capital markets and urban unemployment in this paper we investigate conditions under which reductions in distortions in one market improve national welfare despite the presence of distortions in another market the specific distortions we study are a differential between capital rentals and a rigid urban wage we also introduce a diagrammatic technique which may find use in the analysis of other problems

foreign ownership and the theory of trade and welfare some standard topics in the theory of international trade are reconsidered in this paper by distinguishing between national and aggregate income when fixed supplies of foreign inputs are present within the home country under conditions that would ensure a national welfare gain if foreign ownership were absent international transfer economic growth or tariff policy might cause a national welfare loss in the presence of foreign ownership the techniques developed could be applied to other domestic distinctions such as those based on race sex age or ethnicity and to the theory of customs unions in a three country world

on the welfare effects of a duty free zone abstract the analysis extends and corrects the results of an earlier paper by hamada two problems are analyzed 1 how is location of production affected by opening up of a free zone taking into account different kinds of trade barriers and zones implications for production consumption and welfare in a number of different cases are analyzed 2 what are the effects of capital inflow either into the zone or into the host country our results show that both types of capital inflow diminish welfare and welfare diminishes comparatively more when imported into the zone repatriated income as well as its composition is explicitly incorporated

sector specific capital interconnectedness in production and welfare the implications of sector specific foreign capital in a labour surplus resource rich economy are analysed in a model of international trade where intercountry capital movements are justified on the basis of interconnectedness in production a variety of policy measures are studied and shown to have interesting and novel effects on factor rewards output levels and welfare le capital dont l utilisation est specifique a un secteur l interconnexion de la production et le bien etre les implications d un mouvement de capital etranger dont l utilisation est sp6cifique a un secteur en direction d une economie qui a un surplus de travailleurs et est riche en ressources naturelles sont analysees a l interieur d un modele de commerce international oui les mouvements de capitaux entre pays sont justifies a partir du degre d interconnexion de la production les auteurs examinent dans ce contexte une variete de politiques qui s averent avoir des effets int6ressants et nouveaux sur le prix des facteurs de production sur les niveaux de production et sur le niveau de bien etre

international factor movements repatriation and welfare abstract this paper analyzes two different ways of allowing foreign capital inflow introducing it into the domestic economy and introducing it into a duty free zone it shows how the ranking of the two policies depends on the production patterns in the duty free zone and the rules of factor income repatriation the result can be used to explain the discrepancy between the rankings of these policies in two recent papers the analysis also shows how the way of repatriating factor income could affect the equilibrium of factor movement the welfare of the factor owners and the welfare of the countries concerned

the gains from duty free zones abstract duty free zones have been established in many countries and duty free shops can be found in every major international airport this paper investigates their welfare effect in the tradition of the pareto gains from trade literature using the dual approach developed in dixit and norman 1980 we show that the introduction of a duty free zone leads to pareto gains over autarky compared to free trade its welfare impact depends on the redistribution mechanism accompanying free trade we show that with a dixit norman tax scheme free trade is pareto inferior to a duty free zone regime the opposite holds true for lump sum redistribution

accounting price of an exhaustible resource response and extensions wei environ resour econ 60 579 581 2015 presents a novel derivation of the accounting price for an exhaustible resource in a non optimal economy subject to an allocation mechanism we show that wei 2015 and hamilton and ruta environ resour econ 42 53 64 2009 are in fact employing different and mutually exclusive allocation mechanisms for the economy and this explains the differences between the respective accounting prices because accounting prices must be defined subject to the allocation mechanism for the economy the prices derived in the two papers are equally valid within their respective allocation domains further analysis shows that if there is declining marginal product of factors a hartwick investment rule for the model economy set investment just equal to depletion valued at the accounting price will lead to declining consumption for the wei 2015 accounting price and increasing consumption for the hamilton and ruta 2009 accounting price this result is extended to consider the accounting standards recommended in the un seea system of environmental economic accounting 2012 central framework united nations european commission food and agriculture organization of the united nations international monetary fund organisation for economic co operation and development world bank 2012 as well as accounting for environmental externalities from resource use

privatization and employment a study of the jute industry in bangladesh this paper analyzes the effect of privatization upon employment in the bangladeshi jute textile industry privatization was partia and the selection of mills which were privatized was not based on current economic performance this provides us with a panel data set which permits reliable estimates of the effects of ownership on employment and output privatization has reduced employment of all categories of permanent workers significantly but the extent of employment reduction has been substantially greater among clerical workers and managers as compared to manual workers this implies that public sector excess employment benefited white collar workers who were both better off and better educated and suggests that public sector behaviour was clientelist rather than welfarist

measuring sustainability in the un system of environmental economic accounting the adoption of the system of environmental economic accounting 2012 central framework as a un statistical standard is a landmark in environmental accounting the seea has the same authority and weight as the system of national accounts in the pantheon of official statistics the seea defines the unit value of depletion of an exhaustible resource to equal the average unit value of the asset the total asset value divided by the physical stock of resource by applying this definition to a non optimal dasgupta heal solow model of an extractive economy we show that depletion adjusted net saving as defined in the seea supports a generalized version of the hartwick rule this measure of saving can guide policies for sustainable development in extractive economies in particular fiscal policies concerning consumption and investment expenditures funded by resource rents the conditions required to support this finding are i that extraction declines over time at a constant rate and ii that the marginal cost of resource extraction is constant a less general result holds in the case of increasing marginal extraction costs

locational choice for free trade zones a comment abstract in this comment we derive conditions under which there are no equilibria for the models investigated by miyagiwa 1993

leviathan resists the endogenous relationship between privatization and firm performance using a panel dataset of privatized cement firms in turkey this paper models and finds support for the simultaneous relationship between privatization and firm performance it is found that favorable short run performance weak market potential higher employment lower socio economic development concentrated voter preferences and weaker representation of right wing parties in the firms locality delay the timing of privatization the paper also finds that privatization increases output in the medium term by reducing the labor stock and promoting the adoption of more advanced technology such that production shifts from constant to decreasing returns to scale

tax on foreign capital income and wage subsidy to the urban sector in the harris todaro model abstract we consider endogenous foreign capital inflow in the different versions of harris todaro model wage subsidies are financed by taxing the foreign capital income which is otherwise repatriated their effects on unemployment and national income are analysed

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

accounting price of an exhaustible resource a comment in a paper titled wealth accounting exhaustible resources and social welfare hamilton and ruta environ resour econ 42 1 53 64 2009 derived accounting price for an exhaustible resource in eq 18 in the so called el serafy economy el serafy in environmental accounting for sustainable development the world bank washington 1989 however the result is not plausible since they improperly replace constant extraction in the value of the resource stock eq 17 with current resource stock divided by reserve life in their derivation in the short comment i show that the accounting price should be the same as the unit user cost defined by el serafy environmental accounting for sustainable development the world bank washington 1989

foreign investment in the presence of an informal sector in the context of a segmented economy in which the urban unemployed subsist in informalsector activities earl grinols has recently questioned conventional wisdom whereby foreign investment with repatriated earnings is necessarily immiserizing for the host country in this paper we extend grinols s analysis and place it in a broader context permitting richer conceptions of informal sector activities our principal finding is that the original insight is surprisingly robust once heckscher ohlin samuelson factor intensities are suitably modified and interpreted our models may also have independent interest for other work on the informal sector

the effects of privatization on efficiency how does privatization work summary uncovering the effects of privatization is difficult because privatization of a particular firm usually is not an accident this paper tests the effects of privatization on productive and allocative market efficiency using a rich panel data set of 22 privatized cement plants from turkey in the 1983 99 period since all public cement firms were privatized and we have pre and post privatization data for all we are able to avoid the problem of endogeneity associated with sample selection our analysis goes beyond just examining the privatization effects and explores how privatization really works changes in objectives of the firm ownership effect and changes in market structure environment effect may both be responsible for privatization outcomes we find that ownership effects are sufficient to achieve improvements in labor productivity our results on allocative efficiency however are dependent on changes in the competitive environment while all plants seem to improve labor productivity through work force reductions plants privatized to foreign buyers also increase their capital and investment significantly

the benefits of privatization evidence from mexico critics of privatization often argue that its benefits come at a high cost to society the authors test the validity of this criticism for mexico s privatization program one of the world s largest case by case programs assessing the performance of newly privatized firms in such areas as profitability and efficiency they find that these firms quickly close the gap with their peers in the private sector their findings suggest that the firms profit gains come from productivity gains 52 percent layoffs 33 percent and higher prices 15 percent

empirical determinants of purchasing power parity deviations abstract this paper investigates the empirical determinants of purchasing power parity ppp deviations over the recent period of flexible exchange rates transitory ppp deviations arise in a world in which prices are sticky but where exchange rates respond instantaneously to news permanent ppp deviations occur when price indices differ across countries and the world is subject to real shocks regressions consistent with the hypothesis that current exchange rate changes create immediate ppp deviations which are slowly dissipated but not eliminated imply that both sticky prices and real shocks are responsible for the recent failure of ppp

wealth accounting exhaustible resources and social welfare the empirical literature on natural resource accounting uses methods which implicitly or explicitly entail measuring changes in total resource asset value when an exhaustible resource is depleted in contrast the growth theoretic literature on saving social welfare and sustainable development is built upon a central finding that the change in real wealth as measured by net or genuine saving is proportional to the change in social welfare we show that the change in total wealth exceeds the change in real wealth in optimal and non optimal models of resource extracting economies this suggests that the change in social welfare is over estimated when the change in total resource asset value is used as the measure of depletion a simple empirical exercise using world bank data on adjusted net saving reinforces the results from theory

immiserizing growth for a quota distorted small economy under variable returns to scale the authors demonstrate that growth of a small open economy distorted by import quotas in contrast to the case of tariffs improves welfare when the industries display identical variable or constant returns to scale furthermore growth cannot reduce welfare if the industry that experiences technical progress exhibits a greater returns to scale than the static industry conversely if the dynamic sector displays a smaller returns to scale than the static sector growth of a quota distorted small economy can be immiserizing the authors results are independent of whether hicks neutral technical progress occurs in the importable or the exportable sector

competition and privatization amidst weak institutions evidence from mongolia mongolia s mass privatization program was implanted in a country that lacked the very basic institutions of capitalism this paper examines the effects of competition and ownership on the efficiency of the newly privatized enterprises using a representative sample of enterprises and controlling for possible selection biases competition has quantitatively large effects perfectly competitive firms having nearly double the efficiency of monopolies enterprises with residual state ownership appear to be more efficient than other enterprises reflecting an environment where the government was pressured to focus on efficiency and institutions gave little voice to outsider owners jel p0 l1 l33 o12

capital markets urban unemployment and land abstract this paper shows that the remarkable result by khan and naqvi that a reduction in the capital rental differential always improves welfare despite the presence of a rigid urban wage can be obtained only for the 2 2 harris todaro model in an extended harris todaro framework incorporating a third specific factor a decrease in a distortion may not necessarily be welfare improving

export share requirements trade balances and welfare a two period analysis abstract this paper provides a two period three sector general equilibrium model for examining the effects of a temporary increase in export share requirements to foreign owned firms on the trade balance and national welfare the analysis suggests that the policy of a temporary rise in export requirements results in increases in the non tradable prices for both periods as well as intertemporal welfare the policy also leads to an improvement in the first period trade balance

the locational choice for free trade zones rural versus urban options abstract urban and rural areas are compared as appropriate locations for a free trade zone within a developing country suffering from urban unemployment if domestic capital is mobile between the two regions then the rural area is shown to be preferable to the urban area and sufficient conditions for this conclusion are presented this conclusion may be reversed however if capital is sector specific the condition for this reversal is also discussed

optimal urban employment policies notes on calvo and quibria we show that quibria s insightful observation on the efficacy of urban policy in a model with an urban trade union and an urban informal sector holds but with a revenue neutral employment tax subsidy combination levied on the urban employer we also draw the relevance of the generalized harris todaro model in providing intuition for the validity of this surprising result

an econometric analysis of telecom competition privatization and regulation in africa and latin america this paper explores the effects of privatization competition and regulation on telecommunications performance in 30 african and latin american countries from 1984 through 1997 fixed effects regressions reveal that competition measured by mobile operators not owned by the incumbent is correlated with increases in the per capita number of mainlines payphones and connection capacity and with decreases in the price of local calls privatization combined with an independent regulator is positively correlated with telecom performance measures privatization alone however is associated with few benefits and is negatively correlated with connection capacity

when does privatization work the impact of private ownership on corporate performance in the transition economies this paper compares the performance of privatized and state firms in the transition economies of central europe while controlling for various forms of selection bias it argues that privatization has different effects depending on the types of owners to whom it gives control in particular privatization to outsider but not insider owners has significant performance effects where privatization is effective the effect on revenue performance is very pronounced but there is no comparable effect on cost reduction overlooking the strong revenue effect of privatization to outsider owners leads to a substantial overstatement of potential employment losses from postprivatization restructuring

a note on the stability of the harris todaro model with capital mobility the present note derives the exact stability condition for the harris todaro model with intersectoral capital mobility where land is explicitly included as a third scarce factor in agriculture while the previous study by neary states the difficulty of deriving a clear cut result in such a case this note demonstrates that if capital and land are never technologically substitutes in the agriculture production neary s condition that the urban sector is more capital abundant than the rural sector becomes a sufficient condition for local stability in an important article in this journal neary 1981 considered the stability of the harris todaro model with intersectoral capital mobility among other things neary showed that when relative commodity prices are fixed and capital and labour are subject to constant returns to scale in agriculture an unspecialized equilibrium is dynamically stable if and only if the urban sector is capital abundant relative to the rural sector however in the original work by harris and todaro 1970 the fixed availability of land is included in the agriculture production function hence strictly speaking the stability condition quoted above is not for the original harris todaro model with intersectoral capital mobility on this point neary concluded that the introduction of a third scarcefactor land in agriculture greatly complicates the analysis and makes it impossible to derive simple and clear cut results the present note argues that a definite result can be derived if the normality property of factors of production which was utilized by rader 1968 and suzuki 1985 is assumed

stability of the mobile capital harris todaro model some further results a necessary and sufficient condition for stability is derived for the mobile capital harris todaro model of rural to urban migration in developing countries when land is a scarce factor in agriculture the stability condition when land is ignored that the urban sector comprising manufacturing industry and the urban unemployed be more capital abundant is no longer either necessary or sufficient for stability nevertheless this condition always enhances stability and it is sufficient though not necessary for stability in many circumstances e g when land is separable in production from labour and capital intuitive explanations of these conditions are provided excerpt

intermediate goods and the formation of duty free zones abstract if a country forms a duty free zone by lowering tariffs on intermediate goods and taxes on foreign capital used in the zone then resources are attracted from the surrounding domestic zone this can worsen the effects of the distortions due to the tariffs remaining in the domestic zone and can lower the host country s national income and welfare this tends to occur if 1 there is less substitutability between the intermediate and labor than between these factors and capital 2 there is currently a small foreign owned sector in which the share of labor in total costs is large relative to the share of the imported intermediate in the foreign sector and relative to the share of labor in total costs in the domestic zone ironically under the latter circumstances the host country is likely to regard a duty free zone as an attractive option

unemployment and the formation of duty free zones abstract a number of authors have suggested that the formation of a duty free zone may reduce the welfare of the host country their analyses assumed full employment for a country suffering unwemployment of the harris todaro type we show that the value of national output at world prices increases with the formation of a duty free zone which involves the reduction of tariffs on intermediate imports into the zone

productivity growth and firm ownership an analytical and empirical investigation we focus on the effect of state versus private ownership on the rates of firm specific productivity growth and cost decline by developing a model of endogenous firm specific productivity growth and testing its implications against panel data on 23 international airlines of varying levels of state ownership over the period 1973 83 our model and empirical results show that state ownership can lower the long run annual rate of productivity growth or cost decline but not necessarily their levels in the short run observed level differences in productive efficiency across private and state owned firms may thus be a function of the age distribution of the firms being compared these results appear to be independent of whether the firms operate under apparently more or less competitive or regulated markets and whether they differ in production scales the analysis offers new insights concerning the recent trend toward privatizing state owned enterprises that has been observed in many countries

a reconsideration of the welfare economics of a free trade zone abstract this paper presents a model of a free trade zone which incorporates the fact that such zones are often established by government subsidies designed to promote non traditional exports in our model the condition is derived under which the establishment of a free trade zone can increase welfare regardless of the relative factor intensity of a zone based industry however the relative factor intensity of a free trade zone plays a crucial role in determining the change in welfare following economic growth and foreign investment

social opportunity costs and immiserizing growth some observations on the long run versus the short social opportunity costs of labor and capital are of importance to planners and loan officers alike and negative social opportunity costs have been studied by theorists in the guise of immiserizing growth see for example bhagwati srinivasan and wan 1978 in this note we present a unified treatment of such costs in the context of distortions of the harris todaro variety to which increasing emphasis is being given in both trade and development theory we pay particular attention to the distinction between the long run and the short i e to situations when capital is intersectorally mobile and when it is not our results clash with our intuition developed on the basis of both a the differential wage setting of which the mobile capital version of our model is an obvious generalization b the harristodaro model with an exogenously given rigid wage in the urban sector and immobile capital for example we show that immiserizing growth is impossible with intersectorally mobile capital but possible when capital is nonshiftable section ii presents the model and section iii investigates the question of the effect of population growth and capital accumulation on the size of the unemployment pool the results of section iii of interest in themselves are then used to discuss social opportunity costs and the possibility of immiserizing growth section v ends the paper with two concluding remarks

the effects of foreign investment in the presence of a factor market monopsony abstract this paper introduces a foreign monopsony within the ricardo viner production model to show that the observed behavior of host country interest groups labor s opposition and domestic capital s support towards greater foreign investment need not be inconsistent with the proposition that an inflow of foreign capital raises real wages and lowers the return to domestic capital it is shown that an increase in foreign investment intensifies the degree of monopsonistic exploitation of labor and produces greater supranormal profits for the foreign monopsony moreover if these profits are distributed to domestic capitalists according to some fixed proportion this increase in income may offset the decline in their real return

tariffs foreign capital and immiserizing growth with urban unemployment and specific factors of production abstract in this note we show that a recent observation of brecher alejandro as regards tariff induced capital inflows essentially extends to a setting with urban unemployment three factors of production and a variety of labor market conditions in the urban sector

on the harris todaro model with intersectoral capital mobility n b professor neary was based at trinity college dublin when this article was first published the full text of the article is not available in ora at this time citation neary j p 1981 on the harris todaro model with intersectoral capital mobility economica 48 191 219 234

privatization and efficiency differentiating ownership effects from political organizational and dynamic effects this paper argues that the private public ownership factor should be differentiated from other factors that also influence the effect of privatization on efficiency this is empirically confirmed in a longitudinal study of 24 spanish firms for which several political and organizational factors are found to influence the estimated effects of privatization on efficiency the analysis of the timing of the effects reveals a strong significance for post privatization years 5 6 negative and 7 8 positive this suggests that the negative effect of these factors is transitional being eventually offset by the positive effects of the change to private ownership 2000 elsevier science b v all rights reserved jel classification l33

foreign capital income inequality and welfare in a harris todaro model abstract the effects of an inflow of foreign capital on social welfare are analysed in a mobile capital harris todaro economy in which all income earned by foreign capital is repatriated and in which there is no tariff we consider the welfare measure of sen 1974 which incorporates the gini coefficient of the income distribution it is shown that an inflow of foreign capital worsens the income distribution and lowers social welfare according to sen s measure even in the absence of a tariff if the manufacturing sector is capital intensive relative to the agricultural sector in employment adjusted terms

altruism in the family and selfishness in the market place adam smith argued in a famous passage that people are selfish in their market transactions it is not from the benevolence of the butcher the brewer or the baker that we expect our dinner but from their regard to their own interest we address ourselves not to their humanity but to their self love and never talk to them of our own necessities but of their advantages 1937 p 14 in an earlier study he said with irony we are not ready to suspect any person of being defective in selfishness 1853 p 446 selfishness in market transactions has been assumed in practically all subsequent discussions of the economic system objections were dismissed with vague allusions to human nature or with an assertion that altruism loses out to selfishness in the struggle to survive in the market sector yet altruism is generally recognized to be important within a family again adam smith said