The Natural Economic Advantage of Dictatorship over Democracy: A “Gresham's Law” of Governance

We show that when democratic and autocratic governments peacefully compete for governance over the same jurisdiction the autocratic has a natural advantage. The autocratic government, which unambiguously reduces welfare for everyone except the autocrat, will drive the competing democratic government to voluntarily shut down in the interests of its own electorate. For instance, if an autocratic government allows the creation of democratic local governments, with the authority to tax and spend at will, these democratic local governments will remain inert and ineffective: A Gresham's Law of Political Economy.     

Foreign banks activities and factors affecting their presence in Malaysia

This paper assesses the presence of foreign banks in Malaysia and analyses their distribution by the country of origin. The paper uses a model developed by Grosse and Goldberg (1991) to test the determinants of the number of offices of foreign banks in Malaysia based on the country of origin. The empirical results indicate that the size of the banking sector in the foreign country, foreign trade with Malaysia, and country risk are positively correlated with foreign banks' presence in Malaysia. Geographic distance and foreign direct investment in Malaysia are not related to foreign banks' presence in Malaysia.The author would like to thank two anonymous referees for helpful comments and suggestions.     

Asymmetric effects of financial development on South-South and South-North trade: Panel data evidence from emerging markets

Using bilateral trade data in total and technology-and-skill-intensive manufactured goods for 28 developing countries that account for 82% of all developing country manufactures exports between 1978 and 2005, this paper explores the effects of financial development on the pattern of specialization in South-South and South-North trade. The empirical results using dynamic panel regressions and comprehensive sensitivity tests suggest that financial development in the South has an economically and statistically significant positive effect on the share of total and technology-and-skill-intensive manufactures exports in GDP, and total exports in South-South trade. In contrast, no such significant or robust effect of financial development is found in South-North trade. Overall, the positive effect of financial development is found to be asymmetric favoring South-South significantly more than South-North trade. In addition, financial development is found to be increasing technology-and-skill-intensive manufactured goods exports significantly more than total manufactured or merchandise goods exports.     

Financial globalization and stock market risk

This paper examines stock market volatility measured by either “beta-volatility” or by the standard deviation of stock returns over 1995-2007. In our dynamic panel data framework, after controlling for size, turnover, and real output growth, we find some support to increases in financial integration reducing total stock return volatility for representative emerging markets, with almost no impact for industrial economies. Allowing for feedback effects from stock volatility to stock turnover, we obtain a richer interpretation for the broadening of investor basis hypothesis: more integrated financial markets leads to lower stock volatility, yet these are not so strong as found previously and are not accompanied by more turnover.     

Assessing stock market dependence and contagion

This paper assesses evidence of the linkages and contagion among important stock markets in Latin America (Brazil, Mexico and Argentina), Europe (UK and Germany), Asia (Japan and Singapore) and the USA from 6 September 1995 to 19 April 2013. To accomplish this task, this paper combines copula modelling with time-varying parameters and pair-copula composition of multiple dependence. The bivariate analyses show an asymmetric dependence between the stock markets as well as contagion. In addition, this work proposes a method to assess the linkages and contagion between two stock markets which takes into account the effects of a third stock market. In applying this method, conditioned on the USA market, most of the evidence of contagion between the Latin American or European markets disappears, but important dependence levels still remain.     

The power of marketing within the firm: Its contribution to business performance and the effect of power asymmetry

While marketing continues to gain prominence as an orientation within the firm, concerns remain about the contributions of the marketing subunit. Given the current limited and conflicting evidence on the issue, this study responds to calls for research on the link between a powerful marketing subunit and business performance. The study draws on the critical contingencies perspective on power, which was specifically developed to study power distribution among organizational subunits. The key objectives of the study are (1) to determine whether a powerful marketing department is beneficial to business performance, (2) to reconcile conflicting evidence pertaining to the marketing function's contribution to performance beyond that of a market orientation, and (3) to investigate the effect on business performance of power asymmetry between marketing and other functions. Employing data from senior managers in medium and large manufacturing firms, the study shows that a powerful marketing function is associated with improved business performance above and beyond the contribution of a market orientation. Power asymmetry between marketing and finance/accounting and between marketing and production has a negative effect on business performance while a power asymmetry between marketing and R&D shows a positive effect on business performance. Finally, a differentiation strategy attenuates the negative performance outcomes of power asymmetry between marketing and production.     

Marketing's reputation and influence in the firm

This study examines whether or not marketing's influence in the firm is fundamentally a reputation issue. Based on a sample of 122 senior executives of Australian firms operating in a wide range of manufacturing industries, empirical findings show that the marketing function's reputation in a firm is an important antecedent of marketing's influence in a firm. Results also show that the reputation-influence link is contingent on a firm's particular strategic stance (cost-leadership strategy and differentiation strategy). Results further show that marketing's reputation was good and marketing's influence was strong in the Australian firms surveyed. Directions for future research are discussed.     

What determines the value of recommendation change? A preliminary analysis

This article determines the condition under which recommendation changes relative to consensus recommendation and recommendation changes relative to analyst’s previous recommendation are valuable. We show that recommendation upgrades (downgrades) relative to consensus recommendation are followed by significantly positive (negative) short-term returns whenever consensus recommendation represents convergence of analysts’ opinions. We also show that as the standard deviation associated with consensus recommendation increase, the value of recommendation changes reduce significantly. This article also shows that recommendation upgrades (downgrades) relative to analyst’s previous recommendation are followed by significantly positive (negative) short-term returns whenever interval between two consecutive recommendations is relatively short. We also show that, as the interval between two consecutive recommendations increase, the value of recommendation changes reduce significantly. Our results are robust across various subsamples based on size and region.     

Does corruption affect health outcomes in the Philippines?

We examine the effect of corruption on health outcomes in the Philippines. We find that corruption reduces the immunization rates, delays the vaccination of newborns, discourages the use of public health clinics, reduces satisfaction of households with public health services, and increases waiting time at health clinics. We also find that corruption affects public services in rural areas in different ways than urban areas, and that corruption harms the poor more than the wealthy. The research underlying this paper was supported by a grant from the World Bank, financed by the Netherlands Trust Fund.     

Sustainability indicators,alternative strategies and trade-offs in peasant agroecosystems: analysing 15 case studies from Latin America

In view of the urgent need to improve agroecosystem sustainability, several efforts have been made to evaluate the effect of alternative strategies on key environmental and socioeconomic variables at the farm, community and regional levels. Most peasant farmers manage complex and diverse agroecosystems, and constantly adapt management strategies with multiple aims. A sustainability evaluation framework for peasant systems has been applied in over 40 case studies in Latin America, from which 15 were analysed, focusing on the choice of indicators, the effect of alternative strategies on agroecosystem sustainability and the trade-offs involved. Common indicators include yields, income, agrodiversity and external input dependence. Alternative strategies include crop/product diversification and soil conservation practices. Yields, income and agrodiversity improved in most cases, but in some cases the establishment costs increased external input use. Trade-offs observed include improved performance of a subsystem (i.e. crops) vs. decreased one in others (livestock, forestry) and increases in productivity vs. decreases in stability, resilience and reliability. The difficulty of assessing systems in transition towards alternative management was acknowledged by some evaluation teams. Applying the framework to such a variety of cases allowed making the sustainability concept operational, promoted alternative strategies and generated knowledge on agroecosystem processes among stakeholders.