Exporting firms and retail internationalization: Evidence from France

This paper questions the impact of the globalization of the retail sector on the export activity of origin country agri‐food firms. We use an original firm‐level database of French agri‐food exports that identifies the domestic suppliers of French retailers through certification with the private International Featured Standard (IFS). The results show that IFS certified French firms are more likely to export and export larger volumes than noncertified firms to markets where French retailers have established outlets. We also show that when French retailers stop their activities in a market, certified firms reduce their exports to this market in the following years. The results are robust to the use of different sets of firm‐year‐ and country‐year‐specific controls and fixed effects, and are not affected by possible selection and endogeneity biases. The difference in the behavior of certified and noncertified exporting firms on markets where French retailers operate confirms the network effect that benefits retailers’ suppliers, which is lost when French retailers exit from the destination country.     

Firm turnover and productivity differentials in Ethiopian manufacturing

Are the forces of market selection at work in Africa? How successful are markets in these economies in sorting out firms on an efficiency basis following the sequence of reforms to liberalize and particularly to transform some of the previous command economies to market oriented ones? What is the pattern of entry and exit in the manufacturing sector and how does it affect industry productivity growth? This study examines these issues using firm-level industrial census data from the Ethiopian manufacturing sector. It is the first attempt to analyze firm turnover and productivity differentials using industrial census data in sub-Saharan Africa. The Ethiopian manufacturing sector exhibits a high firm turnover rate that declines with size. Exit is particularly high among new entrants; 60% exit within the first 3 years in business. Our study consistently shows a significant difference in productivity across different groups of firms, which is reflected in a turnover pattern where the less productive exit while firms with better productivity survive. We also found higher aggregate productivity growth over the sample period, mainly driven by firm turnover.     

DESIRABILITY AND SEQUENCE OF LIBERALIZATION AND STRUCTURAL REFORM POLICIES IN A MODEL WITH INFORMAL SECTOR

The paper develops a three-sector general equilibrium model with informal sector and examines the welfare effects of liberalization and structural reform in the presence of labor and capital market distortions. It attempts to determine a credible sequence of reforms that may be the most welfare-enhancing, since implementation of reforms in all the markets at a single stage may be neither feasible nor optimal. Foreign capital is welfare-improving only in the presence of labor market distortion, while welfare deteriorates if the capital market is distorted. While tariff and capital market reforms may be welfare-enhancing in the absence of labor market distortion, labor market reform may intensify the formal-informal wage gap and have a worsening effect on welfare in the presence of tariff distortion and capital market imperfection. One of the plausible sequences of reforms may be to initially undertake tariff reform followed by capital and labor market reforms, respectively.     

Modernising pay in the UK public services: trends and implications

The emerging character of the UK government's public sector pay reforms during the second and third (New) Labour terms of office is reviewed and contextualised. Three settings are examined where pay reform has been actively employed – with the accent on harmonisation, simplification and devolution of practice, with the express intention of restoring public service workforce morale, while improving services to clients – namely, local government, the National Health Service and the Higher Education sector. The evidence is interpreted as illustrating undoubted change, but also significant areas where progress has been less than intended, measured against the government's original programme goals. Equal pay considerations appear to have dominated all three projects reviewed: the failure to date of public sector managements to capitalise on opportunities the new pay architecture affords them to change local working practices may be attributed to a combination of factors discussed in the article. These have given rise to tensions as efforts have been pursued to transplant private sector pay techniques, somewhat hastily in some cases, without due consideration of the institutional context within which public services and proximal institutions function.     

Private Property in the Context of Community

The dominant philosophy of private land ownership—that private property exists for the benefit of its owner and that use and ownership should be determined by market forces—is not the only philosophy in the American tradition. Classical republicanism's proprietarian perspective was equally in favor of private property, but held that private property exists for the benefit of society. This article begins by presenting the proprietarian view of private property rights, drawing on the legal scholarship where this perspective has been revived. Next, I use the case of contemporary land reform in Scotland to exemplify the rationale for this perspective. Lastly, I attempt to import the lessons of Scottish land reformers without importing their model, instead considering ways in which private land ownership might be embedded in non‐market institutions in the United States.     

Africa’s contribution to Qatar’s diversification priorities in the immediate to long term

Diversification experiences started across the African continent in the immediate post-independence period, in an attempt to break with traditional colonial models of development. Most African countries embarked upon industrial development during the 1960s and the 1970s, in order to diversify their economies and reduce their risk dependency on primary commodities due to the fluctuation in prices. After a change of priorities in the 1980s and 1990s, there has recently been a renewed attention and debate on economic diversification in Africa. Insight gained from African experiences demonstrates that new activities and capacities can be set in place via linkages with natural resource exploitation. Investment opportunities in non-energy sectors in Africa are nevertheless also critical and need to be examined. In fact, the success of diversification strategies depends on a sound development strategy, inspiring comprehensive public policy frameworks, strong political leadership, and a sound natural resource governance framework including diversification. Presenting examples and insights from various African countries, the article highlights misperceptions and improvements of socio-economic conditions in Africa useful to properly assess risks and opportunities in various contexts. Analyzing the role of the private sector and of African state-owned institutions related to foreign direct investments in non-energy sectors, the article focuses on strategies, lessons learned, and challenges of economic diversification.     

The microallocative impact of the Hungarian economic reform of 1968: Some evidence from the export sector

Summary We have investigated the allocative efficiency of the Hungarian export sector in both pre-reform and post-reform years. The results indicate that, although misallocation due to bilateral currency constraints was reduced by the reform, the overall efficiency of the export sector declined significantly. While the failure of the reform in a single, although from the Hungarian viewpoint, critical sector of the economy is not direct evidence of the failure of the entire reform, it does indicate that successful reforms may be more difficult to achieve than either western or socialist economists have anticipated.     

Market reforms in the time of imbalance

We study the consequences of product and labor market reforms in a two-country model with endogenous producer entry and labor market frictions. We focus on the role of business cycle conditions and external constraints at the time of reform implementation (or of a credible commitment to it) in shaping the dynamic effects of such policies. Product market reform is modeled as a reduction in entry costs and takes place in a non-traded sector that produces services used as input in manufacturing production. Labor market reform is modeled as a reduction in firing costs and/or unemployment benefits. We find that business cycle conditions at the time of deregulation significantly affect adjustment. A reduction of firing costs entails larger and more persistent adverse short-run effects on employment and output when implemented in a recession. By contrast, a reduction in unemployment benefits boosts employment and output by more in a recession compared to normal times. The impact of product market reforms is less sensitive to business cycle conditions. Credible announcements about future reforms induce sizable short-run dynamics, regardless of whether the announcement takes place in normal times or during an economic downturn. Whether the immediate effect is expansionary or contractionary varies across reforms. Finally, lack of access to international lending in the wake of reform can amplify the costs of adjustment.     

Government administrative burdens on SMEs in East Africa: reviewing issues and actions

The important macroeconomic reforms achieved in East African economies (Kenya, Tanzania and Uganda) during the late 1980s and early 1990s have failed to deliver the magnitude of private sector growth and increased employment expected. Governments in the region have begun to recognize that lower-level policies and administrative procedures impose significant constraints on private sector development, stemming primarily from the command and control bureaucracies that characterised colonial governance. There are three priority areas for administrative reform: business licensing and registration, tax and customs procedures and specialised approvals. Also discussed are the problems of the special position of the informal sector, the impact of corruption and access to commercial justice.     

Accounting Insights from the Healthcare Sector

Over the last decade, significant accounting reforms have been considered by a wide range of state and local governments throughout the world. Few countries have undertaken such extensive reform of their public sector, or of their public sector accounting practices as an integral part of those reforms, as New Zealand. While the central government accounting reforms are more well known, the reforms at local government have been equally dramatic, the most recent being the introduction in 1998 of a long-term financial planning regime under the Local Government Amendment (No. 3) Act 1996. This paper examines the factors leading up to the legislation, describes the requirements of the new regime, identifies the accounting and related issues which have arisen and concludes with some lessons which other countries may wish to consider in their own quest for transparency and accountability.     

Towards a theory of the labor market with a public sector

The object is to specify and analyze equilibrium in a labor market with frictions when there is a significant public sector. In the vast majority of equilibrium studies on labor markets, a public sector has been ruled out by assumption. This seems a strange oversight as about 17% of workers in the US are public sector workers, whereas in western Europe, approximately 22% of workers work in the public sector. The goal in this study is to provide answers to such questions as: what happens to private sector wages if the public sector is increased? If the Government increases the number of public sector jobs, does this crowd out private sector jobs? When will private sector wages be greater (less) than the public sector wage? Reasonably complete answers to these questions (and others) are provided within the context of the model developed.     

A STRATEGIC PERSPECTIVE OF BANK FINANCIAL CONGLOMERATES IN LONDON AFTER THE CRASH

The deregulation of financial markets has led to severe challenges for bank management and banking strategy. Investment banking is a sector that has experienced important and well-publicized changes. London's celebrated ‘Big Bang’ helped to stimulate new banking strategies that were characterized by the formation of so-called ‘bank financial conglomerates’. The October 1987 stock market crash, however, has precipitated strategic and organizational crises for many of these banks active in securities business and capital market products. This article re-examines investment banking strategies in London and some of the lessons associated with the crash experiences.     

Epidemics,labour markets and unemployment: the impact of SARS on human resource management in the Hong Kong service sector

This article examines the links between epidemics and their economic consequences, specifically in terms of their impacts on labour markets and jobs. To exemplify the above, we examine the effects of SARS (Severe Acute Respiratory Syndrome) on the Hong Kong economy, its labour market and its level of employment and unemployment. The article hypothesizes that the greatest impact would be on human resource management (HRM) in the service industries and on particular sub-sectors, such as the hotel sector. It concludes that the dramatic demand and supply ‘shocks’ significantly affected both the demand for and the supply of labour in the sector, with discernible HRM consequences.     

Do services hold the key to an improved UK trade performance?

The UK has established a central role in the global market for trade in services, ranking second to the US in terms of its share of global exports. Our modelling finds that the key factor behind the UK's success is that its exports are focused on the markets where demand has been growing quickest. This represents a notable contrast with research on UK goods exports, which has found that the geographical focus of goods exports has been the main reason for the UK's persistent underperformance. The global financial crisis caused significant damage to the UK's export performance, particularly to the key financial sector which accounts for a quarter of UK services exports and almost two‐fifths of the UK's surplus on services trade. However, the UK's export performance is on the mend and we expect it to retain its position as a key global player in the market for services over the coming five years.     

Where did they go? Modelling transitions out of jobs

We study individual job separations and their associated destination states for all individuals in the private sector in Denmark for the period 1980 to 2000, and account for their magnitude and cyclical flows. One finding is that individual and workplace characteristics as well as business cycle effects determine the individual behaviour. In policy simulations the consequences for individual labour market transitions are analysed. We find that structural and growth policies have different consequences for the economy due to the way they change workers' incentives. Policy interventions targeting displaced workers coming from plant closures are argued to be inefficient.     

THE MOST IMPORTANT BOOK ON THE MOST IMPORTANT TOPIC OF OUR DAY: A REVIEW OF AFTER WAR: THE POLITICAL ECONOMY OF EXPORTING DEMOCRACY,BY CHRISTOPHER J. COYNE1

Efforts to export democracy and liberty through military intervention have often been ineffective and have resulted in unintended and undesirable consequences. Countries are free because of belief systems, and institutions that follow from those beliefs, which support and reinforce political and economic freedom. Rational constructivist attempts at nation building are therefore likely to fail in places where there is no tradition of such beliefs and institutions. In this superb book Coyne argues that principled non‐interventionism and free trade have historically had the greatest degree of success and should be our guiding policies today.     

New Public Management

The paper presents an assessment and evaluation of what is termed ‘new public management’ at the end of the 1990s. In order to provide this assessment, new public management is defined in several ways: as a movement, as an academic commentary, and as reformed organizational practice in the public sector. The paper uses the UK health sector to examine some of the assumed relationships between ideology, actions and consequences implied within a broad understanding of new public management. Developments in the UK health sector are used to address assumptions focusing on different aspects of the ideology (private sector practices and markets can increase efficiency in the public sector), actions (introduction of market mechanisms and business-like, practices) and consequences (operational performance, strategic direction, governance and values). Drawing on developments in the UK health sector, an assessment of new public management at the end of the 1990s sees it much diversified and expanded from original conceptions, which are ensuring its contested survival as a movement, as an academic commentary, and as reformed organizational practice in the UK despite a change of government in 1997.     

Bank valuation in new EU member countries

This paper studies the role of institutional reforms in affecting bank valuation in new European Union (EU) member countries. It takes advantage of the dynamic nature of institutional reforms in transition economies and explores the causal effects of those reforms on banks’ Tobin's Q over the period of 1997–2008. Using a difference-in-difference approach, the paper shows that Tobin's Q increases substantially after these countries reform their legal institutions and liberalize banking. However, it decreases after stock market reforms. After further examination of the interactive relationships between different reforms and bank valuation, it is observed that when the banking reform is well implemented, legal reform can have a stronger impact on banks’ Tobin's Q. On the other hand, banking reform and security market reform has a substitutive relationship. The analysis also suggests that foreign ownership, market power, and asset diversification significantly affect Tobin's Q. These results are robust even after simultaneously controlling for equity risk.     

Do labor market institutions matter for business cycles?

Using panel data of 19 OECD countries observed over 40 years and data on specific labor market reform episodes we conclude that labor market institutions matter for business cycle fluctuations. Spearman partial rank correlations reveal that more flexible institutions are associated with lower business cycle volatility. Turning to the analysis of reform episodes, wage bargaining reforms increase the correlation of the real wage with labor productivity and the volatility of unemployment. Employment protection reforms increase the volatility of employment and decrease the correlation of the real wage with labor productivity. Reforms reducing replacement rates make labor productivity more procyclical.     

A retrospective on the subprime crisis and its aftermath ten years after Lehman’s collapse

This paper reviews the interactions between policymaking, the financial system and the U.S. economy before, during and after the subprime crisis, with particular attention to current controversies about the policy decisions that led to Lehman’s downfall and their lessons for the future. The first part of the paper documents and analyzes the interactions between policy, financial markets and the economy during the acute and subsequent moderate phases of the crisis as well as during the later gradual exit from the zero lower bound and the extremely slow reduction in high powered money and bank reserves. The remaining parts develop alternative aspects of the thesis that mutual uncertainties inflicted by financial institutions on policymakers and by the latter on financial markets were at the root of the non-negligible surprises that the crisis inflicted on everybody. In particular, it discusses the political economy of bailout operations, reviews and evaluates recent controversies about the reasons for not rescuing Lehman Brothers, and informally presents the structure and policy lessons from a general equilibrium model of the financial sector highlighting the consequences of policy actions that have raised (Knightian) bailout uncertainty. The last section takes a brief look ahead and discusses some longer term consequences of the crisis.