The role of factor substitution in the theory of economic growth and income distribution: Two examples

While much empirical evidence suggests that the Cobb–Douglas production function may be a reasonable benchmark for aggregate analysis, we argue that the practice, particularly prevalent in contemporary growth theory, of adopting the Cobb–Douglas technology, may lead to misleading implications. Using two examples, we show that key implications of the models are highly sensitive to small deviations of the elasticity of substitution from unity. The first employs the standard neoclassical model and emphasizes the sensitivity of the speed of convergence to small changes in the elasticity of substitution. This in turn has profound consequences for wealth and income distribution. The second deals with foreign aid and highlights how the relative merits of “tied” versus “untied” aid are also very sensitive to the elasticity of substitution.     

Using early concept narratives to collect valid customer input about breakthrough technologies: The effect of application visualization on transportation

The value of early customer input has long been recognized by companies. However, especially when breakthrough technologies are involved, more insight in valuable methods for collecting early customer input is needed. In this paper, we propose a method to evaluate a breakthrough technology with customers. First, a creative process should point out applications of the breakthrough technology. Applications allow customers to imagine the benefits of the technology behind it. By using early concept narratives, typically scenarios of somebody using and interacting with the application, this imagination process is enhanced. When no prototypes are available yet, it appears that narratives and visuals allow customers to really “see” the new world of the application, a process called transportation, which is a mix of imagery, feelings, and attention. In an experiment in which we make use of a case of an application of a breakthrough technology, we provide empirical support for our claim that early concept narratives could be a valuable tool to get valid customer reactions. Furthermore, we show which kind of visual format the applications should have in order to optimize transportation. The results of this study will support decision making about how to pursue breakthrough application evaluations early in the product development process.     

Globalisation, capital mobility and tax competition: theory and evidence for OECD countries

Are the predictions of tax competition theory wrong? While the tax competition literature predicts that taxes on income from capital decrease with increasing globalisation, past empirical studies on various data find contradicting evidence. By using different data and additional elements of economic theory, this paper aims to challenge the empirical contributions. For a panel of 14 OECD countries and for the period 1967–1996, we find that globalisation has indeed a negative and significant impact on corporate taxes. Furthermore, globalisation tends to raise labour taxes and social expenditures. As a consequence, the so-called “efficiency” and “compensation” hypotheses of globalisation are not competing, but rather, both appear to apply at the same time. Efficiency has an impact on the tax-mix, whereas compensation is provided through increased social expenditures.     

Green consumers and public policy: On socially contingent moral motivation

“Green” consumers appear to accept individual responsibility for the provision of public goods. The propensity to take such responsibility may depend on beliefs about others’ behavior, even for consumers motivated by internalized moral norms, not by social sanctions. This effect can produce multiple equilibria with either high or low demand for “green” products. Permanent increases in green consumption may be achieved by imposing temporary taxes or subsidies, or through advertising that influences beliefs about others’ behavior or about external effects. If a tax is interpreted as taking responsibility away from the individual, however, taxes can reduce the influence of moral motivation.     

QTIP: Quick technology intelligence processes

Empirical technology analyses need not take months; they can be done in minutes. One can thereby take advantage of wide availability of rich science and technology publication and patent abstract databases to better inform technology management. To do so requires developing templates of innovation indicators to answer standard questions. Then, one can automate routines to generate composite information representations (“one-pagers”) that address the issues at hand, the way that the target users want.     

Characteristics of technology transfer in business ventures: the case of Daejeon, Korea

This article explores the characteristics of venture business and entrepreneurs in Korea to (1) identify technology transfer activities, (2) analyze the differences between technology transfer in linear and nonlinear venture businesses, and (3) guide more effective venture business policy and strategy. This empirical assessment reveals that entrepreneurs have insightful evaluations about their resources and capacities as well as expectations with regard to functions and features of science parks and incubators. Respondents from “linear model”-based start-ups tend to be older and have higher education, employ more basic research and development (R&D) and have more R&D-oriented careers, and have more varied work experience than “nonlinear”-based start-ups. The functions and features of science parks and incubators were generally not considered a critical influence on start-ups nor on the growth of venture businesses. Accordingly, alternative venture-nurturing strategies are discussed as being key to accelerate venture businesses growth.     

Foreign Market Entry Strategies under Asymmetric Information*

A home firm signals her private cost information by expanding in a foreign firm’s country. Credible signaling to deter counter‐entry may occur through a direct investment (but not through exports), and may even entail entering an unprofitable market. While this produces social benefits, uninformative signaling may be welfare‐reducing. Hence, we argue that moderate to high location costs may be socially desirable. We also show that there are not simple monotonic relationships between technology/demand conditions and firms’ entry modes. Thus, the signaling interpretation of international expansion makes it possible to explain some controversial empirical findings on a theoretical ground.     

Sustainability of nations by indices: Comparative study between environmental sustainability index, ecological footprint and the emergy performance indices

The present work makes a comparison between the two most used environmental sustainability indices of nations: “ecological footprint” and “environmental sustainability index”, with two emergy ratios (renewability and emergy sustainability index). All of them are gaining space within the scientific community and government officials. Despite the efforts for obtaining an index that adequately represents the sustainability of a region, according to the result of this research, nowadays there is not yet a completely satisfactory index. We consider that all of them need to be improved, but the results point out the possibility of obtaining one better index of sustainability through the junction of ecological footprint with renewability emergy index.     

Home country effects of foreign direct investment: From a small economy to a large economy

Previous studies on home country effects mainly focused on FDI from large developed economies to other countries. But today's super recipient is a relatively larger economy than its investors and many of these investors are not classified as “developed economies.” A simple Ak type model implies that a small and more developed country investing in a large and less developed country will experience decreases in both employment and income disparity (compared to the recipient country) as the less-developed recipient country gains the higher technology of production through FDI inflows. The empirical results for the Four Tigers (source countries) and China (recipient country) are consistent with our theoretical model of FDI outflows. We also find that FDI outflows to China decrease the ratio of exports to GDP only for small source countries, even though a higher investment in China raises the share of these countries' exports-to-China to China's total imports.     

Technology Forecasting Activities in Japan

Japan started its development in science and technology later than other countries but was nevertheless quite successful. Many factors contributed to this success—and one of them was the adaptation of large foresight studies at the end of the 1960s. In Japan, the Science and Technology Agency (STA), among others, in 1971 started to conduct a large study on the future of science and technology. The Delphi method was one technique used for foresight activities. This was not considered a tool of prediction but an instrument to systematically look into the long-term future. Among the aims of this type of national activity is the identification of areas of strategic research and of generic technologies most likely to yield the greatest economic and social benefits. Although many countries stopped their national foresight activities in the 1970s, the Japanese Delphi process continued and was applied every five years. In 1997, the sixth study was finished. Yet, Japanese technology policies are less consistent than is commonly believed and involve an assortment of policy measures and actors/agencies pragmatically devised to address diverse, ever-changing, and sometimes conflicting needs embedded in a broad range of issues. Forecasting results provide the “language” to communicate among Japanese actors in science, technology, and society.     

Socio-economic evaluation of mental health as a basis for financing health care in Sweden

The objective of this paper is to examine hypotheses about the relationships between socio-economic factors, risk factors in working life, and the occurrence of mental illness, together with the degree of quality of life and consumption of health care, costs for health care, and costs for social insurance. This is a prospective and longitudinal study of 1,347 individuals of an active working age, 18–64 years, who have been on sick leave for more than 30 days. The group is characterized by the prevalence of risk factors in their work environment and welfare losses, such as multiple health problems, poor quality of life, inability to work, and dependency on society's support from health care and social insurance. The costs for health care were just over 2.8 million SEK, or 30 percent higher for those with psychological distress as compared to the group without. The payments from social insurance also increased by approximately 15 percent. The relatively greater weighting of health care costs and sickness cash benefits were motivating factors to study whether this group had an optimal amount and quality of health care, or if the resources available for health care should be distributed in another way that better satisfies the needs of the group.     

An interactive computer-based approach to aid group problem formulation

The size, cost, and complexity of quantitative modeling in the social and physical sciences demand that the modeler focus attention on premodeling phases of analysis, specifically on formulation and definition of “problems.” This is especially true in the “softer” or less “well-structured” problem areas of futures research and technology assessment. At this stage of modeling, a key factor is communication among modelers. This paper briefly discusses approaches to classifying and formulating problems that illustrate the role of communication in modeling. It then describes a computer-based communication system as one possible aid in the problem-formulation process.     

On the Design of Peer Punishment Experiments

Some peer punishment technologies may bias experimental results in unwanted ways. A critical parameter to consider in the design is the “fine-to-fee” ratio, which measures the income reduction for the targeted subject relative to the cost for the subject who requested the punishment. We show that a punishment technology commonly used in experiments embeds a variable fine-to-fee ratio and show that it could confound the empirical findings about why, whom, and how much subjects punish.JEL Classification: C91, C92     

A brief technology assessment of the Carbon Dioxide effect

Significant increases in atmospheric carbon dioxide are occuring as a result of fossil fuel combustion. More than a four-fold increase over preindustrial levels may occur by the year 2100. Heating of the atmosphere, changes in precipitation patterns and global storm paths, and other resulting effects are sure to cause significant social changes. This article is essentially a methodological case study demonstrating a useful but inexpensive type of technology assessment. It summarizes current research findings on “the CO₂ effect,” and presents hitherto unpublished findings that resulted from a brief but systems-oriented approach. These findings suggest that most published forecasts of phenomena associated with a CO₂ buildup may be systematically low because various positive feedback relationships are not reflected.     

In defense of health-based standards

This paper explores the utilitarian ethical foundations underlying two standards for pollution control: an efficiency standard and a health-based standard. The main point is that a health-based standard can be defended quite easily on utilitarian grounds; safety proponents need not be self-serving, irrational nor ignorant. Criticism of health-based standards as “too costly” is not always persuasive since material consumption is not the only component of social welfare, nor do consumption increases necessarily increase social welfare.     

In search of stars: Network formation among heterogeneous agents

This paper reports results from a laboratory experiment on network formation among heterogeneous agents. The experimental design extends the Bala–Goyal [Bala, V., Goyal, S., 2000. A non-cooperative model of network formation, Econometrica 68, 1131–1230] model of network formation with decay and two-way flow of benefits by introducing agents with lower linking costs or higher benefits to others. Furthermore, agents' types may be common knowledge or private information. In all treatments, the (efficient) equilibrium network has a “star” structure. While equilibrium predictions fail completely with homogeneous agents, star networks frequently occur with heterogeneous agents. Stars are not born but rather develop: with a high-value agent, the network's centrality, stability, and efficiency all increase over time. A structural econometric model based on best response dynamics and other-regarding preferences is used to analyze individual linking behavior. Maximum-likelihood estimates of the underlying structural parameters, obtained by pooling data from several treatments, allow us to explain the main treatment effects.     

Hierarchical impacts of the length of technology waves: An analysis of technolabor homeostasis

This work is based on the postulate that the hierarchical order of technology development can be maintained by a subtle balance between technology waves having different lengths, and that the current collapse of the “virtuous cycle” between technology development and economic growth can be attributed to a stall in the balance of technology waves. This paper examines the subtle technolabor relationship of Japan's electrical machinery industry, and supports such phenomena by demonstrating the hierarchical impacts of the length of technology waves.     

Societal aspects of technology assessment

Despite earnest admonitions in most technology assessments that institutional arrangements, social impacts, and societal implications be taken into account, the methodology commonly used not only systematically and systematically excludes these very dimensions but often creates a distorted focus. The paradigm dominating structural modeling in technology assessment is technically-oriented; the techniques, lineal descendants of systems analysis, are no more reliable for “assessing” the uncertain future than have been their ancestors in “managing” the present.