Firm financing and growth in the Arab region

This paper documents how firms in Arab countries use equity, corporate bond and syndicated loan markets to obtain financing and grow. Working with a new dataset on issuance activity in domestic and international markets and firm performance, the paper finds that capital raising through these markets has grown rapidly since the early 1990s and involved an increasing number of firms. Whereas the amounts raised in equity and loan markets (relative to gross domestic product) stand well relative to international standards, bond issuance activity lags behind. However, bond financing has gained importance over time. Equity issuances take place primarily in domestic markets, whereas bonds and loans are mostly issued internationally, display long maturities and entail low levels of credit risk. Issuing firms from the Arab region are very large compared to international standards. They also tend to be larger, faster growing and more leveraged than non-issuing firms in Arab countries.     

Network formation with sequential demands

This paper introduces a non-cooperative game-theoretic model of sequential network formation, in which players propose links and demand payoffs. Payoff division is therefore endogenous. We show that if the value of networks satisfies size monotonicity, then each and every equilibrium network is efficient. The result holds not only when players make absolute participation demands, but also when they are allowed to make link-specific demands.     

Technology development in developing countries: The case of a private R & D institution in Brazil

Research Development (RD) is concerned with the conversion of inventions (i.e. new ideas) into innovations (i.e. new products, processes and services in the market-place). Empirical evidence indicates that the rate of success of RD is small. In the innovation chain of events the scientific or technical accomplishment is but one link, a necessary but not sufficient condition of success. Often the market is the decisive factor.
Many research and development organizations (R & DOs), especially those funded privately, allocate their resources with a strong orientation towards satisfying perceived market needs. If this incentive persists during the R & D work the RD effort will probably be much facilitated.
In the light of the above concepts, the Brazilian R & D and RD experiences are reviewed with practical examples and emphasis on the efforts of Centro de Tecnologia Promon—CTP (Promon Technology Center). CTP works on non-conventional energy, industrial process development and telecommunication product development.
The experience reported is not intended to serve as a general solution to R & D or RD problems in the developing world. The purpose is rather to suggest alternative pathways and to point out the importance of a diversified approach to the tough task of closing the innovation loop.     

Geographic Indications and Farmer‐Owned Brands: Why Do the US and EU Disagree?

Geographic Indications (GIs) identify the geographic origin of products whose quality, reputation or other characteristic can be attributed to the geographic origin. We focus on a subcategory of GIs, Farmer Owned Brands. Like GIs in general, FOBs require governmental assistance to protect the property rights of the brand owners. GIs are receiving increased attention because many countries and producer groups realize the importance of property right protection for GIs, and are negotiating such rights in international forums like the World Trade Organization. Here we explore possible reasons for US opposition to EU policies conferring special property right protection to GIs. We conclude that the most plausible explanation for the US position is the lack of a domestic constituency advocating greater GI protection, which means that the US position represents the interests only of those who stand to lose from such protection. It will take a change in US property right regulations and a widespread understanding and adoption of the concept among producer groups before the political pendulum changes within the US. This process will take several years and until then we will have the unusual situation of the US opposing the only market-based solution to the US rural development problem that we are aware of.     

Genetically Modified Crops: Their Market and Welfare Impacts

A framework is developed for examining price and welfare effects of the introduction of genetically modified (GM) products. In the short run, non-GM grain generally becomes another identity-preserved product. However, more profound market effects are observed under some reasonable parameterizations. When calibrated to reflect the U.S. corn market, introducing GM technology increases aggregate welfare over a wide range of scenarios, unless the corresponding production cost savings are small and consumers are seriously concerned about GM products. The possibility that GM technology may reduce aggregate welfare is interesting because the model assumes rational agents and does not include regulatory constraints.     

Accounting for Negative,Zero and Positive Willingness to Pay for Landscape Change in a National Park

In contingent valuation, despite the fact that many externalities manifest themselves as costs to some and benefits to others, most studies restrict willingness to pay to being non‐negative. In this paper, we investigate the impact of allowing for negative, zero and positive preferences for prospective changes in woodland cover in two UK national parks, the Lake District and the Trossachs. An extended spike model is used to accomplish this. The policy implications of not allowing for negative values in terms of aggregate benefits are also investigated, by comparing the extended spike model with a simple spike making use of only zero and positive bids, and a model which considers positive bids only. We find that ignoring negative values over‐states the aggregate benefits of a woodland planting project by up to 44%.     

Index Models and Land Allocation Reconsidered

In contrast with previous index model land applications, this article shows that the land allocation problem is a portfolio model with two constraints, namely, investable funds and land. The two-constraint model implies a drastic reinterpretation of what previous studies have quantified as diversifiable and systematic risks in agricultural production. The article also argues that the constant marginal-rate-of-product-substitution (MRPS) technology implicit in financial portfolio models is unlikely to hold in a production context such as the land allocation problem, and that the index model must be modified accordingly. Farm-level data are used to illustrate and test the hypotheses advanced. Empirical results indicate that most of the risk for corn and soybeans is diversifiable, and that corn and soybeans are characterized by decreasing MRPS. The MRPS effect is found to be large from an economic standpoint and implies that crop diversification may be optimal, even for risk-neutral farmers.