Globalization and its discontents

Joseph E. Stiglitz. 2002. Globalization and Its Discontents. New York: W.W. Norton & Company. xxii + 282 pages. ISBN: 0‐393‐05124‐2.     

Consumer value conflicts surrounding ethical food purchase decisions: a focus on animal welfare

Ethical attitudes in relation to meat purchases were studied among urban and rural consumers in Scotland. All subjects perceived at least some ethical issues in relation to animal production systems, in particular, systems keeping animals in close confinement. Welfare‐friendly production systems were viewed as adding value to a food, but this value was not necessarily realizable to producers if purchases occurred only when foods were on special offer. Statements made by individuals were often contradictory, revealing ambivalence, unresolved value conflicts and a general lack of involvement in the nature of meat production. A number of barriers to the establishment of stable attitudes and behaviours in relation to the ethical treatment of food animals were also identified. A key finding of the study is that individuals can hold two views on animal welfare. On the one hand, they may think as citizens influencing societal standards, and on the other, as consumers at the point of purchase. As citizens, they support the notion of animals being entitled to a good life; as meat consumers, they avoid the cognitive connection with the live animal. This paper explores both the citizen–consumer relationship and purchase strategies used by consumers to resolve value conflicts. Lessons for public and commercial policy are highlighted in the context of the Curry Report (2002) which advocates more effective market segmentation where markets are finely attuned to their customers, with the development of a number of assurance schemes discussed in the article.     

KwaZulu-Natal Income Dynamics Study (KIDS) 1993–98: A longitudinal household database for South African policy analysis

An important adjunct of apartheid has been the absence of credible and comprehensive data on which policies, such as poverty reduction strategies, can be grounded. The 1993 Project for Statistics on Living Standards and Development (PSLSD) provided the first comprehensive household database for South Africa. Despite its usefulness, however, the one round PSLSD cannot provide answers to many questions important to policy researchers and practitioners, particularly questions about dynamic processes. The primary objective in this article is to introduce a new longitudinal household database, based on the PSLSD, which begins to fill this gap. Households surveyed by the PSLSD in KwaZulu-Natal province were re-surveyed in 1998 by the KwaZulu-Natal Income Dynamics Survey (KIDS). As a research endeavour, the KIDS project addresses one of the most vexing and important problems confronting contemporary South Africa: understanding the forces and mechanisms which contribute to the perpetuation of apartheid's legacy of poverty and inequality.     

The Life Cycle of the U.S. Tire Industry

We introduce a new theory of industry evolution. According to our model, the nonmonotonicity in firm numbers found in many young industries is a consequence of the gradual decline in unit costs. Early stages of the industry life cycle, when unit costs and profit margins are high, display positive net entry rates. In later stages, declining unit costs and increasing competition limit the market room for (fringe) firms accumulating in a shakeout. The model explains paths of output, price level, and firm numbers using a recursive system of equations. We apply the model to the U.S. tire industry.     

New Borders and Trade Flows: A Gravity Model Analysis of the Baltic States

The objective of this paper is to provide evidence on the effects of an economic and political union by studying the trade flows of the three Baltic countries of Estonia, Latvia and Lithuania after the breakup of the Soviet Union. We specify and estimate a gravity model of exports for the Nordic countries which enables us to determine the size and direction of trade flows in the Baltic states had they not been affected by the political institutions of the Soviet Union. Our results suggest that Baltic foreign trade was not only reduced significantly but also diverted to the members of the former Soviet Union. Consistent with our estimates, we also find that these consequences of the former political union are quickly dissipating, and the Baltic countries are increasing their share of exports to the European Union and the U.S.     

The Equilibrium Rate of Unemployment in the Netherlands

The rise in unemployment in the 1970s and its subsequent persistence have challenged the conventional wisdom embodied in the standard Phillips curve, namely that equilibrium unemployment is fairly constant over time. This paper attempts to explain the apparent non-constancy of equilibrium unemployment by developing and estimating a structural model in which equilibrium unemployment is endogenous and results from the interactions of wage bargaining and the price and employment determination of firms. We find that the three major determinants of equilibrium unemployment are tax rates, the replacement rate and the real interest rate. The rise in unemployment in the 1970s and early 1980s was mainly due to a rise in the first two factors. That equilibrium unemployment remained high when tax rates and the replacement rate were reduced in the 1980s and early 1990s is attributed to the rise in real interest rates during this period.     

The Impact of the Proposed June 1987 Income Tax System on Saskatchewan Grain and Hog Operations

The changes to the federal income tax system proposed in June 1987 are analyzed for their impact on farm size and competitiveness of Saskatchewan grain and hog operations. Farm growth, income and income taxes paid are simulated over a 20-year period. The June 1987 proposed tax system is projected to be progressive in taxing grain operations when there is no land inflation and excess depreciation is recaptured, but is nearly neutral or slightly regressive when the Saskatchewan livestock tax credits are taken into account. Assuming no land inflation and recapture of excess depreciation, small grain operations pay less income tax than small livestock operations, medium-sized grain operations pay slightly more but large grain operations pay considerably more taxes than the corresponding hog operations. The elimination of the capital cost allowance recapture tends to increase the competitive advantage of the hog operation over the grain operation, but a modest 4% annual increase in land values coupled with capital gains exemptions increase dramatically the overall competitive advantage of the grain operation over the hog operation. Les modifications apportées au régime d'impôt sur le revenu proposé en juin 1987 sont analysées pour leurs répercussions sur la taille des exploitations et la compétitivité des céréaliculteurs et des éleveurs de pores de la Saskatchewan. On a simulé la croissance des exploitations, le revenu et les impôts sur le revenu payés au cours d'une période de 20 ans. Le régime fiscal proposé de juin 1987 se veut progressif dans l'imposition des fermes céréalières lorsqu'il n'y a pas d'inflation du prix des terres et que l'amortissement excédentaire est récupéré, mais est pratiquement sans incidence sur les fermes ou légerement régressif à cause des crédits d'impôt consentis sur le bétail de la province. En sup-posant l'absence d'inflation du prix des terres et la récupération de l'amortissement excédentaire, les petits producteurs de céréales paient moins d'impôt sur le revenu que les petits éleveurs de bétail, les producteurs moyens en patient légèrement plus, mais les gros producteurs paient beaucoup plus d'impôt que les éleveurs correspondants de pores. L'élimina-tion de la déduction pour amortissement a tendance à accroître l'avantage concurrentiel des éleveurs par rapport aux producteurs, mais un modeste 4% d'augmentation annuelle de la valeur des terres, conjugué à des exonérations pour gains en capital, augmente de facon dramatique l'avantage concurrentiel global dont jouit le producteur par rapport à l'éleveur de pores.     

Modelling stochastic crop response to fertilisation when carry-over matters

Soils in a large part of Niger's agricultural area are sandy and very low in nitrogen (N), phosphorus (P) and organic matter. This low soil fertility combined with low and erratic rainfall constitutes a severe constraint on food cropping in the area. Although agronomists have advised chemical fertilization as a means of improving soil fertility, little fertilizer has been used in this area of the world. The economic management of soil fertility in the agricultural area of Niger is analyzed using a dynamic model of farmer decision-making under uncertainty. The model is based on agronomic principles of plant growth and accounts for the carry over of P, an immobile nutrient. At current input prices, a soil P content of at least 14 ppm is found to be desirable. This target is above the natural soil fertility level of about 3 ppm. It can be maintained with a moderate annual application (12 kg P₂O₅ ha^?1) of simple superphosphate. Results also suggests that returns to N fertilization are too low and variable to warrant the use of this input.     

How to define and study farmers' management capacity: theory and use in agricultural economics

Textbooks and articles on farm management stress the importance of the management capacity of the farmer with respect to his farm results. However, explicit definitions together with an elaboration of this concept are hard to find. In this article, aspects of management capacity are grouped into: (1) personal aspects, consisting of fanner's drives and motivations, fanner's abilities and capabilities and his biographical facts such as age and education; and (2) aspects of the decision-making process, consisting of practices and procedures with respect to planning, implementation and control of decisions at the farm. Empirical studies on the role of management capacity in relation to farm results are reviewed. Frontier production functions are widely used in recent literature to estimate technical and economic efficiency of farms. However, in explaining differences in efficiency most studies do not go further than adding a biographical variabk (e.g., level of education). This study concludes that a next step would be to include aspects of the decision-making process. Longitudinal on-farm observations, which give possibilities for studying the dynamic aspects of the decision-making, are suggested to further analyze the concept of management capacity.