Mind-Dependence. The Past in the Grip of the Present

Synopsis Recent developments in economic literature have pointed out that path-dependence has a cognitive dimension. The paper shows how this result may be analyzed in more depth, by making explicit the links between the properties of path-dependent processes in economics and the functioning of the mind. Through the investigation of memory mechanisms, we explain why human beings might be considered as complex systems whose growth follows a stochastic and non-ergodic dynamic. Our main claim is that the concept of path-dependence, as commonly interpreted, does not take the reconstructive nature which characterizes human memory into full account. When such nature is acknowledged, the relevance of the mind in orientating individual attitude toward the past is extended and seems to be more important than discussed in the traditional literature. To specifically clarify the active role played by the human mind in the continuous process of revising past experiences and their influence on current outcomes, we introduce the concept of mind-dependence. Among the most relevant implications for economic theory, mind-dependence extends the meaning of lock-in and allows for the definition of new devices to escape trapping states.      

Reviews

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Cultural technology district: a model for local and regional development

The urgency to cope with the international economic crisis has led to efforts to identify innovative tools and frameworks that are capable of regenerating local and national economic development. The enhancement of the cultural heritage sector can be a strategic factor in improving the competitiveness of country systems. In Italy, the nation's rich cultural heritage is not managed in an efficient and effective manner, even though it embodies a tremendous opportunity to enhance local economic growth, especially in light of the role of new cultural technology districts (CTDs). This article intends to present the CTD business model aimed to promote local and regional development in Italy, to attract domestic and international tourist flows and spread them out more evenly across all regional territories and to verify the CTD's opportunity through the Lazio Region experience.     

Current Account ‘Core–Periphery Dualism’ in the EMU

Current account (CA) dispersion within European Union (EU) Member States has been increasing progressively since the 1990s. Interestingly, the persistent deficits in many peripheral countries have not been accompanied by a significant growth process able to stimulate a log run rebalancing as neoclassical theory predicts. To shed light on the issue, this paper investigates the determinants of Eurozone CA imbalances, focusing on the role played by financial integration. The analysis considers two samples of 22 OECD and 15 EU countries, three time horizons corresponding to various steps in European integration, different control variables and several panel econometric methods. The results suggest that within the EU group of countries financial integration contributed to explain the CA deterioration in the peripheral countries especially in the post‐EMU period creating an asymmetric behaviour within the EMU. From a financial stability perspective, this ‘divergence’ could hinder the effectiveness of monetary policy. By reducing the apparent benefits of participating in the monetary union, it also raises the risk of a break‐up.     

Microfinance,subsidies and local externalities

We analyse equilibrium borrowers’ effort and the cost of microcredit loans in the presence of moral hazard, project correlation and subsidies under group lending conditions. Our results show that under the assumption of endogenous effort, project correlation has significant effects on borrowers’ effort only when it is determined by asymmetric (positive or negative) shocks. These findings indicate that the well-known negative effect of within-group (symmetric) project correlation on group lending with joint liability disappears once endogenous effort is taken into account. We also analyse the effects of subsidised lending (and asymmetric correlation) on the relative convenience (in terms of borrowers’ effort) of the alternative (1) between group lending and individual lending with notional collateral and (2) among three different market structures of the microfinance industry.     

China’s Outward FDI: An Industry-Level Analysis of Host-Country Determinants

We use disaggregated data by country and industry to empirically analyze the host country determinants of Chinese outward foreign direct investment (FDI) for the years 2003 to 2011. Our results suggest that the host-country determinants of Chinese FDI differ between high- and low-income countries. While all Chinese FDI is invariably market seeking, other motivations stand out for differing sectors in specific country groups. The resource seeking motivation is relevant for manufacturing FDI to high-income countries with relatively high fuel abundance, and to low-income countries with primary resource abundance (other than fuels). Differently, the strategic-asset seeking motivation, measured by the level of R&D spending on GDP, only positively and significantly affects Chinese manufacturing and service FDI to OECD countries, while higher education levels are an attraction factor for all investing firms. Natural resource is an important attraction factor for Chinese FDI, not only in resource-related sectors, but also in manufacturing and service sectors. Finally, Chinese FDI tends to follow exports (rather than foster them), especially in service sectors.