Beyond Brenner's investment overhang hypothesis: the case of the steel industry

This article challenges the way liberal economic governance has come to be theorised as a passive and depoliticised form of governance. Using the classic case of the gold standard, it shows how state intervention came to be shaped by considerations of state power and diverged considerably from the traditional emphasis on free markets and stable conditions of investments. As I argue, the gold standard was constructed through political struggles over monetary governance which involved significant constraints for capitalist investors. Its institutions helped establish a new structure for exerting control over finance. By resituating the gold standard in a broader historical perspective, I show how nineteenth-century monetary governance, far from leading to a retreat of the state, established in fact the foundations of a new form of state intervention: modern central banking.     

The role of land-based strategies in rural livelihoods: The contribution of arable production,animal husbandry and natural resource harvesting in communal areas in South Africa

The majority of South Africa's rural population resides in the former homelands. Although cash from urban and government sources is the mainstay of the rural economy in many areas, the multiple and diverse livelihood base of rural households is not widely recognised. This diversity includes the land-based strategies of arable farming, livestock husbandry and consumption and trade in natural resources. This article examines recent and emerging literature from a livelihood perspective in terms of the role and value of each of these three land-based livelihood sectors. We conclude that the contribution of land-based activities to rural livelihoods is important in both financial and social terms, and is probably greater than previously appreciated within the whole gamut of livelihood strategies adopted by rural households, including transfers from formal employment and state pensions. We examine the policy implications of this for land and agrarian reform in South Africa.     

Trade Facilitation and Export Diversification

This paper shows that improved trade facilitation can help promote export diversification in developing countries. We find that 10 per cent reductions in the costs of international transport and domestic exporting costs (documentation, inland transport, port and customs charges) are associated with export diversification gains of 4 and 3 per cent, respectively, in a sample of 118 developing countries. Customs costs play a particularly important role in these results. Lower market entry costs can also promote diversification, but the effect is weaker (1 per cent). We also find evidence that trade facilitation has stronger effects on diversification in poorer countries. Our results are highly robust to estimation using alternative dependent and independent variables, different country samples, and alternative econometric techniques. We link these findings to recent advances in trade theory that emphasise firm heterogeneity, and trade growth at the extensive margin.     

Audit pricing and nature of controlling shareholders: Evidence from France

This study examines whether auditors are employed as a monitoring mechanism to mitigate agency problems arising from different types of controlling shareholders. In a context of concentrated ownership and poor investor protection, controlling shareholders can easily expropriate wealth from minority shareholders and profit from private benefits of control. However, this agency conflict has been rarely studied, as the most commonly assumed agency conflict occurs between managers and shareholders. Using an audit fee model derived from Simunic (1980), we study the impact of the nature of controlling shareholders on audit fees in French listed firms. Our results show: (1) a negative relationship between audit fees and government shareholdings; (2) a positive relationship between audit fees and institutional shareholdings; and (3) no relationship between audit fees and family shareholdings. These results illustrate the mixed effects of the nature of ownership on audit fees.     

Understanding offshoring: A research framework based on disintegration, location and externalization advantages

We present an analytical framework explaining offshoring in this paper. We address the question: why do firms offshore their business functions? Given the growing prevalence of offshoring as a dominant business practice in the world of global business, this question merits further research attention. We propose that firms embark on offshoring when they perceive three sets of interrelated advantages: disintegration advantages (D), location-specific resourcing advantages (L) and externalization advantages (E). Theories from multiple disciplines form the foundation of Disintegration–Location–Externalization (DLE) framework. Implications for managers, government policy makers and recommendations for future research are explored.     

The Land Crisis in Zimbabwe Viewed from South of the Limpopo

Farm invasions in Zimbabwe have highlighted the pressing need for land reform throughout the southern African region. In South Africa, where the racial disparities in land holding are most severe, the events in Zimbabwe have raised the temperature of the land debate and led to calls for land invasions by some rural groups. The ANC-led government, facing criticism from both right and left for the slow pace of reform, has veered between strident defence of private property rights and threats to expropriate white farms. White farming interests have reacted differentially, with some progressive voices joining the calls for an accelerated reform programme. Current land reform policy in South Africa seems set to advance the interests of emerging black commercial farmers and tribal chiefs at the expense of the rural poor and landless.     

Exchangeability, Correlation, and Bayes' Effect

We examine the difference between Bayesian and frequentist statistics in making statements about the relationship between observable values. We show how standard models under both paradigms can be based on an assumption of exchangeability and we derive useful covariance and correlation results for values from an exchangeable sequence. We find that such values are never negatively correlated, and are generally positively correlated under the models used in Bayesian statistics. We discuss the significance of this result as well as a phenomenon which often follows from the differing methodologies and practical applications of these paradigms – a phenomenon we call Bayes' effect.     

Social Capital: The World Bank's Fungible Friend

Book reviewed in this article:
Christian Grootaert and Thierry van Bastelaer (eds), The Role of Social Capital in Development: An Empirical Assessment     

Stock markets, banks, and economic growth: Empirical evidence from the MENA region

Over the last four decades, a wide theoretical debate is concerned with the fundamental relationship between financial development and economic growth. Recent studies shed some light on the simultaneous effect of banks and financial system development on growth rather than a separate impact. The empirical study is conducted using an unbalanced panel data from 11 MENA region countries. Econometric issues will be based on estimation of a dynamic panel model with GMM estimators. Thus, peculiarities of MENA region countries will be detected. The empirical results reinforce the idea of no significant relationship between banking and stock market development, and growth. The association between bank development and economic growth is even negative after controlling for stock market development. This lack of relationship must be linked to underdeveloped financial systems in the MENA region that hamper economic growth. Then, more needs to be done to reinforce the institutional environment and improve the functioning of the banking sector in the MENA region. Based on these results, other regions at the same stage of financial development such as Africa, Eastern Europe or Latin America should improve the functioning of their financial system in order to prevent their economies from the negative impact of a shaky financial market.