Monotonicity of indices of “Revealed“ comparative advantage: Empirical evidence on Hillman’s condition

Conclusions The necessary and sufficient condition suggested by Hillman [1980] for the index of RCA, when used in cross-country comparisons, to provide a one-to-one relationship between pre-trade comparative advantage and revealed comparative advantage is fulfilled for the great majority of the “commodities” traded in 1985 by 118 developing economies. Given the low level of data aggregation (the lowest for which statistical information is currently available), the large sample of countries and the high percentage of developing economies’ total exports captured in this research, we can conclude that Balassa’s export-performance index, for cross-country comparisons, is a good indicator of comparative advantage as reflected by pre-trade prices. In other words, Hillman’s condition is a useful indicator of the presence of monotonicity in indices of RCA: we have observed that at a 5-digit level of commodity aggregation, increases in Balassa’s export performance index of RCA are likely to correspond to increases in export levels. Aggregation of commodities at a 3-digit and at a 1-digit level suggests that Hillman’s condition is unlikely to be violated if the cause for values of the Hillman’s Index less than one is due to export specialization; on the contrary, the number of cases of a Hillman Index smaller than one due to a large share of world markets is expected to be negatively related to the level of aggregation. Our results suggest that Hillman’s index should be calculated in any empirical investigation trying to assess the long-term implications of trade liberalization negotiations using an export-performance index of RCA. There is evidence that, if used at a disaggregated level, the HI is a tool that may help flag cases in which the RCA index can be a misleading indicator of countries’ comparative advantage, even in cross-country comparisons. It may also help reduce disagreements regarding the most appropriate coefficient of RCA. Further research should be directed toward enlarging the sample of countries to include the entire world and to incorporate at least three years of trade so as to be able to eliminate the possible influence of cycles.     

Optimal Stabilization Policy Under Governmental Risk Aversion

Governmental stabilization policies take account of the underlying risk aversion of its voters. A utility function for the government is defined, one which includes variances of national income changes with respect to its policy instruments—here the budget variable, the bond rate of interest, and the currency-exchange rate. The consequence of this for the optimal set of policies is a target level of national income less than what a risk-neutral government aims at. This applies to an open economy when this is a key-currency country, as it need attend to balance-of-payments effects only insofar as they affect national income. The non-key-currency country, by contrast, must take account directly of balance-of-payments effects and their variance, so it reaches a lower level of utility than the key-currency country.     

Relational paths in business network dynamics: Evidence from the fashion industry

This paper addresses the topic of business network dynamics. Starting with a review of the IMP literature, it aims to shed light on potential relational paths by which a firm may reconfigure its business network. To this end, two main emerging paths are described: integration and substitution. Methodologically, the paper presents and discusses the data collected during a longitudinal case analysis of four Italian textile producers. The main implications for business networks stemming from these emerging relational paths are described. In particular, the main findings from the cases analyzed suggest that business network dynamics should be interpreted in terms of the processes of both business network change and consolidation.     

“Less is more” or “more is better”? The effect of asymmetric information distribution on market efficiency and wealth inequality

Journal of Economic Interaction and Coordination - We provide experimental and empirical evidence on the role of information distribution and accuracy in solving market inefficiency and the related...     

Bootstrapping the Malmquist indexes for Italian airports

This paper uses data envelopment analysis to assess the operational performance of 28 Italian airports during the period of 2000 through 2006. Recent developments in bootstrapping techniques are used to correct total factor productivity estimates for bias and to assess the uncertainty surrounding such estimates. This study found that the Italian airport industry experienced a significant technological regress, with few airports achieving an increase in productivity led by improvements in efficiency. Moreover, the paper shows that the form of ownership (public majority vs. private majority) of an airport management company does not significantly affect performance. In contrast, this type of the concession agreement has positive and significant effects on airport productivity. Finally, the paper highlights the existence of a productivity gap between airports located in the North-Central part of the country and those located in the south.     

Beyond survival: the implementation of new forms of work organization in the UK and German steel industries

This paper outlines and analyses the major changes in work-force organization that have been introduced by British and German steel producers in the past decade, against a backcloth of retrenchment in the industry, new product development and technological change. Including multiskilling, a reduction in demarcation and team–working, these changes have had a major effect upon the composition of the work–force and the nature of work undertaken at the shopfloor level.

While these changes have had a common broad trajectory, they have been introduced at a different pace and in different forms. The contrasts are provided not only at the international level, but between plants in the same countries. The paper further outlines the response of trade unions to these changes and the implications for industrial relations at the shopfloor level.     

Credit allocation and the financial crisis: evidence from Spanish companies

The worldwide financial crisis of 2007–2008 raised serious concerns about the soundness of banks’ activities and about the extent to which banking regulation should supervise banks’ investment decisions. We contribute to this topic by examining the Spanish case, which has been emblematic of the bubble and burst dynamics in the credit market. In particular, we study the allocation of bank credit among Spanish companies from 1999 to 2014, showing that larger companies accumulated greater amounts of bank loans per unit of total assets, thus leading to a notable concentration. We also find that, during the Spanish boom period, bank loans shifted from the manufacturing to the construction industry, and in particular to the largest companies of the latter sector. This happened in spite of the high leverage of large construction firms, which was increasing also due to their growing debt. We argue that the higher operating benefits, reflecting the increase of the housing price during the boom period, overvalued construction firms as potential borrowers. The bankruptcy of several large construction companies during the Spanish crisis supports the need for monitoring and regulation, to avoid an excessive concentration of bank credit to a few large companies, especially if they belong to a specific sector.