Intragenerational mobility and the concept of the equalization of longer-term incomes: An estimation for a developing country

This paper calculates the degree of intragenerational income mobility and carries out the decomposition of the influence of observable characteristics on income mobility. Using the concept of mobility as the equalization of longer-term incomes, we quantify the class of measures called the E index using administrative records for social security contributions of formally employed young adults in Colombia between 2010 and 2018. In addition, we use the Recentered Influence Function (RIF) decomposition method to extend its application to the E index and decompose the influence of observable characteristics on our estimates. Our findings indicate Colombia's mobility is disequalizing. We also show that female mobility is even more disequalizing than male mobility. Our decomposition shows that disequalizing mobility depends on employees' type of contract, economic sector, and location.     

Innovation diffusion: research agenda for developing economies

This paper reviews the literature on innovation to build an agenda for research on innovation diffusion in developing countries. The main ideas on innovation diffusion are discussed, aiming at identifying the key aspects that determine the introduction and development of new technologies in an economy. Analysis of the literature suggests that innovation diffusion depends on three contextual aspects that are economy and government, technology strategies of firms, and management of innovation. Based on this analysis, four areas for research on the subject are identified, aiming at increasing the knowledge about mechanisms and approaches of innovation diffusion in developing countries.     

The effect of corruption on entrepreneurship in the presence of weak regulatory quality: Evidence from developing countries

Efforts to improve currently low entrepreneurship in developing countries could be necessary but likely hampered by the high corruption. With poor regulatory quality in most developing countries, the effect of corruption on entrepreneurship could be unique. By using the Generalized Method of Moments (GMM) estimator, utilizing 48 developing countries as the sample for the period from 2008 to 2016, this study finds that there is a conditional effect of corruption on entrepreneurship, implying that poor regulatory quality has forced and opened up the door for individuals to offer bribes in order to start a new business. Nonetheless, as corruption could add to the high cost of business start-ups, to enhance entrepreneurship, policymakers need to give priority to improving regulatory quality and, subsequently, force corruption to fade away.     

The impact of Universal Service Obligations and International Cross-subsidies on the dispersion of telephone services in developing countries

This paper re-evaluates the telecommunication policies often applied to create regional dispersion of services in developing countries. We observe that failure to consider the complexities of the regional telecommunication systems in creating policies and investment strategies has increased the telecom gap between urban and rural regions worldwide. In particular, the teledensities of rural telecommunications in developing countries have remained very low in spite of support through universal service obligation fees and cross-subsidization from international services. As traditional methods for economic analysis and modeling have failed to identify mechanisms that improve telephone dispersion in these countries, we use a system dynamics modeling approach to deal with complexities of the situation in order to evaluate how Universal Service Obligations (USOs) and International Cross-Subsidy (ICS) policies affect telephone densities. We demonstrate that these policies may be counterproductive due to the structure of the telecom system itself. We also show that, when market-clearing pricing is combined with USOs once the urban telephone density reaches a minimum threshold, the dispersion of rural telecommunications can be considerably improved.     

Foresighting FLOSS (free/libre/open source software) from a developing country perspective: The case of Turkey

Since free/libre open source software (FLOSS) promotes collaboration and contributions from different parties in software production and innovation processes, it can create a unique opportunity for developing countries, by generating an innovative capability in software technology. To benefit from this opportunity, it is important to understand the strategic factors and future trends that affect the development of an efficient FLOSS economy in developing countries.This paper aims to examine the strategic factors and future trends that are likely to affect the development and deployment of FLOSS in Turkey. Based on the internal and external factors identified through the practice of technological foresight, a SWOT analysis will be carried out to identify the strengths, weaknesses, opportunities and threats for Turkey in creating a competitive software industry that can benefit from the advantages of FLOSS. Accordingly, with regard to the required technical infrastructure, an innovative/competitive business climate, skilled human resources and support for institutional structures, policy suggestions are outlined here that could be usefully implemented by government, industry and universities.     

Sovereign debt composition and time-varying public finance sustainability

We compute time-varying responses of the sovereign debt ratio to primary budget balances for 13 advanced economies between 1980 and 2012, and assess how fiscal sustainability reacts to different characteristics of government debt. We find that the sustainability time-varying coefficient increases and countries become more fiscally sustainable if they contract a higher share of long-term public debt, if more debt is held by the central bank or if it is easily marketable in capital markets.     

Can inflation targeting reduce price information asymmetry and alleviate corruptive behavior? Evidence from developing countries

This paper examines the role of inflation targeting as a price signaling mechanism reducing price information asymmetry and potentially reducing incentives for corruptive actions through its direct control on the inflation rate, thus simultaneously increasing institutional quality. The obtained evidence suggests that adopting inflation targeting lowers corruption in a sample of 61 developing countries for the period between 1990 and 2018. Countries that have adopted inflation targeting experience lower corruption levels, as measured by the corruption perceptions (CP) index, controlling for other relevant determinants of corruption identified in the empirical literature, such as inflation, level of income, income distribution, trade openness and the rule of law. This result is sensitive to the type of inflation targeting adopted. Soft (unofficial) inflation targeting has no significant effect on the corruption level, giving support to the claim that strong institutional commitment, accompanied by transparency and constant communication with regards to inflation targets by the central bank, provides an adequate price signaling mechanism. In addition, the analysis provides evidence that an efficient rule of law reduces corruption levels significantly, although its effects are rather modest to support the claims that it can solely lessen corruptive behavior in the sample of developing countries.     

A SURVEY OF THE ECONOMICS OF FAIR TRADE

Fair Trade has spread in developing countries as an initiative aimed at lifting poor smallholder farmers out of poverty by providing them with premium prices, availability of credit, and improved community development and social goods. Fair Trade is also viewed as a niche market for high value products in a context of globalization and trade liberalization policies that affect smallholder farmers in developing countries. This paper provides an overview of the potential effects of Fair Trade, both theoretical and empirical, on small‐scale producers in developing countries. Our review discusses the empirical evidence on prices and income, as well as the importance of limited market access and productivity. We discuss evidence on labor markets and human capital investments as well.     

Between the traditional and the contemporary: careers of women managers from a developing Middle Eastern country perspective

Informed by Institutional Theory, this study adopts an exploratory, qualitative, in-depth interviews-based approach as it explores the self-reported career paths of 32 women managers in Lebanon. The results indicate that in contrast with the majority of Western-based literature, the traditional-organizational career path in comparison to contemporary career patterns is still relevant, and continues to exist for Lebanese women managers as they progress in their managerial careers. At the same time, the findings suggest that women selectively adopt some aspects of contemporary, flexible careers to navigate their career paths amidst the macro-national economic and sociocultural factors and institutional challenges. The overall results and the implications for various stakeholders are further discussed in light of the related literature. This study suggests that scholars interested in women's careers in under-researched developing nations need to further integrate the agentic process – and the role played by women's individual agency in constructing their careers as they respond to institutional mandates – into their career models in more details. Similarly, multinational companies currently operating or interested in expanding their operations to the developing Arab Middle East region should incorporate these factors into their management and human resource practices.     

The role of buyers justice in achieving socially sustainable global supply chains: A perspective of apparel suppliers and their workers

The absence of an effective public model (e.g., government regulations and law enforcement) in developing countries has driven clothing brands and retailers to rely on a private voluntary formal model (e.g., compliance and collaboration approaches) to manage suppliers' internal social issues (e.g., poor working conditions). However, this model has been recently criticised for falling short in addressing these issues as it overlooks their main root causes. In this study, we suggest that suppliers' internal social issues can be driven by buyers' unfair practices, and therefore, we propose and examine that buyers' justice can ensure suppliers' internal social performance. We further postulate and investigate that addressing these issues would result in advantages for buyers beyond traditional performance outcomes in the form of reduced supply operational risk. Based on a census of the 117 suppliers comprising the ready-made garment industry in a Middle Eastern country (Jordan), we received survey responses from 97 suppliers and their shop floor workers. The analysis revealed that only buyer’s distributive and procedural justice, but not interactional justice, are positively related to suppliers' internal social performance. We also found evidence that improving suppliers' internal social performance can diminish supply operational risk. This study contributes to the extant research by empirically investigating a new approach to handle the increase in suppliers' internal social issues in a developing country context. It also does by capturing suppliers' internal social performance from the workers' perspective and highlighting the role of improved suppliers' internal social performance on mitigating supply operational risk.     

Editorial introduction: Is the World Bank lending effective in developing countries?

This special issue of Economic Systems includes five papers about the World Bank lending in developing countries. The motivation for the special issue stems from the relatively extensive literature on the sister institution, namely, the International Monetary Fund (IMF), but not on the World Bank itself. The papers’ focus is the influence of the World Bank lending on economic growth, education and health, poverty reduction, and regulation in the recipient countries. The papers’ findings contribute to our understanding of the effects of the World Bank lending in developing countries, which reflects both successes and shortcomings.     

A multi-criteria expert decision system for investment decisions: The case of commercial real estate investments in China

Consistent with the rapid growth of the Chinese economy and its commercial real estate (CRE) market, evaluating CRE investments in China is becoming an important application area where a multi-criteria expert decision system can make a significant contribution. We used a multi-criteria expert decision system to evaluate ten actual CRE investments in China. Based on thirty-one industry experts, we identified key decision factors to consider when evaluating different CRE investment projects and determined their importance weights. We then evaluated whether or not the ten CRE investment projects were considered to be successful, taking into account the unique characteristics of each CRE investment project. We finally compared the evaluations for the ten cases with their actual performance using four different performance indicators. The results showed that the evaluations had at least 87.5% accuracy across four different performance indicators. As probably one of the first systematic and in-depth scholarly studies to evaluate CRE investment projects in China, this study contributes to a better understanding of such evaluations and helps CRE investors evaluate CRE investment projects in a more informed fashion.     

Are the effects of minimum wage on the labour market the same across countries? A meta-analysis spanning a century

The effects of the minimum wage (MW) on the labour market have been studied for almost a century, but the results remain inconsistent. To review what is known until now, a global, multilingual database of 588 articles on MW effects is constructed spanning more than a century, from 1900 to 2020. Most of the studies belong to developed countries, and less than a third come from developing countries. The most researched subject during the period under review is the impact of the MW on employment, but the evidence is mixed independently of the country studied. Consequently, it is only possible to perform a meta-regression to suitably evaluate the impact of the MW on employment according to the number of studies collected on this topic. The meta-regression model is useful to explain the reasons for these differences. For this purpose, recently developed meta-analysis methods are implemented distinguishing between developed and developing countries. To the best of our knowledge, this is the first meta-analysis that reviews articles on the effect of MW without limits on the analysis period, the variables relative to the labour market or the countries under consideration. The results show a negative publication bias for developed countries but not for developing countries. The impact of the MW on employment is negative in both groups, adjusting for that bias. This adverse effect is small but robust. Characteristics related to the control variables, the demographic groups concerned, the methods implemented and the inclusion of local fixed effects, trend or time dummies account for the estimated employment effect. Public policy recommendations are proposed based on the studies reviewed.     

Decision-Maker Characteristics and the Global Intensity of Professional Service Firms

Abstract

The purpose of this research is to examine the global intensity of professional service firms in light of the firms' and top managements' characteristics. Questionnaires were sent to 1,600 service firms in the United States representing a broad cross-section of service industries potentially engaged in international business. The results indicate that the international experience and focus of top management, as well as firm size, contribute to differences among the levels of global intensity investigated.     

Assessing the accuracy of electricity production forecasts in developing countries

This study assesses the accuracy of time series econometric methods for forecasting electricity production in developing countries. An analysis of the historical time series for 106 developing countries over the period 1960–2012 demonstrates that econometric forecasts are highly accurate for the majority of these countries. These forecasts have much smaller errors than the predictions of simple heuristic models, which assume that electricity production grows at an exogenous rate or is proportional to the real GDP growth. However, the quality of the forecasts diminishes for the countries and regions, where rapid economic and structural transformation makes it difficult to establish stable historical production trends.     

Trade and Growth: Reconciling the Macroeconomic and Microeconomic Evidence

Abstract.  Many empirical studies based on plant-level data have found that firms that enter the export markets are more productive than non-exporters and that this difference in productivity is achieved before firms become involved in exporting. These findings have challenged the traditional view that openness to trade increases productivity and economic growth. This article reconsiders the literature on trade, growth, and trade policies and argues that a careful examination of these new findings is consistent with the idea that exporting increases productivity and economic growth.     

Sovereign credit rating: Evidence of bias against poor countries

We assess whether credit rating agencies limit poor countries’ sovereign credit ratings. Consistent with prior studies, our heterogeneous middle-inflated ordered probit model indicates a statistical bias stacked against poor countries whenever their fundamentals change. This is important, as second-generation crisis models suggest that such biases can have self-fulfilling consequences.     

The efficiency of schools in developing countries,analysed through PISA 2012 data

This paper analyses the efficiency of more than 6800 schools in 28 developing countries, by means of a two-stage Data Envelopment Analysis and using data from OECD PISA 2012. The results reveal that the average efficiency of schools is around 70%, meaning that achievement scores can be raised by 30% by employing a more effective use of available resources. Substantial heterogeneity exists both between and within countries; in general, efficiency scores are higher when comparing schools only with those in the same country. Among factors associated with schools' efficiency, the most important are the characteristics of student population (for instance, motivation, truancy, etc.). Therefore, some practices related to accountability, teachers’ involvement and professional development, and extracurricular activities are also positively associated with higher levels of efficiency.     

The knowledge spillover theory of entrepreneurship: the developing country context

International Entrepreneurship and Management Journal - This is among the few studies to test the Knowledge Spillover Theory of Entrepreneurship (KSTE) at the city level in a developing country...     

Enterprise clusters in developing countries: mechanisms of transition and stagnation

This paper analyses the dynamics of clustered enterprise development in developing countries. It is focused on the different types of clusters that can be identified in these contexts. After a brief introduction, the cluster concept is explained and the need to understand clusters as an expression of social connectivity rather than mere spatial agglomerations is established. Next, a typology of clusters is presented. This typology is discussed on the basis of recent research on small and medium-sized enterprise clusters in different countries and continents. The types of linkages prevailing in different types of clusters are analysed, as well as their implications for technological change. It is argued that the mechanisms of enterprise growth and innovative activity are different in each type of cluster and hence the opportunity structures that entrepreneurs face are variable across cluster types. Therefore, the mechanisms of transition from one type to another are different, and these are discussed next, as well as mechanisms of stagnation and continuity. In conclusion, the implications for development research and policy are outlined and it is emphasized that support must be tailored to the actual state of existing clusters and cannot be deduced from general theory.