ASSESSING THE REGIONAL ECONOMIC IMPACTS OF DEFENSE ACTIVITIES: A SURVEY OF METHODS

Defense activities exercised in a specific region may alter the region's economic performance. An accurate assessment of the potential economic impacts of defense activities is a valuable undertaking to enable regional planners to prepare for changes. The variety in the methods (among others, input–output models, economic base models, Keynesian regional multipliers, fixed‐effects estimators, and case‐study approaches) inspired by geography, sociology, and political science can pose a dilemma. We detail the historical and theoretical background of each method, as well as select exemplary cases where these methods were applied. By examining old and “new” methods, we aim to construct a typology that could be valuable to all stakeholders. In this sense, defense economics can also contribute to the allied social sciences by outlining evaluation methods that may be applicable to other fields.     

THE ECONOMIC IMPACTS OF VOLUNTARY ENVIRONMENTAL PERFORMANCE OF FIRMS: A CRITICAL REVIEW

Abstract.  New trends in studies on the governance of natural assets include substantial consideration of the role of voluntary initiatives. A traditional economic view states that there is a trade-off between being green and being competitive. According to that view, no voluntary environmental action is expected to occur. To undertake an in-depth analysis of the scope for voluntary action, this paper reviews empirical literature that analyzes the relationship between manufacturing firms' environmental initiatives or performance and economic results. This review moves beyond the general test of the 'pay to be green' hypothesis, preferring instead to systematize empirical results in more specific research questions. Empirical findings of the reviewed literature generally support that there is no penalty for being green. In addition, the typology of firms, the methods utilized for implementing environmental initiatives, the intensity of abatement efforts and stockholders' valuation of green firms have all been shown to have a sizeable influence on the actual economic results of environmental action or management. Consequently, the findings of this paper challenge the traditional strategic theory that predicts widespread free-riding; it holds major implications for environmental policy-making and environmental business decisions.     

FROM THE WAR ON POVERTY TO WELFARE REFORM: HOW THE AMERICAN UNDERSTANDING OF THE CAUSES OF POVERTY CHANGED

The American understanding of the causes of poverty has changed significantly since the War on Poverty was launched in 1964. It was then commonly believed that jobs were unavailable to the poor and that poverty should be reduced by doles. Today most observers contend that jobs are available for the poor, and that poverty stems from self-defeating behaviours that doles exacerbate.     

REGIONAL ECONOMIC INTEGRATION AND ITS IMPACTS ON GROWTH, POVERTY AND INCOME DISTRIBUTION: THE CASE OF VIETNAM

Trade liberalization and regional economic integration have recently accelerated in East Asia, where several free trade areas have been established or are under negotiation. Vietnam, after acquiring Association of Southeast Asian Nations (ASEAN) membership in 1995, has signed a bilateral trade package with the United States and participated in the China-ASEAN free trade area. This paper attempts to analyze the impact on Vietnam of ongoing regional economic integration, focusing on growth, poverty reduction and income distribution. For this purpose, we have constructed a globally linked Computable General Equilibrium (CGE) model and made use of Global Trade Analysis Project (GTAP) database version 6.0 and Vietnam's living standards surveys. The simulation analysis shows that the regional economic integration generally has a positive impact. It both enhances welfare and improves income-distribution for Vietnam. Household income and consumption increase, and poor and rural household groups benefit more than urban high income groups.     

REGIONAL ECONOMIC INTEGRATION AND ITS IMPACTS ON GROWTH, POVERTY, AND INCOME DISTRIBUTION: THE CASE OF INDONESIA

Indonesia continually tries to open its economy through free trade areas (FTAs) on bilateral, regional, and multilateral bases. This paper discusses the impacts of FTAs on the Indonesian economy, particularly for economic growth, poverty, and income distribution. By using a Global Computable General Equilibrium (GCGE) model, we conducted the simulation analysis by setting eighteen scenarios for the ongoing and potential FTAs of different frameworks. Indonesia is found to benefit from joining in FTAs, except for the FTA with India. It is also implied that FTAs increase rural household income at higher rates than they increase urban household income. Moreover, FTAs' impacts are more favorable for unskilled workers than for skilled ones, and also for relatively poor households more than for rich households, both in urban and rural areas. In brief, FTAs provide Indonesia with income redistribution effects.     

CGE EVALUATION OF A UNIVERSITY'S EFFECTS ON A REGIONAL ECONOMY: AN INTEGRATED ASSESSMENT OF EXPENDITURE AND KNOWLEDGE IMPACTS

In recent years many universities have commissioned studies of the effects of their institutions on their local economies. Typically, these impact studies have concentrated on the demand-side stimuli to the regional economy that the university generates. Normally, the studies are undertaken with comparative-static input-output models. The present study employs a dynamic multiregional computable general equilibrium model to investigate supply-side as well as demand-side effects. There are a range of supply-side effects that have been investigated in the spatial econometrics literature. The supply-side impacts of the university that we examine in particular are a rise in the average skill level of the local workforce, and successful R&D outcomes. CGE modelling allows simulation of the associated productivity effects, while the dynamic features of the model allow for consequent effects on a region's population and capital stock growth rates to be taken into account.     

MAKING INDONESIA MORE ATTRACTIVE TO FOREIGN INVESTORS: A COMPUTABLE GENERAL EQUILIBRIUM ANALYSIS OF REDUCING THE RISK PREMIUM IN CENTRAL JAVA

Indonesia aims to increase inward foreign direct investment. However, widespread discrimination in how investments are treated, the weak application of the rule of law and opaque regulations have increased the risk premium confronting potential investors and impaired foreign direct investment. This study employs a Computable General Equilibrium Model to simulate the economic effect of a reduction in the risk premium in Central Java on investors in the chemical sector and a select range of sectors nominated by the Central Java government as representing investment opportunities. The results suggest capital flows to Central Java increase, generating higher employment, labor productivity, real wages and GDP in Central Java. At the national level, real investment, aggregate capital stock and GDP increase for Indonesia as a whole. The policy implications are that greater transparency and consistency in the application of the rule of law, will increase capital inflow and result in improved macroeconomic performance.     

THE ECONOMIC CAUSES OF OBESITY: A SURVEY

Abstract.  Obesity rates have increased dramatically over the last 30 years. Rising obesity has developed into a considerable worldwide public health problem with significant economic and social consequences. Accordingly, obesity has become a subject of economic research. This paper provides a broad survey of the recent and growing economic literature on the causes of obesity. The literature, both theoretical and empirical, overall aims to explain the rising obesity trend and to identify the factors that contribute to obesity. Also surveyed are non-economic causes and consequences of obesity and the interconnection with economic influences. An understanding of the causes of obesity allows policies to be considered that might stem the global increase in obesity.     

SOCIO‐ECONOMIC STUDIES ON SUICIDE: A SURVEY

Abstract In this paper, we review economic theories and empirical studies on the socio‐economic aspects of suicide. Through our survey, we would like to emphasize the importance of studying suicide by employing a ‘rational’ approach that complements the medical perspective on suicide. We first introduce major economic theories of suicide and then present a summary of a variety of empirical studies from the socio‐economic perspective. To shed light on the mixed empirical evidence, we employ a meta‐regression method to investigate how the existing empirical results vary. We have identified a publication bias, not highlighted previously, in the existing literature with respect to several commonly employed socio‐economic factors. Several characteristics of existing studies have been identified as influencing the qualitative outcome. We then discuss the recent developments in economic studies on suicide, on the basis of the authors’ ongoing project on suicide. In the concluding section, we point out some issues for further studies.     

EVALUATING SUPPLY-SIDE AND DEMAND-SIDE SHOCKS FOR FISHERIES: A COMPUTABLE GENERAL EQUILIBRIUM (CGE) MODEL FOR ALASKA

This study used computable general equilibrium (CGE) models to investigate the economic effects of three exogenous shocks to Alaska fisheries: (1) reduction in pollock allowable catch (TAC); (2) increase in fuel price; and (3) reduction in demand for seafood. Two different model versions, ‘Keynesian’ and ‘neoclassical’, were used to estimate impacts on endogenous output, employment, value added, and household income. By using a CGE model, this study overcomes the limitations of fixed-price models (such as input–output models) including (1) inability to calculate welfare effects due to fixed prices; and (2) difficulty of addressing supply-side shocks. There are currently few examples of CGE studies addressing fisheries issues appearing in the literature. Among those, this study is unique in that it uses a relatively disaggregated sector scheme and examines both supply-side and demand-side shocks.     

A NOTE ON TRADE LIBERALIZATION, PUBLIC ABATEMENT, AND WELFARE

This paper extends Haibara (2006) in order to focus on the welfare consequences of a pollution tax and foreign aid financed for public abatement. The main finding is that environmental protection as a result of increasing a pollution tax by the aid recipient increases the optimal value of foreign aid chosen by the donor and reduces that of a tariff chosen by the recipient. This implies that international environmental cooperation is possible between the donor and the recipient.     

A REFLECTION ON THE EFFECTS OF TRANSPORT COSTS WITHIN THE NEW ECONOMIC GEOGRAPHY

This paper analyzes, in the light of recent contributions of New Economic Geography models, the spatial consequences of transport cost reductions. So far, the role of transport costs have been only partially unveiled; papers focused either on the Dixit-Stiglitz-Iceberg framework or on the alternative framework put forth by Ottaviano et al. (2002) ,—which departs from the former in preferences and transport modeling. This paper goes a step further, offering a comprehensive view that includes the two approaches, in contexts both of two and of more than two locations. Contrary to other revisions of the literature focused mainly on the centripetal forces included in these models, we emphasize the role of dispersion forces. In a two-location setting, the results seem quite robust against changes in transportation modeling, so that considering either multiplicative transport costs or additive the predictions are identical. However, when allowing for a multilocation setup, the analysis becomes more complex.     

TWENTY-FIVE YEARS OF PROMOTING FREE MARKETS: A HISTORY OF ECONOMIC AFFAIRS

On the 25th anniversary of Economic Affairs this article examines the history of the journal from its founding in 1980 to the present. It presents an account of the key themes that have featured in the journal during that time and argues that its most important contribution has been to explain how markets operate and why well-meaning government intervention seldom improves upon the imperfect outcomes produced by markets.