Is gravity linear?

Despite the solid theoretical foundation on which the gravity model of bilateral trade is based, empirical implementation requires several assumptions which do not follow directly from the underlying theory. First, unobserved trade costs are assumed to be a (log‐)linear function of observables. Second, the effects of trade costs on trade flows are assumed to be constant across country pairs. Maintaining consistency with the underlying theory, but relaxing these assumptions, we estimate gravity models—in levels and logs—using two data sets via nonparametric methods. The results are striking. Despite the added flexibility of the nonparametric models, parametric models based on these assumptions offer equally or more reliable in‐sample predictions and out‐of‐sample forecasts in the majority of cases, particularly in the levels model. Moreover, formal statistical tests fail to reject either parametric functional form. Thus, concerns in the gravity literature over functional form appear unwarranted, and estimation of the gravity model in levels is recommended. Copyright © 2008 John Wiley & Sons, Ltd.     

Modes,weighted modes,and calibrated modes: evidence of clustering using modality tests

We apply recent results from the statistics literature to test for multimodality of worldwide distributions of several (unweighted and population‐weighted) measures of labor productivity. Specifically, we employ Silverman (Bump) and Dip modality tests, calibrated to correct for their incorrect asymptotic levels. We show that test results are sensitive to the test statistic employed and to population weighting. But regardless of the statistical criterion used, multimodality is present throughout, or emerges during, our sample period (1960–2000). We also examine (a) movements of economies between modal clusters and (b) relationships between certain key development factors and multimodality of the productivity distribution. Copyright © 2008 John Wiley & Sons, Ltd.     

The global hip-hop Diaspora: Understanding the culture

From New York to Paris, Tokyo and Sydney, hip-hop culture is a Diaspora transcending ethnic, linguistic, and geographic boundaries. As Osumare [Osumare H. Beat streets in the global hood: connective marginalities of the hip-hop globe. Journal of American and Comparative Cultures 2001;2(Spring/Summer):171-181.] indicates, “Global hip-hop youth culture has become a phenomenon in the truest sense of the word and has affected nearly every country on the map (171).” We extend our knowledge of the worldwide diffusion of hip-hop culture (Stanley TL. Cool consumption goods fit for hip-hop. Advert Age 2004;75:12 [July 12]) and employ qualitative research methods to address our research questions. Our findings identify commonalities among members of the hip-hop Diaspora and suggest that the core essence of hip-hop is shared by marginalized groups. Our data also illustrate that hip-hop is malleable and is adapted to speak to members of multiple national cultures, and localized socioeconomic and political conditions: hip-hop youth culture is glocalized.     

Scale Externalities in Korea

This paper estimates the nature and magnitude of scale externalities in a developing country, Korea, in the period 1983–1993. This is a period of rapid industry deconcentration from Seoul to other metro areas, providing a context where externalities are measured when local scale magnitudes are changing dramatically. The data allow us to examine the emerging degree of national industrial concentration in different industries, as related to their scale externality magnitudes. We also examine whether individual industries agglomerate in cities which have a comparative advantage for that industry.     

Tourism in Dubai: overcoming barriers to destination development

The Middle East as a whole attracts comparatively few visitors, and political events in the current century have generated new uncertainties and tensions which seem likely to further discourage tourists and investors. Additional barriers relate to poor accessibility, a perceived lack of conventional attractions and limited promotion. Despite these apparently unfavourable circumstances, international tourism has been adopted by the Dubai authorities as a core element in a programme of economic diversification. They have invested heavily in expensive facilities, as well as undertaken extensive marketing, and the outcome has been strong growth in tourism. There are great expectations of the future, reflected in the setting of very high arrival targets. However, there are also several constraints that might inhibit progress, with a need to review strategies. The experience of Dubai thus serves to illustrate factors that are critical to destination development, major impediments and approaches to overcoming these. Copyright © 2006 John Wiley &Sons, Ltd.     

Pseudo linear pricing rule for utility indifference valuation

This paper considers exponential utility indifference pricing for a multidimensional non-traded assets model, and provides two linear approximations for the utility indifference price. The key tool is a probabilistic representation for the utility indifference price by the solution of a functional differential equation, which is termed pseudo linear pricing rule. We also provide an alternative derivation of the quadratic BSDE representation for the utility indifference price.     

Strategic Planning in an Accounting Department using Causal Maps and Cognitive Factions

Strategic planning can be a time-consuming task for academic departments. As such, an effective and efficient strategic planning approach is paramount. This paper presents a strategic planning approach using causal mapping to uncover the factors which faculty members believed would make their department (in the USA) more successful. The information gathered during the session was used as part of an AACSB accounting maintenance of accreditation process. The approach applied here elicits faculty involvement in ways which bring to the surface perspectives held by subgroups/factions of faculty. Additional perspectives are positive in a strategic planning context as they can contribute to devising strategies that might not have resulted by considering only majority views. Content analysis of the strategic plan suggests the range of views uncovered were integrated into the plan, including both the strategic factors and the relative importance of the factors.     

How quickly do CEOs become obsolete? Industry dynamism,CEO tenure,and company performance

Scholars have characterized CEO tenures as life cycles in which executives learn rapidly during their initial time in office, but then grow stale as they lose touch with the external environment. We argue, however, that the opportunities for adaptive learning are limited because (1) a CEO assumes office with a relatively fixed paradigm that changes little thereafter; (2) inertia limits the speed at which an organization can align itself with a new CEO's paradigm; and (3) for any within‐paradigm learning to occur, the external environment must be stable enough so that the cause–effect relationships that CEOs glean today remain relevant tomorrow. In a longitudinal study of 98 CEOs in the relatively stable branded foods industry and 228 CEOs in the highly dynamic computer industry, we found results that strongly supported our hypotheses. In the stable food industry, firm‐level performance improved steadily with tenure, with downturns occurring only among the few CEOs who served more than 10–15 years. In contrast, in the dynamic computer industry, CEOs were at their best when they started their jobs, and firm performance declined steadily across their tenures, presumably as their paradigms grew obsolete more quickly than they could learn. Copyright © 2006 John Wiley & Sons, Ltd.     

The agglomeration of headquarters

This paper uses a micro data set on auxiliary establishments from 1977 to 1997 in order to investigate the determinants of headquarter agglomerations and the underlying economic base of many larger metro areas. The significance of headquarters in large urban settings is their ability to facilitate the spatial separation of their white collar activities from remote production plants. The results show that separation benefits headquarters in two main ways: the availability of differentiated local service input suppliers and the scale of other headquarter activity nearby. A wide diversity of local service options allows the headquarters to better match their various needs with specific experts producing service inputs from whom they learn, which improves their productivity. Headquarters also benefit from other headquarter neighbors, although such marginal scale benefits seem to diminish as local scale rises.     

Does Education Matter for Economic Growth?

Empirical growth regressions typically include mean years of schooling as a proxy for human capital. However, empirical research often finds that the sign and significance of schooling depends on the sample of observations or the specification of the model. We use a non‐parametric local‐linear regression estimator and a non‐parametric variable relevance test to conduct a rigorous and systematic search for significance of mean years of schooling by examining five of the most comprehensive schooling databases. Contrary to a few recent articles that have identified significant nonlinearities between education and growth, our results suggest that mean years of schooling is not a statistically relevant variable in growth regressions. However, we do find evidence (within a cross‐sectional framework), that educational achievement, measured by mean test scores, may provide a more reliable measure of human capital than mean years of schooling.