Measuring human development: a stochastic dominance approach

We consider a weighting scheme that yields a best-case scenario for measured human development such as the official equally-weighted Human Development Index (HDI) using an approach that relies on consistent tests for stochastic dominance efficiency. We compare the official equally-weighted HDI to all possible indices constructed from a set of individual components to obtain the most optimistic scenario for development. In the best-case scenario index education is weighted considerably more than the other two components, per capita income and life expectancy, relative to the weight that it gets in the official equally-weighted index. It also turns out that the improvement in the official HDI is mainly driven by improvements over time in the education index, the component moving fastest relative to its targets, when compared with per capita income and life expectancy. We find that the best-case scenario hybrid index leads to a marked improvement of measured development over time when compared with the official equally-weighted HDI.     

Population heterogeneity and growth

I investigate the robustness of the link between growth and heterogeneity in a population along ethnic, linguistic, religious, and socio-economic class lines using cross-country data covering the period 1960–92 and 72 countries. In addition to 21 distinct explanatory variables extensively used in the empirical growth literature, I consider several fragmentation and polarization indices capturing the heterogeneity in a population to deal with measurement uncertainty, and utilize Bayesian Model Averaging techniques to address uncertainty issues regarding model specification. My results indicate that while substantial data evidence favors the inclusion of population heterogeneity as a theory when proxied by fragmentation indices, it does not support the inclusion of this theory when proxied by polarization indices. Furthermore, the religious fragmentation index has the strongest evidence in favor of its inclusion as opposed to ethnic and linguistic fragmentation indices and income inequality.     

Option market making under inventory risk

We propose a mean-variance framework to analyze the optimal quoting policy of an option market maker. The market maker’s profits come from the bid-ask spreads received over the course of a trading day, while the risk comes from uncertainty in the value of his portfolio, or inventory. Within this framework, we study the impact of liquidity and market incompleteness on the optimal bid and ask prices of the option. First, we consider a market maker in a complete market, where continuous trading in a perfectly liquid underlying stock is allowed. In this setting, the market maker may remove all risk by Delta hedging, and the optimal quotes will depend on the option’s liquidity, but not on the inventory. Second, we model a market maker who may not trade continuously in the underlying stock, but rather sets bid and ask quotes in the option and this illiquid stock. We find that the optimal stock and option quotes depend on the relative liquidity of both instruments as well as on the net Delta of the inventory. Third, we consider an incomplete market with residual risks due to stochastic volatility and large overnight moves in the stock price. In this setting, the optimal quotes depend on the liquidity of the option and on the net Vega and Gamma of the inventory.      

Multinationals in the Middle East: Challenges and opportunities

This introduction to the special issue on Multinationals in the Middle East first reviews the historical growth and development of multinational enterprises (MNEs) in the territory extending from Morocco to Turkey alongside the southern and eastern shores of the Mediterranean as far east as Iran, and south to Sudan and Yemen. Then, several opportunities and challenges affecting MNEs in the region are discussed, including economic and social diversity, non-market strategies and entry-mode choices, and animosity toward MNEs. The seven papers featured in the special issue that address these topics are then discussed.     

Open trade and skilled and unskilled labor productivity in developing countries: A panel data analysis

Abstract

This paper examines the effect of trade openness on the productivity of skilled and unskilled labor in a group of 36 developing countries using panel data and fixed effect approach. We have developed and utilized an empirical model that readily lends itself to testing the hypothesis posed. Our results support the hypothesis that trade openness has a positive and significant impact on labor productivity for both skilled and unskilled labor in the sample countries. We also observe that the beneficial effect of trade openness is relatively stronger for the skilled labor than the unskilled labor. We conclude that contrary to the claim made by Mayda and Rodrik (2001 Mayda, A. M. and Rodrik, D. 2001. “Why are some people (and countries) more protectionist than others? A cross country analysis”. Mimeo: Harvard University.  [Google Scholar]), skilled workers in developing countries may oppose protectionism. When adjusting for the purchasing power parity, the impact of trade openness on labor productivity, although positive and significant, is not as pronounced as it is for other definitions of openness.     

Kemalist Eurasianism: An Emerging Geopolitical Discourse in Turkey

Over the past decade or so, there has been a convergence between the Eurasianist and Kemalist ideologies in Turkey. A number of Kemalist and Socialist intellectual and political actors together with sections of the military have started to articulate Eurasianism (Avrasyac?l?k in Turkish) as a new geopolitical discourse for Turkey and as an alternative to Turkey's pro-Western foreign policy orientation. In this perspective, Eurasianism stands for a political, economic and cultural alliance with ‘Eurasian countries’, such as Russia, Iran, and Turkic countries in Central Asia, as well as Pakistan, India and China. This article aims to deepen the analyses carried out thus far on this emerging geopolitical discourse. To this end, it contextualises the emergence of the Eurasianism in Turkey within the wider social, political and historical context of which it forms a part, including the framework of asymmetrical political and economic relations that developed between Turkey and its Western allies in the post–Cold War period.     

A Study on the Travel Patterns of Physically Disabled People

The main objective of this paper is to highlight the travel patterns and experiences of people with a physical disability. To understand better the travel needs of people with a physical disability, it is useful to examine how travel patterns differ across demographic variables. The method chosen for the empirical data collection was a self-completed web-based questionnaire, which was answered by a total of 596 physically disabled people. The data obtained were evaluated using frequency, percentage, arithmetic average, t-test, chi-square and factor analysis. The research findings reveal that people with physical disability in different demographics groups differ in their travel patterns.     

Halal tourism: travel motivators and customer retention

This research was designed to identify halal-friendly travel motivation factors and unearth their role in Muslim customer retention process in Korea. Qualitative and quantitative procedures were used to achieve research objectives. A comprehensive structural model was developed to distinguish the role of all proposed indicators. Our results revealed that halal-friendly travel motivations are significantly associated with customer return on investment and satisfaction, and that such relationships contribute to improving customer retention. The effectiveness of higher-order structure of halal-friendly travel motivations was demonstrated. The formation of Muslim customers’ post-purchase decisions was significantly moderated by the sense of belonging to a tourist destination.