China's Exchange Rate Policy: The Case for Greater Flexibility

Since the Asian crisis, the merit of the Chinese government's de facto peg to the US Dollar has been the subject of widening debate. This paper reviews the issues surrounding China's currency regime choice and assesses the case for greater fiexibility. Reform era exchange rate policies are examined along with the performance of the economy during and since the Asian crisis. In the Chinese context, the arguments for and against fixed exchange rates are then explained and assessed. Finally, an elemental comparative static macroeconomic model is used to examine the implications of domestic and external shocks under different exchange rate regimes and with differing degrees of capital mobility. The results support the view that more fiexibility would be beneficial to China and that this benefit can be expected to increase as capital mobility increases.     

Trade,imitative ability and intellectual property rights

Economic theory suggests some ambiguity concerning the effects of strengthening intellectual property rights (IPRs) on international trade. Here we extend the empirical literature that attempts to resolve this ambiguity. We use panel data to estimate a gravity equation for manufacturing exports, in aggregate and by industry, from five advanced countries to 69 developed and developing countries over the period 1970–1999. In particular, we use threshold regression techniques to determine whether the impact of IPR protection on trade depends upon the level of development, imitative ability and market size of the importing country. We confirm the importance of the importers’ imitative ability, and also find some evidence of a role for market size in this relationship. The individual industries present different patterns of thresholds and coefficients, with Total Manufacturing closely reflecting that of Fabricated Metal Products.     

Japanese Interfirm Networks: Exploring the Seminal Sources of their Success

An extensive body of literature explains features of the highly co-operative relationship between Japanese firms, particularly Toyota, and their supplier-firm network. The literature does not explore when these networks emerged or the factors conducive to their emergence. This paper uses transaction cost analysis and game theory to address these issues. It indicates that the networks emerged in the 1950s, and that the initiating factors were exogenous to the networks, centring on the unusual business environment that then prevailed in Japan. The analysis indicates why firms like Toyota gained an advantage over competitors in America. They were relieved of two major transaction costs: those linked to internalization and decomposed subcontracting. In addition, successful networks developed intragroup understandings that led to significant reductions in both interfirm co-ordination costs and direct production costs per unit of output. The paper questions the extent to which Toyota-type networks are prevalent in Japan. It questions the advantage that firms in America or elsewhere (even Japan) can gain from emulating Toyota practices such as unguarded subcontracting. It offers a different interpretation to standard business practices in firms like Toyota, such as relational contracting. It provides a basis for a reinterpretation of Japanese business history and the role of ‘Japan Inc.’.     

Beyond learning by experience: The use of alternative learning processes by incrementally and rapidly internationalizing SMEs

How firms learn about foreign markets and internationalization processes is an important theme in the literature on SME internationalization, evidenced by the Uppsala model’s emphasis on experiential learning as an explanation for incremental internationalization, and attempts to explain how early and rapid internationalization can be facilitated by alternative modes of learning, especially congenital learning. Yet, the learning processes used, and the content and source of learning, have not been compared systematically, especially with respect to how these evolve as firms become increasingly internationalized. This paper reports the findings of a retrospective longitudinal analysis of the learning processes, sources and foci of four New Zealand-based SMEs that internationalized incrementally, and four that internationalized rapidly. The findings demonstrate that while experiential learning is important, both incrementally and rapidly internationalizing firms use other learning modes at different stages of their internationalization, and that there are differences in the content and source of learning. Thus, the relationship between internationalization and learning processes may be more complex than the literature currently suggests, inviting further exploration of the multiple ways that SMEs learn, and the contingent factors that might influence this.     

Technologies,products and firms' strategies part 1—a framework for .analysis

This article examines, the character and significance of ‘strategies’ formulated within the R&D function of a business, and their relatzonship to the broader business strategy of the parent company. The discussion forms a basis for the analysis of case studies of three large UK companies, which will be published later as Part 2 of this article Part 1 of the article identifies three foci of innovation studzes: first, that of the innovations themselves; secondly, that of patterns of innovation within discrete industrial sectors; thirdly, that of the innovating firms and their strategies. The discussion focuses on the third topic nad explores two aspects of the tehnological components of innovation strategies. First, the shape of the prorgolio of products under development, the technical and market specificities they possess, and secondly, the structure of the portfolios of technologies required and used in those products. These dimensions of strategy combine both firm-specific and public-domain tecnoligical competenes. These competences affect both the competitive position and the strategic direction of firms. Finally, the article proposes some analytical devices for making sense of technology strategies in the thre firms studied. Part 2 of the article presetns the substance of the case studies, and reviews the lessons which they reveal.     

Third contribution to the ergodic/nonergodic critique: Reply to Davidson,part 2

This second part of my reply to Davidson (2015 Davidson, P. “A Rejoinder to O'Donnell's Critique of the Ergodic/Nonergodic Explanation of Keynes's Concept of Uncertainty.” Journal of Post Keynesian Economics, 2015, 38 (1), 1–18.[Taylor & Francis Online], [Web of Science ®] , [Google Scholar]) discusses mathematical and statistical matters using a simple model of ergodicity whose properties do not match many of those asserted by ENE. It responds to Davidson's counterarguments against pre-infinity indeterminacy, examines the works of Billingsley, Uffink, and Malinvaud as cited by Davidson, and then turns to important methodological issues. As in Part 1 of my reply, Davidson's rejoinder helps make the critique stronger, deeper, and more relevant.