The dilemma of international capital tax competition in the presence of public capital and endogenous growth

Using an OLG-model with endogenous growth and public capital we show, that an international capital tax competition leads to inefficiently low tax rates, and as a consequence to lower welfare levels and growth rates. Each national government has an incentive to reduce the capital income tax rates in its effort to ensure that this policy measure increases the domestic private capital stock, domestic income and domestic economic growth. This effort is justified as long as only one country applies this policy. However, if all countries follow this path then all of them will be made worse off in the long run.

Choosing physical science courses: The importance of cultural and social capital in the enrolment decisions of high achieving students

This paper reports and discusses findings from a recent study which explored the science enrolment decisions of high achieving, or ‘science proficient’ secondary level students in Australia (Lyons 2003). The research was prompted by the increasing reluctance of such students to enrol in postcompulsory science courses, particularly in physics and chemistry. The study investigated the influences on students’ deliberations about taking a range of science courses. However, this report confines itself to decisions about enrolling in the physical sciences. The paper summarises the students’ experiences and conceptions of school science, as well as the characteristics of their ‘family worlds’ found to be influential in their decisions1. The paper discusses the important roles of cultural and social capital in these decisions, and concludes that enrolment in physical science courses was associated with congruence between the students’ conceptions of school science, and characteristics of their family backgrounds.

Export subsidies and foreign capital inflows

The welfare effect of a foreign capital inflow in an economy which practises an export-oriented trade policy is examined. The latter takes the form of optimally designed export subsidies, minimizing the welfare costs of existing import tariffs. Under the practice of this policy, an inflow of foreign capital is shown to have anambiguous welfare effect. An empirically relevant condition for welfare improvement is derived and discussed.

Financial liberalization and sectoral reallocation of capital in South Africa

We examine the impact of financial reforms on efficient reallocation of capital within and between sectors in South Africa using firm-level panel data for the period 1991–2008. The measure of efficient allocation of capital is based on the Tobin’s Q. We find that financial reforms are associated with improvements in within-sector, but not between-sector allocation of capital. These results imply that for South Africa to unleash the potential for take-off that is often associated with reallocation of resources from the primitive to modern sectors, reforms that focus beyond the financial sector are necessary. While more research is necessary to determine what would fully constitute such additional reforms, our analysis shows that reforms that improve the quality of economic institutions may be a step in the right the direction.