The effect of land tenure governance on technical efficiency: evidence from three provinces in eastern China

This study aims to identify the mechanisms through which land tenure governance affects the technical efficiency of grain production in an integrated framework and to examine the impacts of the public governance, village self-governance, and relational governance of land tenure on the technical efficiency of contracted land and rented-in land. Farm-level survey data collected from Liaoning, Jiangxi, and Jiangsu provinces covering the years of 2014 and 2015 is used for the empirical analysis. The findings indicate that (i) public governance associated with land certification significantly increases the technical efficiency of grain production; (ii) village self-governance and administrative land reallocations can serve as substitutes for the land rental market in optimizing the distribution of land resources and improving technical efficiency; and (iii) compared to multi-year transfer contracts, both annual and open-ended transfer contracts have negative impacts on technical efficiency.     

The role of off-farm employment in the rural energy consumption transition — A village-level analysis in Jiangxi Province, China

Energy consumption in rural areas in China is characterized by high consumption of fuelwood, straw and other biomass. Off-farm employment can play an important role in the transition towards more sustainable sources of energy by increasing rural household incomes and reducing the amount of labor available for biomass collection. The purpose of this paper is to examine the impact of off-farm employment on rural household energy consumption choices, and to disentangle the various causal relationships that play a role in this respect. To this end, a hybrid farm household/village computable general equilibrium (CGE) model is used that has been calibrated for a remote village in Northeast Jiangxi Province where fuelwood is the main source of energy. The model takes into account nonseparability of farm household production and consumption decisions as well as linkages within the village between households involved in off-farm employment and households with no members working off-farm. Contrary to previous research for a richer region in rural China, we find that fuelwood is not an inferior good. The positive impact of more food consumption on fuelwood collection more than compensates the higher leisure demand associated with higher incomes. Shifts in production activities and in prices on village factor markets caused by increased labour scarcity (the lost-labour effect of off-farm employment), on the other hand, cause a reduction in fuelwood collection and consumption. This lost-labour effect is much stronger for migration than for local off-farm employment, because the latter can more easily be combined with on-farm work and fuelwood collection. For local off-farm employment the income effect dominates the lost-labour effect, resulting in a positive overall impact of higher off-farm participation on fuelwood consumption. For migration, on the other hand, the income effect and the lost-labour effect are almost equal in size. Hence, the amount of fuelwood collected and consumed does not change much when households participate in migration. The final conclusion is therefore that increased off-farm employment opportunities do not promote the transition of rural energy use in the poorer regions of rural China.     

Combining results of different models: the case of a levy on the Dutch nitrogen surplus

Economic instruments, such as levies are considered by the Dutch government for reducing the harmful effects of the production and application of manure. To analyse these levies a framework which makes it possible to combine and to choose among different types of research is developed. The results are integrated along the line of the marginal abatement cost curve. The problems related to integrating different types of research are taken into account. The method developed allows every farmer to react to a levy differently. A levy turns out to be more effective to reduce the nitrogen surplus on farm level in the pig fattening sector when compared to the pig breeding sector. But even a levy of 2 guilderd/kg of nitrogen does not remove the total manure surplus in the pig sector and results in large profit losses. Further research is needed to underpin the empirical input required by the model.     

Short- and long-term participation tax rates and their impact on labor supply

Generous income support programs as provided by European welfare states have often been blamed to hamper employment. This paper investigates the importance of incentives inherent in the tax-benefit system for the individual decision to take up work. Using German microdata over the period 1993–2010, we find that recent reforms in Germany increased work incentives at the extensive margin measured by the participation tax rate (PTR), particularly for low-income individuals. Work incentives are even higher if the time horizon is extended to more than one year, pointing at an overestimation of the disincentives by standard measures. Regression analysis reveals that a decrease in the PTR increases the probability of taking up work significantly.     

Internal Capital Markets and Capital Structure: Bank Versus Internal Debt

We argue that domestic business groups are able to actively optimise the internal/external debt mix across their subsidiaries. Novel to the literature, we use bi‐level data (i.e. data from both individual subsidiary financial statements and consolidated group level financial statements) to model the bank and internal debt concentration of non‐financial Belgian private business group affiliates. As a benchmark, we construct a size and industry matched sample of non‐group affiliated (stand‐alone) companies. We find support for a pecking order of internal debt over bank debt at the subsidiary level which leads to a substantially lower bank debt concentration for group affiliates as compared to stand‐alone companies. The internal debt concentration of a subsidiary is mainly driven by the characteristics of the group's internal capital market. The larger its available resources, the more intra‐group debt is used while bank debt financing at the subsidiary level decreases. However, as the group's overall debt level mounts, groups increasingly locate bank borrowing in subsidiaries with low costs of external financing (i.e. large subsidiaries with important collateral assets) to limit moral hazard and dissipative costs. Overall, our results are consistent with the existence of a complex group wide optimisation process of financing costs.     

Broiler production in South Africa: Is there space for smallholders in the commercial chicken coup?

It is agreed that agriculture provides avenues for impoverished households to produce and trade their way out of poverty. However, this requires market access and value chain integration of small-scale farmers. This paper explores the possibilities for integration of small-scale farmers into the mainstream commercial broiler value chain in South Africa. Production costs of small-scale producers are evaluated within the context of their commercial counterparts, with a case study approach. It revealed that small-scale producers pay more for inputs but also receive a substantial premium for sales of live birds in the informal market. This results in attractive gross margins for small-scale producers. There is, however, a production ceiling, due to demand and production considerations, associated with small-scale broiler production. This ultimately results in a dualistic industry with an informal (live sale) value chain at the one end of the spectrum and a sophisticated large-scale commercial value chain at the other. Given the salient production features and investment requirements associated with large-scale broiler production, organic growth from the small-scale value chain into the commercial value chain seems improbable. The dual nature of this industry should therefore be considered when developing policy geared towards development, poverty alleviation and value chain integration.     

Sustainable natural resource use in rural China: Recent trends and policies

In this paper we provide an overview of recent trends in the availability and quality of land and water resources in rural China, and examine the common presumption that rural resources are rapidly degrading in China. Data based on consistent definitions and measurement methods that have recently become available are used to that end. In addition, we analyse the impact of new policy initiatives to introduce market-based instruments and new institutions to address land degradation and water scarcity problems.We find that the decline in cultivated area has accelerated in the beginning of the new century. Ecological recovery programs, not urbanization and industrialization, are the major factors causing this decline. Ecological recovery programs are also a major force behind the increase in forest land area and the reduction of water erosion. Modest successes can be observed in the protection of wetlands and (until the mid-1980s) for the average quality of cultivated land. On the other hand, degradation of natural grassland and wind erosion have become much more severe in recent decades.In northern China, particularly in the 3-H (Hai and Luan, Huai and Huang) river basins, the availability of water has tightened. Groundwater tables have fallen considerably in the Hai river basin, because farmers increasingly rely on groundwater for irrigation. Evidence on other parts of northern China is mixed. Pollution of surface water is getting worse since the beginning of the 1990s in two major lakes in southern China and until recently in the rivers in northern China. Water quality problems in the larger rivers in southern China are less severe and getting less. These problems are to a large extent caused by agriculture-based non-point source pollution, especially in the major lakes and reservoirs.The sloping land conversion program, water pricing, and the establishment of water user associations and payments for environmental service projects are used as cases to examine the introduction of market-based instruments and new institutions. We argue that less government interference in the implementation of these instruments and institutions is likely to enhance ecological as well the economic benefits. Moreover, supportive measures to improve the functioning of land and labor markets are usually needed to ensure the sustainability of the impact of interventions.     

Self-initiated nature conservation by farmers: an analysis of Dutch farming

In Europe, the active contribution of farmers to nature conservation is mainly voluntary. Whereas participation in agri-environmental schemes (AES) has been studied in detail, less is known about self-initiated nature conservation. Given the alarming decline in species diversity and abundance in agricultural landscapes, it is important to explore this form of conservation in more detail. In this paper we report on the results of a survey of Dutch dairy and arable farmers. We conclude that a large majority of farmers conduct self-initiated conservation activities on their farmyards and fields with varying ecological impacts and impacts on farming system. Helping birds was the most often mentioned activity. Farm size, on-farm side activities (in dairy farming), organic farming, the quality of the surrounding area and the absence of external constraints have a positive effect on the number of activities. Intensity has a negative effect on both the number of activities and on the probability that farmers conduct activities with substantial ecological impacts. There is no unambiguous evidence of a ‘crowding-out effect’ due to participation in AES. More research in this area can help contributing to a maximal exploitation of the conservation potential by farmers and to creating synergies with agri-environmental policies.     

Notes and Communications, A Requiem for the European Coal and Steel Community (1952-2002)

In July 2002 the Treaty on the European Coal and Steel Community (ECSC) expired. The ECSC is now being dissolved, its assets are transferred into special research funds, and European coal and steel policy is integrated into mainstream EU industrial policy. The ECSC's main task was to integrate the post-war European coal and steel industry, but the ECSC can also be looked upon as an experiment in supranational government and economic policy coordination, among other things. The paper first discusses these different aspects of the ECSC. Attention is then paid to the economic policy and budgetary heritage the community leaves behind. In the light of the coming EU enlargement particularly the ECSC's experiences in fostering innovation and regional restructuring might provide useful lessons. Therefore, we conclude that in spite of its expiration, the basic ideas of the ECSC have lost nothing of their relevance yet.     

Corporate Failure Prediction Modeling: Distorted by Business Groups' Internal Capital Markets?

Abstract:  Most models in the bankruptcy prediction literature implicitly assume companies are stand-alone entities. However, in view of the importance of business groups in Continental Europe, ignoring group ties may have a negative impact on predictive reliability. We find that models encompassing both bankruptcy variables defined at subsidiary level and at group level have a substantially better fit and classification performance. Furthermore we find that the group's support causes improved survival chances for subsidiaries, especially when these subsidiaries belong to the group's core business. Overall our results are consistent with existing theoretical and empirical findings from the internal capital markets literature.