on the determinants of direct foreign investment evidence from east and southeast asia abstract a model of derived demand for foreign capital by a multiple product monopolist is estimated for seven asian countries direct foreign investment dfi inflows are estimated to be less elastic with respect to the costs of capital including taxes than to wages and to be more elastic with respect to aggregate demand in export markets than domestic demand the output deterrent effect of higher wages is estimated to outweigh any substitution toward greater capital intensity the estimates also suggest that dfi rises with greater costs within the investors home countries no similar effect occurs with respect to costs in rival host countries and concerns for political stability have overlain economic determinants

extrinsic uncertainty and the informational role of prices abstract we study a financial economy with finitely many states of private information there are two agents informed and uninformed we define agents expectations on future equilibrium prices as a probability distribution over k distinct values i e we introduce k extrinsic events we show that there are open sets of economies with nonrevealing and also with partially revealing equilibria for an appropriate choice of self fulfilling price expectations observable equilibrium prices are signal invariant journal of economic literature classification numbers d52 d82 d84

an econometric analysis of u s foreign direct investment this paper constructs a theoretical model of foreign direct investment and examines the extent to which the model can explain the level of outward direct investment by u s companies over the last two decades the authors find that market size and factor costs both labor and capital are important factors in the investment decision instrumental variable estimation is used to demonstrate that the expectation of short run fluctuations in the dollar also influences the timing of investment copyright 1996 by mit press

in search of smoking guns what makes income inequality vary over time in different countries we investigate the forces affecting the distribution of income by analyzing an unbalanced panel of information for 16 industrialized countries for the years 1966 through 1994 income inequality is measured with the gini coefficient of equivalent disposable income individuals are the unit of analysis the statistical analysis uses panel methods the results suggest that many factors affect the development of income inequality some factors are strictly economic a decreased industrial sector generally fosters inequality and some support is found for the view that increased trade of manufactured goods from developing countries is also a factor other forces are outside a strictly defined market sphere low inequality is found when a large proportion of the labor force belongs to a trade union and also when there is a large public sector in addition demographic circumstances are important since the proportion of the population under age 15 has a positive effect on inequality we find however no association between the unemployment rate and inequality

a class of monotone economies in which rational expectations equilibria exist but prices do not reveal all information abstract some economies having excess demands which depend monotonically on agents information signals are examined if there are no multiple market clearing prices then these economies have strict rational expectations equilibria in which equilibrium prices alone do not transmit all information

the effect of outward investment to china on domestic r d a two hurdle model with endogenous odi outward direct investment odi and domestic r d are interrelated but empirical evidence is affected by the nature of a firm s data which are heavily censored firm data contain a firm s yes no decision to invest in china yes no decision of r d and the decision of r d intensity we thus adopt a two hurdle model and allow the china investment decision to be endogenous in an r d model in order to examine the effect of odi in china on domestic r d investment in taiwan s electronics industry in the model a two equation simultaneous subsystem is formed in which three regression equations are specified a decision of r d intensity and a yes no decision of location to conduct r d together with a yes no decision to invest in china our results indicate that china investment and r d intensity are positively related such that odi in china helps to raise significantly a firm s r d intensity as compared to the estimate if the endogeneity of china investment and the nature of data were not properly accounted

rational expectations in microeconomic models an overview abstract this paper is an expository introduction to several topics of current research in the general equilibrium theory of rational expectations more specifically we discuss the existence of exact and approximate rational expectations equilibria the implementation of equilibria the behavior of learning and smoothing processes by which traders construct expectations from repeated observations of the market and the lagged use of the information revealed by prices in an intertemporal sequence of markets the purpose of this discussion is to introduce papers on these topics appearing in the journal of economic theory symposium on rational expectations in microeconomic models

the political economy of government domestic expenditure in the affluent democracies 1960 80 despite the large number of studies of the determination of government expenditure in the affluent democracies most students of the subject admit that we know relatively little about the complex dynamics of spending change using multiple regression analyses of changes in nonmilitary outlays over the years 1960 to 1973 and 1973 to 1980 this study attempts to remedy some of the problems in the literature by providing new tests of several old hypotheses by introducing and testing several relatively new hypotheses and by evaluating such propositions in the context of an integrated theoretical framework and of analyses that span two distinct political economic eras results suggest that the dynamics of domestic expenditure change are partially conditioned by macroeconomic and political environments of particular eras overall the self interests and ideological preferences of policymakers the institutional and extrainstitutional political action of policy relevant groups and needs for state assistance emerge as principal sources of changes in domestic expenditure

trickle down or transfers postwar determinants of family income inequality the expansion of social welfare has been promoted as one means of equalizing the distribution of economic well being macroeconomic expansion has been touted as an alternative strategy for improving the lot of the poor focusing on the postwar era this paper provides an empirical assessment of these two competing theories of income redistribution for female headed families and unrelated men and women the growth of public transfers is seen to be the major force behind a reduction in income disparities only husband wife families and men living apart from kin seem to have experienced any distributional impact of business cycles

finance and income inequality in kazakhstan evidence since transition with policy suggestions abstractkazakhstan gained independence in 1990 and has undergone significant changes in economic social and trade conditions since then we analyse the effects of financial development on income inequality in kazakhstan incorporating economic growth foreign investment education and the role of democracy as the drivers we establish that income inequality in kazakhstan is impaired by financial development in summary we send three messages for policy purposes first strengthening financial sector is necessary to close the gap between haves and have nots second attracting fdi beyond the hydrocarbon sector is necessary to alleviate inequality finally adaptation of education system to the new social and economic environment would help in improving income distribution

patterns of internationalisation of corporate technology location vs home country advantages given the trends towards increasing globalisation of markets and of production the globalisation of technology remains a subject of considerable interest to analysts and policy makers in the 1990s this paper provides some new empirical observations for debate and discussion on the patterns of technological activities of large firms outside their home countries it is based on a systematic analysis of the us patenting activities of 220 of the most internationalised firms in terms of their technology in the 1990s although firms are active outside their home countries in the high technology fields such as computers pharmaceuticals telecommunications image and sound and materials quite a sizeable proportion of their foreign activities are concerned with process and machinery technologies moreover a comparison of the technological advantage of the company at home and the advantage of the location shows that in a large majority of cases firms tend to locate their technology abroad in their core areas where they are strong at home these results suggest that adapting products and processes and materials to suit foreign markets and providing technical support to off shore manufacturing plants remain major factors underlying the internationalisation of technology they are also consistent with the notion that firms are increasingly engaging in small scale activities to monitor and scan new technological developments in centres of excellence in foreign countries within their areas of existing strength however there is little evidence to suggest that even these most internationalised firms routinely go abroad to compensate for their weakness at home

elections keynes bureaucracy and class explaining u s budget deficits 1961 1978 the determination of u s federal budget deficits and surpluses during a period of keynesian fiscal activism is modeled in light of relevant social science literatures rational choice emphases upon electoral manipulation of the economy and keynesian stabilization marxian emphases upon monopolization andfiscal control of labor militancy organizational decision theory emphases upon budgeting inertia and a number of additional thrusts from other literatures are supported by time series regression analyses of 1961 1978 surpluses deficits the final model is statistically well behaved analysis of so called high employment measures of discretionary surpluses deficits supports all interpretations requiring discretionary policy making but an indication of automatic stabilization emerges as well a focus upon executive policy making roles is suggested as one means to further theoretical integration of explanations of state macroeconomic policy

collective labor rights and income inequality this article examines the relationship between income inequality and collective labor rights conceptualized as workers legal and practical ability to engage in collective activity although worker organization is central to explaining income inequality in industrialized democracies worldwide comparative studies have neglected the role of class based actors i argue that the repression of labor rights reduces the capacity of worker organizations to effectively challenge income inequality through market and political processes in capitalist societies labor rights however are unlikely to have uniform effects across regions this study uses unbalanced panel data for 100 developed and less developed countries from 1985 through 2002 random and fixed effects models find that strong labor rights are tightly linked to lower inequality across a large range of countries including in the global south interactions between regions and labor rights suggest that the broader context in which class based actors a

the impact of primary schooling on economic development a review of the evidence abstract the contribution of primary schooling to economic development is greater than has conventionally been percieved this review of recent research shows that primary schooling increases labour productivity in both urban and rural sectors and that the economic returns to such investment are typically high in addition it reduces fertility improves health and nutrition and promotes other behavioural and attitudinal changes which are helpful to economic development investment strategies which give primary schooling an important place would be more conducive of growth with equity than many alternatives priorities for government and donor policies are indicated as are those for future research

foreign direct investment and income inequality further evidence abstract this paper examines the relationship between foreign direct investment fdi and income inequality special attention has been paid to data comparability and model specification by comparing models with and without geographical dummies this study shows that the statistically significant correlation between fdi and income inequality widely obtained in earlier studies might capture more of the geographical difference in inequality than the deleterious influence of fdi and to the extent that fdi does give rise to more unequal income distribution in the host less developed countries ldcs only east southeast asia ldcs appear to have been harmed by the inflow of fdi during the 1970s it should be noted however that the second result refers only to the marginal impact not the total impact apart from fdi our empirical evidence suggests that the level of economic development the direct role of government and to a smaller degree the significance of the agriculture sector in an ldc are crucial determinants of income inequality

on the political economy of welfare expansion a comparative analysis of 18 advanced capitalist democracies 1960 1971 this article elaborates the thesis that economic growth and various types of collective action by class linked actors determine the expansion and decline of welfare spending in rich capitalist democracies our multivariate model of this thesis specified to 1960 1971 growth rates in direct cash transfer payments as proportions of gross domestic product is supported strongly by regression analyses these indicate that economic growth notably facilitates transfer payment growth they also suggest that rightist party participation in government notably dampens welfare expansion while leftist centrist and christian democratic party participation in government are conducive to welfare expansion and they suggest that the political influences of both unions and large industrial corporations are conducive to growth in transfers payments as well in addition state authorities appear to augment welfare spending in response to working class protests strike activity and capital investment disinvestment activ

age structure politics and cross national patterns of public pension expenditures this study examines the determinants of spending on public pensions unlike other programs pensions benefit an easily identifiable high voting group the aged and may be especially amenable to their political influence with that in mind we draw out predictions of industrialism and class theories for the explanation of public pension expenditures the explanations are tested with data on 48 nations at all levels of political and economic development for four time points 1960 1965 1970 1975 pooling the data allows multivariate analysis of appropriate determinants both within and across different groups of nations and detailed analysis of advanced industrial democracies industrialism variables such as percent aged social insurance program experience andfamily size have dominant effects however the effects of percent aged increase with political democracy suggesting that the aged wield political power in increasing pension expenditures class variables in contrast have little or no effect on pensions suggesting the importance of age politics over class politics in the spending for this program

the interdependence between fdi and r d an application of an endogenous switching model to taiwan s electronics industry foreign direct investment fdi and research development r d are mutually dependent and should be treated as endogenous variables in empirical studies an endogenous switching regression model is used to examine the mutual effect of fdi and r d in taiwan s electronics industry the empirical results show that fdi and r d are positively related and do reinforce each other unbiased coefficients are obtained as they are compared to those estimates if fdi and r d are treated as exogenous variables the results have a strong public policy implication for taiwan s foreign direct investment and can be further used to estimate the difference in r d expenditures between fdi and non fdi firms

income inequality regime repressiveness and political violence death rate from political violence is postulated to vary cross nationally as a positively accelerated time lagged function of income inequality and as a nonmonotonic inverted u function of regime repressiveness the former hypothesis is consistent with approaches to the explanation of collective political violence that emphasize the general concept of discontent or more specifically relative deprivation the latter hypothesis is consistent with a political process version of the resource mobilization approach in the context of a multivariate model estimated across two decades 1958 67 and 1968 77 support is found for the inequality hypothesis support also is foundfor the regime repressiveness hypothesis in the decade 1968 77 for which the index of regime repressiveness is available the u curve effect of regime repressiveness appears to have stronger impact on variation in rates of deadly political violence than the positively accelerated effect of income inequality

the globalisation of technology what remains of the product cycle model this paper reexamines two hypotheses associated with earlier versions of the product cycle model the first hypothesis that innovations are almost always located in the home country of the parent company is rejected on the basis of evidence drawn from one hundred years of u s patent office data the second hypothesis that the international dispersion of activity is led by technology leaders is historically valid however over the last twenty years technology leaders have been ahead instead in the globalization of technology that is in developing internal international networks to exploit the locationally differentiated potential of foreign centers of excellence c 1995 academic press inc copyright 1995 by oxford university press

the generic existence of rational expectations equilibrium in the higher dimensional case abstract the study of the generic existence of rational expectations equilibrium has concentrated on three cases according to whether the space of states of private information has dimension less than equal to or greater than the price space previous results have shown that in the first case fully revealing equilibria exist generically and in the second case there are open sets of environments with no equilibrium this paper shows that in the third case there is a residual set of environments which permits equilibria which are arbitrarily close to fully revealing

economic determinants of democracy the relationship between the level of economic development and the level of democracy found in most quantitative cross national research implies that the largest gains in democracy are experienced by countries at intermediate levels of development during the 1960s and 1970s however middle income countries were more likely to register declines in democracy than increases i explain this anomaly with the hypothesis that income inequality affects democracy and this effect often counteracts the positive influence of economic development because intermediate levels of economic development are associated with the highest levels of income inequality the independent negative effect of income inequality on change in level of democracy explains the declines in democracy in middle income countries cross national data from a sample of 58 countries support the hypothesis of a negative effect of income inequality on change in level of democracy from 1965 to 1980 this effect is robust when noneconomic determinants of democracy are taken into account and when sample size is increased

politics the state and basic human needs a cross national study this study examines ways that political processes influence the provision of basic human needs once the effects of aggregate national wealth are removed three general explanatory approaches are examined these are based on the size or strength of the national government the achievement ofdemocratic processes and the ideological orientation ofruling elites along a left right dimension these three approaches are analyzed by regressing an index of physical well being the pqli on measures drawn from each perspective for a sample of 1 16 contemporary nations the findings indicate that political attributes do indeed have an impact on the provision of basic needs even when controlling for aggregate social wealth democratic processes are related to positive welfare outcomes irrespective of state strength and ideological norms for regimes with a roughly centrist ideology state strength appears to make little noticeable difference one way or another for those on the left state strength promotes welfare performance for those on the right state strength is found to inhibit the provision of basic needs how do political processes affect the welfare of individuals this question in countless variants has motivated students of political economy at least since the advent of the modern nation state in its simplest form the empirical question becomes what kind of state achieves the highest level of welfare for its citizens although it may seem that there are as many answers as possible dimensions of states most analyses have centered on one or more of three general explanatory approaches the first focuses on the size or strength of the state apparatus as the essential ingredient in translating productive potential into welfare outcomes successful welfare performance hinges on the capability of the state because the state is considered the one social institution concerned with the material needs of the population as a whole a second model highlights procedural aspects of the political system rather than the budgetary strength of the state by linking successful welfare outcomes to the relatively even distribution of political power brought about by political democracy the third approach is distinguished from the other two by its emphasis on the ideological orientation usually on a left right continuum of ruling elites this model posits welfare

partial revelation with rational expectations we exhibit a partially revealing rational expectations equilibrium where no individual knows the state of the world or the quantities traded by any other individual c 1998 academic press

politics and inequality in latin america and the caribbean this article presents the first pooled time series analysis of the impact that politics and policy have on inequality in latin america and the caribbean the authors build on models consisting of sociological and economic variables adding the strength of the democratic tradition long term legislative partisan political power distribution and social spending to explain variation in inequality they analyze an unbalanced pooled time series data set for income distribution in 18 latin american and caribbean countries from 1970 to 2000 they show that the political variables add explanatory power a strong record of democracy and a left leaning legislative partisan balance are associated with lower levels of inequality as are social security and welfare spending under democratic regimes thus they replicate some and modify other well established findings from studies of organization for economic cooperation and development oecd countries in the very different context of latin america and the caribbean

union organization in advanced industrial democracies i suggest a new explanation of cross national differences in unionization rates the size of the labor force size matters because the gains unions are able to achieve in collective bargaining depend on the proportion of substitutable workers who are organized while the costs of organizing depend in part on the absolute number to be recruited the comparison of the costs and benefits of organizing new workers yields the conclusion that unions in larger labor markets will accept lower levels of unionization statistical analysis of cross national differences in unionization rates among advanced industrial societies in the late 1970s indicates that the size of the labor force and the cumulative participation of leftist parties in government explain most of the variance

economic inequality and its socioeconomic impact abstract income inequality is of fundamental interest not only to economists but also to other social scientists a substantial literature in economics and the social sciences has investigated the relationship between income inequality and economic growth and a variety of social phenomena the links between inequality and economic growth are explored as well as those between inequality and such key social variables as political conflict education health and crime the analysis in this paper follows a two step process first a review of the empirical evidence relating inequality to growth and to each of the above social variables is undertaken second the various causal mechanisms that have been proposed in the social science literature to explain those links are surveyed

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

economic openness democracy and income inequality an empirical analysis scholars have studied effects of economic openness and democracy on national income inequality in two literatures in democracy studies scholars agree democracy reduces inequality but empirical evidence is ambiguous in globalization studies effects of economic openness on inequality are debated but have not been rigorously examined this article is the first systematic statistical study of the effects of both economic openness and democracy on income inequality these effects need to be studied together the authors measure national income inequality from a comprehensive gini coefficient data set economic openness is measured from trade flows foreign direct investment inflows and financial capital inflows the period studied is 1960 to 1996 the unit of analysis is a country decade and the sample includes 69 countries the authors find that democracy and trade reduce income inequality foreign direct investments increase income inequality and financial capital does not affect income inequality policy implications are discussed

new concepts and trends in international r d organization abstract the globalization of markets the regionalization of technical and scientific expertise and the rapid change in technologies are forcing technology based companies to continuously adjust their r d organization our study of 33 companies reveals five different types of r d organization in multinational companies mnc we classified r d organizations according to the dispersion of r d activities and the degree of cooperation between individual r d units and identified the ethnocentric centralized the geocentric centralized the polycentric decentralized the r d hub and the integrated r d network organization five trends of organizational change among these forms of international r d organization were identified 1 stronger orientation of r d activities towards international markets and knowledge centers 2 establishment of tightly coordinated listening posts 3 strengthening and reinforcement of foreign r d sites 4 increased integration of decentralized r d units and 5 tighter coordination and recentralization of r d activities at fewer know how centers the search for the optimal balance between coordination and control is reflected by hybrid structures and intermediary configurations detected in some of the investigated companies since effective changes in behavioral orientation require considerable time successful quantum leaps in multinational r d organization are next to impossible

technology sourcing versus technology exploitation an analysis of us foreign direct investment flows the traditional paradigm of foreign direct investment fdi suggests that fdi is undertaken principally to exploit some firm specific advantage in a foreign country which provides a locational advantage to the investor however recent theoretical work suggests a model of fdi in which the motivation is not to exploit existing technological advantages in a foreign country but to access such technology and transfer it from the host economy to the investing multinational corporation via spillover effects this paper tests the technology sourcing versus technology exploiting hypotheses for a panel of sectoral fdi flows between the united states and major oecd nations over a 15 year period the research makes use of patel and vega s research policy 28 145 55 1999 taxonomy of sectors which are likely a priori to exhibit technology sourcing and exploiting behaviour respectively while there is evidence that fdi flows into the united states are attracted to r and d intensive sectors very little support is found for the technology sourcing hypothesis either for inward or outward fdi flows the results suggest that in aggregate firm specific ownership effects remain powerful determinants of fdi flows

income inequality development and dependence a reconsideration we reconsider the role of foreign investment in income inequality in light of recent critiques that question the results of quantitative cross national research on foreign capital penetration we analyze an unbalanced cross national data set in which countries contribute different numbers of observations with a maximum of 88 countries and 488 observations dated from 1967 to 1994 random effects regression models that control for unmeasured country heterogeneity are used to investigate effects of foreign capital penetration on inequality measured as the gini coefficient against the background of an internal developmental model of inequality we adapt firebaugh s 1992 1996 critique of the literature on the effect of foreign investment on economic growth to the study of income inequality and find that the stock of foreign direct investment has an effect on inequality that is independent of the mechanisms identified by firebaugh we explore tsai s 1995 claim that the effect of foreign capital penetration is spurious and find that foreign stock has a significant positive effect on inequality net of region specific differences an alternative interpretation of the findings of the foreign investment inequality literature is discussed in light of the discovery of an inverted u shaped relationship between income inequality and foreign investment stock per capita we conclude that thinking on the relationship between income inequality and investment dependence should be revised in light of an investment development path relating the inflow and outflow of foreign capital to economic development

foreign direct investment in industrial research in the pharmaceutical and electronics industries results from a survey of multinational firms abstract this paper examines motives location characteristics inter temporal characteristics and modes of entry for foreign direct investment fdi in research and development r d the paper is based on a detailed empirical survey of laboratory sites established by 32 large multinational companies domiciled in 5 countries findings indicate that fdi in r d has risen considerably over the last 40 years and that firms invest in r d sites abroad in order to augment their knowledge base or in order to exploit it the former motive leads to establishment of facilities primarily close to universities while the latter type leads to establishment of facilities close to existing manufacturing facilities and markets the paper also finds that greenfield investments are the dominant mode of entry and that firms establish multiple r d sites in their home countries before investing in such sites abroad

does liberte egalite a survey of the empirical links between democracy and inequality with some evidence on the transition economies the effect of the distribution of political rights on income inequality has been studied both theoretically and empirically the authors review the existing literature and in particular the available empirical evidence the literature suggests that formal exclusion from the political process through restrictions on the voting franchise appears to have caused a high degree of economic inequality and democratization in the form of franchise expansion has typically led to an expansion in redistribution at least in the small sample of episodes studied in a less pronounced way albeit more emphatically compared with the ambiguous results of earlier research recent evidence indicates an inverse relationship between other measures of democracy based on civil liberties and political rights and inequality the transition experience of eastern european countries however seems to some extent go against these conclusions this opens possible new vistas for research namely the need to incorporate the length of democratic experience and the role played by ideology and social values

linking fdi motivation and host economy productivity effects conceptual and empirical analysis we develop a taxonomy that relates foreign direct investment fdi motivation technology and cost based to its anticipated effects on host countries domestic productivity we then empirically examine the effects of fdi into the united kingdom on domestic productivity and find that different types of fdi have markedly different productivity spillover effects which are consistent with the conceptual analysis the uk gains substantially only from inward fdi motivated by a strong technology based ownership advantage as theory predicts inward fdi motivated by technology sourcing considerations leads to no productivity spillovers

diffusion development and democracy 1800 1999 while a trend of growth in democratization over the past two centuries has been generally observed it is the remarkable growth in the democratization of the world over the past 30 years that has truly captured the imagination of social scientists policymakers and the general public alike two major sets of factors have dominated studies attempting to predict democratization one set characterizes endogenous or internal features of countries and may be referred to as socioeconomic development the other set less often tested characterizes exogenous variables that influence democratization via forces at work globally and within the region in which a country resides this set may be referred to as diffusion processes this study provides the first systematic comparison of these two sets of variables when assessed alone development indicators are robust predictors of democracy but their predictive power fades with the inclusion of diffusion variables in particular diffusion predictors of spatial pr

network linkages and location choice in foreign direct investment this paper shows that network linkage is an important determinant of location choice in foreign direct investment fdi network linkages are divided into internal intra firm and external inter firm linkages external linkages are further separated into strategic and relational linkages we found that taiwanese firms are keen on making external linkages but are indifferent to or incapable of making internal linkages through fdi strategic linkages motivate taiwanese fdi in the united states while relational linkages facilitate taiwanese fdi in southeast asia and china small firms are more sensitive to relational linkages than large firms in their choice of fdi location

european market integration through technology driven m as merger and acquisitions m as have been an important tool for reorganizing the european market since the establishment of european economic and monetary union this article suggests that european integration helped and encouraged european firms to source technology across national borders in europe establishing european innovative firms the figures confirm that once barriers impeding the free movement of capital goods and labour had fallen european firms used m as intensively to enter foreign european markets enhancing technology competencies is found to be one of the main motives for cross border acquisitions in the 1990s but is not a factor in domestic acquisitions over the same period

inequality and political violence revisited in their 1987 article in this review muller and seligson used logged ordinary least squares lols to estimate the effect of income inequality on cross national levels of deaths by political violence t y wang challenges the robustness of the main conclusion and argues for the application of a maximum likelihood approach the exponential poisson regression epr model rather than lols he concludes that the widely used lols approach yields misleading conclusions when applied to event count data dixon muller and seligson replicate previous work using both lols and epr approaches and conclude that in most but not all respects the two approaches yield similar results supporting the effect of inequality when the specifications are identical they also argue in response to concerns expressed by brockett 1992 that the inequality results are robust when account is taken systematically of the best information on underreporting of deaths

the political economy of deficit spending in nine industrialized parliamentary democracies the role of fiscal institutions this article analyzes the influence of four sets of factors on deficit spending in 9 industrialized parliamentary democracies during 1958 1990 this article analyzes the influence of these factors and introduces and tests the importance of an additional potential influence on the size of a country s fiscal deficit the strength of fiscal bureaucracy it is argued that the stronger a country s fiscal bureaucracy the lower its deficit ceteris paribus empirically the authors find that the state of a nation s economy heavily affects its deficit little systematic relationship is found between the ideology of the ruling political party and a nation s deficit or between the political strength of the ruling party and deficits in contrast to the findings of roubini and sachs finally it is found that the strength of a country s fiscal bureaucracy is an important influence on the deficit in these 9 industrialized parliamentary democracies

investigating geography and institutions as determinants of foreign direct investment in africa using panel data this article uses a cross country econometric approach to identify the determinants for foreign direct investment fdi in africa the contribution is 3 fold firstly we recognize that the estimation techniques used elsewhere such as ordinary least squares may be flawed we therefore use a dynamic one step generalized method of moments gmm estimator due to arellano and bond 1991 the gmm estimates identified a number of robust determinants of fdi namely government consumption inflation rate investment governance political stability accountability regulatory burden rule of law and initial literacy it is concluded that geography does not seem to have a direct influence on fdi flows to africa neither market seeking nor re exporting motives of fdi seem to dominate with different policy instruments being significant in the different specifications this does not discount the importance of good policies but probably indicates the importance of good policies made by good institutions institu

politics and the structural dependence of the state in democratic capitalist nations i explore empirically a central claim of the structural dependence thesis namely that capitalists ability to disinvest fundamentally conditions policy choices in democratic capitalist systems utilizing time series data for 16 affluent democracies from 1965 to 1984 i find that indeed low rates of business investment are associated with reductions in corporate tax burdens and that these reductions are more pronounced in periods of economic crisis moreover low rates of capital formation engender cuts in personal income taxes during periods of economic stress however i also find that the magnitude of responsiveness of taxation to low rates of investment is relatively small and that analyses of the political context of investment and taxation indicate that governments have choices the responsiveness of corporate tax burdens to capital formation may under some governments be part of a policy mix designed to maintain adequate investment and to address the demands of core constituencies

welfare policy expansion in botswana and mauritius explaining the causes of different welfare regime paths how come two developing countries with similar economic institutional and democratic attributes have developed vastly different welfare regimes drawing inspiration from the welfare regime literature the author subjects botswana and mauritius to a comparative historical analysis that explores the economic and political trajectories of their welfare policy development the findings offer both support and modifications to the established and mostly western oriented literature first politics affect welfare policy development in developing countries the rural population can promote welfare policy expansion but it is middle class interests that shape the direction of policy development second given the importance of politics conceptualizations of welfare policies need to include both the spending and the financing side finally the causes of different welfare regime paths need to be examined with attention to the particular economic contexts of developing countries and how welfare and economic poli

income inequality democracy and public sector size this study synthesizes and tests explanations of how public sector size and democracy affect income inequality the results based on unbalanced panel data for 64 developing and developed countries

the kuznets curve and the great u turn income inequality in u s counties 1970 to 1990 the authors examine the determinants of inequality in the distribution of family income in approximately 3 100 counties of the united states in 1970 1980 and 1990 such a study provides a window on global trends in social inequality during the period which spans the tail end of the kuznets curve and the more recent upswing in income inequality results from random effects regression models that control for unmeasured heterogeneity among states reveal the continued importance of the kuznetsian pattern of declining inequality with economic development a positive effect of urbanization on inequality a declining positive impact of sector dualism an increasing positive effect of educational heterogeneity and a persistent effect of racial dualism several variables associated with the recent upswing in inequality have significant effects female labor force participation negative female headed households positive percent of the population over age 65 changes from positive to negative over the period manufacturing employment negative and unemployment ambiguous they also discuss methods of estimating the gini coefficient for income inequality at the county level and measures of sector farm nonfarm dualism racial black white dualism and educational heterogeneity

the impact of technological innovation on international trade patterns the evidence reconsidered abstract this paper presents some new evidence in relation to the role of technical change in particular industrial innovation on the international competitiveness of the various oecd countries its originality consists primarily of a using a technology output indicator to measure technological performance b presenting and comparing various measures of trade and technological performance for each individual oecd country with the exception of iceland c analysing at a relatively high level of product industry disaggregation the relationship between export performance and technological performance at the same time the very limited scope of the paper has to be emphasized a the analysis is purely static all the evidence presented relates to one year 1977 b most of the results obtained are preliminary and should be further substantiated by more detailed empirical and theoretical research c as a consequence little attention has been paid to policy implications which it was felt could only be discussed properly in a later stage the paper consists of four sections a brief review of the state of the art section 1 a discussion on definitions of technology intensity section 2 the development of the best technology output indicator section 3 and the empirical analysis itself section 4 the following most important results emerge from these various sections a there are serious shortcomings in using average technology intensity as bench mark for classifying products or industries in technology intensive or nontechnology intensive categories b there is a substantial difference between technology intensity as measured on the basis of a technology input proxy rd c yet as between countries the most traditional output and input indicators the number of patents granted and the amount spent on rd d foreign patenting in particular foreign patenting in the united states figs 1 and 2 section 3 is a more reliable technology output proxy than domestic patenting e in terms of technological comparative advantage as opposed to technology intensity it is the small oecd countries as opposed to the large ones which seem to base their trade comparative advantage on technological comparative performance table 7 section 4 1 f at the individual industry level it is found that i for most technology intensive industries defined however in a less restrictive way than us r d intensities a close relation exists between technological performance and export performance and ii that as compared to other country specific resource variables technological performance is the most important trade explanatory variable its elasticity increasing with the technology intensity of industries tables 11 and 12 section 4 2 space constraints prevented us from presenting the data in relation to the inter industry and inter country analysis these can however be obtained from the author

political rights and income inequality a cross national test among contemporary nations the relationship between income equality and national wealth exhibits an inverted u shape low among the richest and poorest nations and high for nations with intermediate wealth to examine the reasons for this relationship i hypothesize that both political democracy and educational enrollment are related in a similar way to income inequality two data sets are used in this analysis modified version of muller s set of 62 nations circa 1965 1975 and hoover s data set multiple regression reveals that measures of political democracy and the educational enrollment levels have an inverted u relationship with income inequality national wealth gnp had no consistent direct effect on income inequality a satisfactory specification of national levels of income inequality must include the polynomial functions of political democracy and education

the drivers of foreign direct investment into research and development an empirical investigation this paper examines the determinants of foreign direct investment fdi in research and development laboratories by 32 multinational enterprises in the pharmaceutical and electronics industries the paper applies a dichotomous set of motives for fdi results from an econometric analysis of 136 laboratory investments show that relative market size and relative strength of a country s science base determine whether fdi in research and development is carried out in order to exploit existing firm specific advantages or in order to build up new firm specific advantages this holds true in similar form for japanese european and u s firms and across the two industries

decentralised r d and strategic competitiveness globalised approaches to generation and use of technology in multinational enterprises mnes abstract using material from surveys of multinational enterprise mne production subsidiaries and laboratories operating in the uk the paper seeks to discern vital changes in the roles of such r d facilities from the primarily tactical and technologically dependent role of adapting established group products for the local market these labs now take more committed positions in support of their group s strategic competitiveness this can involve a much more profound involvement in original product development or inputs into programmes of pre competitive basic or applied research to support the longer term evolution of the core technology of the mne group it is suggested that this evolution of decentralised labs positioning in mne knowledge strategies implies i an increasing involvement in product development rather than adaptation ii an interdependent rather than dependent position in group technology programmes iii increased relevance of supply side influences host country technology competencies capacities and heritage iv decline of centralising forces on r d e g economies of scale communication and co ordination problems concerns of knowledge security

determinants of relative poverty in advanced capitalist democracies using relative poverty measures based on micro level data from the luxembourg income study in conjunction with pooled time series data for 14 advanced capitalist democracies between 1970 and 1997 the authors analyze separately the rate of pretax transfer poverty and the reduction in poverty achieved by systems of taxes and transfers socioeconomic factors including de industrialization and unemployment largely explain pre tax transfer poverty rates of the working age population in these advanced capitalist democracies the extent of redistribution measured as poverty reduction via taxes and transfers is explained directly by welfare state generosity and constitutional structure number of veto points and the strength of the political left both in unions and in government

the revelation of information and self fulfilling beliefs abstract at a rational expectations equilibrium ree individuals are assumed to know the map from states to prices this hypothesis has two components that agents agree consensus and that they have point expectations degeneracy we consider economies where agents beliefs are described by a joint distribution on states and prices and these beliefs are fulfilled at equilibrium beliefs are self fulfilling if every price in the support of the distribution is an equilibrium price the corresponding equilibria are beliefs equilibria be the further restriction that agents have the same beliefs results in common beliefs equilibria cbe we study the relationship between be cbe and ree thus isolating the role of consensus and of degeneracy in achieving rational expectations journal of economic literatureclassification numbers d51 d82

partially revealing rational expectations equilibrium in a competitive economy abstract a class of pure exchange economies is considered in which some agents are informed of private information and others are uninformed existence of a partially revealing rational expectations equilibrium ree is proved without restricting attention to particular functional forms for utility functions and probability distributions without introducing noise into the model and without departing from the standard definition of ree the equilibrium is robust in the sense that if the primitives of the economy are slightly perturbed the economy continues to have a qualitatively similar ree with somewhat stronger assumptions placed on the economy the equilibrium is also the unique measurable ree

analysing the determinants of us direct investment in mexico in this paper a simple model of foreign direct investment is developed and tested on investment flows from the usa to mexico between 1967 and 1994 using cointegration analysis domestic demand and relative factor costs are found to influence direct investment flows suggesting support for both the cheap labour and market size hypotheses the short run dynamics of the model indicate that exchange rate movements have an effect on the timing of the investment decision

information aggregation in a noisy rational expectations economy abstract this paper analyzes a general equilibrium model of a competitive security market in which traders possess independent pieces of information about the return of a risky asset each trader conditions his estimate of the return both on his own private source of information and price which in equilibrium serves as a noisy aggregator of the total information observed by all traders a closed form characterization of the rational expectations equilibrium is presented a counter example to the existence of fully revealing equilibrium is developed