Informality,public employment and employment protection in developing countries

This paper proposes an equilibrium matching model for developing countries’ labor markets where the interaction between public, formal private and informal private sectors are taken into account. Theoretical analysis shows that gains from reforms aiming at liberalizing formal labor markets can be annulled by shifts in the public sector employment and wage policies. Since the public sector accounts for a substantial share of employment in developing countries, this approach is crucial to understand the main labor market outcomes of such economies. Wages offered by the public sector increase the outside option value of the workers during the bargaining processes in the formal and informal sectors. It becomes more profitable for workers to search on-the-job, in order to move to these more attractive and more stable types of jobs. The public sector therefore acts as an additional tax for the formal private firms. Using data on workers’ flows from Egypt, we show empirically and theoretically that the liberalization of labor markets plays against informal employment by increasing the profitability, and hence job creations, of formal jobs. The latter effect is however dampened or even sometimes nullified by the increase of the offered wages in the public sector observed at the same time.     

Public firms' merger,employment, and welfare in developing countries: A general equilibrium analysis

This paper examines the effect of a merger of state‐owned firms on wage gap, employment, and social welfare in a general equilibrium setting. For a developing economy with state‐owned firms in the urban sector, a merger via a reduction in the number of the urban state‐owned firms can reduce the cost of capital. It then lowers the skilled wage rate through the factor‐substitution effect, while it raises the unskilled wage by the inflow of capital to the rural sector and hence lowers urban unemployment. In addition, the reduction in the number of the urban state‐owned firms can yield a scale effect to the firms. The beneficial effects on higher urban output and less urban unemployment can improve social welfare of the developing economy.     

Income distribution in East European and Western countries

This study compares income distribution in East and West, taking into account the effects of different tax systems and the special benefits of the elite group in Eastern Europe.     

Trade, technology transfer and national efficiency in developing countries

This paper simultaneously explores the determinants of the developing countries’ production frontier and these countries’ ‘efficiency’ in using the available resources and technology. In doing so it allows for the transfer of (industrial country) technology in determining the frontier and for international trade's influence on absorptive capacity and national efficiency levels. Stochastic frontier analysis is used to model the production frontier for 57 developing countries for the period 1970-1998, to measure cross-country and temporal differences in efficiency levels and to explain the differences in efficiency levels. The results indicate significant differences in efficiency levels across countries and regions and movement over time, and an important influence of trade and trade policy in raising output both through technology improvements embodied in imported capital goods and by inducing efficiency improvements.     

Testing for PPP in developing countries using confirmatory analysis and different base countries: an application to Asian countries

Previous studies on PPP have tested either the null hypothesis of non-stationary or the null of a stationary real exchange rate and used the US as the base country and focused on industrialized countries. It has been argued that testing either null is insufficient to confirm the presence of PPP. It has also been noticed that the results are sensitive to the choices of the base country; for instance, the US versus Germany. In contrast to previous studies, this paper uses different unit root tests, confirmatory analysis, and different base countries to test PPP for a sample of developing countries in Asia during the current float. Overall, the results do not seem to be sensitive to the choice of the base country, and joint rejections are not present but joint non-rejections are far more common. Using Perron's test, which allows for a one-time break in the series, the results indicate evidence of stationarity for Indonesia, Korea, Malaysia and Thailand when the US is the base country. When Japan is the base country, evidence of stationarity is detected only for Indonesia.     

Appropriate technology for developing countries: Some issues

Major problems in forecasting and identifying the appropriate technologies, especially in developing countries, have been presented. A set of criteria has been suggested for the objective evaluation of appropriate technologies. A conceptual analysis on appropriate technosystems with special reference to forecasting and planning has been carried out to show that it may be very difficult to attain self-organizing systems without huge inputs of energy and information.     

Intellectual property rights,technology transfer and exports in developing countries

We develop a model to analyze one mechanism under which stronger intellectual property rights (IPR) protection may improve the ability of firms in developing countries to break into export markets. A Northern firm with a superior process technology chooses either exports or technology transfer through licensing as its mode of supplying the Southern market, based on local IPR policy. Given this decision, the North and South firms engage in Cournot competition in both markets. We find that stronger IPR would enhance technology transfer through licensing and reduce the South firm's marginal production cost, thereby increasing its exports. Welfare in the South would rise (fall) if that country has high (low) absorptive capacity. Excessively strong IPR diminish competition and welfare, however. Adding foreign direct investment as an additional channel of technology transfer sustains these basic messages.     

Intellectual property rights, technology transfer and exports in developing countries

We develop a model to analyze one mechanism under which stronger intellectual property rights (IPR) protection may improve the ability of firms in developing countries to break into export markets. A Northern firm with a superior process technology chooses either exports or technology transfer through licensing as its mode of supplying the Southern market, based on local IPR policy. Given this decision, the North and South firms engage in Cournot competition in both markets. We find that stronger IPR would enhance technology transfer through licensing and reduce the South firm's marginal production cost, thereby increasing its exports. Welfare in the South would rise (fall) if that country has high (low) absorptive capacity. Excessively strong IPR diminish competition and welfare, however. Adding foreign direct investment as an additional channel of technology transfer sustains these basic messages.     

Integrating business and technology strategies in developing countries

In the present era of deregulation, privatization and increasing global market competition, most industrialists in developing countries have come to the realization that better technology is needed for the survival of both public and private sector enterprises. Therefore, they acknowledge that technological considerations must be properly incorporated into overall business strategies. However, in the absence of an established theory and due to lack of relevant data, they face enormous difficulties. This paper describes a simple framework for integrating business and technology strategies, particularly in the context of developing countries. Possible strategic mixes are identified by considering four commonly practiced business strategies, namely: price, value, niche and image leadership; and four evolving technology strategies, namely: technology leader, follower, exploiter and extender. Necessary considerations for technological capability development and technology strategy progression path are also discussed for different enterprise situations and development conditions.     

Exhaustible resources,technology choice and industrialization of developing countries

How should the world economy adapt to the increased demand for exhaustible resources from countries like China and India? To address that issue, this paper presents a dynamic model of the world economy with two technologies for production; a resource technology, which uses an exhaustible resource as an input and an alternative technology, which does not. I find that both the time path of resource extraction and the adoption of the alternative technology depend on the optimal allocation of capital across the technologies, and on the size of the capital stock in relation to the resource stock. In particular, if the capital stock is low, only the resource technology is used initially and the alternative technology is adopted with a delay. Next, I use the model to analyze the effects of industrialization of developing countries on the extraction of oil and technology choice for energy production. As a result of industrialization, the alternative technology for energy production is adopted earlier.     

International policy coordination and growth prospects of developing countries: An optimal control application

This paper estimates the gains from implementing cooperative policies among the North, the South, and OPEC. This is accomplished by applying optimal control to an econometric model of a three-region world economy. The results suggest that while a worldwide recovery is feasible, not all regions benefit equally from it. Motivated by these findings, the paper also examines how a shift in the regional balance of power in favor of the South improves their growth prospects.     

International technology diffusion and economic growth: Explaining the spillover benefits to developing countries

Technology spillovers offer great opportunities for economic growth to developing countries that do little, if any, R&D activity. This paper explores the extent to which these countries benefit from foreign technology, the diffusion mechanisms involved, and the factors that shape their absorption capabilities. Results based on a non-stationary panel of 55 developing countries indicate that the benefits are quite substantial: a ten-percent increase in foreign R&D stock is translated into more than a two-percent increase in aggregate productivity. Of the diffusion channels considered, imports appear to be more conducive to R&D spillover. In addition, developing countries that enjoy larger benefits tend to exhibit larger stock of human capital, more openness to trade and foreign activities, and stronger institutions. These North–South R&D spillovers, although larger than previously suggested, appear less strong than North–North spillovers, adding to the general literature on economic divergence between developed and developing countries.     

Small manufacturing establishments in developing countries: An empirical analysis

There is considerable literature on the promotion of small and medium establishments (SMEs) in developing countries. Rather little attention has been given to the long-term performance of these in the development process. This paper considers the small literature on the trends in the SMEs' contribution to manufacturing in the long run, and the more recent discussion of the effect of policy on these trends. Using considerably more data than previous studies, the paper concludes that (1) it appears that the importance of SMEs tends to decline in early stages of development (as others have suggested), but that this is reversed as countries reach middle-income status, and (2) several of the generalisations frequently made about the impact of policy variables on SMEs cannot be sustained at the country level.     

Science and technology policies for industrialization of developing countries

Science and technology have been increasingly looked upon by many countries, particularly the so-called developing countries, as the most important and powerful instruments for bringing about extensive economic growth. The development of a nation, however, neither starts nor ends with economic development alone. It should encompass much more than that if it is both to bear and to enjoy the fruits of economic development. This paper is not intended to dwell on the pros and cons of these conflicting views. Instead, we will discuss the policies and strategies of science and technology development in the industrialization of a developing country from a point of view of industrial growth as the prime source of impetus for national development.Some of the leading industrial sectors in a developing country are geared primarily to breaking the inertia of underdevelopment of many kinds. They introduce technology quite advanced relative to their absorptive capacity, but feeder industries supporting the leader sectors do not necessary require such advanced technology. We desire, therefore, to look at the issue from both the national and the local points of view so that what is thought to be the ideal—“production by the masses” not “mass production,” involving both leader and feeder industries—can be realized.One pressing problem in developing these lead-sector industries was whether or not they could be operated at full or at least near-full capacity. It was found that the allowance was extremely small because of the fact the cost of the capital for these industries, which mostly originated abroad, was very much higher than for the advanced countries. In addition, the adaptation of a lead-sector approach with greater economy of scale necessitated the introduction to industry of new, more, and higher level technologies of an order of magnitude never before experienced. It is an irreversible decision so far as science and technology development are concerned and was an issue of survival or extinction in an ever-stiffening international competition. For these reasons, the Korean government opted to begin with a formulation of intensive policies and strategies for the development of science and technology with many innovative supporting measures.The major elements of the policy guidelines for the 1970s were:

• 1.Provision of a secure foundation for scientific and technologic growth;
• 2.Strategic development of industrial technology, and
• 3.Creation of a favorable climate for science and technology.

This was followed by concrete planning to execute these policies. In this plan, Korea adopted what might be called a three-pronged approach, emphasizing capability build-up—particularly manpower development at various levels—accelerated introduction of foreign technologies, and stimulation of domestic R&D activities. To this end, the implementation plan was formulated with consideration for the institutional and legal factors, among others.For the institutional framework, the Korean approach was somewhat daring. It included the establishment of 1) the Ministry of Science and Technology (MOST) in 1967 as the central policy-making, planning, coordinating, and promotional body in the government; 2) the Korea Institute of Science and Technology, by a special law (KIST Assistant Act) in 1966, as an autonomous, multidisciplinary industrial-research institute chartered as a contract research organization; 3) the Korea Technology Development Corporation, as a financial intermediary to ensure a smooth flow of money for R&D purposes; 4) the Korea Advanced Institute of Science (KAIS) in 1971, in addition to the many existing universities and colleges, as a mission-oriented postgraduate school in selected applied sciences and engineering, to educate high-caliber scientists and engineers in number and in quality sufficient enough to meet the emerging needs of Korean industry; and 5) a huge number of vocational-training institutes along with technical high schools to meet the rapidly rising, almost explosive demand for skilled workers and technicians.The emergence of the Ministry of Science and Technology spearheaded the enactment of several very important laws for the development of science and technology. They include the Science and Technology Advancement Law, the Law for the Promotion of Industrial Technology Development, and the National Technical Qualification Law.     

Linkages between industry and services and their implications for urban employment generation in developing countries

The paper examines the nature and extent of linkages between industry and services, using an international input-output table for the Pacific Basin countries. Empirical evidence seems to suggest that the manufacturing sector contributes to urban employment creation in developing countries more through its interindustry and intersectoral linkages, as well as its income-induced demand for various types of services, than through its direct employment effects.     

创新全球化及其对发展中国家科技政策的挑战

创新全球化产生的背景主要有两个方面。 1.创新全球化是经济全球化的结果。自20世纪60年代末以来,经济全球化是从广度和深度这两个既相互独立又内在相关的方面展开的。     

An assessment of telecommunications reform in developing countries

This paper analyzes the impact of policy reform in basic telecommunications on sectoral performance using a new panel data set for 86 developing countries across Africa, Asia, the Middle East, Latin America and the Caribbean over the period 1985 to 1999. We address three questions. First, what impact do specific policy changes—relating to ownership and competition—have on sectoral performance? Second, how is the impact of change in any one policy affected by the implementation of the other, and by the overall regulatory framework? Third, does the sequence in which reforms are implemented affect performance? We find that both privatization and competition lead to significant improvements in performance. But a comprehensive reform program, involving both policies and the support of an independent regulator, produced the largest gains: an 8 percent higher level of mainlines and a 21 percent higher level of labor productivity compared to years of partial and no reform. Interestingly, the sequence of reform matters: mainline penetration is lower if competition is introduced after privatization, rather than at the same time.     

Science policy mechanism and technology development strategy in the developing countries

The strengthening of science and technology is essential for economic growth in the developing countries. Effective science policy mechanisms do not suffice. An adequate infrastructure must be established—one that is conducive to this task. The paper focuses on the roles of government and industry in creating a favorable environment.     

Poverty, political freedom, and the roots of terrorism in developing countries: An empirical assessment

We find that political freedom has a significant and non-linear effect on domestic terrorism, but has no statistically significant effect on transnational terrorism. Geography and fractionalization limit a country’s ability to curb terrorism, while strong legal institutions deter terrorism.     

Tax decentralization,labour productivity,and employment in OECD countries

Tax decentralization should improve the efficiency of local governments and ultimately boost output growth. However, the empirical evidence is mixed. Decomposing output growth into labour productivity and employment growth, we show that the ultimate effect of fiscal decentralization on growth depends on which factor prevails, thus rendering the direct estimation of tax decentralization on growth ambiguous. Using an instrumental variable approach, with instruments based on institutional similarities and geographic distance, the empirical analysis on a sample of 20 OECD countries shows that the positive and significant effect of tax decentralization on the employment growth rate is offset by the reduction of labour productivity growth, resulting in the absence of any statistically significant effect on output growth.