Buying a pig when both buyer and seller are in pokes

This paper considers the situation of a foreign company buying an enterprise in an Eastern European country. Since the enterprise has no record in a market economy, neither buyer or seller knows what value should be placed on it. In addition, very often the physical assets of the enterprise have little value, so the purchasing firm is actually buying a license to engage in a particular line of business and expects some subsidy or protection while the enterprise is being renovated and is entering the market. Bargaining postulates are developed and a simple bargaining model is evolved which show conditions under which bargaining will succeed. The role of the proportion of equity purchased and the effect of subsidies are considered.     

From elite capture to marginalization of the poorest: a new social exclusion in anti-poverty programmes in China

Based on a case study of state-directed aid resources in anti-poverty programmes, we detected a new phenomenon of social exclusion in China. In a period of several years, a shift is observed from elite capture to marginalization of the poorest. This phenomenon occurs under the administrative pressure from the authoritarian state and the morbid democratic mechanism. Contemporary structural changes in economic and social culture also make it difficult for marginal people to escape from this predicament. From a social structural transformation point of view, we suggest that the marginalization of the poorest should be seriously taken into consideration in rural development programmes and policies.     

Regional food security and agricultural policy in southern Africa: A challenge of policy conversion in diverse settings

Regional food security is viewed as one of the major challenges for the Southern African Development Community (SADC) countries and the important role of agriculture in this challenge has been highlighted. This article confirms these notions, but continues to argue the complexity and diversity of the region, the importance of creating agricultural policy conversion and harmonisation, despite this diverse setting, and the parameters for agriculture to support food security in the region. Timmer's agricultural 'growth' model is adapted and applied to the southern African region to create a framework for such conversion.     

Getting a job when times are bad: recruitment practices in Sweden before,during and after the Great Recession

Research on recruitment shows that networks matter and are effective as search channels. The aim of this article is to analyse how recruitment practices varies over time, and specifically, how it has varied before, during, and after the Great Recession 2008–2009. The findings are that recruitment practices change both in the short term, in relation to labour supply, which we can call a cyclical effect, but also in accordance to a long-term, structural effects. Informal recruitment practices, such as recruitment through ‘friends and acquaintances’ and ‘employer made contact’, seem to increase during bad times. In the long run, the recruitment practices ‘direct application’, ‘friends and acquaintances’ and ‘formal private’ increase in relation to recruitment through the Swedish Public Employment Agency (SPEA). A reason for this may be that the labour market in the new knowledge economy demands a heterogenic workforce with high demands on non-cognitive skills and customisation. Here the new network recruitment practices seem to fit in.     

The empirics of trade and growth: where are the policy recommendations?

Existing literature repeatedly documented a strong correlation between trade and growth. It has also shown a causal effect of imports (though not necessarily exports) on growth in simultaneous equation models but to a lesser extent in Granger-causality tests. Export and import taxes have sometimes been found to negatively affect growth. Drawing policy conclusions from these general findings for a particular country is difficult not only because of the contradictory results but also because of potential second best world effects and the implied endogeneity of trade policy. Policy recommendations for a specific country require a careful analysis of market and institutional arrangements and can not be based on the existing cross-country literature.This project started while both authors were working at the World Bank. Views expressed in this paper do not necessarily represent the views of the World Bank or the institutions they are currently affiliated with. We would like to thank Lucas Bretschger, Shanta Deverajan, Marion Jansen, Marcelo Olarreaga, Howard Pack, Karen Pittel and Paul Welfens for helpful discussions and comments. We are especially indebted to Simon Evenett for very detailed and constructive comments.     

Export subsidies and minimum access guarantees in agricultural trade: a developing country perspective

The paper presents a framework for and results from a quantitative analysis of two proposals to GATT, made as part of an effort at containing or rolling back the spread of non-tariff barriers in agriculture. The first proposes export subsidies, which would be financed by the producers themselves, requiring no government outlay. The second calls for a minimum access for importers. This analysis examines the magnitude of the effects on trade flows, world prices, the impact on the production, consumption, and trade of the OECD countries and on foreign exchange earnings of less developed countries (LDCs), of minimum access as applied to sugar trade — one of the most protected products in OECD countries and one with great potential for LDC exporters. Results are then compared with an analysis of more comprehensive trade liberalization in the sugar market, i.e., complete removal of trade barriers in all OECD countries.     

Urban population in late medieval England: the evidence of the lay subsidies

Was there a growth in the proportion of the population living in England's towns in the later middle ages? Uncertainty about national population trends and about the taxation multipliers needed to arrive at population totals has made it difficult to answer this question. A direct comparison of the proportion of taxpayers that was urban in 1377 and 1524 suggests that the urban share of population was static or may even have declined in this period. However, such decline provides no simple index of urban prosperity or decay: a decline in urbanization could be the product of rural buoyancy rather than of urban recession.     

Regional heterogeneity,the rise of public debt and monetary policy in post-bubble Japan: lessons for the EMU

Both Japan and parts of the European Monetary Union have experienced boom and bust in stock and real estate markets, which have been followed by a lasting crisis. The paper analyses the role of a high degree of regional heterogeneity for public debt and monetary policy in the context of crisis. It is shown for Japan that the attempts to maintain regional cohesion via a regional transfer mechanism has contributed to the unprecedented rise in public debt and persistent monetary expansion. Econometric estimations show that in Japan regional redistribution of funds has ensured homogeneous living conditions across Japanese regions pre- and post-crisis. The side condition is monetary expansion. A similar effect could emerge in Europe, if the crisis persists.     

Wage vs. industry subsidies: coping with technology related unemployment in a globalized economy

In the past, economic policy has largely adopted a sectoral approach to technology-related unemployment. More recently though, wage subsidies have gained attention as an alternative means of reemployment, with the dispute on how best to cope with unemployment still unsettled. However, despite the fact that results may differ, research mostly assumed a closed-economy setting. Based on a HOS model with factor-augmenting technical change and labor-market rigidities, the paper examines the differences of these two subsidization schemes on output and employment. Since both schemes work through different channels, namely the demand versus the supply side, effects differ not only in magnitude. The paper includes a comparative calibration exercise for the case of Germany.

Fiscal policy and growth forecasts in the EU: are official forecasters still misestimating fiscal multipliers?

Review of World Economics - Blanchard and Leigh (Am Econ Rev 103(3):117–120, 2013; IMF Econ Rev 62(2):179–212, 2014) find fiscal multipliers to be underestimated in the EU in the deep...     

The Leontief paradox in a multi-country setting: Comments

Conclusions Apart from the commodity mix effect, exports, imports consumption and production respond identically to changes in relative capital endowment, regardless of whether one refers to physical capital, human capital or total capital. Hence, when allowing technology and product mix to vary, one cannot distinguish between export goods and import goods in terms of capital intensity. These conclusions are still in agreement with Hirsch [1977, p. 418] who argues “Poor countries export low capital-intensive and import high capital-intensive goods, while rich countries import low capital-intensive and export high capital-intensive goods.” The only response that is significantly different is due to the commodity mix effect.     

Amortization policy as a factor in the investment policy of an economy

The article is based on the Concept and a draft law on amortization policy in the Russian Federation prepared by the Association of Mining and Metallurgical Industrialists of Russia (Russian abbreviation: AMROS). It examines the role and place of amortization policies in Russia and around the world as well as their essential differences in terms of the economic mechanisms of capital reproduction. Measures to improve Russia’s amortization policy are suggested.     

Population policy in South Africa: a critical perspective

The argument in this article is that population growth and the concept of balancing resources against population growth is flawed when the context, in this case South Africa, is gross inequalities in resource distribution. The fact is that causes of poverty are located in the social and political structures which give people unequal access to existing resources or international aid. Population trends reflect the mode of production of that society. It is argued that the Malthusian law of population and the theory of demographic transition is ahistorical and inaccurate. The theory does not explain why population growth rates change. In South Africa, fertility reflects lack of control over one's life and poverty. Migrant labor in South Africa undermined normal social institutions and disrupted family life. Government has emphasized a fear of a future population crisis because of resource shortages and a fear of the growing black population. The South African population development program is extracted and discussed. Questions are raised about the theory of demographic transition, the way resource allocation is ascertained, the relationship between resources and population in a specific area, and the relationship between population growth and development in general. The theory of demographic transition is examined and the Western influences which contributed to population growth through requests for changes in sexual mores and the effects of colonization. When demographic transition theory postulates that mortality rates decline with industrialization as a result of access to medical care and an improved diet, it doesn't take into account the discriminatory health care allocation under apartheid, or the displacement of rural people from their land and undermining of the rural peasantry. Separate development has led to inferior schooling and lack of access to skilled employment. In discussing the availability of resources in South Africa, the question is raised as to whether there is an absolute limit to water, or whether water management or water conservation is at issue, as in the case example of the Transkei. What is economical reflects political decisions about national priorities when consideration is given to alternative strategies for increasing the water supply, or solving pollution problems. The potential to feed South Africans is substantiated, and the problems of maldistribution identified. In establishing the balance between family planning and development, the Population Development Program (PDP) expresses contradictory aims; i.e., seeking community involvement of a politically disenfranchised population. The concept of overpopulation and the application of population control programs in South Africa does not address the problems of poverty and powerlessness.     

Savings: the policy debate in Europe

Three issues dominate the public policy debate over savingsin Continental Europe. First, can private savings substitutefor public pensions in the provision of retirement income, giventhat the current generosity of pay-as-you-go financed pensionsis hardly sustainable in the light of population ageing? Andif so, which policy steps have to be taken to alleviate thistransition? Second, does the evolution of a 'new financial landscape'in Europe necessitate policy response in terms of taxation andregulation, specifically considering the increase in pensionfunds? And third, closely related to the other two issues, isthere too much or too little saving in an ageing Europe? Willpension reform and the new financial landscape increase or decreaseoverall saving? Do we need to subsidize saving more or lessthan we currently do? The paper reviews economic theory andempirical evidence on these intertwined issues. Most importantly,it identifies many gaps in our theoretical and empirical knowledgethat caution us against overly strong policy recommendations.     

Economic crisis and policy response in Malaysia: the role of the new economic policy

Since achieving independence in 1957, Malaysia has experienced three recessions, each of which emanated from different sources of vulnerability. This paper analyses the policy response to economic crisis, in particular, the role of the New Economic Policy (NEP) which was introduced in 1970 and which remains in force today. It concludes that in spite of the diversity in the proximate causes of the crises, the policy response was consistent and sought to ensure that NEP objectives were paramount and the vested interests that had emerged as a result of the NEP and which were linked to the ruling party were preserved.