Natural Resources,Institutional Quality,and Economic Growth in China

The resource curse has been mainly studied using cross-country samples. In this paper we analyze a cross-province sample from one country: China. We focus on the interplay between resource abundance, institutional quality, and economic growth, using two different measures of resource abundance (a stock: resource reserves; and a flow: resource revenues), and employing various econometric approaches including varying coefficient models. We find that resource abundance has a positive effect on economic growth at the provincial level in China between 1990 and 2008, an effect that depends nonlinearly on institutional quality (1995 confidence in courts). The ‘West China Development Drive’ policy, initiated in 2000, caused substantial changes, which we investigate through a comparative panel-data analysis.     

Entrepreneurship,innovation, and human flourishing

This essay uses Edmund Phelps’ new book Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change (Phelps 2013) as inspiration to discuss innovation and entrepreneurship. The book is laudable for its discussion of what constitutes a “good life”. Phelps argues that true life satisfaction cannot be achieved through a purposeless quest for wealth and material consumption, but rather through adventure, entrepreneurship, and creative endeavors. Weaknesses of the book include an overly glossy characterization of the period before World War II, a niggardly evaluation of European innovation, and the lack of convincing empirical evidence for the claim that the rate of innovation has slowed. These flaws are regrettable given the importance of the book’s main message: innovation and creative entrepreneurship are not merely the keys to economic growth, but to life satisfaction as well. This essay discusses topics in entrepreneurship research linked to the book, including the link between innovation and entrepreneurship, the role of institutions for entrepreneurship, and the tendency of national accounts to under-record the social value of innovation and entrepreneurship. If the measures used do not capture the full social value of innovation, we are likely to underestimate the genuine rate of innovation. Government policy may also be misguided. Finally, the challenge to entrepreneurial capitalism posed by the postmodernist research paradigm is discussed.     

Product chain collaboration for sustainability: A business case for life cycle management

Life cycle management (LCM) is frequently described as a holistic sustainability perspective along the product chain. It has mainly been a company internal practice. However, recent developments reveal a new type of LCM where companies collaborate in product‐chain‐specific initiatives. This raises questions concerning why corporations extend “corporate LCM” toward “product chain LCM”. Here, we explore rationales and challenges for corporations engaging in one such coalition: The Sustainable Transport Initiative. The study covers five companies in different product chain positions and practitioners in different corporate functions. The results show a broad range of rationales for engaging in product chain LCM, related both to self‐interest and a shared interest in the product chain. The importance of the “business case,” both for the individual companies and the product chain, is identified. The importance of sustainability managers as actors and as facilitators in discussions between managers from different corporate functions is also identified.     

Taxation, Labor Market Policy and High-Impact Entrepreneurship

Public policy affects the prevalence and performance of both productive and high-impact entrepreneurship. High-impact entrepreneurship prospers when knowledge is successfully generated and exploited in the economy. This process depends on complementary key actors who use their competencies in what we denote a competence bloc. Although variations in economic contexts make prescribing a general panacea impossible, a number of relevant policy areas that affect key actors can be identified. In this paper this is done in the areas of tax policy and labor market policy. It is shown that high and/or distortive taxes and heavy labor market regulations impinge on the creation and functioning of competence blocs, thereby reducing high-impact entrepreneurship.     

Entrepreneurship and second-best institutions: going beyond Baumol’s typology

This paper reconsiders the predominant typology pioneered by Baumol (J Polit Econ 98(5):893–921, 1990) among productive, unproductive and destructive entrepreneurship. It is shown that the foundation of Baumol’s classification scheme is the restrictive concept of first-best outcomes, and therefore it easily fails to appreciate the true impact of entrepreneurship in real-world circumstances characterized by suboptimal institutions. We present an alternative way of generalizing the notion of entrepreneurship and show how and why it encompasses the Baumol typology as a special case. Our main distinction is between business and institutional entrepreneurship. We draw on Schumpeter and introduce the entrepreneur in an additional function: as a potential disturber of an institutional equilibrium. Various subsets of institutional entrepreneurship are posited and discussed. It is shown that changing the workings of institutions constitutes an important set of entrepreneurial profit opportunities. An implication of this is that entrepreneurial efforts to reform or offset inefficient institutions can, in many cases, be welfare-improving.     

Stock option taxation: a missing piece in European innovation policy?

Europe continues to lag behind the USA in venture capital (VC) activity and in the creation of successful startups, and has recently been surpassed by China. This is despite the fact that many European countries have deep financial markets, strong legal institutions, and high R&D spending. We point to the tax treatment of employee stock options as an explanation for the stronger growth of the US VC sector. As a response to high uncertainty and transaction costs, VC financiers have developed a model in which founders and key recruitments are compensated with stock options under complex contracts. Low tax rates on employee stock options further raise the relative returns of working and investing in innovative entrepreneurial firms, and shift financial capital and talent to that sector. We measure the effective tax on stock options in VC-backed entrepreneurial firms in a number of developed economies. Countries with lower stock option taxation have higher VC activity and more high-growth expectation entrepreneurial activity. Based on these associations and the theoretical and empirical literature, we argue that more lenient taxation of gains on employee stock options can be a strategy for European countries to catch up in entrepreneurial finance. This tax policy would narrowly target entrepreneurial startups without requiring broad tax cuts. The favorable tax treatment of stock options allows the state to promote firms that rely on entrepreneurial finance and make use of these types of contracts without lowering taxes for other sectors of the economy.     

Deal with it! The emergence and reversal of an agro-ecological crisis,Southern Sweden in the eighteenth and nineteenth centuries

The European Early Modern period provides examples of stagnating and even declining production and energy consumption per capita, which can be interpreted as indicators of an emerging crisis. With a focus on agriculture sector, some have suggested that the crisis was ‘conditional’ – meaning that a crisis can only be observed in some cases. This article investigates one such case, a village in Southern Sweden during the eighteenth and nineteenth centuries, and investigates the mechanisms that mediate population growth to deteriorating living standards and environmental degradation. It provides new insights into the conditions of pre-industrial agriculture, particularly as regards the consequences of intensified demand pressure in ecologically fragile areas, and argues that human societies must be studied in tandem with their natural surroundings.     

Conditional crisis? Ecological challenges and conditions of growth during the agricultural revolution in southern Sweden,c. 1700–1900†

Was there an agro‐ecological crisis in Europe which preceded and contributed to pushing forward the agricultural revolution? This article presents a new theoretical and empirical approach to this controversial perspective on agricultural transformation and relates to an ongoing debate on conditions of growth in pre‐industrial societies. The results demonstrate that there were indeed indicators of a crisis, which grew stronger during the eighteenth century and culminated in the early nineteenth century. The crisis was, however, not general, but was rather restricted to areas that stand out due to poor natural conditions for agriculture. In other words, the crisis was conditional. Furthermore, the findings show that the crisis could push forward changes that were important for enabling agricultural transformation and growth. However, both the emergence and reversal of the crisis were connected to new opportunities opened up by market development. Enough differences were found between different types of regions to suggest that there were many development paths within the agricultural transformation process, and that they were not necessarily linear.