NEW LABOUR, PUBLIC–PRIVATE PARTNERSHIPS AND RAIL TRANSPORT POLICY

The New Labour government has favoured the deployment of Public–Private Partnerships (PPPs) to provide investment in transport infrastructure. The results of this policy on the railways have, however, been disappointing in terms of cost and efficiency. Public transport PPPs require complex contracts underpinned by regulatory mechanisms in order to maintain performance and safety standards. Moreover, risk transfer is difficult to achieve, as essential infrastructure cannot be left to the ultimate market discipline of bankruptcy.     

GOVERNMENT SIZE AND GROWTH: A SURVEY AND INTERPRETATION OF THE EVIDENCE

Abstract The literature on the relationship between the size of government and economic growth is full of seemingly contradictory findings. This conflict is largely explained by variations in definitions and the countries studied. An alternative approach – of limiting the focus to studies of the relationship in rich countries, measuring government size as total taxes or total expenditure relative to GDP and relying on panel data estimations with variation over time – reveals a more consistent picture. The most recent studies find a significant negative correlation: an increase in government size by 10 percentage points is associated with a 0.5% to 1% lower annual growth rate. We discuss efforts to make sense of this correlation, and note several pitfalls involved in giving it a causal interpretation. Against this background, we discuss two explanations of why several countries with high taxes seem able to enjoy above average growth. One hypothesis is that countries with higher social trust levels are able to develop larger government sectors without harming the economy. Another explanation is that countries with large governments compensate for high taxes and spending by implementing market‐friendly policies in other areas. Both explanations are supported by ongoing research.     

THE CHANGING ROLE OF LOCAL GOVERNMENT UNDER A DECENTRALIZED STATE: The case of the Philippines

This paper discusses the evolving role of local government in the Philippines under an environment of local autonomy and decentralized structures. With the passage of the Local Government Code by Congress in 1991 which devolved powers and authority to local governments, they were given wide latitude to make vital decisions in governing their local communities. Thus, they were enabled and expected to assume new and wider roles in local governance through innovation and changes in the local structures, though with limited resources. Within this changing context, this paper presents and discusses some issues and concerns which beset the implementation of their enabling role. It also presents two documented case studies which illustrate the shifting of roles of local governments from that of a traditional bureaucratic enabler to a market-oriented or community-oriented enabler.     

THE USE AND ABUSE OF MARKETS IN HOUSING POLICY

This paper argues that, despite its rhetoric in support of markets, government does not understand how markets work, but is rather trying to use certain aspects of markets to control social housing. The paper looks at three areas: first, the idea of private finance and how this is used by government as a form of public policy; second, the notion of risk and whether it actually occurs in social housing; and third, the contention that government is incapable of appreciating the manner in which markets operate because it only wishes to provide safe options and so cannot countenance real choice and competition.     

THE BIAS OF THE MULTIPLIER MATRIX WHEN SUPPLY AND USE TABLES ARE STOCHASTIC

The literature on stochastic input–output (I–O) analysis has paid considerable attention to the bias in the Leontief inverse. This paper extends previous studies by assuming supply and use tables (SUTs rather than I–O tables or input coefficients matrices) to be stochastic. This is a natural starting point because SUTs have become the basic data sources for I–O applications. In a Monte Carlo simulation experiment, a given SUT is randomized in two different ways and the effects are determined for eight different multiplier matrices. The analysis is carried out for Spain, Italy, the Netherlands, Germany and Finland, using their SUTs for 2006. The findings indicate that, in general, biases are statistically significant but negligibly small. This corroborates earlier findings obtained for stochastic I–O tables.     

SHARING THE BURDEN OF FINANCING: GOVERNMENT AND HOUSEHOLD PARTNERSHIPS FOR BASIC EDUCATION1

If the goal of achieving education for all is to be met consideration has to be given to how it is financed. States in which there is least primary education are often those with unstable governments and poor tax collection systems. In such circumstances, education for all is often best achieved by partnerships between governments, families and other bodies in both the provision and funding of education.     

GOVERNMENT SIZE AND GROWTH: A SURVEY AND INTERPRETATION OF THE EVIDENCE – A COMMENT

In contrast to the commonly held view, Bergh and Henrekson (2011) conclude that a consensus has almost been reached on the thesis that government size is negatively correlated with economic growth in developed countries. They underpin this by claiming that the only study in the survey to deviate from this consensus view, i.e. Colombier (2009), was rebutted by Bergh and Öhrn (2011). This comment shows that the claim by Bergh and Henrekson (2011) cannot be upheld because the analysis by Bergh and Öhrn (2011) is based on a flawed dataset. The re‐estimation of Colombier's (2009) regressions with time‐fixed effect does not reject his main findings. Moreover, it is demonstrated that recent empirical evidence on the growth impact of government size in rich countries is not as unanimous as the survey by Bergh and Henrekson (2011) suggests. Thus, the claim that a consensus view has been reached is premature.     

THE DEVELOPMENT AND USE OF INTERREGIONAL INPUT-OUTPUT MODELS FOR INDONESIA UNDER CONDITIONS OF LIMITED INFORMATION*

Spatial development planning in developing economies has created the need for analytical frameworks that are capable of providing assessment of alternative strategies. This paper reports on the methods used to construct a set of interregional input-output tables for a five-region division of Indonesia under conditions of limited information for 1980 and 1985. The tables were constructed as a prelude to the development of a comparable set of interregional social accounts and the eventual construction of an interregional computable general equilibrium model. The structure of the Indonesian economy is explored and described; the fine structure is revealed through an examination of the fields of influence of some of the analytically important coefficients. Finally, a brief examination of the use of the model in an export promotion strategy is reported. The dominant positions of Sumatera and Java are revealed as is the concomitant difficulties attendant upon development strategies that attempt to encourage growth in other regions.     

THE PRIVATE FINANCING OF NHS HOSPITALS: POLITICS, POLICY AND PRACTICE

This article outlines and critiques the main fiscal and economic rationales for the Private Finance Initiative and examines the impact of the policy on the long-term financial viability of NHS trusts. It concludes that the PFI funding of capital investment is highly problematic. Its high costs can have a negative impact on the finances of health systems.     

THE ERRONEOUS USE OF CHINA'S POPULATION AND PER CAPITA DATA: A STRUCTURED REVIEW AND CRITICAL TEST

Hundreds of studies in economics misinterpret China's subnational population and per capita data. The most widely used population counts are of hukou registrations from each province, prefecture, county, or city rather than of the people living in each place and generating local gross domestic product. Over 220 million people have left their place of registration, while almost none had when reforms began, creating time-varying errors in estimates of per capita income of subnational units. We survey empirical articles in blue ribbon journals, in development journals, and in regional and urban economics journals that use China's subnational data. Over 80% of articles use these data erroneously; most commonly the wrong population or employment counts are used to measure the size of subnational units, and per capita data are calculated with the wrong denominator for how variables are interpreted. We provide examples of errors from each group of journals, and a critical test of one highly cited study. Specifically, we show that if hukou registrations are erroneously used to measure the local population, following existing practice, conclusions about driving forces for urban area expansion are reversed. We give recommendations for more careful use of China's subnational population and per capita data.     

THE IMF: A BIRD'S EYE VIEW OF ITS ROLE AND OPERATIONS

Abstract The International Monetary Fund (IMF) is the world's premier international financial institution with 184 member countries and active programmes in a significant number of them at any one time. The Fund attracts a great deal of attention, much of it critical. But the discussion is often polemic in style. Strongly held, but frequently opposing, views are expressed. This survey attempts to examine, in an objective way, the theory and evidence relating to the Fund's operations. Many aspects of the empirical research are relatively recent and a universal consensus is yet to emerge; as a consequence there is scope for disagreement to persist. However, the research is also gradually clarifying many important issues. The format for the survey is to examine the life cycle of IMF arrangements. What makes a country turn to the Fund for assistance? Should the IMF be lending? What influences the outcome of negotiations and the design of programmes? Are IMF programmes effective? And why do some countries make prolonged use of IMF resources? For completeness there is also some discussion of the history of the IMF, the extent to which Fund policies have been influenced by advances in economic theory and the Fund's systemic role. Important organisational and governance issues are also covered briefly. Although primarily adopting an economist's perspective, the survey reflects the growing recognition that in order to understand the IMF's operations, economics has to be combined with politics. Examining the IMF is an exercise in applied political economy.     

COPENHAGEN,CANCÚN AND THE LIMITS OF GLOBAL WELFARE ECONOMICS

The rise of a global welfare economics directed at the environmental challenges facing our planet represents a new policy phenomenon. This paper examines the most ambitious attempt so far to put such economics into practice via the Kyoto Protocol and more specifically the Clean Development Mechanism of the Protocol. The Copenhagen and Cancún climate change conferences have put an end to hopes of the Protocol serving as an effective tool in the mitigation of global warming. This failure of the new global welfare economics is the result of flawed principles, not just defective implementation.     

THE ESTIMATION OF HUMAN CAPITAL BY ADMINISTRATIVE ARCHIVES IN A STATIC AND LONGITUDINAL PERSPECTIVE: THE CASE OF MILAN

Abstract This paper focuses on the estimation of the latent variable human capital (HC) at disaggregated level (worker) by available routinely institutional data flows. In particular we utilize the Lombardy region administrative archive ‘Employment Centers of the Province of Milan’, collecting information about careers of workers in the private sector of the Milan area, and administrative flows collecting mandatory workers' individual income tax returns, filed with the National Internal Revenue Service. First, we propose and empirically estimate HC scores in a static (referred to 2004) framework, by means of a realistic measurement model within causal relationships among endogenous and exogenous (investment) HC indicators. Furthermore, the model also specifies a set of (concomitant) indicators that, not belonging to HC investment indicators, have causal impact on endogenous variables and on HC scores, too. Second, we propose a longitudinal analysis (period 2000–2004) aimed to investigate how workers' earned income growth rates vary over workers' educational levels and other personal characteristics. The empirical results of both analyses confirm the characteristics of the Italian job market, denoted by marked inequalities, and knowledge regarding the process of school to work transition, characterized by a weak incidence of education on longitudinal trajectories of earned income.     

DEFINING, MEASURING AND DEFENDING LIBERTY: A REVIEW OF THE QUALITY OF FREEDOM BY MATTHEW H. KRAMER AND NORMS OF LIBERTY: A PERFECTIONIST BASIS FOR NON-PERFECTIONIST POLITICS BY DOUGLAS B. RASMUSSEN AND DOUGLAS J. DEN UYL

The Quality of Freedom offers a precise, meticulously argued, non-moralised understanding of socio-political liberty as physical unforeclosedness. Norms of Liberty: A Perfectionist Basis for Non-Perfectionist Politics presents an innovative 'metanormative defence' of negative liberty rights that does not depend on atomism, a social contract or self-ownership.     

SLUM DWELLERS' ACCESS TO BASIC AMENITIES: THE ROLE OF POLITICAL CONTACT, ITS DETERMINANTS AND ADVERSE EFFECTS

This paper analyzes slum dwellers' access to basic amenities and the ways in which they gain access. Associations between Indian states' share of slums, proportions of notified slums, and prevailing conditions in terms of basic amenities present political contact as a key factor. Based on the political economy framework, slum survey data (2004–2005) show that political contact helps access facilities such as land tenure and basic amenities. The logit model identifies determinants of political contact by examining social networks and individual endowments. While political accessibility is crucial as a survival strategy, slum dwellers' vulnerability hardly diminishes over time; on the contrary, the political use of slums perpetuates it. However, strong social networks can prevent low income households from declining to a low equilibrium. The role of political contact is less applicable in other Asian countries. Instead, rational policies have greater relevance in improving the conditions of these low income households.     

THE ROOTS OF MODERN ‘SOCIAL COST OF GAMBLING’ ESTIMATES

We discuss some critical issues in social cost of gambling methodologies which suggest that many social cost estimates are arbitrary. Rather than using monetary estimates of costs and benefits, we argue policy‐makers should focus on fundamental issues: consumer sovereignty, property rights and the role of government in free societies.     

ECONOMIC ANALYSIS OF KNOWLEDGE: THE HISTORY OF THOUGHT AND THE CENTRAL THEMES

Following the development of knowledge economies, there has been a rapid expansion of economic analysis of knowledge, both in the context of technological knowledge in particular and decision theory in general. This paper surveys this literature by identifying the main themes and contributions, and outlines the future prospects of the discipline. The wide scope of knowledge‐related questions in terms of applicability and alternative approaches has led to the fragmentation of research. Nonetheless, one can identify an enduring quest for analyzing various aspects of the generation, dissemination and use of knowledge in the economy.