Alternative scenarios for Ukraine

Major trends and driving forces are analysed in four areas, i.e. polity, economy, society and international environment of Ukraine, as well as their inter-linkages, in order to define overall dynamics of Ukrainian society. It leads to three basic scenarios for the medium term: a pan-Slavic state centred scenario (example Belarus), a feudalisation/mercantilist scenario (example Pakistan) and a liberalisation scenario (example Mexico). It is argued that the rent seeking state and the rent seeking economy are deeply rooted in a society that can be characterised as patrimonial. Although having some distinctive features, such as high level of human capital and an over-powerful state, Ukraine faces problems that are characteristic for many stagnating Third World countries. A predatory and patrimonial state could develop due to the weakness of civil society.As Aristotle has said, we can learn the nature of anything when it has reached and past its maturity. Since the abolishment of communism and the proclamation of independence, in 1991, Ukraine is experiencing a turbulent transition to a new social, political and economic system. The most tangible change was the transition from an industrialised country, where people were assured of a decent living standard, to a country where industrial production declined by 75 per cent and where the overwhelming majority of the population has been pushed into poverty. The scale and speed of deprivation was unheard of as was the social peace that accompanied this destructive movement. Leonid Kuchma, who played a major role in Ukraine for most of the 1990s as President and as Prime Minister, was re-elected by the Ukrainian population with a big margin (56 per cent) in November 1999, when faced with the choice between Kuchma and Symonenko, the latter being an orthodox communist. It showed, to a certain extent, the break with the communist past although Ukraine has not developed yet into a participatory democracy. But Ukraine has consolidated its status as an independent nation in the heart of Europe.However, the overall impression is that of disintegration, hierarchical breakdown and decline. Ukraine has been the only transition economy not to have known at least one year of economic growth during the 1990s. Only in 2000 the Ukrainian economy started to grow.Here, an analysis is made of defining features and major trends in the political sphere, the economy, society and the international environment in order to identify overall dynamics. This exercise allows the formulation of relevant questions about the interrelationships of the various sub-systems in society as well as the major challenges that Ukraine may face in the medium term.     

Continuous and discrete models in finance,in particular for stochastic interest rates

The paper explains a general method for constructing interest rate models in discrete time. The relevant term structure can be computed recursively in the Markovian case with finite state space. Calculations become particularly easy for binary and ternary tree structures.It is instructive to look at the diffusion limits of such Markov Chains. This diffusion limit does not inherit all properties of the Markov Chain which it approximates.     

Squatters in the creative city: rejoinder to Justus Uitermark

A recent change in attitude of politicians and officials in Amsterdam towards artists who use squatted workspaces does not entail co‐optation of squatters as providers of cultural services. The municipal Breeding Places Amsterdam (BPA) project is a continuation of the long‐standing tendency to legalize squats, but now motivated in terms of the artists' function for the city. There are no indications that recent legalizations have an effect that is different from earlier legalizations. They did not cause the squatters' movement to shift from waging a housing struggle towards creative expression, nor did they affect the core business of the movement: squatting. Internal conflicts, the use of legal procedure instead of political arguments and highly differentiated outcomes for individual squatters are not specific to the recent era of squatting. Some squatters are now trying to play their cards in a way that is compatible with the hype of the creative city. This illustrates the resilience of the prevailing pattern of ‘flexible institionalization’. Flexibility and diversity may well be characteristics that have enabled the squatters' movement to survive under increasingly adverse conditions. A Amsterdam, le récent changement d'attitude des politiciens et fonctionnaires à l'égard des artistes qui travaillent dans des ateliers squattés n'entraîne pas de cooptation des squatters comme fournisseurs de services culturels. Le projet municipal BPA (l'Amsterdam des pépinières) perpétue une tendance à légaliser les squats, quoique désormais motivée par le rôle des artistes dans la ville. Il n'existe aucun indice que les récentes légalisations aient un effet différent des précédentes. Elles ne font pas évoluer le mouvement des squatters d'une agitation de lutte pour le logement vers une expression créative, ni ne modifient l'activité première du mouvement: squatter. Conflits internes, recours à une procédure légale plutôt qu'à une argumentation politique, et résultats très différenciés selon les individus ne sont pas spécifiques à l'époque récente. Certains squatters tentent désormais leur chance selon une méthode compatible avec la dynamique promotionnelle de la ville créative, illustrant ainsi la résilience du schéma dominant ‘d'institutionnalisation flexible’. Ainsi, souplesse et diversité pourraient être les caractéristiques qui permettraient au mouvement des squatters de survivre dans des conditions de plus en plus défavorables.     

Investor Protections and Concentrated Ownership: Assessing Corporate Control Mechanisms in the Netherlands

Abstract. The Berle–Means problem – information and incentive asymmetries disrupting relations between knowledgeable managers and remote investors – has remained a durable issue engaging researchers since the 1930s. However, the Berle–Means paradigm – widely dispersed, helpless investors facing strong, entrenched managers – is under stress in the wake of the cross‐country evidence presented by La Porta, Lopez‐de‐Silanes, Shleifer and Vishny, and their legal approach to corporate control. This paper continues to investigate the roles of investor protections and concentrated ownership by examining firm behaviour in the Netherlands. Our within‐country analysis generates two key results. First, the role of investor protections emphasized in the legal approach is not sustained. Rather, firm performance is enhanced when the firm is freed of equity market constraints. Second, ownership concentration does not have a discernible impact on firm performance, which may reflect large shareholders' dual role in lowering the costs of managerial agency problems but raising the agency costs of expropriation.