Income,inequality, and the stability of democracy — Another look at the Lipset hypothesis

This paper studies the endogenous emergence of political regimes, in particular democracy, oligarchy and mass dictatorship, in societies in which productive resources are distributed unequally and institutions do not ensure political commitments. The political regime is shown to depend not only on income levels, but also, in particular, on resource inequality. The main results imply that under any economic environment a distribution of resources exists such that democracy is the political outcome. This distribution is independent of the particular income level if the income share generated by the poor is sufficiently large. On the other hand, there are distributions of resources for which democracy is infeasible in equilibrium regardless of the level of economic development. The model also delivers results on the stability of democracy. Variations in inequality across several dimensions due to unbalanced technological change, immigration or changes in the demographic structure affect the scope for democracy or may even lead to its breakdown. Among other historical examples, the results are consistent with the different political regimes that emerged in Germany after its unification in 1871.     

‘Networks of practice’ in the Italian motorsport industry

The purpose of this paper is to advance research on inter-organisational networks by proposing a practice-based view of network formation and development in technology intensive environments. The research followed an exploratory, qualitative research design based on interviews, observation and documentary evidence to examine the recursive practices that have been enacted by racing car manufacturers and suppliers in the Italian motorsport industry in their efforts to develop increasing levels of collaboration and participation in product development activities. The results show how motorsport actors acted strategically and reflexively in negotiating their roles and the level of involvement in joint activities moving towards increased interpenetration and promoting legitimisation. However, in contrast to other studies of strategic network management, the leading actors have not imposed themselves unilaterally in structuring the network and knowledge flows. Rather lead firms have acted to encourage collaboration, participation and promote a shared sense of identity amongst network members.     

Does WTO accession matter for the Chinese textile and clothing industry?

Based on field surveys conducted in Guangdong, Zhejiang andBeijing in 2000 and 2001, this paper argues that accession tothe World Trade Organisation (WTO) by China will create a newcompetitive arena for different categories of textile and clothingfirms located in that country, partly dependent on the sizeand ownership of the firm. From the perspectives of reducingimport tariffs, eliminating export quotas and the regulationson trade disputes, WTO accession does matter for the majorityof Chinese firms in this ‘win–lose’ game.From the perspective of compliance with international standards,this paper argues that accession to the WTO does not reallymatter for some Chinese firms, as they may not survive the intensecompetition prior to 2005, when the effects of the Agreementon Textiles and Clothing materialise.     

Another look at competition: a regime–switching aproach

Measuring the level of competition in an industry is an empirical task with a lengthy history. Many of the traditional measures offer a snapshot of the industry, where the distribution of market share is examined at a given point in time. The purpose of this inquiry is to utilize a regime-switching model which highlights the importance of intra-industry movement. The empirical results suggest that even in an environment where the distribution of market share is improving, an industry can still be persistently dominated by the same collection of leading firms.     

Do changes in the rules of the game affect FDI flows in Latin America? A look at the macroeconomic,institutional and regional integration determinants of FDI

This paper aims to identify the main determinants of FDI in Latin America during the period 1990–2010. Evidence points to positive influences on FDI inflows of trade openness, maintaining low short-term debt levels and presenting a balance of payment deficit, government stability and low expropriation risk. Countries such as Argentina, Bolivia, Ecuador and Venezuela, in which the investment framework has become relatively less stable over the last decade, are finding it more difficult to attract foreign investors. From a risk-management perspective, both public solutions (such as sovereign guarantees) and private institutions have important roles to play in reducing the uncertainty involved in foreign investment decisions. Another result is that the DR CAFTA agreement does not seem to have played a significant role in the recent increase in investment directed towards Central America.     

A bootstrap-corrected causality test: another look at the money–income relationship

Previous studies of the causal relationship between money supply and real output are based on asymptotic distributions. If the assumption of normality is not fulfilled and if ARCH effects are present, asymptotic distributions perform inaccurately. In this paper, we reinvestigate the potential causal relationship between money and output by applying an alternative methodology based on the leveraged bootstrapped simulation techniques using data from Denmark, Japan, Sweden, and the US. We find unidirectional causality from money to output for the sample countries except for Sweden for which causality is bi-directional. This finding of unidirectional causality between money and output supports monetary business-cycle models and reveals one important policy implication—that is, in looking for the sources of output fluctuations, money might be a major factor.

How do the determinants of firm survival change in the course of the industry life cycle? A fuzzy-set analysis

Industry life-cycle research on firm survival often tests the effects of innovativeness, entry timing, and experience from related industries. However, findings on how these effects change over different stages of the life cycle are scarce. To fill this gap, we perform a fuzzy-set qualitative comparative analysis on a data-set of 58 video game device producers in six product generations. We find that innovation provides a consistent survival advantage only in the mature stage of the life cycle. We also find that experience accumulated within the industry loses its value in the mature stage, and the advantage shifts to de alio entrants only after shake-out. These findings are discussed relating to technological uncertainty, the role of internal and external knowledge, and the construction of sufficient technological performance.     

A fresh look at fiscal multipliers: one size fits it all? Evidence from the Mediterranean area

Following the adoption of important fiscal stimuli to fight the recent crisis, a large literature estimated fiscal multipliers. Focusing on an area particularly appealing, given its diversity and the diversity of the response of countries that compose it to the current crisis, namely the Mediterranean area, we unveil major disparities regarding the significance, sign and size of fiscal multipliers depending mainly on the economic characteristics, the type of multiplier, the time span and the type of fiscal stimulus. Evidence of such important heterogeneities highlights the need for better cooperation among countries, particularly regarding the design of fiscal policy. Failing to do so might divert public resources to ineffective fiscal policies in some countries, or, on the contrary, deprive other countries of potentially high benefits of appropriate fiscal policies, including a reliable tool for exiting the current crisis.     

Cost structure,productivity and efficiency of the Italian public higher education industry 2001–2011

In this paper, I analyze the cost structure of the Italian higher education system for the decade between 2001 and 2011, by means of a stochastic translog cost function. I suggest that the judgment about the optimal configuration of the sector is strongly dependent upon the policy priorities set by decision makers. When assuming that the universities’ output is the number of students, scale economies are exhausted, and marginal costs are relatively low; when considering graduates as outputs instead, there is opportunity for increasing the scale of operations. Inefficiency affects production in a sensible manner, especially when assuming that the target output is the number of graduates. Moreover, efficiency contributes to explaining a relevant portion of the productivity increases in the period. No significant scope economies between teaching and research emerge, suggesting that a higher degree of universities’ specialization can be a direction for improving the sector’s efficiency and productivity.     

Not just financial support? Another role of public subsidy in university–industry research collaborations

Management of university–industry research collaboration (hereafter UIC) is the key to its success. In this respect, government can play an essential role in UIC. A public subsidy for research and development (hereafter R&D) is not only an important financial support for UIC but may also serve as a useful means of promoting trust among UIC members, resulting in higher innovation performance. However, few empirical studies have investigated the role a public R&D subsidy plays in promoting trust in UIC. To this end, by using original survey data, this study examines empirically whether a public R&D subsidy for UIC contributes to trust formation and, thus, to higher innovation performance based on trust. Our findings suggest that a public R&D subsidy promotes trust formation, which then increases the innovation performance of UIC participants, partially mediating the more direct effects of R&D subsidy on innovation performance.     

What determines productivity performance of telecommunications services industry? A cross-country analysis

This article investigates the key factors that determine the productivity performance of telecommunications services industry. A simple theoretical model is used to illustrate that the Total Factor Productivity (TFP) growth is attributable to the effects of scale economies, market competition and technical change. We then examine empirically the effect of various factors on the TFP growth in the industry using panel data in 12 Organization for Economic Co-operation and Development (OECD) countries for the period 1983 through 2003. The empirical results are consistent with the theoretical prediction. A new finding in this article is that higher machinery and equipment (M&E) capital intensity and human capital contribute to higher TFP growth in the telecommunications services industry. The decomposition analysis also suggests that technical change induced by changes in M&E capital intensity and human capital are important sources of productivity performance in the industry across the OECD countries, contributing to about 20–50% and 2–7% of TFP growth, respectively. These findings highlight the importance of improving the conditions for M&E capital investment and the quality of human capital, which in turn could facilitate the adoption of new technologies and enhance the productivity in the industry.     

Does industry self-regulation reduce pollution? Responsible Care in the chemical industry

Self-regulation programs, in which industry associations set membership codes beyond government regulations, are prevalent despite scarce evidence on their effectiveness. We examine Responsible Care (RC) in the US chemical manufacturing sub-sector, whose membership codes include pollution prevention, using our author-constructed panel database of 3,278 plants owned by 1,759 firms between 1988 and 2001. We apply two sets of instrumental variables to address a plant’s parent firm’s self-selection into the program, using: (i) the characteristics of other plants belonging to the same firm in our multi-plant sample; and (ii) firm participation in the industry association before the establishment of RC and industry-level RC participation in our full sample. We find that on average, plants owned by RC participating firms raise their toxicity-weighted pollution by 15.9% relative to statistically-equivalent plants owned by non-RC participating firms. This estimated increase is large relative to the yearly 4% reduction in pollution among all plants in our sample between 1988 and 2001. Moreover, RC raises plant-level pollution intensity by 15.1%. These results caution against reliance on self-regulation programs modeled on the pre-2002 RC program that did not require third party certification and in those sectors that lack independent third party certification.     

Is there also a North–South Divide in the Diffusion of Crime? A Cluster Analysis of Italian Provinces

The presence of crime is often considered as one of the most important social variables to be negatively associated with economic development. As is well known, Italy exhibits an economic divide between its central‐northern and southern regions. This paper tries to ascertain whether there is also a divide in the diffusion of crime. To this purpose, Italian provinces are classified into groups by using a new methodology that combines cluster analysis with time series cross‐section data. The statistical searches for groups are carried out by using an unbalanced time series cross‐section data‐set made up of yearly observations. The results of the analysis show that crime is not inextricably tied to certain geographical locations, and not others, as is usually believed.     

Another Nail in the Coffin? Or Can the Trade Based Explanation of Changing Skill Structures Be Resurrected?

The skill structure of wages and employment has altered markedly in recent years. In some countries (most notably the UK and the US) wage inequality has risen sharply and in most countries relative demand has shifted unfavourably against the less skilled. In this paper we reassess the evidence that rising international competition from developing countries is the crucial factor underpinning these changes. Our results, based on newly constructed internationally comparable industry data, find little support for the predictions of the basic Heckscher-Ohlin (H-O) trade model.
JEL classification: J 31; F 14     

Does method selection matter? A new look at FDI and human capital in Chinese high-tech industries

Using the data that comes from China Statistical Yearbook on High Technology Industry, this paper examines the human capital accumulation, the R&D expenditure and the FDI externality effects on the productivity improvement of Chinese high-tech industries. Our empirical results suggest that the effects of FDI and human capital accumulation on technological progress depend in part on the adopted approaches. We believe that the dynamic model dominates the static model estimates. This paper finds little evidence in support of technological spillovers from FDI and indicate that the technological progresses are mainly rooting in human capital accumulation other than technology spillover induced by FDI in Chinese high-tech industry.     

A vote at the opera? The political economy of public theaters and orchestras in the German states

Policymakers generally have powerful incentives to attract votes by strategically manipulating public policies, for instance by increasing public spending during election periods or by implementing ideologically valued policies for their electoral base. At first sight, public theaters and orchestras appear an unlikely domain for such tactics. Highbrow culture is elitist and provides few jobs to artists as voters (patronage). However, we argue that policymakers indirectly target a larger highbrow culture-consuming voting public, as this public is more likely to go voting, to actively engage in politics, and to influence other voters' political behavior through political and sociological multiplier effects. We find evidence of such manipulation tactics in Germany, 1993–2010. Artist numbers increase during state-level, and even more during municipal-level, election years (electioneering). More tentatively, leftwing party power increases cultural subsidies and jobs in Eastern states.     

Policy tolerance of economic crime? An empirical analysis of the effect of counterfeiting on Italian trade

Some governments seem ambivalent towards economic crime because, on the one hand, there are adverse effects on competition and legal businesses; on the other hand, there are benefits through (shadow) employment and income in less-developed areas, as well as benefits through relations of political clientage. We focus on counterfeiting and its economic effects on trade in Italy during the economic crisis. Using a newly built regional dataset and a dynamic panel model, we find evidence of the dual impact of counterfeiting. The production (and exchange) of fake goods depresses the legal market that relies on intellectual property rights but supports shadow-economic activities for the benefit of illegal workers, criminal organisations, and political clientele. We show that the negative effects outweigh the positive effects.