The impact of public investment on private investment spending in Latin America: 1980–95

This paper investigates the theoretical and empirical links between key economic variables and private spending in Latin America during 1980 to 1995. The empirical findings of this paper directly address the complementarity hypothesis which suggests that increases in public investment spending raise the marginal productivity of private capital, thereby inducing higher rates of private investment spending. This paper also addresses the issue of whether changes in the real exchange rate (expenditure-switching policies) have a deflationary effect on the economics of Latin America. The findings in this paper make an important contribution to the ongoing debate about which policies need to be promoted to raise and sustain the rate of private capital formation in Latin America—the region's future source of employment and income creation.     

POLICY PAPER: The Technical Process of Bank Privatization in Mexico

This paper describes the process of Mexican bank privatization that took place in 1991. We show that the Mexican government was very careful to ensure due process and transparency through the entire bank privatization process. However, the lack of a legal and regulatory framework and lax oversight shadowed the success of the technical process. Hence, the financial system in Mexico had to deal with a banking crisis shortly after their privatization, in 1994.     

A Model of Elitist Qualification

This paper deals with the collective qualification of members of society as belonging to a certain category or group based on a fixed attribute. Our model contains three main features: the existence of individual gradual opinions, the notion of elitism (only the opinions of certain individuals are taken into account to delineate the reference group), and the idea of sequentiality (elites are successively created by using the previous elites’ opinions on a social decision scheme). The main results of the paper characterize when this sequential procedure converges for some intuitive ways of aggregating individual opinions. Finally, we analyze the role of convergence for two extra basic properties (symmetry and contractiveness) that elitist rules should possess.     

The costs of increased localization for a multiple-product food supply chain: Dairy in the United States

There is increased interest in greater localization of food supply chains but little evidence about the effects of localization on supply-chain costs. Assessing these effects is complex in multiple-product, multi-process supply chains such as the dairy industry. In this study, we develop a spatially-disaggregated transshipment model for the US dairy sector that minimizes total supply-chain costs, including assembly, processing, interplant transportation and final product distribution. We employ the cost-minimizing solution as benchmark to compare alternative scenarios of increased supply chain localization. Our results indicate: (1) short-run limits to increased localization, (2) modest impacts on overall supply-chain costs, and (3) large cost re-allocations across supply chain segments, regions and products. We find that increased localization reduces assembly costs while increase processing and distribution costs. Cost increases are larger in regions with smaller raw milk supplies and during the season when less raw milk is produced. Minimizing distances traveled by all dairy products results in tradeoffs across products in terms of cost and distance traveled. The relationship between increased localization and costs appears to be nonlinear.     

PARALLEL EXCHANGE RATES IN DEVELOPING COUNTRIES

Dual exchange rates and black markets for foreign exchange arecommon in developing countries, and a body of evidence is beginningto emerge on the effects that such parallel foreign exchangesystems have on macro-economic performance. This article presentsa simple typology of parallel systems, discusses their emergence,and looks at why countries prefer these arrangements to themain alternatives. The article examines the ability of parallelmarkets to insulate international reserves and domestic pricesfrom shocks to the balance of payments. Drawing on the findingsfrom eight detailed case studies, the authors discuss the determinationof the parallel premium in the short and long terms, the relationshipbetween the premium and illegal transactions, and the fiscaleffects of parallel rates. They compare the experiences of countriesthat have attempted to unify their foreign exchange marketsand discuss the implications for policy alternatives.      

Industry,management capabilities and firms' competitiveness: An empirical contribution

The aim of this paper is to contribute to the knowledge of strategic factors that explain the competitive position reached by firms in their activity sector. We have used a survey carried out in 1999 on 287 executives that belong to the service sector in the province of Santa Cruz de Tenerife. We have analysed the differential factors that distinguish the strategic performance of competitive vis‐à‐vis non‐competitive firms, by jointly assessing the variables representative of the sector (five competitive forces defined by Porter) and variables of an internal feature. Finally, we have moved the level of analysis from the industry to the firm; specifically, we have focused on managerial capabilities due to the significant role played by managers in the strategic decision‐making process. The use of cluster analysis to classify firms depending on their degree of competitiveness and the application of the See5 induction algorithm of rules and decision trees to determine the differential factors that distinguish competitive from non‐competitive firms, provide a methodological framework for the most significant contributions of this work. Copyright © 2004 John Wiley & Sons, Ltd.     

Organizational Culture, Individual Differences and the Participation System in Cooperativism of Associated Workers in Andalusia, Spain

From a psychosocial perspective, we have attempted to identify the characteristics of the democratic systems of a sample of 36 Andalusian cooperatives of associated workers. In this study it has become evident that those who participate the least in the governments of their organizations are the workers and those with less education. Thus, there is a high degree of association between participation in the governing of the cooperative and the development within it of an appropriate organizational culture. The results of this study have allowed us to empirically deconstruct the concept of cooperative democracy, and this process may have an effect on the improvement of human resource administration in this type of organization.     

Currency substitution, portfolio diversification, and money demand

Abstract .  We extend the Thomas (1985) dynamic optimizing model of money demand and currency substitution to the case in which the individual has restricted or no access to foreign currency denominated bonds. In this case currency substitution decisions and asset substitution decisions are not separable. The results obtained suggest that the significance of an expected exchange rate depreciation term in the demand for domestic money provides a valid test for the presence of currency substitution. Applying this approach to six Latin-American countries, we find evidence of currency substitution in Colombia, Dominican Republic, and Venezuela, but not in Brazil and Chile.