Trade liberalisation and endogenous growth: A q-theory approach

This paper introduces a new approach to the analysis of endogenous growth effects and uses it to illustrate two novel trade-and-growth links. The approach’s simplicity allows us to introduce scale economies and imperfect competition into the R&D and financial intermediation sectors of a Romer–Grossman–Helpman endogenous growth model. We show that trade liberalisation can stimulate growth via a procompetitive effect in the R&D sector and/or financial sector.     

Multinationals, Endogenous Growth, and Technological Spillovers: Theory and Evidence*

FDI has received surprisingly little attention in theoretical and empirical work on openness and growth. This paper presents a theoretical growth model where MNCs directly affect the endogenous growth rate via technological spillovers. This is novel since other endogenous growth models with MNCs, e.g. the Grossman–Helpman model, assume away the knowledge‐spillovers aspect of FDI. We also present econometric evidence (using industry‐level data from seven OECD nations) that broadly supports the model. Specifically, we find industry‐level scale effects and international knowledge spillovers that are unrelated to FDI, but we also find that bilateral spillovers are boosted by bilateral FDI.     

The seasoned executive's decision-making style

Leaders make decisions every day of their lives, but how they do it changes dramatically over the course of their careers. At lower levels, the job is to get widgets out the door; action is at a premium. At higher levels, the job involves decisions about which widgets to offer and how to develop them. To climb the corporate ladder and be effective in new roles, managers need to change the way they use information and evaluate options. Based on a study of the decision-making profiles of more than 120,000 executives, the authors found that people make decisions very differently in public than they do in private and that the decision styles of successful managers evolve in highly predictable patterns. The most successful managers and executives become increasingly open and interactive in their leadership (or public) styles, and more analytic in their thinking (or private) styles, as they progress in their careers. The research shows that decision-making profiles do a complete flip over the course of a career; that is, the decision profile of a successful CEO is the opposite of a successful first-line supervisor's. When does the major change in focus occur? Somewhere between the manager level and the director level, executives find that formerly effective decision styles no longer work so well. At this point, decision styles fall into a "convergence zone", where managers use all styles more or less equally. From then on, the executives continue to evolve their styles. The most successful managers come to the convergence zone quickly and continue to adjust their styles as their careers progress. Low performers seem to stagnate once they hit the convergence zone; their styles do not evolve in new directions. Clearly, relying on past successes and habits is no guarantee of success-indeed, it may be the road to failure.     

Measurement of Productivity Changes: Two Malmquist Index Approaches

The adjacent Malmquist productivity index is compared to the more recently suggested base period Malmquist productivity index. The two index approaches are evaluated with respect to base period dependency, the circular test, and with respect to a set of additional classical index tests. In addition it is shown that the base period index is independent of base period if and only if the marginal rate of substitution of inputs is independent of time. Finally, the adjacent and the base period indexes are put through a Monte Carlo (bootstrap) test to see if they yield similar results when applied to a panel of Swedish pharmacy data.     

Profits,dividends and industry restructuring: the Swedish paper and pulp industry between 1945 and 1977

This paper explores the role of profit distribution in the restructuring of the Swedish paper and pulp (P&P) industry between 1945 and 1977. In addressing this issue, we will draw on the life-cycle theory and market imperfection arguments to examine whether the less profitable firms shared more of their profits as dividends, or remained on the market longer by reinvesting the majority of the profits. Our study shows that an increasing share of the profits was distributed to owners over time, and thus less profit was reinvested in industrial renewal. We find that the observed general upward trend in dividends can be attributed to the decline in profit and firm legacy, as firms in the Swedish P&P industry kept dividends up while reducing reinvestment as their profit margins decreased over time. Our study shows that the market imperfections related to capital taxation and investment funds increased rather than decreased dividends.     

Trade and Location with Horizontal and Vertical Multi-region Firms

We analyse the effect on agglomeration tendencies of allowing multi-region firms in a standard trade and location model, the core–periphery (CP) model developed by Kurgman (1991). The introduction of horizontal multi-region firms mitigates the agglomeration effects found in the CP model by reducing the range of trade costs for which the core–periphery equilibrium occurs. The introduction of vertical multi-region firms that separate the location of headquarters and plants has two counteracting effects. While headquarters exhibit a strong tendency to concentrate, plants tend to spread out. The equilibrium is always asymmetric in spite of the underlying symmetry of the model.     

Analysis of the mechanism of injury in non-fatal vehicle-to-pedestrian and vehicle-to-bicyclist frontal crashes in Sweden

The aim of this paper is to analyse and compare injuries and injury sources in pedestrian and bicyclist non-fatal real-life frontal passengercar crashes, considering in what way pedestrian injury mitigation systems also might be adequate for bicyclists. Data from 203 non-fatal vehicle-to-pedestrian and vehicle-to-bicyclist crashes from 1997 through 2006 in a city in northern Sweden were analysed by use of the hospitals injury data base in addition to interviews with the injured. In vehicle-to-pedestrian crashes (n = 103) head and neck injuries were in general due to hitting the windscreen frame, while in vehicle-to-bicycle crashes (n = 100) head and neck injuries were typically sustained by ground impact. Abdominal, pelvic and thoracic injuries in pedestrians and thoracic injuries in bicyclists were in general caused by impacting the bonnet. In vehicle-to-pedestrian crashes, energy reducing airbags at critical impact points with low yielding ability on the car, as the bonnet and the windscreen frame, might reduce injuries. As vehicle-to-bicyclist crashes occurred mostly in good lighting conditions and visibility and the ground impact causing almost four times as many injuries as an impact to the different regions of the car, crash avoidance systems as well as separating bicyclists from motor traffic, may contribute to mitigate these injuries.     

Comparative Advantage and the Location of Production

The paper returns to a familiar topic in international trade, comparative advantage, introducing it into Krugman's classic, core–periphery model of economic geography. This extra force of dispersion radically changes the stability properties of the model. Instead of the familiar result that trade liberalization leads to increased industrial concentration, lowering trade costs leads initially to increased concentration and then to dispersion of production. When a pattern of comparative advantage exists, integration may lead to international specialization of production. This may be good news for peripheral countries, which may be able to retain industry despite the attraction of the core.     

Workers’ participation in regional economic change following establishment closure

This article analyses if and when workers affected by economic destruction in the form of establishment closures move to more productive or newly started establishments in the region, become self-employed, leave the region or become displaced. Results from multinominal probit models show that the majority of these workers face destructive employment outcomes from a Schumpeterian point of view compared to a matched sample of workers not subject to a closure. However, we do find indications of a creative destruction as a small, albeit significant, share become employed in young establishments. Different types of human capital influence the likelihood of triggering positive or negative regional outcomes. While higher education significantly decreases the risk for unemployment, high-income earners more often become engaged in creative outcomes. Firm tenure increases the likelihood of becoming employed in younger establishments. There are significant spatial differences where metropolitan regions excel as loci of creative change, whereas smaller and peripheral regions face far less creative outcomes of economic transformation.