NGOs Address Structural Racism: After the Storm in New Orleans

The long history of institutional and historical racism found an explosive expression in the events around Katrina in New Orleans. Racial inequalities were evident in the actual destruction caused by the hurricane and even more significantly in the government response to the disaster. The Non-Governmental Organization (NGO) sector provided alternative approaches to recovery and reconstruction, but such alternatives were inadequate to counter the formidable forces of capitalism arrayed against them. NGOs provided substantial direct service to the most distressed residents of the city and, in some cases, provided important advocacy roles in addressing the inequities caused by government action and/or inaction. The specific initiatives of six NGOs are reviewed here, including the work of the New Orleans Habitat for Humanity, the Catholic Charities of the Archdiocese of New Orleans, the Common Ground Collective, the Association of Community Organizations for Reform Now, the Peoples Hurricane Relief Fund and Oversight Coalition, and the People’s Organizing Committee. NGO initiatives were not structurally capable of generating a broad militant anti-racist mass movement of New Orleans’ working class for social change. Five years after the storm the working class of New Orleans faces deepened racial and economic distress. A return to the strategy of bold anti-racist mass movements confronting capital and the state would seem to be in order for the coming period of time.     

Residents' Perceptions of the Impact of Cultural Tourism on Urban Development: The Case of Gwangju,Korea

Cultural tourism constitutes an alternative strategy of sustainable urban development for improving quality of life. The main objective of this type of tourism is to transform regions characterized by cultural resources into ideal places for vacation, residence or business. In this study residents' perceptions of cultural tourism were examined in a case study of Gwangju, Korea. It was found that the majority of the respondents were aware of the importance of cultural tourism and that they argued that it could contribute to urban development. The findings also suggest that there is a strong relationship between the respondents' characteristics and their perceptions of the impact of cultural tourism on urban development.     

Presidential Agenda Building and Policymaking: Examining Linkages Across Three Levels

To investigate the role of strategic political communication in governing, this study comprehensively examined presidential agenda-building associations at three levels during the first six months of U.S. president Barack Obama’s second term. Multiple presidential information subsidies, national news content, and policymaking activity were monitored. The results revealed solid support for all three levels of agenda-building (i.e., object salience, attribute salience, and network associations among objects or attributes), but the linkages with media coverage and policymaking were not uniform across information subsidy types. Based on the analysis, presidential news releases, blog posts, and presidential speeches were the most effective all-around strategic agenda-building tools for media management and policymaking purposes during this time period. The theoretical and practical implications are discussed.     

How Much Common Belief Is Necessary for a Convention?

We study Bayesian coordination games in which players choose actions conditional on the realization of their respective signals. Due to differential information, the players do not have common knowledge that a particular game is being played. However, they do have common beliefs with specified probabilities concerning their environment. In our framework, any equilibrium set of rules must be simple enough so that the actions of all players are common belief with probability 1 at every state. Common belief with probability close to 1 will not do.Journal of Economic LiteratureClassification Numbers: C72, D82.     

Financial Liberalization and Corporate Investments: Evidence from Korean Firm Data*

This paper examines whether financial liberalization procedures introduced in Korea in the early 1990s succeeded in relaxing financing constraints on firms. Because external funds are more costly than internal funds in an imperfect capital market, corporate investments depend on the availability of internal funds. As financial liberalization mitigates constraints on firms, the sensitivity of investments to cash flow can be reduced. Using panel data on Korean firms, we found that cash‐flow effects on investment spending decreased drastically during the liberalization period. In particular, small, non‐chaebol and established firms that were severely constrained gained most from liberalization. Chaebol firms appeared to lose preferential access to credit after liberalization.     

City versus Metropolis: The Northern League in the Milan Metropolitan Area

Entire metropolitan areas are often seen as fundamental components of the emerging global space–economy. The national and global roles of central cities, however, may lead them in fundamentally different economic and political directions from their hinterlands if the functions of the cities are decreasingly complementary to those of their surrounding areas. In particular, the political complexions of city and hinterland may come to reflect different cultural and economic orientations as a result of divergence in political–economic trajectories between the two. This possibility is explored using the example of the northern Italian city of Milan and its hinterland, taken as the provinces of Bergamo, Como, Lecco and Varese, and the rest of the province of Milan outside of the city with respect to geographical patterns of support for the regionalist/separatist movement, the Northern League, over the course of three national elections: 1992, 1994 and 1996. Putatively a movement representing the interests of northern Italy as a whole, the Northern League’s stands on issues tended increasingly to represent the identities and interests of the small manufacturing firms that dominate part of the fringe of the metropolitan area, whereas Milan itself has an economic base of advanced services and national–oriented manufacturing firms that would lead to the expectation of a very different political orientation. Analysis of election returns suggests a divergence between city and hinterland that is in large part accounted for by their distinctive economic trajectories. There is no simple identity between a city and its metropolis. On considère souvent des zones métropolitaines entières comme des composantes fondamentales de l’espace économique mondial naissant. Les rôles nationaux et planétaires des grandes villes centrales peuvent toutefois les pousser dans des directions économiques et politiques totalement différentes de leur arrière–pays si leur fonction perd de sa complémentarité par rapport à leur zone environnante. Les aspects politiques de la ville et de l’arrière–pays peuvent notamment finir par traduire des orientations économiques et culturelles distinctes è la suite d’une divergence dans leurs trajectoires politico–économiques respectives. Cette possibilité est étudiée au travers de l’exemple de Milan, ville du nord de l’Italie, et de son arrière–pays (couvrant les provinces de Bergame, Côme, Lecco, Varèse et le reste de la province de Milan extérieur à la ville) en s’attachant à la carte géographique des partisans du mouvement régionaliste et séparatiste de la Ligue du Nord au cours de trois élections nationales (1992, 1994 et 1996). Ce mouvement, supposé traduire les intérÁts de toute l’Italie du Nord, a penché de plus en plus souvent pour des positions représentant les identités et intérÁts des petites industries qui dominent partiellement la périphérie de la zone métropolitaine, alors que la base économique de Milan se compose de services de pointe et d’entreprises industrielles d’envergure nationale laissant supposer une orientation politique toute différente. Une analyse des résultats des élections révèle une divergence entre ville et arrière–pays, en grande partie justifiée par leurs axes économiques distincts. Il n’existe pas d’identité simple entre une ville et sa métropole.     

Internationalization and the Dynamics of Product Adaptation—An Empirical Investigation

Firms competing in foreign markets can choose to make no changes to the physical product and packaging, called a product standardization policy, which keeps costs low. The main drawback of such a policy is that the product might not satisfy customers. Conversely, firms may choose to modify, or to adapt, the physical characteristics or attributes of a product and its packaging to fit the needs and desires of consumers in different countries better, but this increases development, manufacturing, marketing, packaging, and distribution costs. Though product adaptation is a core aspect of customizing an export market offering, little research has investigated modifying the physical product and packaging. To be successful, an adapted product must add sufficient incremental revenue (through increased sales due to better satisfying customer needs and wants relative to competitive product offerings) such that the additional manufacturing and marketing costs that result from adapting the product are recovered. In this article, a model of the product adaptation process is developed. Using mail surveys, information is gathered from managers in 239 U.S. organizations and 302 South Korean organizations, all of which export products. The goal was to understand better the motivation of firms to adapt their products for export markets as well as the performance implications of adapting products. Furthermore, the model was tested in these two countries to determine if the model is robust and to uncover differences between the United States and South Korea. Using structural equation modeling to analyze the data, a positive association was found between the level of product adaptation and profitability at the project level. Second, U.S. firms appear to be more reactive when adapting products for export markets, doing so when laws and regulations in the export market mandate changes relative to the U.S. market. Conversely, South Korean firms appear to be more proactive and to adapt products even when not required by the governments of export markets. Third, greater international product adaptation is linked to a more responsive marketing organization with customer‐focused practices. Fourth, while a positive link was expected between business unit experience and the extent of international product adaptation, inconsistent results were found between the two country samples. For U.S. firms, it was found that greater experience in international business and product design capability is linked to a higher level of international product adaptation. For South Korean firms, however, a negative relationship was found. Greater international product adaptation occurred with less international business and product design experience. These findings are discussed, and areas for future research are noted.     

STOCHASTIC HYPERBOLIC DYNAMICS FOR INFINITE-DIMENSIONAL FORWARD RATES AND OPTION PRICING

We model the term-structure modeling of interest rates by considering the forward rate as the solution of a stochastic hyperbolic partial differential equation. First, we study the arbitrage-free model of the term structure and explore the completeness of the market. We then derive results for the pricing of general contingent claims. Finally we obtain an explicit formula for a forward rate cap in the Gaussian framework from the general results.     

University of Texas Roundtable on The State of the U.S. Private Equity Market

In this discussion that took place at the 2017 University of Texas Private Equity conference, the moderator began by noting that since 2000, the fraction of the U.S. GDP produced by companies that are owned or controlled by global private equity firms has increased from 7% to 15%. What's more, today's PE firms have raised an estimated $1.5 trillion of capital that is now available for investing. And thanks in part to this abundance of capital, the prices of PE transactions have increased sharply, with EBITDA pricing multiples rising from about 8.8X in 2012 to 11.5X at the beginning of 2017. Partly as a consequence of such abundant capital and high transaction prices, the aggregate returns to U.S. private equity funds during this four‐year period have fallen below the returns to the stockholders of U.S. public companies. Nevertheless, the good news for private equity investors is that the best‐performing PE firms have continued their long history of outperforming the market. And the consistency of their performance goes a long way toward explaining why the overwhelming majority of the capital contributed by limited partners continues to be allocated to funds put together by these top‐tier PE firms. In this roundtable, a representative of one of these top‐tier firms joins the founder of a relatively new firm with a middle‐market focus in discussing the core competencies and approaches that have enabled the best PE firms to increase the productivity and value of their portfolio companies. Effective financial management—the ability to manage leveraged capital structures and the process of readying their companies for sale to potential strategic or financial investors—is clearly part of the story. But more fundamental and critical to their success has been their ability to find undervalued or undermanaged assets—and either retain or recruit operating managements that, when effectively monitored and motivated, are able to realize the potential value of those assets through changes in strategy and increases in operating efficiency.