bluuebunny/crossref_metadata_2025 huggingface dataset:
The Fable of the Keiretsu
Authors: Miwa Yoshiro , Ramseyer J. Mark
Published: January 2004

Central to so many accounts of post‐war Japan, the keiretsu corporate groups lacked economic substance from the start. Conceived by Marxists committed to locating “domination” by “monopoly capital,” they found an early audience among western scholars searching for evidence of culture‐specific group behavior in Japan. By the 1990s, they had moved into mainstream economic studies, and keiretsu dummies appeared in virtually all econometric regressions of Japanese industrial or financial structure. Yet the keiretsu began as a figment of the academic imagination, and they remain that today. Regardless of the keiretsu definition used, cross‐shareholdings within the “groups” were trivial, even during the years when keiretsu ties were supposedly strongest. Neither does membership proxy for “main bank” ties. Econometric studies basing “keiretsu dummies” on the available rosters produce predictably haphazard and unstable results. In the end, the only reliably robust results are the artifacts of the sample biases created by the definitions themselves.
Patent Licensing Under Strategic Delegation
Authors: Saracho Ana I.
Published: January 2004

The modern corporation is characterized both by a separation of ownership from management and by managerial incentives that often include strategic elements in addition to the standard incentive elements. Despite the importance of these two features in the agency and corporate‐governance literatures, they are absent in the treatment of the firm in the patent‐licensing literature. The analysis in this paper shows how, by simply taking into account these two features of the modern corporation, it is possible to offer a new explanation for the use of royalties in licensing agreements.
The Impact of Activity‐Based Costing on Managerial Decisions at Insteel Industries—A Field Study
Authors: Narayanan V.G. , Sarkar Ratna G.
Published: January 2004

In this field‐based study, we interview top‐ and middle‐level managers at Insteel Industries and conduct statistical analysis of firm‐level data in order to shed light on whether activity‐based costing (ABC) provides new information to managers and whether activity‐based management (ABM) significantly influences product and customer‐related decisions. We find that after the ABC analysis, Insteel undertook a number of process improvements that resulted in significant cost savings. Additionally, Insteel displayed a higher propensity to discontinue or increase prices of products and discontinue customers that were found comparatively unprofitable in the ABC study. Thus we provide empirical evidence that ABC influences both strategic and operational managerial decisions.
Employee Involvement And Pay At Us And Canadian Auto Suppliers
Authors: Helper Susan , Levine David I. , Bendoly Elliot
Published: January 2004

We use survey data and field research to investigate the effects of employee involvement practices on outcomes for blue‐collar workers in the auto‐supply industry. We find these practices raise wages by 3–5%. The causal mechanism linking involvement and wages appears to be most consistent with efficiency‐wage theories, and least consistent with compensating differences. We find no evidence that employee involvement affects plants' survival or employment growth.
Venture‐Capital Syndication: Improved Venture Selection vs. The Value‐Added Hypothesis
Authors: Brander James A. , Amit Raphael , Antweiler Werner
Published: January 2004

Syndication arises when venture capitalists jointly invest in projects. We model and test two possible reasons for syndication: project selection, as an additional venture capitalist provides an informative second opinion; and complementary management skills of additional venture capitalists. The central question is whether venture capitalists are engaged primarily in selection or in managerial value added. These alternatives imply contrasting predictions about comparative returns to syndicated and standalone investments. Our empirical analysis, using Canadian data, finds that syndicated investments have higher returns, favoring the value‐added interpretation. We also discuss risk sharing and project scale as possible reasons for syndication.
Revisiting Oligopolistic Reaction: Are Decisions on Foreign Direct Investment Strategic Complements?
Authors: Head Keith , Mayer Thierry , Ries John
Published: January 2004

Knickerbocker (1973) introduced the notion of oligopolistic reaction to explain why firms follow rivals into foreign markets. We develop a model that incorporates central features of Knickerbocker's story—oligopoly, uncertainty, and risk aversion—to establish the conditions required to generate follow‐the‐leader behavior. We find that rival foreign investment will make risk‐neutral firms less inclined to move abroad once its rivals have done so. We show that Knickerbocker's prediction relies on risk aversion and derive an expression for the minimum amount of risk aversion needed to generate oligopolistic reaction.
Why Should the Boss Own the Assets?
Authors: Wernerfelt Birger
Published: January 2004

In the context of an employment relationship, I present an argument suggesting that it is more efficient for the boss to own the productive assets. The idea is that a conflict between productivity and depreciation is internalized if the player deciding what an asset is used for also has residual claims. An empirical test finds evidence consistent with this. By asking whether the boss should own the assets, the paper reverses the reasoning from the literature in which it is argued that the owner has power and thus is the boss.
On the Use of Nonfinancial Performance Measures in Management Compensation
Authors: Sliwka Dirk
Published: January 2004

It is often claimed that (i) managers work too hard on operational issues and do not spend enough effort on strategic activities, and (ii) something can be done about this by introducing nonfinancial performance measures, as for instance with a balanced scorecard. We give an explanation for both claims in a formal model. The distortion toward operational effort arises because with financial performance measures strategic effort can only be rewarded in the future. But renegotiation‐proof long‐term compensation plans entail too weak variable components in the future. This problem can be reduced by introducing performance measures that help to disentangle strategic and operational effects.
Mergers to Monopoly
Authors: Tombak Mihkel M.
Published: January 2004

Horizontal mergers between firms that have different costs are examined. Owners can transfer technology to an acquired firm and decide whether to consolidate or operate their firms as separate entities in the product market. Thus mergers can exhibit both efficiencies and a market‐power effect. The prices of target firms are determined via a bargaining game. An equilibrium sequence of mergers entails the largest firm targeting the next largest rival firm. Initially, this sequence of mergers with technology transfers involves no consolidations and improves welfare. Ultimately, the acquisitions lead to consolidation and may decrease total welfare.
Product Switching Cost and Strategic Flexibility: Correction
Authors: Jacques Armel
Published: January 2004

This note corrects Proposition 3 of Chang (1998).
Do Pharmaceutical Sales Respond to Scientific Evidence?
Authors: Azoulay Pierre
Published: January 2004

I investigate how different sources of information influence the diffusion of pharmaceutical innovations. In prescription‐drug markets, both advertising and scientific information stemming from clinical trials can affect physicians' prescription choices. Using novel indices of clinical‐research output, I find that both marketing and scientific evidence directly influence the diffusion process in the antiulcer‐drug market, with marketing having a more pronounced influence. I also find evidence that clinical outputs are important drivers of firms' marketing efforts, affecting sales indirectly. Taken together, the direct and indirect effects of science on demand imply strong private incentives for clinical research. I conclude that product‐market competition in the pharmaceutical industry is shaped by both advertising rivalries and scientific rivalries. Moreover, drug advertising may perform an important informative function.
The Determinants of Organizational Change and Structural Inertia: Technological and Organizational Factors
Authors: Colombo Massimo G. , Delmastro Marco
Published: January 2004

There are a growing body of theoretical work, wide anecdotal evidence, and a few large‐scale empirical studies supporting the view that business firms quite rarely change their organizational structure, a phenomenon usually referred to in the literature as structural inertia. The present paper aims to analyze empirically the determinants of structural inertia and organizational change. As far as we know, this work constitutes the first attempt to directly address such issues through econometric estimates based on a large, longitudinal dataset at plant level. For this purpose, we consider changes of the organizational structure within a sample composed of 438 Italian manufacturing plants observed from 1975 to 1996. More precisely, we specify and test a duration model of the likelihood of an individual plant changing the number of hierarchical tiers after a spell r, provided that no change has occurred up to T. We also analyze the direction of change, distinguishing increases from decreases of the number of managerial layers. We consider a set of plant‐ and industry‐specific explanatory variables that are expected to induce or oppose organizational change. The findings show that the adoption of advanced manufacturing technologies and new human‐resources management practices favors organizational change. On the contrary, the presence of sunk costs and the extent of influence activities figure prominently in explaining structural inertia of business organizations.
Open Source Software: Private Provision of a Public Good
Authors: Johnson Justin Pappas
Published: January 2004

A simple model of open source software (as typified by the GNU‐Linux operating system) is presented. Individual user‐programmers decide whether to invest their own effort to develop a software enhancement that will become a public good if so developed. The effect of changing the population size of user‐programmers is considered; finite and asymptotic results are given. Welfare results are presented. It is shown that whether development will increase when applications have a modular structure depends on whether the developer base exceeds a critical size. Potential explanations of several stylized facts are given, including why certain useful programs don't get written.
In Support of Trigger Strategies: Experimental Evidence from Two‐Person Noncooperative Games
Authors: Mason Charles F. , Phillips Owen R.
Published: January 2004

Cooperative equilibria can be supported in a repeated game when players use trigger strategies. This paper tests how well trigger strategies explain behavior in two‐person experimental games. Reducing payoffs for choices larger than the Cournot level induces smaller average outputs, behavior generally consistent with trigger strategy models. Reducing payoffs for choices well above the Cournot level will not affect behavior if actions are consistent with a trigger strategy involving longer‐lived, less intense punishment phases (the grim‐reaper strategy), but would matter for trigger strategies with short‐lived but intense punishment phases. Results show that behavior is most consistent with the former.
Power in the Firm and Managerial Career Concerns
Authors: Ortega Jaime
Published: January 2004

More powerful managers make more important decisions. Therefore, firm performance is more informative about the abilities of such managers, who, realizing that they are more visible, are more eager to improve performance. If this reputation effect exists, how should firms allocate power? I analyze the optimal allocation of power and derive implications for several issues that often arise in management practice: the choice of departmentation criteria, the importance given to seniority, and the width of job definitions. Finally, I show that the model is consistent with the empirical evidence on managerial succession.
Does Ownership Matter? Evidence from the Zaibatsu Dissolution Program
Authors: Miwa Yoshiro , Ramseyer J. Mark
Published: January 2004

In 1985, Demsetz and Lehn argued both that the optimal corporate ownership structure was firm‐specific, and that market competition would drive firms toward that optimum. Because ownership was endogenous to expected performance, any regression of profitability on ownership patterns would yield insignificant results. To test this hypothesis, we use the zaibatsu dissolution program from late‐1940s Japan as a natural experiment: an exogenous shock to the equilibrium ownership structure. Through that program, the US‐run occupation removed the more prominent shareholders from many of the most successful Japanese companies. By focusing on the way firms and investors responded to the mandated selloff, we accomplish two goals: (a) we avoid the endogeneity problem that has plagued much of the other research on the subject, and (b) we clarify the equilibrating dynamics by which competitive markets move firms toward their optimal ownership structure. With a sample of 637 Japanese firms for 1953 and 710 for 1958, we confirm the equilibrating mechanism behind the Demsetz‐Lehn hypothesis: between 1953 and 1958, the ex‐zaibatsu firms did retructure their ownership patterns. As of 1953, the unlisted ex‐zaibatsu and new firms still had not been able to negotiate the transactions necessary to approach their profit‐maximizing ownership structures. Even the listed firms had not fully undone the effect of the occupation‐induced changes on managerial practices. By 1958 the firms had done this, and the earlier correlation between profitability and ownership disappeared. By then, firm profitability showed no correlation with ownership, whether under linear, quadratic, or piecewise specifications. We further find no evidence that ex‐zaibatsu firms sought to strengthen their ties to banks over 1953–1958.
Why aren't all Truck Drivers Owner‐Operators? Asset Ownership and the Employment Relation in Interstate for‐hire Trucking
Authors: Nickerson Jack A. , Silverman Brian S.
Published: January 2004

Transaction‐cost and agency theorists have frequently cited trucks as prototypical user‐owned assets, and have consequently predicted a predominance of self‐employed drivers who contract with motor carriers. In fact, owner‐operators accounted for less than one‐third of US trucking activity conducted by large interstate trucking firms in 1991, a proportion that has changed little since deregulation. Given the predictions of organizational economists, why is self‐employment in the interstate trucking industry not the dominant organization form?

We propose that transaction costs and agency costs are indeed important in the trucking industry. In the absence of externalities across hauls, contracting between carriers and owner‐operators is preferred for traditional agency reasons. However, when the outcome of one haul imposes externalities on other hauls or on the carrier's reputation, an owner‐operator will not internalize all costs associated with poor outcomes. Given problems of noncontractibility of maintenance effort, carrier ownership of the vehicle is the preferred organizational form in such a case. We also propose that vehicle idiosyncrasy can create thin market conditions that encourage carrier ownership of vehicles. A study of the organization and operations of 354 trucking firms for 1991 provides evidence consistent with these predictions.
Sunk Costs, Contestability, and the Latent Contract Market
Authors: Stefanadis Christodoulos
Published: January 2004

The idea that an industry with sunk costs may be contestable even in the absence of long‐term contracts has received little attention informal economic theory yet is sometimes popular among practitioners. This paper formally illustrates the argument. In an infinitely repeated game, there exists a class of contestable outcomes in which the monopolist sells only on the spot market and charges low prices along the equilibrium path to prevent customers from resorting to long‐term contracts. The crucial test for contestability is the level of transaction costs in the latent contract market.
Endogenous Technological Spillovers: Causes and Consequences
Authors: Gersbach Hans , Schmutzler Armin
Published: January 2004

We develop a new approach to endogenizing technological spillovers. We analyze a game in which firms can first invest in cost‐reducing R&D, then compete on the human‐capital market for their knowledge‐bearing employees, and finally enter the product market. If R&D employees change firms, spillovers arise. We show that technological spillovers are most likely when they increase total industry profits. We use this result to show that innovation incentives are usually stronger for endogenous than for exogenous spillovers and that endogenous spillovers may reverse the result that innovation incentives are stronger under quantity competition than under price competition. Finally, we explore the robustness of our results with respect to contractual incompleteness and the number of R&D workers.
Efficient Intercarrier Compensation for Competing Networks When Customers Share the Value of A Call
Authors: Degraba Patrick
Published: January 2004

In competitive telecommunications markets each carrier relies on competing networks to terminate internetwork calls. Regulators typically require the calling party's network to pay a termination fee to the called party's network equal to the terminating network's “incremental cost” of completing the call, effectively imposing all of the costs on the calling party's network. These payments can affect retail prices and therefore consumption. I show that when both parties benefit from a call, they should bear its costs in proportion to the benefit they receive. Therefore, imposing all of the costs of an internetwork call on the calling party's network can be inefficient if these costs are reflected in the calling party's usage rates. A system in which two networks exchange traffic at specified points on a bill‐and‐keep basis imposes some of the cost on each network, which will then be imposed on the parties. This can generate more efficient network utilization, even with unbalanced traffic between networks. Thus, regulators may improve the efficiency of telecommunications markets by establishing bill‐and‐keep intercarrier compensation rules.
Backward Integration by a Dominant Firm
Authors: Linnemer Laurent
Published: January 2004

This paper studies the welfare consequences of a vertical merger that raises rivals' costs when downstream competition is a la Cournot between firms with constant asymmetric marginal costs. The main result is that such a vertical merger can nevertheless improve welfare if it involves a downstream firm whose cost is low enough. This is because by raising the input price paid by the nonmerging firms the merger shifts production away from those relatively inefficient producers in favor of the more efficient firm. Yet, there is a trade‐off between the gain in productive efficiency and the loss in consumers' surplus caused by the higher downstream price that follows a higher input price. It is also shown, through an example, that this result extends to price competition with differentiated products.
Downstream Competition, Foreclosure, and Vertical Integration
Authors: Chemla Gilles
Published: January 2004

This paper analyzes the effect of competition among downstream firms on an upstream firm's payoff and on its incentive to integrate vertically when firms in both segments negotiate optimal contracts. We argue that as downstream competition becomes more intense, the upstream firm obtains a larger share of a smaller downstream industry profit. The upstream firm may encourage downstream competition (even excessively) in response to high downstream bargaining power. The option of vertical integration may be a barrier to entry downstream and may trigger strategic horizontal spinoffs or mergers. We extend the analysis to upstream competition.
Knowledge Spillovers and Growth in the Disagglomeration of the Us Advertising‐Agency Industry
Authors: King Charles , Silk Alvin J. , Ketelhöhn Niels
Published: January 2004

We investigate knowledge spillovers and externalities in the disagglomeration and growth of the advertising‐agency industry. A simple model of high demand, low wages, and externalities associated with clusters of related industries can explain the dispersion of advertising agency employment across states. Other factors affected the industry growth rate within states. Consistent with Jacobs and Porter but contrary to Marshall, Arrow, and Romer, competition, but not specialization, enhanced growth. In accord with Porter (1990), growth increased with buyer cluster size. Diversity had no effect on growth. Despite improvements in telecommunications and transportation reducing effective distances, location still matters.
The Dvd‐vs.‐Divx Standard War: Empirical Evidence of Network Effects and Preannouncement Effects
Authors: Dranove David , Gandal Neil
Published: January 2004

We test empirically for network effects and preannouncement effects in the DVD market. We do this by measuring the effect of potential (incompatible) competition on a network undergoing growth. We find that there are network effects. The data are generally consistent with the hypothesis that the preannouncement of DIVX temporarily slowed down the adoption of DVD technology.
Randal Heeb Innovation and Vertical Integration in Complementary Markets
Authors: Heeb Randal
Published: January 2004

This paper studies vertical integration by an essential‐good monopolist into complementary markets. Unlike previous studies of complementary products, consumers are allowed to purchase some components of a complementary basket, but not others. Two different pricing strategies by the integrated firm may emerge. In mass‐market equilibria, the price of the complement under integration is zero and it is given away with the essential good. Niche‐market equilibria have more conventional pricing. This dichotomy is consistent with consumer software pricing. Integration enhances consumer and total surplus, unless it leads to exit by the higher‐quality rival, in which case welfare is reduced. Exit is most likely when it is least damaging to consumer welfare. Integration reduces innovation by the rival firm. The effect on innovation by the integrated firm is ambiguous, but numerical computation of an extended model indicates that integration increases the innovation of the integrated firm and enhances welfare.
Selling to Socially Responsible Consumers: Competition and The Private Provision of Public Goods
Authors: Bagnoli Mark , Watts Susan G.
Published: January 2004

We model firms as competing for socially responsible consumers by linking the provision of a public good (environmentally friendly or socially responsible activities) to sales of their private goods. In many cases, too little of the public good is provided, but under certain conditions, competition leads to excessive provision. Further, there is generally a trade‐off between more efficient provision of the private and the public good. Our results indicate that the level of private provision of the public good varies inversely with the competitiveness of the private‐good market and that the types of public goods provided are biased toward those for which consumers have high participation value.
A Comparison of Exit and Voice Relationships Under Common Uncertainty
Authors: Dawid Herbert , Kopel Michael
Published: January 2004

We consider a repeated interaction between a manufacturing firm and a subcontractor. The relationship between the two parties is characterized (1) by moral hazard, and (2) by the fact that they do not have perfect knowledge about the base cost level of the project, which is carried out by a subcontractor (the parties only have identical a priori beliefs). We consider a two‐period model where the players can update their estimate of the base cost level according to incoming information. Exit relationships, where the firm signs one‐period contracts with different subcontractors, are compared with voice relationships, where both partners commit to a two‐period interaction and (due to information sharing and face‐to‐face communication between the partners) additional information about the base cost level is generated. It is shown that in such a dynamic framework with common uncertainty the quality of the additional information plays a crucial role in determining the characteristics of the optimal relationship: voice‐based strategies governed by long‐term contracts are preferable if the precision of the additional information about the base cost level is high. If the precision of the additional signal is low, exit strategies with frequent changes of the subcontractors are optimal for the manufacturer.
Bargaining When Exchange Affects the Value of Future Trade
Authors: Hadlock Charles J. , Lewis Tracy
Published: January 2004

We examine bargaining in a dynamic context where exchange between two parties affects the potential surplus from future trade. In this setting traders negotiate current contracts anticipating the impact of their agreement on future exchanges. We show that in growing environments these dynamic considerations will often ameliorate bargaining inefficiencies associated with private information and facilitate exchange as both parties cooperate to nurture the relationship. In contrast, we find that in declining environments dynamic considerations will often exacerbate bargaining inefficiencies and hinder trade, as both parties are hesitant to let the relationship mature. These findings have implications for preferences to form long‐lived relationships.
Traded and Nontraded Goods and Real Wages
Authors: Beladi Hamid , Batra Ravi
Published: January 2004

The paper explains most, if not all, observations made by the empirical literature regarding the behavior of skilled and unskilled real wages in the United States, especially those since 1980. Generalizing the Stopler–Samuelson theorem, the authors show that the nontraded sector is critical to explaining the effects of changes in the price of traded goods on relative and absolute wages. Factor‐intensities play their role as in the traditional Stolper–Samuelson model, but the output of the nontraded sector matters as well. Specifically, freer trade benefits capital and hurts both the skilled and unskilled labor if the import as well as the nontraded sectors contract. This is a new result to the literature on Stolper–Samuelson issues.
Household Strategies of Coping with Shocks in Post‐crisis Russia
Authors: Lokshin Michael M. , Yemtsov Ruslan
Published: January 2004

The paper looks at the subjective evaluations of a number of coping strategies that respondents undertook to mitigate the effect on their welfare of the Russian financial crisis. Given the dramatic drop in formal cash incomes, how are people able to adapt? What are the relative importance and effectiveness of coping strategies to resist hardship in reducing poverty for different groups of households? The results of the analysis indicate that the choices of survival strategies are determined by the level of human capital in the household. The higher the household human capital, the more likely the household is to choose active strategies. Households with low human capital, households headed by pensioners, and low‐educated households are more likely to be socially excluded. A specific set of policy interventions should be targeted on such households to avoid the entrenchment of poverty, and the trend toward marginalization and impoverishment of these groups should be expressly monitored.
Is an Exhaustible Resource Economy Sustainable?
Authors: Farzin Y. Hossein
Published: January 2004

The paper focuses on two alternative concepts of sustainability dominating the literature: (i) maximum permanently maintainable consumption level (Fisherian income) and (ii) the amount of consumption that leaves total value of wealth intact (Hicksian income). In the context of a pure exhaustible resource economy, the author derives an explicit relationship between the two sustainability criteria and shows that while such an economy is not sustainable in the former sense, itisin the latter sense provided social preferences are represented by a logarithmic utility function. The implications of the two concepts for greening of national income are derived. Finally, the paper shows the range of values of the parameters of the model for which the utilitarian optimal path can be close to paths satisfying the alternative sustainability criteria, suggesting that such outcomes are less likely for very poor resource‐dependent countries than for the rich ones.
Consequences of Imitation by Poor Countries on International Wage Inequalities and Global Growth
Authors: Kind Hans Jarle
Published: January 2004

The paper presents an endogenous growth model where the level of international transaction costs may be decisive for whether the relatively poor East specializes in agriculture production, imitates goods from the rich West, or makes its own innovations. The author shows that the East produces only agricultural goods if transaction costs are high, while innovation is profitable when transaction costs are low. In between there are a range of transaction costs where the East imitates, possibly resulting in a lower global growth rate and a larger international wage gap than if imitation were not possible.
Effectiveness of Capital Controls: the Case of Brazil
Authors: Miles William
Published: January 2004

The emerging market crises of the past decade have led some observers to question the wisdom of a completely open capital account. But even if capital controls are desirable, empirical evidence is needed to demonstrate when and under what circumstances restrictions are effective. This paper investigates this issue for Brazil. Much analysis of policy effectiveness has been conducted with vector autoregressions. The validity of policy inference based on this technique has been cast into doubt, so this paper employs a more “narrative” method, modeling flows to Brazil as ARMAX processes. This approach yields the interesting result that controls can be effective when the reaction of financial market participants to restrictions is taken into account, and derivatives and debt market activities curtailed.
A Barrier to the Diffusion of Tacit Knowledge
Authors: Takii Katsuya
Published: January 2004

The paper examines the impact of skill transfer on economic growth. Even if there are the benefits of backwardness and the ability to absorb them, the South may not exploit them, because the skilled workers in the North are not willing to come to the South owing to their high opportunity cost. It is shown that if the South's relative income is low, the South cannot offer high wages to attract skilled workers from the North, and stays in the low rank. But if its relative income is high enough, exploiting the benefits of backwardness, it attains high growth and converges to a relatively higher position. This prediction is consistent with the evidence that the world distribution of relative income has two peaks. The study also shows that an increase in human capital in the North increases the minimum requirement for human capital in the South to soar.
Using Quality of Interview Information to Assess Nonrandom Attrition Bias in Developing‐Country Panel Data
Authors: Maluccio John A.
Published: January 2004

Panel data often provide an understanding of household behavior not possible with cross‐sectional information alone. However, a disturbing feature of such data is that there can be substantial, nonrandom attrition and many analysts share the concern that this inhibits the ability to make accurate inferences. The author examines attrition in the KwaZulu–Natal Income Dynamics Study 1993–1998, assesses the extent of attrition bias for a specific empirical example, and proposes and implements a selection correction methodology using quality of first round interview variables as identifying instruments. The results show that attrition does lead to statistical bias in the “behavioral” coefficients in estimation of household‐level expenditure functions. Since it is typically difficult to determine the bias for a particular analysis a priori, and such bias is by its nature model‐specific, it behooves researchers using panel data to evaluate the effects of attrition in their analyses.
Measuring the Impact of Various Income Sources on the Link between Inequality and Development: Implications for the Kuznets Curve
Authors: Deutsch Joseph , Silber Jacques
Published: January 2004

To understand the link between inequality and development, a decomposition of the Gini index by income sources is used that emphasizes the role of three components measuring the impact of the shares of the sources, the degree to which they are unequally distributed, and their correlation with total income. Such a breakdown explains why the rising section of the Kuznets curve is mainly the consequence of the increasing share of wages while its declining section reflects the decreasing share of entrepreneurial income and the negative correlation between transfers and total income. The data sources were provided by the International Labour Office.
Simple Model of Resource Degradation and Agricultural Productivity in a Subsistence Economy
Authors: Sylwester Kevin
Published: January 2004

Resource degradation poses problems in many developing countries. In the model presented in the paper, current agricultural production lowers future land productivity. Since agents must produce to meet current subsistence needs, this can lead to a poverty trap in which land quality is continuously degraded over time. However, the model shows that not all subsistence farmers fall into this trap, although it might be difficult in practice to distinguish among those belonging to each case. The model also demonstrates why government programs such as income transfers, loans, and price controls might have differing effects upon economic outcomes depending upon the specific circumstances of farmers.
The Effect of Inequality on Growth: Theory and Evidence from the Indian States
Authors: Ghosh Sugata , Pal Sarmistha
Published: January 2004

The paper examines the effect of inequality on growth among the subnational states in India. Theoretically, growth of the regional economy is driven by productive public investment in the provision of health and education services financed by a linear output tax, and the optimum tax rate is determined by the median voter. In contrast to existing results, the authors obtain an ambiguous relationship between initial inequality and subsequent economic growth. Analysis of the Indian state‐level data suggests that rural inequality influences growth of total output more than urban inequality, and does so negatively. The indicator of intersectoral inequality is more important in explaining sectoral output growth.
The Influence of IMF Programs on the Re‐election of Debtor Governments
Authors: Dreher Axel
Published: February 2004

The paper develops a model explaining why IMF programs are less likely to be concluded before national election dates. Since conclusion of an IMF arrangement may signal the incumbent's incompetence, rational voters use this signal when deciding upon his re‐election. In order to demonstrate competence, politicians may therefore decide not to conclude IMF programs prior to elections. The model also shows that re‐election probabilities of politicians who nevertheless conclude arrangements at election times depend on the state of the economy. Using panel data for 96 countries between 1976 and 1997, the model is tested empirically. The results show that conclusion of an IMF arrangement within six months prior to an election increases re‐election probabilities when GDP growth is low, but reduces the chance to win an election with high growth rates.
Democracy in Latin America: Issues of Governance in the Southern Cone
Authors: Tedesco Laura
Published: January 2004

This article explores academic debates on transitions and democratic development, and outlines ideas relating to the governance issues considered by the papers in this special section. It presents a discussion of recent debates on democracy and transition in Latin America and concludes on the need to conceptualise the state in the region after the return to democracy. In so doing, it analyses issues of governance and highlights the role of the political class in building a democratic state.
Security Challenges in Latin America
Authors: Diamint Rut
Published: January 2004

This article challenges established security ideas on Latin America, beginning with the assumption that militarised states and military coups d'état now belong to a bygone era. The attempt is to demonstrate that, despite a regional framework for cooperation, democratic governments here have not established a democratic process of decision‐making, particularly where security issues are concerned. This absence of democratic civil control over the military could challenge, and even potentially undermine, the consolidation of democracy in Latin America.
Doing Politics in a Depoliticised Society: Social Change and Political Deactivation in Chile
Authors: Silva Patricio
Published: January 2004

This article explores the process of political deactivation in Chile which has taken place since the military coup of 1973. Its stresses a series of political, social and cultural factors which have produced an increasing depoliticisation of the Chilean population under both the Pinochet regime and the current Concertaciòn governments. The forced depoliticisation generated by repression and fears under the military government marked the genesis of political deactivation. Since the late 1970s the marketisation of Chilean society and its increased consumerist orientation have weakened even further the readiness and interest among Chilean citizens to participate actively in party politics. In addition, in recent years politicians and politics in general have experienced in Chile a growing decrease of prestige and credibility. The media, and particularly the television, have become the main arenas in which new style politicians sell their electoral products to a depoliticised mass who expect quick and concrete solutions to their particular problems and demands.
Strengthening Citizenship in Brazil's Democracy: Local Participatory Governance in Porto Alegre
Authors: Koonings Kees
Published: January 2004

In Latin America, and particularly Brazil, inequality and social exclusion continue to plague the quality of democracy despite two decades of transition and consolidation. Still, in Brazil, the Workers’ Party has been remarkably successful over the past decade, explicitly addressing the problem of social exclusion and ‘incomplete citizenship‘. This paper provides an analysis of the case of Porto Alegre covering the four Workers’ Party municipal administrations from 1989 to the present in order to assess the significance of social incorporation and citizenship for the quality of democracy in Brazil. The paper discusses some conceptual notions that are relevant for the question of democracy in Brazil, particularly the role of citizenship and civil society in ‘deepening’ democracy. Then the paper goes into the evolution and dynamics of Porto Alegre's system of ‘participatory budgeting’. The paper's assessment of this experience with respect to its performance, depth and robustness shows that ‘participatory budgeting’ has had positive effects with respect to the provision of public goods services, the quality of governance, and citizens’ participation in what is seen as a new ‘public space’ shared by the local state and grass roots organisations. The paper concludes by relating the case experience to the question of citizenship, civil society and democracy and by reflecting upon its wider implications for the current and future quality of democracy in Brazil.
World Bank, Governance Reforms and Democracy in Argentina
Authors: Tuozzo María Fernanda
Published: January 2004

The World Bank's endorsement in the 1990s of institutional reforms as a constitutive dimension of economic development led to the adoption of a governance agenda. The paper analyses the role the Bank exercised in Argentina and explains its influence in the adoption of a new state model, of new state civil society relations and on particular key components of democracy. This paper argues that while the Bank has helped to set up an agenda of reform regarding governance problems, the push for particular policies and practices has also produced partial and contradictory results on the consolidation of democracy.
Methodological Issues in Community‐based Studies of Gynecological Morbidity
Authors: Bhatia Jagdish , Cleland John
Published: January 2004

This report describes the lessons learned from a series of community‐based studies of gynecological morbidity among young married women in Karnataka State, India. Women's self‐reports of symptoms of illness were found to be responsive to the context of the interview and the nature of questioning. In particular, women appeared much readier to report symptoms to lay interviewers after being invited to undergo a clinical examination in the near future than they were if no examination were offered. Little consistency was found in the results obtained from interviews, clinical examinations, and laboratory tests. Apparently, no alternative exists to the collection of biological specimens for laboratory analysis when estimates of disease prevalence are needed. Use of generic health‐related quality‐of‐life assessments is recommended for future surveys. Prospective studies will yield more valuable data on these topics than will cross‐sectional surveys.
Can Poor Countries Surmount High Maternal Mortality?
Authors: Shiffman Jeremy
Published: January 2004

Does poverty bind developing countries to high levels of maternal death in childbirth? Or, as safe‐motherhood advocates claim, do public health and social policy interventions have the potential to accelerate maternal mortality transitions? Globally, almost one in 200 live births leads to the death of the mother, making maternal mortality an issue of critical international import. This article presents an analysis of the determinants of national maternal mortality levels with a view to shedding light on these questions. A cross‐national regression of 64 countries shows that wealth indicators explain only a portion of the variance in national maternal mortality levels. Other determinants, including women's educational levels and the proportion of deliveries attended by trained health personnel, are more clearly associated with national maternal mortality levels than are measures of wealth. The results offer grounds for optimism concerning the potential for global safe‐motherhood efforts to induce maternal mortality transitions.
The Effect of Gender Preference on Contraceptive Use and Fertility in Rural Egypt
Authors: Yount Kathryn M. , Langsten Ray , Hill Kenneth
Published: January 2004

Data are used from two surveys of currently married women aged 15–44 conducted in 1979–80 and 1990–91 to explore the changing impact of gender preference on modern contraceptive use and on fertility in rural Menoufia, Egypt. The significantly positive effects on contraceptive use of having one or more sons in 1979 remained constant in 1990. Families without living sons had higher odds of having a birth than did families with two or more sons during 1979–80, and these relative odds were even higher in 1990–91 among families with three or more living children. The implications of these findings for subsequent declines in aggregate fertility are discussed.
Abortion Trends in Japan, 1975–95
Authors: Goto Aya , Fujiyama‐Koriyama Chihaya , Fukao Akira , Reich Michael R.
Published: January 2004

In this study, recent trends in the incidence of induced abortion are analyzed in order to identify the target population and its requirements for family planning policy in Japan. Abortion statistics from 1975 to 1995 from the Ministry of Health and Welfare are reviewed. The abortion rate (the number of cases of induced abortion per 1,000 women per year) for women younger than 20 increased during the study period. The abortion ratio (number of cases per 1,000 live births) remained the highest among women aged 40–44. An increase in the abortion ratio was seen in the two youngest groups (younger than 20 and 20–24), especially among those who were born after 1955. The proportion of abortions experienced by women younger than 25 increased from 18 percent between 1976 and 1980 to 30 percent between 1991 and 1995, and a slight increase was also observed among women aged 40–44. The proportion of abortions performed after eight weeks of a pregnancy for the two youngest groups remained higher than that for older age groups during 1975–95. The analysis demonstrates that women younger than 25 should be the principal concern of family planning policy in Japan. Further investigations on unintended pregnancy are recommended.
External and internal noise surveys of London primary schools
Authors: Shield Bridget , Dockrell Julie E.
Published: February 2004

Internal and external noise surveys have been carried out around schools in London, UK, to provide information on typical levels and sources to which children are exposed while at school. Noise levels were measured outside 142 schools, in areas away from flight paths into major airports. Here 86% of the schools surveyed were exposed to noise from road traffic, the average external noise level outside a school being 57 dB LAeq. Detailed internal noise surveys have been carried out in 140 classrooms in 16 schools, together with classroom observations. It was found that noise levels inside classrooms depend upon the activities in which the children are engaged, with a difference of 20 dB LAeq between the “quietest” and “noisiest” activities. The average background noise level in classrooms exceeds the level recommended in current standards. The number of children in the classroom was found to affect noise levels. External noise influenced internal noise levels only when children were engaged in the quietest classroom activities. The effects of the age of the school buildings and types of window upon internal noise were examined but results were inconclusive.