New Economics Papers
on Business, Economic and Financial History
Issue of 2009‒11‒07
fifteen papers chosen by

  1. Britain, China, and the Irrelevance of Stage Theories By McCloskey, Deirdre Nansen
  2. Argentina-Canada from 1870: Explaining the dynamics of divergence By González, Germán; Viego, Valentina
  3. Measuring productivity increase by long-run prices: The early analyses of G.R. Porter and R. Giffen By Opocher, Arrigo
  4. On the informal economy: the political history of an ethnographic concept By Keith Hart
  5. Counter-Terrorism in a Police State : The KGB and Codename Blaster, 1977 By Harrison, Mark
  6. Romanian accounting between tradition and international influences in the xxth By Bunget, Ovidiu-Constantin; Farcane, Nicoleta; Popa, Adina
  7. Debtors' Prisons in America: An Economic Analysis By Mathhew Baker; Metin Cosgel; Thomas J. Miceli
  8. Why the West Became Rich before China and Why China Has Been Catching Up with the West since 1949: nother Explanation of the “Great Divergence” and “Great Convergence” Stories By Vladimir Popov
  9. Is the 2007 U.S. Sub-Prime Financial Crisis So Different? An International Historical Comparison By Carmen M. Reinhart; Kenneth S. Rogoff
  10. Economical Crisis From the Perspective of an Intercivilization War By Chiritescu Dumitru Dorel; Vasilescu Maria
  11. Bank regulation and bank crisis By Sigbjørn Atle Berg; Øyvind Eitrheim
  12. Tear Down this Wall : On the Persistence of Borders in Trade By Nitsch, Volker; Wolf, Nikolaus
  13. Bedrock Depth and the Formation of the Manhattan Skyline, 1890-1915 By Jason Barr; Troy Tassier; Rossen Trendafilov
  14. A bibliometric review of the research papers of the Central Bank of Turkey By Yucel, M. Eray
  15. Mobility of Corporate Headquarter Functions: A Literature Review By Matthias Deschryvere

  1. By: McCloskey, Deirdre Nansen
    Abstract: Britain was first, though the classical (and many of the neoclassical) economists did not recognize that its course was beginning the factor of 16. The slow British growth in the 18th century proposed by Crafts and Harley is unbelievable, but however one assigns growth within the period 1700-1900 it is now plain that something unprecedented was happening. Only non-economists recognized it at the time. The central puzzle is why innovation did not fizzle out, as Mokyr has put it---as it had at other times and places. Productivity in cotton textiles, for example, grew at computer-industry rates, and continued to into the 20th century. But Europe’s lead was not permanent. The California School of Pomeranz and Goldstone and Allen and others have shown that China led the West in 1500, and maybe as late as 1750, then fell dramatically behind. It was the continuation of European growth in the 19th and 20th centuries that is strange and new. Explaining the Great Divergence requires focusing on non-European events in the 19th century---not some deep-seated European cultural superiority. On the other hand, Europe’s fragmented polity was an advantage, as shown in the swift uptake of the printing press. The way that non-European places like Japan or Botswana or India have been able to grow demonstrates that the stage theories popular in European thought from the 18th century to the present (for example, in modern growth theory) are mistaken. The metaphors of biological stages or human foot races are inapt, as in the business-school talk of “competitiveness” nowadays. The “rise” of non-European economies does not presage a “decline” or Europe or its offshoots, merely a borrowing of social and engineering technologies such as Europe once borrowed from elsewhere. The dignity and liberty of ordinary people stands in the middle of such “technologies.”
    Keywords: industrial revolution; economic history; growth theory; productivity; Britain; China; non-European economies
    JEL: N13 N0
    Date: 2009–07–09
  2. By: González, Germán; Viego, Valentina
    Abstract: Argentina and Canada started their industrialization processes while exporting natural resources and importing capital goods. These two nations were sparsely populated but received significant inflows of European immigrants since the second half of the nineteenth century. Until the start of World War II, both economies experienced similar per-capita GDPs. However, the gap between both per-capita GDPs began to grow, widening throughout the century. We carry out an empirical study of the deep determinants of the divergence process between both economies. We confirm that while Canada was drawn into a successful path due to the adjacency with a bigger and complementary economy, Argentina fell into a “staple trap”.
    Keywords: Relative per-capita GDPs; development accounting; total factor productivity; Argentina; Canada
    JEL: O11 N16 N12 O57
    Date: 2009–06
  3. By: Opocher, Arrigo
    Abstract: The 19th century economic commentators did not possess a formal measure of the rate at which productivity was increasing during the industrial take-off. Yet they did develop an intuitive method based on the comparative change in prices and wages. This paper reviews the contributions of G.R. Porter and R. Giffen and, in the light of some modern contributions, presents an assessment of their rationality and improvability under current standards. It is argued, in particular, that a proper measure of industrial productivity increase based on the change in real earnings rates is the mathematical dual of a Solovian measure of the industrial Total Factor Productivity growth.
    Keywords: productivity growth; TFP: cost function; real wages; income distribution.
    JEL: D33 B16 D24
    Date: 2009–08–31
  4. By: Keith Hart (Goldsmiths University of London and , School of Development Studies, University of Kwazulu-Natal, Durban.)
    Abstract: I explore here the dialectic of formal and informal economy in the context of ‘development’ discourse over the last four decades. It would not be hard, in post-colonial Africa for example, to conceive of this dialectic as a war waged by the bureaucracy on the people, allowing informal economic practices to be portrayed as a kind of democratic resistance. Yet, however much we might endorse the political value of self-organized economic activities, there are tasks of large-scale co-ordination for which bureaucracy is well-suited; and the institution’s origins were closely linked to aspirations for political equality, even if historical experience has undermined that expectation. So the task is not only to find practical ways of harnessing the complementary potential of bureaucracy and informality, but also to advance thinking about their dialectical movement. Informality may be conceived logically in terms of four categories: division, content, negation and residue. Neoliberal globalization has vastly expanded the scope of informal activities; so that we also need to examine what social forms positively organize them and how these relate to governments, corporations and international agencies. The current crisis of world economy has already begun a major swing of the pendulum back from the market to the state (wherever that may be these days). The political potential of our moment in history is well illuminated by a review of how the major development agencies have variously construed the dialectic of bureaucracy and informal economy through the state/market pair since the concept’s origins around 1970.
    Date: 2009–10
  5. By: Harrison, Mark (Department of Economics, University of Warwick ; Centre for Russian and East European Studies, University of Birmingham ; Hoover Institution on War, Revolution, and Peace, Stanford University)
    Abstract: The paper provides a rare case study of terrorism and counter-terrorism within a closed society, carried out under a blanket of official secrecy. This case is unexpectedly revealing in what it tells us about terrorism, counterterrorism, and the relative strengths of open and closed societies. Documents from the archive of the Lithuania KGB show how the Soviet authorities managed the hunt for the perpetrators of bombing attacks carried out in Moscow in January 1977. Lithuania, a sensitive border region with a troubled history, was far distant from the epicenter of the conspiracy in Soviet Armenia, but the authorities did not know this beforehand, and made considerable efforts to establish or rule out a Lithuanian connection. It was a problem that the KGB, like other Soviet organizations, was vulnerable to boxchecking and other kinds of perfunctory working to the plan. The career concerns of regional KGB leaders appear to have countered this tendency. The paper evaluates the strengths and weaknesses of a counter-terrorist operation carried out under conditions of the intense secrecy that was normal in the Soviet police state.
    Keywords: Career Concerns ; Homeland Security ; Moral Hazard ; Secrecy ; Terrorism. JEL Codes: H56 ; K42 ; N44.
    Date: 2009
  6. By: Bunget, Ovidiu-Constantin; Farcane, Nicoleta; Popa, Adina
    Abstract: What we proposed ourselves through this work is to appreciate the impact of the foreign influences on the Romanian accounting system throughout the 20th century. In this sense we will further present an evolution of the accounting system during this period. Along the 20th century there are three major periods, characterized through a different evolution of the accounting system: the period between 1900-1950 is characterized through a maturity of the Romanian accounting thinking, when the first steps in Romanian accounting are defined, between 1950-1990, the accounting system is passing through a stagnation period caused by the soviet – socialism domination, after the 90’s Romanian accounting evolves, and not only new coordinates for an accounting system specific for a transition economy are defined, but also new coordinates ensuring the adjustment of the accounting system to the needs of the market economy in the context of Romania becoming member of the European Union. Based on the study of accounting literature and former studies related to the accounting evolution in Romania, we identified, during each of the mentioned periods the foreign influences on the Romanian accounting system and also the specific features of the Romanian Accounting School.
    Keywords: accounting history; accounting system
    JEL: M41
    Date: 2009–11–01
  7. By: Mathhew Baker (Hunter College, City University of New York); Metin Cosgel (University of Connecticut); Thomas J. Miceli (University of Connecticut)
    Abstract: Debtors' prisons have been commonplace throughout history, including in the United States. While imprisonment for debt no doubt elicited some repayment by benefactors of the debtor, we argue that its primary function was to deter default in the first place by giving borrowers an incentive to disclose hidden assets. Because of its cost, however, imprisonment was destined to be replaced by more efficient ways of preventing borrowers from sheltering assets. Empirical analysis of state laws banning imprisonment for debt provides support for this argument. In particular, the results suggest that states in which the publishing industry developed sooner (thus facilitating the flow of information) were more likely to enact early bans on imprisonment for debt.
    Keywords: Debtors' prison, default, imprisonment
    JEL: D82 E51 G21
    Date: 2009–10
  8. By: Vladimir Popov (New Economic School, Moscow)
    Abstract: The goal of this paper is to offer a non-technical interpretation of the “Great Divergence” and “Great Convergence” stories. After reviewing existing explanations in the literature, I offer a different interpretation. Western countries exited the Malthusian trap by destroying traditional institutions, which was associated with an increase in income inequality and even a decrease in life expectancy, but allowed the redistribution of income in favor of savings and investment at the expense of consumption. When the same pattern was imposed on some developing countries (colonialism ?Sub-Saharan Africa (SSA), Latin America (LA), and the Former Soviet Union (FSU)), it resulted in the destruction of traditional institutions, increase in income inequality, and worsening of starting positions for catch-up development. Other developing countries (East Asia (EA), South Asia (SA), and the Middle East and North Africa (MENA countries)) that were less affected by colonialism and managed to retain traditional institutions by the end of the twentieth century found themselves in a better starting position for modern economic growth. The slow-going technical progress finally allowed them to find another exit from the Malthusian trap—increased income that permitted the share of investment in GDP to rise without a major increase in income inequality or decrease in life expectancy. The roots of the impressive long-term performance of China lie in the exceptional continuity of the Chinese civilization—the oldest in the world—that managed to preserve its uniqueness and traditions without major interruptions. It is argued that institutional continuity (East Asia, India, and MENA) is more conducive to growth than attempts to replace existing institutions by allegedly more advanced institutions imported from abroad (Latin America, FSU, and SSA). Like Russia in 1917, China re-established collectivist institutions in 1949 as a response to the failure of Westernization. Unlike Russia after 1991, China in 1979-2009 managed to preserve “Asian values” institutions—priority of community interests over the interests of the individual. However, the rapid increase in income inequality since 1985 could be a sign of weakening of collectivist institutions, which is the single most important threat to the continuation of fast economic growth.
    Date: 2009–10
  9. By: Carmen M. Reinhart (University of Maryland and the NBER, USA); Kenneth S. Rogoff (Harvard University and the NBER, USA)
    Abstract: Is the 2007-2008 U.S. sub-prime mortgage financial crisis truly a new and different phenomena? Our examination of the longer historical record finds stunning qualitative and quantitative parallels to 18 earlier post-war banking crises in industrialized countries. Specifically, the run-up in U.S. equity and housing prices (which, for countries experiencing large capital inflows, stands out as the best leading indicator in the financial crisis literature) closely tracks the average of the earlier crises. Another important parallel is the inverted v-shape curve for output growth the U.S. experienced as its economy slowed in the eve of the crisis. Among other indicators, the run-up in U.S. public debt and is actually somewhat below the average of other episodes, and its pre-crisis inflation level is also lower. On the other hand, the United States current account deficit trajectory is worse than average. A critical question is whether the U.S. crisis will prove similar to the most severe industrialized-country crises, in which case growth may fall significantly below trend for an extended period. Or will it prove like one of the milder episodes, where the recovery is relatively fast? Much will depend on how large the shock to the financial system proves to be and, to a lesser extent, on the efficacy of the subsequent policy response.
    Keywords: Financial crises, Economic growth, Public debt
    JEL: E44 F30 N20
    Date: 2008–05
  10. By: Chiritescu Dumitru Dorel; Vasilescu Maria (Constantin Brancusi University, Faculty of Economics, Romania)
    Abstract: America is at the half way of the road and the time of the definitive imposing seems to have arrived. After a world-wide bi-polar power system (SUA-URSS), it can pass to a unique-polar power system avoiding a multi–polarities system dangerous at world-wide scale. Pax Americana remains a main order objective, an universal project at which the other countries more or less important can join.
    Keywords: economic-financial crisis, new global economic and political order, supremacy, Pax Americana
    JEL: E60 P50 O11 R11
    Date: 2009–05
  11. By: Sigbjørn Atle Berg (Norges Bank (Central Bank of Norway)); Øyvind Eitrheim (Norges Bank (Central Bank of Norway))
    Abstract: The Norwegian experiences of the past thirty years illustrate what we believe are two general tendencies in bank regulation. The first one is that a bank crisis will tend to focus regulators' minds and lead to stricter regulations. The second one is that cycles in regulation tend to interact with the economic cycle, in the sense that the rationale for strong regulation tends to become somewhat blurred when the economy is booming. These patterns appear in the Norwegian experience after the banking crisis of 1988-92, and they can presumably also be recognized in many other jurisdictions.
    Keywords: Banking crises, history of bank regulation, capital adequacy, Basel I & II
    JEL: G28 N44
    Date: 2009–10–21
  12. By: Nitsch, Volker (Technische Universität Darmstadt); Wolf, Nikolaus (University of Warwick and CEPR)
    Abstract: Why do borders still matter for economic activity? The reunification of Germany in 1990 provides a unique natural experiment for examining the effect of political borders on trade both in the cross-section and over time. With the fall of the Berlin Wall and the rapid formation of a political and economic union, strong and strictly enforced administrative barriers to trade between East Germany and West Germany were eliminated completely within a very short period of time. The evolution of intra-German trade flows after reunification then provides new insights for both the globalization and border effects literatures. Our estimation results show a remarkable persistence in intra-German trade patterns along the former East-West border ; political integration is not rapidly followed by economic integration. Instead, we estimate that it takes at least one generation (between 33 and 40 years or more) to remove the impact of political borders on trade. This finding strongly suggests that border effects are neither statistical artefacts nor mainly driven by administrative or “red tape” barriers to trade, but arise from economic fundamentals.
    Keywords: integration ; home bias ; globalization JEL Codes: F14 ; F15
    Date: 2009
  13. By: Jason Barr; Troy Tassier; Rossen Trendafilov
    Abstract: Skyscrapers in Manhattan need to be anchored to bedrock to prevent (possibly uneven) settling. This can potentially increase construction costs if the bedrock lies deep below the surface. The conventional wisdom holds that Manhattan developed two business centers--downtown and midtown--because the depth to the bedrock is close to the surface in these locations, with a bedrock "valley" in between. We measure the effects of building costs associated with bedrock depths, relative to other important economic variables in the location of early Manhattan skyscrapers (1890-1915). We find that bedrock depths had very little influence on the skyline; rather its polycentric development was due to residential and manufacturing patterns, and public transportation hubs.
    Keywords: skyscrapers, geology, bedrock, sprawl, urban agglomeration
    JEL: N61 N92 R14 R33
    Date: 2009–10
  14. By: Yucel, M. Eray
    Abstract: This paper presents a bibliometric assessment of the research papers produced in the Central Bank of the Republic of Turkey from 1988 to 2009. Concentration over subjects and the Journal of Economic Literature (JEL) classification codes are provided in addition to the time distribution of bibliography cited in the research papers. Overall, it is observed that the examined series did provide an adequate pool of knowledge for both academics and the general public.
    Keywords: Bibliometrics; Central bank research; Economic research
    JEL: A39 Z0 Y9
    Date: 2009–11–03
  15. By: Matthias Deschryvere
    Abstract: ABSTRACT : This paper reviews the recent literature on the relocation of headquarters (HQs). Overall results show that full and direct international relocations of corporate HQs are rare events. However, there is a trend that MNEs increasingly unbundle their HQs so as to spread their different HQs functions over several locations around the world. The literature on the organisation of companies shows that HQ unbundling can go hand in hand with different patterns of HQ relocations. The international trade literature underlines that falling communication costs enable firms to offshore HQ-tasks that were previously considered non-traded. International competition occurs now between individual workers performing similar HQ-tasks in different nations. The new economic geography literature explains the spatial concentration of HQs functions by the existence of agglomeration effects. Most empirical literature focuses on relocations within the United States. Relocations within the EU are less frequent which may be explained by legal and cultural barriers. An important finding is that many HQ relocations result from a merger or acquisition, but institutional factors, such as international tax incentives and labour market institutions, were also identified as key drivers of HQ relocations. The effects of relocations on the company performance are relatively small although results seem to depend on the motivation behind the relocation. For nations, the unbundling of HQs implies that the competition between (potential) locations for HQ functions will rise. Pääkonttoritoimintojen liikkuvuus. Katsaus kirjallisuuteen
    JEL: F23 L22 H25 R38
    Date: 2009–10–21

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