New Economics Papers
on Business, Economic and Financial History
Issue of 2010‒09‒18
seventeen papers chosen by

  1. Technology Diffusion and Postwar Growth By Diego A. Comin; Bart Hobijn
  2. Path of Chinese institutional modernization By Sahoo, Ganeswar
  3. Diversity of economic landscapes and common land persistence in 19th century Spain: an interpretative proposal By Francisco J. Beltrán Tapia
  4. "What Should Banks Do? A Minskyan Analysis" By L. Randall Wray
  5. Guideline for constructing nutrient balance in historical agricultural systemes (and its application to three case-studies in southern Spain) By Manuel González de Molina; Roberto García Ruiz; Gloria Guzmán Casado; David Soto Fernández; Juan Infante Amate
  6. Employment Policies in Brazil: History, Scope and Limitations By Roberto Henrique Gonzalez
  7. Critical connections : Islamic politics and political economy in Indonesia and Malaysia By Khoo, Boo Teik; Vedi, R. Hadiz
  8. The Bulgarian Economic Thought since 1989: A Personal View By Nikolay Nenovsky
  9. The Idea of Economics in a University By Gabriel Martinez
  10. The Demography of an Early Mortality Transition: Life Expectancy, Survival and Mortality Rates for Britain's Royals, 1500-1799 By Paul A. David; S. Ryan Johansson; Andrea Pozzi
  11. The Zollverein and the Formation of a Customs Union By Florian Ploeckl
  12. The Evolution of Singapore Business: A Case Study Approach By Anisha Sabhlok
  13. General Purpose Technologies and the Industrial Revolution By Leonard Dudley
  14. Employment Policies in Brazil: History, Scope and Limitations By Roberto Henrique Gonzalez
  15. Transversality and Transition: Branching to New Regional Path Dependence By Philip Cooke
  16. The Big Mac Index Two Decades On An Evaluation Of Burgernomics By Kenneth W Clements; Yihui Lan; Shi Pei Seah
  17. Oil and the Duration of Dictatorships By Jesus Crespo Cuaresma; Harald Oberhofer; Paul Raschky

  1. By: Diego A. Comin (Harvard Business School, Business, Government and the International Economy Unit); Bart Hobijn (Federal Reserve Bank of San Francisco)
    Abstract: In the aftermath of World War II, the world's economies exhibited very different rates of economic recovery. We provide evidence that those countries that caught up the most with the U.S. in the postwar period are those that also saw an acceleration in the speed of adoption of new technologies. This acceleration is correlated with the incidence of U.S. economic aid and technical assistance in the same period. We interpret this as supportive of the interpretation that technology transfers from the U.S. to Western European countries and Japan were an important factor in driving growth in these recipient countries during the postwar decades.
    Keywords: wars, economic growth, technology adoption, cross-country studies.
    JEL: E13 O14 O33 O41
    Date: 2010–09
  2. By: Sahoo, Ganeswar
    Abstract: We see the progress today that China has developed a treasure of modernity in terms of its World figure both in economic development and its strong military power with countless path of ups and downs in the past. We are more concerned with the historical study of its institutional modernization than a mere philosophical debate over its development and can discuss its various levels of struggle for ‘Substitute Modernity’2 since mid-19th century(the two opium wars) to till date.
    Keywords: China; Institutional Modernization
    JEL: N9
    Date: 2009–11–15
  3. By: Francisco J. Beltrán Tapia (Department of Economic History and Applied Economics, Universidad de Zaragoza. Gran Vía 2, 50005 Zaragoza)
    Abstract: The massive land privatization that took place over the 19th century deeply transformed the Spanish economic landscape. Nevertheless, the outcome of the process was quite different, both in pace and impact, depending on the geographic area we analyze. The explanation for this regional diversity in the persistence of common lands has been attributed to the institutional and environmental context, together with the level of market penetration that characterized the different rural societies. However, the important role that the commons themselves played in this process has been often overlooked. The aim of this paper is to complement those previous explanations by proposing a model that focuses on the collective land remaining, at any given moment, as a crucial explanatory variable and to provide an interpretative framework that would contribute to unveiling the complexity of a process that led to so many different outcomes.
    Keywords: Common lands, privatisation, Spain, 19th century.
    JEL: N53 N93 Q15 R14
    Date: 2010–09
  4. By: L. Randall Wray
    Abstract: In this new brief, Senior Scholar L. Randall Wray examines the later works of Hyman P. Minsky, with a focus on Minsky’s general approach to financial institutions and policy. The New Deal reforms of the 1930s strengthened the financial system by separating investment banks from commercial banks and putting in place government guarantees such as deposit insurance. But the system’s relative stability, and relatively high rate of economic growth, encouraged innovations that subverted those constraints over time. Financial wealth (and private debt) grew on trend, producing immense sums of money under professional management: we had entered what Minsky, in the early 1990s, labeled the “money manager” phase of capitalism. With help from the government, power was consolidated in a handful of huge firms that provided the four main financial services: commercial banking, payments services, investment banking, and mortgages. Brokers didn’t have a fiduciary responsibility to act in their clients’ best interests, while financial institutions bet against households, firms, and governments. By the early 2000s, says Wray, banking had strayed far from the (Minskyan) notion that it should promote “capital development” of the economy.
    Date: 2010–09
  5. By: Manuel González de Molina; Roberto García Ruiz; Gloria Guzmán Casado; David Soto Fernández; Juan Infante Amate (Agro-Ecosystems History Laboratory. Pablo de Olavide University)
    Abstract: The purpose of this paper is to provide interested researchers with a simple tool to evaluate the efficacy of different methods of fertility replenishment that have accompanied and made possible the contemporary agriculture. We propose a nutrient balance model created especially to be applied to the past. In the first part of this working paper each term in the balance is defined and specified the information the user must input into the model. The second part of this paper reports on the application of this methodology based on the balances of nutrients to the evolution of Andalusian agriculture since the mid 18th Century. The nutrient balances show the effects of agrarian growth in an environmentally limited context, offering reasonable doubt regarding the medium and long-term stability of certain forms of cultivation. The balances show that in the last decades of the 19th Century, productive intensification had reached its ceiling, with livestock numbers levelling off or clearly declining. The deficits of nutrients even began to exceed the fertilisation capacity of the available livestock. The intensification applied in unfertilised rotations and crops had to be sustained through the extraction of soil reserves.
    Keywords: Soil fertility management, Nutrient balances, Past organic agricultures, Agrarian growth, Socio-ecological transition, Agricultural change
    JEL: Q10 Q11 Q19 N53
    Date: 2010–09
  6. By: Roberto Henrique Gonzalez (Institute for Applied Economic Research)
    Abstract: Although Brazil has had consolidated labour-market institutions since the 1940s, policies to help unemployed workers find a job only began in the 1970s. This was made possible by the creation of the National Employment System (Sistema Nacional de Emprego, SINE). Before that there was only one compensation mechanism for workers who lost their jobs, the Severance Pay Indemnity Fund (Fundo de Garantia por Tempo de Serviço, FGTS), as well as some assistance of very limited scope for the unemployed. (...)
    Keywords: Employment Policies in Brazil: History, Scope and Limitations
    Date: 2010–09
  7. By: Khoo, Boo Teik; Vedi, R. Hadiz
    Abstract: This article explores Islamic politics in two Muslim-majority countries in Southeast Asia, Indonesia and Malaysia, by linking their trajectories, from late colonial emergence to recent upsurge, to broad concerns of political economy, including changing social bases, capitalist transformation, state policies, and economic crises. The Indonesian and Malaysian trajectories of Islamic politics are tracked in a comparative exercise that goes beyond the case studies to suggest that much of contemporary Islamic politics cannot be explained by reference to Islam alone, but to how Islamic identities and agendas are forged in contexts of modern and profane social contestation.
    Keywords: Southeast Asia, Indonesia, Malaysia, Internal politics, Islam, Islamization, State, Economic transformation, Economic crises, Populism
    Date: 2010–06
  8. By: Nikolay Nenovsky
    Abstract: The objectives of this paper could be brought to three. First, a methodological one, to explain how economic knowledge disseminates and what its channels are, as well as the basic transmission mechanisms of economic theory in Bulgaria after the disintegration of the socialist bloc. Second, a purely informational objective, to present the major topics and issues studied over the period 1989-2009, and, of course, the economists working on them. And a third and parallel task to interpret theoretically the development of the Bulgarian economic thought during that period, its character and specificities.
    Keywords: economic thought, economic knowledge, post-communist economy, Bulgaria
    JEL: B20 B41 P20 P50
    Date: 2010–09
  9. By: Gabriel Martinez (Department of Economics, Ave Maria University)
    Abstract: Relying on John Henry Newman’s Idea of a University, this paper explores the relation between economics and other disciplines. Newman had high regard for disciplinary specialization, which he thought would teach students and scholars how to think and would keep them intellectually honest. At the same time, he insisted that the learning and exploring of a science had to take place within a university, that is, with proper regard to the science’s place among other disciplines. This paper contributes to the debate on the proper way to do economics by applying to it Newman’s ideas, arguing that it is at its best when faithful to its own character, as long as it seeks out the contributions and the corrections of other disciplines. Indeed, because economics focuses on order, principle, and method, and because it provides a “connected view or grasp of things,” it can contribute to the cultivation of the philosophical habit of mind.
    Keywords: Newman, philosophy of economics
    JEL: A11 A12
    Date: 2010–09
  10. By: Paul A. David (Stanford University & All Souls College, Oxford); S. Ryan Johansson (Cambridge Group for the History of Population and Family Social Structure, Cambridge University); Andrea Pozzi (Einaudi Institute for Economics and Finance (Rome))
    Abstract: This paper details the statistical sources, methods and findings that underpin the demographic evidence offered by Johansson (2010) in support of her thesis regarding “Europe’s first knowledge-driven mortality transition,” namely the pronounced and sustained rise in the expectations of life that took place among the 17th and early 18th century birth cohorts of members of Britain’s royal families. The consequent interest in exposing the existence of systematic demographic effects of changes in the medical treatments and healthcare regimens received by this elite makes it germane to establish the statistical significance of a particular pattern of inter-cohort changes in the royals’ mortality experience – namely, one whose timing and age- and sexspecificity make it plausibly attributable to the historical improvements in the medical knowledge and practice of their doctors, as has been documented by Johansson (1999, 2010). Complete genealogical data for the members of Britain’s royal families born c. 1500 – c.1800, due to Weir (1996), permits construction of cohort life expectancy at birth and at age 25 for royal males, royal females, as well as for the small number of male monarchs, their female consorts and the queens. Inter-cohort comparisons of life table mortality schedules are obtained by using the 5-year average survival rate distributions for the successive birth cohorts to estimate for each cohort the parameters of Anson’s (1991) general model of age-specific mortality hazard rates – the empirical probability of dying within 5 years of age x, conditional on having survived to that age. A variety of tests show the gross changes of interest to be statistically significant. The discussion contrasts the mortality transition among the royal families’ members with the contemporaneous demographic experience of rural and urban segments of the English population at large.
    Date: 2010–08–15
  11. By: Florian Ploeckl (Department of Economics and Nuffield College, University of Oxford)
    Abstract: The Zollverein, the German customs union of 1834, was the institutional centrepiece of Germany’s economic unification. A bargaining model is applied to analyze the structure of its negotiation process and accession sequence. The existence of negative coalition externalities, the effect of a coalition on non-participants, led Prussia to choose sequential over multilateral negotiations. The nature of these externalities within the areas of financial revenues, trade policy and domestic political economy also explains the observed accession sequence. The choice of a customs union as institutional structure allowed Prussia to extract higher concessions from other states due to stronger coalition externalities.
    Keywords: N73, F13
    Date: 2010–08–20
  12. By: Anisha Sabhlok
    Abstract: This volume contains summaries of 12 case studies for three categories of business organisations defined by ownership, i.e. foreign, state and (local) private. The case studies explore the history and pattern of development of 12 business groups/companies in Singapore, highlighting specified aspects including: turning points in terms of business growth, diversification and expansion in domestic, regional and global markets, the strategies that led to their achievements, the role of the government and the measures taken at micro-levels to negotiate the transition to a knowledge-based economy (KBE), and world-class excellence. [Working Paper No. 10. (Volume 2)]
    Keywords: business, organisations, case studies, Singapore, domestic, regional, global markets, government, micro-levels, world-class, excellence
    Date: 2010
  13. By: Leonard Dudley
    Abstract: Did breakthroughs in core processes during the Industrial Revolution tend to generate further innovations in downstream technologies? Here a theoretical model examines the effect of a political shock on a non-innovating society in which there is high potential willingness to cooperate. The result is regional specialization in the innovation process by degree of cooperation. tests with a zero-inflated Poisson specification indicate that 116 important innovations between 1700 and 1849 may be grouped into three categories: (1) General Purpose Technologies (GPTs) tended to be generated in large states with standardized languages following transition to pluralistic political systems; (2) GPTs in turn generated spillovers for their regions in technologies where cooperation was necessary to integrate distinct fields of expertise; (3) however, GPTs discouraged downstream innovation in their regions where such direct cooperation was not required.
    Keywords: General Purpose Technologies, Industrial Revolution, innovation, cooperation, spillovers Length 38 pages
    JEL: O3 N6
    Date: 2010–04
  14. By: Roberto Henrique Gonzalez (Institute for Applied Economic Research)
    Abstract: The objective of this paper is to present the main characteristics of the public employment system in Brazil, focusing on its history, scope and current coverage. It seeks to contribute to the debate on social and employment policies, especially as regards creating job opportunities that help people escape from poverty. A conceptual caveat: throughout the paper, the expression ?employment policies? is used in a narrow sense to encompass policies ?whose specific objectives promote direct and explicit actions within the labour market? (Barbosa and Moretto, 1998: 20). The paper therefore omits other policies that act on macroeconomic factors, labour relations, access to social security and healthcare. While these greatly influence the level and quality of employment in the economy, their actions are beyond the scope of the paper. On the other hand, regulation of certain aspects of working conditions and wages has been regarded as falling within the scope of ?employment policy? whenever the goal of such regulation was to affect labour market outcomes directly. This includes setting a minimum wage, for example, but it excludes workplace health and safety standards. The term ?public employment system? is reserved for the set of employment policies that are seen as acting together to ensure individuals? entry or reintegration into the labour market. The paper is divided into three parts. The first outlines the history of employment-related government policies, from the compensation scheme for newly terminated employees and supplemental pay to the design of what it known as the employment system. The second section maps out the scope of existing employment policies and points to the limitations of the public employment system as currently understood by the Brazilian government; it also presents selected indicators concerning the public system?s coverage relative to the Brazilian labour market. The final section highlights a number of issues faced by the public employment system today as regards its ability to reintegrate workers into the labour market. (...)
    Keywords: Employment Policies in Brazil: History, Scope and Limitations
    Date: 2010–09
  15. By: Philip Cooke
    Abstract: Since Paul David published his economic histories of path dependent innovation the subject has exerted fascination upon scholars of innovation, technological change and, latterly, regional scientists and economic geographers. This paper speaks to the third and fourth of these communities in the main, though it may have theoretical and empirical elements of interest to the first two as well. The paper begins with an overview of recent perspectives and critiques concerning the relevance of the path dependence concept to the understanding of regional economic development and its associated governance. It then goes on to discuss the contribution of evolutionary economic geography to thinking about ÔbranchingÕ from path dependence and the creation of new paths. Evidence for key generic spatial processes of path transition is provided before the main content of the paper concludes with new insights into the contributions of regional innovation policy to path evolution. Conclusions are then drawn.
    Keywords: regional path dependence, branching, transition, transversality
    JEL: R11
    Date: 2010–09
  16. By: Kenneth W Clements (UWA Business School, The University of Western Australia); Yihui Lan (UWA Business School, The University of Western Australia); Shi Pei Seah (UWA Business School, The University of Western Australia)
    Abstract: The Big Mac Index, introduced by The Economist magazine more than two decades ago, claims to provide the “true value” of a large number of currencies. This paper assesses the economic value of this index. We show that (i) the index suffers from a substantial bias; (ii) once the bias is allowed for, the index tracks exchange rates reasonably well over the medium to longer term in accordance with relative purchasing power parity theory; (iii) the index is at least as good as the industry standard, the random walk model, in predicting future currency values for all but shortterm horizons; and (iv) future nominal exchange rates are more responsive than prices to currency mispricing. While not perfect, at a cost of less than $US10 per year, the index seems to provide good value for money.
    Date: 2010
  17. By: Jesus Crespo Cuaresma; Harald Oberhofer; Paul Raschky
    Abstract: This paper studies empirically the relationship between oil endowment and the duration of autocratic leaders. A simple theoretical setting shows how the relationship between oil endowment and the duration of the dictatorial regime is mediated by the price of oil. Using a dataset on 106 dictators, our empirical analysis supports the predictions of the theoretical model and indicates that dictators in countries which are relatively better endowed in terms of oil stay longer in office. This result is robust to changes in the definition of dictatorial regimes, as well as to controlling for other economic and political variables.
    Keywords: Natural resources, dictatorship, political economy, duration
    JEL: Q34 D72 H11
    Date: 2010–05

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