The growth of UK companies and their contribution to job generation, 1985–1987

Theories of firm growth are reviewed and various models examined. The firm growth and job generation process in the UK over the period 1985–87, is examined empirically, by using the very large data files of the Dun and Bradstreet credit rating organisation. In the analysis, four computer processes were carried out; the sorting and matching of files, the cleaning of the data, the validation of the cleaned data, and the scaling up the results. The final adjusted data were grossed-up to provide an overview of the growth and job generation potential of UK firms. This is compared with past results for the periods 1971–81, and 1982–84. Small firms performed well, providing 48% of all new jobs, although consisting of only 21% of all employment in 1985. The 1000+ employee range provided only 13% of all new jobs over the period, although consisting of 37% of all employment in 1985. An overall trend of positive performance in smaller firms, and negative in larger firms was apparent. The 20–49 employee cohort performed unusually poorly in firm and job creation, against the expected pattern. The effect of takeovers, mergers and rationalisations on employment was examined. As expected, there was negligible restructuring of small firms, but over 5% of employees in the largest 1000+ cohort were involved in some form of reorganisation.In this and the two previous studies for 1971–81 and 1982–84, we found a consistent pattern of small firms as net generators of jobs, and large firms as net losers. This overall net behaviour is essential for the overall stability of the population, and can not be seen in good or bad terms. Bolton in 1971 found that the UK had an unduly small and weak small-firm sector. That trend to concentration is being reversed.This research was supported by the Department of Employment, Small Firms Division.     

Banks and the stability of the international financial system

Summary Does today's banking scene pose a potential threat to the stability of the international financial system? The article discusses three possible sources of vulnerability of the international banking system: a major bank failure causing a general banking crisis via the extensive interbank linkages; the systemic risks allegedly inherent in certain new (as well as traditional) financial products; and the impact of external events such as debt crises, violent swings in exchange or interest rates, deregulation and recession. The author's conclusion is twofold: systemic risks clearly exist, but the probability of a major banking crisis tends to be greatly exaggerated. Banks not only survived the various crises of the seventies and eighties; they also learned in the process. Capital and reserves have been strengthened, provisions for country risk and for general contingencies have increased, supervision has been tightened and it is exercised on a comprehensive as well as a world-wide consolidated basis (i.e. including all contingent and off-balance liabilities, and all offshore activities). Assuming reasonably intelligent policies on the part of the monetary authorities and adequate international coordination, a general banking crisis can be avoided. Official rescue operations do, however, raise difficult questions of an ethical, political and economic nature.     

Life insurance for endowment--great concept or a booby trap?

Life insurance as a charitable gift is an attractive alternative. But first the fund raiser must check out the companies and the different types of policies available.     

Optimal Environmental Policy Differentials in Open Economies under Emissions Constraints

Is there a case for preferential treatment of the exposed sector in an economy when compliance to an aggregate emissions constraint induced by an international environmental agreement is mandatory? This question is being debated in many countries in the context of the implementation of the Kyoto Protocol. We address the issue in a general equilibrium framework and theoretically cover several market structures, including perfect competition, the large country case and oligopoly. We identify the conditions under which preferential treatment of the exposed sector is not warranted from the point of view of maximizing social welfare. In addition, we demonstrate that in the case of oligopoly, instituting a more stringent environmental policy on the exposed sector might be profit-enhancing for this sector. This finding lends theoretical support to a specific interpretation of the Porter hypothesis.     

Socioeconomic predictors of forest use values in the Peruvian Amazon: A potential tool for biodiversity conservation

Conservation is a crisis discipline requiring rapid action with limited funds. This study examines the potential of socioeconomic variables to predict forest use values. If natural resource use can be predicted from socioeconomic data, conservation planners could rapidly identify and focus conservation programs on the sectors of local populations that most intensively utilize local flora and fauna. Families in three communities in the northern Peruvian Amazon were surveyed over a 6-month period. Data were collected on use of flora and fauna from six locally determined use categories (food, medicine and poisons, wood, weavings, adornments, and “other”) in forest types of three age classes (fallow fields—very young forests, young secondary forests, and old secondary forests). Forest use values were the dependant variables calculated in $/ha/year. Socioeconomic variables included: age, education, family size, residence time, land worked, land owned, number of fishing nets, chickens, pigs, cows, and/or mules owned (all proxies for productive assets), and level of ecological knowledge (ability of informants to correctly identify forest species and answer basic questions about their biology). Ordinary least square multiple regressions were run independently for each forest type. Regressions were also run separately for the two most valuable use categories, food and wood. Low R² adjusted values (all < 0.3) reflect the difficulty in predicting human behavior due to confounding variables and complex interactions. Residence time and a household's community of residence were the most significant predictors of forest use values. Households in Vista Alegre, the community with the highest density of people and smallest landholdings per household, extracted the highest value of forest products per hectare. The longer a family stayed in any community the higher the value of forest goods they extracted. If families that lived in an area longest are the most intensive extractors of forest products, they should be a major focus for conservation programming. In addition, the higher value of products extracted from forests by some families may make them more open to strategies seeking to protect long-term viability of the resources they utilize. The importance of residence time also indicates that planners need to account for changes in the resource use patterns of stakeholders over time.     

Noisy chaotic dynamics in commodity markets

The nonlinear testing and modeling of economic and financial time series has increased substantially in recent years, enabling us to better understand market and price behavior, risk and the formation of expectations. Such tests have also been applied to commodity market behavior, providing evidence of heteroskedasticity, chaos, long memory, cyclicity, etc. The present evaluation of futures price behavior confirms that the resulting price movements can be random, suggesting noisy chaotic behavior. Prices could thus follow a mean process that is dynamic chaotic, coupled with a variance that follows a GARCH process. Our conclusion is that models of this type could be constructed to assist in forecasting prices in the short run but not over long run time periods.First version received: June 2001/Final version received: March 2003