The Economics of a Reduction in VAT*

We explore the effects of a temporary cut in VAT, identifying three possible effects: an income effect as people benefit from a lower cost of living during the period of the reduction, a substitution effect as people bring their consumption forward and an arbitrage effect as people buy non‐perishable goods before the end of the period of low VAT for consumption after the VAT rate has been raised. International evidence suggests a clear overall impact on consumption, although the nature of the pattern depends on the way in which the data are analysed. However, the key policy issue is the impact of the VAT change on output and, to examine that, a simulation model of the whole economy is needed. Evidence from the National Institute's Global Economic Model suggests that the impact of the recent VAT reduction is likely to build up during the course of 2009. The reduction in VAT from 17½ per cent to 15 per cent is likely to result in consumption being augmented by less than 1 per cent by the fourth quarter of 2009. However, GDP is likely to be raised by less than half a per cent relative to what would have happened without the VAT increase. After the temporary reduction is over, both consumption and GDP are depressed as a result of the policy.     

Some sceptical comments on the relationship between social support and well‐being

There appears to be widespread acceptance that there is a general positive correlation between ‘social support’ and well‐being. Individuals' health may remain better and their recovery from certain diseases more likely when potential, if not actual, social support is available. This paper addresses two specific methodological problems. Firstly, the definition of ‘social support’ varies very widely in the literature. Furthermore, whilst other variables may be rigorously controlled, the ‘social support’ variable may still be a proxy for other factors. The lack of international agreement on a common meaning for social support vitiates comparative analysis. Secondly, in an attempt to explain why some societies are ‘healthier’ than others, Wilkinson points to an association between more egalitarian societies, ‘better’ micro‐social relationships and better health. This attempt to explain societal differences in terms of micro‐social processes is problematic. First, individuals with good social support may still be healthier in ‘unhealthy’ societies than those without such support in ‘healthy’ societies. Extrapolation of individual outcomes may not be the best way to explain societal differences. Secondly, it is not demonstrated that specific micro‐social processes either cause or are caused by the institutional, organizational and political contexts, which variously characterize more healthy or less healthy societies amongst the most developed nations.     

New approaches to the finance and delivery of health care

Radical reform of the financing of health care has emerged onto the political agenda in recent months. Any new proposals must, however, be judged in terms of their impact on the fundamental public policy objectives of efficiency, equity and choice. How do the new proposals measure up?     

R&D and Technological Learning in Indian Industry: Econometric Estimation of the Research Production Function

Estimation of research production functions has produced rich and useful results for developed countries in the past. This paper makes a pioneering attempt to estimate the same in the context of a less-developed country (LDC) (India). The objective is to examine the process of technology generation and learning in Indian industry. The existing literature recognizes two principal characteristics of technological activities in LDCs. First, their R&D effort is geared towards "minor" as opposed to "major" innovations. Second, technological learning constitutes an integral part of their research thrust. This paper attempts to capture these characteristics in a rigorous econometric framework by estimating a comprehensive research production function incorporating the role of learning. We use Indian firm-level in-house R&D data for two sectors: pharmaceuticals and electronics. Our study not only captures the role of learning in determining research effort and research output, but also re-examines some of the existing hypotheses relating to the effects of firm size, technology import and ownership. We find that the two sectors display two distinct learning trajectories, but in both cases learning proves to be crucially important in technology generation.     

Evaluating sustainable intensification and diversification options for agriculture-based livelihoods within an aquatic biodiversity conservation context in Buxa,West Bengal,India

Potential impacts of sustainable intensification and diversification options for agriculture-based livelihoods in Buxa, West Bengal, India, were evaluated using bioeconomic modelling. The baseline scenario involved multiple cropping seasons and a combination of crops on 0.9 ha land-holdings, livestock husbandry, and exploitation of common property resources. With capital costs of Rs.128,180 (US$2293) and annual operating costs of Rs.37,290 (US$667), the net benefit generated (excluding depreciation) was Rs.70,250 (US$1257) annually. The pay-back period was 1.8 years, and the internal rate of return (IRR) was 53.7% over 10 years. Allocation of 20 days annually to fishing increased the net benefit to Rs.75,030 (US$1342) and IRR to 56.5% with minimal added costs and risks. Adopting the system of rice intensification (SRI) for paddy cultivation on 0.35?ha increased the IRR to 61.1%, while reducing agrochemical and inorganic fertilizer use. Including small-scale fish culture in a 0.1 ha pond integrated in the irrigation scheme for SRI cultivation resulted in an IRR of 77.3% and reduced the pay-back period to 1.3 years. Some risks to biodiversity are apparent with each scenario; however, with appropriate safeguards, sustainable agricultural intensification and livelihoods diversification could bolster agrobiodiversity and social-ecological resilience of highland communities, while alleviating pressure on biodiversity.     

Beyond technology dependence

Technology and globalization have the potential to make higher education more affordable and accessible. In practice, however, rising costs limit educational access, and competition threatens the sustainability of many colleges and universities (Grummon, 2009). With the relevance of traditional curricula in question and the demand for alternate delivery methods expanding, many higher learning institutions face a challenge to reinvent themselves (Barnatt, 2008; Grummon, 2009; Lee, Brennan, & Green, 2009). We asked four higher education leaders from demographically and structurally diverse institutions to address the question, “How will colleges and universities serve the global knowledge economy in the coming decades?” Our respondents represent perspectives from multiple educational paradigms—public and private, local and international, for‐profit and nonprofit, brick‐and‐mortar and online. George Mihel, president of Sauk Valley Community College in Illinois, offers a position paper on the need to transform some of higher education’s deep‐rooted institutional traditions. George Miller, chancellor of American InterContinental University, teams with Caroline Molina‐Ray, a University of Phoenix faculty member, to address how higher education can foster both technological competency and critically reflexive thinking. Naana J. S. Opoku‐Agyemang, vice chancellor of the University of Cape Coast in Ghana, offers insight into the unique challenges and accomplishments of higher education in Africa. Finally, Vicki T. Purslow, associate dean of the College of Arts and Sciences at Southern Oregon University, and Christine Cook Florence, a higher education marketing consultant, present a commentary synthesizing the symposium contributions and issuing a call to action for higher education leaders. Together, these diverse perspectives offer a glimpse into the higher education of the future.     

Bilateral Agreements in a MultiFirm Industry: Technology Transfer and Horizontal Merger

The paper studies the profitability of technology transfer and horizontal merger between two asymmetric firms in a multifirm Cournot oligopoly. If there is only one technologically advanced firm and one or many technologically backward firm(s), a profitable technology deal between two asymmetric firms exists if and only if the collaborating firms are "close" in terms of their initial technology levels. With more than one advanced firm such a technology deal is "always" profitable. Contrary to that, a profitable bilateral horizontal merger occurs if and only if the gap of technologies between the two partners is larger than a critical level. The paper also studies the relative profitability of these two bilateral arrangements.     

The Political Economy of Strategic Trade Policies*

This paper applies Grossman and Helpman's (1994 ) common agency model to investigate the formation of strategic export subsidy and strategic import tariff under both Cournot competition and Bertrand competition. The results of this paper indicate that even with political pressure, the Grossman–Helpman politically‐determined export policy is identical to the rent‐shifting export policy, which is export subsidy (export tax) in Cournot (Bertrand) competition. The politically‐determined import tariff will be higher than the optimal level. This paper highlights the possibility that lobbying can restore the level of trade intervention to a more efficient one in the absence of the benevolent dictator.