Soft Budget Constraints and Regional Industrial Policy: Reinterpreting the Rise and fall of De Lorean

The rise and fall of De Lorean Motor Cars Limited (DMCL) has been traditionally interpreted as either the result either of John De Lorean’s psychological flaws or as confirming the supposed limitations of activist industrial policy. However, when the episode is examined in greater historical detail, neither of these interpretations are compelling. The reinterpretation outlined here draws on institutional analysis as well as a range of archival sources, much of it previously unreleased. The inefficiencies within the original contractual agreement are highlighted. The lack of credibility associated with this agreement was in turn traceable to the institutional environment (with its associated risk-reward implications) under which industrial policy operated. This environment had a political element - it had been distorted by the Troubles and the resulting fears policymakers had of a cumulative causation relationship between violence and unemployment. Officials in Belfast, against Treasury opposition, advocated state-led entrepreneurship as a policy response.

Chinese export competition, declining exports and adjustments at the industry and regional level in Europe

We analyze how a set of 22 European countries was affected by increased Chinese export competition between 1995 and 2008. Employing product-group level data, we observe a reduction in the export volumes of European countries due to increased Chinese export competition. This deceleration in the export sector induces changes within the manufacturing industries, especially a decline in employment. When using more aggregated, regional-level data, our analysis shows that the industry sector as a whole declines, resulting in an increased unemployment rate. The importance of Chinese export competition for Europe is attributable to its high export intensity.

Philosophers and practical men: Charles Babbage, Irish merchants and the economics of information

Before the emergence of coordination of production by firms, manufacturers and merchants traded in markets with asymmetric information. Evidence suggests that the practical knowledge thus gained by these agents was well in advance of contemporary political economists and anticipates twentieth-century developments in the economics of information. Charles Babbage, who regarded merchants and manufacturers as the chief sources of reliable economic data, drew on this knowledge as revealed in the evidence of manufacturers and merchants presented to House of Commons select committees to make an important pioneering contribution to the theory of production and exchange with information asymmetries.