New Economics Papers
on Business, Economic and Financial History
Issue of 2013‒05‒22
seventeen papers chosen by

  1. Deviant Behavior : A Century of Philippine Industrialization By Emmanuel S. de Dios; Jeffrey G. Williamson
  2. Women, Medieval Commerce, and the Education Gender Gap By Graziella Bertocchi; Monica Bozzano
  3. Fiscal Discriminations in Three Wars By George J. Hall; Thomas J. Sargent
  4. The Dual Crises of the Late-Medieval Florentine Cloth Industry, c. 1320 - c. 1420 By John H. Munro
  5. Which state, which nation? States and national identity in Europe, South America, and the United States compared, 1750-1930. By Fernando Lopez-Alves
  6. Wipeout : Sangley Mercantile Dominance and Persistence in the Spanish Colonial Period in the Philippines By Raul V. Fabella
  7. Reconciling behavioural and neoclassical economics By Guilhem Lecouteux
  8. Business Fluctuations and Monetary Policy Rules in the Philippines: with Lessons from the 1984-1985 Contraction By Dante B. Canlas
  9. What remains of Sraffa's economics By Pier Luigi Porta
  10. A Gender (R)evolution in the Making? Expanding Women's Economic Opportunities in Central America : A Decade in Review By World Bank
  11. Designing the "New Public" Legal Framework for Local Governments and Promoting Regional Economic Development (Japanese) By KITAMI Tomitaro
  12. History and Evolution of Social Assistance in Indonesia By World Bank
  13. Sic et Non: Contribution of Adam Smith to Public Economics By Frantisek Svoboda
  14. O Sentido da Integração da Política Pública do Brasil na América do Sul By Luís Maurício Martins Borges
  15. Creative industries from an evolutionary perspective: A critical literature review By Jürgen Essletzbichler
  16. Path dependence, place dependence, and the evolution of a patchwork economy: Evidence from Western Australia, 1981-2008 By Paul Plummer; Matthew Tonts
  17. Study of the Formation of the Semiconductor Equipment Industry in the Bingo District in Hiroshima (Japanese) By KATO Atsumi

  1. By: Emmanuel S. de Dios (School of Economics, University of the Philippines Diliman); Jeffrey G. Williamson (Harvard University and University of Wisconsin)
    Abstract: Recent work has documented industrial output growth around the poor periphery from 1870 to the present, finding unconditional convergence on the leaders long before the modern BRICS and even before the Asian Tigers. The Philippines was very much part of that catching up. In the decade or so up to 1913, Philippine industrial output grew at 6.3 percent per annum, way above that achieved by the industrial leaders. Indeed, the Philippines was the third Asian country to enter the 5% industrial growth club: Japan 1899, China 1900, the Philippines 1913, Taiwan 1914, Korea 1921, and India 1929. The Philippines continued its industrial catch up during the interwar years 1920-1938, as it did during the ISI years 1950-1972. While the Philippines conformed to the world-wide unconditional industrial convergence pattern for seven decades, it began to deviate from the pack in the 1980s, leaving the industrial catching up club in 1982, never to re-enter. What were the causes of this regime switch? Was it political instability at a critical time in the 1980s? Was it a subsequent failure to exploit the move of Japanese manufacturing FDI into the region? Was it an institutional weakness benign in the pre-1982 past but made more powerful since? Was it some liberal policy package that penalized manufacturing when it was already on the ropes? Was it a labor emigration surge in the 1980s that stripped the work force of industrial skills? Was it some massive Dutch Disease created by subsequent huge emigrant remittances? Given the initial political shock, all of these negative forces had their influence in the form of a ‘perfect de-industrializing storm’.
    Keywords: industrial development, growth, Philippines
    JEL: F1 N7 O2
    Date: 2013–04
  2. By: Graziella Bertocchi; Monica Bozzano
    Abstract: We investigate the historical determinants of the education gender gap in Italy in the late nineteenth century, immediately following the country’s Unification. We use a comprehensive newly-assembled database including 69 provinces over twenty-year sub-samples covering the 1861- 1901 period. We find robust evidence that female primary school attainment, relative to that of males, is positively associated with the medieval pattern of commerce, along the routes that connected Italian cities among themselves and with the rest of the world. The effect of medieval commerce is particularly strong at the non-compulsory upperprimary level and persists even after controlling for alternative long-term determinants reflecting the geographic, economic, political, and cultural differentiation of medieval Italy. The long-term influence of medieval commerce quickly dissipates after national compulsory primary schooling is imposed at Unification, suggesting that the channel of transmission was the larger provision of education for girls in commercial centers.
    Keywords: Education gender gap, medieval commerce, Italian Unification, political institutions, family types.
    JEL: E02 H75 I25 J16 N33 O15
    Date: 2012
  3. By: George J. Hall (Economics Department, Brandeis University); Thomas J. Sargent (New York University)
    Abstract: In 1790, a U.S. paper dollar was widely held in disrepute (something shoddy was not ‘worth a Continental’). By 1879, a U.S. paper dollar had become ‘as good as gold.’ These outcomes emerged from how the U.S. federal government financed three wars: the American Revolution, the War of 1812, and the Civil War. In the beginning, the U.S. government discriminated greatly in the returns it paid to different classes of creditors; but that pattern of discrimination diminished over time in ways that eventually rehabilitated the reputation of federal paper money as a store of value.
    Keywords: Repudiation, Reputation, Discrimination, Legal tender, Greenbacks, Alexander Hamilton, Albert Gallatin, Ulysses S. Grant
    Date: 2013–05
  4. By: John H. Munro
    Abstract: During the hundred-year period from about 1320 to about 1420, the Florentine woollen cloth industry underwent two closely connected crises. The first crisis was the consequence, direct and indirect, of the ravages of warfare and falling population, afflicting the entire Mediterranean basin and western Europe from the 1290s, which raised transportation and other transaction costs to such an extent that long-distance trade in cheaper textiles became unprofitable, thereby forcing West European cloth producers to reorient their export-oriented production to very high priced luxury woollens (and silks) and also to shift from being price-takers to price-makers. Initially, the first crisis seemed to have had beneficial consequences for Florence: for its luxury woollens industry soon became late-medieval Italy's single most important export-oriented manufacturing industry, with large spill-over benefits for Italian commerce, banking, and finance. Indeed, by the third quarter of the 14th century, the Florentine woollen industry (Arte della Lana) was rivalling and then surpassing the previously pre-eminent leaders - those in the southern Low Countries (Flanders and Brabant); and in Mediterranean markets of this era, Florentine woollens reigned supreme over all rival textiles. But the consequences of that first economic crisis, in the ensuing transformation of the Florentine cloth industry, contained the very seeds that spawned the second and far more major crisis, which led to the inexorable downfall of this once majestic industry, by the early 15th century. The chief factors in that decline were: the accelerating population decline (especially after the Black Death), further raising transaction costs; the reorientation to very narrow luxury markets, with very restricted demand; and especially the complete dependence on imported, tax-burdened English wools (as the prime determinant of both luxury quality and the very high prices of Florentine woollens). All of these adverse factors led to drastic reductions in Florentine cloth production: from about 75,000 bolts in the 1330s to only about 9,500 in the 1420s - an overall fall of 87% (far more than the decline in the Florentine labour supply, or the European population). The Florentine cloth industry never regained its former if transitory glory. How the industry did, however, manage to achieve some recovery in the later 15th and 16th centuries, by resorting to domestic and then Spanish wools, is beyond the scope of this study.
    Keywords: warfare; depopulation; transaction costs; woollens; worsteds; says; serges; scarlets; silks; English wools; Spanish merino wools; Arte di Calimala, Arte della Lana; lanaiuoli; luxury markets; Florence; Tuscany; Lombardy; the Levant
    JEL: D23 H25 J11 J21 L67 N33 N43 N63 N73 N93
    Date: 2013–05–13
  5. By: Fernando Lopez-Alves
    Abstract: For almost two centuries substantial research in Sociology, Political Science, History and Anthropology has focused on the state, the nation, nationalism, and national identity. Despite a very remarkable amount of knowledge and intelligent theorizing a number of questions need revisiting and more encompassing comparative work is needed. Here, I offer an argument that involves three areas seldom, if ever, compared: Western Europe, South America, and North America (particularly the United States). The period spans from the sixteenth century to the 1930s but I specially focus on the epoch that starts in the 1750s. The length of the period under scrutiny allows testing correlations among variables over long periods of time. First, I revisit the concept of “nation” and stress that nations are intellectual constructs as much as they are cultural and imagined ones. Second, I emphasize the state’s conceptualizing of the nation as a key independent variable connected to the construction of national identity. Third, I bring some findings of the philosophy of language to bear upon the ways states conceptualize nations and construct their public discourse in relation to national identity. Fourth, I argue that rather than other important factors such as the cultural, ethnic, and linguistic characteristics of the national community, the construction of national identity depends upon the modernization of bureaucracies (in Max Weber’s sense) and the characteristics of the civil service. I am particularly interested in the way modern bureaucracies institutionalize meaning. Finally, I suggest that the terms “nation-state” and “national-state” have contributed more to a theory of the state than to a theory of the connections between states and nations. I therefore redefine these terms and add a third concept (‘state-nation’) in order to better capture the relations between states and nations in the regions compared. I identify the relation between states and nations as one of codependency and I claim that different types of codependency are connected to the consolidation of different types of political regimes. During the last two and a half centuries codependency between states and nations has progressively augmented, despite the ups and downs of globalization, different types of international conflict, and changes in the global economic cycle.
    Date: 2013–04
  6. By: Raul V. Fabella (University of the Philippines School of Economics)
    Abstract: Documentary evidence of the emergence and the eventual complete dominance of the Chinese mercantile traders (Sangleys) during the Spanish colonial period in the Philippines is first presented. We identify the critical traits in the Sangley mercantile genome and the new contractual and organizational technologies which led to the wipeout of non-Sangley merchants from the market. A Malthusian replicator dynamics is proposed to explain the wipeout process. We explain the persistence of the mercantile dominance of Sangleys via the forces serving to curve abuse of market power and non-assimilation of winning Sangley traits by non-Chinese following the Akerlof-Kranton identity economics.
    Keywords: Market dominance, Sangley traits, Emergence, Ethnicity
    JEL: N0 L10
    Date: 2012–10
  7. By: Guilhem Lecouteux (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X)
    Abstract: The representation of the individual in economics as a rational homo oeconomicus had been seriously questioned by the development of behavioural economics. Some authors nevertheless argue that economists do not need to produce complex models of human behaviour, since such investigation does not fall within the scope of economic analysis. We show that the mere definition of the scope of economic analysis is quite ambiguous, between on the one hand a conception of economics as a science of individual choice and on the other hand as a science of social institutions: this duality finds its origins during the marginalist revolution with Jevons, Menger and Walras, whose theories seem to be in conflict concerning the scope of economic analysis and the definition of the "economic man". Economists then produced two distinct models of this economic man, one as the simplification of a real individual, and the other as a representative agent. The figure of the homo oeconomicus developed later by Pareto homogenized these two traditions, leading to the indeterminacy of the scope of economic analysis and in fine to the development of behavioural economics. Since behavioural and neoclassical economics are the continuation of these two distinct traditions, we stress that they should be considered as complementary rather than substitute approaches to economic analysis.
    Keywords: homo oeconomicus, marginalist revolution, behavioural economics, economic man, rational choice theory.
    Date: 2013–05–02
  8. By: Dante B. Canlas (School of Economics, University of the Philippines Diliman)
    Abstract: The paper reviews recent research on macroeconomic theory of business fluctuations and its influence on monetary policy rules. It focuses on triggers to business fluctuations and the mechanisms that propagate the fluctuations once started. The Philippines is used as empirical setting. The theory’s predictions are examined using time-series data on aggregate output performance, money growth, and budget deficits of government. The paper casts a spotlight on the output contraction of 1984-1985, the longest downturn in the postwar economic history of the Philippines. The role of monetary policy and fiscal policy shocks in triggering that downturn is studied, followed by the role of subsequent macroeconomic policy adjustments that propagated the downturn. The paper points out that monetary policy rules evolved in the aftermath of the 1984-1985 downturn, culminating in the inflation-targeting rule that the monetary authority currently uses. The adoption of inflation targeting hinged on the introduction of legislation that enabled the creation of a central bank with policy and instrument independence from the fiscal authority.
    Date: 2012–06
  9. By: Pier Luigi Porta
    Abstract: Recently the Cambridge Journal of Economics have launched a project on New Perspectives on the Work of Piero Sraffa in a Conference and a Special Issue of the Journal. "Almost two decades after the opening of the Sraffa Archives - the Introduction reads - and 50 years on from the publication of PCMC seemed an appropriate moment to reflect on ongoing debates on Sraffa's overall contribution to economics and, in particular, on the relevance of the opening of the Sraffa Archives in this regard. Does Sraffa's lasting contribution to economic analysis essentially remain limited to PCMC or is it taken beyond this by his unpublished writings? In the latter case, is it possible to identify a distinctive research project that Sraffa had in mind?". This paper discusses these problems and proposes an answer to both questions. It is argued that the opening of the Archives changes substantially the judgment that can be given of the intellectual legacy of Piero Sraffa. The contributions to the ongoing debate on Piero Sraffa's economics are discussed. It is argued that the publication of Sraffa's literary remains is the necessary step to make the debate more productive.
    Keywords: Sraffian economics, Structural economic dynamics
    JEL: A10 B12
    Date: 2013–05
  10. By: World Bank
    Keywords: Gender - Gender and Development Social Protections and Labor - Labor Markets Health, Nutrition and Population - Population Policies Social Protections and Labor - Labor Policies Education - Primary Education
    Date: 2012–01
  11. By: KITAMI Tomitaro
    Abstract: As the role of local governments in developing regional economies is very important, the effectiveness of public works as a fiscal economic stimulus conducted by local governments such as cities and villages, coupled with their recent fiscal difficulties, is being put under more careful scrutiny. The local administrative outsourcing under the "New Public" framework, which brings complex regional economic effects, is a prospective alternative for local economic stimulus policy.<br />First, this paper overviews the historical development of the legal framework for local administrative outsourcing in the post-World War II local administrative reforms in Japan and traces how the legal framework for local administrative outsourcing changed from that for procurement to "New Public." Second, it offers structural and functional models of the present legal framework for local administrative outsourcing, and also shows institutional diversification of administrative outsourcing policies in individual local governments. Third, the paper fulfills regression analysis to estimate the relationships among administrative implementation forms (direct implementation by public officers, outsourcing, subsidizing, public works, and social income reallocation) and short-term and long-term regional economic improvements.<br />The results show that the indexes of regional economic improvement have strong correlation with the outsourcing ratio to local governmental expenditure but only limited correlation with the public works ratio to local governmental expenditure. This implicates possible regional economic policy compatible with administrative and fiscal reforms at the fundamental governmental level.
    Date: 2013–05
  12. By: World Bank
    Keywords: Social Protections and Labor - Safety Nets and Transfers Health Monitoring and Evaluation Public Sector Expenditure Policy Poverty Reduction - Rural Poverty Reduction Finance and Financial Sector Development - Access to Finance Public Sector Development Health, Nutrition and Population
    Date: 2012–02
  13. By: Frantisek Svoboda (Department of Public Economics, Masaryk University)
    Abstract: The work of Adam Smith is often interpreted as a justification of the natural order of economy, an apology which harmonizes individual and public interests. In addition to the concern for the economic system, Smith’s books comprise valuable passages in which the role of the state is explored within its both negative and positive implications. Generally, the corpus of his work includes three problem areas of fundamental importance for public economics. The first of these fields consists in the presentation of the tendency toward reciprocity as a significant trait of human behaviour. The second main topic constitutes a definition of the role of the State in economy, and it is based not only on the strictly economic assumption that the State ought to finance activities not profitable for a private person, but also on numerous exceptions. The third central issue then concerns the opportunism of individuals in its various forms. As the outlined topics are crucial for public economics, a further insight into Adam Smith’s ways of approaching them may be rewarding.
    Keywords: public economics, Adam Smith, reciprocity, opportunism, role of government, public policies
    JEL: B12 D63 H00
    Date: 2012–12
  14. By: Luís Maurício Martins Borges
    Abstract: No presente texto de investigação é realizada uma análise histórica e contemporânea da trajetória das políticas públicas brasileiras, especialmente as orientadas ao desenvolvimento regional, a fim de caracterizar o padrão de integração do território. A inflexão que se procura está na transformação da integração regional promovida tradicionalmente como meio de apropriação mercantil dos recursos, com forte exclusão social e transformação avassaladora do ambiente, buscando-se uma dinâmica mais intensa na geração de tecnologia, renda regional, inclusão social e limites de impacto ambiental. Para isso, a revisão bibliográfica percorre o histórico de integração econômica da América do Sul, através do caso brasileiro, cujos destaques são a escala econômica e a intervenção da política pública. A partir do histórico da integração regional, consideram-se algumas das características dos fatores produtivos do mercado do continente. A análise dos investimentos brasileiros e sul-americanos vigentes no Plano Mais Brasil (PMB 2012-2015) e na Agenda de Projetos Prioritários de Integração 2012 (API, 2011) mostra a conexão dos projetos, mas com traços do padrão histórico brasileiro de integração dos fatores de produção (terra, trabalho e capital) no que diz respeito à falta de garantia da inclusão social e da preservação ambiental. O sentido que se procura relaciona-se à importância do processo econômico de integração regional, que passa pela construção de infraestrutura urbana, logística e produtiva, mas também por uma política pública brasileira ampla e articulada com os países do continente. The present investigation text performs a historical and contemporary analysis on the Brazilian public policy trajectory, specially focused on the regional development, aiming at characterizing the pattern of the territorial integration. The inflexion one searches relies on the regional integration transformation, traditionally promoted as a means of appropriation of mercantile sources, followed by social exclusion and radical environment transformation, vis-à-vis a more intense dynamic of technology generation, regional income, social inclusion and environmental impact boundaries. For that purpose, the bibliographic review goes through the history of the South America economic integration, from a Brazilian standpoint, which highlights the economic. scale and the public intervention. As from the regional integration background, one considers some market characteristics of the continent productive factors. The analysis of the Brazilian and South American investments pursuant the Plan Plus Brazil (PMB 2012-2015) and the Agenda of Priority Integration Projects 2012 (API, 2011) shows the projects connection, although with traces of the Brazilian historic pattern of production factors integration (land, work and capital), with regard of the lack of guarantee of social inclusion and environmental protection. The meaning one searches relates to the importance of the regional integration economic process, which tangle with the construction of urban, logistic and productive infrastructure, as well as with a broad and articulated Brazilian public policy, jointly with the continent’s country.
    Date: 2013–04
  15. By: Jürgen Essletzbichler
    Abstract: This paper builds on and complements work by evolutionary economic geographers on the role of industry relatedness for regional economic development and extends this work into a number of methodological and empirical directions. First, while recent work defines relatedness through co-occurrence, this paper measures relatedness as intensity of input-output links between industry pairs. Second, this measure is employed to examine industry evolution in 360 U.S. metropolitan areas over the period 1977-1997. The paper confirms the findings of existing work: Industries are more likely to be members of and enter and less likely to exit a metropolitan industry portfolio if they are technologically related to those industries. Third, based on average industry relatedness in a metropolitan area, an employment weighted measure of metropolitan technological cohesion is developed. Changes in technological cohesion can then be decomposed into selection, entry and exit effects revealing that the change in technological cohesion is not only due to the entry and exit of related industries but employment growth in strongly related incumbent industries.
    Keywords: Evolutionary economic geography, industry relatedness, industrial branching, technological cohesion, selection, entry, exit
    Date: 2013–05
  16. By: Paul Plummer; Matthew Tonts
    Abstract: This paper contributes to debates about that application and relevance of evolutionary concepts in the analysis of regional economies. In particular, we address the propostion that geography and history matter in shaping regional economic development by drawing on the concepts and methodology of dynamic econometrics, offering an analysis of Western Australia, 1981-2008. More specifically we test for path and place dependence using data on incomes per capita for regions within the State. The results provide evidence of both path and place dependence, although indicate that there is a degree of heterogeneity in how places are evolving and responding to shocks.
    Date: 2013–05
  17. By: KATO Atsumi
    Abstract: In this paper, we give an overview on how the semiconductor equipment industry in the Bingo district in Hiroshima was developed. The textile industry once prospered in the Bingo district, but after its decline, semiconductor equipment-related companies were started centering around the Shinco Electronics Group Co., Ltd., which was a subcontractor of ROHM Co., Ltd. Furthermore, other semiconductor equipment companies and liquid crystal equipment companies are located in the Bingo district, and the business environment there allows for fabless companies to start up easily. It became clear that small- and medium-sized firms supporting such fabless companies are not dependent upon particular customers.
    Date: 2013–05

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