Corporate governance quality: Trends and real effects

This paper constructs a composite index of corporate governance quality, documents its evolution during the 1994–2003 period in selected emerging and developed economies, and assesses its impact on growth and productivity of the economy and its corporate sector. Our investigation yields three main findings. First, corporate governance quality in most countries has overall improved, although in varying degrees and with a few notable exceptions. Second, the data exhibit cross-country convergence in corporate governance quality with countries that score poorly initially catching up with countries with high corporate governance scores. Third, the impact of improvements in corporate governance quality on traditional measures of real economic activity—GDP growth, productivity growth, and the ratio of investment to GDP—is positive, significant and quantitatively relevant, and the growth effect is particularly pronounced for industries that are most dependent on external finance.     

Assessment of social–ecological transitions in a peri-urban Ethiopian farming community

In a peri-urban poverty-stricken community in the outskirts of Addis Ababa, Ethiopia, 15 years of development efforts were undertaken by establishing an enterprise, which initially consisted of a horticultural farm and finally was composed of a multifunctional farm and a restaurant with a shop. The enterprise collaborated with BioEconomy Africa, which was charged with administrative, monitoring and facilitation tasks, and provided a training, demonstration and research facility. In the innovation process, the enterprise selected technologies and implemented them within the context of local economic and market conditions. The project benefitted from a flexible allocation of modest funds. This paper assesses the sustainability of the enterprise and the community on the basis of social–ecological system transformability and resilience. The scheme of the Food and Agriculture Organization is used to evaluate the transformability, while resilience is evaluated through self-organization capacity, disturbance absorption capacity, and learning and adaptability. The project period was divided into five Macro-phases. The transformability assessment of the enterprise revealed nonlinear and asynchronous dynamics of environmental sustainability, economic resilience, social well-being and governance that after reaching a minimum attained a maximum at the end of the period under observation. The resilience assessments showed that the self-organization capacity, the disturbance absorption capacity, and learning and adaptability slowly changed to reach a satisfactory level at the end of the observation period. The changes in transformability and resilience profoundly affected the livelihood of the community. The paper demonstrates the important role of agricultural in the development of poverty-stricken peri-urban communities and indicates that innovation processes and the efficiency of facilitation extension model implementation can be enhanced by applying adaptive project execution procedures. It can be concluded that the continuous monitoring and assessments of transformability and resilience are a prerequisite for efficiently moving the socio-ecological system on a smooth road towards a socially acceptable standard of living.     

Eco-social analysis of an East African agro-pastoral system: Management of tsetse and bovine trypanosomiasis

A key constraint for development of many East African agro-pastoral communities is African animal trypanosomiasis or nagana caused by Trypanosoma spp. and vectored by species of tsetse flies (Glossina spp.). Suppression of trypanosomiasis through trapping of tsetse fly populations was conducted from 1995 to 2005 at and near Luke, Southwest Ethiopia. Odor baited mass trapping technology was used to suppress adult fly populations to very low levels while tryponocidal drugs were used to treat trypanosome infections in cattle. Data on ecological, economic and social variables were collected and analyzed in the context of eco-social dynamics in the community.The bio-economic model of Regev et al. [Regev, U., Gutierrez, A.P., Schreiber, S.J., Zilberman, D., 1998. Biological and Economic Foundations of Renewable Resource Exploitation. Ecological Economics 26, 227-242] and Gutierrez and Regev [Gutierrez, A.P., Regev, U., 2005. The bioeconomics of tritrophic systems: applications to invasive species. Ecological Economics 52, 382-396] was used as a methodological framework for qualitative evaluation of the effects of tsetse/trypanosomiasis suppression on ecological, economic and social aspects. An objective function for single farmers was formulated to determine the optimal harvesting level of cattle, exposed to high and low levels of risk from tsetse/trypanosomiasis, as measured by the discount rate (δ) for a given base level pastoral resource (R = pasture or forage for cattle). The socially optimal objective function for resource exploitation by all farmers is that which maximizes the present value of utility of individuals expending revenues (consumption) from the revenue stream in ways that enhance the quality of life and yet assures the persistence of the resource base over an infinite time horizon (i.e., renewable resource sustainability).The bio-economic model predicts that reducing risk (δ) from tsetse and disease increased the cattle populations and their marginal value. The model also predicts that the interaction of decreased δ and increased productivity (θ) can lead to increased human and cattle populations and hence to over-exploitation of base resources (pastures) that lower environmental carrying capacity and reduced sustainability.Trap catches indicated that tsetse populations were reduced to very low levels, while the disease prevalence decreased from 29% to 10%. This led to a substantial increase in cattle including oxen populations, increased calving rates, increased milk production and increased the per-capita income. The availability of oxen allowed an increase in cultivated land from 12 ha in 1995 to 506 ha in 2005. Revenues (consumption) were invested in the purchase of more cattle and the establishment of a school for educating village children. Increases in land allocated to crops and other sources of income were also found.The bioeconomic model predicts the solution of the trypanosomiasis problems so transforms the East African agro-pastoral communities that new social structures will be required to cope with the ecological, economic and social consequences of this technological changes on sustainable development (sensu [Goodland, R., 1995. The concept of environmental sustainability. Annual Review of Ecology and Systematics 26, 1-24]). This insight should not be lost in international rural development programs.     

Collaterals and macroeconomic volatility

In this paper, we study the effects of collaterals on business cycles and growth in monetary economies with credit market imperfections. We consider an endogenous growth model with a partial cash-in-advance constraint. It is assumed that the share of consumption purchases paid on credit depends positively on the collaterals available to the agent. In this case, money is no longer superneutral. We find that, under mild inflation rates, a higher money growth rate is welfare-improving and, surprisingly, it makes the occurrence of expectations-driven fluctuations less likely. The shape of credit share in consumption purchases, as outcome of regulatory policies, has an impact on both welfare and stability. In particular, the higher the sensitivity of the credit share to collaterals, the more stable the economy under rational expectations. These analytical findings are complemented by economic interpretations.     

Continuous representations of interval orders based on induced preorders

Conditions are given for the existence of a pair of continuous real valued functions (u, v) representing an interval order on a topological space (X, ), in the sense that [xy if and only ifu(x)].I am deeply indepted to Professor Alain Chateauneuf for many valuable suggestions.