Entrepreneurial talent, occupational choice, and trickle up policies

We study market inefficiencies and policy remedies when agents choose their occupations, and entrepreneurial talent is subject to private information. Untalented entrepreneurs depress the returns to entrepreneurship because of adverse selection. The severity of this problem depends on the outside option of entrepreneurs, which is working for wages. This links credit, product and labor markets. A rise in wages reduces the adverse selection problem. These multimarket interactions amplify productivity shocks and may generate multiple equilibria. If it is impossible to screen entrepreneurs then all agents unanimously support a tax on entrepreneurs that drives out the less talented ones. However, if screening is possible, e.g., if wealthy entrepreneurs can provide collateral for their loans, then wealthy entrepreneurs do not support surplus enhancing taxes.     

Trade liberalisation and endogenous growth: Some evidence for Turkey

This paper examines the impact of trade liberalisation on the long-run economic development as measured by the real GDP per capita in Turkey. Based on the endogenous growth theory, we employ bivariate and multivariate cointegration analyses to test the long-run relationship among the relevant variables. Results for Turkey suggest a stable, joint long-run relationship among real GDP per capita, an index of trade liberalisation, human and physical capital in accordance with the endogenous growth theory. Statistically significant error-correction terms provide further evidence that those variables are indeed cointegrated. This also implies causal effects.     

MIGRATION THEORIES AND EVIDENCE: AN ASSESSMENT

Abstract. This paper presents a critical survey of theories of migration, their welfare and policy implications and their empirical relevance. We also develop some extensions to the theory beginning with the Harris and Todaro (HT) model. In particular, the HT model is extended to examine risk averse behaviour within families where the migration of members of families serves to diversify risk. The welfare implications of the individual migration decision and government intervention in the form of employment subsidies are examined. Recent evidence on international migration is presented. It is shown that migration does not flow automatically in response to wage differentials. Characteristics of migrants and the process of self-selection are found to be important determinants of the rate of migration.     

Trade and migration flows between some CEE countries and the UK

The recent enlargement of the European Union (EU) has enhanced interest in the causes and also the consequences of migration between Central and Eastern European (CEE) and Western European countries. This paper considers the possibility that some of these consequences make themselves felt in the trade flows between migrants' countries of origin and destination. Using a panel of data covering a number of CEE countries between 1996 and 2003, we employ an augmented gravity model to examine the effects of immigration from these transition countries on their bilateral trade flows with the UK. We pay attention to a number of issues that have been raised within the literature on gravity models. We find evidence that migration positively enhances the bilateral exports of the migrants' home country; however, there is less (but some) evidence that the imports from their destination country are also enhanced.     

Petty services,profit‐led growth and rural–urban migration in a developing economy

This paper develops a structuralist urban dual economy model for a developing economy consisting of a capitalist formal sector and a “petty” or informal service sector. The petty service sector plays an important role in wage determination and capital accumulation in the formal sector. The urban dual economy is situated in the midst of a rural area endowed with generous amount of surplus labour. The rural area augments urban labour supply over time through rural–urban migration. The paper, therefore, incorporates rural–urban migration within a structuralist framework and highlights its implication for growth and structural change in urban spaces of developing economies riddled with persistent formal–informal duality.     

Large Shareholder Activism in Corporate Governance in Developing Countries: Evidence from India

Most of the existing evidence on the effectiveness of large shareholders in corporate governance has been restricted to a handful of developed countries, notably the UK, US, Germany and Japan. This paper provides evidence on the role of large shareholders in monitoring company value with respect to a developing and emerging economy, India, whose corporate governance system is a hybrid of the outsider‐dominated market‐based systems of the UK and the US, and the insider‐dominated bank‐based systems of Germany and Japan. The picture of large‐shareholder monitoring that emerges from our case study of Indian corporates is a mixed one. Like many of the existing studies, while we find blockholdings by directors to increase company value after a certain level of holdings, we find no evidence that institutional investors, typically mutual funds, are active in governance. We find support for the efficiency of the German/Japanese bank‐based model of governance; our results suggest that lending institutions start monitoring the company effectively once they have substantial equity holdings in the company and that this monitoring is reinforced by the extent of debt holdings by these institutions. Our analysis also highlights that foreign equity ownership has a beneficial effect on company value. In general, our analysis supports the view emerging from developed country studies that the identity of large shareholders matters in corporate governance.     

Herding by Foreign Institutional Investors: An Evidential Exploration for Persistence and Predictability

The primary objective of the study is to explore the predictability of herding patterns of foreign institutional investors in the Indian market using high frequency data over a period from January 2003 to June 2014. Herding of an individual stock was measured estimating a simple volume based ratio and persistence of trends was detected using the runs test (Wald and Wolfowitz [1940 Wald, A., and J. Wolfowitz. “On a Test Whether Two Samples are from the Same Population.” The Annals of Mathematical Statistics, 11, (1940), pp. 147–162.[Crossref] , [Google Scholar]]) on that ratio. Predictability of herding behavior has been successfully modeled by applying 7 data mining models using various measures of performance. Market regulators may consider our findings to regulate the foreign institutional investors trading to make the financial system more transparent and robust.     

The Long-Term Sustenance of Sustainability Practices in MNCs: A Dynamic Capabilities Perspective of the Role of R&D and Internationalization

What allows MNCs to maintain their sustainability practices over the long-term? This is an important but under-examined question. To address this question, we investigate both the development and sustenance of sustainability practices. We use the dynamic capabilities perspective, rooted in resource-based view literature, as the theoretical basis. We argue that MNCs that simultaneously pursue both higher R&D intensity and higher internationalization are more capable of developing and maintaining sustainability practices. We test our hypotheses using longitudinal panel data from 1989 to 2009. Results suggest that MNCs that have a combination of both high R&D intensity and high internationalization are (i) likely to develop more sustainability practices and (ii) are likely to maintain more of those practices over a long-term. As a corollary, MNCs that have a combination of both low R&D and low internationalization usually (i) end up developing little or no sustainability practices and (ii) find it difficult to sustain whatever little sustainability practices they might have developed.