Lending versus giving: The economics of foreign assistance

Historically, very little attention has been devoted to assessing the costs and benefits of concessional loans vs grants as the means of transferring resources to developing countries. Here it is argued that this omission is in part due to the lack of an acceptable analytic construct within which to measure the costs to donors and benefits to recipients of loans and grants. The paper proposes such a framework and explores some of the policy implications for development assistance policy, in particular the trade-off between the volume of assistance and the terms of that aid. The objective is to lay the groundwork for a more constructive dialogue between borrowers and lenders which, hopefully, could foster foreign assistance flows of greater value to developing countries.     

Competitive attack,retaliation and performance: An expectancy-valence framework

This research examines how competitive attacks can best reduce the chances of retaliation. An expectancy–valence model is developed that views retaliation as a function of the subtlety of an attack: that is, its visibility, the difficulty rivals might have in responding to it in kind, and the importance or ‘centrality’ to rivals of the market under siege. Motivational theories suggest that all three of these independent variables need to be in place in order to elicit a response—or conversely, that low visibility, substantial response difficulty, or minimal centrality would each by itself be enough to prevent retaliation. This notion was not supported. Each one of the independent variables could serve as the ‘weak link of the chain,’ increasing the chances of retaliation. However, as predicted by expectancy theory, these variables selectively demonstrated some interactions that compound the threat of retaliation. In combination, high visibility and low levels of difficulty were especially likely to evoke responses from rivals. Finally, there appears to be a real incentive to avoid retaliation given its negative associations with performance.     

Book reviews

Journal of the Academy of Marketing Science -     

Empirics for Growth and Distribution: Stratification, Polarization, and Convergence Clubs

This paper studies cross-country patterns of economicgrowth from the viewpoint of income distribution dynamics. Sucha perspective raises new empirical and theoretical issues ingrowth analysis: the profound empirical regularity is an emergingtwin peaks in the cross-sectional distribution, not simplepatterns of convergence or divergence. The theoretical problemsraised concern interaction patterns among subgroups of economies,not only problems of a single economy's accumulating factor inputsand technology for growth.     

Stewardship vs. Stagnation: An Empirical Comparison of Small Family and Non‐Family Businesses*

abstract Two major perspectives can be construed in the literature concerning the nature of family owned businesses (FOBs). The first implies that these enterprises have unique characteristics of stewardship. FOB owners are said to care deeply about the long‐term prospects of the business, in large part because their family's fortune, reputation and future are at stake. Their stewardship is said to be manifested by unusual devotion to the continuity of the company, by more assiduous nurturing of a community of employees, and by seeking out closer connections with customers to sustain the business. The second perspective is less flattering. It proposes that FOBs are unusually subject to stagnation: they are said to face unique resource restrictions, embrace conservative strategies, eschew growth, and be doomed to short lives. This paper develops and examines the merits of the two perspectives, neither of which has been systematically articulated or researched. It does so in an empirical study of only small firms that are owned and managed by their founder. Within this sample, it compares firms that are FOBs, that is, family owned and managed, with non‐FOBs, that is, owned and managed by a founder with no other relative involved in the business. The findings show significant support for all three aspects of the stewardship perspective of FOBs, and no support for any elements of the stagnation perspective.     

Local Currency Bond Market Development in Sub-Saharan Africa: A Stock-Taking Exercise and Analysis of Key Drivers

This article studies the current state and drivers of government local currency bond market (LCBM) development in Sub-Saharan Africa. We first show that, increasingly, African governments issue fixed-rate local currency bonds with tenors of ten years and more on a regular basis. However, African LCBMs are also often marked by illiquidity, very few corporate securities, and narrow, bank-dominated investor bases. Second, we present an econometric analysis of the drivers of African government LCBMs based on a new high-quality, OECD-compiled panel dataset. LCBM capitalization is found to be correlated negatively with governments’ fiscal balance and inflation, and positively with common law legal origins, institutional quality and democracy.     

Using Geographically Weighted Choice Models to Account for the Spatial Heterogeneity of Preferences

In this paper, we investigate the use of geographically weighted choice models for modelling spatially clustered preferences. We argue that this is a useful way of generating highly‐detailed spatial maps of willingness to pay for environmental conservation, given the costs of collecting data. The data used in this study come from a discrete choice experiment survey of public preferences for the implementation of a new national forest management and protection programme in Poland. We combine these with high‐resolution spatial data related to local forest characteristics. Using locally estimated discrete choice models we obtain location‐specific estimates of willingness to pay (WTP). Variation in these estimates is explained by characteristics of the forests close to where respondents live. These results are compared with those obtained from a more typical, two stage procedure which uses Bayesian posterior means of the mixed logit model random parameters to calculate location‐specific estimates of WTP. We find that there are indeed strong spatial patterns to the benefits of changes to the management to national forests. People living in areas with more species‐rich forests and those living nearer bigger areas of mixed forests have significantly different WTP values than those living in other locations. This kind of information potentially enables a better distributional analysis of the gains and losses from changes to natural resource management, and better targeting of investments in forest quality.