The origin,birth, and adolescence of the review of black political economy and the black economic research center

The Review of Black Political Economy (RBPE) and the Black Economic Research Center (BERC) arose from the atmosphere of the late sixties, when black nationalism was at its apex and vigorous efforts were under way to give meaning to the concepts of “black economic development” and “black capitalism.” They were created as vehicles to assist black economists and economic activists to analyze and disseminate relevant data on black economic affairs and to explore and facilitate new approaches to black economic problems.RBPE offered black economists a place where they could publish their work and share it with their colleagues. The flavor ofRBPE has changed somewhat over its twenty-three year life, becoming less polemical and more scholarly.     

Labor market racial discrimination against black women

Conclusion The data we have reviewed describe black women as having achieved parity with white women and indicate that this conclusion is not seriously affected after controlling for the direct and indirect effects of differences in time worked. However, the economic position of black women is not uniform throughout the economy. Black women have advanced primarily in public sector jobs and these advances have been made primarily by the youngest cohorts. Progress in the private sector has been much slower. Claims that a “new labor market” exists for black women ought to be carefully qualified, for their progress is impressive primarily when they are compared to white women—another disadvantaged group. Both groups of women are falling farther behind men in terms of relative earnings.16 Furthermore, it may be quite erroneous to interpret small differences in earnings between black and white women as evidence that black women do not suffer racial discrimination, as the following example illustrates.     

Trade and growth

The National Economic Association introduced the W. Arthur Lewis Distinguished Lecture series in December 1985 at the Allied Social Sciences Association meetings in New York City. The Lewis Lecture is named in honor of the 1979 Nobel Laureate in Economics, much of whose research has been devoted to the problem of Third World economic development. In the same spirit, the Lewis Lectures are intended to explore the themes of global inequality. Third World poverty, and prospects and possibilities for change. The inaugural Lewis address was delivered by Lance Taylor, professor of economics and nutrition at the Massachusetts Institute of Technology. Taylor, an immensely creative economist, has led contemporary development economists in the analysis of disparities in the structural relationships between Northern (that is, more-developed) and Southern (that is, less-developed) countries. Taylor’s subject matter, “Trade and Growth,” constituted both a provocative assessment of the stale of knowledge in this area and a compelling indictment of the insights offered by conventional economics. Taylor’s address, presented December 28, 1985, provides a sterling beginning to what promises to be an important lecture series.     

Using home-biased demand to test trade theories

Using Home-Biased Demand to Test Trade Theories. — This paper proposes a discriminating hypothesis that distinguishes between two paradigms of international trade: (1) constant returns and perfect competition (CRS-PC) and (2) increasing returns and monopolistic competition (IRS-MC). The discriminating hypothesis rests on the different degree of home bias among “consumers.” It predicts a positive relationship between a country’s share in world output and a country’s share in the world home-biased expenditure if the sector is IRS-MC and no relationship if the sector is CRS-PC. Accordingly, 7 sectors (covering 54.86 per cent of industrial output) of the eight countries under investigation were associated with the IRS-MC and 10 sectors (41.15 per cent) with the CRS-PC paradigm.     

Regional integration in East Asia. From market-driven regionalisation to institutionalised regionalism?

Conclusions The analyses have shown that ESACs unprecedented emergence in world trade and capital transactions has been accompanied by a growing share of intra-area transactions. At least for the goods sector, the evidence is clear. Intra-area transactions grew faster than those to the rest of world, and the latter rose faster than world trade. Given this “double growth” performance, there was no trade diversion in the static zero sum meaning. Driving forces of fast growing intra-area transactions were basically internal conditions, such as “natural” trading partnership (geographical and cultural proximity, size, and complementarity in resource endowment and production structure), rising income levels fostering intra-industry trade, the economic opening of China, and unilateral liberalisation of trade and capital transactions on a non-discriminatory basis. It cannot be denied that external factors as protectionism and recession in non-Asian OECD countries have also contributed to this performance. Yet, it seems safe to assume that even without the US and European recession in the early eighties and early nineties and without the spread on non-tariff barriers, intraarea transactions would have received sufficient fuels from the internal factors to grow more rapidly than transactions with the rest of the world.¹⁷ Furthermore, a base effect of a low initial level of intra-area trade cannot be neglected.     

A critique of mises’s theory of monopoly prices

Conclusion Built on Rothbardian insights, our attempt to show the peculiarities of Misesian monopoly theory results in a few conclusions. First of all, in Mises’s theory of monopoly two of the three conditions for the emergence of monopoly prices belong to different realms of scientific inquiry. On the one hand, Mises points out the idea of a counterfactual comparison between competitive price and monopoly price; on the other hand, he stresses the importance of an empirical method to discover monopoly prices. The latter, even if it describes a true statement about market conditions, i.e., the entrepreneurs do not know (beforehand) the market demand curve, does not help us to identify the monopoly price on market. Second, Mises erroneously founds his welfare arguments on value theory. His utilitarian endeavor to show that “consumers’ sovereignty” is infringed by monopolistic restriction of production does not succeed. He based his arguments on nonscientific interpersonal and intertemporal comparisons of utility. Third, Mises is not consistent in the use of a standard of comparison for “monopoly prices”: on the one hand, the market prices are not distinguishable from “monopoly prices”; on the other hand, the transfer of the discussion to the equilibrium framework does not help us either, as we try to explain real market phenomena. Thus, Mises’s attempts to incorporate the neoclassical concept of monopoly price into the framework of the market process, as depicted by Austrians, do not succeed. Our inquiry supports the largely shared opinion among Austrian economists that monopoly price (at least in its present definition) does not exist on the free market; it appears only, and is logically identifiable, as a result of a privilege given by the State.     

Rhonda M. Williams: Competition, race, agency, and community

As the United States approaches the twenty-first century… in an information-based, transnational and managerial economy, it is becoming increasingly apparent that if we do not better negotiate race and ethnicity in our society, we will not adequately solve the problems of economic inequality and discrimination. Racial and/or ethnic divisions and competition shape our efforts to understand and challenge hierarchy and inequity. As long as we ignore those issues, we cannot solve the problems of poverty, unemployment, and crime, nor effect productive job creation and economic justice. Absent a cultural and economic reckoning with racism’s legacies, we will fail to revitalize our cities and to recover from the socioeconomic costs of “ending welfare as we knew it.” Although masked behind pronouncements of a “color-blind” society, unfinished racial business weakens our national will to provide one another the portfolio of social and economic rights essential to the sustenance of humane community in the post-industrial global economy. (Nembhard and Williams 1998).     

Comments on R. Cooper, M. Bordo and H. James: Exchange rate arrangements and disarrangements: prospects for a world currency

This note evaluates the prospects for a world currency, using as a departure point the papers by Bordo and James (2006) and Cooper (2006). The note argues that a world currency is unlikely in the foreseeable future and probably undesirable. Although more evidence is needed, there seem to be no strong forces towards the creation of new monetary unions among the countries with major currencies or between those countries and the periphery. Based on recent experience, the note also argues that one of the main benefits to establish a world currency, the elimination of exchange rate uncertainty, is likely less important than commonly believed. No matter how rigid a currency arrangement is, initiatives to dissolve it tend to appear as bad times arise. Still, the present equilibrium of no world currency leaves unresolved many difficult issues related to the functioning of the domestic and international monetary systems. Sergio L. Schmukler has prepared this note as a comment to the papers “Proposal for an OECD Currency” by Richard N. Cooper and “One World Money, Then and Now” by Michael Bordo and Harold James, presented at the conference “Regional and International Currency Arrangements,” February 24 and 25, 2006, Vienna, Austria, organized by the Bank of Greece and the Oesterreichische Nationalbank (Central Bank of Austria). I thank conference participants for useful comments. I am also grateful to Jose Azar and Francisco Ceballos for excellent research assistance. The views expressed in this paper are entirely those of the author and do not necessarily represent the opinion of the World Bank.     

Internalization is still a general theory of foreign direct investment

Conclusions Part IV of Parry's article discusses three types of FDI activity by MNEs; these are correctly analyzed and fully consistent with my earlier work. All the three cases (vertical integration, transfer pricing and quality control) are examples of market imperfections which lead to internalization. I am glad that Parry accepts these“three areas where internalization appears to provide an explanation of FDI as a specific form of international involvement by the MNE” but I am surprized that he still cannot accept the general point that these are examples of“market failure” in an international context, which lead to multinational hierarchical activity. The focus of my survey article was to demonstrate that“established theories of FDI” tend to fasten one to one or another of such market imperfections, but in all cases internalization results. Internalization as a general theory of FDI is still a robust principle. It provides the conceptual foundation for analysis of the MNE and the field of international business.     

Exploring the Intensive and Extensive Margins of World Trade

World trade evolves at two margins. Where a bilateral trading relationship already exists it may increase through time (intensive margin). But trade may also increase if a trading bilateral relationship is newly established between countries that have not traded with each other in the past (extensive margin). We provide an empirical dissection of post–World War II growth in manufacturing world trade along these two margins. We propose a “corner-solutions version” of the gravity model to explain movements on both margins. A Tobit estimation of this model resolves the so-called “distance puzzle”. It also finds more convincing evidence than recent literature that WTO-membership enhances trade. JEL no. F12, F15     

Testing the Unstable Middle and Two Corners Hypotheses About Exchange Rate Regimes

The recent rash of international currency crises has generated considerable interest in the role that exchange rate regimes have played in contributing to these crises. Many economists have argued that efforts to operate adjustably pegged exchange rate regimes have been a major contributor to “the unstable middle” hypothesis and some have argued that this unstable middle is so broad that only the two corners of hard fixes or floating rates will be stable in a world of high capital mobility—the two corners or bipolar hypothesis. Two recent empirical studies by researchers at the International Monetary Fund reach opposing conclusions on these issues. We examine the issue further and show that conclusions can be quite sensitive to how exchange rate regimes are grouped into categories and the measures of currency crises that are used. In general we find that the dead center of the adjustable peg is by far the most crisis prone broad type of exchange rate regimes, but that countries need not go all the way to freely floating rates or hard fixes to substantially reduce the risks of currency crises.

“Following” or “attracting” the customer? Japanese Banking FDI in Europe

Using firm-level Japanese FDI data on investment into 18 European countries between 1970–2000 in all industries (banking, manufacturing, wholesale/retail distribution, and business services), this study examines if the “follow the customer” (FTC) hypothesis holds for firm-level data. The results suggest that banks do follow their customers into a foreign market, as part of a larger strategy that goes beyond the FTC theory. The firm level data show that the majority of FDI into a host country occurs after the foreign bank has established operations. Policy implications of this finding include the suggestion that host economies liberalize their financial sector early in an effort to attract banking FDI which then will attract non-banking FDI rather than the reverse.     

Immigrant Struggles in New Orleans Post-Katrina

Race relations in New Orleans have often been narrowed to Black and white, especially pre-Katrina. According to the 2000 census, the city was about 67% African American, 27% white, 2% Asian, and 3% “Hispanic.” In a city with a deep history of racial tensions between Black and white, other people of color—and especially recent immigrants—often went unmentioned in discussions of city demographics. The city’s world famous culture—whether in the traditions of Mardi Gras Indians and secondline parades, or in music like jazz and bounce—is also famously rooted in specifically African cultures. Even in media coverage of the city post-Katrina, the story of immigrant experiences has remained mostly invisible. When these stories have been told, they have often fit into the old stereotypes of “model minorities” (as in the case of the Vietnamese recovery) or of low-wage workers stealing jobs (as in the case of news reports on the city’s new Latino population). However, the stories of these other New Orleanians offer an important lens through which to view the overall struggle over the city’s recovery. And the work of grassroots activists from these communities, who strived to not only work for justice for their friends and neighbors, but also to build broad multi-racial alliances, provides an inspiring example for people in other cities who are waging similar fights.     

Why Speed Doesn’t Kill: Learning to Believe in Disinflation

Central bankers generally prefer to reduce inflation gradually. We show that a central bank may try to convince the private sector of its commitment to price stability by choosing to reduce inflation quickly. We call this “teaching by doing”. We find that allowing for teaching by doing effects always speeds up the disinflation and leads to lower inflation persistence. So, we clarify why “speed” in the disinflation process does not necessarily “kill” in the sense of creating large output losses.     

Economic forces,structural discrimination and black family instability

The social and economic gains achieved by black families during the 1960s were severely eroded during the seventies and eighties. Unemployment, poverty, single-parent families, out-of-wedlock births, and adolescent pregnancies soared to alarming levels. According to the thesis of the declining significance of race, this crisis is mainly concentrated among the black “underclass” and it is broad societal trends, not racism, that is mainly responsible for their increased deprivation. We contend that this thesis fails to assess the role of institutionalized racism as it is manifested in “unintended” or “structural” discrimination, i.e., the disproportionate adverse effects of economic trends and policies on the functioning of low-income and middle-income black families. Moreover, we argue that social forces or policies that have racially disparate adverse effects are “discriminatory” by result, whether intended or not. The major economic trends that affected black families adversely during the seventies and eighties were: back-to-back recessions, double-digit inflation, and industrial and population shifts. The key economic policies that undermined black family stability have been: anti-inflation fiscal and monetary policies, trade policies, plant closings, social welfare, block grants, and federal per capita formulas for allocating funds to states and local areas that have not been corrected for the census undercount.     

Implications of revenue sharing for black political and economic goals

Conclusions Thus far urban development has been subject to the “regulation” of forces generated by the market economy. Such planning as has existed has been overwhelmed by the dynamics of market forces, perverted priorities, political fragmentation and economic differentiation. The joint goals of removing the “crisis” elements of urban growth and of expanding black political potential have provided the framework in which we have analyzed revenue sharing. We have analyzed the specific Nixon and Mills proposals as well as the general idea of revenue sharing, and compared revenue sharing proposals to present Federal aid to state and local governments.     

SBA regional loan distribution to minorities

Summary We have shown in this paper a great disparity in the lending activities of a number of Small Business Administration regional offices. There were considerable differences between these regions on their rates of increase and then decline of loans and loan dollars issued over the 1968-1976 period and on their loans and loan dollars per unit population, small businesses, and small business employees. This was found to be the case both for minorities and for the population at large. This, however, is especially disturbing in the context of minority lending activity since SBA lending was the chief vehicle of the federal government’s minority economic development efforts from 1968 to 1976. The economic well-being of a great many minorities with ties to the small business sector was to a large measure affected unequally by the differential SBA lending rates between regions. In fact, insofar as the measures we have selected can be related to “need,” the policy seems to have been counterproductive, having concentrated lending activity precisely in the regions where minority small business in terms of population, employment, and numbers of establishments was strongest and by implication the “need” was least!     

Dutch disease revisited. Oil discoveries and movements of the real exchange rate when manufacturing is resource-intensive

We study how natural resource booms affect the real exchange rate in a situation where there are input–output linkages between the manufacturing sector and the natural resource sector. An increase in revenues from natural resources could de-industrialize an economy by raising the real exchange rate, rendering the manufacturing sector less competitive. This tendency towards de-industrialization has been called “Dutch disease”. We build a theoretical model showing that a country experiencing discoveries of natural resources, such as oil, is not necessarily bound to experience the Dutch disease. The appreciation of the real exchange rate can be escaped if patterns of specialization shift towards the manufacturing industries that use oil more intensively. In the second part of the paper, we test the model and find support for the claim that Dutch disease effect associated with discoveries of natural resources (namely oil) are dampened in countries that specialize in resource-intensive manufacturing industries.     

An alternative to Marshall: Economic history and applied economics at the early LSE

Conclusion The LSE in its early years did not produce a “school of economics” in the sense that Marshall's Cambridge constituted a “school.” English historical economics was too diffuse, too lacking in strong leadership, too untheoretical, and too committed to economic history as a discipline to create such a “school.” The special contribution of the LSE in the pre-war period was certainly not in theory, since one of the chief reasons for it being an alternative to Marshall's school of orthodoxy was that it paid relatively little attention to economic theory during this period. Rather, its alternative economics was its central conception that the economist'sraison d'etre was to solve pressing contemporary problems for which orthodox theory seemed to offer little guidance. Thus its teachers and curriculum, assembled by Hewins and the Webbs, emphasized applied subjects and economic history.     

Specific Factors and International Monetary Policy Coordination

The consequences of intersectoral factor immobility for optimal monetary policy are examined in a “New Open Economy Macroeconomics” framework. When labor cannot be reallocated between tradable and nontradable goods production, this rigidity generates a welfare loss, which increases as the sectors become more different. When prices are predetermined, the model becomes a monetary “specific factor” model. Intersectoral factor immobility complicates the optimal monetary policy problem by creating a tradeoff between stabilizing tradable and nontradable sector labor. When labor is mobile between sectors, policy coordination can significantly reduce labor volatility. When it is not mobile, coordination results in less volatility in tradable sector labor, but increased nontradable sector labor volatility.