Building Local Development Institutions in the Hinterland: A Regulationist Perspective from British Columbia,Canada

This article examines the process of local development within the context of restructuring in hinterland British Columbia, Canada. The role of local development in the reconstruction of hinterland space is attracting considerable research attention, building upon an existing body of work from Canada and elsewhere, which is steadily refining our understanding of the local development process. Through a case study of two communities, this article seeks to enhance the theory–practice coordination of this work by using a regulation approach to examine the process, organizational structures and relationships inherent in local development. The communities in this study used local development both to pursue economic diversification and also to offset the uncertainty caused by economic and political restructuring. The findings illustrate that the case communities responded to restructuring in a systematic manner. This shows that the practice of local development may be related to theoretical interpretations of institution‐building. Regulation theory provides a framework within which to forge a link between the practical dimensions of the local development process and the concept of building local institutions. Specifically, the development of a local mode of social regulation is dependent upon the stability and coordination of a locally based development institution. Cet article examine le processus de développement local parallèlement à la restructuration de l’arrière‐pays en Colombie britannique (Canada). Le rôle du processus dans la reconstruction de cet espace soulève l’intérêt manifeste de chercheurs qui, ajoutéà un corpus de travaux émanant du Canada ou d’ailleurs, affine régulièrement notre appréhension du développement local. A partir d’une étude de cas portant sur deux communautés, l’article tente d’améliorer la coordination entre théorie et pratique de ce travail en utilisant la régulation comme démarche d’investigation des processus, structures organisationnelles et relations propres au développement local. Les communautés concernées se sont servies du développement local pour mener une diversification économique, tout en compensant l’incertitude née de la restructuration économique et politique. D’après les résultats, elles ont réagi de manière systématique à la restructuration, ce qui montre que l’on peut lier l’exercice du développement local à des interprétations théoriques de la création d’institutions. La théorie de la régulation offre le cadre oùétablir un lien entre les dimensions pratiques du processus et le concept de création d’institutions locales. Plus précisément, le développement d’un mode local de régulation sociale dépend de la stabilité et de la coordination d’une institution de développement basée localement.     

Earnings Volatility,Post–Earnings Announcement Drift,and Trading Frictions

We find that lower ex ante earnings volatility leads to higher Post–Earnings Announcement Drift (PEAD). PEAD is a function of both the magnitude of an earnings surprise and its persistence. While prior research has largely investigated market reactions to the magnitude of the earnings surprise, in this study we show that the persistence of the earnings surprise is equally important. A unique feature of the anomalous PEAD returns documented here concerns the association between abnormal returns and trading frictions. Besides demonstrating that firms with lower earnings volatility have higher abnormal returns, we also find that lower earnings volatility firms have lower trading frictions. Taken together, these findings imply that higher abnormal returns are associated with lower trading frictions. We exploit this implication to empirically demonstrate that PEAD returns due to earnings volatility are not concentrated in the firms with the largest trading frictions, which is in contrast to the findings in prior anomaly studies.     

Savings and the Budget

The fall in the personal sector savings ratio to a record low last year has been a major factor behind the rapid growth of domestic demand in the past two years and the associated deterioration in the current account. It is also a major uncertainty in the Chancellor's Budget judgement. Existing econometric relationships for the consumption function have failed to predict the fall in personal savings over the past few years. Possible explanations include statistical error, the effects of financial deregulation, the housing boom, expectations of higher growth in incomes, and demographic influences. In this Viewpoint, we report on a new consumption function that successfully explains the decline in savings. It provides evidence of a major demographic influence resulting from the decline in the proportion of the population in the 45–64 age cohort, the main savers in society. Subsidiary effects arise from the boom in house prices, and statistical mis-measurement. The equation predicts an appreciable revival of savings over the next few years as the 45–64 age cohort grows again. These shifts in demographic structure reflect the after-effects of the Second World War. This new evidence suggests that the Chancellor has done quite enough to ensure a slowdown in consumption, and that he would be ill-advised to heed calls for special measures to boost savings. By contrast, well conceived tax changes that remove microeconomic distortions in the tax system (perhaps moving in the direction of an expenditure tax) would improve the tax structure, and may well increase the scope for tax cuts in future budgets. Our new consumption function also lends weight to the Chancellor's argument that the current account deficit is not a source of concern, insofar as it arises from a shift in savings associated with demographic changes that will be reversed in due course.     

Focus: Supply-Side Improvements in UK Exporting of Manufactures

The present difficulties with the UK current account deficit have breathed new life into longstanding doubts in some quarters about the fundamental state of UK manufacturing, despite the supply side reforms of the last ten years and the large increases in labour productivity. The deterioration in trade in manufactured goods from a small surplus of £2bn in 1982 to a deficit of £21bn in 1988, is taken to be the most stark illustration of this deep structural malaise.     

Control Theory and Macroeconomic Policy

This Briefing Paper examines the contribution that control theory can make to our understanding of macroeconomic policy. Control theory is an area of study, orginally developed in engineering, which has since been applied to a very wide range of problems not only in engineering but also in biology. ecology, physiology, space exploration and economics. The kinds of questions in economics which conrrol theory could help us to answer include: what objectives should the government be pursuing, infation or unemployment or both, and by what means? what instruments should be used and in what combinations? should the government adopt targets for the money supply or the exchange rate, or concentrate on unemployment and the balance of payments?     

Changing Regimes of Workplace Governance,Shifting Axes of Social Mobilization,and the Challenge to Industrial Relations Theory

This article challenges prevailing views about the collapse of the New Deal industrial relations system and the role of the market. It argues that the old system has been replaced not by the market but by an employment rights regime, in which the rules of the workplace are imposed by law, judicial opinions, and administrative rulings, supplemented by mechanisms at the enterprise level that are responsive to the law but also are susceptible to employee pressures, both individual and collective. The emergence of this regime is the product of a shift in the axes of social and political mobilization from mobilization around economic identities rooted in class, industry, occupation, and enterprise to identities rooted in the society outside the workplace: sex, race, ethnicity, age, disability, and sexual orientation. The shift in the axes of mobilization in turn reflects the collapse of the underlying model of social and economic organization upon which the collective bargaining regime was built and more fundamentally a shift in our understanding of the nature of industrial society and its direction of evolution in history. This interpretation poses a challenge to the conceptual tools used in industrial relations to understand the issues of work and to frame the public policy debate. We conclude with some suggestions as to the direction in which we might move to provide an alternative conceptual framework.