Pre-entrepreneurial income,cash-flow growth and survival of startup businesses: Model and tests on U.K. data

A target income/human capital model of startup survival and growth is derived and tested. The objective of the entrepreneur is to produce an independent source of income for him/herself to replace income from previous employment. Target income is a function of pre-entrepreneurial income and human capital represented by age. The model predicts that higher pre-income entrepreneurs and more mature individuals will grow faster to achieve these targets and that growth is an ambiguous function of size. It also predicts that these same individuals, and businesses that start larger, will be more likely to survive. The key results of the empirical analysis are that (a) businesses run by proprietors with higher pre-entrepreneurial incomes do indeed grow faster than other startups but have no greater survival prospects, and (b) businesses run by mature proprietors possess greater longevity. We conclude that business income targets in practice constitute a significant motivation for startup growth, and that the human capital represented by age plays no additional role. However, proprietor age rather than pre-income determines survival, despite the fact that pre-income and age are positively correlated both with each other and with growth.National Westminster Bank Principal Research Fellow and Assistant Director (Research) of Warwick University SME Centre. This research is part of a wider study financed by the National Westminster Bank of Great Britain. I am indebted to the Bank for the provision of the raw data. Needless to say the views expressed here are those of the author and not necessarily those of NatWest.     

The Political Economy of Trade Protection: The Determinants and Welfare Impact of the 2002 US Emergency Steel Safeguard Measures

This paper analyses the political economy of trade protection in the context of the factors determining the US Emergency Safeguard Measures for steel imposed in March 2002. The paper identifies several factors in addition to the official justification of problems of global over‐capacity and the penetration of imports in the US market, namely the continued failure to restructure poorly performing firms, failure of previous attempts at protection and the influence of the domestic steel lobby and short‐term political gains to the Bush administration of protectionist action. The paper also reviews several ex ante and ex post empirical studies of the impact of the steel Safeguards on the steel industry and downstream steel‐consuming activities. All of these studies find that the costs of the Safeguard Measures outweighed their benefits in terms of aggregate GDP and employment as well as having an important redistributive impact. The paper provides a brief summary of the subsequent WTO steel case and the final resolution of the dispute. The evidence suggests that the steel Safeguards owed more to political expediency than justification for protection under the WTO rules.ost empirical studies of the impact of the steel Safeguards on the steel industry and downstream steel‐consuming activities. All of these studies find that the costs of the Safeguard Measures outweighed their benefits in terms of aggregate GDP and employment as well as having an important redistributive impact. The paper provides a brief summary of the subsequent WTO steel case and the final resolution of the dispute. The evidence suggests that the steel Safeguards owed more to political expediency than justification for protection under the WTO rules.     

Horatio Alger Meets the Mobility Tables

The question of how entrepreneurship relates to income mobility is cogent given the current public debate about the sources of income inequality and mobility in United States society. We examine how experience with entrepreneurship has affected an individual's place in the earnings distribution. Our basic tack is to follow individuals' positions in the income distribution over time, and to see how their mobility (or lack thereof) was affected by involvement with entrepreneurship. Our main finding is that for low-income individuals there is some merit to the notion that the self-employed moved ahead in the earnings distribution relative to those who remained wage earners. On the other hand, for those at the upper end of the earnings distribution, those who became self-employed often advanced less in the earnings distribution than their salaried counterparts.     

Foreign investment in North America and the pharmaceutical industry in Canada

Unique among developed countries in denying patent protection for pharmaceuticals, Canada modified her laws in 1987 and again in 1993 to meet international standards, thereby permitting her to participate in NAFTA and become a signatory of the TRIPS of the Uruguay Round. Canada's concerns for containing health costs and providing quality health care for all its citizens were important factors in her original position. It was only as a result of international pressure and an alliance between the multinational pharmaceutical firms and the university community in Canada that she offered greater patent protection. The results of these changes had an immediate effect on improving the business environments and significant investments by the multinational pharmaceutical firms have increased substantially since 1987.