Investing exhaustible resource rents and the path of consumption

Abstract.  We set out dollar‐valued net national product for an economy with a wasting essential stock (oil deposit). We take up 'maintaining capital intact' and locally unchanging consumption. The percentage change in 'net investment' or 'genuine savings,' relative to the market rate of interest, denotes whether current consumption is rising, constant, or declining. JEL classification: O13, Q28, F0     

Offshoring technology innovation: A case study of rare-earth technology

Many US firms are improving their individual competitiveness by offshoring manufacturing operations, services and, increasingly, knowledge work. Although research to date has maintained that these practices are beneficial to the offshoring firm and national economies, by reducing costs and expanding markets, little is known about the longer term effect of offshoring on the rate of innovation of home economies. This paper suggests that offshoring practices have adverse effects on innovation at the national home base. The analysis uses patents in the rare-earth element industry, a high-tech area which is among those that have evolved the furthest towards outsourcing and relocation away from the US and to developing countries. Looking at the rare-earth industry can provide insights in identifying potential long term impacts of offshoring on innovation because many other US industries are likely to adopt similar offshoring strategies.     

An Essay on When to Fully Disclose in Sales Relationships: Applying Two Practical Guidelines for Addressing Truth-Telling Problems

Salespeople have a moral obligation to prospect/customer, company and self. As such, they continually encounter truth-telling dilemmas. "lgnorance" and "conflict" often block the path to morally correct sales behaviors. Academics and practitioners agree that adoption of ethical codes is the most effective measure for encouraging ethical sales behaviors. Yet no ethical code has been offered which can be conveniently used to overcome the unique circumstances that contribute to the moral dilemmas often encountered in personal selling. An ethical code is developed that charts ethical paths across a variety of sales settings (addressing "ignorance") while illustrating why the cost associated with acting morally is generally reasonable (addressing "conflict"). The code applies the universal transactional notions of customer expectations and salesperson reputation to illustrate why and when salespeople are morally required to tell the truth. In doing so, the code tackles head-on the vexing question of how best to juggle mixed motives - involving self-interests, corporate-concerns, cus-tomer-needs and other influences such as the nature of the transaction. The issue of how mixed motives can be dealt with through moral means is one that ethicists have previously sidestepped (Stark, 1993).     

A comparison of the WHO and the UK codes of practice for the marketing of breastmilk substitutes

In 1981 the WHO approved a code of practice for the marketing of breastmilk substitutes, and in 1983 the UK Government sponsored the introduction by the manufacturers of a code which applied the WHO Code to the UK. The government used a drafting by sellers method which is almost identical to the procedure used by the Office of Fair Trading to draft the codes it sponsors. The text of the UK Code diverges from that of the WHO Code so that the present marketing mix for infant formula in the UK is protected: advertisements in the Health Service, informational materials for mothers, free samples for mothers, donations to Health Staff, an advisory service directly to mothers, and point of sale promotion. In effect, the UK Code renders the WHO Code inoperative in the UK.The comparison of the two codes suggests that the drafting by sellers procedure used for OFT-sponsored codes and adopted by the government for the UK Code of Practice for Infant Formula, results in codes that are weak ones from the point of view of the consumer. The drafting procedure eases the introduction of codes but also conserves the status quo in the market. The procedure precludes a balanced judgement between the interests of the consumers and the producers.

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Ein Vergleich der internationalen und der englischen Richtlinien für das Marketing von Muttermilch-Ersatzprodukten

Zusammenfassung Im Jahre 1981 erließ die Weltgesundheitsorganisation internationale Richtlinien für das Marketing von Muttermilch-Ersatzprodukten. Zwei Jahre später unterstützte die britische Regierung die Einführung entsprechender nationaler Richtlinien für das eigene Land. Wie bei anderen britischen Marketing-Richtlinien wurden sie auch hier von den Herstellern selbst formuliert.Der Text der britischen Richtlinien weicht von den internationalen Richtlinien dahingehend ab, daß das derzeitige Marketing-Mix für Säuglingsnahrung in Großbritannien geschützt wird, nämlich Werbung im Gesundheitsdienst, Informationsmaterial für Mütter, Probepackungen für Mütter, Werbegeschenke an das Krankenhauspersonal, ein Direktberatungsdienst für Mütter sowie Verkaufsförderung in den Geschäften. Im Ergebnis werden damit die internationalen Richtlinien für Großbritannien außer Kraft gesetzt. Der Vergleich der beiden Richtlinien führt zu der Schlußfolgerung, daß die starke Beteiligung der Hersteller bei der Erarbeitung der Richtlinien, so wie sie in Großbritannien üblich ist, zu Richtlinien führt, die unter dem Gesichtspunkt des Verbraucherinteresses zu schwach sind. Das Verfahren erleichtert zwar die Einführung von Richtlinien, sichert aber zugleich den Status quo auf dem einzelnen Markt. Es verhindert dadurch einen angemessenen Ausgleich zwischen den Interessen der Nachfrager und Anbieter.

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Robert Hamilton is a Lecturer in Marketing at the University of Lancaster, Gillow House, University of Lancaster, Bailrigg, Lancaster, UK, LA1 4YX, and Dale Whinnett a Research Assistant at the Trent Business School, Nottingham, UK, NG1 4B4.     

Capital Accumulation and Resource Depletion: A Hartwick Rule Counterfactual

How much produced capital would resource-abundant countries have today if they had actually followed the Hartwick Rule (invest resource rents in other assets) over the last 30 years? We employ time series data on investment and rents on exhaustible resource extraction for 70 countries to answer this question. The results are striking: Venezuela, Trinidad and Tobago, and Gabon would all have as much produced capital as South Korea, while Nigeria would have five times its current level. A specific rule for sustainability – maintain positive constant genuine investment – is shown to lead to unbounded consumption.     

Efficiency and distributional implications of global restrictions on labour mobility: calculations and policy implications

This paper sets forth a procedure for calculating the annual efficiency gains from alternative changes in existing international immigration restrictions and evaluates the impact of wage rate changes on nonmigrating labor. Data on US gross national product (GNP)/capita across countries are used to infer differences in the marginal productivity both between countries and across major world trading areas. The method assumes that the worldwide labor supply is fixed, that full employment occurs in all regions, and that differences in labor's marginal product across regions arise because of barriers to inward mobility of labor in high-wage countries. When these barriers are removed, labor is assumed to be reallocated and efficiency gains occur. Results of the calculations suggest large gains from the removal of global immigration controls which, in most cases, exceed existing worldwide GNP generated in the presence of labor mobility restrictions. A large portion of the gain is accounted for by labor migration between the aggregated rich and poor countries. Over 40% of the total potential gain is realized when only 10% of the wage differential is eliminated, suggesting that small changes in global migration restrictions have large marginal effects. Wage rates increase in labor-losing regions and decline in labor-receiving regions, dramatizing the incentives for labor unions in high-wage countries to oppose liberalization of immigration restrictions. These results suggest large potential worldwide efficiency gains from a move toward an international labor market free of immigration controls. This issue may be far more important to the North-South debate than a focus on initiatives such as commodity price stabilization, relaxation of trade protection, or increased aid flows.     

Initial Responses to the Statutory Recognition Provisions of the Employment Relations Act 1999

We report how trade unions and employers initially reacted to the introduction of the statutory recognition procedure in the Employment Relations Act 1999 (ERA). Interview data indicate that the ERA and the drift of EU influence have acted to shift employer attitudes towards greater approval of unions and have accelerated the rate at which employers are redesigning their relationships with unions. Although they are restricting unions’ influence over traditional issues such as pay‐setting, employers are increasingly seeking their assistance in implementing organizational changes. We explore the impact of these developments on union activity and on collective representation more broadly.     

Google in China: A Manager-Friendly Heuristic Model for Resolving Cross-Cultural Ethical Conflicts

Management practitioners and scholars have worked diligently to identify methods for ethical decision making in international contexts. Theoretical frameworks such as Integrative Social Contracts Theory (Donaldson and Dunfee, 1994, Academy of Management Review 19, 252–284) and more recently the Global Business Citizenship Approach [Wood et al., 2006, Global Business Citizenship: A Transformative Framework for Ethics and Sustainable Capitalism. (M. E. Sharpe, Armonk, NY)] have produced innovations in practice. Despite these advances, many managers have difficulty implementing these theoretical concepts in daily practice. Using the example of recent decisions by internet service providers Google, Yahoo, and MSN regarding censorship requirements in China, we offer six heuristic questions to help managers to resolve cross-cultural ethical conflicts in which the firm’s way of doing business differs from the practice in the host country. Recognizing that companies can take different approaches to law and ethics (Paine, 1994, Harvard Business Review 72(2), 107–117), our aim is to provide a management decision process to deal with demands or opportunities for engaging in questionable business practices in a host country.     

Stock market volatility and the business cycle

This paper investigates the joint time series behavior of monthly stock returns and growth in industrial production. We find that stock returns are well characterized by year-long episodes of high volatility, separated by longer quiet periods. Real output growth, on the other hand, is subject to abrupt changes in the mean associated with economic recessions. We study a bivariate model in which these two changes are driven by related unobserved variables, and conclude that economic recessions are the primary factor that drives fluctuations in the volatility of stock returns. This framework proves useful both for forecasting stock volatility and for identifying and forecasting economic turning points.