Trading Arrangements and Industrial Development

This article outlines a new approach for analyzing the roleof trade in promoting industrial development. It offers an explanationas to why firms are reluctant to move to countries with lowerlabor costs and shows how trade liberalization can change theincentives for firms to locate in developing countries. It modelseconomic development as the spread of concentrations of firmsfrom country to country. Different trading arrangements mayhave a major impact on this development process. By changingthe attractiveness of countries as a base for manufacturingproduction, they can potentially trigger—or postpone—industrialdevelopment. The analysis shows that unilaterally liberalizingimports of manufactures can promote industrialization but thatmembership in a preferential trading arrangement is likely tocreate larger gains. South-South preferential trading arrangementswill be sensitive to the market size of member states, whileNorth-South arrangements seem to offer better prospects forparticipating southern countries, if not for excluded countries.     

The Italian hedge funds industry: An empirical analysis of performance and persistence

This study analyses Italian hedge funds performance and persistence. The peculiarity of the Italian hedge fund industry is that 95% of the hedge funds are funds of hedge funds (FoHF), whereas only 5% of them employ other investment styles. Using monthly data on FoHF provided by MondoHedge, we examine the impact of both market variables and funds’ own characteristics on funds performance using panel data. We find that the European, the Japanese and the emerging markets equity markets, and the commodity market have a positive impact on Italian FoHF performances, while the US Bond Market negatively affects them. Moreover, we find performance fees and notice days to have a negative impact on funds performances. Finally, we test the presence of performance persistence. Employing two different nonparametric methods, we find that funds performances are persistent on a monthly and quarterly basis, while the regression-based parametric method provides evidence of persistence only on a monthly basis.     

Corporate discourse and environmental performance in Argentina

There is substantial research and policy interest in the relationship between firms and the natural environment, including how this relationship is influenced by regulators, international pressures, rival firms and stakeholder demands. With some exceptions, the ‘softer’ dimensions of environmental aspect management – how attitudes, beliefs and perceptions and the human factors drive corporate behaviour – have been understudied. The work that exists tends to be informal, and allows little scope for the statistical validation that is required for robust inference. This paper examines whether corporate values towards the environment affect a firm's environmental performance. It uses survey methods as well as content and discourse analyses of interview text and corporate reports and web sites to explore the links between managerial ‘mindsets’ and the environmental performance of the firms of which they are a part. Though the application is Argentina, the lessons learned can be generalized to other developing and industrialized countries. Copyright © 2006 John Wiley & Sons, Ltd and ERP Environment.     

On the role and effects of IMF seniority

We analyze the IMF as a lender to countries in financial distress highlighting the fact that it is a senior creditor. An advantage of delegating senior lending in a single institution rather than on competitive markets is that it would be able to reach the socially optimal solution. This would require the IMF not to intervene when the crisis is severe enough. However, a commitment device might be needed to achieve the socially optimal solution. If IMF lending were done for all shocks, the country would be always ex-post better off but lenders would be worse off when the country situation is either good or weak, which is consistent with empirical evidence. Anticipation of senior lending might make the country better off by preventing inefficient liquidation. However it might actually hurt the country ex-ante and too much rescuing in the future could lead to too little lending in the present which is contrary to the moral hazard critique.     

Bank competition in Russia: An examination at different levels of aggregation

We analyze bank competition in Russia at different levels of aggregation. First, we compute a country-level measure of competition and compare it to that for similar-sized economies. Second, we contrast competition across different groups of banks in Russia. Third, we analyze bank competition across Russian regions. We find that banks in Russia are less competitive than those in Brazil, but more so than those in China and India. Large and state-owned banks exert more market power than others. Finally, competition is stronger in regions where there is less bank concentration, greater presence of banks, and greater financial and/or economic development.     

Citizens’ Europe: Crowded out by economic focus

Over the last ten years the European unification project seemed to rely overwhelmingly on progress in economic terms. The most prominent achievements — the Single Market, the harmonisation of market regulation, the euro — were all driven by an economic rationale. However, attempts to rescue Europe from the ongoing financial crisis call for mutual support and solidarity, concepts that can hardly be derived from pure economic reasoning. This leads to an important question that has been too long neglected: what is the political and civic motivation for a united Europe? Besides a great desire to stabilise peace in Europe, the origins of the unification activities also included mutual interest in language, culture, habits and people in neighbouring countries. Has this been abandoned in favour of a purely economic vision? Or are the economic arguments merely the easiest to promote to the European population? What message does this send in times of mistrust in markets and dim economic prospects for the eurozone? Can a political, cultural and civic European spirit still be reinvigorated, and if so, how?     

Globally networked: Intraorganizational boundary spanning in the global organization

Multinational corporations (MNCs) need to sense, source, and mobilize knowledge when and where it arises, whether at home, or elsewhere in the world. For this reason, MNCs benefit from employee networks of relationships that span across intraorganizational barriers, allowing for the efficient mobilization of knowledge across boundaries. Yet, which organizational members are more likely to be able to develop these boundary spanning networks? We leverage a unique data set from a large multinational corporation to empirically test a comprehensive model that captures the effect of an employee’s mandate, expertise, and behavioral orientations on her likelihood to span intraorganizational boundaries that manifest themselves in the form of hierarchies, intra-functional domains, and geographic territories. We find that the employees that are more likely to be boundary spanners are those having mandates with a global impact, high levels of expertise, and a collaborative orientation in their networking behaviors. In addition, we find that these effects are stronger for those employees that have large formal workflow networks.     

Decomposing the growth in residential land in the United States

This paper decomposes the growth in land occupied by residences in the United States to give the relative contributions of changing demographics versus changes in residential land per household. Between 1976 and 1992 the amount of residential land in the United States grew 47.7% while population only grew 17.8%. At first glance, this suggest an important role for per-household increases. However, the calculations in this paper show that only 24.5% of the growth in residential land area can be attributed to state-level changes in land per household. 37.3% is due to overall population growth, 22.6% to an increase in the number of households over this period, 6% to the shift of population towards states with larger houses, and the remaining 9.6% to interactions between these changes. There are large differences across states and metropolitan areas in the relative importance of these components.     

Agriculture and aggregate productivity: A quantitative cross-country analysis

A decomposition of aggregate labor productivity based on internationally comparable data reveals that a high share of employment and low labor productivity in agriculture are mainly responsible for low aggregate productivity in poor countries. Using a two-sector general-equilibrium model, we show that differences in economy-wide productivity, barriers to modern intermediate inputs in agriculture, and barriers in the labor market generate large cross-country differences in the share of employment and labor productivity in agriculture. The model implies a factor difference of 10.8 in aggregate labor productivity between the richest and the poorest 5% of the countries in the world, leaving the unexplained factor at 3.2. Overall, this two-sector framework performs much better than a single-sector growth model in explaining observed differences in international productivity.