Relative Backwardness and Technological Catching Up with Scale Effects

This paper theoretically and empirically analyzes the sources of the observed pattern that the levels and growth rates of technology are different across countries. The model is extended version of endogenous growth models with catching up model which is formulated by the relative backwardness hypothesis and the adoption capacity. The relative backwardness hypothesis states that the backward countries attain a high productivity growth rate because adopting advanced technologies is easier and less costly than innovation, Thus, the technologically less advanced countries tend to grow faster than technologically leading countries. A necessary condition, in order that the laggard countries might be able to take advantage of the available technology, is the well-developed capacity, ``Adoption capacity'', to adopt the superior technology. This is determined by policy variables that are conducive to technology adoption. The catching up theory states that technological catching up is strongest in countries that are not only technologically backward but also in those countries which have policy determinants conducive to technology adoption. Theoretically, it is shown that the steady state growth rate of technology is determined by population growth rate while the steady state relative backwardness depends on the adoption capacity, the productivity in the R&D sector, and the relative human capital stock. The empirical relevance of the catching up theory is investigated as well. The empirical results support the formalized catching up theory by showing the significant role which policy determinants conducive to technological adoption play. The robust role of scale effects in explaining technological catching up is also shown. Further, the speeds of technological catching up are estimated to be around 2 percent.

Overseas Entry Decision and Ownership Strategy of Japanese Companies: Institution and Corporate Governance

Using 20-year panel data, this paper tests Japanese companies' sequential decisions: (1) to invest abroad or not and (2) if so, what ownership strategy for that local company to be employed. In addition to transaction advantage emphasized by traditional studies on FDI, the focus is the role of corporate governance of the parent companies and institutional environment of the host countries. Through Heckman's two-step estimation, corporate governance is found to play an important role for entry decision but not for ownership strategy. Transaction cost approach has been well supported for entry decision. Most importantly, an institutional environment favorable to MNEs leads to higher level of ownership of local companies. Firm size plays a significant role for FDI decision as well as for ownership decisionSample selection bias; Entry decision; Ownership strategy; Corporate governance; Institution

Intellectual Capital Architectures and Bilateral Learning: A Framework For Human Resource Management

Both researchers and managers are increasingly interested in how firms can pursue bilateral learning; that is, simultaneously exploring new knowledge domains while exploiting current ones (cf., March, 1991). To address this issue, this paper introduces a framework of intellectual capital architectures that combine unique configurations of human, social, and organizational capital. These architectures support bilateral learning by helping to create supplementary alignment between human and social capital as well as complementary alignment between people-embodied knowledge (human and social capital) and organization-embodied knowledge (organizational capital). In order to establish the context for bilateral learning, the framework also identifies unique sets of HR practices that may influence the combinations of human, social, and organizational capital

After Johnny Came Marching Home: The Political Economy of Veterans' Benefits in the Nineteenth Century

This paper explores new estimates of the number of veterans and the value of veterans' benefits -- both cash benefits and land grants -- from the Revolution to 1900. Benefits, it turns out, varied substantially from war to war. The veterans of the War of 1812, in particular, received a smaller amount of benefits than did the veterans of the other nineteenth century wars. A number of factors appear to account for the differences across wars. Some are familiar from studies of other government programs: the previous history of veterans' benefits, the wealth of the United States, the number of veterans relative to the population, and the lobbying efforts of lawyers and other agents employed by veterans. Some are less familiar. There were several occasions, for example, when public attitudes toward the war appeared to influence the amount of benefits. Perhaps the most important factor, however, was the state of the federal treasury. When the federal government ran a surplus, veterans were likely to receive additional benefits; when it ran a deficit, veterans' hopes for additional benefits went unfilled. Veterans' benefits were, to use the terms a bit freely, more like a luxury than a necessity.

Capitalizing Patriotism: The Liberty Loans of World War I

In World War I the Secretary of the Treasury, William Gibbs McAdoo, hoped to create a broad market for government bonds, the famous Liberty Loans, by following an aggressive policy of "capitalizing patriotism." He called on everyone from Wall Street bankers to the Boy Scouts to volunteer for the campaigns to sell the bonds. He helped recruit the nation's best known artists to draw posters depicting the contribution to the war effort to be made by buying bonds, and he organized giant bond rallies featuring Hollywood stars such as Douglas Fairbanks, Mary Pickford, and Charlie Chaplin. These efforts, however, enjoyed little success. The yields on the Liberty bonds were kept low mainly by making the bonds tax exempt and by making sure that a large proportion of them was purchased directly or indirectly by the Federal Reserve. Patriotism proved to be a weak offset to normal market forces.