The Challenge of Market Power under Globalization

The legacy of Adam Smith leads to a false confidence on the optimality of laissez faire policies for the global market economy. Instead, the polarized character of current globalization deeply affects both developed and underdeveloped economies. Current globalization is characterized by factor exchange between economies of persistently unequal development. This implies the existence of persistent extraordinary market power in transnational corporations, reflected in their disproportionate participation in income and policy. These are shown to be steady‐state features of globalization in a convergence club model of development and underdevelopment including trade and foreign direct investment (FDI). Moreover, results in tax competition explain how the increased share of transnational profits under globalization leads to lower corporate taxes, more conservative policies, and weaker institutions for balancing market power. The increased level of market power under globalization poses a serious challenge for national and global governance that deeply impacts economic development, distribution, sustainability, and democracy everywhere.     

The Fallacy of Composition: A Review of the Literature

This paper reviews the literature on the fallacy of composition with an emphasis on labour‐intensive manufactures. It briefly addresses the protectionist and the partial‐equilibrium versions of the argument before focusing on general‐equilibrium considerations and the debate on the manufactures terms of trade of developing countries. The review indicates a potential fallacy of composition problem in labour‐intensive manufactures, where competition among different groups of developing countries for export market shares may constitute a new form of the fallacy of composition. The likelihood of a country that exports labour‐intensive manufactures to become subject to the fallacy of composition rises with the increasing integration of several strongly populated low‐income countries into world markets, while it declines with continuous structural change and favourable aggregate demand conditions particularly in developed and the advanced developing countries.     

New Venture Internationalization from an Emergent Market: Unexpected Findings from Russia

This article offers new insights on determinants of degree and scope of new venture internationalization from emerging markets. We set our study by development of a theoretical framework and hypothesis integrating entrepreneur-, firm-, industry-, and institutional factors to be tested in the Russian empirical context. The results indicate that institutional factors have the strongest relationship with the degree and scope of internationalization in Russian NVs. However, contrary to our expectations and existing literature, entrepreneur-, firm-, and industry-related factors are not associated with new venture internationalization. These unexpected findings have motivated us to implement the second round of empirical research using qualitative approach. As an outcome, we were able to explain the underlying forces behind the inconsistencies in the survey results and to develop four puzzles that provide a foundation for the theoretical extension of new venture internationalization from emerging markets.     

Das Mindestlohngesetz — Hoffnungen und Befürchtungen

The German government plans to introduce a minimum wage from 2015. This must be understood as a response to the decline in collective bargaining coverage and the marked increase in employment in the low-wage sector. The authors discuss how many workers are affected by this new regulation and whether the minimum wage is too high in relation to the average wage of workers (Kaitz index). They assume that the introduction of a minimum wage in Germany can have a number of effects. It is not possible to forecast all the reactions and behaviour of market participants to handle higher wages and goods prices. Some authors warn that these measures are significant labour market interventions that could have adverse employment effects. They recommend allowing more exemptions from the minimum wage law than intended by the government, especially for young employees and student apprentices. Other authors hope that minimum wages would help to strengthen collective bargaining and stabilise wages. Some authors emphasise that there should be a careful evaluation of the economic effects by scientists.     

Does the U.S. Consumer Product Safety Commission make a difference? An assessment of its first decade

In 1972 the Consumer Product Safety Commission (CPSC) was given the mandate of protecting the U.S. public against unreasonable risks of injury associated with consumer products. Pooled cross-sectional time-series data from 1961 to 1982 on states' accidental home death rates are used to examine how effective the CPSC has been. This evaluation controls for several relevant historical forces (besides the CPSC) which may have contributed to fluctuations in the accidental home death rate. The results indicate that after controlling for those exogenous factors for which there are data, the CPSC reduced accidental home deaths by an estimated 17,941 over its first ten years of operation.     

Policy dialogue between multilateral institutions and developing countries

The lending criteria applied by the IMF and the World Bank have been converging for some time. Considering also that since the floating of exchange rates in the early seventies the IMF seems to have lost in importance as a monetary institution, debate is growing on the question of whether the Fund needs to correct its policy course, to be assigned new tasks by its member countries or even to be amalgamated with the World Bank into one efficient development aid institution.     

The ethical challenge of management buy-outs as a form of privatisation in Central and Eastern Europe

There has been a growing debate about the ethics of management buy-outs (MBOs). One possible criticism of the MBO is that it serves the interests of incumbent management at the expense of shareholders. In this paper we develop the general arguments concerning the ethical aspects of the MBO to include other forms of buy-out beyond “going privates” and apply the analysis to MBOs as a mode of privatisation in Central and Eastern Europe (CEE). MBOs are justified in this context postperestroika as a means of incentivising economic activity by giving managers an ownership stake in former state enterprises. The actual mode of privatisation, though, raises issues of social justice and the criticism that MBOs are at the expense of the broader social good. The ethical problem for the CEE is to balance the economic gains of a move to markets with the ethical risks to the agents of these markets.     

Productivity growth and inter-sector spill-over in Dutch horticulture, 1976–1995

This article calculates nonparametric measures of total factor productivity growth on Dutch horticultural firms in the period 1976–1995. Individual components of total factor productivity growth, i.e., efficiency change and technical change are regressed on socioeconomic factors reflecting the effects of the world oil crises, household and demographic characteristics, location, and investment in physical capital. Also, the article investigates the presence of inter‐sector spill‐overs between groups of firms with different specializations in Dutch horticulture.