Trade and agricultural development in the 1980s and the challenges for the 1990s: Asia

Asian developing countries have had varying experiences in trade and agricultural development in the 1980s, attributable in part to their differing stages of economic development and structural characteristics. Other important influences relate to the external economic environment and the policy choices made by their governments not only during the period but also in the preceding decade. The achievements of Asian developing countries under the adverse external conditions of the 1980s are discussed in terms of their macrocconomic and agricultural growth, the commodity structure of agricultural growth, their food production and trade, the expansion and diversification of their agricultural exports, and the policy and nonpolicy factors affecting them. Special attention is given to the role of policy reforms implemented in China and the South Asian countries, following similar policy developments in Northeast and Southeast Asia in the 1960s and 1970s, toward greater openness in their trade regime and increased private-sector participation in the economy. These reforms have contributed to the observed acceleration in gup , agricultural, and export growth in the 1980s. However, macroeconomic imbalances have emerged that threaten the sustainability of economic liberalization in those countries. The major challenges for the 1990s also differ among the Asian developing countries. In the industrially advanced Northeast economies of Taiwan and South Korea, the primary need is to ease the transition of the remaining rural population as farm incomes continue to fall and workers move to industrial and service activities. This challenge has to be addressed in the context of growing external pressure to further open their domestic market for agricultural imports. Among the Southeast and South Asian countries, there is a need to reduce the existing policy biases against agriculture, particularly against export crop production. Moreover, China and the South Asian countries face the additional challenges of continuing to deregulate their trade regime and internal markets, and of promoting macroeconomic stability. Despite the external trend recently toward regionalism, Asian developing countries generally seem committed to an open trading system, on which in fact their past impressive economic performance has been predicated. An important challenge for them in the 1990s is to play an active role in arresting and reversing any protectionist tendencies arising from the formation of regional trading blocs and to support multilateral initiatives such as the Uruguay Round that promote global trade liberalization.     

Incorporating Prior Information into A GMM Objective For Mixed Logit Demand Systems

Random parameters demand system estimates can generate upward sloping demands and imply margins outside of the theoretical bounds for profit maximization. If such violations are numerous enough, they can confound merger simulation exercises. Using Lerner indices for multiproduct firms playing static Bertrand games, we find that up to 35 per cent of implied margins for beer are outside the bounds. We characterize downward sloping demand and the theoretical bounds for profit maximization as prior information and extend the GMM objective function, incorporating inequality moments for product‐level own‐elasticities and brand level or product level Lerner indices. Very few violations remain when an inequality constrained estimator is used.     

A Typology of Reverse Innovation

Reverse innovation commonly refers to an innovation initially launched in a developing country and later introduced to an advanced country. Adopting a linear innovation model with the four sequential phases of concept ideation, product development, primary target market introduction, and subsequent secondary market introduction, this study expands the espoused definition of reverse innovation beyond its market‐introduction focus with reversals in the flow of innovation in the ideation and product development phases. Recognizing that each phase can take place in different geographical locations, the paper then introduces a typology of global innovation with 16 different types of innovation flows between advanced and emerging countries, 10 of which are reverse innovation flows. The latter are further differentiated into weak and strong reverse innovation, depending on the number of innovation phases taking place in an emerging country. This analytical framework allows recasting of current research at the intersection between innovation and international business. Of the 10 reverse innovation flows, six are new and have not been covered in the literature to date. The study addresses questions of ethnocentrism and the continuity of the flow of innovation, and discusses possible extensions of the model with respect to the number of geographical categories and phases of innovation. Four research propositions highlight areas for future investigation, especially in the context of optimizing a firm's portfolio of global innovation competence and capability. The implications for management are concerned with internal and external resistance to reverse innovation. Most significantly, while greater recognition and power of innovation in formerly subordinate organizational units is inconvenient to some, the ability to leverage the potential of reverse innovation makes a firm more likely to succeed in global innovation overall.     

Toward a theory of international new venture survivability

In this longitudinal study, we explore in-depth how entrepreneurs acquire legitimacy for their new ventures in an attempt to internationalise and survive before and after the dot.com bubble. We adopted a longitudinal multiple-case study methodology for the purpose of theory building. Five firms were selected on the basis of purposeful sampling logic from a homogeneous empirical context: they were small, software firms from Scotland that internationalised and struggled for survival between 1999 and 2001. To explore these companies’ critical events and episodes, the method of critical incident technique was employed. The method of constructing typologies by reduction was employed to advance the typology of hype defined as the overall sentiment of the environmental context, within which the firm is embedded, about the future. Grounded in data, there emerged a middle-range theory of international new venture survivability that postulates that the closer the new venture is to the hype, the higher the likelihood of failure. Several implications to the theory of new venture legitimacy could be singled out. The paper makes an attempt to understand the nature of a legitimacy threshold. The data in the study points to the continuous nature of the legitimacy threshold and suggest that it may be defined by the time when the emergent industry moves away from hype towards risk decision making settings. A set of propositions is put forward to stimulate future research in the area of new venture legitimacy.     

Foreign Borrowing as Dutch Disease: A Quantitative Analysis for the Philippines

This Paper investigates the economy-wide effects of increased foreign borrowing in the empirical context of the Philippines, using a multi-sectoral, general equilibrium model. The focus of the analysis is on the comparative static repercussions of the domestic spending of externally borrowed funds and on the resource allocation effects of the appreciation of the Philippine peso induced by the expanded supply of foreign exchange. The results of model simulation indicate, among other findings, a relatively small impact on national income, with rural income increasing by much less than urban income. [430]     

Do Newspaper JOAs Charge Monopoly Advertising Rates?

Conventional wisdom argues that all commercial and economic competition between two daily newspapers stops when they merge their advertising and printing capabilities to form a joint operating agreement (JOA). Clearly the JOA acts a monopolist in the sale of advertising, but there are two forces that may constrain the JOA to sell more advertising than a profit maximizing single paper monopolist would find optimal. First, there is the possibility of what is sometimes termed ``end game competition'. Disposition of assets from a JOA are often not determined until the JOA is near its termination date, and this may induce the weaker paper to maintain quality, both to improve its bargaining position and to keep open the possibility of remaining in the market as a competitor at the end of the JOA. Second, a daily paper arguably has to maintain a certain level of advertising and maintain a certain ``look' and ``feel' if it is to be considered a daily paper. This may constrain the JOA to sell more advertising and maintain a higher joint circulation than might be optimal for a single paper monopolist. We present econometric evidence that shows JOAs to have ad rates that are closer to those of competitive dailies than to those of single paper and 2-edition monopolists.     

Effects of Increasing Agricultural Productivity in a Multisectoral Model for the Philippines

This paper investigates empirically the economy-wide effects of agricultural productivity increases in the Philippines, reporting the results of a quantitative analysis based on a general equilibrium framework. A multisectoral, price endogenous model of the Philippine economy is employed, emphasizing not only agriculture but also other production sectors with which it closely interacts, as well as the distinction between rural and urban households in their income generation and consumption patterns. Among other findings, the differential effects on the real income of rural households vis-a-vis urban households arising from increased productivity in the various components of the agricultural production sector are striking. The resulting improvements in the trade balance and national income, among other macroeconomic variables, are also relatively significant. Moreover, there are significant differences in the economy-wide effects among the four sectors of food and agriculture distinguished in the study. Particularly interesting is the highly favorable impact of rising productivity in the food processing sector on agricultural crop production and rural income, a linkage effect that has not received much attention in the development literature.     

Import demand for capital equipment in the Philippines

Zusammenfassung Zur Importnachfrage nach Kapitalgütern eines weniger entwickelten Landes: Die Philippinen. — In dieser Arbeit wird bezweifelt, da▾ die übliche Importnachfragefunktion im Fall der Kapitalgüter und Maschinen von Entwicklungsl?ndern angewendet werden kann. In einem typischen Entwicklungsland sind importierte Kapitalgüter ein notwendiger Produktionsfaktor und bringen einen Strom von Inputleistungen hervor. Daher sollte vielmehr direkt der gewünschte Bestand an importierten Ausrüstungsgütern als die tats?chlichen K?ufe (die eine Vergr?▾erung des gegebenen Bestands darstellen) erkl?rt werden. Vorgelegt wird eine ?konometrische Untersuchung der Nachfrage nach importierten Kapitalgütern der Philippinen, die in verschiedener Hinsicht frühere Untersuchungen der Importnachfrage von Entwicklungsl?ndern verbessert.

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Résumé La demande d'importation d'équipement de capital dans un pays en voie de développement: Les Philippines. — Cet article met en doute l'applicabilité de la fonction standard de la demande d'importation à l'équipement de capital et aux machines des pays en voie de développement (PVD). Dans un PVD typique les biens de capital importés sont un facteur nécessaire de la production et créent un flux des services d'input. En conséquence c'est la demande des stocks d'équipement de capital et moins les achats courants (qui représentent l'accroissement des stocks existants) qu'on devrait expliquer directement. Une investigation économétrique de la demande d'équipement de capital importé dans les Philippines est présentée, qui améliore des études précédentes sur la demande d'importation des PVD à quelques égards.

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Resumen Demanda de importatión por bienes de capital en un país en desarrollo : Las Filipinas. — En este artículo se cuestiona la aplicabilidad de la función de demanda de importación standard a equipos de capital y maquinaria para países en desarrollo. En un típico país en desarrollo los bienes de capital importados son un factor de productión necesario y generan un flujo de servicios de input. De tal manera, lo que debería explicarse directamente es el stock de demanda por equipos importados en vez de su adquisición (lo que representa un incremento del stock existente). Se presenta una investigation econométrica de la demanda por equipos de capital en las Filipinas, mejorando estudios anteriores sobre demanda de importación en países en desarrollo en varios aspectos.