The merits of horizontal versus vertical FDI in the presence of uncertainty

We examine the impact of uncertainty on vertical and horizontal FDI. Our model shows that greater supply uncertainty reduces the expected income from vertical FDI but increases the expected income from horizontal FDI. Greater demand uncertainty adversely affects the expected income under both production modes. Uncertainty about predatory actions by the host country is more costly to the multinational under vertical than under the horizontal mode. We examine sales by foreign affiliates of U.S. parent companies. Conditioning on host-country characteristics thought to influence FDI, we find evidence that volatility and sovereign risk have a greater negative impact on vertical FDI than on horizontal FDI.     

Rural women leaders

This research project was designed to study the determinants of leadership development in rural women. The first phase of the study involved individual interviews with women recognized as leaders within a rural community. Each of the 25 rural women leaders interviewed was raised on a farm or in a community with a population smaller than 2,000. The second phase of the study was administered via Survey Monkey to 133 women using a modified version of the Review of Personal Effectiveness with Locus of control (ROPELOC) instrument, which included the key domains of interest and was expanded to include additional questions focusing on unique challenges to leadership among women living in rural communities. The project used leadership‐related community groups as an entry point to identify women across rural Kansas for the survey. The results from these two methods identified six themes: lifelong learners, bias and discrimination, self‐efficacy and overcoming barriers, community influence and social capital, leadership mentors, and expression of leadership.     

WHY ARE SOME PLACES RICH WHILE OTHERS ARE POOR? THE INSTITUTIONAL NECESSITY OF ECONOMIC FREEDOM

We survey perspectives on the economic differences between countries and argue that economic freedom is the key to prosperity. We close by outlining the policy implications. Specifically, removing obstacles to the exercise of economic freedom is an important step towards prosperity.     

Unit determination: National Labor Relations Board rule making in the health care industry

This article reviews the events leading up to the National Labor Relations Board's (NLRB) historic decision to engage in substantive rule making over appropriate bargaining units in the health care industry. It describes the rule-making process and outcomes, and the reaction of hospital unions and management to the rules. Finally, the potential for the use of rule making for other issues facing the NLRB is analyzed. This analysis uses a cost/benefit framework from the agency's perspective to predict the likelihood of future rule making. The article concludes that rule making is sufficiently costly to make extensive use in other situations unlikely.The order of the author's names was determined randomly and should not be interpreted as implying an unequal contribution.     

Anti-insurance: Analysing the Health Insurance System in Australia

This paper develops a model to analyse the Australian health insurance system when individuals differ in their health risk and this risk is private information. In Australia private insurance both duplicates and supplements public insurance. We show that, absent any other interventions, this results in implicit transfers of wealth from those most at risk of adverse health to those least at risk. At the social level, these transfers represent a mean preserving spread of income, creating social risk and lowering welfare – what we call anti-insurance. The recently introduced rebate on private health insurance can improve welfare by alleviating anti-insurance.     

Agricultural market policy reforms and growth in Nigerian export crops

The paper investigated the prospect of selected export crops in meeting the demand of emerging commodity and futures market in Nigeria within the context of a counterfactual model, The data covered about three decades （1973-2000）. The model was estimated to capture two economic policies in the period namely stabilization （1973-1985） before introduction of Structural Adjustment Programme （SAP） and liberalization policy （1986-2005） that followed SAP The results indicated positive divergence between factual and counterfactual trends for palm kernel, cocoa, coffee and rubber but neuative for groundnut after SAP     

Globalization and Taste Convergence: the Cases of Wine and Beer

This paper investigates changes in cultural consumption patterns for a low‐concentration industry: wine and beer. Using data on 38 countries from 1963–2000, there is clear convergence in the consumption of wine relative to beer between 1963 and 2000. Convergence occurs even more quickly within groups of countries that have a higher degree of integration. A key prediction of international trade is confirmed in the data: greater trade integration weakens the association between production and consumption patterns—although the relative consumption of wine can be explained well in 1963 by grape production and latitude, these variables are much less significant in 2000. Despite these “scientific” explanations, there is also a cultural angle to wine consumption. While the relative wine consumption of France and Germany is converging, several Latin American countries fail to converge. The patterns of convergence are consistent with dynamics of adjustment in overlapping generation habit formation models.     

Contestability, Complementary Inputs and Contracting: The Case of Harbour Towage

It has been argued that competitive tendering for contracts can be used to overcome problems of natural monopoly and to make markets 'contestable'. The recent Productivity Commission (2002) report into harbour towage in Australia noted the potential benefits of competition for contracts. Using the example of harbour towage, we investigate these claims when competitive tendering involves one segment of a vertical production chain. We show that direct customer contracting will not result in a perfectly contestable outcome if there is a complementary input provider with market power. We consider whether this situation improves when customers delegate the contracting process. Delegation only improves the outcome from the customers' perspective if the authority is able to receive side payments from the towage operators. Such side payments a priori would appear to be against the interests of the customers. We show, however, that side payments help the port authority to overcome the problems of market power, benefiting both the port authority and the customers. Further, these contracting outcomes are socially preferred to the unregulated outcome where port authorities and towage operators set prices and quality independently. This analysis sheds light and generally supports the Productivity Commission's recommendations.     

Capital Mobility In A Second–Best World: Moral Hazard With Costly Financial Intermediation

The paper studies financial integration in the presence of moral hazard, where banks may mitigate excessive risk by costly monitoring. The author shows that a drop in banks' cost of funds, less efficient intermediation technology, higher macroeconomic volatility, and a more generous deposit insurance raise the riskiness of projects in a competitive equilibrium. Overborrowing would arise even in the absence of deposit insurance in circumstances where the cost of risk monitoring is high, the banks' cost of funds is relatively low, and macroeconomic volatility is high. Reforming an inefficient banking system and improving its operation is a precondition for successful financial integration.