FDI,Education, and Economic Growth: Quality Matters

In this paper, we revisit the results from the influential study by Borensztein et al. (Journal of International Economics 45:115–135, 1998), which argues that inward foreign direct investment (FDI) promotes the economic growth in a less developed host country only when the host country obtains a threshold level of secondary schooling. Borensztein et al. (Journal of International Economics 45:115–135, 1998) only focus on the quantity of education. We take into consideration both the quantity and the quality of education. We adjust the original schooling data in Borensztein et al. (Journal of International Economics 45:115–135, 1998) by two quality of education indices and re-estimate their model. We find that the complementarity between inward FDI and schooling still exists, but the threshold level of schooling in our study is lower than the threshold calculated in Borensztein et al. (Journal of International Economics 45:115–135, 1998). Our results support the importance of education quality and suggest that with improved quality of education, it does not take as much quantity of schooling, as established in Borensztein et al. (Journal of International Economics 45:115–135, 1998), for inward FDI to have a positive impact on economic growth in the host country.     

Rates of return to education of blacks in South Africa

The aim of this empirical study was to calculate private and social rates of return to education and to test the hypothesis that education is a major determinant of earning differentials for blacks in South Africa. Data for 23 278 working men and women were extracted from the 1985 Current Population Survey files. This comprised a sample representative of the black population in the Republic of South Africa excluding the former Transkei, Bophuthatswana, Venda and Ciskei territories. Lifetime earnings profiles were constructed from these data for five educational levels, namely, no schooling up to Standard 1; Standards 2 to 4; Standards 5 to 7; Standards 8 to 9; and Standard 10. Schooling was assumed to account for 60 per cent of the earnings differentials between these profiles. Imputed average household outlays on schooling were taken as the private direct cost of education. These were supplemented by estimates of per pupil spending by the various government departments responsible for black education, to calculate the social costs per year of primary and secondary schooling. Indirect costs in the form of imputed foregone earnings were included from Standard 5 (age 15) onwards. The private internal rates of return to education of males were found to be about 16 per cent at primary level and 24 per cent for secondary schooling. Corresponding social rates of return are about 6 per cent for primary and 15 per cent for secondary education. Estimates for females showed negative rates of return between no schooling and Standards 2 to 4, the private and social rates being estimated at ‐1 per cent and ‐4 per cent respectively; from Standards 2 to 4 to Standards 5 to 7, a private rate of 12 per cent and a social rate of 4 per cent are reported; and for the remaining secondary school phases private rates of about 32 per cent and social rates of about 15 per cent are estimated. The study confirms that education is a major determinant of earnings differentials and education expansion can be regarded as a powerful earnings equaliser.     

Relative income position,individual and social income satisfaction,and income inequality

Summary The survival probability as estimated by an individual is,ceteris paribus supposed to depend on his relative income position in a set of reference incomes. The relative income position is thus defined in close connection to the preference formation theory of Kapteyn. It is shown that then this survival probability, called ‘utility,’ may be equated to the relative income position. A nice result of this approach is the possibility to formulate a utilitarian welfare function, which leads to the definition of income inequality measures. It is shown that the use of sets of reference incomes may lead to considerably smaller measured inequality.     

The paradox of Black pupil enrolment growth rates in South African schools

In this paper, an outline is presented of a paradoxical feature of past trends in the demand for and supply of schooling to the Black population of South Africa. The paradox is that demand for Black schooling increased despite disincentives to do so under the apartheid policy. As background, a brief historical review of the provision of schooling to Blacks is also presented.     

The effect of duty drawback on export promotion: The case of Korea

This paper examines whether or not the duty drawback system has contributed to promoting Korea's exports. The unit root tests show that they can be assumed to be integrated of order one. Banerjee et al.'s [Banerjee, A., Dolado, J. J., & Mestre, R. (May 1998). Error-correction mechanism tests for cointegration in a single-equation framework. Journal of Time Series Analysis, 19(3), 267–283] small sample error correction mechanism (ECM) test shows that there is no evidence of cointegration. The estimation results show that there are strong evidences of the positive effect of export subsidy in terms of duty drawback on export supply. That is, the efficiently managed duty drawback system may contribute to export promotion significantly.     

Monopoly supply

Summary and Conclusions In the preceding sections, it is shown that a supply curve in the ordinary sense does exist and can be derived, which corresponds to a specified family of demand curves described by changes in a single parameter of demand. If the demand curve hasn parameters, an equal number of supply curves can be derived, one corresponding to each family of demand curves generated by variation in one of the parameters, holding the remainingn–1 constant. Since the demand curve family facing the perfectly competitive firm has the formP =a, there is only one supply curve in this case. Further, that supply curve does not involve demand parameters since the sole demand parameter,a, is eliminated in its derivation. In general, this is not the case and the marginal cost schedule will be insufficient to describe the supply relation for imperfectly competitive firms.In the teaching of graduate and undergraduate microeconomics, students often become confused by conflicting discussion suggesting that monopoly nopoly supply is meaningless, irrelevant, or a point. If there is only one demand curve, the equilibrium price-quantity supply will be one point regardless of whether monopoly or perfectly competitive firms are being considered. The broader definition of supply advocated here offers the pedagogic advantage of stressing the fundamental uniformity of the supply concept in the theory of the firm. With shifting demand, there is a meaningful supply relation in both the competitive and monopoly case.As indicated in Section III, this generalized definition of supply has strong implications for empirical work, showing that it is tractable to estimate monopoly supply relations as well as marginal cost curves in the monopoly case and thus opening the door to useful new empirical work.     

The Determinants of Labour Supply and Demand in Irrigated Agriculture: A Case Study of the Gezira Scheme in Sudan*

Abstract: The objective of this study was to estimate the determinants of labour supply and demand in irrigated agriculture with reference to the Gezira scheme. Two samples, one comprising the farmers and the other the agricultural workers, were randomly selected through a field survey during the 2003/2004 season. A log‐linear model of multiple regressions was fitted to the data. The results indicated that labour demand and supply depend mostly on variables related to the household characteristics and economic and non‐economic conditions.     

Rural employment and rural-urban differences in employment in Zaire: A comparative perspective

This article provides evidence on the extent of de-agrarianization, the nature of rural employment, and rural-urban differences in employment in Zaire. The composition of employment by industry is examined using data from Zaire’s 1984 Census. Increased schooling was associated with a greater propensity to be involved in nonagricultural employment. Since 1990, Zaire’s chronic economic crisis has become acute and is intertwined with the political crisis resulting from President Mobutu’s resistance to popular calls for democratization. In these circumstances, de-agrarianization is effectively put on hold. Nonagricultural employment opportunities have diminished considerably, and an increasing proportion of the country’s population is being pushed back to subsistence agriculture. An earlier version of this article was presented at the African Studies Centre-International Labour Organization workshop on “De-agrarianization and Rural Employment,” May 10–12, 1994, Leiden, The Netherlands.     

Expected-utility-consistent mean-variance preference functions with perverse derivatives

It is well-known that if every attainable gamble x can be completely characterized by its mean μ and variance σ², then expected utility is given by a mean-variance preference function: EU (x) = V (μ, σ²). It is shown here thatV _σ ² can be positive even if U″<0 and thatV _μ can be negative even if U′>0. Necessary and sufficient conditions on the family of attainable gambles are given to rule out these possibilities.     

Pain of disasters: The educational cost of exogenous shocks evidence from Tangshan Earthquake in 1976

Based on a random sample from 1 percent population survey data of 2005, this paper studies the impacts of Tangshan Earthquake on the educational attainment and subsequent labor market outcomes of affected cohorts using the methodology of difference-in-differences model and the local average treatment effect interpretation of instrumental variables technique. We find that the schooling years of the cohorts potentially affected by Tangshan Earthquake is 14%–21% of a year of schooling lower than the non-earthquake cohorts, which can be considered as the shortterm educational cost of Tangshan Earthquake. The rate of returns to years of schooling for the earthquake cohorts is 20.93%–27.85%. The earthquake leads 3.51%–4.77% loss of average income through the reduction of schooling years. A loss of 0.30%–0.41% of GDP in 2005 can be attributed to the lower educational attainment of the earthquake cohorts, which can be considered as the long-term educational cost of Tangshan Earthquake.     

Elites and the expansion of education in nineteenth‐century Sweden

A large literature emphasizes that elite capture of political institutions hampered the spread of mass schooling in the nineteenth and twentieth century. We collect new data on investments in elementary education and the distribution of voting rights for more than 2,000 local governments in nineteenth‐century Sweden and document that educational expenditure was higher where the distribution of political power was more unequal. In particular, areas governed by local landed elites—even those where a single landowner had de jure dictatorial powers—invested substantially more in mass schooling relative to areas where political power was more widely shared, or where it lay in the hands of capitalist elites. Our findings lend quantitative support to an earlier literature produced by economic and social historians which argues that landed elites advanced mass schooling as part of their historical role as patrons of the local community and as a response to the increasing proletarianization of the rural population, while also furthering our understanding of how Sweden maintained a high level of human capital despite its low level of economic development and restricted franchise in the nineteenth century.     

On the Aggregate Labor Supply: A Progress Report

Abstract

At the aggregate level, the labor supply elasticity can significantly depart from the micro elasticity. In an economy where households make decisions on the labor market participation, the slope of the aggregate labor supply curve is determined by the distribution of reservation wages rather than by the willingness to substitute leisure intertemporally. We present a model economy where earnings and wealth distributions are comparable to those in the micro data. We find that the aggregate labor supply elasticity of such an economy is around 1, which is greater than the typical micro estimates but smaller than those often assumed in the aggregate models. Our model also sheds some light on the recent debate on the failure of the representative agent model.     

State-of-the-art of Russia’s heat supply systems

The paper overviews the contemporary state of Russia’s heat supply systems and fuel consumption within its centralized part, the structure of heat consumption by economic sectors and types of industrial consumers. As shown, the centralized heat supply systems, providing the major part of country’s economy with low temperature heat, have heat losses and accident rate at a critical level. The state of decentralized heat supply systems of low rise buildings is not covered by national statistics at all. A second paper on the prospects and development of Russia’s heat supply systems will be published in a subsequent issue.     

Green and Brown? Globalization and the Environment

Globalization—viewed as a process of economic integrationthat embraces governance as well as markets—could leadto worldwide convergence toward higher or lower environmentalquality, or to environmental polarization in which the ‘greening’of the global North is accompanied by the ‘browning’of the global South. The outcome will not be dictated by aninexorable logic. Rather it will depend on how the opportunitiescreated by globalization alter balances of power within countriesand among them.     

Inequality and Determinants of Earnings in Malaysia, 1984–1997*

Using three large nationally‐representative Malaysian Household Income Surveys from 1984, 1989 and 1997, the present paper examines inequality and determinants of earnings. During the period 1984–1997, Malaysia's real per capita GDP increased by approximately 70percent, the participation rates for both men and women went up among all age groups, and the average number of years of schooling increased by 1.2years. There was a significant relative wage improvement among the bottom deciles. The rate of return to an additional year of schooling remained high (at 10percent), despite the huge increase in the supply of the highly educated. The stable overall rate, however, masks an increased rate of return on women's education, and a decreased rate for men. Wage discrimination against women amounts to 16–20percent, and the bias has increased in 1997. The pro‐Chinese earning ethnic bias is estimated at 31percent.     

Een dynamisch duopoliemodel II

Summary This paper is a continuation of ‘A Dynamic Duopoly Model’ (De Economist, 1970, pp. 458–490). According to the argument given in that paper, each duopolist changes his price twice in each period: first, there is an autonomous change, and, secondly, an induced one to neutralize the effect of the autonomous price change of the other duopolist. In the present paper, however, it is assumed that both duopolists change their prices only once a period. These ‘combined’ price changes are partly autonomous and partly induced; only the duopolist himself could tell in how far they are autonomous or induced. The steady state solution of this model corresponds with the endogenously determined duopoly solution of the earlier investigations.     

The circulating medium of exchange in colonial Pennsylvania, 1729–1775: new estimates of monetary composition, performance, and economic growth

Market transaction data are used to estimate the quantity of specie in circulation. This estimate is used to provide the first comprehensive measure of a colony's money supply and, along with data on population and prices, to retest the quantity theory of money and measure output growth using the equation of exchange. Output growth is found to depend on periodization and the extent that rising commercialization increased the velocity of circulation. Specie was becoming relatively less scarce as the Revolution approached, and movements in specie and paper currency both offset and reinforced each other depending on the period of analysis. (JEL N11, N21, E42, E51)     

Multimarket Equilibrium,Trade, and the Law of One Price

This paper describes the setup of two classroom markets, one with a thin supply side and relatively higher prices. A comparison of the equilibrium price tendencies in the two markets helps students discover how to apply supply and demand analysis in this context. The introduction of speculators, who buy in one market and sell in the other, reduces or eliminates the price disparity. Class discussion can be focused on how “nonproductive” speculation can increase surplus measures of efficiency when price is permitted to convey the correct information about opportunity cost. Use: This experiment can be used in classes in the principles of economics, intermediate economics, or international trade to illustrate supply and demand analysis and the effects of inter-market trade. In upper-level classes, optimal bidding can be addressed as well. Time: Reading instructions and completing five trading rounds takes 30 to 40 minutes. Discussion lasts an additional 15 minutes. Materials: One deck of cards for up to 36 students, one copy of the instructions, and eight small blank slips of paper for each student.     

On the measurement of differences in the commodity composition of imports or exports

Conclusion Following earlier reservations concerning the use of Glejser et al.’s index, this paper has attempted to show that Glejser et al.’s basic ideas concerning the measurement of the extent of specialization in imports and exports did not depend on the use of a specific index. Any measure of the inequality of the ratios (M _i/M_gi) defined earlier (and similarly for exports) could, in fact, be used. The empirical section of this paper, which looked at the commodity composition of the exports and imports of Denmark, Ireland and the United Kingdom, before and after they joined the EEC, confirmed that there was a positive correlation between the various indices proposed.     

Monetary Policy in Austria–Hungary, 1876–1913: An Econometric Analysis of the Determinants of the Central Bank’s Discount Rate and the Liquidity Ratio

This paper presents a model to explain the official discount rate of the Central Bank of Austria–Hungary from 1876 to 1913. The discount rate is assumed to depend on the liquidity ratio of the Bank, defined as the ratio of its stock of metals to banknotes issued, and on changes in foreign discount rates. The paper also presents an equation explaining the liquidity ratio. We use “not equally spaced chronologically ordered data” referring to the 50 discount rate changes enacted. The regressions confirm that the liquidity ratio was the main determinant of the discount rate and that Germany (and not Great Britain) played a significant role in determining the Austro–Hungarian discount rate and the liquidity ratios, supporting the view that the classical gold standard was a decentralized multipolar system rather than a system fully dominated by London as suggested by Keynes. The regressions also suggest that, although Austria–Hungary had an inconvertible paper currency (1879–1892) and fluctuating exchange rates (1876–1895) and formally joined the gold standard only in 1902, it “shadowed” the behaviour of gold standard Central Banks with such consistency that the stability of the estimated regressions was relatively unaffected by the frequent institutional changes.