micro incentives and municipal behavior political decentralization and fiscal federalism in argentina and mexico summary this article analyzes the mixed results of political and fiscal decentralization in latin america by comparing taxing and spending policies in six cities in argentina and mexico consistent with previous studies we find that decentralization has been frustrated by overconcentration of power at the provincial level and large vertical fiscal imbalances though we characterize these as functional elements in a system of redistributive policy making that benefits a wide array of provincial and municipal actors we seek to add a new dimension to the literature by arguing that micro level incentives conditions and circumstances particular to specific places are more important determinants of municipal behavior than macro level structures those policy and institutional changes intended to make officials more responsive to local conditions federalism local elections intergovernmental transfers and own source revenues we conclude that the theory of decentralization relies on a flawed conception of the causal mechanisms that are hypothesized to create responsiveness in local officials

liquidity risk and occupational choices we explore which financial constraints matter the most in the choice of becoming an entrepreneur we consider a randomly assigned welfare program in rural mexico and show that cash transfers signi cantly increase entry into entrepreneurship we then exploit the cross household variation in the timing of these transfers and find that current occupational choices are significantly more responsive to the transfers expected for the future than to those currently received guided by a simple occupational choice model we argue that the program has promoted entrepreneurship by enhancing the willingness to bear risk as opposed to simply relaxing current liquidity constraints

effect of inter temporal factors on the real time pricing of electricity a rigorous theoretical framework for the solution of the price formation and optimal dispatch problems taking into account intertemporal dependence of demand under spot and dynamic tariffs is presented the case in which a common tariff is to be applied to all customers is examined the difference in system response for spot and day ahead dynamic tariffs is illustrated simulation examples of a variety of event types are provided

toward a theory of sustainable entrepreneurship reducing environmental degradation through entrepreneurial action this article explains how entrepreneurship can help resolve the environmental problems of global socio economic systems environmental economics concludes that environmental degradation results from the failure of markets whereas the entrepreneurship literature argues that opportunities are inherent in market failure a synthesis of these literatures suggests that environmentally relevant market failures represent opportunities for achieving profitability while simultaneously reducing environmentally degrading economic behaviors it also implies conceptualizations of sustainable and environmental entrepreneurship which detail how entrepreneurs seize the opportunities that are inherent in environmentally relevant market failures finally the article examines the ability of the proposed theoretical framework to transcend its environmental context and provide insight into expanding the domain of the study of entrepreneurship

incentive compatible imbalance settlement imbalance settlement markets are managed by the system operators and provide a mechanism for settling the inevitable discrepancies between contractual agreements and physical delivery in european power markets settlements schemes are mainly based on heuristic penalties these arrangements have disadvantages first they do not provide transparency about the cost of the reserve capacity that the system operator may have obtained ahead of time nor about the cost of the balancing energy that is actually deployed second they can be gamed if market participants use the imbalance settlement as an opportunity for market arbitrage for example if market participants use balancing energy to avoid higher costs through regular trade on illiquid energy markets third current practice hinders the market based integration of renewable energy and the provision of financial incentives for demand response through rigid penalty rules in this paper we try to remedy these disadvantages by proposing an imbalance settlement procedure with an incentive compatible cost allocation scheme for reserve capacity and deployed energy incentive compatible means that market participants voluntarily and truthfully state their valuation of ancillary services we show that this approach guarantees revenue sufficiency for the system operator and provides financial incentives for balance responsible parties to keep imbalances close to zero

optimal pricing in electrical networks over space and time an electrical system is modelled with a transmission network customers central generators and independent generators the system is subject to stochastic failures and stochastic demand parameters optimal spot prices are derived for the system they vary stochastically with space and time and depend on electrical load flow patterns the price difference between two locations or two voltage levels and the wheeling charge between them will change magnitude and sometimes sign over time as a function of events throughout the network current spatial pricing methods are significantly different from the spot price based methods derived here

does decentralization contribute to efficiency evidence from oecd countries abstractthis article provides evidence on the relationship between fiscal decentralization and technical efficiency we begin the first stage of this study with a data envelopment analysis to obtain technical efficiency estimates for a sample of 23 oecd countries over the period 1992 2009 in a second stage we explore the effects of fiscal decentralization and other control variables on technical efficiency the results including all the control variables reveal a statistically significant negative relationship between fiscal decentralization of public expenditure and technical efficiency

developing acquired foreign subsidiaries the experience of mnes in transition economies drawing on subsidiary evolution and dynamic capabilities research i test how development and growth of subsidiaries recently acquired in transition economies are affected by multinational enterprise mne and target capabilities these subsidiaries often lack important resources their cross border transfer enhancement and exploitation are problematic however data on 170 acquisitions in central and eastern europe confirmed the importance of the pre acquisition experiences of both target and mne for subsidiary growth although cultural differences moderated the predicted effects notably

federalism chinese style the political basis for economic success in china china s remarkable economic success rests on a foundation of political reform providing a considerable degree of credible commitment to markets this reform reflects a special type of institutionalized decentralization that the authors call federalism chinese style this form of decentralization has three consequences first it fosters competition not only in product markets but also among local governments for labor and foreign capital this competition in turn encourages local government experimentation and learning with new forms of enterprises regulation and economic relationships second it provides incentives for local governments to promote local economic prosperity finally it provides a significant amount of protection to local governments and their enterprises from political intrusion by the central government

optimal pricing of non utility generated electric power the importance of an optimal pricing policy for pricing nonutility generated power is pointed out in this paper an optimal pricing policy leads to benefits for all concerned the utility industry and the utility s other customers in this paper it is shown that reliability differentiated real time pricing provides an optimal nonutility generated power pricing policy from a societal welfare point of view firm capacity purchase and hence an optimal price for purchasing firm capacity are an integral part of this pricing policy a case study shows that real time pricing without firm capacity purchase results in improper investment decisions and higher costs for the system as a whole without explicit firm capacity purchase the utility makes greater investment in capacity addition in order to meet its reliability criteria than is socially optimal it is concluded that the nonutility generated power pricing policy presented in this paper and implied by reliability differentiated pricing policy results in social welfare maximizing investment and operation decisions

estimation of the inconvenience cost of a rolling blackout in the residential sector the case of south korea abstract south korea is experiencing a serious imbalance in electricity supply and demand which caused a blackout in 2011 the korean government has planned to perform a rolling blackout to prevent large scale blackouts when the electricity supply reserve margin reaches less than 1 million kw this study attempts to estimate the inconvenience cost of household customers from a rolling blackout by using survey data to this end we apply a contingent valuation method cvm to measure their willingness to pay wtp in order to avoid a rolling blackout i e the suspension of electricity supply in this study we estimate the inconvenience costs stemming from both an unannounced and an announced rolling blackout as a result we find that the inconvenience cost of a sudden rolling blackout is estimated at 3900 67 krw 3 56 usd per month per household while that of an announced rolling blackout stands at 3102 95 krw 2 83 usd this difference in costs shows that people place value in receiving prior notice of a blackout and that inconvenience costs of between 166 0 billion krw 151 6 million usd and 174 3 billion krw 159 2 million usd per year can be reduced nationwide by giving households advance notice of a planned rolling blackout

entrepreneurship developing countries and development economics new approaches and insights this paper provides an introduction to this special issue of small business economics dealing with the long postponed integration of entrepreneurship into the discipline of development economics and casting a formal light on the role of entrepreneurship in developing countries the paper departs from the premise that with more than a billion people living in absolute poverty it is of great practical importance to understand if and when entrepreneurship is a binding constraint on economic development and catching up in developing countries this in turn requires at least a deeper theoretical modeling of the entrepreneur in development economics this special edition contains a number of contributions emanating from the unu wider project on promoting entrepreneurial capacity which integrates the disciplines of entrepreneurship and development economics these contributions model and explore the role of the entrepreneur in key areas of concern for development economics such as structural change and economic growth income and wealth inequalities welfare poverty traps and market failures this introduction discusses and contextualizes these various contributions and their implications for further theoretical and empirical work

reward structures and the allocation of talent as relative rewards that different professions receive are a key factor in the allocation of talent what determines the reward structure of a society is an important question this paper develops an equilibrium model of the allocation of talent between productive and unproductive activities such as rent seeking the existence of rent seeking creates a negative externality on productive agents and implies that relative rewards are endogenously determined the same externality can also lead to the existence of multiple equilibria each with different reward structures in a dynamic setting allocations of past generations as well as expectations of future allocations influence current rewards and the society may get trapped in a rent seeking steady state equilibrium the paper also discusses how the non pecuniary reward structure can be influenced by equilibrium selection and a historical example that suggests the presence of a causal link from the allocation of talent to non pecuniary rewards

sub national tax autonomy and deficits empirical results for 27 oecd countries van rompuy p sub national tax autonomy and deficits empirical results for 27 oecd countries regional studies this paper explores the impact of the revenue mix on the budgetary performances of regions and local governments in 27 organisation for economic co operation and development oecd countries from 1995 to 2010 the main data are obtained from the oecd fiscal decentralization database that distinguishes tax income according to the degree of sub national control over own resources the empirical results point to a positive impact of autonomous tax income on sub national fiscal balances in contrast to tax sharing agreements however the positive budgetary influence of tax autonomy only prevails from a minimum share of autonomous taxes in sub national own revenue

nigerian consumer attitudes toward foreign and domestic products the nigerian consumer obsession with foreign made goods has had a detrimental effect on the domestic manufacturing industry this paper uses conjoint analysis to investigate the importance of a product s country of manufacture relative to other attributes in the nigerian consumer choice it was found that the country of manufacture is significantly more important than price and other product attributes in consumer preference nigerian consumers have a negative image of the made in nigeria label rating it lower than labels from more economically developed countries additional analyses indicate that the superior reliability and technological advancement of foreign products are the most important correlates of the nigerian consumer s likelihood to purchase foreign products implications for foreign marketers domestic governments and domestic manufacturers are discussed

political decentralization economic growth and regional disparities in the oecd ezcurra r and rodriguez pose a political decentralization economic growth and regional disparities in the oecd regional studies recent scholarly work has addressed whether decentralization affects economic growth and regional disparities by typically resorting to fiscal decentralization while disregarding political decentralization indices this article covers this gap by investigating the association between different political decentralization indices with two measures of economic performance changes in gross domestic product gdp per capita and in territorial inequalities the results suggest a lack of statistical relationship between political decentralization and economic growth regardless of how political decentralization is measured in the case of regional disparities the results depend on the index used and range from the absence of a link to a positive association between both factors ezcurra r and rodriguez pose a oecd

unbundling of transmission and ancillary services ii cost based pricing framework for pt i see ibid vol 12 no 2 1997 this paper presents a systematic framework for pricing transmission and ancillary services in competitive power markets this framework is based on the recovery of fixed and operating costs and it meets the traditional revenue requirements it is practical feasible easy to implement and to regulate it can be implemented with minimum transition cost this network flow dependent and nondiscriminatory framework is based on the decomposition approach presented in part i of this paper this decomposition forms an essential part of the proposed framework for usage based recovery of the fixed and operating costs the transmission system related fixed cost component is recovered from all transactions based on percentage utilization of the transmission system equipment the charge is based on the actual network power flows the ancillary service charge for a given transaction can be computed as the sum of the costs incurred at secondary generation for compensating the imbalance caused by that specific transaction the path providing function of the transmission grid is viewed as a true monopolistic service its pricing is cost based and charge for its use is usage based the generation based ancillary service supply can be made competitive its pricing is market based and charge for it is usage based a global overview of the proposed pricing strategy is analyzed in the context of other alternatives especially cost based methods a numerical example on a five bus system is given to illustrate the use of this pricing strategy

racing to the bottom or to the top decentralization revenue pressures and governance reform in china summary china s decentralization has been praised for promoting inter jurisdictional competition that incentivizes local officials to promote economic development the downside of decentralization is that it enables these same local authorities to slow or block implementation of centrally mandated governance reforms especially when these may negatively affect local development goals we suggest that china s fiscal system and promotion system have created mismatched incentives that encourage cash strapped local authorities to disregard central governance reforms specifically we show that cities with weaker revenue bases were slower to implement new centrally mandated environmental transparency regulations additional evidence points to a bifurcation in development strategies in fiscally strong cities increased foreign investment leads to greater compliance in fiscally weak cities foreign investment is associated with decreased disclosure suggesting they aim to promote local development by becoming pollution havens similarly high levels of pollution induce fiscally strong cities to increase pollution disclosures while the opposite holds in fiscally weak cities these findings imply that mismatched decentralization policies can undermine other important governance reforms even ones that might be expected to be complementary to decentralizing initiatives

reliability differentiated pricing of spinning reserve this paper derives the spinning reserve pricing policy implied by the reliability differentiated pricing model and illustrates the importance of such a pricing policy the purchase of additional spinning reserve capacity at the prices derived leads to benefits for the customers through reduced real and reactive power prices and improved reliability of the power system and for the power system as a whole through reduced societal costs and less investment in system reinforcements the magnitudes and behavior of the optimal prices for real and reactive spinning reserve are illustrated in two case studies one case study determines reliability differentiated prices of real and reactive power for a sample four area power system with and without spinning reserve purchase and the optimal purchase prices for both real and reactive power spinning reserve capacities the results of this case study show that when reliability differentiated pricing is extended to both real and reactive power reserve it leads to benefits for customers and the power system as a whole a second case study examines the locational dependence of optimal prices for real and reactive reserves on the operating status of equipment in the 24 bus ieee reliability test system it is concluded that even small amounts of reliable reserve capacity purchase from neighboring electric utilities can improve the reliability of the power system and lower expected real and reactive power prices leading to gains in social welfare

fiscal decentralization and development outcomes in india an exploratory analysis summary this paper attempts to quantify the impact of fiscal decentralization in india on its social infrastructure and on rural development overall the results in this paper indicate that government of india within a federal framework has been fostering development equitably across its states particularly through health and education expenditures aimed at improving human capital development in this context the importance of the two tier centre states decentralization should be noted however the third tier of local governance particularly the state rural local bodies decentralization has been dismal and has not achieved significant results across states which warrant the attention of the central and state governments

property tax revenues and multidimensional poverty reduction in colombia a spatial approach summary fiscal decentralization as an instrument to reduce poverty is an open debate that still takes place with little and contradictory empirical evidence regarding whether or not it has served the poor this paper focuses on analyzing the impact of municipalities per capita property tax revenues on multidimensional poverty in the colombian case this locally raised tax is used as an indicator of the state capacity that municipalities exercise when fiscal decentralization takes place to estimate its impact on poverty we control for the possible endogeneity biases that might affect this relationship while taking into account that multidimensional poverty exhibits strong spatial correlation among colombian municipalities we find statistically significant results that demonstrate a causal and diminishing effect of property tax revenues on the poverty headcount ratio and gap we also find that this effect has substantial spillovers across municipalities the findings of the paper highlight the need to strengthen subnational revenue systems through policy designs to increase locally raised revenues we simulate four different counterfactual scenarios to evaluate the potential effect of alternative policy designs on multidimensional poverty the results of these policy scenarios demonstrate that spatially differentiated policy schemes have greater effectiveness in reducing multidimensional poverty than geographically mute designs

the influence of decentralized taxes and intergovernmental grants on local spending volatility abstractthe influence of decentralized taxes and intergovernmental grants on local spending volatility regional studies this paper studies what affects the volatility of sub central public spending in 20 organisation for economic co operation and development oecd countries the evidence based on data from 1972 to 2007 shows that the volatility of intergovernmental grants from upper levels is positively associated with the volatility of local expenditure on the other hand the volatility of local tax revenues mainly that of property taxes exerts the opposite effect these findings suggest that making local governments rely more on grants than own tax revenues adversely affects their spending stability allowing them to levy autonomously taxes relying on responsive tax bases provides incentives to smooth their expenditure

modeling productive entrepreneurship in developing countries this paper develops a model of entrepreneurial start ups in an economy with costly firm creation costly entry to the skilled labor market and a mismatch between skilled workers and available jobs as prevailing in many developing countries it examines several mitigating policies such as improving the business environment reducing tax rates and cost of starting business and subsidizing entrepreneurial search and skilled employment to be effective policies need to target the most binding constraints to productive entrepreneurship when the constraints are on the side of firms search subsidies would be more effective in encouraging productive start ups than subsidies to skilled employment although fewer entrepreneurs may choose to operate in the formal sector than under the latter both types of subsidies should be phased out with reforms of the business environment and improved labor markets

the impact of corruption on entry strategy evidence from telecommunication projects in emerging economies with globalization and the growth in emerging economies multinational enterprises mnes now frequently confront challenges associated with corrupt governments already a growing body of research has demonstrated that corruption significantly reduces a countrys aggregate inflows of foreign direct investment through its effects on firm performance we move the analysis of corruption from aggregate financial flows toward managerial theory and practice by examining how firms adjust their strategy for entering foreign markets in corrupt environments and how different types of corruption affect firms choices building on institutional theory we predict that mnes will respond to pervasive and arbitrary corruption in a host country by selecting particular types of equity and nonequity modes of entry using data on 220 telecommunications development projects in 64 emerging economies we find that firms adapt to the pressures of corruption via short term contracting and entry into joint ventures we also find that the arbitrariness surrounding corrupt transactions has a significant impact on firms decisions in addition to the overall level of corruption in contrast to extant research we show that mnes use nonequity entry modes or partnering as an adaptive strategy to participate in markets despite the presence of corruption

decentralization and the composition of public expenditure in spain gonzalez alegre j decentralization and the composition of public expenditure in spain regional studies this paper examines the effects of fiscal decentralization on the economic distribution of public expenditures using panel data from the seventeen spanish regions 1984 2003 it is shown that fiscal decentralization is a crucial determinant of the share of the public budget devoted to capital the estimation run is based on a model in which the utility of the representative agent from the current public expenditure depends on the distance to the level of the administration that provides it that could be the cause why decentralized economies experience a higher share of current expenditure in the budget of the public administrations gonzalez alegre j la decentralisation et la structure des depenses publiques en espagne regional studies cet article cherche a examiner l impact de la fiscalite decentralisee sur la distribution economique des depenses publiques a partir des donnees provenant d une

public private entanglement entrepreneurship in lebanon s hybrid political order while the literature is clear that political influence and clientelism characterises the investment decisions of entrepreneurs and the performance of their firms when governance is weak it is less understood how governance systems and entrepreneurs interact particularly when governance is of a hybrid nature we address this issue in this paper by studying how entrepreneurs obtain access to electricity in lebanon showing that the hybrid political order imposes a high cost on electricity we furthermore find that a hybrid political order channels entrepreneurial talent into lobbying and bribery the key constraint that emerges from the hybrid political order in this case is the corrupt organisation of governance of the electricity sector this results in higher prices because bribes for contracts have to be earned back in entrenchment of oligopolies because contracts often come with political protection

micro entrepreneurship and subjective well being evidence from rural bangladesh abstract microcredit has long been hailed as a powerful tool to promote livelihoods and reduce poverty through entrepreneurship however its impacts on people s subjective well being remain underexplored we present a unified theoretical framework for analyzing the effect of microcredit enabled entrepreneurship on overall life satisfaction a key manifestation of subjective well being empirically we apply an instrumental variable approach to a unique census like household survey conducted in three villages of bangladesh in 2013 in spite of having no direct effects we find that microcredit borrowing has an indirect negative effect on overall life satisfaction through increased worry on a positive note we find that female micro borrowers experience an increase in satisfaction with financial security and achievement in life we also provide evidence that micro borrowers with higher levels of assets experience an increase in satisfaction with financial security

public budget composition fiscal de centralization and welfare we study the optimal degree of fiscal decentralization in a dynamic federal economy where governments decide on budget size and its allocation between public education and infrastructure spending we find that full centralization of tax and expenditure policies is optimal when infrastructure productivity is similar across regions when differences are not too large partial centralization is optimal with strong differences full decentralization becomes optimal national steady state output tends to be highest under full decentralization we provide a justification for the mixed evidence regarding the oates conjecture by showing that full dominates partial decentralization despite being inferior to complete decentralization on etudie le degre optimal de decentralisation fiscale dans une economie federale dynamique ou les gouvernements decident de la taille du budget et de son allocation entre les depenses en education publique et en infrastructures on decouvre qu une pleine centralisation des taxes et des depenses est optimale quand la productivite des infrastructures est la meme dans toutes les regions quand les differences ne sont pas trop importantes une centralisation partielle est optimale en presence de fortes differences la pleine decentralisation est optimale la production nationale en regime permanent tend aetre la plus elevee quand il y a pleine decentralisation on fournit une justification pour les resultats mixtes obtenus quant a la conjoncture de oates en montrant que la pleine decentralisation est preferable a la decentralisation partielle meme si elle est inferieure a la decentralisation complete

directly unproductive profit seeking dup activities this paper propses directly unproductive profit seeking dup activities as a general concept that embraces a wide range of recently analyzed economic activities including the subset of rent seeking activities considered by krueger it then proceeds to provide a synthesis and generalization of the welfare theoretic analysis of such activities by developing a fourfold categorization of cases depending on the levels of distortions before and after the dup activity thus a unification and overview of the subject are achieved

fiscal decentralization and economic growth abstract fiscal decentralization may indeed have a direct impact on economic growth but the theoretical underpinnings for this relationship remain largely undeveloped a fair summary of the empirical search for a direct relationship between fiscal decentralization and economic growth is that it remains an open question much less attention has been devoted in the literature to the indirect channels through which fiscal decentralization may affect economic growth we argue that much work remains to be done before policy advisors and decision makers can formulate and implement decentralization programs on the basis of improving the rate of economic growth

a new data set measuring income inequality this article presents a new data set on inequality in the distribution of income the authors explain the criteria they applied in selecting data on gini coefficients and on individual quintile groups income shares comparison of the new data set with existing compilations reveals that the data assembled here represent an improvement in quality and a significant expansion in coverage although differences in the definition of the underlying data might still affect inter temporal and international comparability based on this new data set the authors do not find a systematic link between growth and changes in aggregate inequality they do find a strong positive relationship between growth and reduction of poverty

on the determinants of fiscal centralization theory and evidence abstract this paper presents a simple model that unifies most of the results of the literature on fiscal federalism the model describes an economy characterized by two levels of government one public good and a private good the predictions of the model are tested by using a new set of measures of fiscal centralization the main findings are that country size income per capita ethnic fractionalization and level of democracy are negatively correlated with the degree of fiscal centralization the model is tested using ols tobit and semi parametric estimators the paper also shows that the variables included in the regression are helpful in the prediction of changes in the level of centralization

fiscal decentralization and economic growth reconsidered recent studies examining the relation between fiscal decentralization and economic growth have failed to take account of the extent of the independent taxing powers available to sub national governments and thus have substantially overstated the degree of effective decentralization results from a cross section study of 19 oecd member countries suggest that when the measure of fiscal decentralization is limited to the revenues over which sub national governments have full autonomy its impact on economic growth is not statistically significant

priority service pricing investment and market organization tingent forward delivery contracts offered by a seller each customer s selection of one contract from the menu determines the customer s service order or priority in each contingency the seller rations supplies by serving customers in order of their selected priorities until the supply is exhausted or all customers are served various forms of priority service are widely

promise and pitfalls in the use of secondary data sets income inequality in oecd countries as a case study this paper examines the role of secondary data sets in empirical economic research taking the field of income distribution as a case study we illustrate problems faced by users of secondary statistics showing how both cross country comparisons and time series analysis can depend sensitively on the choice of data after describing the genealogy of secondary data sets on income inequality we consider the main methodological issues and discuss their implications for comparisons of income inequality across oecd countries and over time the lessons to be drawn for the construction and use of secondary data sets are summarized at the end of the paper

the power to tax analytical foundations of a fiscal constitution preface 1 taxation in constitutional perspective 2 natural government a model of leviathan 3 constraints on base and rate structure 4 the taxation of commodities 5 taxation through time income taxes capital taxes and public debt 6 money creation and taxation 7 the disposition of public revenues 8 the domain of politics 9 open economy federalism and taxing authority 10 toward authentic tax reform prospects and prescriptions epilogue notes selected bibliography index

reliability differentiated real time pricing of electricity optimal resource planning and power dispatch models from a societal welfare point of view imply an optimal pricing policy which is referred to here as reliability differentiated real time pricing or in short reliability differentiated pricing this pricing scheme combines real time pricing and priority pricing with reliability differentiation based on consumer outage costs this pricing policy is analyzed the model used in the analysis is developed with particular emphasis on consumer behavior and welfare effects the implications of the model for the pricing of spinning reserve and firm capacity as well as for revenue reconciliation are examined it is concluded that such a pricing scheme will in general result in greater attainable welfare than either the real time pricing or priority pricing paradigms moreover it results in the maximum attainable welfare for the system with revenue reconciliation and provides an optimal pricing scheme for spinning revenue and firm capacity

entrepreneurship and advancing national level economic efficiency we explore the channels under which entrepreneurship fosters productivity by disentangling its impact on national level economic efficiency and find that more entrepreneurship in aggregate is not always good for economic growth and most importantly identifying the form and activity of entrepreneurship is critical for policy makers to better manage changes in their economies our national level results also suggest that the new product entrepreneurship and to a lesser extent improvement driven opportunity entrepreneurship both significantly contribute to the improvement of national level efficiency however both measures would benefit from further development and it seems a higher coincidence of both is more likely to advance a nation s economic efficiency

decentralisation as an incentive scheme recent changes have introduced more decentralization in a number of traditionally centralized countries 1 in the case of france it is sometimes claimed that the 1982 1983 reform of subcentral government is of historical importance although the principles of that reform are not contested any more by the new majority elected in 1986 opinions still differ on a number of policy issues some of the issues are presented in this introductory section but the main purpose of this paper is not to expose or discuss in detail the problems of decentralization in france as argued in the second part of the introductory section the theoretical framework in which the policy issues of decentralization are usually discussed by economists is somewhat unsatisfactory in particular when applied to unitary states such as britain or france the bulk of the paper is devoted to the exploration of a different approach to decentralization it is not purported however that this approach could completely replace the more traditional one consequently when in the concluding section we return briefly to the policy issues identified here this is to be read as a preliminary attempt to evaluate the relevance of the reasoning developed in the paper

distributive justice corruption and entrepreneurial behavior this article introduces equity theory to the economic growth literature to examine whether a relationship exists between perceptions of distributive justice and the productivity of entrepreneurial behavior using survey responses from 317 entrepreneurs in india we find that productive entrepreneurship is positively related to distributive justice perceptions but negatively related to perceptions that corruption is pervasive in contrast nonproductive forms of entrepreneurship are negatively related to distributive justice but positively related to corruption unexpectedly the findings also show that corruption mediates the relationship between distributive justice and legal entrepreneurial behavior while distributive justice mediates the relationship between corruption and illegal entrepreneurial behavior we conclude with a discussion of the study s findings and their implications for entrepreneurship and economic growth

economic performance through time prize lecture to the memory of alfred nobel december 9 1993 this abstract was borrowed from another version of this item

predator or prey parasitic enterprises in economic development abstract in many developing and transition economies mafia like activities are rampant extortion and other forms of predation lower profitability in private businesses and distort investment incentives incorporated in a model of industrialization bimodal club convergence may result economies may get stuck in a predators club characterized by a vicious cycle of poverty and predation societies with a low flow of new entrepreneurs are especially vulnerable to predation and never get out of this club poor societies with a high flow of new entrepreneurs however may grow out of the trap and join the rich producers club

fiscal decentralisation and idc economic growth an empirical investigation the impact of fiscal decentralisation on ldc economic growth and development is widely debated in the development literature notwithstanding this there has been little attempt to test systematically this relationship accordingly in this note we present an empirical examination of the relationship between the level of fiscal decentralisation and economic growth rates across a sample of twenty three ldcsfrom 1974 to 1991 we fail to find however any strong systematic relationship between the two among our sample of ldcs

entrepreneurship and human development a capability approach abstract we provide a formal model of entrepreneurship in human development the framework is provided by the capabilities approach ca hence we extend not only the conceptualisation of entrepreneurship in development but the reach of the ca into entrepreneurship from a ca view entrepreneurship is not only a production factor or a means to an end as is often taken to be the case by economists but also an end in itself entrepreneurship can be a human functioning and can contribute towards expanding the set of human capabilities through being both a resource and a process our model shows however that entrepreneurship is not automatically a functioning where it is a necessity it stops being a valued functioning the model also shows that even when entrepreneurship is valued entrepreneurs may often not match their ideas with suitable opportunities policy implications are discussed

decentralization and corruption evidence across countries the relationship between decentralization of government activities and the extent of rent extraction by private parties is an important element in the recent debate on institutional design the theoretical literature makes ambiguous predictions about this relationship and it has remained virtually unexamined by empiricists the authors make a first attempt at examining the issue empirically by looking at the cross country relationship between fiscal decentralization and corruption as measured by a number of different indices their estimates suggest that fiscal decentralization in government spending is significantly associated with lower corruption moreover they find that the origin of a country s legal system for example civil versus common legal code performs extremely well as an instrument for decentralization the estimated relationship between decentralization when so instrumented and corruption is even stronger the evidence suggests a number of interesting areas for future work including investigating whether there are specific services for which decentralized provision has a particularly strong impact on political rent extraction and understanding the channels through which decentralization succeeds in keeping corruption in check

surfeiting the appetite may sicken entrepreneurship and happiness do the presence and nature of entrepreneurship impact on national happiness and are nations with happy citizens better for entrepreneurs to start new businesses to provide tentative answers we survey the literature on entrepreneurship and subjective well being and use various data sources to uncover the first evidence of the relationship between entrepreneurship and happiness at the country level we find that opportunity motivated entrepreneurship may contribute to a nation s happiness but only to a certain point at which the effects of happiness begin to decline moreover our results suggest that a nation s happiness affects early stage opportunity driven entrepreneurial activity

is public expenditure productive abstract this paper considers the relationship between aggregate productivity and stock and flow government spending variables the empirical results indicate that i the nonmilitary public capital stock is dramatically more important in determining productivity than is either the flow of nonmilitary or military spending ii military capital bears little relation to productivity and iii a core infrastructure of streets highways airports mass transit sewers water systems etc has most explanatory power for productivity the paper also suggests an important role for the net public capital stock in the productivity slowdown of the last fifteen years

decentralization and inflation commitment collective action or continuity do political and fiscal decentralization make it easier or harder to control inflation statistical analysis of average annual inflation rates in a panel of 87 countries in the 1970s and 1980s found no clear relationship between decentralization and the level of inflation political decentralization however does appear to reduce change in countries relative inflation rates over time by creating additional veto players federal structure may lock in existing patterns of monetary policy whether inflationary or strict among the mostly developed countries that started with low inflation inflation tended to increase more slowly in federations than in unitary states among the mostly developing countries that started with high inflation inflation tended to increase faster in the federations there is evidence that political decentralization locks in a country s degree of practical central bank independence whether high or low and the relative hardness or softness of budget constraints on subnational governments

corruption taxation and natural resource management in tanzania abstract democratic decentralisation of natural resource management requires careful attention to the distribution of power devolved accountability and institutional design however even if all these elements are well crafted failures in efficiency equity and service delivery are possible because of the way institutions of government are lived out in the practice of day to day life this paper presents a detailed account of the performance of local government in tanzania it demonstrates remarkable deficiencies in the workings of local government taxation and service delivery despite the well structured downwardly accountable nature of local government it considers the implications of these failures for calls for community based conservation and the importance of good institutional design in effective decentralisation

introduction to special issue of small business economics on female entrepreneurship in developed and developing economies research into entrepreneurship has for many years been interested in the differences in rate of participation and performance by female entrepreneurs the motivation for considering female entrepreneurship in both developing and developed countries arises from our increasing understanding of the significance of the role of women in creating running and growing businesses as a fundamental driver for economic growth this special issue examines the reasons for differences in gender participation across levels of development using empirical studies

an institutional view of china s venture capital industry explaining the differences between china and the west abstract institutional theory argues that institutions in general and culture in particular shape the actions of firms and individuals in a number of subtle but substantive ways the theory has been used to explain a number of significant and substantive managerial differences found in different parts of the world to date the examination of venture capital outside the us and europe however has been rather limited institutional theory also suggests that there would be differences in how venture capital may operate in other parts of the world such as asia where the culture is substantially different from the west based on interviews with 36 venture capitalists in 24 venture capital firms investing in china this exploratory research finds that china s institutional environment creates a number of significant differences from the west the article discusses the impact of these findings on future research on asian venture capital theory development and the activities of venture capital professionals in that region

government size decentralization and growth empirical evidence from italian regions abstractthe aim of this study is to empirically assess the relationship among government size decentralization and economic growth in italian ordinary regions the empirical analysis based on a panel dataset on italian regions provides evidence in support of the existence of an inverted u shaped relationship between public expenditure and economic growth that depends on the degree of fiscal decentralization in particular according to our estimates on the specific italian case the optimal degree of decentralization is around 32 while the optimal government size value is approximately 52

the social organization of conspiracy illegal networks in the heavy electrical equipment industry we analyze the social organization of three well known price fixing conspiracies in the heavy electrical equipment industry although aspects of collusion have been studied by industrial organization economists and organizational criminologists the organization of conspiracies has remained virtually unexplored using archival data we reconstruct the actual communication networks involved in conspiracies in switchgear transformers and turbines we find that the structure of illegal networks is driven primarily by the need to maximize concealment rather than the need to maximize efficiency however network structure is also contingent on information processing requirements imposed by product and market characteristics our individual level model predicts verdict guilt or innocence sentence and fine as functions of personal centrality in the illegal network network structure management level and company size people of the same trade seldom meet together but the conversation ends in a conspiracy against the public or in some diversion to raise prices

why firms engage in corruption a top management perspective this study builds upon the top management literature to predict and test antecedents to firms engagement in corruption building on a survey of 341 executives in india we find that if executives have social ties with government officials their firms are more likely to engage in corruption further these executives are likely to rationalize engaging in corruption as a necessity for being competitive the results collectively illustrate the role that executives social ties and perceptions have in shaping illegal actions of their respective firms

the impact of fiscal decentralization on the composition of public expenditure panel data evidence from italy grisorio m j and prota f the impact of fiscal decentralization on the composition of public expenditure panel data evidence from italy regional studies this paper is an original contribution to the understanding of the relationship between fiscal decentralization and public expenditure composition it studies the effects of the ongoing decentralization process in italy on the share of different categories of public spending in total expenditure of the italian regional administrations over the period 1996 2008 the data used allow one to go beyond the usual distinction between current and capital expenditures and to present a functional classification of public expenditures through a panel data analysis the paper shows that the level of decentralization influences the composition of expenditure

grit and self employment a multi country study blending the literatures on grit and self employment we propose the role of grit in separating the self employed from the employed based on a sample of 13 210 respondents from nine countries our results indicate that not only is grit related to self employment but also grit is more strongly related to self employment for risk takers females and younger individuals the findings are robust controlling for several individual characteristics and alternate specifications and have implications for the broader literature on self employment

fiscal decentralization and intergovernmental fiscal relations a cross country analysis abstract fiscal decentralization consists primarily of devolving revenue sources and expenditure functions to lower tiers of government by bringing the government closer to the people fiscal decentralization is expected to boost public sector efficiency as well as accountability and transparency in service delivery and policy making decentralization also entails greater complexity in intergovernmental fiscal relations and coordination failures in fiscal relations are likely to have a bearing on fiscal positions nationally and subnationally evidence provided in this paper for a sample of 30 countries suggests that coordination failures in intergovernmental fiscal relations are likely to result in a deficit bias in decentralized policy making particularly in the case of developing countries which may not meet important requirements for successful decentralization

fiscal federalism decentralization and economic growth a meta analysis the theoretical literature on fiscal federalism has identified several channels through which government decentralization could affect economic growth much of the literature focuses on the efficiency aspects of a decentralized provision of public services but decentralization may also increase growth by raising the ability of the political system to innovate and carry out reforms in contrast some authors argue that decentralization increases corruption and government inefficiency and thus may diminish growth given this theoretical ambiguity several studies have attempted to identify the effect of decentralization on economic growth empirically over the last two decades we review and conduct a meta analysis of this empirical literature based on our analysis we point out open questions and discuss possible ways to answer them jel h77 043 c52 i introduction building on various theoretical contributions an empirical literature analyzing the effect of fiscal decentralization on economic growth has emerged since the 1990s the relevant studies vary as to whether they use cross sectional time series or panel data as to whether they rely on cross country or single country samples and they vary in estimation methods decentralization measures and sample composition given the size and heterogeneity of the empirical literature it is useful to review the individual studies and summarize their main findings conducting a comprehensive search we identify 31 published and unpublished studies on the effect of fiscal decentralization on economic growth each of these studies estimates several models resulting in over 400 individual estimates while we first review these studies in a traditional manner our main aim is to analyze these estimates quantitatively specifically the main contribution of this article is to offer a meta analysis of the empirical findings on fiscal decentralization and economic growth a meta analysis is a useful methodology in our context as it is difficult to obtain clear cut conclusions with only a traditional survey of empirical literature the individual studies vary substantially in their characteristics and correspondingly in the findings they report by conducting a meta analysis however we can identify how the idiosyncratic characteristics of a particular study relate to its findings the meta analysis approach thus addresses model uncertainty with regard to each individual estimate in addition it can also serve as a partial response to the methodological critique of empirical research on fiscal decentralization by rodden 2004 as it helps to clarify the quantitative effects of different decentralization measures and estimation techniques finally as meta analytical techniques are rarely used in economics we also aim at contributing to the further establishment of this methodology stanley 2001 2008 the next section briefly discusses the various theoretical arguments as to why fiscal decentralization may affect economic growth we then provide a short traditional survey of the empirical studies in section iii we review this literature more systematically and quantitatively in section iv in section v we report the results of meta regressions and discuss how the idiosyncratic characteristics of a given study are related to its specific findings finally section vi provides a discussion of the results and some conclusions ii how could fiscal federalism affect economic growth theoretical approaches within the framework of the solow swan model solow 1956 swan 1956 fiscal federalism may be associated with a different level of efficiency in governance than unitary systems leading to a different value of solow s a the level of technology a regime change toward federalism would then be associated with temporarily different growth rates and eventually different levels of income but not with persistent growth differences

institutions transaction costs and economic growth this essay develops a theoretical framework which explores the historical obstacles to economic growth these obstacles are examined in the context of the political economic institutional framework of economies in history and consequent transaction costs that determine economic performance and growth the essay concludes with specific suggestions for the study of economic growth

the impact of fiscal decentralization on economics performance in high income oecd nations an institutional approach this paper examines the impact of public sector decentralization on per capita income controlling for differences in institutional arrangements among countries panel data regressions on a sample of observations from 20 high income oecd nations spanning the years 1972 to 2005 indicate that decentralization is positively related to income the empirical analysis shows that institutions consistent with economic freedom enhance the positive income effects of decentralization thus the impact of public sector decentralization is dependent upon a nation s institutional environment

corruption governance investment and growth in emerging markets the article investigates the potential impact of corruption on economic growth by examining the effect that corruption may have on several significant determinants of economic growth namely investment in human private and public capital and on governance our theoretical approach allows for corruption to influence economic growth directly and indirectly through different investment and governance channels all previous empirical work on this issue has been based on national income and product accounts nipa data which do not normally break down gross domestic investment into its private and public sector and if they do they misclassify investment by public enterprises as private investment potentially biasing empirical findings in this article we use a data set from the international finance corporation that bypasses these problems we find that the impact of corruption on the level of public investment appears to be more ambiguous than it has been found in the previous literature we however

determinants of expenditure decentralization evidence from china summary this study is the first attempt to examine the determinants of expenditure decentralization at sub provincial levels in china the chinese central government gives detailed guidelines to local governments on public finance but ironically their expenditure assignment is far from being well regulated differences in fiscal decentralization on the expenditure side are enormous among local governments employing a panel dataset of 1995 2006 we provide empirical evidence that transfer dependency negatively affects expenditure decentralization in chinese local governments it suggests that intermediate governments i e provincial governments may have grabbed central grants for self interests

phase transitions and emergence of entrepreneurship the transformation of chinese soes over time abstract configurational theory has been a key building block of organizational research an understanding of how certain configurations evolve over time especially during discontinuous changes such as economic transition has been largely a missing link in the literature considering economic transition as a process rather than an outcome this study examined strategic adaptations among chinese soes in two phases 1990 and 2002 findings from two surveys and from interviews revealed that environmental characteristics changed significantly over time and that firms responded with more entrepreneurial strategies aimed at firm growth rather than at satisfying state planners such changes were related to improved performance the study closes by offering implications for research and practice

fiscal decentralization and economic growth a cross country study abstract we use a panel data set of 46 countries over the 1970 1989 period to investigate the relationship between fiscal decentralization and economic growth we find a negative relationship between fiscal decentralization and growth in developing countries but none in developed countries several explanations are offered for our findings

federal state and local governments evaluating their separate roles in us growth we use us county level data from 1970 to 1998 to explore the relationship between economic growth and government employment at three levels federal state and local increases in federal state and local government employments are all negatively related to economic growth we find no evidence that government is more efficient at lower levels while we cannot separate out the productive and redistributive services of government we document that the county level income distribution became slightly more unequal from 1970 to 1998 we conclude that a release of government employed labor inputs to the private sector would be growth enhancing

fiscal incentives and policy choices of local governments evidence from china abstract this paper examines how fiscal incentives affect the policy choices of local governments in the context of china based on exogenous changes in the intergovernmental revenue sharing scheme we construct a simulated instrumental variable to resolve the endogeneity problem we find evidence that local governments shifted their efforts from fostering industrial growth to urbanizing china i e to developing the real estate and construction sectors when their retention rate of enterprise tax revenue was reduced the increase from the new revenue source compensated for half of the losses in revenue that resulted from the reassignment of fiscal rights the reassignment had also the effect of retarding the industrial growth of domestically owned firms in particular

swords or plowshares a theory of the security of claims to property this paper develops a general equilibrium model of the allocation of resources among appropriative and productive activities the model emphasizes the distinction between offensive weapons which are the instruments of predation and fortifications which provide defense against predation the analysis of this model shows how the equilibrium security of claims to property is determined the analysis focuses on the possibility of a nonaggressive equilibrium in which no resources are allocated to offensive weapons and claims to property are fully secure we also analyze the complex relation between economic welfare and the security of claims to property we find for example that a relatively poor agent could be better off in an equilibrium with less secure claims to property

the composition of public expenditure and economic growth abstract noting that the literature has focused on the link between the level of public expenditure and growth we derive conditions under which a change in the composition of expenditure leads to a higher steady state growth rate of the economy the conditions depend not just on the physical productivity of the different components of public expenditure but also on the initial shares using data from 43 developing countries over 20 years we show that an increase in the share of current expenditure has positive and statistically significant growth effects by contrast the relationship between the capital component of public expenditure and per capita growth is negative thus seemingly productive expenditures when used in excess could become unproductive these results imply that developing country governments have been misallocating public expenditures in favor of capital expenditures at the expense of current expenditures

venture capitalists decision policies across three countries an institutional theory perspective this paper examines the influence of economic institutions upon venture capitalists vcs decision policies we conducted policy capturing experiments on 119 vcs across three countries representing distinct economic institutions us mature market economy south korea emerging economy and china transitional economy results show that vcs in rules based market economies us rely upon market information to a greater extent than vcs in emerging economies korea and chinese vcs transitional economy weight human capital factors more heavily than either us or korean vcs findings suggest that although professional institutions may dictate which information is included in vc decision policies the extent to which that information is emphasized is determined partly by the economic institution in which the decision maker operates journal of international business studies 2007 38 691 708 doi 10 1057 palgrave jibs 8400291

of free markets and a secular mind the value of economic decentralization and individual secular values in entrepreneurship building upon hayek s seminal work regarding the benefits of market decentralization in this study we examine the complementary role of an individual s secular values in further explaining the association between decentralization of economic affairs entrepreneurial activity and self employment we argue that studies on hayek s notion of decentralization may be incomplete in their conceptualization without a transition to individual morality based on more secular values we consider decentralization of economic affairs and secular values to explain why entrepreneurial activity differs across countries in study 1 we find that the decentralization of economic affairs increases the odds of being an entrepreneur in a startup but does not influence the likelihood of owning managing a business or perceptions related to the opportunity to start a business in study 2 we find evidence of mixed support for decentralization and self employment however with meaningful effect sizes but with marginal significance we find that an individual s secular values complement the association between decentralization of economic affairs and self employment the findings are robust to alternate specifications by demonstrating the role of secular values in strengthening decentralization we lay the foundation for melding economic perspectives with the freedom from religious ethos as an important consideration for entrepreneurial activity however the mixed effects of decentralization on different modes of entrepreneurship also call into question the value of decentralization in modern economies plain english summary higher levels of individual secular values even by a small amount enhance the benefits that economic decentralization can have on entrepreneurial activity in this paper we use a two study approach to examine how individual secular values might influence the effects of economic decentralization on entrepreneurial activity in study 1 we find that the decentralization of economic affairs increases the odds of being an entrepreneur in a startup but does not influence the likelihood of owning managing a business or individual perceptions related to existing opportunities to start a business in study 2 we find evidence of mixed support for the effects of economic decentralization on self employment however we find some evidence suggesting that an individual s secular values complement the association between decentralization of economic affairs and self employment thus the principal implication of this study is that policymakers should take into consideration the overall secular values present in society when making decisions regarding economic decentralization particularly with regard to understanding the potential effects that decentralization could have on entrepreneurial activity

fiscal decentralization and economic growth in the oecd what impact if any does fiscal decentralization fd have on economic growth further investigations of the inter relationships between fd and economic growth are timely given that government decentralization remains at the forefront of many organization for economic cooperation and development oecd policy agendas this study incorporates a range of measures of fd to better account for the direct impact of different levels of subnational fiscal autonomy on economic growth the analysis also considers the impact of previously omitted public sector decentralization variables that provide further indication of the extent to which subnational governments sng are closer to the people and potentially better able to account for local preferences in fiscal decision making whilst little evidence of a direct relationship between fd and output growth is found some evidence is found to suggest that federal systems tend to have lower growth rates than do unitary states independent of their degree of decentr

optimal departures from marginal cost pricing focuses on departures from marginal cost pricing optimal allocation or resources level of tax revenue that will be collected by the government theorems developed for resource allocation ebsco

government in transition abstract the speed of economic reforms is not the only important determinant of the success of the transition to a market economy the transition of government from a communist state to an institution supporting a market economy is as critical survey evidence shows that russia lags significantly behind poland in the transition of its government which may account for its inferior economic performance despite adopting similar economic reforms i argue that the lack of turnover of old communist politicians and the creation of inappropriate electoral and fiscal incentives for these politicians may account for the poor performance of the russian government and suggest some strategies for improving the situation

entrepreneurs creativity and firm innovation the moderating role of entrepreneurial self efficacy there are several studies in entrepreneurship investigating determinants of innovation outcomes in smes although entrepreneurs entrepreneurial creativity is often seen as a prerequisite previous research indicates it is not an exclusive determinant of innovation we use theoretical logics of social cognitive theory and innovation theory to develop a conceptual model of entrepreneur s creativity self efficacy and innovation outcomes the model is then tested on a large sample of small and medium firms from two distinct economies the united states and slovenia empirical findings partially support the proposed moderation effects of entrepreneurial self efficacy but with the same variations between countries the implications of these results in relation to entrepreneurship theory and practice are discussed