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Volume 01, Issue 03 (December 2011)
Partha Gangopadhyay, Ngo Van Long, Binh Tran-Nam, And Henry Y. Wan, Jr.
Pages 225–229
https://doi.org/10.1142/S2010269011000270
See: https://www.worldscientific.com/toc/ijdc/01/03
Binh Tran-Nam
Pages 231–239
https://doi.org/10.1142/S2010269011000142
Abstract
Murray Kemp has been widely acknowledged as a foremost economic theorist of our time and this special issue of the journal is dedicated to his 85th birthday. As a background paper for the special issue, this article aims to serve a two-fold purpose. First, it provides a brief biography of Murray Kemp as an academic economist. Second, and more importantly, it presents the results of an informal survey of a small group of Kemp’s friends and colleagues. Based on the personal views and experiences obtained from the survey, there emerges Murray Kemp’s portrait as a scholar, a colleague, a teacher, and a person.
See: https://www.worldscientific.com/toc/ijdc/01/03
2. The Discovery of the Heckscher–Ohlin Model of International Trade
Peter Lloyd
Pages 241–263
https://doi.org/10.1142/S2010269011000154
Abstract
Heckscher (1919) and Ohlin (1924, 1933) constructed the Heckscher–Ohlin model of international trade with variable proportions between nonspecific factors. However, four other authors have been credited with the discovery independently of a variable proportions model of international trade before Ohlin in 1933. They are Haberler (1930), Viner (1931), Leontief (1933), and Lerner (1932, 1934).
This paper compares the structure of models of these six authors and examines whether each derived the four core theorems; gains from trade, factor price equalization, the Heckscher–Ohlin theorem and the Stolper–Samuelson Theorem. The claims for Haberler and Viner are dismissed but Leontief and Lerner constructed models of international trade similar to those of Heckscher and Ohlin. I then consider how the development of production and general equilibrium models enabled the discovery of the “Heckscher–Ohlin” model and explore reasons for the longevity of the Heckscher–Ohlin model.
See: https://www.worldscientific.com/toc/ijdc/01/03
3. A Review of the Gossenian Approach to the Theory of Time Allocation
Binh Tran-Nam
Pages 265–282
https://doi.org/10.1142/S2010269011000166
Abstract
Today Hermann Heinrich Gossen is primarily known to economists as one of the forerunners of the Marginal Revolution. His other contribution to economic theory, namely, a theory of time allocation, is equally if not more significant but not widely cited by economists. Surprisingly this has remained the case despite the availability of several major papers (in English) on his contributions to economic ideas. Building on the work of others, this paper seeks to provide a biographical sketch of Gossen, examine why his work has been neglected, analyze his contribution to economic theory, and assess his influence on the discipline of economics. The paper incorporates discussions on the latest findings about Gossen himself, translations of his book and the implications of his laws for the theory of the evolution of customs.
See: https://www.worldscientific.com/toc/ijdc/01/03
John Lodewijks
Pages 283–302
https://doi.org/10.1142/S2010269011000178
Abstract
This article captures findings of oral interviews with six highly distinguished Australian economists who have established international reputations in the fields of macroeconomics, natural resources, econometrics, development, and information economics. Their pioneering contributions are highlighted and their career paths are examined to reveal the commonalities of the Australian environment and the impact that the North American experience had on their intellectual development. Despite the diversity of subdisciplines and research methodology employed by these economists this synthesis highlights the freshness of the profession and the innovative opportunities taken by its leading academics, irrespective of their country of origin.
See: https://www.worldscientific.com/toc/ijdc/01/03
5. A Necessary First Test for the Creation of an Infant Industry
Geoffrey Fishburn
Pages 303–306
https://doi.org/10.1142/S201026901100018X
Abstract
It has long been appreciated that any country wishing to develop by means of fostering the growth of an infant industry must be prepared to trade off a temporary loss of welfare for the greater long-term gain when the candidate industry has matured. But the application of an observation by Murray C. Kemp (Kemp, 2003) now alerts us to the possibility that intervention in trade, such as in the case examined here of bringing the candidate (import-competing) industry to a desired level of output from which growth can proceed autonomously, might not be sustainable. Whether this can be done is the first test which must be applied to any proposal for infant-industry status.
See: https://www.worldscientific.com/toc/ijdc/01/03
Henry Y. Wan, Jr.
Pages 307–320
https://doi.org/10.1142/S2010269011000191
Abstract
In discussing the Mill–Bastable doctrine, where under provisos, infant-industry protection may be justifiable to encourage entry against a first mover that lacks inherent advantage, Kemp (1960) noted that if infant-industry protection can block the competition from the foreign first mover, entry by domestic rivals may still inhibit the potential second mover who lacks experience and acquired skill, and asked whether better alternatives exist. Later studies raised more doubts; no provision is made for infant-industry protection under WTO-GATT. This study calls to attention that in fact globalization has brought a better alternative. As explained in Tung and Wan (2011), as first movers, Americans invented the hard disk drive, and then in pilot plants, Singaporean workers gained the production experience to impart that acquired skill into operational menus for mass production by Thais, with their inherent advantage of abundant labor.
See: https://www.worldscientific.com/toc/ijdc/01/03
7. Optimal Tariff Policy with Endogenous Location Choice
Takao Ohkawa, Makoto Okamura, and Masayuki Okawa
Pages 321–338
https://doi.org/10.1142/S2010269011000208
Abstract
This paper examines the optimal tariff policy of an importing country when duopoly firms choose to export or undertake foreign direct investment (FDI). We establish that (i) the government sets its optimal tariff rate to encourage FDI when the fixed cost of FDI is low. Choosing FDI creates a Prisoner’s Dilemma for both firms and is not optimal for the source country; and (ii) when the fixed cost of FDI is high, the optimal tariff is set to induce both firms to choose exports.
See: https://www.worldscientific.com/toc/ijdc/01/03
8. The Effects of Home Bias in A Model of Endogenous Growth
Eric W. Bond, Kazumichi Iwasa, and Kazuo Nishimura
Pages 339–354
https://doi.org/10.1142/S201026901100021X
Abstract
We examine the effects of home bias in preferences in a two country model of endogenous growth without markets for international lending and borrowing. We show that the presence of a consumer preference for domestic goods can result in a multiplicity of prices consistent with trade balance when the elasticity of substitution between goods is sufficiently low. However, the uniqueness condition is always satisfied when home bias is due to transport costs. We derive conditions for existence, uniqueness, and saddle path stability of the balanced growth path. We also examine the effect of home bias on the terms of trade and the speed of convergence to the balanced growth path.
See: https://www.worldscientific.com/toc/ijdc/01/03
9. Private Defense of Intellectual Properties and Economic Growth
Taro Akiyama, Yuichi Furukawa, And Makoto Yano
Pages 355–364
https://doi.org/10.1142/S2010269011000221
Abstract
This paper investigates the private defense of intellectual properties in a standard North–South endogenous growth model in which R&D activities are endogenized. It identifies two major factors determining whether or not private defense activities contribute to economic growth: (i) The relative cost between private defense and innovation, and (ii) the strength of intellectual property laws in the South.
See: https://www.worldscientific.com/toc/ijdc/01/03
10. On the Measurement of Unemployment in the Developing and Developed Countries
Satya Paul
Pages 365–377
https://doi.org/10.1142/S2010269011000233
Abstract
The nature of unemployment is not the same in developing and developed countries. A large proportion of population in the developing countries lives in the rural sector where the agriculture and agriculture based activities are the main sources of livelihood. The work activities in agriculture are quite irregular and sporadic, leading to frequent entry and involuntary withdrawals from the labor force on the part of laborers. The intensity of unemployment or underutilization of labor is likely to vary with the agricultural and related seasonal activities, rainfalls and natural calamities. In contrast, a large proportion of the populations in the developed (rich) countries live in urban areas where most work activities are regular. However, given the technological innovations, the developed nations are characterized by the phenomenon of job construction and destruction leading to frictional unemployment. Since developed economies are also prone to business cycles, the level of unemployment fluctuates over the business cycles, leading to the problem of longer unemployment durations. Thus, the nature of unemployment in developed countries is different from that in the developing countries. A single analytical framework for measuring unemployment is unlikely to capture the unemployment situations in the developed and developing countries. This paper surveys the existing literature and presents separate analytical frameworks for measuring unemployment in developing and developed countries.
See: https://www.worldscientific.com/toc/ijdc/01/03
Yunfang Hu And Koji Shimomura
Pages 379–397
https://doi.org/10.1142/S2010269011000282
Abstract
This paper examines the relationship between the dynamic stability of steady state equilibrium and the welfare effects of international transfers in a two-country dynamic Heckscher–Ohlin model. We find that local stability properties of the steady state equilibrium may link closely to the welfare aspect of international transfers. When the two consumption goods exhibit asymmetric properties with respect to income change, multiple steady state equilibria are possible. The usual donor-loss, recipient-benefit result prevails at the saddle-point stable steady state. When a continuum of equilibrium paths exists around one steady state (indeterminacy), transfer paradoxes may occur. Furthermore, we examine the welfare effects of endogenously determined transfers. When international transfers are voluntary unrequited, a positive optimal transfer benefits both the donor and the recipient country. When the optimal transfer is negative, a positive transfer may still benefit the donor country when the world economy starts from an indeterminate steady state.
See: https://www.worldscientific.com/toc/ijdc/01/03
12. Status-Seeking and Exhaustible Resource Under Uncertainty
Hiroshi Ohta And Seiichi Katayama
Pages 399–417
https://doi.org/10.1142/S2010269011000245
Abstract
This paper is to extend Katayama and Long (2010) to examine the effect of uncertainty on the optimal consumption and resource extraction paths when economic agents are status-seeking. We consider an economy endowed with an exhaustible natural resource and an artificially augmentable capital, both of which are accessible by each agent. The utility of an agent is derived not only from his/her own consumption level but from its relative position in consumption scale among the agents. The resource stock is subject to uncertainty and may increase by newly discovered reservoir or may decrease by, say, water immersion. Two types of uncertainty are modeled: continuous change in stock level over time and jumps in discrete interval of time. The introduction of uncertainty may counteract the property under Markov-perfect Nash equilibrium established by Katayama and Long (2010) that a higher degree of status-seeking leads to greater consumption than in the social optimum.
See: https://www.worldscientific.com/toc/ijdc/01/03
Ngo Van Long
Pages 419–433
https://doi.org/10.1142/S2010269011000257
Abstract
This paper formulates a dynamic game between the governments of two countries that share a common stock of natural capital (such as environmental quality). The objective of each government is to find a sustainable utility path that satisfies the sequential maximin property. A utility path is a sequential maximin if it survives all successive rounds of eliminating Pareto inferior outcomes based on the maximin criterion. It is shown that, under the sequential maximin objective, there exists a Markov perfect Nash equilibrium in which utility is constant over time. This equilibrium turns out to be Pareto efficient, in sharp contrast to the typical inefficiency of Markov perfect Nash equilibria under the usual discounted utilitarian objective. We also find a Stackelberg equilibrium that results in sustainable development, in which the welfare of the leader is lower (and that of the passive follower is higher) than the symmetric welfare level in the Nash equilibrium.
See: https://www.worldscientific.com/toc/ijdc/01/03
14. Trade And Dynamics of Environmental Degradation: Theory And Evidence From Yangtze River Delta
Jenny Zhang And Partha Gangopadhyay
Pages 435–455
https://doi.org/10.1142/S2010269011000269
Abstract
This paper develops a theoretical model to argue that trade and economic growth cannot always be harmful to the environment if investors value the environment as an important asset, or ingredient, in their production process. In other words, the incentives of investors to move away from highly polluted locations to less polluted regions can unleash a virtuous process of environmental improvement. We empirically examine the impact of trade and economic growth on pollution in China’s Yangtze River Delta to ascertain the findings of our theoretical model. Our analysis of the panel data from 16 cities, over the period 2004 to 2007, reveals that the positive correlation between trade, growth and pollution is weakened if the environment is taken into account in production and location decisions of investors. In addition, this paper also attempts to decompose the impact of trade on the environment in terms of scale, technique, and structure effects. By making use of data from 1999 and 2009, however, we stress that the impact of technique and structure effects of trade on environment in Yangtze River Delta has been adverse — a sharp increase in exports has resulted in strong scale effect.
See: https://www.worldscientific.com/toc/ijdc/01/03
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