ECONOMIC GROWTH, INCOME AND HAPPINESS: AN EXPLORATORY STUDY

The pursuit of high economic growth is considered desirable as it generates an increase in a nation's wealth, income, employment and output. The rising income should enable consumers to purchase more goods and services, which in turn should result in enhanced utility and subjective happiness. Empirical studies suggest that higher income resulting from high rates of economic growth contribute to poverty alleviation and life satisfaction in low income countries. Higher income raises the happiness of the poor. In developed countries, higher income does not seem to buy higher happiness, once a threshold level of income is reached. This exploratory study seeks to examine the quantitative and qualitative sources of happiness. A higher absolute level of income is found to be significantly related to subjective happiness. Among the non-income factors, family togetherness, a good working environment and a higher level of education can contribute to making people happier. Happiness thus involves more than just economic growth and income.     

NEW ESTIMATES OF AUSTRALIAN PUBLIC BORROWING AND CAPITAL RAISED IN LONDON, 1849–1914

Current statistics of Australian public borrowing to 1914 suffer from several limits. On the basis of a comprehensive revision, an upward bias is shown in all the alternative time series of London borrowing, while statistics of local bond issues are derived for the first time. The new time series show the importance of the initial borrowing cycle during the 1850s and 1860s; the scale of debt repatriation from the mid-1890s; the interaction between domestic and overseas borrowing before the 1880s; and the potential significance of remittance as an 'invisible stabiliser' of the exchanges and alternative indirect source of capital imports.     

Private Goods,Public Goods,and Common Pools with Homo Reciprocans

Familiar inefficiencies arise with competing interests over private goods in Stackelberg and investment games. Private good experiments reveal whether reciprocity enhances cooperative outcomes. Familiar social dilemmas arise with voluntary provision of public goods and voluntary appropriation from common pools. Experiments with pairs of payoff‐equivalent provision and appropriation games reveal whether reciprocity is more or less effective in ameliorating under‐provision or over‐appropriation. Experiments with asymmetric provision and appropriation games also yield insight into the effects of the Indian caste system on inefficiency from social dilemmas. Experiments with three types of games, with a private good, public good or common pool, provide diagnostic tests of the homo reciprocans model.     

EFFECTS OF IMPROVING INFRASTRUCTURE QUALITY ON BUSINESS COSTS: EVIDENCE FROM FIRM‐LEVEL DATA IN EASTERN EUROPE AND CENTRAL ASIA

Public infrastructure is one of the important determinants of economic growth. Not only access to but also quality of infrastructure affects firm productivity as well as people's livelihood. Frequent interruptions of the infrastructure‐service supply impose extra backup costs on enterprises, hinder their timely business activities, and result in large losses of sales opportunities. This paper focuses on the impacts of improving the quality of public utilities (electricity, water supply, and telecommunications), using firm‐level data from 26 transition economies in Eastern Europe and Central Asia. The results suggest that firm costs would significantly increase when electricity outages occur frequently and the outage duration becomes longer. Similarly, when more time is required to restore suspended water supply, firms' competitiveness would be weakened. Not surprisingly, the impacts tend to vary depending on industry. The construction, manufacturing, and hotel and restaurant sectors are found particularly vulnerable.     

MACROECONOMIC PERFORMANCE AND INEQUALITY: BRAZIL, 1983–94

We examine how poor macroeconomic performance, mainly in terms of high rates of inflation, affected earnings inequality in the 1980s and early 1990s in Brazil. The results, based initially on aggregate time series, and then on sub‐national panel time‐series data and analysis, show that the extreme inflation, combined with an imperfect process of financial adaptation and incomplete indexation coverage, had a regressive and significant impact on inequality. The implication of the results is that sound macroeconomic policies, which keep inflation low and stable in the long run, should be a necessary first step of any policy package implemented to alleviate inequality in Brazil.     

WILDLIFE MANAGEMENT IN ZIMBABWE: EVIDENCE FROM A CONTINGENT VALUATION STUDY

If communities living adjacent to the elephant see it as a burden, then they cannot be its stewards. To assess their valuation of it, a contingent valuation method study was conducted for one CAMPFIRE district in Zimbabwe. Respondents were classified according to their preferences over the elephant. The median willingness to pay for the preservation of 200 elephants is ZW$260 (US$4.73) for respondents who considered the elephant a public good and ZW$137 (US$2.49) for those favouring its translocation. The preservation of 200 elephants yields an annual net worth of ZW$10,828 (US$196) to CAMPFIRE households. However, the majority of households (62%) do not support elephant preservation. This is one argument against devolution of elephant conservation. External transfers constitute one way of providing additional economic incentives to local communities.     

FDI AND DOMESTIC INVESTMENT IN TAIWAN: AN ENDOGENOUS SWITCHING MODEL

The purpose of this paper is to examine the effect of the FDI decision on domestic investment in the case of Taiwanese manufacturing firms. In addition, we also consider the deferral effect of the FDI decision and the role of firm size. To this end, this paper takes advantage of an endogenous switching model from which consistent estimators are obtained after correcting for the self‐selection problem. The empirical results show that the effect of these manufacturing firms’ FDI decisions on domestic investment is significant within the firms. Furthermore, a crowding‐out effect of FDI on domestic investment is found when Taiwanese firms engage in defensive FDI. Finally, FDI is found to have a positive influence on the domestic investment of the larger firms, while the influence is negative in the case of the smaller firms.     

GOVERNANCE INSTITUTIONS AND PRIVATE INVESTMENT: AN APPLICATION TO THE MIDDLE EAST AND NORTH AFRICA

This paper addresses the issue of the low level of private investment in the Middle East and North Africa (MENA) region, with special emphasis on the role of governance. Based on the existing published reports, we categorize what types of governance institutions are more detrimental to entrepreneurial investments. We then estimate a simultaneous model of private investment and governance quality where economic policies concurrently explain both variables. Our empirical results show that governance plays a significant role in private investment decisions. This result is particularly true in the case of “administrative quality” in the form of control of corruption, bureaucratic quality, investment‐friendly profile of administration, law and order, as well as for “political stability.” Evidence in favor of “public accountability” is also found. Our estimations also stress that structural reforms like financial development, trade openness, and human development affect private‐investment decisions directly, and/or through their positive effect on governance.     

STRUCTURE, CONDUCT AND PERFORMANCE ANALYSIS OF THE SOUTH AFRICAN AUTO INSURANCE MARKET: 1980-2000

The traditional structure-conduct-performance framework makes the explicit prediction that market structure determines market conduct, performance and power. The primary goal of this study is to evaluate this prediction using the South African (SA) short-term auto insurance market. The empirical evidence shows that a link between market structure and market conduct, performance and/or power is not present. Prices and profits are not statistically significantly related to various sellers' concentration measure and do not follow any explicit trend over time. By construction, profits are directly related to prices and follow a cyclical trend, as observed in other countries. A secondary goal of this paper is to compare the findings for the US auto insurance market with the empirical evidence on the SA auto insurance market. While there are few similarities, there is an underwriting cycle in the SA auto insurance market such as is observed for the US auto insurance market.     

MAKING THE COLONIAL STATE: DEVELOPMENT,DEBT, AND WARFARE IN NEW ZEALAND, 1853–76

Warfare in New Zealand during the 1860s has recently been linked to the rise of the central state and growth of the national debt in that colony. This article argues that any parallel to the growth of the European fiscal‐military state is misguided. The fundamental cause of state centralisation and rising indebtedness was the same long‐run dynamic of colonial development active in all settler societies during the nineteenth century. The colonial state functioned, in part, to raise capital for development, and if necessary the colonial state would be remodelled in order to achieve this. New Zealand was no exception.     

WAGNER'S LAW: AN ECONOMETRIC TEST FOR SOUTH AFRICA, 1960‐2006

The main objective for this paper is to test Wagner's law by analysing the causal relationships between real government expenditure and real income for South Africa for the period 1960‐2006. The paper tests the long‐run relationship between the two variables using the autoregressive distributive lag approach to cointegration suggested by Pesaran et al. We use the Granger non‐causality test procedure developed by Toda and Yamamoto, which uses a vector autoregression model to test for the causal link between the two. Evidence of cointegration is sufficient to establish a long‐run relationship between government expenditure and income. However, support for Wagner's law would require unidirectional causality from income to government expenditure. Therefore, cointegration should be seen as a necessary condition for Wagner's law, but not sufficient. This research does find a long‐run relationship between real per capita government expenditure and real per capita income. Results for the short‐run causality find bidirectional causality. On the basis of empirical results in this paper, one may tentatively conclude that Wagner's law finds no support in South Africa.