Appropriate Institutions and Economic Growth - one size fits no-one

Modern-day economics is increasingly biased towards believing that institutions matter for growth, an argument that has been further enforced by the recent economic crisis. There is also a wide consensus on what these growth-promoting institutions should look like, and countries are periodically ranked depending on how their institutional structure compares with the best-practice institutions, mostly in place in the developing world. In this paper, it is argued that ”non-desirable” or “second-best” institutions can be beneficial for fostering investment and thus providing a starting point for sustained growth, and that what matters is the appropriateness of institutions to the economy’s distance to the frontier or current phase of development. Anecdotal evidence from Japan and South-Korea is used as a motivation for studying the subject and a model is presented to describe this phenomenon. In the model, the rigidity or non-rigidity of the institutions is described by entrepreneurial selection. It is assumed that entrepreneurs are the ones taking part in the imitation and innovation of technologies, and that decisions on whether or not their projects are refinanced comes from capitalists. The capitalists in turn have no entrepreneurial skills and act merely as financers of projects. The model has two periods, and two kinds of entrepreneurs: those with high skills and those with low skills. The society’s choice of whether an imitation or innovation – based strategy is chosen is modeled as the trade-off between refinancing a low-skill entrepreneur or investing in the selection of the entrepreneurs resulting in a larger fraction of high-skill entrepreneurs with the ability to innovate but less total investment. Finally, a real-world example from India is presented as an initial attempt to test the theory. The data from the example is not included in this paper. It is noted that the model may be lacking explanatory power due to difficulties in testing the predictions, but that this should not be seen as a reason to disregard the theory – the solution might lie in developing better tools, not better just better theories. The conclusion presented is that institutions do matter. There is no one-size-fits-all-solution when it comes to institutional arrangements in different countries, and developing countries should be given space to develop their own institutional structures that cater to their specific needs.

Puunoston kehittäminen Stora Enso Metsän Helsingin palvelupisteessä

The operation environment in the roundwood trade in Finland in the 1990’s include several changes. They are changes in the structure of non-industrial private forest (NIPF) ownership, forest taxation, in forest legislation, in price recommendation agreement, diminishing resources of forestry extension services, etc. At the same time, the roundwood demand has been rising. All these developments cause uncertainty in wood procurement organisations, and call for research to find out how to adapt into the changing environment. The objective of this study is to produce information for roundwood purchasing planning and cus-tomer satisfaction management to be used by Stora Enso Metsä Customer Service, Helsinki. For this pur-pose, data needs to be gathered about the urban NIPFs and their forest estates, behaviour related to forestry and timber-selling, customer satisfaction in their latest timber selling transaction, and their opinions about Enso’s new customer service office and its service concept. To fulfil the objective of the study, a NIPF -owner -survey (N=1064, response rate 39,7%) was con-ducted in October 1998-January 1999. The sample was made on the basis of the marketing database of Stora Enso Oyj Forest Customer Service in Helsinki. In planning the frame of reference of the empirical study, the model of service quality by Grönroos was applied. The following aspects were included in the 7-page questionnaire: demographic, sosio-economic and forest estate background, relation to the forest service supply, behaviour related to forestry, timber-selling motives and behaviour, last contact organisation and its image in forestry business, expectations and percep-tions in the latest timber-selling transactions, and behavioural intentions. The results revealed that the share of women, pensioners and academically educated people among forest owners was quite high. The majority of the forest estates of the metropolitan forest owners were situ-ated in the provinces of South Finland and East Finland. The average forest estate area was considerably smaller than in a previous study. Economic and recreational objectives were most important in the use of forests. Forest Associations were involved in half of the roundwood sales transactions of the respondents in the metropolitan area. The wood quantity of transactions was considerably higher than the average in the whole country. Bank-organised forest-related activities, taxation infos and trips to the forest were the most popular activities. Among the services, silvicultural advices were needed mostly and stub treatment least. Brochure material related to stumpage timber sales and taxation were considered most important compared to material related to delivery sales. The service expectations were at highest for women and they were less satisfied with the service than men. 2nd and 3rd generation residents of the metropolitan area thought about the new customer service concept more positively than the 1st generation residents. Internet users under 60 years thought more positively about new satellite picture-based woodlot search concept. Cross-tabulation of factor scores against background variables indicated that women with relatively low education level a greater need to sell roundwood than entrepreneurs, white-collar workers and directors, and Internet users. Suspiciousness towards timber procurement organisations was relatively strong among women and those whose forest income share of the total income was either null or over 20 %. The average customer satisfaction score was negative in all nine questions. Statistical differences be-tween different companies did not exist in the average satisfaction scores. Stora Enso’s Helsinki forest cus-tomer service could choose the ability to purchase all timber grades as its competitive advantage. Out of nine service dimension included in the questionnaire, in this particular service dimension, Enso’s Helsinki forest customer service’s score exceeded most all organisations’ average customer satisfaction score. On the basis of importance – performance matrix, advice and quidance could have been provided more to the forest owners in their latest timber–selling transaction.

Nonlinear mixture autoregressive model: economic applications

The aim of this dissertation is to model economic variables by a mixture autoregressive (MAR) model. The MAR model is a generalization of linear autoregressive (AR) model. The MAR -model consists of K linear autoregressive components. At any given point of time one of these autoregressive components is randomly selected to generate a new observation for the time series. The mixture probability can be constant over time or a direct function of a some observable variable. Many economic time series contain properties which cannot be described by linear and stationary time series models. A nonlinear autoregressive model such as MAR model can a plausible alternative in the case of these time series. In this dissertation the MAR model is used to model stock market bubbles and a relationship between inflation and the interest rate. In the case of the inflation rate we arrived at the MAR model where inflation process is less mean reverting in the case of high inflation than in the case of normal inflation. The interest rate move one-for-one with expected inflation. We use the data from the Livingston survey as a proxy for inflation expectations. We have found that survey inflation expectations are not perfectly rational. According to our results information stickiness play an important role in the expectation formation. We also found that survey participants have a tendency to underestimate inflation. A MAR model has also used to model stock market bubbles and crashes. This model has two regimes: the bubble regime and the error correction regime. In the error correction regime price depends on a fundamental factor, the price-dividend ratio, and in the bubble regime, price is independent of fundamentals. In this model a stock market crash is usually caused by a regime switch from a bubble regime to an error-correction regime. According to our empirical results bubbles are related to a low inflation. Our model also imply that bubbles have influences investment return distribution in both short and long run.

Patents, Ethics and Stem Cell Research : The Case of hESC Innovation in Australia, Europe and the United States

Embryonic stem cells offer potentially a ground-breaking insight into health and diseases and are said to offer hope in discovering cures for many ailments unimaginable few years ago. Human embryonic stem cells are undifferentiated, immature cells that possess an amazing ability to develop into almost any body cell such as heart muscle, bone, nerve and blood cells and possibly even organs in due course. This remarkable feature, enabling embryonic stem cells to proliferate indefinitely in vitro (in a test tube), has branded them as a so-called miracle cure . Their potential use in clinical applications provides hope to many sufferers of debilitating and fatal medical conditions. However, the emergence of stem cell research has resulted in intense debates about its promises and dangers. On the one hand, advocates hail its potential, ranging from alleviating and even curing fatal and debilitating diseases such as Parkinson s, diabetes, heart ailments and so forth. On the other hand, opponents decry its dangers, drawing attention to the inherent risks of human embryo destruction, cloning for research purposes and reproductive cloning eventually. Lately, however, the policy battles surrounding human embryonic stem cell innovation have shifted from being a controversial research to scuffles within intellectual property rights. In fact, the ability to obtain patents represents a pivotal factor in the economic success or failure of this new biotechnology. Although, stem cell patents tend to more or less satisfy the standard patentability requirements, they also raise serious ethical and moral questions about the meaning of the exclusions on ethical or moral grounds as found in European and to an extent American and Australian patent laws. At present there is a sort of a calamity over human embryonic stem cell patents in Europe and to an extent in Australia and the United States. This in turn has created a sense of urgency to engage all relevant parties in the discourse on how best to approach patenting of this new form of scientific innovation. In essence, this should become a highly favoured patenting priority. To the contrary, stem cell innovation and its reliance on patent protection risk turmoil, uncertainty, confusion and even a halt on not only stem cell research but also further emerging biotechnology research and development. The patent system is premised upon the fundamental principle of balance which ought to ensure that the temporary monopoly awarded to the inventor equals that of the social benefit provided by the disclosure of the invention. Ensuring and maintaining this balance within the patent system when patenting human embryonic stem cells is of crucial contemporary relevance. Yet, the patenting of human embryonic stem cells raises some fundamental moral, social and legal questions. Overall, the present approach of patenting human embryonic stem cell related inventions is unsatisfactory and ineffective. This draws attention to a specific question which provides for a conceptual framework for this work. That question is the following: how can the investigated patent offices successfully deal with patentability of human embryonic stem cells? This in turn points at the thorny issue of application of the morality clause in this field. In particular, the interpretation of the exclusions on ethical or moral grounds as found in Australian, American and European legislative and judicial precedents. The Thesis seeks to compare laws and legal practices surrounding patentability of human embryonic stem cells in Australia and the United States with that of Europe. By using Europe as the primary case study for lessons and guidance, the central goal of the Thesis then becomes the determination of the type of solutions available to Europe with prospects to apply such to Australia and the United States. The Dissertation purports to define the ethical implications that arise with patenting human embryonic stem cells and intends to offer resolutions to the key ethical dilemmas surrounding patentability of human embryonic stem cells and other morally controversial biotechnology inventions. In particular, the Thesis goal is to propose a functional framework that may be used as a benchmark for an informed discussion on the solution to resolving ethical and legal tensions that come with patentability of human embryonic stem cells in Australian, American and European patent worlds. Key research questions that arise from these objectives and which continuously thread throughout the monograph are: 1. How do common law countries such as Australia and the United States approach and deal with patentability of human embryonic stem cells in their jurisdictions? These practices are then compared to the situation in Europe as represented by the United Kingdom (first two chapters), the Court of Justice of the European Union and the European Patent Office decisions (Chapter 3 onwards) in order to obtain a full picture of the present patenting procedures on the European soil. 2. How are ethical and moral considerations taken into account at patent offices investigated when assessing patentability of human embryonic stem cell related inventions? In order to assess this part, the Thesis evaluates how ethical issues that arise with patent applications are dealt with by: a) Legislative history of the modern patent system from its inception in 15th Century England to present day patent laws. b) Australian, American and European patent offices presently and in the past, including other relevant legal precedents on the subject matter. c) Normative ethical theories. d) The notion of human dignity used as the lowest common denominator for the interpretation of the European morality clause. 3. Given the existence of the morality clause in form of Article 6(1) of the Directive 98/44/EC of the European Parliament and of the Council of 6 July 1998 on the legal protection of biotechnological inventions which corresponds to Article 53(a) European Patent Convention, a special emphasis is put on Europe as a guiding principle for Australia and the United States. Any room for improvement of the European morality clause and Europe s current manner of evaluating ethical tensions surrounding human embryonic stem cell inventions is examined. 4. A summary of options (as represented by Australia, the United States and Europe) available as a basis for the optimal examination procedure of human embryonic stem cell inventions is depicted, whereas the best of such alternatives is deduced in order to create a benchmark framework. This framework is then utilised on and promoted as a tool to assist Europe (as represented by the European Patent Office) in examining human embryonic stem cell patent applications. This method suggests a possibility of implementing an institution solution. 5. Ultimately, a question of whether such reformed European patent system can be used as a founding stone for a potential patent reform in Australia and the United States when examining human embryonic stem cells or other morally controversial inventions is surveyed. The author wishes to emphasise that the guiding thought while carrying out this work is to convey the significance of identifying, analysing and clarifying the ethical tensions surrounding patenting human embryonic stem cells and ultimately present a solution that adequately assesses patentability of human embryonic stem cell inventions and related biotechnologies. In answering the key questions above, the Thesis strives to contribute to the broader stem cell debate about how and to which extent ethical and social positions should be integrated into the patenting procedure in pluralistic and morally divided democracies of Europe and subsequently Australia and the United States.

Yhteiskuntaluokka ja maku

Thee thesis, which consists of four original articles and a summarizing chapter, discusses homology between social class and cultural taste. Cultural taste is defined as the choices made in different areas of culture (television, cinema, reading, music, visual arts, sports, dining out, and leisure pursuits). Taste choices manifest themselves as likes and dislikes but also in what a person does. Social class is observed through occupational status, level of education, income and subjective views on class. The central research question concerns the relationship between social class and consumption of culture. The study aims to clarify what kind of class related differences can be found in cultural consumption, but also how these differences are connected to other factors stratifying the society such as gender, age and mother tongue. The data that is being analyzed consists of the data gathered by the project Cultural Capital and Social Differentiation in Contemporary Finland: An International Comparison. Class identification and the relation of cultural divisions to the socioeconomic ones are being analyzed using a nationally represent-ative survey data (N = 1388). Individual interviews (N = 25) and twenty focus group interviews (N = 20) on cultural consumption are also being analyzed. The theoretical framework is built around Pierre Buourdieu s theory of distinction and its critique but also recent research that expands on bourdieusian theory. In the theory of distinction lifestyle is thought to be defined through the quantity and quality of different capitals (economic, cultural and social). Cultural tastes are therefore linked to class status through different capitals. The study shows that the majority of Finns can place themselves in the class scene. Moreover, class-related differences can be found in cultural consumption in empirical analyses. The main differences between classes can be seen in how different classes relate to cultural products but also in the number of leisure pursuits. Being well-off economically is connected to being well-off culturally. High status manifests as omnivorous cultural consumption. The central differences are built upon occupational class so that the working class is more passive than other class groups. Same difference can be found in relation to education and income level. Other im-portant divisive variable is age. Age group defines what is being consumed: the younger respondents are inclined to choose popular culture whereas the older age groups choices represent more traditional taste choices.

Economic evaluation of forest policy programs.

XVIII IUFRO World Congress, Ljubljana 1986.

The Biopolitics of Gender

This dissertation inquires into the relationship between gender and biopolitics. Biopolitics, according to Michel Foucault, is the mode of politics that is situated and exercised at the level of life. The dissertation claims that gender is a technology of biopower specific to the optimisation of the sexual reproduction of human life, deployed through the scientific and governmental problematisation of declining fertility rates in the mid-twentieth century. Just as Michel Foucault claimed that sexuality became a scientific and political discourse in the nineteenth century, gender has also since emerged in these fields. In this dissertation, gender is treated as neither a representation of sex nor a cultural construct or category of identity. Rather, a genealogy of gender as an apparatus of biopower in conducted. It demonstrates how scientific and theoretical developments in the twentieth century marshalled gender into the sex/sexuality apparatus as a new technology of liberal biopower. Gender, I argue, has become necessary for the Western liberal order to recapture and re-optimise the life-producing functions of sex that reproduce the very object of biopolitics: life. The concept of the life function is introduced to analyse the life-producing violence of the sex/sexuality/gender apparatus. To do this, the thesis rereads the work of Michel Foucault through Gilles Deleuze for a deeper grasp of the material strategies of biopower and how it produces categories of difference and divides population according to them. The work of Judith Butler, in turn, is used as a foil against which to rearticulate the question of how to examine gender genealogically and biopolitically. The dissertation then executes a genealogy of gender, tracing the changing rationalities of sex/sexuality/gender from early feminist thought, through mid-twentieth century sexological, feminist, and demographic research, to current EU policy. According to this genealogy, in the mid-twentieth century demographers perceived that sexuality/sex, which Foucault observed as the life-producing biopolitical apparatus, was no longer sufficiently disciplining human bodies to reproduce. The life function was escaping the grasp of biopower. The analysis demonstrates how gender theory was taken up as a means of reterritorialising the life function: nature would be disciplined to reproduce by controlling culture. The crucial theoretical and genealogical argument of the thesis, that gender is a discourse with biopolitical foundations and a technology of biopower, radically challenges the premises of gender theory and feminist politics, as well as the emancipatory potential often granted to the gender concept. The project asks what gender means, what biopolitical function it performs, and what is at stake for feminist politics when it engages with it. In so doing, it identifies biopolitics and the problem of life as possibly the most urgent arena for feminist politics today.

Income inequality in the process of economic development : An empirical approach

This thesis studies the effect of income inequality on economic growth. This is done by analyzing panel data from several countries with both short and long time dimensions of the data. Two of the chapters study the direct effect of inequality on growth, and one chapter also looks at the possible indirect effect of inequality on growth by assessing the effect of inequality on savings. In Chapter two, the effect of inequality on growth is studied by using a panel of 70 countries and a new EHII2008 inequality measure. Chapter contributes on two problems that panel econometric studies on the economic effect of inequality have recently encountered: the comparability problem associated with the commonly used Deininger and Squire s Gini index, and the problem relating to the estimation of group-related elasticities in panel data. In this study, a simple way to 'bypass' vagueness related to the use of parametric methods to estimate group-related parameters is presented. The idea is to estimate the group-related elasticities implicitly using a set of group-related instrumental variables. The estimation results with new data and method indicate that the relationship between income inequality and growth is likely to be non-linear. Chapter three incorporates the EHII2.1 inequality measure and a panel with annual time series observations from 38 countries to test the existence of long-run equilibrium relation(s) between inequality and the level of GDP. Panel unit root tests indicate that both the logarithmic EHII2.1 inequality measure and the logarithmic GDP per capita series are I(1) nonstationary processes. They are also found to be cointegrated of order one, which implies that there is a long-run equilibrium relation between them. The long-run growth elasticity of inequality is found to be negative in the middle-income and rich economies, but the results for poor economies are inconclusive. In the fourth Chapter, macroeconomic data on nine developed economies spanning across four decades starting from the year 1960 is used to study the effect of the changes in the top income share to national and private savings. The income share of the top 1 % of population is used as proxy for the distribution of income. The effect of inequality on private savings is found to be positive in the Nordic and Central-European countries, but for the Anglo-Saxon countries the direction of the effect (positive vs. negative) remains somewhat ambiguous. Inequality is found to have an effect national savings only in the Nordic countries, where it is positive.