On the exchange-rate elasticity of the demand for international reserves: Some evidence from industrial countries

Summary and Conclusion In this paper we tried to investigate the supposition that a change in exchange rate lowers the demand for international reserves. This goal was achieved by incorporating the real effective exchange rate into a standard real reserve demand equation from the literature. The model was estimated for a sample of 13 countries for which the effective exchange rate was available, using pooled quarterly data over the 1973-1985 period. The empirical results revealed that a change in exchange rate indeed reduces the demand for reserves supporting the theoretical arguments of the previous studies.     

Employee job satisfaction in developing countries: The case of Kenya

Although developing countries that rely on agriculture continue to invest considerable amounts of resources toward the training of qualified agricultural manpower, the intensification of agricultural research, and the development of favourable agricultural policies, little attention is given to the organizational and social structure of the workplaces of the technical workers in agriculture. We argue that an understanding of what produces satisfied agricultural technicians is important in its own right, but is also important for indirectly increasing agricultural production in these developing countries. Following a social exchange theoretical argument, and using a national sample of technically trained agricultural personnel in Kenya, we identify the factors in the workplace that affect job satisfaction. Implications for management are drawn from these findings.     

Technical choice in developing countries: The case of leather manufacturing

The study examines the scope of technical choice in developing countries by viewing the evolution of technology in leather manufacturing and comparing alternative techniques for manufacturing upper leather from cattle hides. Two important conclusions have emerged. First, a developing country aiming to establish a leather manufacturing industry has a reasonably wide technical choice. Second, techniques using relatively higher labour and lower fixed capital generally appear to be better choices than more capital-intensive techniques.     

The international environment for adjustment in developing countries

The international disequilibrium of the 1970s imposed on developing countries a burden of adjustment out of all proportion to their degree of responsibility for the imbalances incurred. The application of traditional stabilization programmes resulted, in a number of cases, in severe disruption of development. There was, moreover, a perverse distribution of the burden of adjustment, the poorest countries suffering most. A number of changes in international policy and practice are required to avoid a repetition of this experience. In particular, special provision is needed for cases in which deficits are largely of external origin, involving more adequate IMF financing at low conditionality so as to permit a stretching out of the period of adjustment.     

The political economy of trade liberalization in developing countries

The paper addresses the issue of trade liberalization in developing countries from a political economy perspective using the theory of collective action. The role of collective action and interest group behavior is analysed critically both with respect to the initiation of attemps at liberalization and its outcome in terms of success or failure. A probit model is then used to test empirically the various hypotheses as to the determinants of likelihood of success of liberalization attempts. A sample of 51 liberalization episodes relating to 24 countries and spanning the period 1950–80 is used. Five factors are found to be critical in the process of liberalization: the strength of exporters groups as represented by the diversification and importance of manufactures and traditional exports, the strength of import-competing sector's opposition as measured by the share of manufacturing in GDP, the time elapsed since the beginning of import substitution, the size of country and the leadership committment and role.     

Trade and convergence between rich and developing countries: Some empirical evidence on macrodeterminants of specialization

Trade and Convergence Between Rich and Developing Countries: Some Empirical Evidence on Macrodeterminants of Specialization. —A case study is proposed considering trade of Italy with many groups of partners belonging to the EU, to the G-7, to the newly industrializing countries and to the newly exporting countries. Using panel estimation data, they reach the conclusion that standard of living convergence does not favour intraindustry trade among rich countries but it is IIT-biased when considering emerging countries like the NICs. A much more important role is played by country-relative size and price differentials and/or vertical differentiation.     

Adjustment policies in developing countries: A reassessment

This paper analyses policy responses to external shocks by developing countries in the 1974–1976 and 1979–1981 periods. It is shown that outward-oriented economies relied largely on output-increasing policies of export promotion and import substitution to offset the balance-of-payments effects of external shocks in both periods and accepted a temporary decline in the rate of economic growth in order to limit their external indebtedness. In turn, inward-oriented economies failed to apply output-increasing policies of adjustment. They financed the balance-of-payments effects of external shocks by foreign borrowing in the 1974–1976 period, and had to take deflationary measures in 1979–1981 as their increased indebtedness limited the possibilities for further borrowing. The policies applied led to substantially higher rates of economic growth in outward-oriented than in inward-oriented economies, with the differences in growth rates offsetting the differences in the size of external shocks several times.     

Construction industry in developing countries

This paper provides a review of the construction capability available in the developing countries to meet the demand for shelter. It discusses the role of construction in the process of development and its importance to economic growth. It considers the issues facing the growth of a viable indigenous construction industry in the developing world within the context of the activities involved in the creation of constructed facilities – planning, design, construction and maintenance; it also examines the environment within which the industry has developed. For each construction activity the paper reviews available capabilities, the various resources needed for the development of an indigenous industry, and some possible means of accommodating these needs.     

Chinese contractors in developing countries

This paper uses turnover data from Chinese contracted projects in as many as 87 low and lower middle income countries from 1998 to 2009. Economic fundamentals motivate Chinese contractor presence in developing countries as their revenues are positively associated with countries’ per capita income and expected growth. All else equal, contractor project revenues are higher in countries with stronger political rights regimes. Moreover, the estimated positive effect of improvements in political freedom is largest among countries with high fuel endowment, but lowest among countries with high ores and metals endowments. Conclusions relating Chinese contractor activities, perceptions on the level corruption, and resource endowment among sub-Saharan African countries must remain tentative as the estimated relationships are sensitive to the corruption indices used.     

Foreign trademarks in developing countries

Foreign trademarks are used in some cases to cover imported goods and generally products made in the host countries by foreign manufacturing subsidiaries and licensees. This industrial property right is a major source of market power for those subsidiaries making consumer goods. Domestic enterprises making similar goods must either accept a reduced share of the market or must enter into trademark license agreements. But even in those cases, although licensees of foreign-owned trademarks receive a current profit out of the licence, they cannot enjoy the result of the goodwill development.Although the advertising expenditures are borne by the consumers of the developing countries, the accrual in goodwill is for the benefit of non-resident owners of this intangible asset. These private benefits — mostly appropriated by the foreign trademark owner — can be considered as net social costs to the recipient country.     

Fiscal disequilibrium in developing countries

Fiscal equilibrium necessitates that ‘permanent’ government expenditures be covered by ‘permanent’ government revenues. The concept of ‘permanent’ goverment expenditures and revenues takes into account future revenue from capital investments as well as temporary windfalls. Hence, equilibrium may exist despite temporary imbalance between revenue and expenditure. The causes of disequilibrium can be classified into five categories: export boom; price-inelastic tax system; public enterprise performance; increased expenditure produced by political exigencies or administrative weaknesses; and worsening terms of trade. In practice, unrealistic customs valuations, specific as opposed to ad valorem taxes and administrative difficulties have been the most common sources of declining government revenue as a percentage of gross domestic product. Increased subsidies both to consumer goods and to public enterprises as well as inadequate control mechanisms have been the most frequent causes of rising government expenditure.     

The trade-growth nexus in the developing countries: a quantile regression approach

This paper applies quantile regression techniques to investigate how the impact of trade openness on the growth rate of per capita income varies with the conditional distribution of growth. Using formal robustness analyses, we first identify robust variables affecting economic growth (investment, government balance, terms of trade, inflation, and population growth) which we then use as controls in the quantile regression estimations. Our findings suggest a heterogeneous trade-growth nexus: for both the short and the long run, the effect of openness on growth is higher in countries with low growth rates compared to those with high growth rates.