The persistent institutional effect of liberal colonialism: evidence from China’s financial policies

ABSTRACT

The effect of liberal colonialism on the allocation of capital persists to this day. We exploit the colonial history of China during 1896-1911 with qualitative evidence to measure liberal colonialism. We document that liberal colonialism promotes the subsequent efficiency of financial policies on the capital allocation in 2004 through the quality of economic institutions.     

Autocatalytic Growth and Development and the South-North Convergence

Abstract:

This article engages with the issue of income convergence between North and South by using the autocatalytic hypothesis of growth and development. Two system models describe positive and negative feedback loops which govern economic flows between North and South. The analysis of endogenous and exogenous negative feedbacks points to the process that would slowly push the world economy towards vanishing growth rates and, eventually, halt its material growth. The present work rejects convergence in per capita GDP between North and South from the theoretical perspective. Such an outcome would stand against one of the fundamental properties of autocatalytic dynamics—centripetality— that has its causal roots in the competitive process and capitalist institutions. In that sense, the autocatalytic hypothesis provides a theoretical explanation for those empirical analyses that dismisses convergence.     

Engines of Growth in China: The Limits of Informal Institutions

Abstract:

Since the 1978 reforms, China has experienced rapid economic and social development. GDP growth has been in the double digits on average yearly, creating the fastest sustained economic growth recorded by a major economy in history. Not only did this transform the economy and society at large, China reached important milestones in terms of reducing poverty and creating prosperity in a short period of time. This article uses the conceptual framework of new institutional economics to examine China’s economic growth and how growth has been achieved largely by ‘informal institutions’ that are grounded in culture, customs, and private interactions that emerge spontaneously. The trajectory by which these informal institutions left their imprint on China’s complex economic landscape and how they can constrain future economic growth are also of central importance. After examining decentralization and risk management practices, property rights, and the legal system, we emphasize the importance of creating formal institutions necessary for long-term growth, most importantly innovation. Preliminary evidence shows total factor productivity is tapering off which may reflect the constraints of China’s institutional environment. This ought to be reversed if China is to enjoy long-term sustained growth.     

Policy Dimensions of Progressive Institutional Change: Lessons from China’s Construction of a Socialist Market Economy

Abstract:

Through a comprehensive review of the progressive institutional change (PIC) literature, I first discuss four possible trajectories of PIC by considering the forces of societal reaction that might frame the path, as well as the scale and scope of the changes. Thus, I pose four questions that need to be asked when related policies are formulated for PIC. To illustrate this method, I scrutinize the evidence from the construction of a socialist market economy by the Chinese government since the 1980s and argue that related policies have successfully promoted PIC from three dimensions: (1) curbing potential conflicts with power groups; (2) promoting a sense of awareness among stakeholders; and (3) minimizing disturbances to the community. Actually, the related changes demonstrate a dynamic “displacement process” for PICs. Despite the success of this sociosystem, it is found that the sustaining of PIC which requires policy factors that enhance instrumental efficiency in the Chinese context will serve as a challenge to the Chinese government ahead.     

Do Rising Top Incomes Spur Economic Growth? Evidence From OECD Countries Based on a Novel Identification Strategy

We investigate the causal relationship between the growth rate of top income shares and economic growth in 12 OECD economies for the period 1950–2010. To analyze patterns of short- and long-run causality, we build upon recent advances in structural-vector autoregressive modeling of non-Gaussian systems. This framework allows us to discriminate between rival transmission channels by means of dependence tests, since independent shocks are unique for a particular causation pattern. We consider the share of income accruing to the top 1 percent (1), to the next 9 percent (9), and to the top decile (10). While structural models display considerable heterogeneity across countries, mean group and pooled results strongly favor a specific transmission pattern. In particular, 1 has a long-run positive impact on economic development. This result, which is also confirmed by identified impulse-response functions, is particularly evident for the post-1980 period.     

Intergenerational Earnings Inequality: New Evidence From Italy

Using an innovative dataset built by merging survey and administrative data, we provide new estimates of intergenerational earnings’ inequality between fathers and sons in Italy, extending previous evidence in several directions. We rely on the TSTSLS method to predict fathers’ earnings and compute intergenerational elasticities and imputed rank–rank slopes, trying to reduce estimation biases. Confirming previous evidence, we find that Italy is characterized by a high intergenerational inequality in cross-country comparison. Extending previous analyses, we show that the intergenerational association increases when sons at older ages and multi-annual averages of pseudo-fathers’ and sons’ earnings are considered. We also find that the intergenerational persistence differs across geographical macro-areas and is high also for daughters, especially when family earnings are considered. Furthermore, estimates where possible mediating factors of the parental influence are included among the covariates show that a high intergenerational association persists when sons’ education and occupation are controlled for.     

Analytically comparing disaster resilience across multiple dimensions

It is important to compare the resilience of complex human systems to different types of disasters, in order to assess their inherent vulnerabilities and take appropriate actions to strengthen them. Resilient behavior can be complicated and multi-dimensional, however, and one must be able to characterize the different ways in which that resilience actually exhibits itself in practice. With this in mind, this paper discusses creating a multi-dimensional indicator for the resilience of a complex human system, and it explores an approach for visualizing and analyzing the relationships between each of the individual resilience dimensions. Because decision makers may differ on the relative contribution of the different dimensions to overall resilience, the paper further discusses the issue of weighting the different dimension values and the impacts that such a weighting scheme can have on the relative ranking of different scenarios. We illustrate the ability to characterize the complexity of multi-dimensional resilience by analyzing an empirical data set that measures the relative resilience of the New York metropolitan area to seven different natural disasters between 2010 and 2012.     

Enhanced network effects and stochastic modelling in generation expansion planning: Insights from an insular power system

Electricity generation capacity expansion is driven by both economic and socio-political realities. Policy makers determine public infrastructural decisions, such as climate and renewable targets, and transmission infrastructure, and the optimal generation capacity expansion follows. Policy makers therefore require planning models that can determine the optimal generation capacity mix in the long run under various scenarios, including policy choices. This work presents a planning model based on linearised alternating current optimal power flow which determines optimal generation capacity expansion and operation, in a least-cost manner, given global and local technical constraints, as well as policy decisions. We apply the model to a test case of the island of Ireland, which has two weakly interconnected systems, high renewable generation targets and low storage and interconnection. We determine the optimal generation expansion and operation out to 2030 considering the effects of increased multi-area interconnection, existing fossil fuel generation phase-out and increased renewable generation targets and carbon prices. Our results find that costs and emissions are driven primarily by the decommissioning of old inefficient generation units. High renewable targets, on the other hand, render increased carbon prices relatively ineffective in reducing system emissions. Furthermore, high renewable generation targets crowd out low-carbon power generation options such as carbon capture and storage (CCS). The strategic north-south interconnection has little effect on renewable energy source installations required to achieve renewable power generation targets but does impact on security of supply and the congestion level across the island.     

How does the availability and use of flexible leave influence the employer–employee relationship?

In this article, we develop, and empirically test, a moderated mediation model of the effects of flexible leave on employees' organizational attachment. Drawing on a social exchange framework and signaling theory, we explore how the material and non-material nature of exchange between the employer and employee shapes their relationship. First, we show that the relationship between the availability of flexible leave and organizational attachment is shaped by two competing mediators, perceived organizational support (POS) and perceived flexibility stigma. Second, we delineate between availability and use of the policy, to show how the effect of POS is enhanced and perceived flexibility stigma reduced, with use. Our findings demonstrate that the relationship between the availability of flexible leave and organizational attachment is complex, but is enhanced through use of flexible leave. We contribute toward HRM scholarship about the relationship between employees' experience of HR practices and their corresponding impact on employees' subsequent behavior.