The New Face of Unequal Exchange: Low-Wage Manufacturing, Commodity Chains, and Global Inequality

The institutional structure of global commodity chains and cross-border production networks has a profound impact on how the benefits of globalized production are distributed. This paper engages with this issue by developing a model that combines the insights of earlier unequal exchange theorists and new work on global commodity chains to clarify the distributive dynamics of the expansion of low-wage manufacturing in the developing world. In this framework, the ability of productivity-led development to raise employment incomes in low-wage manufacturing is constrained and depends on how the benefits of productivity improvements are captured – as lower prices for consumers or higher rents for brandname multinationals. In contrast, consumption-led growth in relatively affluent consumer markets will contribute to income convergence when demand for manufactured consumer imports is sufficiently income elastic. However, in the long-run, labor market, macroeconomic, and environmental constraints will likely compromise this form of export-led employment growth.trade, global commodity chains, multinational corporations, subcontracting, branding, inequality

The Burden of Knowledge and the 'Death of the Renaissance Man': Is Innovation Getting Harder?

This paper investigates, theoretically and empirically, a possibly fundamental aspect of technological progress. If knowledge accumulates as technology progresses, then successive generations of innovators may face an increasing educational burden. Innovators can compensate in their education by seeking narrower expertise, but narrowing expertise will reduce their individual capacities, with implications for the organization of innovative activity - a greater reliance on teamwork - and negative implications for growth. I develop a formal model of this "knowledge burden mechanism" and derive six testable predictions for innovators. Over time, educational attainment will rise while increased specialization and teamwork follow from a sufficiently rapid increase in the burden of knowledge. In cross-section, the model predicts that specialization and teamwork will be greater in deeper areas of knowledge while, surprisingly, educational attainment will not vary across fields. I test these six predictions using a micro-data set of individual inventors and find evidence consistent with each prediction. The model thus provides a parsimonious explanation for a range of empirical patterns of inventive activity. Upward trends in academic collaboration and lengthening doctorates, which have been noted in other research, can also be explained by the model, as can much-debated trends relating productivity growth and patent output to aggregate inventive effort. The knowledge burden mechanism suggests that the nature of innovation is changing, with negative implications for long-run economic growth.

The burden of knowledge and the ‘death of the Renaissance man’: Is innovation getting harder?

This paper investigates, theoretically and empirically, a possibly fundamental aspect of technological progress. If knowledge accumulates as technology progresses, then successive generations of innovators may face an increasing educational burden. Innovators can compensate in their education by seeking narrower expertise, but narrowing expertise will reduce their individual capacities, with implications for the organization of innovative activity - a greater reliance on teamwork - and negative implications for growth. I develop a formal model of this “knowledge burden mechanism” and derive six testable predictions for innovators. Over time, educational attainment will rise while increased specialization and teamwork follow from a sufficiently rapid increase in the burden of knowledge. In cross-section, the model predicts that specialization and teamwork will be greater in deeper areas of knowledge while, surprisingly, educational attainment will not vary across fields. I test these six predictions using a micro-data set of individual inventors and find evidence consistent with each prediction. The model thus provides a parsimonious explanation for a range of empirical patterns of inventive activity. Upward trends in academic collaboration and lengthening doctorates, which have been noted in other research, can also be explained by the model, as can much-debated trends relating productivity growth and patent output to aggregate inventive effort. The knowledge burden mechanism suggests that the nature of innovation is changing, with negative implications for long-run economic growth.

Bank interest rates pass-through: new evidence from French panel data

This paper investigates the pass-through mechanism from market interest rates to bank interest rates using a panel of French banks based on new interest rates statistics. The data are extracted from new individual contracts, on a monthly basis for the three main sectors of the credit market (consumers loans, mortgage loans and loans to enterprises) from January 2003 to July 2007. The pass-through is estimated using recent econometric methods on non-stationary panel data. In contrast to previous studies, cross-sectional dependence among banks is allowed. Our results confirm that bank rates for loans to enterprises and mortgage loans do not adjust completely to changes in market rates, even in the long run. The model also captures the narrowing of the intermediation margin during the period considered.transmission mechanism of monetary policy, nonstationary panel data, cross-section dependence

Emerging Perspectives on Self Service Technologies in Retail Banking

This paper attempts to critically examine the available literature on the subject, discuss a model that provides a managerial framework for analyzing the variables associated with customer value, and to identify potential research areas. The discussion draws conceptual impetus from new technologies in banking services through self service technologies in banking as a tool for optimizing profit. The discussion in the paper also analyzes the main criteria for successful internet-banking strategy and brings out benefits of e-banking from the point of view of banks, their technology and customer values and tentatively concludes that there is increasing returns to scale in the bank services in relation to the banking products, new technology and customer value.Self service technology, retail banking, customer value, profit optimization

Borders and economic growth: The case of Sabah and her neighbours

Disparity in income across states and regions in Malaysia continues to be a matter of concern. The purpose of the present study is to investigate empirically the question of whether the economic development of the state of Sabah has an impact on her neighbouring countries or vice versa, the growth of her neighbouring countries have causal effect on the growth of the state of Sabah. Using annual data for the period 1983 to 2003, our results from employing the ARDL bounds testing approach indicate that the growth of the state of Sabah is affected by the growth of Brunei Darussalam, Sarawak, and Kalimantan Timur. Further, the growth of the state of Sabah has an impact on her neighbouring states, country and provinces during the period under study.economic growth; Sabah; granger causality

Does trade integration matter for reducing intra-regional disparities? ASEAN evidence from a panel co-integration approach

Needless to say, it is necessary to study the relative scales of the trade creation effect and the trade diversion effect to evaluate success of ASEAN trade integration and to determine whether or not the intra-bloc trade share is appropriate as an indicator of the progress of reducing intra-regional disparities in ASEAN. Therefore, this paper first uses descriptive statistics and some key indicators to track the progress in economic growth and in trade integration that is the main pillar of building ASEAN Economic Community. Second, we make an attempt to provide answers to the question of whether trade integration matters for reducing intra-regional disparities among ASEAN member states over the period 1995-2007. We perform the panel co-integration method developed by Pedroni (1999) that allows for heterogeneity across ten ASEAN countries. Our major finding shows that trade integration, which is captured by intra-regional exports and imports flows, is appropriate as an indicator of progress of reducing income disparities in the ASEAN zone. Finally, applying the General Method of Moments (GMM) estimation, we also find that deepening of intra-regional trade integration creates more trade flows among ASEAN member states without diverting trade flows with non-members.Growth, Trade Integration, Intra-regional disparities, Co-integration, ASEAN

The Violent Narrowing of Animal Life

Mainstream environmentalism has long prioritized wild animals and their habitats while paying little attention to the explosive growth of global livestock production and consumption. However, this blind spot to livestock is changing quickly, in large part because of the rising general awareness of the resource and emissions intensity of animal-based foods and how it relates the interwoven crises of climate change and biodiversity loss. This paper considers both the fertile ground for animal advocacy to be found in the mounting scientific evidence about environmental inefficiencies of animal-based foods, and the need to be attentive to the risks it bears. The principal danger of efficiency-centred narratives is that if they are largely focused on climate change and biodiversity loss, the goal of reducing relative associated impacts can appear in a way that helps to further stoke the growth of industrially produced birds, which should be understood in relation to the already well-established poultrification of global livestock supply and demand. This paper highlights the importance of challenging this partial lens and response, and stresses the need to connect macro-scale environmental concerns to critical reflection about the ways that animal lives are organized in industrial livestock production. The concern for declining wild animal populations among environmentalists is a key lever for this, as industrial livestock can be shown to bear on the loss and fragmentation of habitats while at the same condemning a large and growing share of all birds and mammals to a short and agonizing existence. What emerges is an indelible image of a pathological mode of production that is violently narrowing how other animals get to inhabit the earth

Sectoral Energy- and Labour-Productivity Convergence

This paper provides an empirical analysis of energy- and labour-productivity convergence at a detailed sectoral level for 14 OECD countries, covering the period 1970-1997. A -convergence analysis shows that the development of cross-country variation in productivity performance depends on the level of aggregation. Both patterns of convergence as well as divergence are found. A -convergence analysis provides support for the hypothesis that in most sectors lagging countries tend to catch up with technological leaders, in particular in terms of energy productivity. Moreover, the results show that convergence is conditional rather than unconditional, meaning that productivity levels converge to country-specific steady states, and that cross-country differences of energy-productivity levels are substantially larger than of labour-productivity levels at all levels of sectoral aggregation. Finally, searching for the fundamentals determining cross-country productivity differentials reveals a positive productivity effect of energy prices and economies of scale in several sectors, while wages, investment share, openness and specialization play only a very limited role in explaining (cross-country differences in) energy- and labour-productivity growth. Keywords: energy productivity, labour productivity, convergence, sectoral analysis JEL codes: O13, O47, O5, Q43

What are the implications for global value chains when the market shifts from the north to the south?

Rapid growth in many low-income economies was fuelled by the insertion of producers into global value chains feeding into high-income northern markets. This paper charts the evolution of financial and economic crisis in the global economy and argues that the likely outcome will be sustained growth in the two very large Asian Driver economies of China and India and stagnation in the historically dominant northern economies. Given the nature of demand in low-income southern economies, it is likely to be reflected in sustained demand for commodities, with other southern economy producers in global value chains being forced into lower levels of value added. Standards are likely to be of considerably reduced significance in value chains feeding into China and India