Access to financing and firm growth

Why do some firms grow faster than others? Although various observed and unobserved aspects of firms have been suggested as potential drivers of firm heterogeneity, economists disagree sharply on the role of financial structure in influencing firm growth. In this paper, I use a sample of quoted and unquoted firms to show that the effect of financial structure on firm growth is statistically significant and quantitatively important. In the presence of external financing constraints, firms rely more on internal funds to finance growth, but the effect of internal financing on firm growth decreases with an increase in the firm’s access to an external bank credit facility. As the external financing constraint is alleviated, the firm relies less on internal funds and switches to external financing as the primary source of financing for its growth. This pattern of transition between internal and external financing is particularly pronounced in small unquoted firms (conditional on their survival). These results suggest a real effect of financial structure on growth via the channel of an external financing constraint.     

Supply-side effects of exchange rates, exchange rate expectations and induced currency depreciation

Within the context of a small open economy model, this paper examines the repercussions of induced currency depreciation. The results presented in this paper are based on a model with firm microeconomic foundations and which takes into account both the supply and demand-side effects of exchange rate variations. The distinguishing feature of the model is the role of exchange rate expectations. We consider three kinds of expectations; adaptive, extrapolative, and regressive expectations. We also perform several sensitivity tests based on these expectations. Our simulation exercise shows that the effect of induced currency depreciation depends largely on supply-side effects. In most cases, we find that currency depreciation results in (i) a fall in output, (ii) an increase in prices and (iii) an improvement in the balance of trade. In the absence of weak supply-side effects of exchange rates, we find that, if the Marshall-Lerner conditions hold, then depreciation of the home currency has a favorable effect on output but its effect on the balance of trade is negative.     

Spatial patterns and economic contributions of mining and tourism in biodiversity hotspots: A case study in China

Mining activities and tourism are both growing fast in biodiversity intense areas globally. However, the dynamic and interactions between mining and tourism when they both occur in biodiversity hotspots, and how they together may impact the economy and environment in these biodiversity rich areas, remain unclear. This paper examined how the two industries interact in terms of their economic contributions and spatial patterns in a biodiversity hotspot, Yunnan, China. We used correlation analyses to measure the relationships between mining activities, tourism visits and local gross domestic productions. We also employed a distance-based technique to investigate the nature of any dependency between mining and tourism sites. Results showed that mining activities tend to be in relatively fluent areas while tourism tends to occur in less developed areas. Our results showed that the location of tourism and mining sites are likely to be close to one another but the two industries usually perform better economically when they are apart from each other. These findings can provide insights on how mining and tourism together may impact the economy and environment in biodiversity rich areas, and provide important information for managers and planners on balancing mining and tourism development in these areas.     

INTER-REGIONAL FARM EFFICIENCY IN PAKISTAN'S PUNJAB: A FRONTIER PRODUCTION FUNCTION STUDY

Agricultural production efficiency in four irrigated cropping regions of the Punjab province of Pakistan was compared on the basis of a probabilistic frontier production function estimated from whole-farm survey data for the year 1984-85. It is found that the gross income of farmers can be increased by 13% at the current levels of resource use if the production gap between ‘best practice’ and ‘average’ farmers is suitably narrowed in all cropping regions. This will increase profits by up to 40%. No significant difference in technical efficiency was found across the regions. Economic efficiency was similar across all cropping regions except in the cotton region, which had significantly lower economic efficiency due to higher allocative inefficiency, which in turn was attributable to the more dynamic production technologies being adopted in that region.     

Impact of organizational and project factors on acceptance and usage of project management software and perceived project success

This study surveyed 497 participants to determine the factors that affect project professionals' acceptance of project management software and the perceived impact of software usage on their performance. The study finds that greater information quality and higher project complexity are the dominant factors explaining higher levels of system utilization, that greater system functionality and ease of use have a significant positive relationship with increased software usage, and that a strong positive relationship exists between higher usage of project management software and perceived project managers' improved performance. Inconsistent with prior research, more training was not found to be associated with project management software usage. The study explains more than 40% of the variation in project management software acceptance and adds project management software usage to project success factors by empirically confirming for the first time that project management software enhances project professionals' perceived performance and provides a positive impact on the results of their projects. The study provides practical implications for project professionals, their organizations, senior management, decision makers, software developers, and vendors. These findings support the call for further research that investigates the diffusion of information technologies in the project management field and their impact on project success and competitive position.     

Taxes, Transfers, and Voter Behavior in U.S. Midterm Elections

The effects of changes in per capita real GDP, real taxes and real government transfer payments on midterm congressional election outcomes during the 1946–2002 period are examined. Voters are found to take all of these, except taxes and transfers at the state and local government levels, into account in casting their ballots. However, the weights they place on each are found not to be the same. Consequently, the common practice of summarizing the economic conditions faced by voters through disposable income seems to be inappropriate. Also, omission of tax and transfer variables from the vote equation, and using vote swing rather than vote share as the dependent variable is found to result in underestimation of the coefficient of per capita GDP growth.     

OPTIMAL DISTRIBUTION OF POWERS IN A FEDERATION: A SIMPLE, UNIFIED FRAMEWORK

In a federation with n≥ 2 regions the relative optimality of five regimes – autarky, centralization, unregulated devolution, regulated devolution and direct democracy – is examined. Public policy consists of redistribution and regional public good provision. Regional incomes are uncertain and correlated. Estimates of the usefulness of regional public goods are uncertain and the federal government's estimates are noisier relative to those of regional governments. The optimality of each regime is influenced by four margins – regional insurance, coarseness of federal information, internalization of spillovers and raiding the commons. Regulated devolution is the only regime that is capable of producing the constrained first best level of public goods. Federal insurance under direct democracy can be inadequate relative to that under a utilitarian federal government. An increase in the number of regions allows better risk pooling but also greater opportunities for raiding the commons.     

European integration, productivity growth and real convergence

This paper derives a stochastic endogenous growth model to investigate the impact of European Union (EU) integration on convergence and productivity growth. The theoretical model implies both temporary and permanent positive effects of the integration process. The empirical part of the analysis uses structural break tests and data envelopment analysis to examine the accession process of five recent members to the EU15. The results show (i) endogenously identified accession dates as structural breaks, (ii) improved rates of productivity growth after accession over and above the Union benchmark level, and (iii) increased pace of overall growth due to capital accumulation as a result of institutional features of the Union such as Structural and Cohesion Funds. These findings support the theoretical model, implying that economic integration is beneficial for member countries, especially from a long-run perspective, and Cohesion and Structural funds help the new members catch up with the core-EU members’ standard of living.     

On the existence of lindahl equilibria in economies with a measure space of non-transitive consumers

We present a generalization of Roberts' theorem on the existence of Lindahl equilibria in economies with a measure space of agents. The principal contribution of this paper is methodological. We show that by formulating the problem in what we consider to be its natural infinite dimensional setting, the basic structure of Debreu's proof in the theory of value can be applied. Our proof makes use of functional analysis and relies, in particular, on Artstein's characterization of weak sequential convergence in L₁(μ).     

Perceived costs and benefits of IFRS adoption in Saudi Arabia: An exploratory study

In response to a current lack of research in the Middle East, this study aims to critically evaluate the perceived costs and benefits associated with the adoption of International Financial Reporting Standards (IFRS) in Saudi Arabia, the world's leading oil and natural gas exporter. Using documentary analysis and interviews with stakeholders (account preparers from listed companies in Saudi Arabia, auditors from Big 4 and local accountancy firms, and university academics), the study contributes to the literature by concluding that the benefits of IFRS adoption in Saudi Arabia outweigh the costs. Importantly, a lack of qualified accountants, significant dependence on Big 4 accounting firms, inadequate coverage of IFRS in university education, and a lack of research are identified as major obstacles to the effective implementation of IFRS. The findings offer a possible policy agenda for local and international policy makers.