Exporting and Productivity in the United Kingdom

This paper investigates various aspects of the links betweenexporting and productivity for a large sample of firms in theUnited Kingdom. We find evidence to support the propositionthat sunk costs are important. Self selection takes place, withlarger and more productive firms entering export markets, andfirms have to become more productive in order to enter. Industrycharacteristics also affect the likelihood of entry—bothindustrial and spatial agglomeration are important. When werely on an unmatched sample of firms we can find some evidenceof further productivity improvement after entry, but this disappearswhen we use a matched sample. Our results suggest that policyshould avoid simply subsidizing firms that may self select intoexport promotion policies and focus instead on reducing informationasymmetries and supporting development of clusters.     

The effect of domestic and foreign competition on performance in Australian manufacturing industries

Summary and Conclusions This study investigated the role of both domestic structural factors and tariff protection in explaining inter-industry differences in profitability in Australian manufacturing industries. At no stage did concentration have a significant effect on profitability at the four-digit level of analysis, in comparison to its observed significant positive effect at the three-digit level. Other structural factors appear to be more important in explaining inter-industry variations in profitability in Australia. The effective tariff rate was negatively associated with profitability, the relationship notably being more highly significant in those industries enjoying higher than average tariff protection. It is suggested that this negative relationship for Australia may be due to a similar phenomenon noted in relation to Canadian manufacturing, namely that tariff protection has led to the permanent creation of too many sub-optimal production units, resulting in lower efficiency and decreased profits. A reduction in the effective rate of tariff protection given to high cost Australian manufacturing industries may therefore yield greater efficiency, as well as at the same time permitting the possibility of increased potential and actual foreign competition.This paper was written while the author was Visting Associate Professor at the University of Delaware. Thanks are due to members of the Industrial Organization Workshop at the University of Virginia for comments on an earlier draft, and to the Managing Editor for his suggestions. I am grateful to the Reserve Bank of Australia for support for this research from their Economic and Financial Research Fund. The views expressed in this paper are those of the author alone.     

Local Economic Performance and Election Outcomes

This paper uses a logit model to test whether voters will alter their support for incumbents in state level elections, specifically gubernatorial and state house and senate elections, when local (i.e., county) economic conditions are observed. The results signify that voters do hold the incumbent party responsible for economic conditions. Furthermore, voters tend to place more emphasis on unemployment levels than on real personal income indicating that incumbent politicians might want to engage in policies that put people to work rather than on policies that raise income. The results also suggest that voters did not hold their state house and senate representative as responsible for local economic conditions as they did the governor.     

Rating the UK: the British government's sovereign credit ratings, 1976–8

The UK received its first sovereign credit ratings in 1978. Despite having required financial assistance from the International Monetary Fund only 18 months earlier, the British government managed to secure ‘triple‐A’ ratings from both Standard and Poor's and Moody's. Both assessments of creditworthiness reflected improving economic conditions but also British efforts to influence the sovereign ratings process. The Bank of England and the Treasury sought guidance from American investment banks to prepare for the ratings process and then controlled the flow of information available to the rating agencies accordingly, stressing the strengths of the national economy and downplaying the weaknesses. The British government subsequently launched its first bond issue in the New York market to high levels of investor demand. Consideration of these achievements complements the historiography concerning Britain's economic fortunes in the late 1970s. Scrutiny of events also offers a rare glimpse into the confidential sovereign ratings process. Both agencies relied on a combination of quantitative and qualitative evaluations of the UK. In addition, this article highlights the existence of a unique period in the history of sovereign credit ratings. From 1974 to 1985, the ratings industry enjoyed a cautious revival focused principally on ‘triple‐A’ borrowers.