Shock Therapy and Entrepreneurial Flare #Brexit

Purpose: Much has been written about trade deal opportunities after Brexit (e.g. Minford et al., 2017; Singham and Tylecote, 2018) but much less about envisaged “supply side mechanisms” that would translate a Brexit shock into improved UK competitive performance. Indications as to the supply side mechanisms involved can be found in some pro-Brexit writings and speeches and revolve around cutting regulation and reducing taxation, to spur innovation entrepreneurship. The authors contend that these measures align to a broad set of policy measures associated with Economic Shock Therapy, the Laffer Curve and the associated “Washington Consensus” (Williamson, 2005). The authors are looking to stimulate a conversation around whether these measures are most likely to stimulate entrepreneurial innovation and growth. The authors open by contrasting these concepts to growth equilibrium dynamics drawn from Wicksell, Keynes and Schumpeter – and by implication dynamic Walrasian General Equilibrium – to pose the question, is entrepreneur-led growth best led via slashing regulations and taxes or by focussing on correcting existing market failures? The purpose of this paper is to promote controversy and debate as to which “supply side measures” are most effective in enabling entrepreneurial growth. Design/methodology/approach: The authors briefly review the pro-Brexiteer economic framework and relate this to broader Economic Shock Therapy and Laffer Curve concepts; how these have been applied and how some argue they can become “supply side” enablers in a positive Brexit innovation and entrepreneurship transformation. By drawing upon fundamental economic relationships such as Wicksell’s (1898) “Natural Rate of Interest”, the authors highlight the importance of information asymmetry and regulatory distortion in financial markets, resulting in some entrepreneurs (and associated innovations) failing to receive the capital their project merit. The authors pose the question, whether Shock Therapy, Laffer Curve type tax cuts and any Brexit “bonfire of regulation” will raise entrepreneurial growth and success. Findings: Both Shock Therapy and Laffer Curve inspired tax cuts have a patchy record of success, despite notable achievements in post-1991 Poland. The authors stress entrepreneurs drive innovation and growth, and a key support to them requires correcting “access to finance” market failures. It is questionable if Economic Shocks contribute anything to resolving this fundamental problem. Originality/value: The authors open the supply side debate on anticipated “Brexit Transformation” in the context of long standing (some maybe long forgotten) theoretical understandings, thereby posing the question as to whether potential Brexit-related deregulation, tax cuts and “Economic Shock” therapy are likely to raise entrepreneurial competitive advantage and success rates. Market failure in financial market support for small firm growth and innovation needs are highlighted. Arguably, economic growth and innovation would be better sustained by addressing these failures, than introducing the “unknowns” and risks associated with a substantial Economic Shock.Peer reviewe

Toward a long-term strategy of economic development of Croatia: Where to begin, what to do and how to do it?

This paper attempts to elaborate the main principles of an economic development strategy suitable for Croatia over the next 10–15 years. Based on brief analyses of advances made in development theory and policy and experiences of the emerging market economies in Asia, Latin America, and Central Europe, the paper identifies critical factors necessary for launching an accelerated process of economic development. These factors are: leadership commitment to economic development; the level and quality of social and human capital; application of modern (especially information) technology; stable and consistent macroeconomic policies; and efficient market-based institutions. The paper then analyses Croatia’s strengths and weaknesses in terms of these factors in comparison with a select group of economies: Slovenia, Hungary, the Czech Republic, Portugal, Ireland, Chile, Uruguay, Hong Kong and Singapore. In addition, the paper analyses implications of “new economy” developments in the United States and other advanced industrial countries for a small open economy like Croatia. Against this background, the paper proposes seven basic principles for elaborating a long-term strategy of Croatia’s economic development: (i) Setting a clear development goal—the paper proposes a doubling of real per capita GDP to US$10,000 in the next 10–15 years, which would require an average annual growth rate of about 5½%, and that this growth rate is achievable; (ii) Ensuring transparency and equal access to development opportunities, as opposed to following specific industrial policy; (iii) Adjusting to globalisation of economic activity and absorbing “new economy” developments; (iv) Implementing fundamental reform of labour markets, with a view to reducing the high non-wage labour costs through pension and health care reforms; (v) Actively promoting financial market development by accelerating corporate and bank restructuring, and legal and judicial system reforms; (vi) Deciding on the economic role of the state in such areas as education, legal and judicial systems, market regulation, infrastructure, and science and technology; and (vii) Maintaining stable and consistent macroeconomic policies to facilitate structural reforms. The paper briefly discusses the main benefits and costs of a possible “euroisation” of Croatia’s economy, and arrangements for a possible transition from the current monetary and exchange rate regime, characterised by a high degree of factor and commodity price indexation to the Deutsche mark, toward a more flexible interim regime that would facilitate the eventual adoption of the euro and be consistent with the overall development strategy outlined

The role of crowdfunding in reducing the equity gap in Poland

The aim of the paper is to verify if equity crowdfunding has an impact on equity gap reduction among early stage companies in Poland. The analysis is based on crowdfunding campaigns organized on the three most popular platforms in Poland during the 2015–2019 period. The presented research on equity crowdfunding allowed the main goal of the paper to be accomplished, namely to characterize equity crowdfunding in Poland. The results obtained also enabled equity crowdfunding to be placed among other equity capital sources for companies in the early stages of development. The results of the study verify the hypothesis that equity crowdfunding has an impact on equity gap reduction among Polish early stage companies. Our key findings prove that equity crowdfunding in Poland is mainly used by relatively small, early stage companies that operate in various sectors. Another finding is that most of the companies raised capital that qualifies as the Macmillan gap. We also proved that there is a relatively high level of information asymmetry among equity crowdfunding campaigns and provided our own definition of equity crowdfunding. W niniejszym artykule podjęto próbę odpowiedzi na pytanie, czy crowdfunding udziałowy wpływa na ograniczenie luki kapitałowej wśród przedsiębiorstw na wczesnych etapach rozwoju w Polsce. W badaniach odniesiono się do kampanii crowdfundingowych przeprowadzonych na trzech najpopularniejszych platformach w Polsce w okresie 2015–2019. Otrzymane wyniki pozwoliły na realizację celu głównego, tj. scharakteryzowanie equity crowdfundingu w Polsce oraz umiejscowienie go pośród innych źródeł kapitału o charakterze udziałowym. Uzyskane wyniki potwierdzają przyjętą hipotezę główną, stanowiącą, że crowdfunding udziałowy ogranicza lukę kapitałową wśród przedsiębiorstw na wczesnych etapach rozwoju w Polsce. W ramach przeprowadzonych badań dowiedziono, że z crowdfundingu udziałowego w Polsce korzystają głównie na wczesnych etapach rozwoju niewielkie spółki z branż wysoko rozwiniętych. Jednocześnie zdecydowana większość z analizowanych projektów w ramach crowdfundingu udziałowego zakończyła się pozyskaniem kapitału mieszczącego się w luce kapitałowej Macmillana. Ponadto wykazano wysoką asymetrię informacji pomiędzy emitentem a inwestorem uczestniczącym w kampanii crowdfundingowej i zaproponowano autorską definicję crowdfundingu udziałowego.

Digital exclusion as a hindrance to the emergence of the information society: the case of Poland

There is no doubt, that digital transformation (knowledge-based transformation) has emerged as the crucial megatrend in modern civilization. Artificial intelligence (AI), machines and autonomous vehicles, the Internet of Things (IoT), financial technology (Fin/Tech), smart investing and the analysis and processing of big data are the most recent manifestations of this trend, but not the only ones. All of these phenomena have led to the emergence and continuing development of the so-called ‘Information Society’ (IS), which refers to a new type of social organization that is clearly distinct from the earlier forms of society. In this new society, information and knowledge play an essential role in facilitating the Knowledge-Based Economy (KBE), where information is collected, transmitted and processed in a faster and more effective manner, and can subsequently be used to foster accelerated economic growth. Unfortunately, the problem of digital exclusion still occurs, also in Poland. The author in the conclusion comes to opinion that people who are digitally excluded find it much more difficult to overcome psychological rather than technical barriers to having access to the Internet and learning basic computer skills. This situation calls for urgent improvement. In the modern information society, a lack of basic knowledge about computers translates into partial or total digital illiteracy and makes it difficult to perform a range of everyday tasks. It is therefore essential in Poland to prevent digital exclusion. People who do not use the Internet are socially and professionally limited, or virtually handicapped, which results in quantifiable economic losses. This translates to lower creativity and innovativeness and reduced revenue of state budget, and impedes the competitiveness of the economy and the development of a post-modern, post-industrial social model. The main research goal is to show the causes of the phenomenon of digital exclusion in Poland and ways to counteract it. In the course of the research, the most frequently used method was causal and effect analysis as well as institutional and legal analysis. Elements of the decision-making, historical, comparative and statistical methods were also used

Toward a Long-Term Strategy of Economic Development of Croatia: Where to Begin, What to Do, and How to Do It?

This paper attempts to elaborate the main principles of an economic development strategy suitable for Croatia over the next 10–15 years. Based on brief analyses of advances made in development theory and policy and experiences of the emerging market economies in Asia, Latin America, and Central Europe, the paper identifies critical factors necessary for launching an accelerated process of economic development. These factors are: leadership commitment to economic development; the level and quality of social and human capital; application of modern (especially information) technology; stable and consistent macroeconomic policies; and efficient market-based institutions. The paper then analyses Croatia’s strengths and weaknesses in terms of these factors in comparison with a select group of economies: Slovenia, Hungary, the Czech Republic, Portugal, Ireland, Chile, Uruguay, Hong Kong and Singapore. In addition, the paper analyses implications of “new economy” developments in the United States and other advanced industrial countries for a small open economy like Croatia. Against this background, the paper proposes seven basic principles for elaborating a long-term strategy of Croatia’s economic development: (i) Setting a clear development goal—the paper proposes a doubling of real per capita GDP to US$10,000 in the next 10–15 years, which would require an average annual growth rate of about 5.5%, and that this growth rate is achievable; (ii) Ensuring transparency and equal access to development opportunities, as opposed to following specific industrial policy; (iii) Adjusting to globalisation of economic activity and absorbing “new economy” developments; (iv) Implementing fundamental reform of labour markets, with a view to reducing the high non-wage labour costs through pension and health care reforms; (v) Actively promoting financial market development by accelerating corporate and bank restructuring, and legal and judicial system reforms; (vi) Deciding on the economic role of the state in such areas as education, legal and judicial systems, market regulation, infrastructure, and science and technology; and (vii) Maintaining stable and consistent macroeconomic policies to facilitate structural reforms. The paper briefly discusses the main benefits and costs of a possible “euroisation” of Croatia’s economy, and arrangements for a possible transition from the current monetary and exchange rate regime, characterised by a high degree of factor and commodity price indexation to the Deutsche mark, toward a more flexible interim regime that would facilitate the eventual adoption of the euro and be consistent with the overall development strategy outlined.economic development, economic growth, new economic paradigm, globalisation, information technology, emerging market economies, transition economies, macroeconomic policies, industrial policy, corporate and bank restructuring, labour market reform, financial market development, exchange rate policy, eurisation.

Contemporary challenges and risks of retail banking development in Ukraine

Retail banking is an essential part of the financial services, accounting for a large part of all banking revenues and capital raising. This business line is designing the vital sphere to apply the adequate decision making approach for customer engagement, sustain profitability and increase competitive advantages. The modern trends in retail banking globally are based on digital innovations, bionic transformation and new regulatory issues. Ukrainian banks have also taken the first step to apply on-line platforms and cashless methods in banking. However, problems occur in the implementation of current global trends in the domestic retail market, which need to be solved. The authors have identified the key objectives of market changes in retail banking operational processes, which have significant impact on the banking ecosystem creation of retail banking in Ukraine. The review part of the article studied the modern challenges and advantages of retail banking development in Ukraine with comparative analyses of current global and regional issues, based on digital technologies and innovations in financial industry. The results of the analyses investigate the state of retail banking, and prospects of revenue growth, explain the key performance indicators of retail banking services, present insights of the key drivers of the Ukrainian’s banking efficiency gap. Based on operational risks and productivity analyses, the authors estimated the negative issues in Ukrainian retail banking. The results enable existing banks to determine the financial and operational risks, and increase the effectiveness of applying digital innovations in domestic retail banking sector. The recommendations for the enforcement of the market and regulatory changes of retail banking landscape in the case of Ukraine are suggested

Consumer credit in comparative perspective

We review the literature in sociology and related fields on the fast global growth of consumer credit and debt and the possible explanations for this expansion. We describe the ways people interact with the strongly segmented consumer credit system around the world—more specifically, the way they access credit and the way they are held accountable for their debt. We then report on research on two areas in which consumer credit is consequential: its effects on social relations and on physical and mental health. Throughout the article, we point out national variations and discuss explanations for these differences. We conclude with a brief discussion of the future tasks and challenges of comparative research on consumer credit.Accepted manuscrip