Endogenous Imitation and Technology Absorption in a Model of North–South Trade

Abstract

This paper considers the transfer of technology from the North to the South that occurs through trade in high-technology goods and explicitly models the ‘reverse-engineering’ process that allows the South to assimilate new technologies. A key finding of this study is that the South's rate of growth is dictated by the size of the country's human capital, which determines its absorptive capacity and its ability to assimilate knowledge from the North. We find that while a Southern country that is poor in human capital can only imitate, Southern countries that possess sufficiently large human capital endowments, beyond a certain threshold, signal the onset of innovation. We also find that the North enjoys a higher rate of innovation and growth with trade than without. North's gains are the highest when it trades with a human-capital ‘poor’ South, because imitation increases South's demand for Northern intermediates. But trade with the Southern countries that are human capital rich (and therefore involved in innovation), dampens their demand for Northern imports, adversely affecting North's growth. The model predicts growth convergence between the North and a South that is well passed the threshold for innovation.     

On the loss structure of federal reserve forecasts of output growth

Utilizing recent techniques with comparable private forecasts as benchmarks, we test the rationality of the Federal Reserve forecasts of growth under flexible loss. Our findings for 1984–2006 indicate that these forecasts are rational (efficient) and directionally accurate under symmetric loss and are thus of value when similar cost is assigned to both incorrect upward and downward predictions. Over-predictions (under-predictions) are costly when the Fed responds by implementing an unnecessary contractionary (expansionary) monetary policy and thus causes lower growth (higher inflation). Symmetric loss thus indicates that the Fed is equally concerned about both low growth and high inflation. Further results reveal that the private sector closely replicates the Federal Reserve forecasts released to the public with a five-year lag, suggesting that one can utilize the readily available private data as proxies for the not-yet-released Federal Reserve forecasts.     

Multi-factor of cultural values: a confirmatory factor analytic approach

All organisations is unique and thus practise different cultural values in the context of an organisation. Determination of values that constitute to the organisation is of challenging task. Therefore, this paper expounds the value-based culture that is related to the performance of the organisation based on the literature review and expert’s view. This study aimed at testing the psychometric properties of the questionnaire of value-based culture items of performance measurement based on the value-based total performance excellence model. 400 questionnaires were distributed to the selected Institution of Higher Learning (IHL) i.e, the public university of Malaysia. The data collected was analysed using predictive analytics software and analysis of moment structures software, both version 18. Structural Equation Modeling (SEM) technique i.e., the confirmatory factor analysis (CFA) approach was employed to test the 6-factor hypothesized model of the value-based cultures which consisted values of citizenship, consultation, caring, trust, respect and quality. The result suggested that 2 core values i.e., consultation and trust that dominantly explained the university’s culture in the selected university from the proposed of 6 core values in the hypothesized model. The findings also paved the way forward for empowering value-based cultures especially at the IHL. However, future research should be conducted to reaffirm this model to represent the values embraced by the universities in Malaysia.     

The concept of capital before and after industrial revolution： Islamic versus market economy

The concept of capital and ownership of capital in market economy and Islamic economy is different. Also the role that capital is expected to play in the economy is different in two economic systems. One of the key elements in creation of the capital （capital formation） is interest rate. In Islam interest is strictly forbidden. This paper reviews the concept of capital and the process of capital formation both before and after industrial revelation. In that context it also looks at the function of interest rate during the time of Prophet Mohammed and the present time.     

Advertising and Competition for Market Share between a New Good Producer and a Remanufacturer

We study the strategic interaction between a new good producer and a remanufacturer who use advertising campaigns to compete for a dominant share of the market for a certain good. Each firm chooses one of three possible strategies for running its advertising campaign. The two rival firms care only about capturing a dominant share of the relevant market. Hence, if a firm expects to capture dominant market share with probability p ∈ [0, 1], then its payoff in the game we study is also p. Our analysis leads to four results. First, we provide the normal form representation of the game between the new good producer and the remanufacturer. Second, we specify the game in matrix form. Third, we indicate what happens at each stage of the elimination of strictly dominated strategies. Finally, we show that the iterated elimination of strictly dominated strategies yields a clear and unique prediction about the outcome of the advertising game.     

Asymmetries exist in the Feldstein–Horioka relationship

Most studies assume symmetry between saving and investment changes. They are wrong to do so. We model the response of investment to positive and negative changes in saving for 17 OECD countries from 1960 to 2015. We use both panel and time series methods. We find that negative changes in saving have a stronger effect on investment than positive changes in saving do. In the short run, causality only runs from negative changes in saving to investment. In the long run, both negative and positive changes in saving Granger cause investment. Models relying on saving-investment symmetry in the long run are called into question. Policies assuming symmetric effects throughout the business cycle are similarly flawed.     

Exchange rate volatility and capital inflows: role of financial development

There is vast literature examining the impact of exchange rate volatility on various macroeconomic aggregates such as economic growth, trade flows, domestic investment, and more recently capital flows. However, these studies have ignored the role of financial development while examining the impact of exchange rate volatility on capital flows. This study aims to analyze the impact of exchange rate volatility on capital inflows towards developing countries by incorporating the role of financial development over the time period 1980–2013. In this regard, the behavior of two types of capital flows is examined: physical capital inflows measured as foreign direct investment, and financial inflows quantified through remittance inflows. The empirical investigation comprises the direct as well as indirect effect of exchange rate volatility on capital inflows. The study employs dynamic system GMM estimation technique to empirically estimate the effect of exchange rate volatility on capital inflows. The empirical results of the study identify that exchange rate volatility dampens both physical and financial inflows towards developing countries. The indirect impact of exchange rate volatility through financial development, however, turns out positive and statistically significant. This finding reflects that financial development helps in reducing the harmful impact of exchange rate volatility on capital inflows. Hence, the study concludes that a developed financial system is an important channel through which developing countries may improve capital inflows in the long run.     

Equity Control of Multinational Firms: Effects on Resource Allocation and National Welfare

In this paper, we re-examine the effects of equity control of multinational firms on resource allocation and national welfare in a model with rural–urban migration and urban unemployment. A large number of recipient (host) countries are developing countries with dual economies. We indicate, among other things, that a restriction on multinational investment may lower the unemployment rate and increase the total employment in the host country. Furthermore, we find that the restriction on multinational investment raises the national welfare in the host economy if the tariff imposed on imports is sufficiently large and the difference between domestic and foreign capital rental is sufficiently small.     

Johnson's algorithm: A key to solve optimally or approximately flow shop scheduling problems with unavailability periods

Johnson's algorithm (JA) is perhaps the most classical algorithm in the scheduling area. JA gives the optimal solution to the two machine flow shop to minimize the makespan in polynomial time. Researchers have tried to extend this notorious result to obtain polynomial time algorithms for more general cases. Such importance motivated us to devote this paper to JA applied to three flow shop problems with unavailability periods to minimize the makespan. First we focus on the optimality condition of JA. Then we propose a modification of JA. After we calculate new performances of JA as a heuristic. Last we deal with an extension of JA.