Convergence and divergence of numeracy: the development of age heaping in Latin America from the seventeenth to the twentieth century1

This study makes the first systematic attempt to trace the long‐term development of Latin American numeracy, a phenomenon of great interest to economic historians in that it serves as an accurate gauge of human capital development. In order to approximate basic numeracy we use age‐heaping techniques. We find that Latin America was on a path of convergence with western Europe during the early eighteenth century. During the early nineteenth century, not only did numeracy development stagnate in some Latin American countries but differences among some of them actually increased. While numeracy rates in Argentina, Uruguay, and to a lesser extent Brazil, along with Europe, underwent a significant increase in the late nineteenth century, they declined in Mexico, Ecuador, and Colombia. By performing a regression analysis, we find that, even when we control for investment in education, mass immigration contributed to human capital formation.     

“Post‐Truth,” “Alternative Facts” and “Fakenomics”

South African companies are accused of hoarding profits to accumulate large amounts of “idle” cash, as well as of being the perpetrators of massive illegal capital flight. This paper argues that much of the claimed corporate cash is either offshore or belongs to banks. It reminds that bank deposits increase when companies borrow, not when they retain profits. It shows, too, that measures of massive capital flight actually reflect data errors. Exaggerating, through faulty methodology the extent to which companies have cash or may be involved in illegal capital flight is unhelpful. It exacerbates already‐fraught government‐business relations, and complicates the search for solutions to South Africa's economic problems.     

SOUTH AFRICA'S POST‐LIBERALISED CAPITAL FLOWS AND BUSINESS CYCLE FLUCTUATIONS

This study used Christiano and Fitzgerald filtered correlation analysis to investigate the cyclical relationships between South Africa's post‐liberalised capital flows and domestic business cycle fluctuations. The results show that foreign direct investment inflows are counter‐cyclical and proactive, while the “hot” inflows are acyclical. Thus, South Africa's post‐liberalisation “hot” inflows have not been significantly associated with domestic business cycle fluctuations. In contrast, the capital outflows are found to be consistently procyclical and proactive, suggesting that the outflows are more significantly associated with domestic business cycle fluctuations than the capital inflows. In addition, it is found that the cyclical relationships between the capital inflows and the business cycle components of exports, household consumption and gross fixed investment are generally procyclical, except for portfolio inflows, which have a counter‐cyclical relationship with fixed investment. In contrast, the capital outflows are counter‐cyclically associated with exports and household consumption, and procyclically associated with fixed investment.     

Human capital estimates in China: New panel data 1985–2010

We introduce new provincial level panel data on human capital in China from 1985 to 2010. Our estimation of human capital is based on the Jorgenson–Fraumeni lifetime income approach modified to fit the Chinese data, thereby allowing a more comprehensive measurement of human capital than traditional partial measurements, such as education. Our provincial data are adjusted for purchasing power parity via a living-cost index as well as for real values so that all values are comparable across the provinces and time. We discuss various characteristics of the data, including total human capital, per capita human capital, and labor force human capital, which in turn are disaggregated based on gender and urban or rural location. Our human capital estimates are compared with the provincial physical capital estimates and provincial GDP. As an illustration, we also use the data to estimate a production function and to decompose China's economic growth from physical capital, human capital, and TFP. Our results, compared with those that use traditional specifications, reassure us as to the reliability of our new China human capital data.     

The productivity of public capital: Evidence from Japan’s 1994 electoral reform

This paper estimates the causal effect of public capital stock on Production, using Japanese prefectural data. We first articulate the difficulty of consistently estimating the regional-level production function with public capital that results from the endogeneity of the public capital stock amount. The public capital amount could be endogenous because of the central government’s political decision-making process of public capital allocation or the local government’s budgetary constraints.Japan’s electoral reform in 1994 offers an exogenous variation in the public capital investment across regions, and we exploit this event to estimate the causal effect of public capital on production. The reform drastically changed the distribution of political representation in the Lower House across regions, and it accordingly changed the allocation of public capital across regions as well. We cannot reject the null hypothesis that public capital is not productive based on the estimates from this natural experimental identification strategy.     

Exchange Rate Regime,Financial Market Bubbles and Long‐term Growth in China: Lessons from Japan

Since 2014, capital inflows into China have turned into capital outflows, reversing the gradual appreciation path of the renminbi against the US dollar into an erratic depreciation path. The paper explains the current capital outflows by comparing China and Japan with respect to the impact of exchange rate expectations on speculative capital flows. It is argued that both in China and Japan, given benign liquidity conditions in the USA, policy‐induced appreciation expectations have generated capital inflows that have contributed to overinvestment and financial market bubbles. The current reversal of capital flows is seen as a signal that the bubble in China has burst. To stabilize growth in China and to discourage speculative capital outflows a fixed exchange rate to the dollar is recommended. Given Japan's experience and given that China's foreign assets remain high, the depreciation pressure on the Chinese renminbi can be expected to abate.     

Business Life Cycle and Capital Structure: Evidence from Chinese Manufacturing Firms

This paper uses a panel data‐fixed effect approach and data collected from Chinese public manufacturing firms between 1999 and 2011 to investigate the impacts of business life cycle stages on capital structure. We find that cash flow patterns capture more information on business life cycle stages than firm age and have a stronger impact on capital structure decision‐making. We also find that the adjustment speed of capital structure varies significantly across life cycle stages and that non‐sequential transitions over life cycle stages play an important role in the determination of capital structure. Our study indicates that it is important for policy‐makers to ensure that products and financial markets are well‐balanced.     

MEASURING THE WELFARE COST OF INFLATION IN SOUTH AFRICA

In this paper, we estimate the long‐run equilibrium relationship between money balance as a ratio of income and the Treasury bill rate for the period of 1965:02 to 2007:01, and in turn use the relationship to obtain welfare cost estimates of inflation. Using the Johansen technique, we estimate a log‐log specification and a semi‐log model of the above relationship. Based on the fits of the specifications, we decided to rely more on the welfare cost measure obtained under the log‐log money demand model. Our estimates suggest that the welfare cost of inflation for South Africa ranges between 0.34% and 0.67% of GDP, for a band of 3‐6% of inflation. Thus, it seems that the South African Reserve Bank's current inflation target band of 3‐6% is not too poorly designed in terms of welfare.     

Measurement of Capital Flight: Methodology and Results for Sub‐Saharan African Countries*

Abstract: This paper presents the methodology for the computation of capital flight and reports new estimates of the magnitude and timing of capital flight from 33 sub‐Saharan African countries from 1970 to 2004. Our methodology calculates capital flight as the residual difference between inflows and outflows of foreign exchange recorded in the balance of payments, with corrections for the magnitude of external borrowing, trade misinvoicing, and unrecorded remittances. We find that total capital flight from these countries in this period amounted to $443 billion (in 2004 dollars). With imputed interest earnings, the accumulated stock of flight capital amounted to $640 billion. These numbers exceed these countries’ external debts, which in 2004 amounted to $193 billion, indicating that sub‐Saharan Africa is a net creditor to the rest of the world.     

Dynamics of Capital Structure: The Case of Korean Listed Manufacturing Companies*

In this paper, we develop a model of dynamic capital structure choice based on a sample of Korean manufacturing firms and estimate the unobservable optimal capital structure using a wide range of observable determinants. Unbalanced panel data of Korean listed firms for the period 1985–2002 is used. In addition to identifying and estimating the effects of the determinants of capital structure, we take into consideration some Korea‐specific features, such as the structural break before and after the financial crisis and firms’ affiliation to chaebol business groups. Our results indicate that the optimal capital structure has been affected by the financial crisis. Although the results suggest that chaebol‐affiliated firms have higher optimal level of leverage and adjust their capital structure faster than non‐chaebol firms, firms’ leverage might be associated with factors other than chaebol‐affiliation, such as size, profitability and growth opportunity.     

Capital Flows: The South African Experience

There has been a significant rise in the empirical work distinguishing between episodes of sharp slowdowns and surges in capital inflows. Much of this analysis has centred on gaining a better understanding of the cyclical behaviour of capital flows. This paper continues in this vein by identifying capital flow episodes for South Africa and analyses the nature and main drivers of cross‐border flows during these episodes. This paper makes two major contributions to the empirical work on South African capital flows. First, specific attention is given to some pertinent measurement issues in the identification of capital flow episodes for South Africa. The post capital account liberalisation period (post‐1995‐period) is delineated into a “normal” period (when capital inflows were close to historical averages) and an “abnormal” period (when capital inflows deviated significantly from the historical average). Second, the paper identifies some defining characteristics during these two periods. In this regard, the behaviour of domestic and foreign agents as drivers of capital flows and the probability of capital flow reversals across asset classes are given particular attention. Although these issues have significant policy implications, they have, to date, been given limited attention in the empirical work on South African capital flows.     

THE EFFICIENCY‐STABILITY TRADE‐OFF: THE CASE OF HIGH INTEREST RATE SPREADS IN VENEZUELA

This paper examines the determinants of the high intermediation spread observed in the Venezuelan banking sector during the 1990s (by far the largest in the Latin American region throughout the 1990s). We trace the evolution of the spread and its connection with other bank‐specific variables. A reduced‐form equation is estimated on the basis of a simple behavioral model for the banking firm previously developed by Shaffer and extended by Barajas, Steiner, and Salazar. Using different types of estimators for aggregate and pooled data of the financial system, we found that high spreads can be attributed to market power, high operating costs, and expected portfolio risk. The empirical results also suggest a trade‐off between assuring bank solvency and lowering profitability.     

Role of Individual Social Capital in Wage Determination: Evidence from China

The present study examines the role of individual‐level social capital in workers’ wage determination in a Nash‐bargaining wage model using Chinese micro‐level data. The study finds a significant contribution of individual‐specific social capital to the wage level. In particular, larger individual social networks and workers’ positive attitudes toward social capital significantly increase the wage level. Moreover, the effect of social capital on the wage level is much larger for men than for women. The results indicate that construction of individual social capital could increase workers’ wages. However, efforts are needed to reduce the unequal contributions of social capital between men and women.     

The Short‐ and Long‐Run Determinants of Less‐Educated Immigrant Flows into U.S. States

We use a gravity model of migration and alternative estimation strategies to analyze how income differentials affect the flow of immigrants into U.S. states using annual data from the American Community Survey. We add to existing literature by decomposing income differentials into short‐ and long‐term components and by focusing on newly arrived less‐educated immigrants between 2000 and 2009. Our sample is unique in that the vast majority of our observations take zero values. Models that include observations with zero‐flow values find that recent male immigrants respond to differences in (short‐term) GDP fluctuations between origin countries and U.S. states, and perhaps to (long‐term) trend GDP differences as well. More specifically, GDP fluctuations pull less‐educated male immigrants into certain U.S. states, whereas GDP trends push less‐educated male immigrants out of their countries of origin. Effects for less‐educated women are less robust, as GDP coefficients tend to be much smaller than for men.     

Capital Stock Estimates by Province and Interprovincial Distribution in Indonesia

We use the perpetual inventory method to estimate gross fixed capital stock at the provincial level in Indonesia. We employ a relatively long series of past annual investments at constant prices for 1983–2007 and a province‐specific survival function for capital. For this purpose, we use published data on provincial income accounts, input–output tables, and surveys from existing studies. Capital was found to be over‐concentrated in the Java‐Bali region and inefficiently distributed among provinces. This distribution contributed to national growth in the majority of the sample years.     

Human capital in Britain, 1760–2009

Human capital can be defined as the knowledge, skills, competencies and attributes embodied in individuals that facilitate the creation of personal, social and economic well-being. It is arguably one of the most important determinants of economic growth. In general, human capital has been calculated with two different approaches: (1) retrospective method through the expenditures on education, (2) prospective through the discounted sum of the wages it would receive over the expected number of remaining working years. In this paper we use the prospective method to calculate human capital in the UK from the mid-eighteenth century to the present, providing the by far longest estimate for human capital for any country. To overcome the problems related to the scarcity of historical data, we developed a method which is able to make the most efficient use of the scarce data available for the eighteenth and nineteenth centuries. Our calculations show a 112-fold increase of human capital, and a 13-fold increase of human capital per worker and per capita from 1760 to 2009. Using cumulative schooling expenditures from 1833 to 2000, we examine whether increased spending on schooling explains this phenomenal growth in human capital.     

The magnitude and determinants of capital flight: The case for six sub-Saharan African countries

Summary Most studies treat capital flight as an exclusively Latin American problem. This paper estimates capital flight for six African countries and shows that the emphasis on Latin American capital flight is not correct. It appears that the burden of capital flight is also important for many African countries. Moreover, this paper tries to find some determinants for the African countries' capital flight. The increase of government and government-guaranteed foreign debt and the overvaluation of the real exchange rate appear to be the most important explanatory factors of capital flight for the African countries in this study.The authors would like to thank Peter van Bergeijk, Richard Brown, Nanne Brunia, Richard Gigengack, Ger Lanjouw, the participants of the Development Economics Seminar, March 1992, Institute of Social Studies, The Hague, and an anonymous referee for their useful comments.     

Estimating the Euler Equation for Aggregate Investment with Endogenous Capital Depreciation

This article looks at the empirical consequences of introducing endogenous capital depreciation in the standard neoclassical model with quadratic adjustment costs. To this end, we formulate an empirical specification that accommodates capital maintenance and utilization in the Euler equations for aggregate investment. The empirical estimates with data from the Canadian Survey on Capital and Repair Expenditures show that, in contrast to the existing literature, the performance of the Euler equations is improved when we account for the impact of variable capital depreciation.     

ECONOMIC LIBERALIZATION AND CHANGES IN CORPORATE CONTROL IN LATIN AMERICA

This article analyzes ownership restructuring and changes in corporate control in four large Latin American countries—Argentina, Brazil, Chile, and Mexico—during the 1990s. Drawing on original firm‐level data, this is a comparative study aimed at identifying cross‐country differences and regularities. It focuses on transactions associated with privatizations and private mergers and acquisitions (M&As)—their evolution, relative importance, and sectoral incidence—as well as the role played by different types of investors: local, foreign, and joint ventures. A specially built database was used in the analysis, comprising 3,085 private M&As and 329 privatization transactions. Although similar to processes occurring elsewhere, it is argued that ownership restructuring in Latin America was facilitated and fostered by specific changes in policy‐associated institutional framework conditions. That is, the wide‐ranging process of ownership restructuring is strongly associated with economic liberalization, which has become the main feature of Latin American national regimes of incentives and regulation.     

Effects of Social Capital,Top Executive Attributes and R＆D on Firm Value in Chinese Small and Medium-sized Enterprises

This study uses an unbalanced panel data analysis to examine the effects of social capital, top executive attributes and R ＆D on firm value in Chinese small and medium-sized enterprises （SMEs） listed on the Shenzhen Stock Exchange Small and Medium-sized Enterprises Board from 2007 to 2011. There are several interesting findings. First, the gender （male） and academic degree of the chairperson in the SMEs have a positive and significant effect on firm value. Second, social capital （measured by politieal connections, managerial business association networks and technology association networks） and R＆D have a positive effect on SME firm value. Third, the effect of politieal connections on firm value for state-owned enterprises （SOEs） is stronger than for non-SOEs, while the effect of business and technology networks on firm value for non-SOEs is stronger than for SOEs. Our study has important policy implications for SMEs that want to compete successfully in China.