Another century, another long war

This report argues that Australia is involved in the early stages of a conflict that may last for the rest of the century. It considers possible solutions, approaches that could be used, and what Australia should do. Overview Australia is involved in the early stages of a conflict that may last for the rest of the century and potentially beyond. Terrorism is but a symptom of a broader conflict in which the fundamental threat is from radical Islamists who are intent on establishing Islam as the foundation of a new world order. While the violence, so far, is mostly confined to Islamic lands, some of the radicals are engaged in a direct war against Western secular nations. The home-grown threat from terror remains and is likely to worsen as radicals return from fighting overseas and the internet dumps unconstrained radical propaganda across the globe. If the caliphate in Iraq and Syria established by the Islamic State survives, it will be a worrying portent of worse to come. The paper looks at the three fronts of this conflict: the oldest and largest front, within Islam, is where Sunni Muslims are fighting Shia Muslims; the second front, again within Islam, is a modern political battle in which radical Islamists are intent on overthrowing existing governments and replacing them with new ones based on sharia law; and the third is the more recent conflict between (usually) Western states and smaller groups of radical Islamists who are motivated by a hatred of the West. It considers possible solutions, approaches that could be used, and more specifically what Australia should do

OLIGOPOLY AND TRADE

In this chapter we present a selective analytic survey of some of the main results of trade under oligopoly. We concentrate on three topics: oligopoly as an independent determinant of trade, as illustrated by the reciprocal-markets model of Brander (1981); oligopoly as an independent rationale for government intervention, as illustrated by strategic trade and industrial policy in the third-market model of Spencer and Brander (1983); and the challenges and potential of embedding trade under oligopoly in general equilibrium as illustrated by the GOLE model of Neary (2002).GOLE (General Oligopolistic Equilibrium); reciprocal dumping; strategic trade policy.

Robust Rules for Industrial Policy in open Economies

The theory of strategic trade policy yields ambiguous recommendations for assistance to exporting firms in oligopolistic industries. However, some writers have suggested that investment subsidies are a more robust recommendation than export subsidies. We show that, though ambiguous in principle, the case for investment subsidies is reasonably robust in practice. Except when functional forms exhibit arbitrary non-linearities, it holds under both Cournot and Bertrand competition, with either cost-reducing or market-expanding investment, and with or without spillovers. Only if firms have strong asymmetries in their investment behaviour and engage in Bertrand competition is an investment tax clearly justified.cost-reducing investment; export subsidies; market-expanding investment; R&D subsidies; strategic industrial policy; strategic trade policy

Symmetric Research Joint Ventures - Cooperative Substitutes and Complements

We introduce the concept of cooperative substitutes and complements, and use it to throw light on the conditions for a research joint venture to choose equal levels of R&D by all member firms. We show that the second-order conditions for a symmetric optimum take a particularly simple form, ruling out both excessive cooperative substitutability and excessive cooperative complementarity, and nesting conditions already derived in the literature. Finally we explore the implications of our results for the comparison between research joint ventures and a non-cooperative equilibrium.Bertrand and Cournot competition; cooperative substitutes and complements; R&D; research joint ventures; strategic trade and industrial policy

Absorptive Capacity, R&D Spillovers, and Public Policy

Empirical evidence strongly suggests that R&D increases a firm’s "absorptive capacity" (its ability to absorb spillovers from other firms) as well as contributing directly to profitability. We explore the theoretical implications of this. We specify a general model of the absorptive capacity process and show that costly absorption both raises the effectiveness of own R&D and lowers the effective spillover coefficient. This weakens the case for encouraging research joint ventures, even if there is complete information sharing between its members. It also implies an additional strategic pay-off to policies that raise the level of extra-industry knowledge.Absorptive capacity of R&D; competition policy; industrial policy; R&D spillovers; research joint ventures

The Workers' Compensation System of British Columbia: Still in Transition

This inventory addresses eight core issues in the British Columbia workers' compensation system:* How is the system administered?* How do claims flow through the system?* What dispute resolution procedures are used, and to what effect?* What benefits are paid?* How are vocational rehabilitation services provided?* How is the system financed?* What are the actual costs of administration, benefits, claims processing, and appeal?* What aspects of the system deserve further attention

Defence diplomacy: is the game worth the candle?

Few defence topics have been as prominent or invested with as much optimism in recent years as defence diplomacy. This paper has been created to explore the issue and help guide policymakers. Foreword Few Defence topics have been as prominent or invested with as much optimism in recent years as defence diplomacy (also called military diplomacy or defence engagement). In response to the growing security challenges of Asia, scholars, policymakers and practitioners have looked for ways to build confidence, decrease the risk and impact of accidents and encourage peaceful dispute resolution. Defence diplomacy, namely the practice of military and defence officials engaging their overseas counterparts, is increasingly regarded as a vital way to achieve these aims. Given the importance of this topic, a special Centre of Gravity paper has been created to explore the issue and help guide policymakers. This edition features six short papers, each with a different take and policy recommendation. The authors were asked the same question ‘Is the game worth the candle?’ and while their answers focus largely on Australia there are lessons and implications from their findings for the entire region. Brendan Taylor, the head of the Strategic & Defence Studies Centre begins the special edition calling for a stocktake of current efforts, in a bid to understand what has worked and what resources it requires. He is joined by two colleagues, John Blaxland who argues strongly in favour of an expanded defence diplomacy program and Hugh White who urges caution about the strategic influence of the practice. To complement these views, Nick Bisley, Executive Director La Trobe Asia, highlights the need for realistic ambitions. Lieutenant General (Ret.) Peter Leahy draws on his distinguished career in the ADF to detail how defence diplomacy occurs in practice and why it matters. Finally, See Seng Tan, Deputy Director of the Institute of Defence and Strategic Studies in Singapore provides a regional perspective on Australia’s defence diplomacy. The authors of these papers don’t agree with each other, and that was precisely why they were invited to contribute. But some common themes are clear. Such as the need for a clear —and public — strategy along with integrating defence diplomacy into the efforts of other parts of government. Together these six papers provide insight into the practice and potential of defence diplomacy. This special edition also marks a re-launch of the Centre of Gravity Series. While some of the design may change, the focus remains the same: inviting some of the best analysts from Australia and around the world to provide short, accessible papers on the key questions facing Australian strategic affairs