Joseph A. Schumpeter's Theory of Social and Economic Evolution : a Reconstruction and Critique

The book presents a reconstruction, interpretation and critical evaluation of the Schumpeterian theoretical approach to socio-economic change. The analysis focuses on the problem of social evolution, on the interpretation of the innovation process and business cycles and, finally, on Schumpeter s optimistic neglect of ecological-environmental conditions as possible factors influencing social-economic change. The author investigates how the Schumpeterian approach describes the process of social and economic evolution, and how the logic of transformations is described, explained and understood in the Schumpeterian theory. The material of the study includes Schumpeter s works written after 1925, a related part of the commentary literature on these works, and a selected part of the related literature on the innovation process, technological transformations and the problem of long waves. Concerning the period after 1925, the Schumpeterian oeuvre is conceived and analysed as a more or less homogenous corpus of texts. The book is divided into 9 chapters. Chapters 1-2 describe the research problems and methods. Chapter 3 is an effort to provide a systematic reconstruction of Schumpeter's ideas concerning social and economic evolution. Chapters 4 and 5 focus their analysis on the innovation process. In Chapters 6 and 7 Schumpeter's theory of business cycles is examined. Chapter 8 evaluates Schumpeter's views concerning his relative neglect of ecological-environmental conditions as possible factors influencing social-economic change. Finally, chapter 9 draws the main conclusions.

Essays on Illegal Activities, Institutions and Economic Growth

In public economics, two extremist views on the functions of a government compete: one emphasizes government working for the public interest to provide value for the citizens, while another regards government mainly as a workhorse for private interests. Moreover, as the sole legitimate authority, the government has the right to define the rules and laws as well as to enforce them. With respect to regulation, two extremes arise: from too little regulation to too much of it. If the government does not function or ceases to exist, the state falls into anarchy or chaos (Somalia). If it regulates too much, it will completely suffocate private activities, which might be considered extralegal (the former Soviet Union). In this thesis I scrutinize the government s interventionist policies and evaluate the question of how to best promote economic well-being. The first two essays assume that the government s policies promote illegal activity. The first paper evaluates the interaction between the government and the mafia, and pays attention to the law enforcement of underground production. We show that the revenue-maximizing government will always monitor the shadow economy, as monitoring contributes to the government s revenue. In general, both legal and illegal firms are hurt by the entry of the mafia. It is, however, plausible that legal firms might benefit by the entry of the mafia if it competes with the government. The second paper tackles the issue of the measurement of the size of the shadow economy. To formulate policies it is essential to know what drives illegal economic activity; is it the tax burden, excess regulation, corruption or a weak legal environment? In this paper we propose an additional explanation for tax evasion and shadow production, namely cultural factors as manifested by religion as determinants of tax morality. According to our findings, Catholic and Protestant countries do not differ in their tax morale. The third paper contributes to the literature discussing the role of the government in promoting economic and productivity growth. Our main result is that, given the complex relationship between economic growth and economic freedom, marketization has not necessarily been beneficial in terms of growth. The last paper builds on traditional growth literature and revisits the debate on convergence clubs arising from demographic transition. We provide new evidence against the idea that countries within a club would converge over time. Instead, we propose that since the demographic transition is a dynamic process, one can expect countries to enter the last regime of stable, modern growth in stages.

Narrative, Memory and the Crisis of Mimesis: the Case of Adam Elsheimer and Giordano Bruno

The triangular space between memory, narrative and pictorial representation is the terrain on which this article is developed. Taking the art of memory developed by Giordano Bruno (1548 – 1600) and the art of painting subtly revolutionised by Adam Elsheimer (1578 – 1610) as test-cases, it is shown how both subvert the norms of mimesis and narration prevalent throughout the Renaissance, how disrupted memory creates “incoherent” narratives, and how perspective and the notion of “place” are questioned in a corollary way. Two paintings by Elsheimer are analysed and shown to include, in spite of their supposed “realism”, numerous incoherencies, aporias and strange elements – often overlooked. Thus, they do not conform to two of the basic rules governing both the classical art of memory and the humanist art of painting: well-defined places and the exhaustive translatability of words into images (and vice-versa). In the work of Bruno, both his philosophical claims and the literary devices he uses are analysed as hints for a similar (and contemporaneous) undermining of conventions about the transparency and immediacy of representation.

The link between foreign aid, public investment and economic growth

Länsimaat ovat rahoittaneet kehitysyhteistyöhankkeita jo lähes kuuden vuosikymmenen ajan, mutta kehitysavun tehokkuudesta ei olla edelleenkään päästy yksimielisyyteen. Yksi avunantajamaiden tapa vaikuttaa kehitysavun tehokkuuteen, eli avun vaikutukseen vastaanottajamaan taloudellisen kasvun kiihdyttäjänä, on sitoa ne julkisen sektorin infrastruktuurihankkeisiin. Joissain tapauksissa tämä vaikuttaa avun vastaanottajan käytökseen ja asenteisiin kehitysapua kohtaan. Tutkielmassa käsitellään kehitysavun tehokkuutta tilanteessa, jossa se on sidottu julkisen sektorin investointeihin kehitysmaassa. Tutkimus pohjaa Kalaitzidakisin ja Kalyvitisin (2008) malliin, jossa osa kehitysmaan julkisen talouden investoinneista rahoitetaan kehitysavulla. Seuraavaksi tarkastellaan ylijäämää tavoittelevan käyttäytymisen (rent- seeking) vaikutusta kehitysavun tehokkuuteen pohjaten Economidesin, Kalyvitisin ja Philippopoulosin (2008) malliin. Tutkielmassa referoidaan lisäksi tutkimuskysymystä sivuavia empiirisiä tutkimuksia, esitellään aluksi tavallisimmat kehitysyhteistyön muodot, sekä esitellään talousteoreettisia näkökulmia kehitysyhteistyön tehokkuuden määrittelylle. Tutkielma perustuu puhtaasti teoreettisiin malleihin ja niissä sovelletut menetelmät ovat matemaattisia. Tutkielmassa käsitellään ensin tapaus, jossa kehitysyhteistyöllä rahoitetaan julkisen sektorin investointihankkeita. Jossain tapauksissa kehitysavun kasvu lasku siirtää vastaanottajamaan kulutusta julkisista investoinneista kulutukseen, jolloin kehitysyhteistyövaroin osittain rahoitettujen hankkeiden koko pienenee, ja suhteellinen tehokkuus laskee. Seuraavaksi tarkastellaan tilannetta, jossa kehitysyhteistyövaroista vain osa päätyy hankkeen rahoittamiseen, ja todetaan, että kehitysavun tehokkuus ja vaikutus maan kansantulon kasvuun vähenee talouden toimijoiden ylijäämää tavoittelevan käyttäytymisen (mukaan lukien korruptio) myötä entisestään. Tämän tutkimuksen perusteella voidaan todeta, että kehitysapu vaikuttaa kehittyvän maan talouden kasvuun tapauksessa, jossa julkisia infrastruktuurihankkeita rahoitetaan osittain maan omin verovaroin ja osittain kehitysyhteistyövaroin. Ylijäämää tavoitteleva käyttäytyminen vaikuttaa kehitysavun tehokkuuteen negatiivistesti vähentäen kehitysavun positiivisia kasvuvaikutuksia.

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.

Sustainable forest management : ecologically sound and socially accepted

This dissertation explored the ecological dimension of ecologically sustainable forest management in boreal forests, and factors of the socio-cultural dimension that affect how the concept of ecologically sustainable forest management is defined. My approach was problem-oriented and generalistic-holistic. I examined associations between the abundances of wildlife groups (grouse, large predators, small predators, ungulates) and Siberian flying squirrels, and their co-occurrence with tree structural characteristics at the regional level. The trade-offs between ecological, social and economic sustainability in forestry were explored at the regional scale. I identified a potential 'shopping basket' of regional indicators for ecologically sustainable forest management, combining the relative abundance of Siberian flying squirrels, a wildlife richness index (WRI) for grouse, diversity indices of saw-timber trees, tree age classes and the proportion of old-growth (> 120 yr) forests. I suggest that the close association between forestry activity, the proportion of young forests (< 40 yr) and a WRI for small predators can be considered as potential 'alarm bells' for regions in which the creation of trade-offs (negative relationships) between economic and ecological components of sustainable forestry is ongoing. Explorative analyses revealed negative relationships between forestry activity and a WRI of 16 game species, the WRI for grouse and tree age diversity. Socially sustainable communities compete less intensively with ecological components of forests than communities where forestry is important. Interestingly, forest ownership types (farmers, other private forest owners, the forestry industry, the State) correlated significantly with the co-occurrence of flying squirrels, grouse and diverse forest structural characteristics rather than, for instance, with the total number of protection areas, suggesting that private forest ownership can lead to increased ecological sustainability. I examined forest actors’ argumentation to identify characteristics that affect the interpretation of ecologically sustainable forest management. Four argumentation frame types were constructed: information, work, experience and own position based. These differed in terms of their emphasis on external experts or own experiences. The closer ecologically sustainable forest management is to the forest actor’s daily life, the more profiled policy tools (counselling, learning through experiences) are needed to guide management behaviour to become more ecologically sound. I illustrated that forest actors interpret, use and understand information through meaningful framing. I analysed the extent to which ecological research information has been perceived in the Forestry Development Centre TAPIO’s recommendations and revised PEFC Finland criteria. We noticed that the political value for decaying wood was much lower in PEFC Finland critera (4 m3) than could be expected as a socially acceptable level (9 m3) or ecologically sound (10-20 m3). I consider it important for scientists to join political discourses and become involved in policy making concerning sustainable forest management to learn to present their results in a way that is reasonable from the user’s perspective.

Reduced visual function and its association with physical functioning in the Finnish adult population : Prevalence, causes, and need for eye care services

The purpose of this study was to estimate the prevalence and distribution of reduced visual acuity, major chronic eye diseases, and subsequent need for eye care services in the Finnish adult population comprising persons aged 30 years and older. In addition, we analyzed the effect of decreased vision on functioning and need for assistance using the World Health Organization’s (WHO) International Classification of Functioning, Disability, and Health (ICF) as a framework. The study was based on the Health 2000 health examination survey, a nationally representative population-based comprehensive survey of health and functional capacity carried out in 2000 to 2001 in Finland. The study sample representing the Finnish population aged 30 years and older was drawn by a two-stage stratified cluster sampling. The Health 2000 survey included a home interview and a comprehensive health examination conducted at a nearby screening center. If the invited participants did not attend, an abridged examination was conducted at home or in an institution. Based on our finding in participants, the great majority (96%) of Finnish adults had at least moderate visual acuity (VA ≥ 0.5) with current refraction correction, if any. However, in the age group 75–84 years the prevalence decreased to 81%, and after 85 years to 46%. In the population aged 30 years and older, the prevalence of habitual visual impairment (VA ≤ 0.25) was 1.6%, and 0.5% were blind (VA < 0.1). The prevalence of visual impairment increased significantly with age (p < 0.001), and after the age of 65 years the increase was sharp. Visual impairment was equally common for both sexes (OR 1.20, 95% CI 0.82 – 1.74). Based on self-reported and/or register-based data, the estimated total prevalences of cataract, glaucoma, age-related maculopathy (ARM), and diabetic retinopathy (DR) in the study population were 10%, 5%, 4%, and 1%, respectively. The prevalence of all of these chronic eye diseases increased with age (p < 0.001). Cataract and glaucoma were more common in women than in men (OR 1.55, 95% CI 1.26 – 1.91 and OR 1.57, 95% CI 1.24 – 1.98, respectively). The most prevalent eye diseases in people with visual impairment (VA ≤ 0.25) were ARM (37%), unoperated cataract (27%), glaucoma (22%), and DR (7%). One-half (58%) of visually impaired people had had a vision examination during the past five years, and 79% had received some vision rehabilitation services, mainly in the form of spectacles (70%). Only one-third (31%) had received formal low vision rehabilitation (i.e., fitting of low vision aids, receiving patient education, training for orientation and mobility, training for activities of daily living (ADL), or consultation with a social worker). People with low vision (VA 0.1 – 0.25) were less likely to have received formal low vision rehabilitation, magnifying glasses, or other low vision aids than blind people (VA < 0.1). Furthermore, low cognitive capacity and living in an institution were associated with limited use of vision rehabilitation services. Of the visually impaired living in the community, 71% reported a need for assistance and 24% had an unmet need for assistance in everyday activities. Prevalence of ADL, instrumental activities of daily living (IADL), and mobility increased with decreasing VA (p < 0.001). Visually impaired persons (VA ≤ 0.25) were four times more likely to have ADL disabilities than those with good VA (VA ≥ 0.8) after adjustment for sociodemographic and behavioral factors and chronic conditions (OR 4.36, 95% CI 2.44 – 7.78). Limitations in IADL and measured mobility were five times as likely (OR 4.82, 95% CI 2.38 – 9.76 and OR 5.37, 95% CI 2.44 – 7.78, respectively) and self-reported mobility limitations were three times as likely (OR 3.07, 95% CI 1.67 – 9.63) as in persons with good VA. The high prevalence of age-related eye diseases and subsequent visual impairment in the fastest growing segment of the population will result in a substantial increase in the demand for eye care services in the future. Many of the visually impaired, especially older persons with decreased cognitive capacity or living in an institution, have not had a recent vision examination and lack adequate low vision rehabilitation. This highlights the need for regular evaluation of visual function in the elderly and an active dissemination of information about rehabilitation services. Decreased VA is strongly associated with functional limitations, and even a slight decrease in VA was found to be associated with limited functioning. Thus, continuous efforts are needed to identify and treat eye diseases to maintain patients’ quality of life and to alleviate the social and economic burden of serious eye diseases.

The effects of marriage partners' socio-economic positions on the risk of divorce in Finland

Väitöskirjatutkimuksen tavoitteena oli selvittää, miten aviopuolisoiden sosioekonominen asema vaikuttaa avioeroriskiin Suomessa. Tutkimuksessa käytettiin Tilastokeskuksen rekistereistä koottua aineistoa, joka koskee suomalaisten ensimmäisiä avioliittoja vuoden 1990 lopussa ja avioeroja vuosina 1991−93. Väitöskirjaan sisältyy kolme osatutkimusta. Ensimmäinen osatutkimus käsitteli avioeroriskin vaihtelua aviopuolisoiden sosioekonomisen aseman eri osatekijöiden (koulutusaste, sosiaaliryhmä, pääasiallinen toiminta, tulotaso, asunnon omistaminen ja asumisahtaus) mukaan. Kaiken kaikkiaan avioeroriski oli sitä pienempi, mitä paremmassa taloudellisessa ja sosiaalisessa asemassa aviopuolisot olivat. Esimerkiksi miehen ja vaimon korkea koulutusaste, toimihenkilöammatti, työssäkäynti (etenkin verrattuna työttömyyteen) sekä omistusasunnossa asuminen liittyivät pienentyneeseen avioeroriskiin. Vaimon sosioekonomisen aseman yhteys avioeroriskiin oli paljolti samanlainen kuin miehen aseman yhteys. Huomattavin poikkeus tähän oli, että vaimon suuret tulot lisäsivät avioeroriskiä, vaikka miehen suurilla tuloilla oli päinvastainen vaikutus. Lisäksi kotitaloustyötä pääasiallisena toimintanaan tekevillä naisilla (pääasiallisen toiminnan luokka ”muut”) oli vielä pienempi avioeroriski kuin työssäkäyvillä naisilla. Toisessa osatutkimuksessa keskityttiin aviomiehen ja vaimon aseman yhdistettyyn vaikutukseen. Selviä viitteitä siitä, että puolisoiden koulutustasojen erilaisuus lisäisi eroriskiä, ei saatu. Pareilla, joissa molemmilla oli enintään perusasteen koulutus, oli kuitenkin odotettua pienempi avioeroriski. Eroriski oli suhteellisen alhainen pareilla, joissa vaimo oli työssäkäyvä tai kotitaloustyötä tekevä ja aviomies työssäkäyvä. Eroriskiä kasvatti se, että aviomies, vaimo tai molemmat puolisot olivat työttömiä. Vaimon korkea tulotaso lisäsi eroriskiä miehen kaikilla tulotasoilla mutta erityisen voimakkaasti silloin, kun miehen tulotaso oli alhainen. Kolmanneksi selvitettiin, vaikuttaako puolisoiden sosioekonominen asema avioeroriskiin eri tavalla riippuen siitä, kauanko avioliitto on kestänyt. Tällöin havaittiin, että vähän koulutettujen ja työntekijäammateissa toimivien puolisoiden suuri eroriski rajoittuu paljolti nuorimpiin avioliittoihin. Sen sijaan esim. puolisoiden työttömyys, vaimon korkea tulotaso ja vuokra-asunnossa asuminen kasvattivat eroriskiä riippumatta siitä, kuinka kauan avioliitto oli kestänyt. Kaiken kaikkiaan eroriski oli siis sitä pienempi, mitä paremmassa taloudellisessa ja sosiaalisessa asemassa puolisot olivat. Vaimon taloudellisilla ja sosiaalisilla resursseilla näyttää kuitenkin olevan myös joitakin avioeroriskiä lisääviä vaikutuksia.

Pathways to health : Determinants of health, health behaviour and health inequalities in early adulthood

There is increasing evidence that the origins of poor adult health and health inequalities can be traced back to circumstances preceding current socioeconomic position and living conditions. The life-course approach to examining the determinants of health has emphasised that exposure to adverse social and economic circumstances in earlier life or concurrent adverse circumstances due to unfavourable living conditions in earlier life may lead to poor health, health-damaging behaviour, disease or even premature death in adulthood. There is, however, still a lack of knowledge about the contribution of social and economic circumstances in childhood and youth to adult health and health inequalities, and even less is known about how environmental and behavioural factors in adulthood mediate the effects of earlier adverse experiences. The main purpose of this study was to deepen our understanding of the development of poor health, health-damaging behaviours and health inequalities during the life-course. Its aim was to find out which factors in earlier and current circumstances determine health, the most detrimental indicators of health behaviour (smoking, heavy drinking and obesity as a proxy for the balance between nutrition and exercise), and educational health differences in young adults in Finland. Following the ideas of the social pathway theory, it was assumed that childhood environment affects adult health and its proximal determinants via different pathways, including educational, work and family careers. Early adulthood was studied as a significant phase of life when many behavioural patterns and living conditions relevant to health are established. In addition, socioeconomic health inequalities seem to emerge rapidly when moving into adulthood; they are very small or non-existent in childhood and adolescence, but very marked by early middle age. The data of this study were collected in 2000 2001 as part of the Health 2000 Survey (N = 9,922), a cross-sectional and nationally representative health interview and examination survey. The main subset of data used in this thesis was the one comprising the age group 18 29 years (N = 1,894), which included information collected by standardised structured computer-aided interviews and self-administered questionnaires. The survey had a very high participation rate at almost 90% for the core questions. According to the results of this study, childhood circumstances predict the health of young adults. Almost all the childhood adversities studied were found to be associated with poor self-rated health and psychological distress in early adulthood, although fewer associations were found with the somatic morbidity typical of young adults. These effects seemed to be more or less independent of the young adult s own education. Childhood circumstances also had a strong effect on smoking and heavy drinking, although current circumstances and education in particular, played a role in mediating this effect. Parental smoking and alcohol abuse had an influence on the corresponding behaviours of offspring. Childhood circumstances had a role in the development of obesity and, to a lesser extent, overweight, particularly in women. The findings support the notion that parental education has a strong effect on early adult obesity, even independently of the young adult s own educational level. There were marked educational differences in self-rated health in early adulthood: those in the lowest educational category were most likely to have average or poorer health. Childhood social circumstances seemed to explain a substantial part of these educational differences. In addition, daily smoking and heavy drinking contributed substantially to educational health differences. However, the contribution of childhood circumstances was largely shared with health behaviours adopted by early adulthood. Employment also shared the effects of childhood circumstances on educational health differences. The results indicate that childhood circumstances are important in determining health, health behaviour and health inequalities in early adulthood. Early recognition of childhood adversities followed by relevant support measures may play an important role in preventing the unfortunate pathways leading to the development of poor health, health-damaging behaviour and health inequalities. It is crucially important to recognise the needs of children living in adverse circumstances as well as children of substance abusing parents. In addition, single-parent families would benefit from support. Differences in health and health behaviours between different sub-groups of the population mean that we can expect to see ever greater health differences when today s generation of young adults grows older. This presents a formidable challenge to national health and social policy as well as health promotion. Young adults with no more than primary level education are at greatest risk of poor health. Preventive policies should emphasise the role of low educational level as a key determinant of health-damaging behaviours and poor health. Keywords: health, health behaviour, health inequalities, life-course, socioeconomic position, education, childhood circumstances, self-rated health, psychological distress, somatic morbidity, smoking, heavy drinking, BMI, early adulthood

Development of foreign direct investment in Finland

During 1990 to 2009, Foreign Direct Investment (FDI henceforth) in Finland has fluctuated greatly. This paper focused on analyzing the overall development and basic characteristics of Foreign Direct Investment in Finland, covering the period from 1990 to present. By comparing FDI in Finland with FDI in other countries, the picture of Finland’s FDI position in the world market is clearer. A lot of statistical data, tables and figures are used to describe the trend of Foreign Direct Investment in Finland. All the data used in this study were obtained from Statistics Finland, UNCTAD, OECD, World Bank and International Labor Office, Investment map website and etc. It is also found that there is a big, long-lasting and increasing imbalance of the inward FDI and outward FDI in Finland, the performance of outward FDI is stronger than the inward FDI in Finland. Finland’s position of FDI in the world is rather modest. And based on existing theories, I tried to analyze the factors that might determine the size of the inflows of FDI in Finland. The econometric model of my thesis is based on time series data ranging from 1990 to 2007. A Log linear regression model is adopted to analyze the impact of each variable. The regression results showed that Labor Cost and Investment in Education have a negative influence on the FDI inflows into Finland. Too high labor cost is the main impediment of FDI in Finland, explaining the relative small size of FDI inflows into Finland. GDP and Economy openness have a significant positive impact on the inflows of FDI into Finland; other variables do not emerge as significant factor in affecting the size of FDI inflows in Finland as expected. Meanwhile, the impacts of the most recent financial and economic crisis on FDI in the world and in Finland are discussed as well. FDI inflows worldwide and in Finland have suffered from a big setback from the 2008 global crisis. The economic crisis has undoubtedly significant negative influence on the FDI flows in the world and in Finland. Nevertheless, apart from the negative impact, the crisis itself also brings in chances for policymakers to implement more efficient policies in order to create a pro-business and pro-investment climate for the recovery of FDI inflows. . The correspondent policies and measures aiming to accelerate the recovery of the falling FDI were discussed correspondently.