Emerging Consensus on Labour Market Institutions and Implications for Developing Countries: From the Debates in India

Abstract

This paper makes a critical intervention to on-going theoretical and policy debates in the economic analysis of labour market institutions (LMIs) in the context of recent debates in India. It focuses on the internal inconsistency of mainstream economic analyses of LMIs, in particular those based on the new institutional economics (NIE) approach, and what appears to be an emerging policy consensus on LMIs within the World Bank and the International Labour Organization (ILO). The paper draws out the possible ideological parallels in these two developments, despite different intellectual origins and intentions of those engaged in these debates. A corresponding modification in policy debates in India is observed in the shifting perspectives from the Second National Commission on Labour (SNCL) to the National Commission for Enterprises in the Unorganised Sector (NCEUS). The apparent emerging consensus in both the theoretical literature and policy debates reveals the tendency for researchers to focus on labour market outcomes and phenomenal forms of LMIs rather than the structures, processes, agencies and relations that underpin them. While this can be seen as an advancement from the traditional distortionist-institutionalist dichotomy, the tendency of this consensus to explain the persistence of seemingly inefficient institutions within the micro-level choice theoretic framework and its appeal to policy agendas on good governance, social capital, trust and civil society, render it vulnerable to appropriation by the mainstream. The paper argues that the emerging consensus on LMIs is an inadequate framework to inform effective policy propositions, and highlights the scope and opportunity for a political economy alternative.     

A Sectoral Approach Balancing Global Efficiency and Equity

This paper explores the idea that a properly designed sectoral approach could be the answer to two sets of constraints that hinder international agreements on climate change, namely a genuine concern from developing countries for economic growth and competitiveness issues from industrialized countries. Our sectoral approach builds on three premises: (i) cap-and-trade systems are established in industrialized countries and intensity targets in developing countries, (ii) sectors subject to international trade abide by the rules of the countries in which they trade and (iii) a fraction of the revenues from permits in industrialized countries go towards carbon mitigation in developing countries. We design an economic model that features interactions in three carbon-intensive sectors (two of which are internationally traded) and two countries (an industrialized country and a developing country). Two scenarios are constructed: an Enhanced Sectoral Approach, which refers to our proposal, and a Global Cap, which implements a uniform CO₂ price. We compare the two scenarios in terms of total welfare and equity. It is shown that, for a minor global welfare loss, the Enhanced Sectoral Approach ranks high in terms of equity for emerging countries. This approach also eliminates competitiveness and leakage issues.     

Policy mix to foster innovation in the Dominican Republic: attempts from an empirical perspective

ABSTRACT

This paper aims to understand firms’ preferences for incentives to foster innovation in Dominican firms. A key research question arises: What are the most preferred science, technology, and innovation (STI) policy options to support innovation in Dominican firms? This research relies on the concept of policy mix and the conjoint analysis to support the empirical approach. Over 300 firms were surveyed across the country, and we discovered that Dominican firms prefer more complex STI policy options, including at the same time research grants, guarantee funds, and tax incentives to support several kinds of innovative activities. But also, firms need to understand the potential of available options such as tax credit and other monetary instruments, including guarantee funds. It is concluded that in the medium and long term, the STI policy mix approach could support as part of the Dominican policy agenda, an economic transition toward a more resilient and competitive economy.     

The 2014–15 Financial Crisis in Russia and the Foundations of Weak Monetary Power Autonomy in the International Political Economy

ABSTRACT

This article contributes to international political economy debates about the monetary power autonomy (MPA) of emerging market and developing countries (EMDs). The 2014–15 Russian financial crisis is used as a case study to explore why an accumulation of large international reserves does not provide protection against currency crises and macroeconomic adjustments in EMDs. The analysis centres on the interplay between two dimensions of MPA: the Power to Delay and the Power to Deflect adjustment costs. Two structural factors condition Russia’s low MPA. First, the country’s subordinated integration in global financial markets increases its financial vulnerability. The composition of external assets and liabilities, combined with cross-border capital flows, restrict the use of international reserves to delay currency crises. Second, the choice of a particular macroeconomic policy regime embraced the financialisation of the – mainly state-owned – Russian banking sector, thus making it difficult to transform liquidity inflows into credits for enterprises. Russia’s main comparative advantage, hydrocarbon export revenues, is not exploited. The type of economy created due to the post-Communist transition means that provided ‘excessive’ liquidity remains in the financial system and is channelled into currency arbitrage. This factor increases exchange rate vulnerability and undermines Russia’s MPA.     

Tailoring CTA for emerging technologies

Technology assessment (TA) has developed into a method that puts a strong emphasis on facilitating interfaces between supply of science and technology and the demand for useful applications. Recently, we also see that TA becomes an integral part of science and technology programs, for instance in nanotechnology. The basic aim of the latter is to articulate the needs, wishes, and constraints, for example from professional users, already in the emerging stage of technological development. TA methods come in many different forms, although they are often different versions of a limited set of ‘basic approaches’ adapted to specific conditions with the overall aim to improve societal embedding. The thrust of this paper lies in the development and results of a variant of constructive TA (CTA), addressing technological development in an early phase in order to bypass the Collingridge dilemma by developing and testing scenarios including options for the further development of emerging technologies.How to support a broad selection of relevant actors effectively with CTA in such a way that they are enabled to play their role in innovation processes of emerging technologies? This is the main research question taken up in this paper. To take on this challenge we develop, apply, and evaluate an intervention we named the 3-step constructive technology assessment (CTA) approach. We will apply the approach to a nanotechnology related topic, Lab-on-a-chip technology. By assessing the effects and evaluating the proposed approach, we also want to contribute to the development of new methodological insights relevant for the TA community.     

Global financial cycle and Brazil’s financial integration

ABSTRACT

Recent studies have discussed the influence of the global financial cycle on capital flows to emerging and developing countries. This paper evaluates the relationship between the greater degree of financial integration, and macroeconomic performance over the last two decades in Brazil. The literature has highlighted the Brazilian experience as being paradigmatic among emerging countries regarding the relationship between financial integration and regulation of capital flows to deal with boom and bust cycles. Methodologically, we employ a vector autoregressive model with error correction that allows us to evaluate the cointegration between the variables. Our main hypothesis is that a greater degree of financial integration is associated with negative developments in variables such as gross domestic product, country risk, interest rates, and exchange rate volatility. In addition, this study presents a further contribution by observing the existence of the interaction between the consequences of financial integration and the global financial cycle. More specifically, we found that: (i) an increase in the degree of financial integration generates deeper effects in downward periods of the global financial cycle; and (ii) a decline in that cycle generates greater impacts when a higher degree of financial integration is present.     

China–US trade War: an Indonesian perspective

ABSTRACT

This paper takes a holistic approach to the effect of US-China trade war on Indonesia. The paper starts by laying out the context of the rise of protectionism and nationalism, comparing developed and developing country context, and its various causes such as unequal distribution of benefits and responses to the rise of China. The new US approach focusing on goods trade deficit, targeting mainly China but also other countries, including Indonesia and it should be seen as a tool to address the real concerns of the US regarding unfair trade, such as technology transfer, industrial subsidies and trade and investment distortions. It also reflects the US view of the inadequacy of the WTO. In terms of direct impact, the US-China trade war is creating uncertainities to global growth and in particular any decline in China’s growth is likely to hit Indonesia and other ASEAN countries given that China has become their number one trading partner. As for benefit from trade diversion and investment relocation to avoid the trade war, given the structure of its exports and lack of integration in the Global Value Chains, Indonesia is unlikely to benefit compared to several other Southeast Asian countries, such as Vietnam. However, any net benefit from this, will far outweigh the cost of the uncertainty in the rules based multilateral trading system (MTS) and the retreat of the US leadership to safeguard the MTS. The paper looks at how the current US unilateralism is framed in a carrot and stick approach, which does not benefit developing countries like Indonesia. To fill the leadership vacuum to maintain an open rules based order, other countries need to take the leadership position. This can be done by pursuing their own unilateral agenda of structural reforms, increasing regional economic integration and take collective leadership to conduct necessary reforms of the WTO especially on issues that are at the heart of the US-China trade war such as industrial subsidies, strengthening IPR, investment issues related to technology transfer, and competition policy and the level playing field.     

Evaluating the competitiveness of enterprise’s technology based on LDA topic model

ABSTRACT

With the advent of the knowledge economy, technology has become the foundation of advancement for many enterprises. To maintain a lasting competitive edge, enterprises must accurately determine the competitiveness of particular technologies. However, emerging innovations are becoming more and more complex, and interdisciplinary trends complicate matters even further. In the competitiveness evaluation based on patent, traditional patent classifications are both loose and time-sensitive. In this paper, we constructed the evaluation model of enterprise’s technology competitiveness based on the technological topics generated by a latent Dirichlet allocation (LDA) topic model. LDA topic model is able to classify technologies into narrower categories and can, therefore, provide rich information on the competitive landscape of a field. Two indexes are used to determine the technological competitiveness of an enterprise in the model – a specialisation index and a diversification index. At the same time, we explore the distribution of enterprises with different technological topics through the relative share, the technology’s appeal, and the competitive advantage that technology might give an enterprise. The empirical study on intelligent connected vehicles validates the model, and the results provide theoretical support for developing R&D strategies and/or making investment decisions.     

Forecaster Rationality and Expectation Formation in Foreign Exchange Markets: Do Emerging Countries Differ from Industrialized Economies?

ABSTRACT

This paper uses the Consensus Economic Forecast poll to investigate how forecasters in the foreign exchange market form expectations and whether the expectation formation process differs between industrialized and emerging countries. In order to explain the expectation formation of forecasters in countries and country groups, we analyze around 50,000 forecasts for 22 OECD member currencies. We find that differences between the way forecasters in industrialized countries and emerging countries form exchange rate expectations. However, we show that one important difference is due to a difference in forecasting behavior of emerging countries. Controlling for this feature lets the forecasting behavior in emerging countries resemble more the ones found for industrialized countries, but not for all forecast horizons.     

Five reasons for the use of network analysis in the history of economics

ABSTRACT

Network analysis is increasingly appreciated as a methodology in the social sciences. In recent years, it is also receiving attention among historians of science. History of economics is no exception in that researchers have begun to use network analysis to study a variety of topics, including collaborations and interactions in scientific communities, the spread of economic theories within and across fields, or the formation of new specialties in the discipline of economics. Against this backdrop, a debate is emerging about how network analysis can help address questions that are pertinent to the history of economics. With this paper, we want to push this debate one step forward by offering and discussing five reasons why network analysis should have a future in the history of economics.     

Manias,Panics and Crashes in Emerging Markets: An Empirical Investigation of the Post-2008 Crisis Period

ABSTRACT

Because of their economic importance, international bond markets are thought to be the likely location for the operation of financial market pressures on emerging market (EM) government policy. An important but unresolved debate that runs through the literature is the relative importance of domestic factors specific to the country receiving the capital flows (pull factors), versus push factors exogenous to the receiving country, in driving portfolio flows to EMs. Through extensive interviews with financial market participants, and analysis of the financial press between January 2008 and 2013, this paper argues that not only were market participants fully aware of the importance of push factors over the cycle, but that their perceptions of the domestic fundamentals themselves were influenced by these push factors. The paper provides evidence on the micro-foundations of investment decision making that make investors susceptible to influence by the push factors, and adds to a growing body of evidence that financial market borrowing costs are even less in the control of emerging market governments than previously assumed, because even when investors pay attention to domestic fundamentals, their assessments can be divorced from reality. This means that government efforts to attract foreign capital through implementing investors' preferred policies may be ultimately futile.     

Intellectual Property Rights and the Quality of Transferred Technology in Developing Countries

This paper addresses the effects of a stronger patent system in developing countries on the quality of transferred technology and welfare. We show that a stronger patent system can reduce the quality of licensed technology. The presence of technology licensing may encourage the developing country to adopt a stronger patent system compared with the situation where licensing is not an option.     

Bank loan versus financial lease: how do traditional and innovative approaches within the banking sector influence economic growth? A comparative analysis between the US and China

ABSTRACT

The argument over the effects of financial structures on economic growth remains unsettled. This study, therefore, compares the dynamic correlation and lead–lag relationship between the different financial approaches within the banking sector (that is, traditional bank loans versus innovative financial leasing) and economic growth. We employ a continuous wavelet analysis using time-series data from 1982–2017 from the US (the world’s largest developed country) and China (the world’s largest developing country). The empirical results show that (1) episodes of significant correlation usually emerge during periods of reform, crisis or policy implementation; and (2) in China, traditional banking promotes economic growth in the long term, while the real economy only imputes the evolution of banks during critical economic reforms in the short term. Meanwhile, financial leasing could only promote the development of the real economy under suitable regulation; and (3) in the US, before the crises, the irrational growth of the real economy could increase bank assets, while during the crises, the traditional banking approach harms economic growth, and after the crises, financial leases play an important role in recovery. Therefore, we suggest that policymakers should establish adequate policies and regulations to solve the situation.     

A functional approach for studying technological progress: Extension to energy technology

This paper extends a broad functional category approach for the study of technological capability progress recently developed and applied to information technology to a second key case—that of energy based technologies. The approach is applied to the same three functional operations—storage, transportation and transformation—that were used for information technology by first building a 100 plus year database for each of the three energy-based functional categories. In agreement with the results for information technology in the first paper, the energy technology results indicate that the functional approach offers a stable methodology for assessing longer time technological progress trends. Moreover, similar to what was found with information technology in the first study, the functional capability for energy technology shows continual—if not continuous—improvement that is best quantitatively described as exponential with respect to time. The absence of capability discontinuities—even with large technology displacement—and the lack of clear saturation effects are found with energy as it was with information. However, some key differences between energy and information technology are seen and these include:

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Lower rates of progress for energy technology over the entire period: 19-37% annually for Information Technology and 3-13% for Energy Technology.

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Substantial variability of progress rates is found within given functional categories for energy compared to relatively small variation within any one category for information technology. The strongest variation is found among capability progress among different energy types.

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More challenging data recovery and metric definition for energy as compared to information technology.

These findings are interpreted in terms of fundamental differences between energy and information including the losses and efficiency constraints on energy. We apply Whitney's insight that these fundamental differences lead to naturally modular information technology artifacts. The higher progress rates of information-based as opposed to energy-based technologies follows since decomposable systems can progress more rapidly due to the greater ease of independent as opposed to simultaneous development. In addition, the broad implications of our findings to studies of the relationships between technical and social change are briefly discussed.     

金融转型、技术创新与中国经济 发展方式的转变

本文建立世代交叠模型,分析金融转型对技术创新和经济发展方式转变的影响。分析表明,在经济发展的早期阶段,选择以投资扩张和技术转移为基础的发展战略是后发国家促进技术进步的最优选择;当距离世界技术前沿越来越近时,技术进步的主要方式将会转向技术创新。在转变过程中,后发国家的金融发展水平具有门槛效应。后发国家在前一阶段赖以进行投资扩张的金融体制,加上追赶型发展战略下地方政府的增长最大化冲动,可能会延迟后发国家向以技术创新为基础的发展方式转变。     

The economic impact of implementing a multiple inflammatory biomarker-based approach to identify,treat, and reduce cardiovascular risk

Abstract

Objectives:

To develop an economic model to estimate the change in the number of events and costs of non-fatal myocardial infarction (MI) and non-fatal ischemic stroke (IS) as a result of implementing routine risk-stratification with a multiple inflammatory biomarker approach.     

Economic impact of industry-sponsored clinical trials of pharmaceutical products in Austria

Abstract

Aims: Modern pharmaceutical product development is a long and complex process associated with significant investments by pharmaceutical companies. The innovative pharmaceutical industry accounts for the vast majority of expenditures in clinical trials of potential new pharmaceuticals and therefore generates economic activity within a country. The aim was to assess the far-reaching economic impact of industry-sponsored clinical-trials (ISCTs) of pharmaceutical products for the healthcare system and the national economy.

Materials and methods: The study approach was based on three analytical steps. First, a survey among 15 pharmaceutical companies in Austria was conducted to evaluate the annual number of ISCTs subdivided according to trial phase, therapeutic areas and associated employees. Second, the monetary value of treatments performed in ISCTs was calculated based on a sample of clinical-trial protocols. Finally, the macroeconomic impact, measured in terms of value-added and jobs created by the conducted ISCTs, was calculated using Input–Output analysis by applying an extended Leontief-model.

Results: The study demonstrated that €116.22 million spent in ISCTs generated a total value added of €144 million, €74 million direct, in 2018. Each year a medical treatment value of €100 million was financed through 463 ISCTs, with an average value of medical treatment of €37,068 per recruited patient. This represents a significant 0.3% of annual current health-expenditures. In summary, each Euro invested by the pharmaceutical industry in ISCTs generates €1.95 for the Austrian economy. ISCTs also created and secured employment in the extent of 2,021 full-time-equivalents, thus resulting in an employment multiplier of 1.66.

Conclusions: In conclusion, conducting clinical-trials by pharmaceutical industry—beside its importance in its own domain—results in tangible benefits and a positive macroeconomic impact that contribute to the sustainability of the Austrian healthcare system by complementing its limited resources. Furthermore, it is a non-negligible factor in locational and industrial policy.     

Financial and Capital Account Liberalization,Financial Development and Economic Development: A Review of Some Recent Contributions

Abstract

This article presents a review of some recent contributions on the relation between global finance and economic development in emerging economies. It first, stresses the growing consensus among economists on the financial instability that financial and capital account liberalization can possibly cause in emerging economies. It then outlines and compares two alternative strategies to tame such instability. The comparison is between the “good-institutions need-to-come-first” approach put forward by some mainstream economists, and the request for a deeper reform of the existing monetary system advocated by heterodox economists.     

Cost-effectiveness of everolimus plus reduced tacrolimus in de novo liver-recipients in the Italian setting

Introduction: Long-term exposure to calcineurin inhibitor-based immunosuppressant (IS) therapy in liver transplant (LT) recipients is associated with renal complications. In the randomized trial H2304, everolimus?+?reduced-dose tacrolimus (EVR?+?rTAC) demonstrated equivalent efficacy and superior renal function compared to standard-dose tacrolimus.

Methods: To evaluate the cost-effectiveness of EVR?+?rTAC vs TAC, in de novo LT patients, a Markov model simulating both liver and kidney function was developed and estimated the long-term outcomes of IS following LT. The analysis used the Italian healthcare payer perspective.

Results: Patients treated with EVR?+?rTAC gained on average 1.92 years and 1.62 quality-adjusted life years (QALYs). The incremental cost-effectiveness ratios (ICER) were €35,851 and €42,567 for LY gained and QALY gained, respectively. For the hepatitis-c sub-population, the ICERs decreased to €22,519 and €30,658, respectively.

Conclusion: EVR?+?rTAC improves survival and quality-of-life and is a cost-effective alternative to calcineurin-inhibitor monotherapy for patients requiring LT.