emigres and us invention historical accounts suggest that jewish emigres from nazi germany revolutionized us science to analyze the emigres effects on chemical innovation in the united states we compare changes in patenting by us inventors in research fields of emigres with fields of other german chemists patenting by us inventors increased by 31 percent in emigre fields regressions which instrument for emigre fields with pre 1933 fields of dismissed german chemists confirm a substantial increase in us invention inventor level data indicate that emigres encouraged innovation by attracting new researchers to their fields rather than by increasing the productivity of incumbent inventors

where did all the dollars go the effect of cash flows on capital and asset structure this paper documents the short and long term balance sheet effect of cash flows we show that cash savings in the short run and debt reduction in both the short and the long run account for a substantial fraction of cash flow use although in the long run investment exhibits substantial sensitivity to cash flows investment does not absorb the entire cash flow shock in fact the tighter the financial constraints the smaller the fraction of cash flow absorbed by investment and the more by leverage reduction firms stage their response to increases in cash flow delaying investment while building up cash stocks and reducing leverage these results suggest that much of the short run economic effect of cash flow shocks to the corporate sector may be channeled into the corporate debt market rather than the capital goods market especially when financing constraints tighten

the corporate propensity to save why do corporations accumulate liquid assets we show theoretically that intertemporal trade offs between interest income taxation and the cost of external finance determine optimal savings intriguingly we find that controlling for tobin s q saving and cash flow are negatively related because firms lower cash reserves to invest after receiving positive cash flow shocks and vice versa consistent with theory we estimate negative propensities to save out of cash flow we also find that income uncertainty affects saving more than do external finance constraints therefore contrary to previous evidence saving propensities reflect too many forces to be used to measure external finance constraints

the impact of negative cash flow and influential observations on investment cash flow sensitivity estimates abstract kaplan and zingales quart j econ 112 1997 169 and clearly j finance 54 2 1999 673 diverge from the large literature on investment cash flow sensitivity by showing that investment is most sensitive to cash flow for the least financially constrained firms we examine if this result can be explained by the fact that when firms are in sufficiently bad shape incurring cash losses investment cannot respond to cash flow we find that while cleary s results can be explained by such negative cash flow observations the kaplan zingales results are driven more by a few influential observations in a small sample we also record a decline in investment cash flow sensitivity over the 1977 1996 period particularly for the most constrained firms

comparative advantage in uk manufacturing trade 1910 1935 this paper uses a maintained hypothesis of comparative advantage based on relative factor endowments to investigate uk manufacturing trade prior to world war ii the results from several independent tests indicate that britain exported goods intensive in the use of unskilled labour and had a comparative disadvantage in goods intensive in the use of human capital right up to the mid 1930s this is consistent with the views of contemporaries but somewhat at odds with recent optimistic assessments of structural change in pre war britain this abstract was borrowed from another version of this item

the resource curse and its potential reversal several recent papers suggest that the negative association between natural resource intensity and economic growth can be reversed if institutional quality is high enough we try to understand this result in more detail by decomposing the resource measure using alternative measures of both resources and institutions and by studying different time periods while an institutional reversal is present in many specifications only ores and metals interacted with the icrg measure of institutional quality consistently have a negative growth effect but a positive interaction that turns the curse around when institutions are good enough

immigrants genes genetic diversity and economic development in the united states this paper examines the relationship between immigrants genetic diversity and economic development in the united states during the late nineteenth and the beginning of the twentieth centuries a period commonly referred to as the age of mass migration from europe to the new world our panel model estimates show that during this period immigrants genetic diversity is significantly positively correlated with measures of u s counties economic development there exists also a significant positive relationship between immigrants genetic diversity in 1870 and contemporaneous measures of u s counties average income jel j11 o51 z13

rethinking economic development i provide a summary reflection and assessment of the current state of economic development in both the policy and academic worlds in terms of development policy currently the primary focus is on policy interventions namely foreign aid aimed at fixing the deficiencies of developing countries academic research also has a similar focus except with an emphasis in rigorous evaluation of interventions to estimate causal effects a standard set of versatile quantitative tools is used e g experimental and quasi experimental methods which can be easily applied in a range of settings to estimate the causal effects of policies which are typically presumed to be similar across contexts in this article i take a step back and ask whether the current practices are the best that we can do are foreign aid and policy interventions the best options we have for poverty alleviation what else can be done is our current research strategy characterized by rigorous but a lack of context specific analysis the best method of analysis is there a role for other research methods for a deeper understanding of the local context and for more collaboration with local scholars repenser le developpement economiquee dans cet article je propose un apercu une reflexion et une evaluation de l etat actuel du developpement economique a la fois dans les spheres politiques et universitaires en matiere de developpement economique l attention est principalement portee sur l intervention politique c est a dire l aide exterieure visant a corriger les defaillances des pays en developpement les recherches universitaires y portent une attention similaire mais en mettant davantage l accent sur l evaluation rigoureuse de ces memes interventions pour en mesurer les effets de causalite a cette fin un ensemble d outils quantitatifs et modulables standard sont utilises notamment par l entremise de methodes experimentales et quasi experimentales pouvant facilement s appliquer a une vaste gamme de situations et ce aux fins d evaluations des liens de causalite engendres par ces politiques liens habituellement consideres comme similaires d un contexte a l autre dans cet article je prends un peu de recul pour m interroger sur la pertinence des pratiques actuelles les interventions politiques et l aide exterieure offrent elles les meilleures options pour reduire la pauvrete que pouvons nous faire d autre notre strategie de recherche actuelle caracterisee par des analyses rigoureuses mais peu adaptees a des contextes specifiques est elle la meilleure d autres methodes de recherche peuvent elles permettre de mieux comprendre les contextes regionaux et favoriser une meilleure collaboration avec les intellectuels locaux

does the source of capital affect capital structure prior work on leverage implicitly assumes capital availability depends solely on firm characteristics however market frictions that make capital structure relevant may also be associated with a firm s source of capital examining this intuition we find firms that have access to the public bond markets as measured by having a debt rating have significantly more leverage although firms with a rating are fundamentally different these differences do not explain our findings even after controlling for firm characteristics that determine observed capital structure and instrumenting for the possible endogeneity of having a rating firms with access have 35 more debt copyright 2006 oxford university press

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

a century of missing trade in contemporary data the measured factor content of trade is far smaller than its predicted magnitude in the pure heckscher ohlin vanek framework the so called missing trade mystery authors wonder if this problem has been there from the beginning that is authors ask if the heckscher ohlin theory was so much at odds with reality at its time of conception authors apply contemporary tests to historical data focusing on the major trading zone that inspired the factor abundance theory the old and new worlds of the pre 1914 greater atlantic economy this places autor s analysis in a very different context than contemporary studies an era with lower trade barriers higher transport costs a more skewed global distribution of the relevant factors especially land and comparably large productivity divergence these conditions might seem more favorable to the theory but the results are still very poor

how sensitive is investment to cash flow when financing is frictionless i analyze the sensitivity of a rm s investment to its own cash ow in the benchmarkcase where nancing is frictionless this sensitivity has been proposed as a measure of nancing constraints in earlier studies i nd that the investment cash ow sensitivities that obtain in the frictionless benchmarkare very similar both in magnitude and in patterns they exhibit to those observed in the data in particular the sensitivity is higher for rms with high growth rates and low dividend payout ratios tobin s q is shown to be a more noisy measure of near term investment plans for these rms does a high sensitivityof a rm s investment to its own cash ow indicate that the rm is nancially constrained a large body of research starting with fazzari hubbard and petersen 1988 hereafter fhp suggests that rms facing nancing constraints should exhibit high investment cash ow sensitivities re ecting the wedge between the costs of external and internal funds empirical ndings seem to give support to this hypothesis since rms classi ed as constrained on a priori criteria such as size dividend payout or leverage do have higher cash ow sensitivities even after controlling for their investment opportunities by conditioning on tobin s q however the reliability of these results critically depends on whether q is a proper control for the investment opportunity set if q performs worse for certain classes of rms higher sensitivities may obtain for these rms simply because cash ow re ects information about investment opportunities this critique is not new in his discussion of fhp poterba 1988 was the rst to point out that measurement error in q may cloud the empirical results similar concerns have been raised in subsequent studies as well while the qualitative point is well known its quantitative impact on the investment cash ow sensitivity has not been analyzed can the linkbetween cash ow and the investment opportunity set account for the observed magnitudes of the sensitivity or are these magnitudes too large to be explained without nancing frictions

assessing the enlargement and deepening of the european union this paper estimates a theoreticallymotivated gravity model to examine the effect of the european union eu on trade and whet her the order of entry has affected the trade performance of member countries additionally we analyse the impact of the diffe rent phases of eu integration on trade the results show that both original countries and successive enlargements boost intra b loc trade moreover the results suggest that the deepening in the integration process has led to more trade creation among members finally only the latter ph ase of the european integration process the single currency has increased trade with non members