The healthy development of economies: A strategic framework for competitiveness in the health industry

Applying a strategic decision-making perspective on the economics of business, we suggest that a competitive locality in the health industry is one that, relative to other localities, is effective in: (1) providing the healthcare that enables everyone to participate fully in the democratic development of the locality; (2) providing the healthcare that is democratically identified as a direct objective of this development; (3) contributing through the health industry to any other democratically determined objectives of the locality's development. The paper hypothesizes that strategic decision-making in organizations is an especially significant determinant of the impacts of the health industry. We conclude that: (i) a locality that suffers concentration in the power to determine the objectives of its health industry could not be strictly competitive in that industry; (ii) the first best way to achieve competitiveness in the health industry would be to democratize its strategic decision-making. What this would entail in practice is discussed in some detail.     

Systemic financial risk indicators and securitised assets: an agent-based framework

The paper presents an agent-based model of a credit economy which includes a securitisation process and a bailout mechanism for bank bankruptcies. Within this framework, banks are able to sell mortgages to a financial vehicle corporation, which finances its activity by creating mortgage-backed securities and selling them to a mutual fund. In turn, the mutual fund collects liquidity by selling shares to households and remunerates them with a monthly interest. The impact of this mechanism is analysed by means of computational experiments for different levels of banks’ securitisation propensity. Furthermore, we study a set of systemic risk indicators which have the aim of assessing the imbalances in the financial system. Two of them are the mortgage-to-GDP ratio and the capital adequacy ratio, which are constructed to detect only the on-balance sheet changes in banks’ credit exposure. We consider two additional indicators, similar to the previous ones with the only difference that they are also able to account for the off-balance sheet items. Moreover, we adopt an indicator, the so-called “virtuous–unvirtuous cycle” indicator, which, besides off-balance assets, targets also the GDP. The results show that higher securitisation propensity weakens the financial stability of banks with relevant effects on different sectors of the economy. Most importantly, the analysis of systemic risk reveals the important issue of designing suitable systemic risk indicators for predicting incoming financial crises, finding that an essential feature of these indicators should be to integrate banks’ off-balance sheet assets.

     

A cross-national study of culture,organization and entrepreneurship in three neighbourhoods

The paper focuses upon the future development of local support for small enterprises in transition economies. It points to the rapid growth in numbers of support agencies in all of these countries. These agencies are largely based upon western models and are supported by western funds. A number of issues are raised in respect of their future. These are explored under three headings: the true relevance of the western models; strategic issues in die survival of agencies; and conceptual issues as they relate to the problems of adding value and effectiveness in networking and organization design. These issues are then examined in the context of a comparative in-depth study of a number of Hungarian and UK Local Enterprise Agencies. The results point to die value of ‘a priori’ comparative exploration of die circumstances that underpin any model that is to be used as a basis for a transfer process. They indicate that UK agencies share many strategic problems with Hungarian agencies and cannot offer many solutions. They also demonstrate the shared weaknesses of die policy and networking conceptual base. The results point to a range of needs that derive from die ‘second stage’ strategies demanded of such agencies in die transition economies if they are to survive and grow following die reduction of donor support.