Firm-level productivity in Latin America and the Caribbean

While the accumulation of factors of production, both physical and human capital, has helped Latin America and the Caribbean (LAC) to narrow the income gap with developed economies, aggregate productivity is still relatively low. Although there are numerous determinants of aggregate productivity, it is largely based on the underlying productivity of all firms in the economy. Using firm-level data from several waves of the World Bank Enterprise Survey and Chile's National Manufacturing Survey, we explore the ‘what’ question on productivity dispersion in LAC. We document three stylized facts: (i) there are significant differences in firm productivity within industries – the firm at the 90th percentile of the productivity distribution produces almost seven times as much output (using the same measured inputs) as the 10^th percentile firm; (ii) productivity differences persist over time – regressing a firm's current productivity on its one-year lagged productivity yields an autoregressive coefficient of around 0.9; and (iii) most of the growth in aggregate productivity comes from improvements in the productivity of existing firms.     

Knowledge,coordination and the firm: Historical perspectives

Abstract

This paper illustrates the problems and processes of developing economic knowledge by a selective historical treatment of ideas about the firm. Coase thought it necessary to explain firms as organizations, but not as distinctive productive units; neither did he explain why markets exist. Chamberlin's attempt to introduce product differentiation and selling costs is compared with Allyn Young's process theory and Marshall's treatment of the firm, and inter-firm relations, as means of organizing the growth of knowledge. The firm is a decision-making system in a context of Knightian uncertainty, and Simon's concept of quasi-decomposability applies to human brains and human organizations.     

Marx,Sraffa, and Surplus: Observations Prompted by Garegnani (2018)

ABSTRACT

In a posthumously published article, Pierangelo Garegnani (2018. ‘On the Labour Theory of Value in Marx and in the Marxist Tradition.’) depicts Marx’s project in Capital as that of ‘developing systematically the theory of Ricardo and [the] implications of social conflict’ implied by Ricardo’s ‘surplus approach to value and distribution’. This paper argues to the contrary that Marx’s theory of surplus value and exploitation differs from (neo-)Ricardian surplus theory in fundamental ways, and modifies Garegnani’s simple Sraffian model to illustrate the distinctive implications of Marx’s theory.     

Normative Power Europe and the Moral Economy of Africa–EU Ties: A Conceptual Reorientation of ‘Normative Power’

‘Normative power’ is an increasingly popularised concept in the study of EU external relations in fields including military policy, human rights, and international trade. Defined by Manners, it acknowledges the normative foundations of the European project, examines how Europe acts to (re)shape internationally accepted norms, and makes the claim that Europe ought to influence external partners' conception of ‘normal’ behaviour in pursuit of a just global order. This article, however, argues that a moral economy perspective is central to a critical reorientation of the concept of normative power towards appraisal of discrepancies between nominal EU norms and material EU policy outcomes. Examining Europe's ‘normative power’ in its relations with the African, Caribbean, and Pacific (ACP) countries, it demonstrates how a moral economy of ACP–EU ties has been instituted in negotiation with European ethical norms as to solidarity with ‘the poor’. Nevertheless, the moral economy of ACP–EU ties is seen not to be ‘moral’ in terms of outcomes for vulnerable citizens in ACP countries. Rather the embedding of moral norms concerning pro-poor ‘development’ has rationalised asymmetric economic ties. ‘Normative power’ is understood as the EU's utilisation of moral norms in the public legitimisation and self-rationalisation of geopolitical interest and commercial gain in its relations with external ‘partners’.     

Maintaining the integrity of the French terroir: a study of critical natural capital in its cultural context

This paper appraises the integrity of France's patrimoine naturel as carrier of collective cultural meanings and as biophysical life support infrastructure. First we situate philosophically the French patrimoine naturel concept with its connotations of cultural heritage or transmission, in relation to the ‘strong sustainability’ precept of maintaining key environmental functions as critical natural capital (CNC). The main results are then presented of a recent survey by the French Institut Français pour l'Environnement (IFEN) exploring perceptions of natural capital—and its criticalness—for the French society and economy. Building on the IFEN survey base, a qualitative analysis highlights France's natural capital as a life support infrastructure vulnerable to breakdown or contamination through pollution, accidents and the production of wastes. Ecosystem contamination is, moreover, closely associated with defilement of food—dioxin in chickens, mistrust of GMOs in agriculture and food, and the vache folle—mad cow disease. The ‘sink’ function of natural capital is thus in conflict with the culturally determined ‘site’ and ‘scenery’ functions. To conclude, we discuss (very briefly) some features of the French political culture that bear on prospects for a successful sustainable development strategy.     

Firm's hedging behavior without the expected utility hypothesis

In this note we analyze the behavior of a competitive firm under price uncertainty and in the presence of a futures market. We show that the ‘separation property’, i.e., the independence of the firm's production level of the stochastic price's distribution, holds even if the firm maximizes non-expected utility functional and is not risk averse. Secondly, we show that its behavior in the futures market is the same as in the classical environment, even if one asks for a weaker notion of risk averseness. Finally, we briefly analyze the state-dependent case.     

Harald B. Malmgren's Analysis of the Firm: lessons for modern theorists?

This paper analyses Harald B. Malmgren's neglected 1961 paper ‘Information, expectations, and the theory of the firm’, which provided the first extensive elaboration of Coase's 1937 analysis in ‘The nature of the firm’. Malmgren's primary sources of inspiration were Coase, Hayek, Richardson and Penrose. Combining these sources in a creative way allowed Malmgren to anticipate themes that have only recently been addressed in the theory of economic organization. However, there is still much to be learned from Malmgren's discussion, particularly the way in which he combined contractual and knowledge-based approaches to the firm. Moreover, Malmgren suggested that it is possible to construct an opportunism-independent approach to economic organization.     

A Return to ‘Civilisational Geopolitics’ in the Mediterranean? Changing Geopolitical Images of the European Union and Turkey in the Post-Cold War Era

The prevalence of the discourse of ideological geopolitics during the Cold War meant that both Turkey and the EU belonged to the West by virtue of their ideological orientation. In the absence of this prevalent geopolitical discourse, both the EU and Turkey have spent the 1990s trying to locate themselves geographically. Drawing on the literature on critical approaches to political geography and international relations, this article seeks to answer the question of whether the EU's post-Cold War security discourse on the Mediterranean in general and on relations with Turkey in particular point to a return to the earlier discourse of civilisational geopolitics. The article also presents a reading of Turkish policy makers’ attempts to resist EU's representation of Turkey in ‘non-Europe’ (as with the ‘Middle East’ or the ‘Mediterranean’) as boundary-producing practices which have served to underline the boundaries between the ‘West’ and the ‘non-West’.     

How should firms carry out technological diversification to improve their performance? An analysis of patenting of Korean firms

This research aims to analyze how a firm's technological diversification strategies influence its financial performances, in terms of ‘technological diversification’ in broad technology sectors and ‘technological concentration’ on its own core technology, especially in the case of Korean large firms. The data used in the analysis were panel data encompassing the years between 1990 and 2006, which linked Korean firms’ patent information registered in the United States Patent and Trademark Office to the financial data of those firms collected from Korea Investors Service, Inc. (Kis-Value). For the estimation of the panel data, a fixed effect model, which considers the individual firms’ own effect on the financial performance, was used. Tobin's q was used as a dependent variable representing firm performance, while ‘broad technology diversity’ and ‘core technology diversity’ were used as the focal explanatory variables. The results show that a firm seeking to have more technological assets should invest in a broad technological diversification strategy in its search for new business opportunities; it should likewise concentrate on the core technology in order to maintain its financial performance.     

Geopolitics and the Screen: War,the Body and Violence

The paper investigates the promise of Carl Schmitt's concept of ‘nomos’ for developing new spatial imaginaries apposite to the study of ‘the border’ in contemporary political life, as per the aims of the ‘Lines in the Sand’ research agenda. Schmitt introduced the idea of a ‘nomos of the earth’ to refer to the fundamental relation between space and political order. There have been various historical expressions of the nomos, from the Respublica Christiana, to the jus publicum Europaeum, to a post–World War II (dis)order yet to be adequately theorised. We aim to explore the relatively overlooked spatial ontology of Schmitt's work and suggest ways in which it might prompt alternative ways of thinking about borders and bordering practices as representative of broader dynamics in the relation between space and political order.     

Market value,R&D,and patents

A significant relationship is found between the market value of the firm and its ‘intangible’ capital, proxied by past R&D expenditures and the number of patents, based on a time-series cross-section analysis of data for large U.S. firms.     

Heterogeneous firms,corporate taxes and export behavior: A firm-level investigation for Italy

This paper analyses the effect of home corporate taxes on a firm’s decision to expand the scale of its activity through exports using a rich dataset on Italian firms. Starting out from the observation that firms’ export activity vary greatly among them and tend to be systematically related to firm’s characteristics, we relate differences in firms’ export choices to firm level incidence of corporate taxes. Our results suggest that (i) corporate taxes matter at both the extensive and the intensive margin and (ii) higher corporate taxes may increase the probability of new firms’ entry in the foreign market while they decrease the export intensity of incumbent exporters.     

Some Issues in the Sraffian View of Competition: Starting from Clifton

The article seeks to advance discussion about the nature of competition and of the ‘firm’ consistent with a classical-Sraffian perspective on relative prices and distribution. Discussion focuses primarily on the work of James Clifton published from the late 1970's. Clifton's insights have a direct bearing on issues at the heart of broader Sraffian research: how relative prices are anchored by the mobility of capital; whether the rate of profit should be interpreted as the exogenous distributive variable in the Sraffian price system; and, the forces which govern the ‘normal’ rate of profit, including the causal significance of the rate of growth. While Clifton's approach lends support to the interpretation of the rate of profit as a target rate of return, the article takes issue with Semmler's explanation as being endogenous to the price system. An alternative exogenous explanation of the target rate by reference to the rate of growth from Eichner is also considered, but rejected, despite the similarities between the insights of Clifton and Eichner into corporate pricing. Some useful implications from Clifton's analysis—as to the modeling of classical competition and gravitation—are also drawn out.     

Creating Economic Advantage By Setting Compatibility Standards: Can ‘Physical Tie-Ins’ Extend Monopoly Power?

The paper deals with the micro-economics of interface manipulation, i.e. the design of the interface between two products to enhance the profits accruing to the firm controlling the design. Taking several alleged instances of ‘physical tie-ins’ as a reference point, it argues that economist's usual treatment of ‘tie-ins’ and bundling is inappropriate for these cases, and it proposes an alternative model. The model identifies the circumstances under which interface manipulation will yield competitive advantages to an integrated system designer. It also focuses on the limits placed on such behavior by the demand for ‘backward compatible’ components. The model's implications are then examined for the light they shed on arguments about the plausibility of ‘leveraging’–i.e. the use of monopoly power in one component market to gain monopoly power in a complementary component market. The paper concludes that the notion of leveraging can be given analytical substance, but emphasizes that the concept should be used with some care.     

Pluralism or isolation of Civilisations? Russia's foreign policy discourse and the reception of Huntington's paradigm of the post‐cold war world

This paper studies the effects of Samuel Huntington's ‘Clash of Civilisations’ thesis on Russian foreign policy discourse. In response to Huntington's thesis, two major currents of Russia's foreign policy thinking ‐ Liberals and Nationalists ‐ are identified, both of which are critical of the thesis. The two groups offer diametrically opposed alternatives to Huntington's paradigm of the post‐Cold War world. The Liberal‐Nationalist controversy reflects Russia's debates about its own political identity and provides us with a rich and informative understanding of the process of identity formation. By identifying Russia's various reactions to the ‘Clash of Civilisations’ thesis, the paper identifies potential influences of various currents in Russian foreign policy thinking on the country's future foreign policy. It also suggests some implications for further studies of cultures/civilisations in international politics.     

Is newest always best? Firm-level evidence to challenge a focus on high-capability technological (product or process) innovation

This paper sets out to address a gap in the empirical literature on the importance of ‘low-capability’ innovation for firms. The study is framed around discussion of the conceptual bias that remains in policy and academic literature towards a narrow subset of technological (product or process) innovation labelled ‘high-capability’ innovation in this paper. The paper argues that this bias influences the public and business community's understanding of the term ‘innovation’ and has implications for innovation measurement, research, policy and strategy. The study uses data from an economy-wide, regional innovation survey based on the Oslo manual, and includes 648 innovative firms covering all industry sectors. The paper combines elements of both subject and object approaches to innovation measurement, using data from an open-ended survey question to explore the alignment between what firms report as their ‘most important innovation’ (MII) and firm capabilities for introducing ‘high-capability’ technological innovation. Results show that a substantial share of firms report an MII that is a ‘low-capability’ innovation, including those firms with high R&D intensity, those with novel technological innovation, and firms in more innovative sectors of manufacturing and knowledge intensive business services. The paper discusses the implications of this result for future innovation measurement and research.     

A historiographical exhumation of J.A. Hobson's Over-Saving Thesis: General theory versus historiography

Abstract

The discussion of J.A. Hobson's understanding of over-saving has been largely confined within John Maynard Keynes' famous critique in the General Theory. I argue that gauging Hobson's contribution by ‘general theory’, that is, by an ahistorical, non-evolutionary yardstick, is to miss the larger part of Hobson's achievement. Hobson's conception of over-saving was contained within an evolving historiography of capital accumulation and took on various meanings depending on whether Hobson was discussing a competitive or monopolistic environment. I show that Keynes' ‘corrected’ version of over-saving was implicitly contained within Hobson's analysis of an evolving monopolistic industrial structure.     

Understanding the culture of markets: A reflection

This essay examines Virgil Storr’s (2013) Understanding the Culture of Markets, particularly the relationship between cultures and constitutions and the particulars of the ideal-typical ‘spirit’ of capitalism. Culture cannot be viewed as a constitution, I argue, because of fundamental differences between the two types of guidance to conduct, both for the actors within them and the researchers studying them. I also consider possibly conflicting interpretations of the idea of the animating spirit(s) of a market in the context of Storr’s example of the economic culture of the Bahamas.     

An agency model of search for alternatives

The agency model of organization is augmented by a sampling process in which the agent continues search as long as the expected marginal benefit exceeds the marginal cost. It is shown that even if the agent is risk neutral in money due to the form of compensation, he may behave either like a risk averter or a risk preferrer. Sufficient conditions are given for the rent contract to be Pareto-optimal in this environment; if the ‘dominant’ factor in the agent's utility function is his pecuniary income then the rent contract dominates all the fee functions for which the principal's income is not negatively correlated with the agent's effort.     

Our Dream is a World Full of Poverty Indicators: The US,the World Bank,and the Power of Numbers

With the launch of its Africa Results Monitoring System (ARMS), the World Bank has recently consolidated its ‘results agenda’, and is now rolling out a concerted effort to improve International Development Association (IDA) borrowers' ability to track the impact of lending projects on a range of poverty indicators. Although the US pushed hard for the implementation of ARMS, viewing it as a means of improving its ability to monitor and control the Bank, the initiative has paradoxically also provided the Bank with an additional source of legitimacy and autonomy. This apparent contradiction forces a clarification of the analytical framework we use to investigate international organisations (IOs) to allow us to understand the ‘positive feedback cycle’ that has developed between the Bank and the US regarding the standard with which to judge the IO's performance. The refined focus on the impact of Bank-supported interventions has important implications for the internal ‘battlefield for knowledge’ in the organisation, particularly concerning the competing visions of an ‘economic’ and a ‘multi-dimensional’ conceptualisation of poverty.