INTERNATIONAL TRADE AND GLOBAL STABILITY1

Trade liberalisation has played a critical role in advancing peace and prosperity. Differences on agriculture have been the major impediment to a future multilateral trade round. The recent agreement on agriculture at the WTO meetings in Geneva may signal a breakthrough in that sector. This article analyses the benefits of recent trade agreements and examines the prospects for future ones. It also presents an alternative framework for advancing trade, the Global Free Trade Association.     

MUST GOVERNMENT GO FISHING?

The depletion of fish stocks around the UK presents serious problems for the UK, and in particular the Scottish, fishing industry. This is a classic 'tragedy of the commons', repeatedly occurring in fisheries, where open access to a limited resource leads to serious depletion and may ultimately wipe out that resource. A recent report by the Royal Society of Edinburgh endorses the scientific basis for drastic cuts in fishing quotas under the Common Fisheries Policy to conserve stocks, and the necessary regulation and restriction of fishing effort in the UK. But it further recommends government-led initiatives to reorganise and finance the industry. Fishing in the UK is a successful entrepreneurial business and no such intervention by government is required. Government must concentrate on devising methods of regulation which, through the extension of tradable property rights in fishing, would encourage the best economic return from this important public resource.     

Debt finance and the cost of management ownership: Some elementary results

Increased debt reduces a company's equity base, which reduces the dollar investment a manager must make to hold a given proportion of stock. Therefore, it is often argued, managers' effort incentives are improved by high leverage. This paper shows that while risky debt reduces the cost of providing managers with substantial equity ownership, the cheaper equity captures less of the fruits of the manager's effort. Managers' effort incentives are improved by high debt levels only under quite restrictive conditions. These conditions are more plausible when agency problems are due to a managerial propensity to expand size by investing in negative net present value projects. The results also imply that when debt is increased to reduce the agency costs of free cash flow, the accompanying covenants should allow for substantial cash distributions to shareholders even before bondholder claims are satisfied.     

Human resource management strategies in declining industries

The conceptualization presented in this article suggests that top management should take into account the role of the human resource function in formulating and implementing strategic responses to decline. Such responses must be formulated within the context of the skills and knowledge available to the organization and according to the type of environmental conditions encountered. These influences will force the human resource manager to focus on sharpening competencies existing within the organization, consolidating competencies so that only those currently required by the organization are retained, adding new competencies, or replacing existing competencies so that the organization can move to a new domain activity. The emphasis on human resource processes such as recruitment and termination, training and development, and evaluation, reward, and retention for purposes of development and maintenance of the competencies needed to implement strategic responses to decline will vary according to the nature of the environmental conditions encountered.     

The marketing of hamburger buns: An improved model for prediction

The Spring 1974 issue of this Journal published a paper that presented a model for predicting sales of hamburger buns. This article evaluates the model on the bases of statistical reporting, model specification, and implications for production policy. In addition, using the same data used for the original model, an improved model is developed whereby there is a 50% increase in explained variance.     

The changing duties of today's foreman

There are, today, more foremen in ratio to the numbers of workers they are supervising; they have better educations than foremen have ever had before, or have ever been expected to have; and their responsibilities are expanding to new areas.     

Duration gaps with futures and swaps for managing interest rate risk at depository institutions

Duration gaps for depository institutions are derived for economic net worth, economic net income, and book value interest income. The duration gaps previously constructed for on-balance sheet accounts are expanded to off-balance sheet accounts, including futures contracts and swap agreements. These expanded duration gaps are indicators of the sensitivity of the market value of net worth and income measures to interest rate fluctuations. Managers of depository institutions can establish these duration gaps as targets and can utilize futures markets and swap agreements to affect the target values. The developments in this article are based on a single factor model of interest rate movements, but the results can be extended.The work in this article is based partly on Bierwag and Kaufman (1989), a study prepared for and funded by the Federal Home Loan Bank Board. We have benefited from comments of discussants and participants at presentations at HEC Jouy-en-Josas, the meetings of the European Finance Association, and seminars at the University of Delaware, Loyola University of Chicago, the Federal Reserve Bank of Chicago, Florida State University, and the University of Illinois, Chicago.