State-Owned Enterprises, Shirking and Trade Liberalization

We explore the implications of trade liberalization in economies with State Owned enterprises (SOEs) and shirking. SOEs are modelled as controlled by the members of the enterprise who determine output and effort levels, while facing output prices and wage rates set by government. Enterprise members must collectively meet a budget constraint that the value of sales equals the enterprise wage bill plus an exogenous enterprise commitment to the state budget. Labour can shirk either through low on the job effort (leisure), or through moonlighting to second jobs in the private sector. Three alternative formulations of equilibria in SOE economies are explored, and in these trade liberalization can produce effects opposite from conventional competitive models. In particular, the output of import competing SOEs increases rather than falls, and negative effects on imports can also occur. These models when calibrated to 1995 data for Vietnam also suggest quantitatively much larger impacts from trade liberalization than is the case for comparable conventional competitive models. This is because departures from Pareto optimality in SOE economies can be large and trade liberalization acts to discipline shirking associated with these inefficiencies. The implication we draw from our analysis is that to evaluate policy initiatives, such as trade liberalization, in developing and transition economies without explicitly recognizing the role that SOE's can play may be misleading. This is especially the case where SOEs account for a significant fraction of economic activity and shirking is involved.

State-Owned Enterprises, Shirking and Trade Liberalization

We explore the implications of trade liberalization in economies with State Owned enterprises (SOEs) and shirking. SOEs are modelled as controlled by the members of the enterprise who determine output and effort levels, while facing output prices and wage rates set by government. Enterprise members must collectively meet a budget constraint that the value of sales equals the enterprise wage bill plus an exogenous enterprise commitment to the state budget. Labour can shirk either through low on the job effort (leisure), or through moonlighting to second jobs in the private sector. Three alternative formulations of equilibria in SOE economies are explored, and in these trade liberalization can produce effects opposite from conventional competitive models. In particular, the output of competing SOEs increases rather than falls, and negative effects on imports can also occur. These models when calibrated to 1995 data for Vietnam also suggest quantitatively much larger impacts from trade liberalization than is the case for comparable conventional competitive models. This is because departures from Pareto optimality in SOE economies can be large and trade liberalization acts to discipline shirking associated with these inefficiencies. The implication we draw from our analysis is that to evaluate policy initiatives, such as trade liberalization, in developing and transistion economies without explicitly recognizing the role that SOEs can play may be misleading. This is especially the case where SOEs account for a significant fraction of economic activity and shirking is involved.Shirking, state owned enterprises, trade liberalization

State-Owned Enterprises, Shirking and Trade Liberalization

We explore the implications of trade liberalization in economies with State Owned enterprises (SOEs) and shirking. SOEs are modelled as controlled by the members of the enterprise who determine output and effort levels, while facing output prices and wage rates set by government. Enterprise members must collectively meet a budget constraint that the value of sales equals the enterprise wage bill plus an exogenous enterprise commitment to the state budget. Labour can shirk either through low on the job effort (leisure), or through moonlighting to second jobs in the private sector. Three alternative formulations of equilibria in SOE economies are explored, and in these trade liberalization can produce effects opposite from conventional competitive models. In particular, the output of competing SOEs increases rather than falls, and negative effects on imports can also occur. These models when calibrated to 1995 data for Vietnam also suggest quantitatively much larger impacts from trade liberalization than is the case for comparable conventional competitive models. This is because departures from Pareto optimality in SOE economies can be large and trade liberalization acts to discipline shirking associated with these inefficiencies. The implication we draw from our analysis is that to evaluate policy initiatives, such as trade liberalization, in developing and transistion economies without explicitly recognizing the role that SOEs can play may be misleading. This is especially the case where SOEs account for a significant fraction of economic activity and shirking is involved

State-owned enterprises, shirking and trade liberalization

We explore the implications of trade liberalization in economies with State Owned enterprises (SOEs) and shirking. SOEs are modelled as controlled by the members of the enterprise who determine output and effort levels, while facing output prices and wage rates set by government. Enterprise members must collectively meet a budget constraint that the value of sales equals the enterprise wage bill plus an exogenous enterprise commitment to the state budget. Labour can shirk either through low on the job effort (leisure), or through moonlighting to second jobs in the private sector. Three alternative formulations of equilibria in SOE economies are explored, and in these trade liberalization can produce effects opposite from conventional competitive models. In particular, the output of import competing SOEs increases rather than falls, and negative effects on imports can also occur. These models when calibrated to 1995 data for Vietnam also suggest quantitatively much larger impacts from trade liberalization than is the case for comparable conventional competitive models. This is because departures from Pareto optimality in SOE economies can be large and trade liberalization acts to discipline shirking associated with these inefficiencies. The implication we draw from our analysis is that to evaluate policy initiatives, such as trade liberalization, in developing and transition economies without explicitly recognizing the role that SOE’s can play may be misleading. This is especially the case where SOEs account for a significant fraction of economic activity and shirking is involved

2002-01 Are Price Controls Necessarily Bad? The Case of Rice in Vietnam

Most economists' instinctive reaction to price controls is that they are harmful. If enforced, they result in shortages and resource misallocation. With weak enforcement they often result in black markets, and high transaction costs. In this paper we assess the pros and cons of rice price controls in Vietnam given these instincts. We argue that these price controls fix producer prices and allow government marketing agencies to sell at higher prices and hence are, in part, a revenue raising device. As such they may be part of an efficient tax mix, particularly so since agricultural incomes and production go untaxed under the formal tax system. We also argue that such controls can act to dampen costly domestic adjustments in the face of volatile world prices. We develop a multi sector multi household general equilibrium model to numerically analyse the consequences of these price controls, and show that this system can be supported as welfare enhancing under conditions which currently prevail in the Vietnamese economy. The case against price controls may hold in other circumstances, but in this case the arguments seem to be more nuanced

The Value of MFN Treatment

We discuss most favoured nation (MFN) treatment in trade agreements, suggesting that its value to individual countries depends critically on the relevant model solution concept used to evaluate it. We analyze both rights to MFN treatment in foreign markets, and the obligation to grant MFN treatment in home markets; the heart of the post-war GATT/WTO multilateral trading system. In a traditional competitive equilibrium framework, MFN gives benefits to small countries in being able to free ride on bilateral tariff concessions exchanged between larger countries in GATT/WTO negotiating rounds. In a non-cooperative Nash equilibrium framework, MFN restrains retaliatory actions to be non-discriminatory. In a co-operative bargaining framework in which trade policies are jointly set, MFN changes the threat point and hence affects the bargaining solution. We use a calibrated numerical model of global trade in which we compute all three solution concepts and compare MFN and non MFN equilibria for each. We use the GTAP (1992) data base, concluding that quantitatively the most significant effect of MFN seems to be in its impact on bargaining rather than on competitive and Nash equilibrium solutions; being beneficial to smaller countries.

Improving management of type 2 diabetes in South Asian patients: A systematic review of intervention studies

OBJECTIVES: Optimal control of type 2 diabetes is challenging in many patient populations including in South Asian patients. We systematically reviewed studies on the effect of diabetes management interventions targeted at South Asian patients with type 2 diabetes on glycaemic control. DESIGN: Systematic review of MEDLINE, EMBASE and CINAHL databases for randomised controlled trials (RCTs) and pre-post-test studies (January 1990 to February 2014). Studies were stratified by where interventions were conducted (South Asia vs Western countries). PARTICIPANTS: Patients originating from Pakistan, Bangladesh or India with type 2 diabetes. PRIMARY OUTCOME: Change in glycated haemoglobin (HbA1c). Secondary end points included change in blood pressure, lipid levels, anthropomorphics and knowledge. RESULTS: 23 studies (15 RCTs) met criteria for analysis with 7 from Western countries (n=2532) and 16 from South Asia (n=1081). Interventions in Western countries included translated diabetes education, additional clinical care, written materials, visual aids, and bilingual community-based peers and/or health professionals. Interventions conducted in South Asia included yoga, meditation or exercise, community-based peers, health professionals and dietary education (cooking exercises). Among RCTs in India (5 trials; n=390), 4 demonstrated significant reductions in HbA1c in the intervention group compared with usual care (yoga and exercise interventions). Among the 4 RCTs conducted in Europe (n=2161), only 1 study, an education intervention of 113 patients, reported a significant reduction in HbA1c with the intervention. Lipids, blood pressure and knowledge improved in both groups with studies from India more often reporting reductions in body mass index and waist circumference. CONCLUSIONS: Overall, there was little improvement in HbA1c level in diabetes management interventions targeted at South Asians living in Europe compared with usual care, although other outcomes did improve. The smaller studies in India demonstrated significant improvements in glycaemic and other end points. Novel strategies are needed to improve glycaemic control in South Asians living outside of India