“Buy-back” in international trade: A rationale

Conclusion When a technology proprietor cannot exploit his advantage by means of ownership of a production facility abroad, a sales contract with “buy-back provisions” may, in fact, be a trade-enhancing resolution to a situation of information-asymmetry between buyer and seller. The important implication is that not all forms of countertrade can be summarily dismissed as inefficient. Just as foreign direct investment can be seen to be a response to environmental or market imperfections, “buy-back” may be a way to deal with institutional or regulatory obstacles such as the prohibition of foreign ownership.     

Internalization is still a general theory of foreign direct investment

Conclusions Part IV of Parry's article discusses three types of FDI activity by MNEs; these are correctly analyzed and fully consistent with my earlier work. All the three cases (vertical integration, transfer pricing and quality control) are examples of market imperfections which lead to internalization. I am glad that Parry accepts these“three areas where internalization appears to provide an explanation of FDI as a specific form of international involvement by the MNE” but I am surprized that he still cannot accept the general point that these are examples of“market failure” in an international context, which lead to multinational hierarchical activity. The focus of my survey article was to demonstrate that“established theories of FDI” tend to fasten one to one or another of such market imperfections, but in all cases internalization results. Internalization as a general theory of FDI is still a robust principle. It provides the conceptual foundation for analysis of the MNE and the field of international business.     

Institutional framework of forecasting and decision making in the innovation sector (by example of space activities)

This paper considers the particular issues associated with expert assessment in the process of forecasting and decision making in the innovation sector. The authors introduce the concept of a “forum,” which they understand as a specific institution designed to gain competent expert knowledge while discussing and making publicly relevant managerial decisions. The forum’s tasks are discussed in the context of the space activities in Russia. The authors also formulate the main requirements for the organization of the forum and expert discussion in the process of prognostication and decision making.     

Think tanks in the USA: Science as an instrument of public policy

The article discusses the organization of the US system of scientific and research institutions. Current and historical aspects of the formation of “think tanks” as a phenomenon of scientific and sociopolitical life are considered, as well as the classification of think tanks and their role in scientific research and in providing independent expert opinion during the development of public policy.     

A new look at the impact of U.S. import barriers on corporate profit expectations

A New Look at the Impact of U.S. Import Barriers on Corporate Profit Expectations. — The notion that industries benefit from protection is firmly grounded in trade theory. However, previous “event studies” measuring the impact of trade restrictions on stock prices reveal that shareholders expect no improvement in industry profits from protection. The implication is that barriers designed to promote industry adjustment are considered ineffective by equity holders. This investigation of U.S. “Escape Clause” cases shows that shareholders do expect protection to enhance profits, but not universally. Outcomes are linked to the type of trade measure selected, with industries protected by tariffs or global quotas faring better than those shielded by nonglobal “Orderly Marketing Agreements.”     

The failure of OCA analysis

Conclusion In this paper I have tried to show that OCA theory fails to advance the case for independent fiat currencies. It does so both because of its empirical irrelevance, and because of its internal inconsistencies. Therefore, from the perspective of international monetary economics, there is no theoretical justification for the present monetary organization. Rather other factors, more related to political interests than to sound economics, should be held responsible for it. It is perhaps interesting to consider the mainstream economists’ systematic reaction when they discover there is no scientific justification for a fluctuating fiat currency system. They simply throw away the whole analysis and return to “common sense” propositions. Some of them even go so far as to recognize the merits of a world currency, eventually pegged to gold, but then dishonestly dismiss the case on the basis of “beliefs,” or popular wisdom. All remaining errors are my own.     

An alternative to Marshall: Economic history and applied economics at the early LSE

Conclusion The LSE in its early years did not produce a “school of economics” in the sense that Marshall's Cambridge constituted a “school.” English historical economics was too diffuse, too lacking in strong leadership, too untheoretical, and too committed to economic history as a discipline to create such a “school.” The special contribution of the LSE in the pre-war period was certainly not in theory, since one of the chief reasons for it being an alternative to Marshall's school of orthodoxy was that it paid relatively little attention to economic theory during this period. Rather, its alternative economics was its central conception that the economist'sraison d'etre was to solve pressing contemporary problems for which orthodox theory seemed to offer little guidance. Thus its teachers and curriculum, assembled by Hewins and the Webbs, emphasized applied subjects and economic history.     

Performing New Orleans: Toward a Political Poetics

This essay documents an embodied model for doing scholarship in and about post-Katrina New Orleans. It suggests lived experience as human capital that provides a public good for rebuilding communities. Specifically, a research-based performance (“Performance and New Orleans: Citizenship, Identity and Housing”) serves as a case study for situating scholarship between theory and practice as a “political poetics.” The essay draws on performance theory and the values of public scholarship to negotiate the challenges of authenticity and motive that confront scholars working in New Orleans. The essay also argues for performance as a means of reaffirming human value and exposing the complexity that surrounds the problems of African American citizenship, identity, and housing in New Orleans 5 years after the storm.     

Unique Equilibrium in a Dynamic Model of Speculative Attacks

A main challenge of understanding currency crises is explaining their puzzling timing. Most “second generation” currency crisis models are static models with multiple equilibria, and exogenous shifts between equilibria are interpreted as shifts of sentiments on financial markets leading to crises. This article develops a dynamic, continuous time model with a payoff structure similar to second generation models. We derive endogenous conditions under which shifts in sentiment occur over time, characterise them in terms the strategic risk associated with speculation, and provide comparative statics. Moreover, we show that the findings correspond almost exactly to the implications of global game currency crisis models, which are often used for equilibrium selection in the static context.     

Entrepreneurship and corporate governance

Conclusions The main message of this article is that Austrians can continue to work within the contractual, or Coasian, approach to the firm in elaborating the insights discussed above. In particular, the problem of corporate governance, and the corollary view that firms are investments, belongs at the forefront of Austrian research on the theory of the firm. Emphasis should thus be placed on the plans and actions of the capitalist-entrepreneur. A particularly undeveloped area concerns the provision of capital to small, “entrepreneurial” ventures. Most of the literature on governance focuses on the large corporation, and the use of stock and bond markets to govern these organizations. Equally important, however, are smaller, privately held firms, financed with venture capital or other forms of investment. So far, the firm-as-investment literature has said little about these organizations, despite their growing importance, particularly in high-growth, technologically-advanced industries like software and biotechnology. Further research in this area is sorely needed. Earlier versions of this article were presented at George Mason University’s “Seminars in Austrian Economics IV: Inside the Black Box,” October 1997; the Austrian Scholars Conference 4, Auburn University, April 1998; and Copenhagen Business School’s RESPECT workshop, November 1998.     

Oil revenues for public investment in Africa: targeting urban or rural areas?

This paper investigates the effects of oil-financed public investment on economic growth and poverty reduction using a dynamic multi-sectoral general equilibrium model featuring inter-temporal productivity spillovers. The paper shows that the relationship between resource-rent flows and real exchange rates, output growth, and poverty is less straightforward than simple models of the “resource curse” suggest. Taking Ghana as a stylized agriculture-based economy with poverty most pronounced in a region with home based agricultural production, a policy mix of smoothing the real exchange rate shock and an allocation of infrastructure spending in rural areas seems to be the most promising public investment strategy to enhance growth and reduce poverty.     

African-oriented and Euro-American-oriented world views: Research methodologies and economics

Conclusion This paper has shown two things. First, it has indicated some of the philosophical ways in which a “pure” African-oriented world view differs in kind from the “pure” Euro-American-oriented one. Second, it has set forth some of their respective differences in research methodology, primarily focusing on the area of economics. However, neither of these world views and, therefore, their research methodologies have absolute validity. Each can claim validity only under its respective limiting conditions. In the words of Kuhn, “truth may, like proof, be a term with only intra-theoretic applications.” In effect, no interworld view comparison can or should be made in terms of absolute correspondence to reality. However, overseas Africans in America do embody both world views in varying degrees. Researchers on black people, therefore, must be familiar with both methodologies in order to analyze completely the behavior of Afro-Americans.     

Rural employment and rural-urban differences in employment in Zaire: A comparative perspective

This article provides evidence on the extent of de-agrarianization, the nature of rural employment, and rural-urban differences in employment in Zaire. The composition of employment by industry is examined using data from Zaire’s 1984 Census. Increased schooling was associated with a greater propensity to be involved in nonagricultural employment. Since 1990, Zaire’s chronic economic crisis has become acute and is intertwined with the political crisis resulting from President Mobutu’s resistance to popular calls for democratization. In these circumstances, de-agrarianization is effectively put on hold. Nonagricultural employment opportunities have diminished considerably, and an increasing proportion of the country’s population is being pushed back to subsistence agriculture. An earlier version of this article was presented at the African Studies Centre-International Labour Organization workshop on “De-agrarianization and Rural Employment,” May 10–12, 1994, Leiden, The Netherlands.     

Specific Factors and International Monetary Policy Coordination

The consequences of intersectoral factor immobility for optimal monetary policy are examined in a “New Open Economy Macroeconomics” framework. When labor cannot be reallocated between tradable and nontradable goods production, this rigidity generates a welfare loss, which increases as the sectors become more different. When prices are predetermined, the model becomes a monetary “specific factor” model. Intersectoral factor immobility complicates the optimal monetary policy problem by creating a tradeoff between stabilizing tradable and nontradable sector labor. When labor is mobile between sectors, policy coordination can significantly reduce labor volatility. When it is not mobile, coordination results in less volatility in tradable sector labor, but increased nontradable sector labor volatility.     

Featherbedding—An easy second best problem

Conclusions The difficulties of second best, as propounded by Lipsey and Lancaster and reasserted by Allingham and Archibald, derive from the allegation that associated with second best optima are necessary conditions that require the violation of necessary first best conditions and which cannot be satisfied by known market forms or decentralized management rules. Specifically, it is alleged that for second best no “solutions” analogous to perfect competition and marginal cost pricing exist. In this paper it has been demonstrated that second best difficulties are not quite as universal as Allingham and Archibald suppose. We have seen that featherbedding contracts give rise to genuine second best situations but that the associated problems are easily solved. If a production unit grants a featherbedding contract but otherwise acts as a price taking profit maximizer, in terms of Paretian criteria (assuming no difficulties at the second order level) no policy action is called for unless society is willing to outlaw the featherbedding contract. Otherwise, the appropriate management rule is simply “behave as a price taking profit maximizer” where this behavior is clearly specified in (28) above and analogous to marginal cost pricing in the first best case.     

Ex ante purchasing power parity: An empirical note

Conclusions In the paper, the EAPPP theory was discussed and three different tests with increasingly statistic power were proposed and implemented. The results are mixed, since the theory passed the randomness and orthogonality tests, but not the direct regression test. The impression is that EAPPP seems to hold in a weak sense, since the evidence confirms random movements of real exchange rates and an efficient use of information by agents but not the constraints on (14) postulated by EAPPP. In general, the results of the present study are in accordance with those of Cumby and Obstfeld [1984], Mishkin [1984], MacDonald [1985] and Gaab et al. [1986] who found only weak support to the EAPPP theory. Furthermore, in the case of the dollar-lira exchange rate, our findings are different from those of Tronzano [1987] according to which “although PPP holds very badly in its traditional (absolute or relative formulation), ex ante PPP (both in “weak” and in “strong” version) [is] highly supported by data”. In fact, in our case both the second orthogonality test and the regression test are unfavourable to the EAPPP.     

Antidumping and foreign divestment: Japanese electronics multinationals in the EU

This paper explores the relationship between the closure of “antidumping jumping” manufacturing plants and the repeal of antidumping measures. Of 67 identified Japanese “antidumping jumping” production lines in the EU in 1990 only 31 remained in operation in 1999. Analysis of the probability of divestment for 209 Japanese plants in the broadly defined electronics industry shows that Japanese plants of manufacturing products for which antidumping duties had been repealed are significantly and substantially more likely to be divested. The results suggest that the potential positive effects of antidumping duties on host economies by inducing inward investment are in many cases short-lived and easily overestimated. JEL no. F23, F13, L11     

Nea presidential address, 1985: Managing African American development

This article outlines a development strategy for the next 30 years, with income targets. It calls for a new type of “civil rights” leadership that has a managerial, problem solving attitude. It offers a set of objectives that emphasize internal discipline.     

A critique of mises’s theory of monopoly prices

Conclusion Built on Rothbardian insights, our attempt to show the peculiarities of Misesian monopoly theory results in a few conclusions. First of all, in Mises’s theory of monopoly two of the three conditions for the emergence of monopoly prices belong to different realms of scientific inquiry. On the one hand, Mises points out the idea of a counterfactual comparison between competitive price and monopoly price; on the other hand, he stresses the importance of an empirical method to discover monopoly prices. The latter, even if it describes a true statement about market conditions, i.e., the entrepreneurs do not know (beforehand) the market demand curve, does not help us to identify the monopoly price on market. Second, Mises erroneously founds his welfare arguments on value theory. His utilitarian endeavor to show that “consumers’ sovereignty” is infringed by monopolistic restriction of production does not succeed. He based his arguments on nonscientific interpersonal and intertemporal comparisons of utility. Third, Mises is not consistent in the use of a standard of comparison for “monopoly prices”: on the one hand, the market prices are not distinguishable from “monopoly prices”; on the other hand, the transfer of the discussion to the equilibrium framework does not help us either, as we try to explain real market phenomena. Thus, Mises’s attempts to incorporate the neoclassical concept of monopoly price into the framework of the market process, as depicted by Austrians, do not succeed. Our inquiry supports the largely shared opinion among Austrian economists that monopoly price (at least in its present definition) does not exist on the free market; it appears only, and is logically identifiable, as a result of a privilege given by the State.