A 50-year history of “zombie firms” in Japan: How banks and shareholders have been involved in corporate bailouts?

We review long-term changes in “zombie firms” in Japan over this half-century using listed firm data with a framework in which the concept of “zombie firms” includes possible efficient bailouts. The first wave of zombie firms occurred during the period of main banks (hereinafter MBs). MBs were able to actively choose which firms would receive bailouts at the time. However, commonly held beliefs about MBs’ monitoring power and the special role of corporate groups and long-term credit banks for bailouts are not supported. In the largest wave of the lost decade, we find the zombie firm problem in the manufacturing sector was just as serious as the non-manufacturing in terms of firm count. Moreover, the pathological phenomena such as unwilling concentration of loans to MBs were also rather typical in the manufacturing. Soft budget constraints have continued in the manufacturing even after the resolution of banks’ non-performing loans since the bubble burst came to an end, leading to the manufacturing-centered third wave of zombie firms following the Global Financial Crisis.     

Time for a Nordic business history initiative?

The current state of Nordic business history is by certain estimates better than ever. Nordic business historians publish extensively in leading international journals and have a strong presence at international business history conferences. Still, in this discussion article we raise a yellow flag of warning for the future of Nordic business history. We argue that the subject field is challenged along three important dimensions: (i) lack of relevant teaching, (ii) continued reliance on commissioned history and (iii) limited recruitment. The article discusses these challenges and seeks to place them in a historical perspective. For each challenge, we develop a set of concrete proposals to address the problems identified. A common theme in our proposed solutions is to intensify Nordic collaboration, particularly through the establishment of common, externally funded Nordic research projects. To create meeting grounds for the development of such projects, The Scandinavian Society for Economic and Social History – the formal collaborative body for Nordic economic historians and the owner of Scandinavian Economic History Review – should be reinvigorated.     

Does history matter? Colonial education investments in India

Can good policy overcome or alter the effects of history? This question is addressed in this article using unique district‐level data for 148 districts of former British India. Controlling for observable differences in geography and income, the ordinary least squares estimates suggest a large and positive effect of colonial expenditures on rural primary education in 1911 on rural literacy up to 1991. However, instrumental variable estimates that control for the endogeneity of colonial investments suggest that the effects of historical spending are significant only up to 1971. Two policy changes can account for these findings: an increase in spending following the 1968 National Education Policy and a greater emphasis on the universal provision of public goods such as schools in the 1970s. Unlike recent studies documenting the persistent effects of historical investments on contemporary outcomes, this study emphasizes how effective policies can overturn the effects of history.     

Is Swedish research in economic history internationally integrated?

Abstract

This paper presents empirical evidence of the international integration of Swedish economic historians. Contrary to the claims of a recent national evaluation of the discipline, the Swedish shares of international publications and conference presentations are robustly below available cross-country and cross-discipline benchmarks. Also considering levels of research inputs, the relative underperformance of the Swedish field is alarming. Four main explanations to this situation are forwarded: 1) being among the largest economic history communities in the world, Sweden has become self-sufficient and almost independent of the international arena; 2) the dominating research language is Swedish; 3) the dominating publication format is the monograph (in Swedish); and 4) Swedish economic historians are reluctant to use modern economic theories and statistical analysis to complement the traditionally dominant qualitative research methods.     

What lessons for economic development can we draw from the Champagne fairs?

The medieval Champagne fairs are widely used to draw lessons about the institutional basis for long-distance impersonal exchange. This paper re-examines the causes of the outstanding success of the Champagne fairs in mediating international trade, the timing and causes of the fairs' decline, and the institutions for securing property rights and enforcing contracts at the fairs. It finds that contract enforcement at the fairs did not take the form of private-order or corporative mechanisms, but was provided by public institutions. More generally, the success and decline of the Champagne fairs depended on the policies adopted by the public authorities — for good or ill.     

Exchange-rate policy in East Asia after the fall: how much have things changed?

This paper evaluates the changes in the exchange-rate policies of East Asian economies in the aftermath of the currency crisis and the process in which the exchange-market stability was re-established. The empirical analysis evaluates the changing roles of the yen and the US dollar in the currency baskets, the shifts in the volatility of the underlying macroeconomic fundamentals and their implications on exchange-rate management, the exchange-market perception of credibility and risk of the postcrisis exchange-rate regimes, and the process of reversion to fundamental values after the massive currency depreciation.The analysis shows that after the abandonment of the quasi-dollar peg, the yen had gained a greater weight in the currency baskets and the greater flexibility in which the exchange rates are being managed serve to accommodate the greater volatility in the macroeconomic fundamentals. The improvement in the macroeconomic conditions and the greater credibility that has been acquired by the regional monetary authorities had allowed the exchange market to stabilize and enabled the exchange rates to revert back to their fundamental values.     

Bioenergy in Southern Africa: An opportunity for regional integration?

ABSTRACT

This introductory paper sets out the rationale for revisiting questions surrounding biofuel futures in Southern Africa and exploring the case for the establishment of a regional market. This contrasts with most research that has focused upon benefits and risks of production and consumption for individual countries. The analysis in this issue suggests that while benefits exist, the key challenges that have stifled production and consumption to date would need to be overcome. Unlocking trade requires relaxing requirements for South African manufacturers to source all their feedstock domestically. Key among factors to encourage production is resolving agricultural investment processes, particularly designing inclusive business models and clarifying land acquisition processes.     

National Concentration of High-tech Products: The Second Great Divergence?

Based on the product-country level trade data from 2004 to 2017, as well as the High-Tech Products Catalog from the US Census Bureau, this paper examines empirically the current phenomenon of “national concentration” in high-tech exports. The results show that the phenomenon of “national concentration” not only exists but also tends to be self-reinforcing. Compared with other products, the exports of high-tech products tend to be concentrated in certain countries, and this concentration trends were further strengthened after the global financial crisis of 2008–2009. The national concentration of R&D activities may be one of the important causes of the national concentration of high-tech products. This pattern remains robust when we further use the value-added export data and different definitions of high-tech products. We argue that the phenomenon of “national concentration” of high-tech exports may herald the arrival of the “Second Great Divergence” – the divergence between innovative and manufacturing activities – in the global economy.     

Where have all the pigs gone? Inconsistencies in pork statistics in China

Official agricultural statistics for China are subject to major inconsistencies and have long been questioned by researchers. The major problem with Chinese meat statistics is that reported meat supply is far greater than consumption, and this is particularly true for pork. Factors contributing to the gap between pork supply and consumption include production over-reporting, loss and waste in the pork supply chain, pork consumed away from home (FAFH), and a mismatch in the Chinese rural household survey between food and mouths (i.e. migrant workers and boarding students who are counted as rural household members but live in urban areas for much of the year). Our estimates indicate that over-reporting of pork production has declined substantially since 2003, but it is still significant and is the largest contributor to the gap between reported supply and consumption. Our estimates also indicate that pork consumption is significantly under-estimated because of FAFH and the rural mismatch between food and mouths. Reforms to the agricultural statistical system should be considered that increase the incentives to report accurate production statistics. Statistics are currently based on reports from local officials who have incentives to inflate production figures so as to improve their performance reviews and prospects for promotion, or they are overseen by local statistical personnel appointed by local governments.     

Stipend-paid volunteers in South Africa: A euphemism for low-paid work?

Given the high unemployment rates in South Africa, the government has introduced policies to assist individuals to enter the job market, including stipend-paid volunteering. This research sought the views of stipend-paid volunteers and managers from four Johannesburg-based non-governmental organisations. The aims were to investigate whether stipend-paid volunteering was more like low-paid work than volunteering, the motivations for stipend-paid volunteering, the relationship between livelihood strategies and stipend volunteering, and the challenges and opportunities facing stipend-paid volunteers. It emerged that stipend-paid volunteers were initially motivated by extrinsic factors, such as the stipend, but later their volunteerism was sustained by intrinsic motivations, such as their community service orientation. While stipend-paid volunteering provided opportunities for training and experience, the work also presented challenges in terms of emotional stress, low remuneration and minimal support. Findings suggest that stipend-paid volunteerism would seem to be a euphemism for low-paid work.     

Health system reform in China: What role for private insurance?

The purpose of the present paper is to show that much of the literature on health economics and on the international experience with different forms of health system organization can be interpreted as supporting the idea that reliance on an unregulated market mechanism for organizing the production and financing of health services is likely to result in major problems both with respect to efficiency and equity. However, reliance on a centralized “command-and-control” model managed by government has also been shown to entail problems in practice. For this reason I argue that the best option at China's current state of development may be a compromise model in which competing private providers are given an important role, both for the production of health services and in the provision of health insurance, but in which the government intervenes (through regulation and direct provision) in such a way as to attain both a high degree of equity of access to health care, and to avoid the most significant forms of “market failure” that would arise in an unregulated private system.     

The top three questions in economics? When theory is confronted with history

Abstract

Three important economic questions have long remained unanswered, and this article explores the nature of these questions. They are: Why was the Great Depression so long and so deep? Why did the Industrial Revolution occur there and then? Why is the whole world not developed? This article gives reasons why these questions may be called the top three questions in economics, investigates the potential multi-disciplinary content of the topics, discusses the pieces of understanding that are still not in place, and makes a few speculations as to how, eventually, the questions may be answered.     

Fiscal Sustainability in the Euro-Zone: Is There A Role for Euro-Bonds?

This paper assesses the fiscal sustainability of ten Eurozone member countries at a national and aggregate level. It is carried out in light of the relevant literature on monetary unions and the framework of the European Monetary Union vis-à-vis the current sovereign debt crisis. The impact of Eurobonds, which are considered as a viable solution, on fiscal sustainability was empirically tested. The results indicate that only three countries appear to be structurally sustainable whereas the majority of the countries are only sustainable in the short-run and two countries are structurally unsustainable. However, the sustainability of the Eurozone is greatly improved when the Eurobonds are used.     

Challenges to small and medium-size businesses in Myanmar: What are they and how do we know?

We conducted a field survey of owners of small and medium enterprises (SMEs) in Yangon, Myanmar to investigate obstacles to business development in the region. The analysis focuses on access to credit, public services, and electricity. We find that relaxing loan collateral requirements is considered of prime importance, while access to bank loans is seen as problematic (equivalent to a 19 percentage point increase in the interest rate). Yet despite their widespread appeal to governments and donors, SME loans are found to have no discernible impact on perceived access to credit. Access to public services is hampered by cumbersome and time consuming procedures, often necessitating daylong trips to the capital for administrative procedures. Streamlining such procedures could yield annual savings of up to US $4700 per business. With regard to electricity, the biggest problems are installing new connections and the unreliability of supply. For benchmarking of concerns, we showed respondents vignettes describing hypothetical businesses facing a particular difficulty, and asked them to rate the gravity of the problem. Although we find some differences in response scales across socio-economic and ethnic groups, the qualitative conclusions about which problems are most important generally hold. This suggests that broad-based policy intervention aimed at easing a particular difficulty can be implemented.