Free trade: what are the terms-of-trade effects?

Changes in trade policy affect a nation’s economic welfare through terms-of-trade and volume-of-trade effects. A move to global free trade would imply higher world economic welfare equal to the sum of all nations’ volume-of-trade, or efficiency, effects. Since the sum of the terms-of-trade effects across all nations is zero, terms-of-trade effects are contentious. Konishi, Kowalczyk and Sjöström (2003) have shown that if customs unions do not affect trade with non-member countries, immediate global free could be achieved if free trade were proposed together with international sidepayments equal to the terms of trade effects. How large would these terms of trade effects, and hence transfers, be? This paper presents estimates from a simple computable general equilibrium model of a world economy of perfect competition. We show that, in some cases, terms-of-trade effects are small compared to efficiency gains, and transfers are not necessary for free trade. In other cases, terms-of-trade gains may account for more than 50% of a country’s gains from free trade and transfers could be large.     

TARIFF FORMATION IN A MULTIDIMENSIONAL VOTING MODEL*

The theory of endogenous trade policy formation argues that tariffs emerge from the political process. This occurs because of conflicting economic interests trying to redistribute income in their favor through the adoption of suitable trade policies. Mayer and Riezman (1987) questioned this view arguing that if individuals differ only in factor ownership they would always prefer some tax/subsidy policy to tariffs. Here we allow individuals to differ not only with respect to factor ownership, but also with respect to consumption preferences and income tax treatment. We show that tariffs might be the social decision even though nobody's individual preferences suggest tariffs as the best choice.     

Effect of supervisor–subordinate guanxi on supervisory decisions in China: an empirical investigation

As China is becoming an important market and there are a lot of foreign ventures operating there, different lines of research have been providing useful information for foreign ventures to manage effectively in China. In this paper, we discuss one of the critical factors leading to successful management of Chinese subordinates, i.e. building and maintaining good guanxi (i.e., interpersonal connection) with them. We conducted an empirical investigation to illustrate (1) the supervisor-subordinate guanxi concept is different and unique when compared to other similar concepts in the Western literature such as leader-member exchange (LMX) and commitment to supervisor; (2) the supervisor-subordinate guanxi will affect the Chinese supervisor's administrative decisions; (3) guanxi can be measured by concrete behaviour/activities. Data on 189 supervisor-subordinate dyads were collected in the People's Republic of China (PRC). Results indicated that supervisor-subordinate guanxi is a distinct concept from LMX and commitment to supervisor. It also has additional explanatory power over supervisory decisions on promotion and bonus allocation after controlling for performance. Implications for foreign ventures and expatriates are discussed.     

Work experiences,work adjustment and psychological well-being of expatriate employees in Hong Kong

This study replicated and extended research on expatriate work adjustment by examining the antecedents of work adjustment and its outcomes in terms of psychological well-being. Data were obtained from a nationally heterogeneous sample (N = 184) of expatriate employees in Hong Kong using a structured questionnaire. Results of regression analysis revealed role conflict to be significantly negatively related to work adjustment, while role discretion, co-worker support and work-method ambiguity (clarity) were significantly positively related to work adjustment. Of the three hypothesized outcomes, work adjustment was significantly positively related only to job satisfaction but not to quality of life and marital adjustment. Though not the focus of this study, interaction adjustment was found to be significantly positively related to quality of life. Limitations of the study and implications of the findings are discussed.     

The Analysis of Chinese Traditional Family Culture

This paper starts with the meaning of family culture and proves the connotation of family culture through the interpretation of the national family, the ancient law in concealment, imperial power terminates in county and the modern family enterprises which illustrate the embodiment of the family culture in social culture. Then the inheritance and clash of family culture is discussed in modern society. Finally the paper pointed that researching the family culture has great important practical significance for rediscovering the profound connotation of Chinese culture as well as reviewing the current social problems.     

Strategic Similarity and Emergent Conventions: Evidence from Similar Stag Hunt Games

This paper reports evidence on the origin of convention in laboratory cohorts confronting similar but not identical strategic situations repeatedly. The experiment preserves the action space of the game, while randomly perturbing the payoffs and scrambling the action labels in an effort to blunt the salience of retrospective selection principles. Hence, the similarity between stage games is reduced to certain strategic details, like efficiency, security, and risk dominance. Nevertheless, we do observe conventions emerging in half of the laboratory cohorts. When a convention emerges subjects's behavior conforms to the selection principles of efficiency rather than security or risk dominance. Journal of Economic Literature Classification Numbers: C72, C78, C92, D83.     

Technological Scanning by Small Canadian Manufacturers

Given that in many industries new production and information technologies have fundamentally changed the way in which firms must operate and compete, the technological aspect of environmental scanning has become a critical success factor for many small and medium-sized manufacturing enterprises. As little is presently known about how technological scanning manifests itself in these organizations and about what determines the nature and level of this activity, a survey study of 324 Canadian firms was done. Testing a research model resulted in identifying four interrelated dimensions of scanning activity, namely scanning objectives, type of information, information sources, and management practices. Key determinants of this activity were also identified, including the firms' strategy, environmental uncertainty, production technology, level of R&D, information networks, and the owner-manager's education level.     

Public policy and health-care delivery: A practitioner’s perspective

Primary health care for inner-city residents is generally provided in institutional settings. This article describes a successful alternate model for health-care delivery: privately owned, for-profit, fee-for-service ambulatory care facilities. The Paul Robeson Health Organization in Harlem is described as an example of such a facility. Most of PRHO’s patients are black; 55% are adult females. Some of the special health needs of inner-city women and the range of services available to them at PRHO are described. A conclusion of this article is that the economic and social benefits derived from a health delivery center like PRHO make this model one worth consideration for replication in other communities.     

Accounting Practices and the Market Valuation of Accounting Numbers: Evidence from Indonesia, Korea, Malaysia, the Philippines, Taiwan, and Thailand

This study examines the relation between stock prices and accounting earnings and book values in six Asian countries: Indonesia, South Korea, Malaysia, the Philippines, Taiwan, and Thailand. The analysis is based on a residual earnings model that expresses the value of the firm in terms of book value and residual income. The model holds for any clean surplus accounting system. However, for finite time horizons, biased accounting may affect model estimates. The six countries examined in this study differ in faithfulness to clean surplus accounting as well as bias (conservatism). The study addresses two questions. First, are there systematic differences across countries in the value relevance of accounting, and are these differences related to accounting differences? Second, are there systematic differences in the incremental and relative information content of book value per share (BVPS) and abnormal (residual) earnings per share (REPS) across the countries, and are such differences related to accounting differences? We find differences across the six countries in the explanatory power of BVPS and REPS for firm values. Explanatory power for Taiwan and Malaysia is relatively low while that for Korea and the Philippines is relatively high. These differences are generally consistent with differences in accounting practice; however, since Korean accounting practice is strongly influenced by tax law, we did not expect the high association for Korea. Second, with respect to the incremental and relative explanatory power of BVPS and REPS, we find BVPS to have high explanatory power in the Philippines and Korea but little in Taiwan. In all six countries REPS has less explanatory power than BVPS in most years. Again, the evidence may be interpreted as suggesting accounting practice affects valuation (with Korea again as the exception). Finally, we provide evidence on the sensitivity of the timing of comparisons of stock prices and accounting values. We find that comparing prices at year-end (even though annual accounting information has not been released at that time), in general, provides the highest correlation between market and accounting numbers.