The Soviet Union’s attitude

The Soviet Union will not be represented at the North-South Summit in Cancún, even though both the developing countries and the Western industrialised countries would have liked to see it participate in the talks on solving the problem of underdevelopment. What are the USSR’s reasons for its negative attitude? Are there any prospects of involving the Soviet Union and its CMEA partners in joint development cooperation?     

ALTERNATIVE PRODUCTION FRONTIER METHODOLOGIES AND DAIRY FARM EFFICIENCY

This paper estimates technical efficiency (TE) measures using four alternative production frontier models, and evaluates the sensitivity of the results to the choice of methodology. The Cobb-Douglas functional form along with data for 1982 and 1983 from 404 dairy farms located throughout six northeastern states in the US are used in the estimation. A general conclusion is that, broadly speaking, frontier function models are neutrally upwardly scaled versions of the OLS or average model. A second conclusion is that different models yield markedly different efficiency levels across firms. However, the correlation between the indexes from the various methods is high, which implies that the ordinal ranking of firms according to their measured level of technical efficiency appears to be independent of the method used for a given year. By comparison, the correlation between efficiency indexes for the same method across time, although positive, is much lower than the previous set of correlations. Correlation analysis of efficiency versus farm size and of efficiency versus returns over variable costs, based on the alternative models, yielded consistent results.     

Blockholder Exit Threats and Financial Reporting Quality

Recent theoretical and empirical studies suggest that blockholders (shareholders with ownership ≥ 5 percent) exert governance through the threat of exit. Blockholders have strong incentives to gather private information and sell their shares when managers are perceived to underperform. To prevent blockholders from selling their shares and the firm from suffering a stock price decline, managers align their actions with the interests of shareholders. As a result of the greater manager‐shareholder alignment, managers' actions are more likely to be in shareholders' best interest, and consequently there is less need for managers to manipulate earnings. Consistent with these predictions from economic theory, we find evidence that as exit threat increases, firms have higher financial reporting quality. Theory also predicts that the impact of blockholders' exit threat on financial reporting quality (FRQ) should increase as the manager's wealth is tied more closely to the stock price, and this is what we find. Our study contributes to the research on the impact of shareholders on FRQ and to an emerging literature on the impact of blockholders in financial markets. Blockholders play an important role in managers' reporting outcomes through their actions as informed investors.     

Russian Nanotechnology Market: High-Technology Industry or Statistical Phenomenon

This article presents a medium-term forecast of the development of the Russian nanoindustry, taking into account the assumed transition of the industry from the formation stage to the investment growth stage. Problems associated with the estimated output volumes of products in the Russian nanoindustry are considered, since the trends recorded in the primary statistical data are very far from reflecting the real situation due to the imperfection of the system of statistics of nano-containing products, as well as a reduction of state funding and a decline in the intensity of research in the industry. It is concluded that a full-fledged industry has not been yet completely formed in Russia and it actually exists only as a statistical phenomenon; in addition, the project really set different objectives from the declared creation of a breakthrough high-technology branch.     

Comparative Assessment of Mortality Rate of the Population in Russian and Foreign Megacities

The article presents the results of a comparative analysis of mortality trends in two Russian capitals and two cities with population over one million, Krasnoyarsk and Rostov-on-Don, in comparison with foreign megacities (Berlin, Hong Kong, London, Los Angeles, New York, Paris, Singapore, Tokyo). From 1990 to 2015, in the Russian “model cities” the standardized mortality rates (SMR) for all causes on average decreased by almost a third: most in Moscow (44% for men and 42% for women) and less for Krasnoyarsk (22% for both men and women). An assessment of the statistical reliability of the decrease in SMR on the basis of long time series showed the absence of a positive dynamic of mortality from diseases of the digestive organs, mainly cirrhosis, which confirms the presence of the alcoholic component. Despite the sufficiently steady decline in mortality in the early 2000s, its level in Russian cities continues to significantly exceed the mortality rate in foreign megacities.     

Note on the applicability of the VCG mechanism to capacitated assignment problems and extensions

For the allocation of heterogeneous items, it is known that the buyers-are-substitutes condition is necessary and sufficient to ensure that a pricing equilibrium can yield the same allocation and payments as the VCG mechanism. Furthermore, concavity of the corresponding transferable utility TU-game guarantees that this VCG outcome can also be achieved by an ascending price auction. We show that concavity, and hence the buyers-are-substitutes condition, holds for the TU-game of the assignment problem with general capacities. Therefore, the VCG mechanism is supported by a pricing equilibrium which can also be achieved by an ascending auction. We also show that the buyers-are-substitutes condition, and hence concavity, does not hold anymore for very natural and straightforward extensions of this problem. This shows that the necessity of the substitutes property is a considerable restriction on the applicability of the VCG mechanism.     

Foreign Direct Investment in the Enlarged EU: Do Taxes Matter and to What Extent?

Foreign direct investment is of increasing importance in the European Union. This paper estimates the effect of taxes on foreign direct investment (FDI) flows and on three sub-components of these flows for the countries of the enlarged European Union. The model in the spirit of gravity equations robustly explains FDI flows between the 25 member states. Sample selection needs to be addressed in the estimation. We show that the different subcomponents of FDI should and indeed do react differently to taxes. After controlling for unobserved country characteristics and common time effects, the top statutory corporate tax rate of both, source and host country, turn insignificant for total FDI and investment into equity. However, high source country taxes clearly increase the probability of firms to re-invest profits abroad and lower the percentage of debt financed FDI. This might reflect profit re-allocation to avoid taxes. Market size factors have the expected signs.