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TABLE OF CONTENTS I. GLOBAL VALUE CHAINS AND EMERGING ECONOMIES II. THE RISE OF GVCS III. GOVERNANCE AND UPGRADING IN GVCS IV. CONNECTING GVCS TO ECONOMIC DEVELOPMENT V. GVCS AND [...]

Countries that have suffered financial crises have, on average, faster economic growth than those with more stable financial conditions. Systemic risk taking is encouraged in financially liberalized economies with moderate contract enforceability to increase investment and economic growth.

Econometrics model is used to examine the impact of industrial policy on labor demand and supply in both industrial sector and private services in Lombardy.

The strengths and weaknesses of neoclassical sociological tradition are examined by analyzing the state-led transition to capitalism in the most successful postcommunist economy, Poland. The analysis has shown that Poland's economic success has resulted from prolonged state ownership and an interventionist state employing various industrial policy tools.

A model is presented that accounts for the reforms implemented by India's government in 1991 by delineating them as a structural break. Findings show that the reforms affected profit margins considerably; inefficient firms displayed dramatically lower profits than other firms.

Traditional theories of rate-of-return regulation are contrasted with alternative processes of price-cap and incentive regulation, using Data Envelopment Analysis of 1988-94 data of more than 20 US telephone companies. Alternative processes were found to produce better firm efficiency.

Soft budget constraints can be found in transitional economies, and the problem can be linked to information asymmetries. Government should beware of bailing out failures due to the impact on expectations.

United Kingdom's implementation of the Privatisation Acts, which seeks to deregulate residential utility markets, is expected to generate regressive distributional effects on some of the country's vulnerable households such as pensioners. With regards to low-income households, the deregulation will most likely increase their expenses on prepayment meters since such group of households consume less gas. Pensioners are also negatively affected since the retail price index which is used to uprate their payments tend to include the lower average prices paid for residential utilities.

Industries appear to behave similarly when it comes to adjusting to their new competitive environment as a result of economic deregulation. This observation contradicts the traditional view that deregulation will have different effects on industries and that it will work for one particular sector and not for others. Empirical evidence also shows that the adjustment of industries is expected to improve consumer welfare and enhance the competitiveness of markets while promoting innovation and customer responsiveness among firms.

Deregulation has resulted in radical changes in labor relations in the trucking, airline, railroad and telecommunications industries. Empirical evidence shows that union membership rates and labor earnings premiums in the aforementioned sectors have declined in 1996. On the other hand, workforce size sharply increased in airlines and trucking, held steady in telecommunications and dramatically declined in railroads. Each industry also used differing approaches to reducing labor costs following deregulation.

Globalization has been presented as undermining the power of national government, and this representation is said to explain why governments have moved to the political right. There are problems with this view, such as the limited extent of globalization, and corporate practice, trade and production are still affected by national boundaries. There is a also a wide range of government responses and relationships with business. Some countries are better able to adapt to changes in the internetional econmies than others. Adaptive responses may increase national differences.

East Asia has been the fastest growing area in the world for the past three decades. The economies of Japan and the Newly Industrializing Economies (NIEs) of Hong Kong, Singapore, [...]

Direct foreign investment is incorporated in a dynamic general equilibrium model with endogenous technological change. In contrast to recent endogenous growth approaches, I allow for geographical separation of the innovation and production of newly developed goods. Firms acquire specific knowledge through R&D investment in the more developed country and use their specific asset to establish a production plant in the low-cost country. Foreign direct investment is accompanied by interregional spillovers of knowledge from the more to the less advanced country. I derive a steady-state equilibrium with active innovation and production activities in the high-technology sector in both countries. Furthermore, the implications of factor flow liberalization as well as of industrial policies are investigated.

The simulated promotion of a key industrial sector in Poland resulted to increased macroeconomic performance proving the effectivity of a temporary industrial policy in facilitating industrial transition in Eastern Europe. It also illustrates that increasing efficiency in key sectors by closing down inefficient enterprises, instead of making new investments, will enable industrial restructuring at a politically acceptable pace. The selection of key sectors should be based on their respective roles in the economy as indicated by linkage analysis., 1. Introduction One of the paradoxes confronting the reformers in Eastern Europe is that unprecedented state action is needed in order to reduce the role of the state in the [...]

This article uses a simple general equilibrium framework to evaluate the incentive structure of a country pursuing a mixed import substitution-export promotion strategy. It illustrates how features of general equilibrium analysis can be incorporated into the traditional Balassa-Corden effective protection framework, which is supplemented by the evaluation of the incidence of protection on firms (importing and exporting), households (consumers and taxpayers) and the government. Its application to a less-developed country (LDC), Cameroon, shows that the burden of tariff protection is shifted (25% in the short run and 64% in the long run) on to the unprotected sectors, especially exports. As a result, average nominal protection (58.8%) is much higher than protection actually provided to the protected sectors. The welfare effect of protection is ambiguous. Households, viewed only as final consumers, lose; when they are viewed as taxpayers, protection may become beneficial in the long run. Taking substitution possibilities into account when measuring protection has an impact on the ranking of firms according to their nominal and effective protection.

We build a hierarchical model of contractual relationships under moral hazard to address issues about subsidiarity, i.e. optimal (de)centralization of incentive industrial policies at the national level or at the European Community level. Incentive policy is viewed as an incentive contract for producers who take unobservable decisions that have spillover effects across Member States. A Community Agency designs contracts for producers and contractual compensatory transfers between States on the basis of its observations; then national regulators and their home producers negotiate, according to a generalized Nash bargaining, a national contract that complements the Community contracts, given that national regulators will have access to more observations on the producers activities. In this setting, we show that full centralization is never optimal; we give sufficient conditions for complete decentralization to be optimal; and when both policies are present, we characterize how they interact to provide incentives to producers. JEL classification: C78; F15; L52 Keywords: Hierarchies; Incentive contracts; Subsidiarity principle; (De)centralization; European integration

Key words economic development, industrial policy, income and regional inequality, resource curse. The Brazilian frontier region, which comprises the Amazon forest in the north and the grasslands of the center [...]

Key words: industrial policy, competitive advantage, authoritarianism, neoliberalism, plantation forestry, radiate pine, exotic species, Valdivian forest. Chile has already been accepted in principle as the next member to be admitted [...]

External factors such as industrial policy and exchange rates play a crucial role in a country's agricultural performance. This was revealed in a study of 18 developing countries between 1960 and 1985. The study found that price interventions negatively affect agricultural prices, income distribution, growth and the budget. Several policy reforms are also outlined to help countries reap the economic benefits of agriculture.

When sustained growth depends on establishing an indivisible infrastructure for directly productive activities (DPAs) both discrete and marginal departures from optimal growth can undermine the dynamic efficiency of the market. Producers' anticipations of paying monopoly fees for infrastructure services dampen their incentive to invest in DPAs and may prevent the economy from reaching a minimal level of activity that would justify investment in a large indivisible infrastructure; and potential investors in infrastructure may be intimidated by the prospect of expropriatory regulation. Thus a credible prior commitment to effective but fair regulation is necessary for achieving optimal growth. But it may not be sufficient. Low-level expectations before the infrastructure is established can be self-fulfilling, indicating a role for coordinative industrial policy. Investment subsidies, even in conjunction with regulation, cannot induce an efficient equilibrium.

During the later 1980s, support for public-private sector partnerships came to the fore in British urban policy. This paper explores one particular manifestation of partnership in an English provincial city, the Sheffield Central Area Study, within the context of growth coalition and regime theories. Analysis of agendas adopted by partners and questions of power, suggests that existing theories do not satisfactorily account for experience within partnerships. In particular, in the British context, conceptualisations of partnership need to embrace questions such as the relatively strong position of local government and its professionalised bureaucracy, and the commensurately weaker status of the business community in general and landowners in particular.

The case for the protection of infant industries has not been convincingly demonstrated by economic theorists because of the lack of appropriate data. Neither has been there conclusive evidence that government intervention in markets characterized by imperfect competition is not economically efficient. An analysis, however, of data dealing with apparel and footwear, rubber products and petroleum products shows higher productivity in protected industries. The observation is nonetheless on an industry-wide level and cannot speak for firm-level performance.

A model of foreign lending and foreign direct investment is obtained to investigate alternative schemes of external finance for a multinational company exposed to sovereign risk. The study revealed two things. First, a host government does not discriminately tax which have liquidated their holdings to their domestic partners. Second, the inflow of foreign direct investment rises in proportion with a country's perceived credit standing.

Key words: global restructuring, local development, community, collective action, mode of production, industrial and labor relations, government-business relations, public-private partnerships, comparative analysis. Development increasingly has become a localized phenomenon, often [...]

Infrastructure investment to create jobs is an attractive short-run economic strategy, but a fragmented policy. A comprehensive infrastructure policy should be a tool for economic growth, research and development, and human-resources development, and should also benefit educational institutions, urban areas, public health, and the environment. Industrial policy can provide concepts that focus on the contributions infrastructure can make to the economy, education and training, technology and development, and the retraining of workers in shrinking industries. This approach can help remake institutional links and bring interests together in different ways, the greatest needs of employment policy. Use of educational institutions and public works agencies can provide an effective management mechanism and help overcome past problems. Federal investments are required to initiate such a program. The goal of the present paper is to stimulate discussion about how civil engineers can contribute to this strategy. Discussion of the present paper can greatly help the ongoing national-policy discussion of these critical issues.

German chemical companies had to accept labor unions, agree to collective bargaining and allow government intervention in labor disputes after the political and social changes of the first world war and the November Revolution of 1918. Previously these firms had been paternalistic in management style. From 1919-20 acquiescence to union and government demands enabled the companies to reassert management of their companies while recognizing the union and keeping government at bay. From 1922-24 management again set working conditions due to weak union management.

The lack of centralized banking resources and the lack of a competent bureaucracy are barriers to the implementation of a Japanese-style industrial policy in the US. Japan effectively subsidizes certain strategic industries through its capital markets and has invested in a well educated bureaucracy. Unlike the mix of free market and regulatory theories in the US, Japan consciously develops goals as part of its industrial policy. Government intervention on the Japanese model would be the wrong course for the US, but the US can remain competitive through education and worker training.

Producer cooperatives (PC) have existed since the first factories were set up in Western economies. The characteristics of PCs with regards to worker motivation, productivity, investment and capital formation were assessed based on existing economic literature and compared with conventional firms. The extent of influence and the nature of operations vary depending on the country and industry. Usually, PCs abound in the plywood, printing and construction industries. Empirical studies have shown that PC practices promote worker productivity and performance.

The implications of the privatization of the distributive network utilities for public policy are investigated. Of specific concern are the issues surrounding regional development and the coordination of infrastructure investment. These utilities' significance to regional economic and social development means that the continued absence of a strategic regional perspective will be detrimental to regulatory policy.

The effect of goverment policy inconsistency on multinational corporations (MNCs) and their relationships with external supply networks was analyzed. Results showed that policy inconsistency raises fear of demand of new contracts by suppliers due to fears of unexpected losses of funding. This event led to transaction cost disadvantages that strain the relationship between the multinational corporations and their local suppliers. Hence, local transactions by MNCs were found to be dependent on the objectives of the host government that the MNCs have not even agreed upon.

A review of developments in China's domestic economy in 1992 is presented. The year is characterized by the rapid expansion in the consumer andcapital goods markets. Competition between government-owned enterprises and private businesses was also heightened, although both sectors enjoyed common prosperity. Most notable in China's domestic economy expansion, however, is thegreat diversity of activities undertaken by various sectors such as the finance, labor, real estate and science and technology markets.

Pres-elect Bill Clinton has indicated his commitment to supporting increased research and development, especially in the high technology industries. He believes this will stimulate new industry and help current businesses with needed economic expansion. The problem with R&D support from the federal government is that the returns from resultant patents remain within the private sector. Taxpayers see no direct benefit on their investment that will reach $76 billion in FY 1993.

The impact of decisions of users, developers and investors in a sub-regional industrial market is examined by analyzing data from Cheshire-Wirral corridor, a manufacturing area in the UK. The study showed that the development of industrial sites is hastened when subsidies are offered. Moreover, areas adjacent to the Cheshire-Wirral corridor compete to supply industrial land contributing further to an increase in land prices and rents. Higher demand for land for uses other than industrial added to the price rise. The study suggests that local authorities can make market information available to regulate market uncertainty and land allocation.

The Korean heavy industry (HCI) drive has been criticised for the misallocation of capital and for negative spillover effects on growth, inflation, the current account and debt. However, such criticism places too much blame on HCI for the late - 1970s' economic deterioration and gives HCI insufficient credit for the subsequent economic rebound. Korean HCI was a catch-up exercise which attracted cheap foreign capital to accelerate structural change. Nevertheless, the mid-1970s' decision to pursue HCI as a Big Push was flawed since it did result in project bunching that strained implementation capacity, despite the safeguards which Korea built into its HCI strategy.

A 'new' neo-classical approach to economic growth, involving either knowledge accumulation and externalities or endogenous innovation, is introduced via several recent studies. A survey of these models is made and compared with the standard Solow neo-classical models. New concepts include increasing returns to scale and consequently, a difference between the equilibrium and optimal growth rate. This approach succeeds in isolating technological change as a major determinant for development, and has important implications for national and international technological policy.

Now that some time has elapsed since the adoption of industrial policies by the American states, it is appropriate to consider the question of policy impact. In this paper, an answer is sought using new data on gross state product and a new measure of state industrial policy activism. The paper discusses the economic origins of industrial policy and describes the development and testing of an impact model for two measures of economic distress for the 1982 to 1986 period. Conclusions are drawn concerning the complicated early impact of state industrial policy.

The US government should resist business demands for government spending on private sector R&D. The private sector actually spent more on R&D than did the public sector in the 1980s despite the huge increase in defense spending. Public support for private R&D would serve to subsidize bad business decisions.

Private ownership of industries will not ensure a competitive market which is necessary for a dynamic, efficient economy. Market socialism, which denotes a degree of state control of firms that are not necessarily government-owned, may solve the problem of managerial incentives for productivity. A proposed bank-centric system would involve banks constantly assessing the economic climate from within on the look-out for potential trouble.

This paper reviews the implications for industrial strategy of recent research on technology capabilities at the firm and national levels. After exploring the nature and determinants of microlevel technological development, a simple framework for explaining the growth of national capabilities is set out, based on the interplay of incentives, capabilities and institutions. Each may suffer market failure and so require corrective intervention. The experience of some industrializing countries is described to assess the validity of this framework. It is concluded that interventions, carefully and selectively applied, are necessary for industrial success.