bluuebunny/crossref_metadata_2025 huggingface dataset:
Director Share Ownership and Corporate Performance – Evidence from Australia
Authors: Farrer Jonathan , Ramsay Ian
Published: March 2003

An important and controversial corporate governance issue is the extent to which share ownership by directors increases corporate performance. Some commentators suggest that increasing directors’ shareholdings in their companies provides directors with the incentive to improve corporate performance. Other commentators suggest that high levels of director share ownership may simply entrench directors. We examine whether there is a positive relationship between the level of director shareholdings and corporate performance for 180 listed Australian companies. We find that, in some circumstances, such a relationship does exist but the results differ according to a number of factors such as the performance measure used, whether director share ownership is measured by dollar value or percentage of the shares of the company outstanding, the size of the company and the industry in which the company operates.
New Corporate Governance Paradigms for Transnational Enterprises – Shell and strategic futures for big oil
Authors: Ledgerwood Grant
Published: March 2003

This paper comments on and positions within the issues of corporate governance the process by which Shell, one of the world’s largest and most successful corporations, first committed important errors in its environmental, community and communications strategies and then responded. It forecasts some of the cultural and structural issues which need to be investigated in order to offset future likelihood of Shell committing similar errors in future.

In exploring recent episodes in corporate governance, Shell’s company culture is seen as one of the ‘7 sisters’ of the world energy oligopoly.1 Alongside OPEC, the Organisation of Petroleum Exporting Countries, the oil giants of America and Europe provide the underpinning for a world system of economic supremacy. In terms of ethics and environmental performance, this hegemony is potentially benign. However, given their dependence on carbon‐based fossil fuels, these giants of the global economy may also tip the biosphere towards deterioration.

The commentary is aimed at a strategic evaluation of Shell’s recent problems. Ethical or societal issues on which the critical events reflect requires separate consideration. An attempt to contribute to cultural dimensions of corporate governance theory concludes the paper.
The Priorities and Performance of Boards in UK Public Companies
Authors: Dulewicz Victor , Herbert Peter
Published: March 2003

This study investigated the tasks and performance of the boards of UK listed companies. Questionnaires were sent to Chairmen of these companies and 134 responses were received from a reasonable cross‐section. First, chairmen were invited to rate the importance of each of sixteen key tasks to their own board, and second, to estimate how much effort their board currently devotes to each. They were then asked to rate their board’s current performance and potential for improvement against the tests of good practice appropriate to each relevant task.

The results provide evidence that boards are under pressure to fulfil ever‐rising stakeholder and regulator expectations and to do more to promote the future prosperity of their companies. In addition, the study provides evidence that boards possessing a majority of executive directors consider that there is conspicuously greater potential for improvement in performance than those where non‐executives are in the majority. Finally, the definitions of board responsibilities and tests of good practice used in the study have been shown to provide a comprehensive and robust template with which boards can assess their effectiveness.
Principles of Corporate Governance in Greece
Authors: Mertzanis Harilaos
Published: March 2003

This article presents the reasons which led the business community in Greece to reconsider existing corporate governance practices of listed corporations in the Athens Stock Exchange, outlines the general rationale for the creation and adoption of specific recommendations for best corporate practice, presents the recommendations in full detail and finally provides suggestions for the required corporate legal reform.
Problems and Limitations of Institutional Investor Participation in Corporate Governance
Authors: Webb Robert , Beck Matthias , McKinnon Roddy
Published: March 2003

During the past decade, major governance breakdowns in public limited companies have brought issues of corporate governance to the forefront of debate. As a result, a series of governance codes have been introduced into the UK that have sought to obligate publicly listed companies to certain practices in their overall operations. One of the codes, the Hampel Code, specifically called for an increased role for institutional investors in governance issues. Using financial system theory as a framework for discussion, this paper questions the viability of institutional investors taking a more active role in monitoring and enforcing governance in the UK. It is argued that, if institutional investors choose to increase participation, then it could create anomalies to the efficient operation of the capital markets, involve institutional investors as delegated monitors, increase costs and create free rider problems.
Managing Creativity in Organizations: a Total System Approach
Authors: Tan Gilbert
Published: March 2003

Organizations need creativity to adapt to the fast‐changing environment and revitalize itself. In response to this need, managers have invested in various single approaches, such as, creativity training programmes, team‐building, and leadership development to improve creativity. This paper argues that managing creativity in organization is a complex problem and thus requires a more integrated approach. In this paper, I have provided a theoretical framework to explain how managers can foster and sustain creativity in their organizations using a total systems approach. In the framework, I depict the organization as having four subsystems, namely, culture, techno‐structural subsystems, management and people. Each subsystem will create unique barriers to creativity. The framework identifies three types of interventions (cultural, organization and design, and training development) that can help develop the ingredients of creativity (foundations, competencies, and support).
Global Adjustment in Korean Textiles
Authors: McNamara Dennis
Published: March 2003

A combination of chronological compression and coordination of serial production has distinguished global adjustment in Korean textiles. Compression denotes the rapid progression from origins to maturity and then decline in what has become one of the world’s leading textile manufacturing and exporting nations. One consequence of rapid development has been inconsistencies in the formation of independent industry institutions necessary for adjustment, such as industry associations.

Coordination denotes matching supply and demand along a long domestic line of production for export. This line stretches from upstream synthetics and spinners, all the way down to fashion and garments. Three distinct patterns of coordination have dominated the Korean production line. 1) Intra‐firm coordination within textile chaebol such as Kabool, Kolon, or Tongkook demand extensive investments upstream and downstream, but permit economies of scale and scope, and facilitate planning and quality control. 2) Inter‐firm coordination by the Korean Federation of Textile Industries [KOFOTI] mobilizes state and industry support for extending and refocusing the production line, but remains hampered by excessive competition within the industry, and by conflicting demands between smaller and larger producers. 3) Industry‐level supervision of the production line through state control of quotas, trade relations, prices, labor, and on raw material imports, as well as through macrolevel state controls in finance and trade.

This paper focuses on the role of associations in global adjustment. Three levels of co‐ordination were critical in addressing the market imperfections of a fast‐growing industry, particularly in finance and in balancing production for domestic and foreign markets until recently. I conclude that without a greater role for industry associations in the face of state withdrawal from industry‐level coordination, contention rather than productive competition will hamper adjustment along South Korea’s long production line.
Interpretive Style, Motivation, Ability and Context as Predictors of Executives’ Creative Performance
Authors: Ford Cameron M.
Published: March 2003

Creativity has overtaken financial capital as the principal constraint facing businesses. Upper‐level executives must, therefore, be able to develop creative solutions to strategic and administrative issues in order for firms to remain viable. Executive creativity not only contributes directly to corporate differentiation and innovation, it also helps create an environment that encourages, or perhaps requires, creative contributions from others. Executives are critically important knowledge workers that direct and enable the creative efforts of intellectual assets within a firm. Unfortunately, few empirical studies have sought to examine the creativity of knowledge workers beyond the narrow confines of basic research or R&D labs. This article presents an initial empirical test of an integrative theory of creative individual work performance in the domain of executive work. The study shows that by simultaneously considering executives’ interpretive style, motivation to pursue creative outcomes, creative ability, and work setting one can explain substantial variation in executives’ creative work performance.
How Individualism‐Collectivism Moderates the Effects of Rewards on Creativity and Innovation: A Comparative Review of Practices in Japan and the US
Authors: Eisenberg Jacob
Published: March 2003

Recent research has shown that the relationship between rewards and creative performance is complex: while rewards increase creativity in some situations, they are detrimental to creative performance in others. The present paper explores the role of cross‐cultural differences in moderating some effects of rewards on creativity and innovation. I focus on individualism‐collectivism and its related differences in motivation, cognition and emotion. I then propose five ways in which differences in I‐C between Japan and the US moderate the effects of incentives on creative performance and innovation in these nations. Specifically, I claim that organizations in individualistic and collectivist cultures differ on: Effects of rewards on intrinsic motivation, effects of in‐group versus out‐group controlled rewards, effects of group vs. individual based incentives, reactions to in‐group and out‐group competition, and the effects of members’ identification with the organization on their innovation efforts. The notion of ‘congruence’ is offered as a theoretical framework for explaining the proposed ideas. Recommendations and implications of these prepositions for management of creativity in a cross‐cultural work force are discussed.
The Frustration of Talent: A Study in Scarlet
Authors: Goodman Malcolm
Published: March 2003

Many organisations are under pressure as they face strong buyers’ markets. This paper presents the findings of a research project designed to discover why talent is so often frustrated by mediocre management and what might be done about it. ICI and Marks & Spencer were selected as the setting, as both are well‐respected corporations and are facing stiff business challenges. The paper explores the locking hold that cultures can exert on operational management. It opens with a profile of each organisation before passing the consultancy brief to an imaginary business detective, Sherlock Holmes. By means of various devices the famous detective applies his powers to the case and the paper closes with a summary of his findings.
Strategic Decision‐making in a New Millennium: The Contribution from Hybrid Decision‐making Modes
Authors: Hsu Frederick B.
Published: March 2003

Empirical studies have provided scope for examining strategic decision‐making behaviours under a range of conditions including those involving environmental ‘jolts’ to expectations, and multiple‐decision activities. Effective decision‐making under turbulent conditions repeatedly involved a hybrid of rational and cybernetic (or experimental information‐seeking) behaviours. This was unpredicted. We have labelled this new mode Promethean rationality. A second hybrid mode was identified, under a more restricted range of conditions, and characterised as Confucian rationality combining rationality with appeal to ‘expert knowledge’. Inspection of a real‐life decision making case under an environmental jolt revealed preliminary evidence of Promethean rationality. The implications are the more valuable as in the rise of a new century, the environment around decision makers becomes more turbulent.
Trust‐based Leadership: Creative Lessons from Intelligent Horsemanship
Authors: Rickards Tudor
Published: March 2003

Mostly unsubstantiated claims have been made that non‐traditional methods of horsemanship have much to offer as models for leadership. The claims include the achievement of rapid and efficient interactions in which trust is gained between the human and unridden foals, or even between human and horses with fear of human contact. A study has begun to explore the relationship between the so‐called ‘join‐up’ approach, and creative leadership. The basic principles of the two approaches have been compared and contrasted in pilot studies with managers on development courses. Preliminary results suggest that creative leadership, and the join‐up approach, have many features in common. A particularly significant similarity is that they are both trust‐based approaches, contrasting with more traditional approaches of human and horse management, in which the goals of the leader/trainer are achieved through reinforcement of power and through the exercise of coercive methods of maintaining dominance. The study raises deep ethical questions of how leaders deal with those over whom they have some power, and for whom they have responsibilities. We conclude that creative leadership, and trust‐based methods of horsemanship achieve involvement and cooperation by psychologically healthy means.
Managing the Knowledge‐Creating Context: A Strategic Time Approach
Authors: Reinmoeller Patrick , Chong Li‐Choy
Published: March 2003

Understanding the contexts of knowledge is necessary to manage knowledge processes successfully. The goal of this paper is to provide a theoretical framework for understanding and utilizing knowledge that is embedded in contexts, focusing on the relationship between time and knowledge processes. This paper integrates the time lens and the literature on the knowledge based view to develop four different time contexts that can enable different organizational knowledge processes. Propositions on how to utilize time to create enabling contexts for organizational knowledge creation and innovation are developed. Suggested intervention strategies help to create contexts for knowledge creation and exploitation.
Evolution and Developmental Sex Differences
Authors: Geary David C.
Published: March 2003

From an evolutionary perspective, childhood is the portion of the life span during which individuals practice and refine those competencies that facilitate survival and reproduction in adulthood. Although the skeletal structure of these competencies appears to be inherent, social interaction and play flesh them out during childhood so that they are adapted to local conditions. Darwin's principles of sexual selection, including male-male competition over mates and female choice of mating partners, successfully explain the acquisition and expression of reproductive competencies in hundreds of species. When this perspective is applied to humans, it predicts sex differences that are, in fact, found in the childhood activities of boys and girls and that reflect sex differences in reproductive strategies in adulthood. A few of these differences are described, along with cultural factors that modify their expression. The article closes with a brief discussion of the social and scientific implications.
Neural Bases of Human Working Memory
Authors: Smith Edward E.
Published: March 2003

Working memory is the memory system that allows us to briefly keep information active, often so we can operate on it. Studies with rhesus monkeys first established that this system is partly mediated by neural mechanisms in the pre-frontal cortex. Recently, there has been a substantial effort to study the neural bases of working memory in humans, using neuroimaging techniques such as positron emission tomography and functional magnetic resonance imaging. Some of the initial neuroimaging studies with humans focused on the neural mechanisms that mediate our ability to keep spatial information active. These results indicated that human spatial working memory is partly mediated by regions in parietal and prefrontal cortex. Subsequent research has shown that a different neural system is involved when people store object (rather than spatial) information, a difference similar to that found in monkeys.
The Dynamics of General Developmental Mechanisms
Authors: van Geert Paul
Published: March 2003

Dynamic systems theory conceives of development as a self-organizational process. Both complexity and order emerge as a product of elementary principles of interaction between components involved in the developmental process. This article presents a dynamic systems model based on a general dual developmental mechanism, adapted from Piaget and Vygotsky. The mechanism consists of a conservative force, further strengthening the already-consolidated level, and a progressive force, consolidating internal contents and procedures at more advanced levels. It is argued that this dual mechanism constitutes one of the few basic laws of learning and change, and is comparable to the laws of effect and of contiguity. Simulation studies suggest that this dual mechanism explains self-organization in developmental paths, including the emergence of discrete jumps from one equilibrium level to another, S-shaped growth, and the occurrence of co-existing levels.
Can We Really Have It All? The Attainment of Work and Family Values
Authors: Perrewé Pamela L. , Hochwarter Wayne A.
Published: March 2003

We discuss the role values and value attainment play in the complex and dynamic process of balancing work and family demands. We contend that an individual experiences conflict between work and family demands because of value incongruence between that individual and a pivotal family member (i.e., lack of value similarity) or because of the incongruent values between that individual and the organization (i.e., lack of value congruence). We further argue that work-family conflict leads to job and life dissatisfaction for individuals because this conflict frustrates the attainment of important work and family values. We develop and propose a conceptual model, capturing both work and family values as they relate to work-family conflict, value attainment, and outcomes.
The Puzzle of Absolute Pitch
Authors: Deutsch Diana
Published: March 2003

Absolute pitch—the ability to name or produce a note of particular pitch in the absence of a reference note—is generally considered to be extremely rare. However, it has been found that native speakers of two different tone languages—Mandarin and Vietnamese—display a remarkably precise form of absolute pitch in enunciating words. Given these findings, it is proposed that absolute pitch may have evolved as a feature of speech, analogous to other features such as vowel quality. It is also conjectured that tone–language speakers generally acquire this feature during the 1st year of life, in the critical period when infants acquire other features of their native language. For speakers of nontone languages, the acquisition of absolute pitch by rare individuals may be associated with a critical period of unusually long duration, so that it extends to the age at which the child can begin taking music lessons. According to this line of reasoning, the potential for acquiring absolute pitch is universal at birth, and can be realized by giving the infant the opportunity to associate pitches with verbal labels during the 1st year or so of life.
From poachers to gamekeepers: Scandinavian warlords and Carolingian kings
Authors: Coupland Simon
Published: March 2003

This article represents the first comprehensive study of the commendation and conversion of Viking leaders by Carolingian rulers, from the first recorded instance under Charlemagne to the agreement with Rollo in the early tenth century. The survey underlines how widespread the practice was, and permits an assessment of its effectiveness as a defensive strategy against Scandinavian incursions. The outcome varied: some Scandinavians found themselves defending Frankish territory against Viking attack, others acted as intermediaries between Franks and Scandinavians, still others were granted Frankish benefices but never trusted, and ultimately killed. Nonetheless, the article demonstrates that in the majority of cases the practice of commendation and conversion worked to the Carolingians’ advantage, neutralizing potential enemies or even turning them into useful allies.
Review article: San Vincenzo al Volturno. History rewritten?
Authors: Balzaretti Ross
Published: March 2003

Books reviewed in this article:

Richard Hodges, Light in the Dark Ages. The Rise and Fall of San Vincenzo al Volturno.

Richard Hodges (ed), San Vincenzo al Volturno 2: the 1980–1986 Excavations. Part 2.
Literacy and the law in Lombard government
Authors: Everett Nick
Published: March 2003

This article examines the Lombard law code as evidence for literate practices in government and society in seventh‐ and eighth‐century Italy. The effectiveness of the code as an instrument of government is testified by the charter evidence, in which the precepts of the code are implicitly acknowledged or cited directly. Although largely the result of a necessary appropriation of late Roman property law, Lombard legislation and notarial practice applied further literate methods to document, and hence to validate, a range of transactions. The use of written law was not merely limited to male landowners, but affected Italo‐Lombard society more widely, as is revealed by the evidence for women's property rights and manumission. The charter evidence and references within the code itself suggest that various uses of writing for governmental administration extended beyond the royal and ducal levels into local society.
The economic principles of pension provision
Authors: Minford Patrick
Published: March 2003

To examine pensions Samuelson's overlapping‐generations model is generally used: its basic workings are set out here for an open economy. Pay‐as‐you‐go (PAYGO) pensions are attractive when the rate of population growth exceeds the real rate of interest; then all generations are better off for the existence of the pension. The only cost is the income tax distortion. Once the rate of growth falls below the real interest rate, only the cost is left and it is better for the state to‘fund’its pensions. If the state borrows to finance the transition to a funded system, it substitutes explicit debt for unfunded liabilities, which leaves its balance sheet unchanged; this avoids the problem of the existing young generation‘paying twice’for its pensions.
The political feasibility of road pricing
Authors: Truelove Paul
Published: March 2003

Attitudes to road pricing at last are showing signs of change. In addition, the existing road‐building and public transport lobbies are now becoming matched by the growth of information technology. Development from now on must be at local level, and the time is now ripe to re‐examine the interests involved so as to maximise satisfaction.
The international importance of low tax rates1
Authors: Reynolds Alan
Published: March 2003

G‐7 economies raised tax rates in the 1990s, unlike the 1980s. Yet many developing nations continued to bring their highest tax rates down. Economic growth among 19 countries with low or falling tax rates averaged 5.8% a year from 1990 to 1996, up from 4.5% in the preceding decade. At the same time, annual GDP growth among G‐7 countries slowed to 1.7%, down from 2.9%.
Europe: single market or political union?
Authors: Howe Lord
Published: March 2003

The choice is between single market and political union over‐simplified. Even an effective single market requires some political integration. So too does the management of a single currency, advantageous in itself. Neither requires a ‘European economic government.’ Beyond this, the peoples of Europe increasingly question the need for further supra‐nationalism.‘Political union,’ in the form which frightens people, will not happen. Britain must play a full part in shaping the EU and its unique institutional structures, and prepare to join the euro‐zone as soon as sensibly possible.
Are gilts ethical investments?
Authors: Arthur Terry
Published: March 2003

In the light of the rolling bandwagon of socially responsible investment (SRI), this paper attacks gilt‐edged securities as highly unethical investments. With gilts not conforming to the rules laid down by the government for the private sector, the author invites the pension funds to shake off this anachronism in favour of expansion of the corporate bond market
Fallacies in the Stakeholding Debate
Authors: Haar Lawrence
Published: March 2003

This paper reviews the logic underlying the fashionable stakeholding literature and finds it at variance with received economic theory. It concludes that many stakeholding views are flawed, particularly in regard to the rôle of profit which is seen as a constraint rather than an objective.
Minimum Wage Myths
Authors: Dillow Chris
Published: March 2003

This paper casts doubt on the positive effects so often claimed for the recently‐introduced national minimum wage by its many supporters. It attacks the notion of the minimum wage as a ‘free lunch’, arguing that its effects are often either negative or simply unknown. Those worst affected by its introduction are those the Minimum Wage most aims to help – the lowest income group.
Agricultural incomes and the CAP
Authors: Hill Berkeley
Published: March 2003

Concern with the living standards of farmers is central to the CAP yet it demonstrates the muddled objectives, inappropriate indicators and misdirected interventions that are the stuff of analysts’ worst nightmares. As a consequence, the performance of the CAP in terms of this fundamental aim has, in all likelihood, been very poor. Attempts to reorientate the CAP to be more in line with its declared objectives face enormous vested interests in the agricultural industry and among policy‐makers.
Endogenous growth theory: a critique
Authors: Al‐Ubaydli Omar , Kealey Terence
Published: March 2003

Endogenous growth theory is based on a misperception of how science and technology are acquired and diffused. In particular, it is incorrect to assume that knowledge is freely available. Any knowledge which has economic value has to be accessed via the brains of experts who are members of the relevant ‘invisible college’ and are rivalrous.It therefore has the characteristics of a private good which can be left to conventional economic incentives to supply.
LANGUAGE AND TOTALITARIAN REGIMES
Authors: Stroińska Magda
Published: March 2003

The communist misappropriation of words for political purposes still makes people in Eastern Europe struggle to find unambiguous language of political and economic thought. This paper discusses the problem of language that distorts reality and focuses on traps that hinder communication between people from the West and people from the post‐communist Eastern Europe.
Explaining the rise in marital fertility in England in the ‘long’ eighteenth century
Authors: Wrigley E. A.
Published: March 2003

abstract
Markets, institutions, and the development of national collective bargaining in Britain: a comment on Adams
Authors: Gospel Howard
Published: March 2003

abstract
From imitation to invention: creating commodities in eighteenth‐century Britain
Authors: Berg Maxine
Published: March 2003

This article presents the history of new goods in the eighteenth century as a part of the broader history of invention and industrialization. It focuses on product innovation in manufactured commodities as this engages with economic, technological and cultural theories. Recent theories of consumer demand are applied to the invention of commodities in the eighteenth century; special attention is given to the process of imitation in product innovation. The theoretical framework for imitation can be found in evolutionary theories of memetic transmission, in archaeological theories of skeuomorphous, and in eighteenth‐century theories of taste and aesthetics. Inventors, projectors, economic policy makers, and commercial and economic writers of the period dwelt upon the invention of new British products. The emulative, imitative context for their invention made British consumer goods the distinctive modern alternatives to earlier Asian and European luxuries.
English rural societies and geographical marital endogamy, 1700–1837
Authors: Snell K. D. M.
Published: March 2003

This article studies 69 rural parishes in eight English counties, examining changes in geographical marital endogamy. It discovers a consistent upward trend in the proportions of marriages that were parochially endogamous, coupled with a decline in so –called ‘foreign’ marriages following Hardwickes’s Act (1753), and a striking shift towards marriages taking place in the brides’ parishes. It explores regional variability in parochial endogamy and stresses the role of settlement sizes. The explanation for rising endogamy highlights factors such as population growth, rising poor relief expenditures, and attitudes resistant to ‘outsiders’ during a period of precarious subsistence and associated tensions.
Prudence and Pragmatism in the Fiscal Stance
Authors: Proce Simon
Published: March 2003

In this article, Simon Price argues that the government is pursuing a remarkably conservative fiscal policy. Not only has demand management been left almost entirely to the MPC, but since 1997 spending has been held down while the overall tax burden has been raised. Consequently, the relative size of the national debt is declining at a rapid rate. There are rules that are intended to govern debt policy, but they are based on less sound principles than the government argues, and may be inconsistent. Oddly, despite the emphasis on these rules, the government has announced a path for spending that makes it clear that it is in fact planning not to follow them. The government may be planning to reduce the national debt at an excessive rate. This may make sense in the short run, but is more problematic in the medium to long term. This is not to say fiscal policy should be immediately relaxed; the current low levels of private sector saving may well justify a temporarily tight fiscal stance.
Stable Multilateral Trade Agreements
Authors: Macho‐Stadler Inés , Pérez‐Castrillo David , Ponsati Clara
Published: March 2003

We analyse multilateral tariff negotiations as a game in coalition form. In a model with three identical countries that produce and trade an homogeneous commodity, and where countries’ aggregated welfare can weight differently their different components, we analyse how changes in the countries’ objective affects the stability of coalitions. In other words, we characterize what tariff‐agreements, if any, are stable (i.e. lie in the core).
Risk and Revelation: Changing the Value of Information
Authors: Creane Anthony
Published: March 2003

A different approach is introduced to determine the value of an information‐sharing agreement: the measure of risk aversion/loving. This approach reveals the relationship between information‐sharing models and the risk literature. It also allows uncertainty regarding the slope of a firm’s own demand function to be examined which previous work eschews. The results suggest that the incentive to reveal information is more prevalent than previously thought: firms prefer to commit to reveal private valued information in both quantity and price competition. This differs from previous work where the incentive to commit depended on the type of competition.
Primary Schooling, Cognitive Skills and Wages in South Africa
Authors: Moll Peter G.
Published: March 2003

Using a fairly rich data set from South Africa, the paper finds that, despite the sobriquet ‘gutter education’, the African schooling systems help to create cognitive skills, and these skills are a determinant of wage levels. Various robust estimators are used but the influential outlier problem does not turn out to be serious. Computational skills appear to be more important than comprehension skills in influencing wages. The African primary schooling system was an extremely poor generator of computational skill, the seven‐year course raising the computational test score by 13%, if that. A policy implication is that productivity could be raised by certain near‐costless reallocations of resources in favour of mathematical learning.
Innovation Races, Strategic Externalities and Endogenous Growth
Authors: Corriveau Louis
Published: March 2003

I expound a tractable model of an infinite‐horizon multi‐sector economy where endogenous growth in the aggregate results from innovation races which go on in each and every sector. I identify five externalities that have strategic implications: the ‘contemporaneous real income’, the ‘lagged real income’, the ‘aggregate demand’, the ‘Shleifer’ and the ‘competition’ effects. I prove that multiple stationary equilibria can exist and lead to different rates of growth, and show that, in any stationary equilibrium, the rate of growth is constant. Finally, I prove that the rate of growth may be higher or lower than social welfare warrants.
The Impact of Alcohol Consumption on Occupational Attainment in England
Authors: Macdonald Ziggy , Shields Michael A.
Published: March 2003

In this study we provide evidence on the effect of alcohol consumption on occupational attainment in England. To do this we use samples of employees from the Health Survey for England between 1992 and 1996. We find that, owing to the endogenous nature of alcohol consumption, OLS estimates may provide a biased picture of the impact of alcohol consumption on occupational attainment. Using various sets of instrumental variables, we find positive and significant returns to moderate levels of drinking for male and female employees which drop off rapidly as consumption increases.
Unemployment and Search Externalities in a Model with Heterogeneous Jobs and Workers
Authors: Gautier Pieter A.
Published: March 2003

This paper presents a matching model with low– and high–skilled workers and simple and complex jobs. I show that the degree to which low–skilled workers are harmed by high–skilled workers who are willing to temporarily accept simple jobs depends on the relative productivity of high– and low–skilled workers on simple jobs and on the quit rate of high–skilled workers. Under certain conditions, low–skilled workers can benefit from job competition with high–skilled workers. Within this framework, some explanations for the high and persistent unemployment rates of lower educated workers in the 1990s are evaluated.
Debt v. Foreign Direct Investment: The Impact of Sovereign Risk on the Structure of International Capital Flows
Authors: Schnitzer Monika
Published: March 2003

The paper compares the two standard forms of international investment in developing countries, debt and foreign direct investment (FDI), from a finance perspective. The sovereign risks associated with debt finance are shown to be generally less severe than the ones that come with FDI. FDI is chosen only if the foreign investor is more efficient in running the project, if the project is risky, and if the foreign investor has a good outside option which deters creeping expropriation. The sovereign risk problem of FDI can be alleviated if the host country and the foreign investor form a joint venture.
Risky Business: Multinationals, Uncertainty and Asymmetric Insurance
Authors: Dewit Gerda
Published: March 2003

A partial equilibrium model is used to examine the international production allocation of a two‐plant multinational firm that is confronted with uncertainty with respect to foreign sales. The firm produces identical products in both plants, using firm‐specific factors. The internationally price‐discriminating multinational has monopoly power in both segmented markets. The analysis focuses on how asymmetric insurance facilities between the firm’s home and host country influence its international production allocation and level of intra‐firm trade.
The Macroeconomic Consequences of Anticipated Price Reform
Authors: Fender J. , Laing D.
Published: March 2003

This paper uses a two‐period model to examine the macroeconomic consequences of anticipated price liberalization. In the first period prices are controlled, there is excess demand for goods and consumers must engage in costly queuing to make purchases. In the second period prices are freed, eliminating the need for queues. We establish the possibility of multiple Pareto‐rankable equilibria and examine the effects of contingent policy rules. The framework enables us to examine a number of issues of importance, such as the problem of the monetary overhang, the relevance of budgetary policies and the effects of foreign aid.
Choosing Democracy
Authors: Rosendorff B. Peter
Published: March 2003

In an autocracy, the ruling elite allocates resources to unproductive contest activities in order to protect its power. This paper establishes that a flatter income distribution, a slow‐growing or shrinking capital stock, and a decrease in the relative size of the workforce increases the likelihood of a decision by the ruling elite to negotiate a transition to democracy. In a model of economic cooperation and political conflict, the losses from ceding control over the tax rate may be lower than the costs of defending minority privilege. These predictions are evaluated in the light of the South African and other recent transitions.
The Political Economy of Postmaterialism: Material Explanations of Changing Values
Authors: Grafstein Robert
Published: March 2003

This paper uses a dynamic stochastic general equilibrium (DSGE) model of the US political economy to explore the impact of public insurance on the way individuals react to partisan changes in economic policy. In response to these aggregate political shocks, individuals rely on public insurance to insulate them from government‐induced volatility in consumption. As a result, the public appears to be relatively less materialistic in its vote choices as well as in “values” surveys, but only because its underlying materialism has less political salience. Thus this insurance model provides an alternative analysis of the rise of “postmaterialist values” and their relation to unemployment.
The wage effects of ethnicity in Estonia
Authors: Kroncke Charles , Smith Kenneth
Published: March 2003

Using the retrospective (1989‐94) Estonian Labour Force Survey (ELFS), we attempt to examine potential wage discrimination based on ethnicity (Estonian and Russian). Using standard wage decomposition methodology, we look at male full‐time workers in the years 1989 and 1994. There is no evidence of discrimination against either ethnic group in 1989. However, the available data provide substantial evidence of discrimination against ethnic Russians in 1994. The evidence also suggests that Estonian language ability does not significantly affect wages. Surprisingly, Estonian‐born ethnic Russians appear to fare worse than immigrant ethnic Russians in terms of wages.

JEL classification: J71, P23.
Control, Incentives and Competition: The Impact of Reform on Chinese State‐owned Enterprises
Authors: Xu Lixin Colin
Published: March 2003

Through the lens of the theory of the firm, I examine how a series of reforms affected the performance of Chinese state‐owned enterprises with a panel dataset of more than 500 firms. The study finds that performance improved with various reforms such as increasing competition, appointing new managers, using firm‐level pay sensitivity, raising marginal profit retention rates and allowing managers to determine wages and to make production decisions. Adopting performance contracts did not improve performance significantly. These results confirm the importance of competition, control rights, managerial and internal incentives, as emphasized by the theory of the firm.
Give Macroeconomic Stability and Growth in Russia a Chance
Authors: Pinto Brian , Drebentsov Vladimir , Morozov Alexander
Published: March 2003

This paper identifies and investigates conceptual and empirical links among Russia's disappointing growth performance of the mid‐1990s, its costly and eventually unsuccessful stabilization, the macroeconomic meltdown of 1998 and the spectacular rise of non‐payments. Non‐payments developed into a system that flourished in an atmosphere of fundamental inconsistency between a macroeconomic policy geared at sharp disinflation and a microeconomic policy of bailing‐out enterprises through soft budget constraints. It embodies a large volume of untargeted, implicit subsidies in the order of 7–10 per cent of GDP, which has stifled growth, contributed to the 1998 meltdown through its impact on public debt and made at best a questionable contribution to equity. The overwhelming priority at this point is to dismantle this system, thereby promoting enterprise restructuring and growth (by hardening budget constraints) and medium‐term macroeconomic stability (by reducing the size of the subsidies).
The effects of foreign direct investment on domestic firms
Authors: Konings Jozef
Published: March 2003

This paper uses firm‐level panel data to investigate empirically the effects of foreign direct investment on the productivity performance of domestic firms in three emerging economies of Central and Eastern Europe: Bulgaria, Romania and Poland. To this end, a unique firm‐level panel dataset is used with detailed information on foreign ownership at the firm level. Two main questions are addressed in the present paper: (1) do foreign firms perform better than their domestic counterparts? (2) do foreign firms generate spillovers to domestic firms?

The estimation technique in this paper takes potential endogeneity of ownership, spillovers and other factors into account by estimating a fixed effects model using instrumental variables in the general methods of moment technique for panel data.

Only in Poland, do foreign firms perform better than firms without foreign participation. Moreover, for all three countries studied here, I find no evidence of positive spillovers to domestic firms, on average. In contrast, on average, there are negative spillovers to domestic firms in Bulgaria and Romania, while there are no spillovers to domestic firms in Poland. This suggests a negative competition effect that dominates a positive technology effect.

JEL classification: D24, F14, O52, P31.
Regional patterns of industrial development during China’s economic transition
Authors: Golley Jane
Published: March 2003

This paper pinpoints ‘circular and cumulative causation’ as the fundamental mechanism driving the observed trend of uneven industrial development in the Chinese economy. A shift–share analysis of manufacturing performance at the provincial level identifies five provinces in South–east China — Guangdong, Fujian, Zhejiang, Jiangsu and Shandong — as the main beneficiaries of this cumulative process during China’s transition period. A descriptive analysis identifies some of the specific transitional factors and policy choices that have compounded the natural tendency towards regional inequality in China’s industrializing economy.

JEL classification: R12, O53, P20.
The Arrival Rate of Initial Public Offers in the UK
Authors: Rees William P.
Published: March 2003

The Initial Public Offer (IPO) is an important event in the development of a firm yet there is little evidence regarding why firms choose certain times to come to the market. This paper extends the available evidence, concentrating on UK data and addressing a number of econometric problems with earlier papers. These advances include acknowledging the non‐negative integer characteristics of count data, compensating for non‐stationarity in the data, and explicitly testing for causality. The paper examines the incentives to conduct an IPO and the results suggest that both the value and number of IPOs are positively and significantly associated with the level of the stock market, with the introduction of the USM, and, in the case of the number of IPOs, positively and significantly associated with a business cycle indicator. Tests of causality suggest that the stock index predicts both the value and number of IPOs.
Credit Risk Exposure with Currency Swaps
Authors: Coppes Robert Christophor
Published: March 2003

Most countries have adopted the proposals of the Bank for International Settlements (BIS) to cover credit risks incurred by banks and security institutions. For derivatives the exposed amount has been defined as the positive marked‐to‐market value plus an add‐on factor. For currency swaps there are three add‐on factors, depending on the remaining life of the contract. In this paper it is shown that they should also depend on interest differentials, the interest rate and exchange rate volatilities, and the interest correlation. Further, it is shown that credit risk is not always divided equally over both parties.
On the Predictability of the Stock Market Volatility: Does History Matter?
Authors: Adjaoute Kate , Bruand Martin , Gibson‐Asner Rajna
Published: March 2003

This study compares the performance of the ISD, the GARCH(1,1), the historical volatility estimates and of two lagged trading volume measures for predicting the Swiss Stock Market Index's (SMI) volatility. The ISD has a superior daily informational content than the GARCH(1,1) estimate and retains unbiased but decreasing explanatory power over up to 20 days ahead horizons. Mean and spread daily volume measures play a significant correcting role when forecasting stock market volatility over daily and longer intervals respectively and clearly dominate the GARCH(1,1) forecasts. Their significance emphasises heterogeneous horizon traders' influence on the SMI volatility time series properties
A Unifying Microstructure Framework for Modeling Intraday and Interday Asset Pricing Dynamics: the Case of Exchange Rates
Authors: Chauveau Thierry , Topol Richard
Published: March 2003

A model of the dynamics of intradaily exchange rates is presented. The current Over‐The‐Counter (OTC) exchange rate is the quote of the quoting bank.Two polar cases are considered: (i) If each bank is able to observe the noises relative to the orders of its own clients, then the OTC exchange rate is shown to obey a random walk with a constant conditional variance. (ii) If each bank is not able to observe the noises relative to the orders of its own clients, the OTC exchange rate is no more a random walk and conditional heteroskedasticity appears.
Short Sales Constraints, Liquidity and Price Discovery: An Empirical Analysis on the Paris Bourse
Authors: Biais Bruno , Bisière Christophe , Décamps Jean‐Paul
Published: March 2003

In the Paris Bourse some stocks are traded on a spot basis, while others are traded on a monthly settlement basis. The latter are likely to be less subject to leverage and short sales constraints. We empirically analyse the consequences of this difference for the order flow and the return process. Consistent with the theoretical analysis of Diamond and Verrechia (1987), we find that market sell orders are less frequent on the spot market than on the monthly settlement market (although not very significantly) and that the spot market reflects good news (significantly) faster than bad news.