Postmaterialism influencing total entrepreneurial activity across nations

The relative stability of differences in entrepreneurial activity across countries suggests that other than economic factors are at play. The objective of this paper is to explore how postmaterialism may explain these differences. A distinction is made between nascent entrepreneurship, new business formation and a combination of the two, referred to as total entrepreneurial activity, as defined within the Global Entrepreneurship Monitor (GEM). The model is also tested for the rate of established businesses. The measure for postmaterialism is based upon Inglehart’s four-item postmaterialism index. A set of economic, demographic and social factors is included to investigate the independent role postmaterialism plays in predicting entrepreneurial activity levels. In particular, per capita income is used to control for economic effects. Education rates at both secondary and tertiary levels are used as demographic variables. Finally, life satisfaction is included to control for social effects. Data from 27 countries (GEM, World Values Survey and other sources) are used to test the hypotheses. Findings confirm the significance of postmaterialism in predicting total entrepreneurial activity and more particularly, new business formation rates.

Entrepreneurship and its determinants in a cross-country setting

The relative stability of differences in entrepreneurial activity across countries suggests that other than economic factors are at play. The present paper offers some new thoughts about the determinants of entrepreneurial attitudes and activities by testing the relationship between institutional variables and cross-country differences in the preferences for self-employment as well as in actual self-employment. Data of the 25 member states of the European Union as well as the US are used. The results show that country specific (cultural) variables seem to explain the preference for entrepreneurship, but cannot explain actual entrepreneurship. The present paper also introduces the remaining four papers of the special issue of the Journal of Evolutionary Economics, which center around the theme Entrepreneurship and Culture.

Transaction tax and stock market behavior: evidence from an emerging market

This study examines the impact of a stamp tax rate increase on market behavior, using data from two stock exchanges in China. We find that when the tax rate increases from 0.3 to 0.5% (which implies that the transaction cost increases by about 1/3) trading volume decreases by 1/3. This implies an elasticity of turnover with respect to a stamp tax of −50% and an elasticity of turnover with respect to transaction cost of −100%. The markets’ volatility significantly increases after the increase in the tax rate. Furthermore, the change in the volatility structure indicates that the markets become less efficient in the sense that shocks are less quickly assimilated in the markets.

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The Social Economics of Globalization

There is general agreement on the moral values that globalization should serve. These are widespread prosperity and economic growth, ecological sustainability, and cultural diversity. Proponents believe that neoliberal globalization will achieve these goals, while the critics believe that globalization undermines them. An institutionalist theory that recognizes the reality of economic power and choice posits that globalization enhances the power of the business sector at the expense of the government and moral–cultural sectors. Policies for redressing this imbalance are discussed.

Complexity of economic structures and emergent properties

This concept revolves around differences of embeddedness of organizations in the macro patterns of routines (economic policy regimes), which in turn may differentially provide them–and the system as a whole–with ‘procedural rationality’ in dealing with identified problems in their relevant complex environment. Regularities of interdependence are specified between different regime patterns and the variety of coordination routines between and inside micro organizations. Corresponding regularities are also observed for internal governance routines of organizations, which in turn determine the behavioral adaptation by self-organization that may be rationally in a local perspective, but–contingent on the organization’s embeddedness in the coordination structure–not necessarily so in a comprehensive one.

Put me in,Coach, I’m ready to play

This paper explores the connection between discrimination and entrepreneurship. To pursue this inquiry we focus on the integration of black players in Major League Baseball (MLB). MLB team owners, acting as entrepreneurs, had to weigh the benefits of integrating versus the costs of alienating consumers who had a taste for discrimination against hiring blacks. We find that the owners whose teams could profit by contending for the league pennant with the addition of black players were the ones who were willing to take the risk of integrating, although integration often stood in contrast to revealed consumer preferences. In addition to illuminating the mechanism through which integration took place, we offer a general understanding of how the costs and benefits associated with consumers’ taste for discrimination can change via entrepreneurial activities.

What is specific about evolutionary economics?

Ever since an “evolutionary” perspective on the economy has been suggested, there have been differing, and partly incommensurable, views on what specifically this means. By working out where the differences lie and what motivates them, this paper identifies four major approaches to evolutionary economics. The differences between them can be traced back to opposite positions regarding the basic assumptions about reality and the proper conceptualization of evolution. The same differences can also be found in evolutionary game theory. Achievements of the major approaches to evolutionary economics and their prospects for future research are assessed by means of a peer survey.

Growth and inflation forecasts for Germany a panel-based assessment of accuracy and efficiency

We analyse forecasts of professional forecasters for Germany regarding the time span from 1970 to 2004. This novel panel data set renders it possible to assess the accuracy and efficiency of growth and inflation forecasts more efficiently than in previous studies. We argue that the forecasts are, on average, unbiased and weakly—but not strongly—efficient. Using model confidence sets suggested by Hansen et al. (2004), we find that, besides the effect of diverging forecasting dates, no other substantial differences in forecasting quality among forecasters exist. Nevertheless, on the basis of a direction-of-change analysis we argue that it is not always advisable to listen to the majority of forecasters.

Export variety and the economic performance of countries

We explore the relationship between export variety and economic development, using data on OECD countries between 1964 and 2003. We show that structural change in the world economy has a particular arrow of time leading to a growing variety of exports. Distinguishing between related variety (within sectors) and unrelated variety (variety between sectors), we also show that related variety stimulates growth instantaneously, while unrelated variety only promotes growth with a considerable time lag. This finding is in line with the evolutionary notions that economic development and international trade patterns are path dependent.

Natural selection and rational decision: two concepts of optimization

There are two different kinds of optimization: “selection” and “rationality” optimization. Selection optimization characterizes competition in human and nonhuman societies sharing the same market or niche. “Rationality optimization”, on the other hand, characterizes human and nonhuman decision making processes. The two kinds of optimization generate the same result: agents end up behaving efficiently. Nonetheless, we should not downplay the differences between the two kinds of optimization. Otherwise, we would fail to capture the role of rationality in the development of the organism and possibly its implication for evolution.

Financial intermediation and growth: causality and causes without outliers

In a seminal paper, Levine et al. (J Monet Econ 46:31–77, 2000) provide cross-sectional evidence showing that financial development has positive average impact on long-run growth, using a sample of 71 countries. We argue that the evidence is sensitive to the presence of outliers.

Institutional change from an evolutionary perspective: the Mexican experience

The fall of the Institutional Revolutionary Party (PRI) in July 2000 marked a milestone in Mexico’s political history. Throughout its 71 years of incumbency, the PRI had incarnated the set of social, political and economic institutions of the country to the extent of becoming synonymous with governance and stability. Using a simple model in which institutional change is the result of the strategic interaction between citizens, an incumbent ruler and a potential new ruler or entrant, we provide a systematic interpretation of this experience emphasizing the role of evolutionary factors such as history, uncertainty, learning and experimentation.

Are residual economic relationships normally distributed? Testing an assumption of neoclassical economics

In both theoretical and applied contexts, neoclassical economics typically assumes that residual economic relationships are mean-zero, finite-variance, normally distributed random variables. However, many have challenged this view, from various perspectives. The Austrian economists, specifically in the tradition of Mises and Rothbard, reject outright the effort to mathematically model human choices. This Austrian view is often derided as unscientific. However, some of the most mathematically sophisticated work in financial economics also rejects the orthodox bell curve. In this paper, we test Benoit Mandelbrot’s “stable Paretian” hypothesis on ten major macroeconomic data sets and reject the normal distribution in nine of them. We further argue that the stable Paretian hypothesis (and, more generally, the field of “chaos theory”) is far more compatible with the Austrian position than one might initially suspect.

Evolutionary thinking in environmental economics

Evolutionary and environmental economics have a potentially close relationship. This paper reviews past and identifies potential applications of evolutionary concepts and methods to environmental economics. This covers a number of themes: resource use and ecosystem management; growth and environmental resources; economic and evolutionary progress; and individual behavior and environmental policy. The treatment will address both biological and economic—including institutional, organizational and technological-evolutionary phenomena. Attention will be drawn to the fact that evolutionary economics shows a surprising neglect of environmental and natural resource factors.

A simple note on herd behaviour

In his ‘Simple model of herd behaviour’, (Banerjee A (1992) A simple model of herd behaviour. Q J Econ CVII:797–817) shows that—in a sequential game—if the first two players have chosen the same action, player 3 and all subsequent players will ignore his/her own information and start a herd, an irreversible one. In this paper, we analyse the role played by the tie-breaking assumptions in reaching the equilibrium. We show that: players’ strategies are parameter dependent—an incorrect herd may be reversed; a correct herd is irreversible.

The persistence of regional new business formation-activity over time – assessing the potential of policy promotion programs

We investigate regional differences in the level and the development of regional new business formation activity. There is a pronounced variance of start-up rates across the regions. The level of regional new business formation is rather path-dependent so that changes are relatively small. The main factors determining the level of regional start-ups are innovation and an entrepreneurial climate. These factors also seem to be responsible for changes in the level of regional new business formation. In addition, unemployment plays a role. Steering innovation and creating an entrepreneurial atmosphere could be an appropriate starting point for policy measures that try to promote start-ups. Our empirical evidence strongly suggests that such measures may have significant effect only in the long run.

“Bad” Decisions,Poverty, and Economic Theory: The Individualist and Social Perspectives in Light of “The American Myth”

Social outcomes are analyzed either by placing responsibility for those outcomes on the individual or to locate the cause in a specific social factor – discrimination. Here, I argue that individual decision-making cannot be the cause of poverty, illustrative of one outcome, and that commentary specifying a particular social factor is insufficient to address the fundamental, underlying cause of poverty. Rather, one must examine the nature of the economic system that lies at the root of such issues. In the process of developing the argument, it is shown that the individualist explanation of poverty is linked to the neoclassical framework, and that this individualist explanation is a product of the (capitalist) economic system itself which then induces an ideology both privileging such an explanation and preventing the development of satisfactory theory that would inform proper policy. An example of this point is drawn from the 1960’s “war on poverty” program.

Efficiency and productivity in the Indian unorganized manufacturing sector: did reforms matter?

This paper analyzes total factor productivity growth of the unorganized manufacturing sector in India using several rounds of the large scale national sample survey state level data for 15 major Indian states for the period 1978–1979 to 2000–2001. Data envelopment analysis is used to compute Malmquist total factor productivity index and its components. The impact of economic reforms on efficiency and productivity is examined. Evidence suggests that total factor productivity registered a positive growth during the period in the country as a whole. Most states in the country witnessed higher total factor productivity growth in the post 1990s reforms period than in the pre-reforms period. Decomposition of the Malmquist productivity index shows that improvement in technical efficiency rather than technical progress had contributed to the observed acceleration in the growth rate. Econometric analysis of the determinants of total factor productivity growth demonstrates that ownership, literacy, farm growth and infrastructure availability significantly influence total factor productivity growth in the sector.

Social Market Economy: origins,meanings and interpretations

This paper investigates various possible meanings of ‘Social Market Economy’—60 years after its political initiation in Germany. We focus on the variety of intellectual sources that influenced the formation and interpretation of the concept in Germany during the first half of the last century. Our particular attention is on Müller-Armack’s definition of a rather dualistic concept of ‘social’ versus ‘market economy’ and the subtle differences it has with an original (Freiburg School) view of ordo-liberalism that lends itself more easily to a constitutional economics perspective.

Vertical Innovation and Catching-Up: Implications of EU Integration for CEECs-5

We analyze the role of vertical innovation in trade patterns for developing economies trading with technologically advanced countries. A model is presented where the international diffusion of knowledge, promoted by economic integration, is the source of a technological catching up and leads to a convergence in the quality of traded goods, with a positive effect on exports. We then turn our attention on the evolution of trade between the Central and Eastern European countries (CEECs-5) and their European Union partner countries, assessing whether economic integration has increase the quality of the goods produced. For the period 1995–2005, we find evidence of the increasing role of intra-industry trade and vertical differentiation and a process of specialization in higher quality products, especially in the medium- and high-skill sectors.