nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2006‒09‒03
four papers chosen by
Karl Petrick
Leeds Metropolitan University

  1. Why it Matters Who Runs the IMF and the World Bank-Updated October 2003 By Nancy Birdsall
  2. Bootstraps not Band-Aids: Poverty, Equity and Social Policy in Latin America By Nancy Birdsall; Miguel Szekely
  3. Emerging Institutions: Pyramids or Anthills? By Czarniawska, Barbara
  4. Why Butterflies Don’t Leave. Locational behaviour of entrepreneurial firms By Erik Stam

  1. By: Nancy Birdsall
    Abstract: Increasing integration has made the great challenge of reducing poverty and advancing human development more achievable than ever, and more dependent than ever on good global economic governance. In this paper I set out the economic logic for why good global economic governance matters for reducing poverty and inequality in the world, and then develop several arguments for how better representation of developing countries in the IMF, the World Bank, and other multilateral institutions would make those institutions more effective in that task. The arguments include the long-run viability of new financing of the institutions, and their effectiveness in managing the political economy challenges of using conditionality. To illustrate the possible link between better representation and effectiveness, I discuss the example of the Inter-American Development Bank, where the developing country borrowers control 50 percent of the votes and the Presidency. I close with a discussion of the dilemma of reconciling the need for sustaining the financial and political support of the rich country members of these global institutions, with stronger poor country representation to ensure their long-run legitimacy and effectiveness.
    Keywords: multilateral organizations, integration, poverty, human development
    JEL: F35 I32 I31 F36 O15 O19 O40 F53 D63
  2. By: Nancy Birdsall; Miguel Szekely
    Abstract: After a decade of economic reforms that dramatically altered the structure of economies in Latin America, making them more open and more competitive, and a decade of substantial increases in public spending on education, health and other social programs in virtually all countries, poverty and high inequality remain deeply entrenched. In this paper we ask the question whether some fundamentally different approach to what we call “social policy” in Latin America could make a difference – both in increasing growth and in directly reducing poverty. We define social policy broadly to include economy-wide (“macro” and employment and other structural) policies that affect poverty and social justice in foreseeable ways, as well as social investment programs such as health and education and social protection programs including cash and other transfers targeted to the poor and others vulnerable to economic and other shocks. Section 1 contains a brief review of what is known about the links among poverty, inequality and growth in the region and elsewhere. We emphasize the relevance of empirical work showing that income poverty combined with inequality in access to credit and to such assets as land and education contributes to low growth and directly to low income growth of the poor. In Section 2 we focus on the effects of the market reforms of the last 10-15 years on poverty and inequality in the region, based on empirical studies using household data. We emphasize the finding that the reforms have not contributed to reducing poverty and inequality. Though reforms have not particularly worsened the situation of the poor, they have not addressed the underlying structural causes of high poverty, i.e. the poor’s lack of access to credit and to productivity-enhancing assets. In Section 3 we describe briefly four stages of social policy in the region over the last four decades. In Section 4 we propose a more explicitly “bootstraps”-style social policy, focused on enhancing productivity via better distribution of assets. We set out how this broader social policy could address the underlying causes and not just the symptoms of the region’s unhappy combination of high poverty and inequality with low growth. Length: 32 pages
    Keywords: Latin America, poverty, equity, social policy
    JEL: D23 J31 O54 O40 O15 I31 I32
  3. By: Czarniawska, Barbara (Gothenburg Research Institute)
    Abstract: In the present text, an institution is understood to be an (observable) pattern of collective action, justified by a corresponding social norm. By this definition, an institution emerges slowly, although it may be helped or hindered by various specific acts. From this perspective, an institutional entrepreneur is an oxymoron, at least in principle. In practice, however, there are and always have been people trying to create institutions. This paper describes the emergence of London School of Economics and Political Science as an institution and analyzes its founders and its supporters during crises as institutional entrepreneurs. A tentative theory of the phenomenon of institutional entrepreneurship inspired by an actor-network theory is then tested on two other cases described in brief.
    Keywords: higher education; institutions; entrepreneurs; actor-network theory
    Date: 2006–08–22
  4. By: Erik Stam
    Abstract: Entrepreneurship is an important process in regional economic development. Especially the continued growth of a minority of new firms is of major significance to the commercialization of new ideas and employment growth. These growing new firms are transforming on a structural basis, like caterpillars turning into butterflies. However, like butterflies they are at risk to leave their region of origin for better places. This paper analyses how and why the spatial organization of firms develops subsequent to their start-up. A new conceptual framework and an empirical study of the life course of entrepreneurial firms are used to construct a theory on their locational behavior that explains that behavior as the outcome of a process of initiatives taken by entrepreneurs, enabled and constrained by resources, capabilities and relations with stakeholders within and outside of the firm. This study shows that entrepreneurs decide whether or not to move their firm outside of their region of origin for different reasons in distinct phases of the firm life course. Being embedded in social networks, for example, is an important constraint on locational behavior during the early life course of a firm, but over time this becomes less important and other mechanisms like sunk costs increasingly determine the locational behavior of fast-growing firms. The development of the spatial organization is also of major importance: when a multilocational spatial organization has been realized, it is much easier to move the headquarters to another region. The spatial organization of entrepreneurial firms co-evolves with the accumulation of their capabilities. A developmental approach incorporating evolutionary mechanisms and recognizing human agency provides new insights into the age-old study of firm location.
    Keywords: location, location behavior, spatial organization, theory of the firm, entrepreneurial firms, entrepreneurship, firm growth, regional economic development
    JEL: D21 L14 L22 M13 R11 R30
    Date: 2006–08

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