Patent Protection and Strategic Delays in Technology Development: Implications for Economic Growth

We present an endogenous growth model in which both the investment to develop a new technology—that upgrades the quality of machines—and entry of imitators are determined endogenously. According to the model, how soon the new‐technology machine is launched after the patent is granted is influenced by two factors: returns to scale in technology development and “strategic delays.” Strategic delays in technology development are most likely to occur when earlier dates of success enable imitators to enter an industry, that is, when imitation is swift and relatively cheap and/or patent protection is relatively lengthy. We then explore the link between the optimal patent length and economic growth and find that the equilibrium investment in technology development and thus the expected rate of technological progress exhibit an inverted U‐shape relationship with respect to the legal patent length.     

Public Education and Intergenerational Economic Mobility

This paper examines the role of public education in determining intergenerational economic mobility. It considers a model in which education is free and admission to schools is competitive. The results indicate that for mobility to increase during the process of development, the share of resources devoted to public education needs to be large enough to offset the relative advantage of having educated parents in academic attainment.     

Low Wage Returns to Schooling in a Developing Country: Evidence from a Major Policy Reform in Turkey

In this paper, we estimate returns to schooling for young men and women in Turkey using the exogenous and substantial variation in schooling across birth cohorts brought about by the 1997 reform of compulsory schooling within a fuzzy regression discontinuity design. We estimate that the return from an extra year of schooling is about 7–8% for women and an imprecisely estimated 2–2.5% for men. The low level of the estimates for men contrasts starkly with those estimated for other developing countries. We identify several reasons why returns to schooling are low for men and why they are higher for women in our context. In particular, the policy alters the schooling distributions of men and women differently, thus the average causal effect puts a higher weight on the causal effect of schooling at higher grade levels for women than for men.     

Sequencing in telecommunications reform: A review of the Turkish case

This paper reviews the Turkish case of telecommunications reform with reference to the evidence from the sequencing literature. Turkey’s progress is in line with the proper sequencing of reform suggested by the literature. Accordingly, Turkey has pursued a gradualist approach by restructuring its public utility, the Posts, Telegraph and Telephone Company, and creating Turk Telecom in 1994; establishing the sector regulator, the Turkish Telecommunications Authority, in 2000; and liberalising the sector in 2003 before selling 55% of Turk Telecom to Oger Telecom, a private company, in 2005. Although the proper sequencing of reform was implemented, the Turkish telecommunications sector has not been functioning satisfactorily as yet, as indicated in the recent progress report of the European Union about Turkey’s accession and as revealed by the performance indicators analysed in this paper. The prevailing information, incentive and commitment problems require a close cooperation by the government with the regulators so as to ensure and reinforce the autonomy of the Telecommunications Authority and to establish a more transparent decision-making process.     

Incentives for Technology Adoption Under Environmental Policy Uncertainty: Implications for Green Payment Programs

Water quality protection policy in the UnitedStates has been based on the provision offinancial incentives to farmers for adoptingimproved nutrient management practices.Increasing reliance on subsidy programs couldresult in expectations for such programs in thefuture. Using an option-value model thatindicates uncertainty can lead to a delay ininvestment, this paper analyzes the extent towhich uncertainty about cost-share subsidypolicies would impact adoption decision.Application of the model to adoption ofsite-specific technologies indicates thatuncertainty about subsidy policies has thepotential to impact the investment decision.When there is currently no cost-share subsidy,an increase in the probability of an expectedpolicy delays adoption. If the policy is ineffect, an increase in the probability of awithdrawal of the program encouragesinvestment. Cost-share subsidy policy is mosteffective when it is immediately offered andguaranteed that it will be removed soon.     

Characteristics of innovating firms in Tunisia: The essential role of external knowledge sources

This article is dedicated to the analysis of the first innovation survey of the Tunisian firms. Starting from basic mechanisms of innovation processes and existing results on other developing countries, we test a set of assumptions on the characteristics of innovating firms in a developing country like Tunisia. The analysis of product and process innovations shows the essential role played by external technical knowledge sources: firms must be able to benefit at least from one such a source in order to attain a significant innovation propensity. We also show that the profile of Tunisian firms can be contrasted with other developing countries. The main contrast concerns the limited role of internal R&D and the insignificant role played by foreign participation. For both types of innovations, another important contrasting result concerns the role of sectoral membership. In Tunisia, this dimension does not seem to structure enough systematically the innovative capabilities of firms. That could indicate an immaturity of sectoral systems of innovations in this country.     

Sustaining multilateral cooperation among asymmetric countries: Does MFN help?

The most favored nation (MFN) clause is widely understood to be the central pillar of the global multilateral trading system. Does the MFN principle of non-discrimination facilitate multilateral cooperation? Using a repeated game approach, we address this question in an oligopolistic three country model of intraindustry trade where production costs differ across countries. The analysis delivers two main results. First, both under MFN and tariff discrimination the incentive constraint of the high cost country determines whether or not free trade is sustainable. Second, the high cost country is more willing to cooperate multilaterally under MFN relative to tariff discrimination.     

The Real Exchange Rate and the Structural Transformation(s) of China and the U.S.

From 1989 to 2010, the RMB–dollar real exchange rate depreciated, despite China's rapid income growth relative to the US. We develop a macroeconomic-trade model of the very long-run equilibrium RMB-dollar real exchange rate. We show that this long-run depreciation of the RMB-dollar real exchange rate can be justified by our model, if we note that Chinese agriculture has relatively low productivity and that agriculture is tradeable. Relative to our equilibrium benchmark, the current real RMB-dollar rate is, if anything, over appreciated.