Passing the food and agricultural R&D buck? The United States and China

The global geographical balance of food and agricultural R&D spending is shifting, characterized by a declining U.S. share and a rising middle-income-country share, propelled heavily by the rapid rise of spending in China. Based on our newly compiled data, we estimate that China now outspends the United States on both public and private food and agricultural research on a purchasing power parity basis. The public-private orientation of the research has also changed markedly, with the private sector now accounting for around two-thirds of the food and agricultural R&D spending total in both China and the United States. Our estimates indicate that China’s private sector tilts heavily towards post-farm R&D activities, whereas the U.S. private sector is split more evenly between on-farm and post-farm spending. While the intensity of Chinese investment in food and agricultural R&D (relative to agricultural GDP) is beginning to grow, it still lags well behind the food and agricultural R&D investment intensities of the United States and other higher-income Asian countries (e.g., Japan and South Korea). The development regularities we reveal in the longer-run trends are indicative of future R&D investment patterns with potentially profound long-run implications for the size, shape and accessibility of the global stocks of scientific knowledge that underpin food and agricultural sectors worldwide.     

Use of Public Transfer Programs and Privat Aid by Farm Workers

Legal status affects the use of public welfare and insurance and private assistance programs by families of farm workers. Families of unauthorized immigrants are more likely to use public medical assistance and less likely to use other public transfer programs than authorized immigrants and citizens. Unauthorized immigrants with young children in the United States are slightly more likely to use welfare, and welfare recipients are slightly more likely to have young children here.     

An Analysis of the Deposit-taking Market of Hong Kong

This paper analyzes the deposit-takingmarket in Hong Kong prior to the deregulation ofinterest rates in 1994. We argue that bankingregulations, in the forms of branching restrictionsand interest-rate ceilings, had created amonopsonistic market for short-term bank deposits. Asa result, banks in Hong Kong had earned asubstantially wider interest-rate margin than banks inother Asia-Pacific countries and the United States. We provide procedures to estimate the economicsignificance of the foregone interest and find themonopsonistic rent to be in the order of 1% of theGross Domestic Product of Hong Kong for the period1987 through 1994.     

Interstate vs. Interprovincial Differences in Union Density

Union density in Canada is approximately twice that in the United States. The range of densities from high to low states/provinces is much smaller, however: 2:1 in Canada vs. 6:1 in the U.S. After adjusting for differences in industry distribution of employment, this study finds that the major source of interstate and interprovincial differences is private sector density. Most of the low union density states have right-to-work laws, while the greater the comprehensiveness of state bargaining laws, the higher the public sector density. In Canada, where all public and private sector employees have the right to bargain, there is a higher average level of public and private sector densities and a smaller range for both. The more supportive labor legislation in Canada may be associated with the existence of labor-oriented political parties at the provincial level.     

Lessons from broadband development in Canada,Japan, Korea and the United States

Broadband network development does not always track closely a nations overall wealth and economic strength. The International Telecommunication Union reported that in 2005 the five top nations for broadband network market penetration were: Korea, Hong Kong, the Netherlands, Denmark and Canada. The ITU ranked the United States sixteenth in broadband penetration.Aside from the obvious geographical and demographic advantages accruing to small nations with large urban populations, broadband development thrives when it becomes a national priority. Both developed and developing nations have stimulated capital expenditures for infrastructure in ways United States public and private sector stakeholders have yet to embrace. Such investments have accrued ample dividends including the lowest broadband access costs in the world. For example, the ITU reports that in 2002 Japanese consumers paid $0.09 per 100 kilobits per second of broadband access compared to $3.53 in the United States.Economic policies do not completely explain why some nations offer faster, better cheaper and more convenient broadband services while other nations do not. This paper will examine best practices in broadband network development with an eye toward determining the optimal mix of legislative, regulatory and investment initiatives. The paper will track development in Canada, Japan and Korea as these nations have achieved success despite significantly different geographical, political and marketplace conditions. The paper also notes the institutional and regulatory policies that have hampered broadband development in the United States.The paper also will examine why incumbent local exchange and cable television operators recently have begun aggressively to pursue broadband market opportunities. The paper will analyze incumbents’ rationales for limited capital investment in broadband with an eye toward determining the credibility of excuses based on regulatory risk and uncertainty. The paper concludes with suggestions how national governments might expedite broadband infrastructure development.     

Price Discovery in American and British Property Markets

This paper examines the securitized (public) and unsecuritized (private) commercial property markets in the United States and the United Kingdom for evidence of price discovery. Appraisal-based returns are corrected for smoothing, without presupposing the true returns to be uncorrelated or unpredictable across time. Real Estate Investment Trusts (REITs) and property company returns are corrected for leverage. We find evidence that price discovery occurs in the securitized market structure in both countries, and that this price information does not fully transmit to the unsecuritized markets for a year or more. In Britain, the unsecuritized market appears to be more closely and immediately linked to the securitized market than is the case in the U.S.     

Housing Tenure Choice in Australia and the United States: Impacts of Alternative Subsidy Policies

This article compares the homeownership rates of young households in Australia and the United States and evaluates the impacts of the two countries' different approaches to subsidizing homeownership. Since about 1950, Australia's rate of homeownership has consistently been higher than that of the United States. The homeownership rate for young adults is also significantly higher in Australia. While the United States allows mortgage interest and property taxes to be deducted from income for tax purposes, Australia has provided cash subsidies for down payments and mortgage payments. We conclude that differences in housing costs and household characteristics do not explain differences in ownership rates. We also conclude that differences in subsidy policies have only a minor impact on ownership rates.     

The impact of economic reforms on R&D by the Indian seed industry

Declining support for public research and advances in technology and new forms of legal protection have induced more private agricultural research. In developing countries, this has sparked a debate about appropriate policies regarding private research. In this context, we examine empirically the consequences of reforms in India’s seed policies which loosened various restrictions on the private sector. The period since the reforms has shown a remarkable increase in R & D effort and an increase in the number of private technology suppliers . We argue these changes were largely due to policy reforms.     

Unionism in the United States and Other Advanced OECD Countries

In this paper we compare the changing pattern of unionization in OECD countries, reviewing existing evidence and presenting new information on union-nonunion differentials in labor market outcomes in these countries. Our principal source of information are the micro data files of the International Social Survey Programme cross-country surveys of 1985–87. Our analysis shows that U.S. unions have a larger effect on wages than on other outcomes than unions in other OECD countries, and we argue that the high union premium in the United States has contributed to the decline in union density and divergence of the US. industrial relations system     

Immigrants and Mortgage Delinquency

This article studies the effect of immigrant status on mortgage delinquency. Due to their different social and economic background, immigrant households may not integrate well into the host society, and therefore are more likely to be delinquent on mortgages than otherwise identical native‐born households. We test this hypothesis by comparing the mortgage delinquency rate between immigrant and native‐born households in the 2009 PSID (Panel Study of Income Dynamics) data, in which all the immigrant households have been in the United States for more than 10 years. We find that, after controlling for observables, those relatively recent immigrants who have been in the United States for 10 to 20 years have a higher mortgage delinquency rate than native‐born, while immigrants who have resided in the United States for more than 20 years are no different from native‐borns. In addition, there is no evidence that the second generation of immigrants is more likely to be delinquent than the third‐or‐higher generations. Our results are robust to potential sample‐selection bias and functional misspecifications.     

Who does private equity buy? Evidence on the role of private equity from buyouts of divested businesses

Research Summary: We examine the role of nonventure private equity firms in the market for divested businesses, comparing targets bought by such firms to those bought by corporate acquirers. We argue that a combination of vigilant monitoring, high‐powered incentives, patient capital, and business independence makes private equity firms uniquely suited to correcting underinvestment problems in public corporations, and that they will therefore systematically target divested businesses that are outside their parents’ core area, whose rivals invest more in long‐term strategic assets than their parents, and whose parents have weak managerial incentives both overall and at the divisional level. Results from a sample of 1,711 divestments confirm these predictions. Our study contributes to our understanding of private equity ownership, highlighting its advantage as an alternate governance form. Managerial Summary: Private equity firms are often portrayed as destroyers of corporate value, raiding established companies in pursuit of short‐term gain. In contrast, we argue that private equity investors help to revitalize businesses by enabling investments in long‐term strategic resources and capabilities that they are better able to evaluate, monitor, and support than public market investors. Consistent with these arguments, we find that when acquiring businesses divested by public corporations, private equity firms are more likely to buy units outside the parent's core area, those whose peers invest more in R&D than their parents, and those whose parents have weak managerial incentives, especially at the divisional level. Thus, private equity firms systematically target those businesses that may fail to realize their full potential under public ownership.     

A Comparative Study of Pioneer Entry Decisions in the United States and China

According to the resource‐based view of the firm, competitive advantages arise from control and deployment of productive resources that are rare and difficult to imitate. Through early entry, pioneers can gain preferential access to key resources. However, the value of that access depends on the presence of isolating mechanisms that limit or prevent competitive imitation. Isolating mechanisms increase the desirability of early entry by lengthening the time horizon over which the firm can earn Ricardian rents on those resources. To explore these implications of the resource‐based view, this study examines the impact of isolating mechanisms on pioneer advantages by analyzing the market entry timing decisions of 209 U.S. and 302 Chinese entrepreneurs. We hypothesize that the stronger intellectual property and legal protections available in the United States are an isolating mechanism that should increase the perceived importance of differentiation and cost advantages in the United States relative to China. Consistent with this argument, we find evidence that the relationships between the number of successful first‐mover decisions and (1) perceived pioneer differentiation advantages and (2) perceived cost advantages are relatively stronger in the United States than in China. We also argue that the importance of personal relationships in China constitutes an isolating mechanism that should increase the perceived importance of preemptive pioneer advantages in China relative to the United States. Consistent with this reasoning, we find that the coefficient linking perceptions of pioneer preemptive advantages with the number of successful first‐mover decisions is significant in the Chinese sample and not in the U.S. sample, but the difference between these coefficients is not significant. These results provide support for the argument that the availability of strong IP and legal protection encourages early entry decisions by entrepreneurs because these protections enhance the pioneer's ability to build a differentiated position in the minds of target customers and secure a cost advantage over later entrants. The results also support the argument that strong personal connections and the practice of reciprocity play a key role in the success of Chinese entrepreneurs.     

Union Strategies,National Institutions and the Use of Temporary Labour in Italian and US Plants

This article analyses variation in the use of temporary labour based on a comparison of two plants of the same US automotive multinational corporation, one in Italy and the other in the United States. We argue that differences in the use of temporary labour are explained by union capacities to make trade‐offs between alternative forms of flexibility as well as trade‐offs in the protection of internal and external groups of workers. Union capacity is dependent on the availability of power resources within different national institutional environments. These resources are shown to influence not only the ways in which temporary workers are used but also bargaining outcomes — including employment conditions — benefiting them.     

Playing in between: patent brokers in markets for technology

Here we argue that patent brokers do not only stay in between supply and demand of innovation, but play in between executing complex transactions and taking entrepreneurial risk. In doing so, they serve a support function to R&D managers of firms adopting various approaches to technological change. We discuss how economic and sociological theories explain brokerage and its existence. Our qualitative analysis of the current practice of patent brokerage in the United States finds some evidence in support of such arguments, and moreover helps us reach a taxonomy of brokerage. We conclude with our own proposition, suggesting that even in very dense environments, the bridging role of intellectual property intermediaries is that of market makers, who leverage their specific investment to play in between technology demand and supply.     

The Impact of Initial-Year Discounts on ARM Prepayments

This study uses new data on the rate of prepayment on conventional single-family adjustable-rate mortgages (ARMs) that originated between 1983 and 1986 to determine if ARMs with and without initial-year discounts have the same probability of paying off. The new data are from a large national private mortgage insurer in the United States. Each loan is tracked from its origination date through prepayment or the end of 1991. Nonparametric test statistics are used to test for differences in these prepayment rates. The findings suggest that ARMs with initial-year discounts are paid off at a rate that is essentially no different from the rate on otherwise comparable ARMs without initial-year discounts.     

Money secrets: How does trade secret legal protection affect firm market value? Evidence from the uniform trade secret act

Research summary : We investigate the impact of trade secret legal protection on firm market value in the context of acquisitions. On one hand, market value may increase because trade secret assets become better protected from rivals. On the other hand, market value may decrease because trade secret protection reduces information about the target and its competitors available to potential buyers, increasing uncertainty about its value. Buyers will discount their offers in expectation of being compensated for riskier deals. Using a sample of private equity investments in the United States, we find that trade secret protection has a positive effect in industries with high mobility of knowledge workers, but a negative effect in industries with (1) high resource–value uncertainty and (2) high poor‐investment risk. Managerial summary : We argue that an increase in trade secret legal protection might not unequivocally benefit firm owners when selling their business. A stronger trade secret protection increases the market value of firms in industries with high workers' mobility, but it decreases the market value of firms in industries with uncertain resource value and/or high risk of poor‐acquisition investments. Based on the contingent effect of trade secret protection, companies may want to adjust their strategic decisions, including where to locate or relocate, based in part on whether they will derive benefits or suffer losses when trade secrets are better protected. Finally, our study should help policymakers understand more fully the economic impact of government policies associated with trade secrets. Copyright © 2016 John Wiley & Sons, Ltd.     

Waiting for the invisible hand: Novel products and the role of information in the modern market for food

This paper places the modern spread of diet-related chronic disease in the United States within the context of more than a century of innovation in food processing technology, discovery in nutrition science, and corrective policy measures aimed at improving public health. We ask whether the current state of affairs represents a market failure, and—if so—what might be done about it. We argue that while today’s industrial food system has its advantages, the asymmetric information problems inherent to this system have resulted in a “lemons-style” breakdown in the market for processed foods. The appropriate policy response to such situations (namely, verifiable quality standards) is well known, but such policies are likely (in the short run) to reduce profits for existing large industrial producers of food. In light of the food industry’s long history of success at regulatory capture, we propose the formation of a new independent food standards agency devoted to protecting the interests of the American consumer.     

Globalization and Declining Unionization in the United States

For decades, the private‐sector unionization rate in the United States has been falling. At the same time, the integration of the United States into the world economy has been rising. Many anecdotes suggest the latter has played a role in that decline, with unions feeling pressured to reduce employment and/or compensation demands in the face of rising cross‐border activity of employers. To investigate this possibility econometrically, in this paper I assembled a panel of U.S. manufacturing industries that matches union‐coverage rates with measures of global engagement such as exports, imports, tariffs, transportation costs, and foreign direct investment. The main finding is a statistically and economically significant correlation between falling union coverage and greater numbers of inward FDI transactions. Possible interpretations of this finding are then discussed. Because U.S. affiliates of foreign multinationals have higher unionization rates than U.S.‐based firms do, this correlation does not reflect just a compositional shift toward these affiliates. Instead, it may reflect pressure of international capital mobility on U.S.‐based companies, consistent with research on how rising capital mobility raises labor‐demand elasticities and alters bargaining power.     

Multiple agency perspective,family control,and private information abuse in an emerging economy

Using a comprehensive sample of listed companies in Hong Kong this paper investigates how family control affects private information abuses and firm performance in emerging economies. We combine research on stock market microstructure with more recent studies of multiple agency perspectives and argue that family ownership and control over the board increases the risk of private information abuse. This, in turn, has a negative impact on stock market performance. Family control is associated with an incentive to distort information disclosure to minority shareholders and obtain private benefits of control. However, the multiple agency roles of controlling families may have different governance properties in terms of investors’ perceptions of private information abuse. These findings contribute to our understanding of the conflicting evidence on the governance role of family control within a multiple agency perspective.     

Governance,ownership structure,and performance of IPO firms: the impact of different types of private equity investors and institutional environments

This paper examines performance effects of ownership concentration and two types of private equity investors (venture capitalists and business angels) in firms that have recently undergone an initial public offering (IPO) in the United Kingdom and France. We expand and contextualize nascent understanding of multiple agency theory by examining heterogeneity of private equity investors and by suggesting that multiple agency relationships are affected by different institutional contexts. We employ a unique, hand‐collected dataset of 224 matched IPOs (112 in each country). Controlling for the endogeneity of private equity investors' retained share ownership, we find support for the agency theory argument that concentrated ownership improves IPOs' performance. The research also shows that the two types of private equity investors have a differential impact on performance, and the legal institutions in a given country moderate this impact. Copyright © 2009 John Wiley & Sons, Ltd.