International arms trade: Revealed political preferences or cartel behaviour?

On the basis of a world matrix of international trade in majorconventional weapons for 1985, a comparison is made between the regional structure of arms trade and the regional structure of trade in civilian goods from a comparable technological background. It turns out that there are striking divergencies between both kinds of trade structures, even within military alliances. These divergencies are then captured by an indicator which is named revealed political preference (RPP). It is argued that introducing a free-trade regime within NATO and other industrialised western countries would make arms trade increase, and, in particular, make the shares of Japan and West Germany in arms exports rise manifold, thereby raising world economic welfare. It is suggested that different hypotheses for explaining world arms-trade structures are relevant according to the region analysed, like the trading-with-the-enemy hypothesis with respect to the arms trade between advanced and less-developed countries, or the military-industrial-complex hypothesis for arms trade within alliances.

Comparative invention performance of major industrial countries: Patterns and explanations

The paper firsjt presents an analysis of invention performance; as measured by patenting activities, of six countries (France, Italy, Japan, United Kingdom, USSR, West Germany) relative to the United States for 41 SIC industries over the past twenty years. It turns out that Non U.S. countries as a whole have increased their (relative) invention performance in all fields of technology, including high technology fields. In the second section hypotheses which can be supposed to explain the relative decline of the United States' patenting activities are discussed and tested. There is strong evidence that catching up processes as well as integration effects contributed most to the relative decrease of the United States; there also is evidence, that government interventions regarding technology production have had counter-productive effects in the United States.

Growth, growth fluctuations, and the stages of technological advance

It is a well-established tradition to define the subject before embarking on an investigation. In our case, definition is to be concerned with economic development and scientific-technical progress. The former poses no problem in the economist's profession. According to Mirabeau, every moral or physical advance can be grasped by one indicator, which he called the net product. Today, Mirabeau would probably encounter objections as far as the measurement of moral progress by the net product is concerned, although some would argue that also today morals, as well as gods, are always with the winners. Anyhow, real changes in the availability of goods and services is, according to national and international standards, measured by changes in real net social product; conceptual problems - e.g., of how to treat the non-pecuniary costs (environmental pollution) and benefits (value added of housewives) - are, of course, part of every measurement. What matters here is that the approach as such is hardly controversial.

Towards a funded system of social security: Design and implications ; the case of Germany

What would a feasible system of social security in Germany have looked like in the year of 1995 and beyond? In order to find an answer we describe three base systems: ( l ) a purely funded system of social security, (2) a fully mandatory funded system of social security, and (3) a partially mandatory funded system. It is argued that - neglecting problems of transition - a purely funded system would be the best in economic terms; a fully mandatory funded system would need almost as many controls as the currently prevailing system (often labelled pay-asyou- go system). A partially mandatory funded system, assuring some kind of basic income, would need less controls and less governmental authority than the fully mandatory system but more than a funded system. After quantification of two scenarios which represent components of the three base systems, a system of taxation with respect to contributions and/or benefits is discussed which is at the same time simple in terms of costs of bureaucracy and does not tax economic growth more than necessary.

Institutional change in search of the market: The case of Slovenia

Six main characteristics of an economic order are discussed and empirically evaluated for the case of Slovenia. All of them pertain to the institutional setting ab urbe condita; they comprise the legal and jurisdictional situation, the role of private property, the institutionalised strive at competition among firms and individuals, the liberty of markets, the solution of the big assignment problem, and the approach to foreign-trade relations. All six aspects impinge upon the conditions which confront investors in material and in human capital in Slovenia. The analysis shows that Slovenia has had, for three years now, by and large the same problems that other countries in transition had. For example, it still has, among others, tight regulations regarding foreign exchange transactions, and a highly socialist property system burdened with too complicated procedures of privatisation. The authors conclude that in Slovenia, as in the other formerly socialist economies, transformation should first and foremost aim at being coherent. Secondly, first things should come first; the first thing would be to privatise. With a proper approach of institutional reforms there should be no barrier to achieving two-digit rates of real growth, just like Germany had after transition into a market economy in 1949.

Defence and space expenditures in the US: An inter-firm analysis

The economic impact of defence and space expenditures has been an important policy issue because of the secondary benefits expected to be accruing from it. Although defence and space activities can stimulate the early development of many technologies, the lasting economic impact of these technologies is difficult to measure. To capture the scientific and technological values added of defence and space financed productions, we have depended on the patents and scientific and technical publications as the indicators. The economic performance has been measured by two separate indicators: (a) firm growth in terms of average annual rate of change in the number of employees, and (b) rate of return on sales measured by the company's net profits in relation to sales. From 1970-75 and 1980-85 the weight within the manufacturing sector of both defence contractors and the civilian companies increased. Defence firms gained considerably in terms of sales, employment, gross plants and company funded R&D in the latter period under the Reagan Administration. Whereas this may be considered a Reagan effect in defence procurement, other indicators point to in the opposite direction: (a) decrease in the shares of defence R&D contracts, (b) relatively low growth of patent output as percent of total manufacturing from the defence firms, and (c) decrease in scientific publications from defence firms per 1000 employees. Firm level analysis showed that military R&D contracts did not contribute to economic or technical efficiency. Space expenditure did not contribute to improvement of economic performance as measured by company growth and profitability. NASA contracts were not associated with technical progress measured by patents, but they improved scientific publications. Defence expenditures are not of importance for the overall economic efficiency. The standard financial variables, capital formation and own R&D activities prove mostly relevant. The study is restricted to an efficiency analysis in a cross sectional comparison and does not include the effect of market structure.

National technology policies and international friction: Theory, evidence, and policy options

Economic theory and empirical evidence suggest that governments might usefully intervene in high-technology competition in two ways: First, they could act as a neutral agent that creates the necessary credibility, commitment and mutual trust among private companies so as to facilitate cooperation in high-risk, high-volume R&D. Second, if — in view of the externalities involved — an element of subsidization is to be added, this could be done in a nondiscriminatory fashion. A favourable tax treatment of R&D expenditures may be the most appropriate tool to achieve this task. In practice, governments do engage in targeted industrial and technology policies, whether justified on economic grounds or not. As a consequence, the string of trade conflicts in hightech industries that began in the 1980s is unlikely to end in the near future, unless substantial reforms are undertaken in some crucial areas of the international trade order. Above all, appropriate reform steps should be made with a view to the regulations on (i) subsidies, (ii) structural impediments, and (iii) dumping and anti-dumping. To mitigate the frictions that arise from a subsidization of domestic firms, a new set of rules should be established. The rules should provide that all plans to grant or to alter existing subsidies are to be notified to and approved by the WTO. Moreover, all subsidies should be ranked according to their potential distortional effects on competition and trade. For each category, quantitative limits that constrain the provision of subsidies to a certain fraction of the subsidy base should be set. To facilitate further liberalization steps, a country should be allowed to exceed these limits, if a national subsidy program offers an open access to firms located in third markets. Besides restrictive business practices of private firms, government regulations and technical standards are the most important structural impediments to trade. Existing GATT Articles already offer a multilateral route to conflict resolution in cases of structural impediments. However, this route has not been used by complainants up to now. The so-called "non-violation" clause of Article 23 GATT provides access to a multilateral dispute settlement even if the defending country has not explicitly violated GATT rules. This route should be tested and, if necessary, improved. To reduce the potential for a protectionist abuse of existing anti-dumping regulations, explicit reference to the state of competition in the relevant exporting and importing country markets should be made in anti-dumping investigations. To meet specific anti-trust concerns in hightech competition — notably with respect to network externalities, systems leverage, standardization, and innovation cartels — one might consider adopting the Draft International Antitrust Code (DIAC) that has recently been proposed by an international group of legal experts. --

Aufwand und Ertrag in der deutschen gesetzlichen Alterssicherung (GRV)

There are only few estimates of the returns on contributions to the German public pension System (GPPS). Those that are published ränge between nominal rates of future returns between about 4,5 % and 48 %, indicating that GPPS treats different groups of people differently. The authors develop a methodology of calculating rates of return of GPPS contributions and apply it to a standardised retiree and to the average retiree, both male and female. The outcome is that the present System implies negative real rates of return for future retirees. It is argued that the returns on contributions have nothing to do with investment returns prevailing on the capital market and that the currently discussed plans for reforming the German social-security System will lead to a further deterioration of the whole system.