Structural Breaks and Convergence in the Regions of Peru: 1970–2010

The aim of this paper is the analysis of stochastic and β‐convergence in the relative regional per capita outputs using different unit root tests both with and without structural breaks and using a further test that is robust to the presence of I(0) or I(1) errors. It allows robust inference on the estimates of the initial per capita output (intercepts) and the respective growth rates (slopes). The results of the application of unit root tests without structural breaks show the absence of stochastic convergence. However, by incorporating the presence of endogenous breaks, the results are reversed for all regions. In the case of β‐convergence, the results of the robust test W_RQF show that all regions have a structural break at some point during the period 1970–2010. We find different behavior for different regions. There is a catching‐up process and a lagging‐behind process for different groups of regions towards more negative or more positive paths.     

Ecotourism development in Ghana: A postcolonial analysis

Despite growing research on ecotourism in Ghana, it is unclear to what extent colonial approaches to forestry and wildlife conservation still influence ecotourism in the country. This paper examines ecotourism development in Ghana from a postcolonialist perspective. It is based on a thematic assessment of primary data from in-depth interviews with a range of ecotourism actors. The paper shows that ecotourism in Ghana, much like colonial forestry and wildlife conservation, faces challenges such as the marginalisation of the local community, the use of neo-crisis narratives, a dependence on international forces, and the marginalisation of local ecological knowledge. It argues for a holistic approach to the development of ecotourism as a win–win strategy for sustainable development.     

Environmental Costs and Responsibilities Resulting from Oil Exploitation in Developing Countries: The Case of the Niger Delta of Nigeria

Interest shown on the environmental impact of operations of multinational enterprises in developing countries has grown significantly recently, and has fuelled a heated public policy debate. In particular, there has been interest in the environmental degradation of host communities and nations resulting from the operations of multinational oil companies in developing countries. This article examines the issue of environmental costs and responsibilities resulting from oil exploitation and production in the Niger Delta region of Nigeria. The case study is based, in part, upon series of interviews with key stakeholders in the Nigerian oil industry. The article further examines the implications of the current practice and policies of multinational oil companies with respect to environmental impact of oil exploitation. The study’s findings illustrates that it is becoming increasingly apparent to oil companies that pollution prevention pays while pollution does not and under pressure from stakeholder groups, oil companies now routinely incorporate environmental impact assessments into their corporate strategy.Dr Gabriel Eweje is a lecturer in Management and International Business at College of Business, Massey University, Auckland Campus, New Zealand. Previously, he worked as a Research Fellow at the United Nations University, Institute of Advanced Studies (UNU/IAS), Tokyo, Japan, and taught at Royal Holloway University of London, England. His PhD from University of London focused on Corporate Social Responsibility and Activities of Multinational Oil and Mining companies in Developing Countries. He also worked as a Research Fellow with International Institute for Environment and Development (IIED), London on a project on how mining and minerals can contribute to sustainable development (MMSD). His research interest lies around the issues of business ethics, corporate social responsibility and sustainability related disciplines.     

Restrictive immigration policy in Germany: pains and gains foregone?

Many European countries restrict immigration from new EU member countries. The rationale is to avoid adverse wage and employment effects. We quantify these effects for Germany. Following Borjas (in Q J Econ CXVIII(4):1335–1374, 2003), we estimate a structural model of labor demand, based on elasticities of substitution between workers with different experience levels and education. We allow for unemployment which we model in a price-wage-setting framework. Simulating a counterfactual scenario without restrictions for migration from new EU members countries in Germany, we find moderate negative wage and employment effects for incumbent foreigners, but positive effects for natives. Our results indicate that for the native German population as a whole the immigration restrictions are not welfare enhancing.     

Modelling the distribution of credit losses with observable and latent factors

This paper proposes a dynamic model to estimate the credit loss distribution of the aggregate portfolio of loans granted in a banking system. We consider a sectoral approach distinguishing between corporates and households. The evolution of their default frequencies and the size of the loans portfolio are expressed as functions of macroeconomic conditions as well as unobservable credit risk factors, which capture contagion effects between sectors. In addition, we model the distributions of the Exposures at Default and the Losses Given Default. We apply our framework to the Spanish banking system, where we find that sectoral default frequencies are not only affected by economic cycles but also by a persistent latent factor. Finally, we identify the riskier sectors, perform stress tests and compare the relative risk of small and large institutions.     

The Impossibility of Entrepreneurship Under the Neoclassical Framework: Open vs. Closed-Ended Processes

In spite of its use to explain market processes, neoclassical economics still has not integrated entrepreneurship into its analyses. This explanatory gap is the consequence of the analytical closed-endedness of the “market” processes described by the neoclassical framework, where social interactions do not result in new unpredictable information. However, entrepreneurship as profit-seeking under uncertainty is an open-ended process characterized by a creatively reflexive and emergent interactive behavior in society. This open-endedness involves the generation of novel, complex, and extensive future information that is not what anyone intended it to be. Neoclassical economics, with its predetermined assumptions on economic behavior, cannot really account for the fundamental uncertainty of open-ended processes because it cannot explain reflexivity or emergence. Therefore, it cannot explain entrepreneurship as either an innovatively cohesive or disruptive behavior that converges toward future market situations.     

Regulation and efficiency in transition: the case of Romanian banks

Using disaggregated panel data for the period 1996–2002, this paper estimates the cost efficiency of Romanian banks and relates it to regulation implemented by the National Bank of Romania. We estimate efficiency using a model that combines the frameworks of both stochastic frontier analysis and shadow cost functions. Our results indicate that, for all types of banks, the cost of technical inefficiency decreases in the years following tightening of regulation. A significant part of this decrease can be attributed to the policy change. Overall, the short-run increase in cost due to additional regulation exceeds the benefits from reduced technical inefficiency. However, our model does not account for other benefits, besides changes in X-inefficiency, such as stability of the banking system, which may be significant.      

Making real options work for practitioners: a generic model for valuing R&D projects

We propose a generic valuation framework for the appraisal of R&D projects based on real option theory. The added value of this approach is the presentation of a model that was implemented in a manner that allows corporate decision makers to use real options in an intuitive and standardized way. The project valuation procedure is separated into three main phases: project modeling, data and input collection, and result generation and analysis. The project model represents the structure of the real world R&D project with its investments, expected results, and decisions that need to be taken conditionally on the outcomes of research activities. The project model is represented in the form of a decision tree, where different research results or taken decisions lead to new branches. In this way, every possible situation the project can pass through can be represented. Uncertainties are separated into market uncertainties (e.g., market prices) and project specific, private uncertainties (e.g. uncertainty of research results). For both uncertainties, event trees are constructed which are then combined and merged with the above mentioned decision tree in order to represent the value evolution of the R&D project under given decisions and uncertainties. For every possible state of the project the real option value is calculated. By creating multidimensional trees, a multitude of decision steps and various kinds of real options (e.g., continue, expansion, switch, abandonment) can be modeled. The calculation complexity for the decision trees is given. From the tree structure we can calculate the real option value of starting an R&D project, i.e., the value of undertaking the first investment and thus acquiring the subsequent decision opportunities given by the completion of the first research effort. Furthermore, the optimal exercise strategy is derived from the decision tree. The exercise strategy gives the manager the possibility to have an a priori overview of where an R&D project may lead to, which decisions need to be taken in which circumstances, and when the project needs to be stopped in order not to generate losses. In an in‐depth case study we use an illustrative R&D project to set up and discuss the three phases of project modeling in the real options framework: building the multidimensional decision tree, input generation, and calculation of the real option value as well as the optimal strategy for the R&D project.     

Conformism and public news

We study a model where investment decisions are based on investor’s information about the unknown and endogenous return of the investment. The information of investors consists of endogenously determined messages sold by financial analysts who have access to both public and private information on the return. We assume that the return is increasing in the aggregate investment. This results into a beauty contest among analysts (or a “conformism” effect). There may exist multiple equilibria, each of which entails analysts sending the most informative messages possible. Beyond the “regular” equilibrium involving an overweighing of the public information, multiplicity introduces “inverted” equilibria where public information is negatively correlated with the return. The correlation across analysts’ information sources implies that not all the information available is transmitted to investors.     

An asymmetric oligopoly model and a method for its empirical application

The purpose of this paper is to develop an asymmetric game-theoretic static oligopoly model suitable for empirical work on oligopolistic markets. Prevailing models in applied research on oligopolistic industries are mainly of the type conjectural variations, Cournot models, although these models are known to be logically flawed from a game-theoretic point of view. As an alternative to these, a Bertrand model with three types of asymmetries is developed: firms can be concurrently asymmetric in cost levels and in the amount of product differentiation, where the impact from product differentiation on a firm's quantity demanded is divided into one relative-price component and one size component. This model is solved for different game-theoretic equilibria solutions. The conduct and performance of individual firms can be analyzed, and welfare effects in terms of consumer-surplus levels are calculated on the firm level. The model contains enough structure for direct use in applied research. A simple method for empirical use of the model is proposed, which minimizes the econometric task: By estimatingn+1 demand elasticities, the asymmetric market-demand structure for then firms will be completely specified.