Financial Markets and Real Ecinomy: Four Essays in International Trade

Financial markets play an important role in an economy performing various functions like mobilizing and pooling savings, producing information about investment opportunities, screening and monitoring investments, implementation of corporate governance, diversification and management of risk. These functions influence saving rates, investment decisions, technological innovation and, therefore, have important implications for welfare. In my PhD dissertation I examine the interplay of financial and product markets by looking at different channels through which financial markets may influence an economy.My dissertation consists of four chapters. The first chapter is a co-authored work with Martin Strieborny, a PhD student from the University of Lausanne. The second chapter is a co-authored work with Melise Jaud, a PhD student from the Paris School of Economics. The third chapter is co-authored with both Melise Jaud and Martin Strieborny. The last chapter of my PhD dissertation is a single author paper.Chapter 1 of my PhD thesis analyzes the effect of financial development on growth of contract intensive industries. These industries intensively use intermediate inputs that neither can be sold on organized exchange, nor are reference-priced (Levchenko, 2007; Nunn, 2007). A typical example of a contract intensive industry would be an industry where an upstream supplier has to make investments in order to customize a product for needs of a downstream buyer. After the investment is made and the product is adjusted, the buyer may refuse to meet a commitment and trigger ex post renegotiation. Since the product is customized to the buyer's needs, the supplier cannot sell the product to a different buyer at the original price. This is referred in the literature as the holdup problem. As a consequence, the individually rational suppliers will underinvest into relationship-specific assets, hurting the downstream firms with negative consequences for aggregate growth. The standard way to mitigate the hold up problem is to write a binding contract and to rely on the legal enforcement by the state. However, even the most effective contract enforcement might fail to protect the supplier in tough times when the buyer lacks a reliable source of external financing. This suggests the potential role of financial intermediaries, banks in particular, in mitigating the incomplete contract problem. First, financial products like letters of credit and letters of guarantee can substantially decrease a risk and transaction costs of parties. Second, a bank loan can serve as a signal about a buyer's true financial situation, an upstream firm will be more willing undertake relationship-specific investment knowing that the business partner is creditworthy and will abstain from myopic behavior (Fama, 1985; von Thadden, 1995). Therefore, a well-developed financial (especially banking) system should disproportionately benefit contract intensive industries.The empirical test confirms this hypothesis. Indeed, contract intensive industries seem to grow faster in countries with a well developed financial system. Furthermore, this effect comes from a more developed banking sector rather than from a deeper stock market. These results are reaffirmed examining the effect of US bank deregulation on the growth of contract intensive industries in different states. Beyond an overall pro-growth effect, the bank deregulation seems to disproportionately benefit the industries requiring relationship-specific investments from their suppliers.Chapter 2 of my PhD focuses on the role of the financial sector in promoting exports of developing countries. In particular, it investigates how credit constraints affect the ability of firms operating in agri-food sectors of developing countries to keep exporting to foreign markets.Trade in high-value agri-food products from developing countries has expanded enormously over the last two decades offering opportunities for development. However, trade in agri-food is governed by a growing array of standards. Sanitary and Phytosanitary standards (SPS) and technical regulations impose additional sunk, fixed and operating costs along the firms' export life. Such costs may be detrimental to firms' survival, "pricing out" producers that cannot comply. The existence of these costs suggests a potential role of credit constraints in shaping the duration of trade relationships on foreign markets. A well-developed financial system provides the funds to exporters necessary to adjust production processes in order to meet quality and quantity requirements in foreign markets and to maintain long-standing trade relationships. The products with higher needs for financing should benefit the most from a well functioning financial system. This differential effect calls for a difference-in-difference approach initially proposed by Rajan and Zingales (1998). As a proxy for demand for financing of agri-food products, the sanitary risk index developed by Jaud et al. (2009) is used. The empirical literature on standards and norms show high costs of compliance, both variable and fixed, for high-value food products (Garcia-Martinez and Poole, 2004; Maskus et al., 2005). The sanitary risk index reflects the propensity of products to fail health and safety controls on the European Union (EU) market. Given the high costs of compliance, the sanitary risk index captures the demand for external financing to comply with such regulations.The prediction is empirically tested examining the export survival of different agri-food products from firms operating in Ghana, Mali, Malawi, Senegal and Tanzania. The results suggest that agri-food products that require more financing to keep up with food safety regulation of the destination market, indeed sustain longer in foreign market, when they are exported from countries with better developed financial markets.Chapter 3 analyzes the link between financial markets and efficiency of resource allocation in an economy. Producing and exporting products inconsistent with a country's factor endowments constitutes a serious misallocation of funds, which undermines competitiveness of the economy and inhibits its long term growth. In this chapter, inefficient exporting patterns are analyzed through the lens of the agency theories from the corporate finance literature. Managers may pursue projects with negative net present values because their perquisites or even their job might depend on them. Exporting activities are particularly prone to this problem. Business related to foreign markets involves both high levels of additional spending and strong incentives for managers to overinvest. Rational managers might have incentives to push for exports that use country's scarce factors which is suboptimal from a social point of view. Export subsidies might further skew the incentives towards inefficient exporting. Management can divert the export subsidies into investments promoting inefficient exporting.Corporate finance literature stresses the disciplining role of outside debt in counteracting the internal pressures to divert such "free cash flow" into unprofitable investments. Managers can lose both their reputation and the control of "their" firm if the unpaid external debt triggers a bankruptcy procedure. The threat of possible failure to satisfy debt service payments pushes the managers toward an efficient use of available resources (Jensen, 1986; Stulz, 1990; Hart and Moore, 1995). The main sources of debt financing in the most countries are banks. The disciplining role of banks might be especially important in the countries suffering from insufficient judicial quality. Banks, in pursuing their rights, rely on comparatively simple legal interventions that can be implemented even by mediocre courts. In addition to their disciplining role, banks can promote efficient exporting patterns in a more direct way by relaxing credit constraints of producers, through screening, identifying and investing in the most profitable investment projects. Therefore, a well-developed domestic financial system, and particular banking system, would help to push a country's exports towards products congruent with its comparative advantage.This prediction is tested looking at the survival of different product categories exported to US market. Products are identified according to the Euclidian distance between their revealed factor intensity and the country's factor endowments. The results suggest that products suffering from a comparative disadvantage (labour-intensive products from capital-abundant countries) survive less on the competitive US market. This pattern is stronger if the exporting country has a well-developed banking system. Thus, a strong banking sector promotes exports consistent with a country comparative advantage.Chapter 4 of my PhD thesis further examines the role of financial markets in fostering efficient resource allocation in an economy. In particular, the allocative efficiency hypothesis is investigated in the context of equity market liberalization.Many empirical studies document a positive and significant effect of financial liberalization on growth (Levchenko et al. 2009; Quinn and Toyoda 2009; Bekaert et al., 2005). However, the decrease in the cost of capital and the associated growth in investment appears rather modest in comparison to the large GDP growth effect (Bekaert and Harvey, 2005; Henry, 2000, 2003). Therefore, financial liberalization may have a positive impact on growth through its effect on the allocation of funds across firms and sectors.Free access to international capital markets allows the largest and most profitable domestic firms to borrow funds in foreign markets (Rajan and Zingales, 2003). As domestic banks loose some of their best clients, they reoptimize their lending practices seeking new clients among small and younger industrial firms. These firms are likely to be more risky than large and established companies. Screening of customers becomes prevalent as the return to screening rises. Banks, ceteris paribus, tend to focus on firms operating in comparative-advantage sectors because they are better risks. Firms in comparative-disadvantage sectors finding it harder to finance their entry into or survival in export markets either exit or refrain from entering export markets. On aggregate, one should therefore expect to see less entry, more exit, and shorter survival on export markets in those sectors after financial liberalization.The paper investigates the effect of financial liberalization on a country's export pattern by comparing the dynamics of entry and exit of different products in a country export portfolio before and after financial liberalization.The results suggest that products that lie far from the country's comparative advantage set tend to disappear relatively faster from the country's export portfolio following the liberalization of financial markets. In other words, financial liberalization tends to rebalance the composition of a country's export portfolio towards the products that intensively use the economy's abundant factors.

The application of NMR and MS methods for detection of adulteration of wine, fruit juices, and olive oil. A review

This review covers two important techniques, high resolution nuclear magnetic resonance (NMR) spectroscopy and mass spectrometry (MS), used to characterize food products and detect possible adulteration of wine, fruit juices, and olive oil, all important products of the Mediterranean Basin. Emphasis is placed on the complementary use of SNIF-NMR (site-specific natural isotopic fractionation nuclear magnetic resonance) and IRMS (isotope-ratio mass spectrometry) in association with chemometric methods for detecting the adulteration.

Geophagia secondary to anaemia in a rich country?

Case Report: A 19 year old female, originally from Cameroon, residentin Switzerland for 10 years, consults for chronic fatigue, constipationand menorrhagia. Clinical examination reveals pain in the iliac fossa,laboratory tests show an iron deficiency anaemia with a hemoglobinof 74 g/l (N: 117-157) and a ferritin less than 3 μg/l (N: 30-300).Gynecological aetiology is strongly suspected.Findings: The dietary history reveals a high intake of African chalkcalled "Mabel" in Lingala, for which she has a craving with criteria forsubstance dependence according to the Diagnostic and StatisticalManual IV. Eating non-food products is called "PICA" and the eatingof earth "geophagia". It is often assumed by the patient that geophagiaoffers nutritional virtues of the earth, and that the land would act asantitoxic, anti-emetic, immune-stimulant, strengthen the intestinalbarrier and be rich in calcium, iron and many nutrients. But insteadgeophagia causes anemia, iron chelation, heavy metal poisoningand significant constipation or obstruction.Management: The patient, following our advice, stopped ingestingchalk. Parenteral iron substitution of ferric carboxymaltose 1000 mgstopped the craving, and resolved her subjective state of fatigue andher haemoglobin normalized to 140 g/l. The menorrhagia resolved withhormone replacement and the constipation subsequently disappeared.Discussion: Our patient was suffering from iron deficiency resulting ina craving for non-food products in this case the earth. We advisepractitioners to systematically ask the question in patients of Africanand South American origin by using synonyms for the word "Mabel"(African chalk, kaolin, Kalaba, calabash chalk, calabash Stone, Kaolin,hurdle, or clay Nzu). A simple question can sometimes avoid costlyinvestigations. The ferrous replacement intravenously can probably stopthe practice of geophagy faster. Finally, we must remember that thispractice is underestimated and rarely expressed by patients as it isoften felt to be a shameful practice.

Salt, blood pressure and cardiovascular risk : what is the most adequate preventive strategy? A Swiss perspective

Among the various strategies to reduce the incidence of non-communicable diseases reduction of sodium intake in the general population has been recognized as one of the most cost-effective means because of its potential impact on the development of hypertension and cardiovascular diseases. Yet, this strategic health recommendation of the WHO and many other international organizations is far from being universally accepted. Indeed, there are still several unresolved scientific and epidemiological questions that maintain an ongoing debate. Thus what is the adequate low level of sodium intake to recommend to the general population and whether national strategies should be oriented to the overall population or only to higher risk fractions of the population such as salt-sensitive patients are still discussed. In this paper, we shall review the recent results of the literature regarding salt, blood pressure and cardiovascular risk and we present the recommendations recently proposed by a group of experts of Switzerland. The propositions of the participating medical societies are to encourage national health authorities to continue their discussion with the food industry in order to reduce the sodium intake of food products with a target of mean salt intake of 5-6 grams per day in the population. Moreover, all initiatives to increase the information on the effect of salt on health and on the salt content of food are supported.

Diffantom: Whole-Brain Diffusion MRI Phantoms Derived from Real Datasets of the Human Connectome Project.

Food allergies are believed to be on the rise and currently management relies on the avoidance of the food. Hen's egg allergy is after cow's milk allergy the most common food allergy; eggs are used in many food products and thus difficult to avoid. A technological process using a combination of enzymatic hydrolysis and heat treatment was designed to produce modified hen's egg with reduced allergenic potential. Biochemical (SDS-PAGE, Size exclusion chromatography and LC-MS/MS) and immunological (ELISA, immunoblot, RBL-assays, animal model) analysis showed a clear decrease in intact proteins as well as a strong decrease of allergenicity. In a clinical study, 22 of the 24 patients with a confirmed egg allergy who underwent a double blind food challenge with the hydrolysed egg remained completely free of symptoms. Hydrolysed egg products may be beneficial as low allergenic foods for egg allergic patients to extent their diet. This article is protected by copyright. All rights reserved.

Food habits and sport activity during adolescence: differences between athletic and non-athletic teenagers in Switzerland.

OBJECTIVE: To describe food habits and dietary intakes of athletic and non-athletic adolescents in Switzerland. SETTING: College, high schools and professional centers in the Swiss canton of Vaud. METHOD: A total of 3,540 subjects aged 9-19 y answered a self-reported anonymous questionnaire to assess lifestyles, physical plus sports activity and food habits. Within this sample, a subgroup of 246 subjects aged 11-15 also participated in an in-depth ancillary study including a 3 day dietary record completed by an interview with a dietician. RESULTS: More boys than girls reported engaging in regular sports activities (P<0.001). Adolescent food habits are quite traditional: up to 15 y, most of the respondents have a breakfast and eat at least two hot meals a day, the percentages decreasing thereafter. Snacking is widespread among adolescents (60-80% in the morning, 80-90% in the afternoon). Food habits among athletic adolescents are healthier and also are perceived as such in a higher proportion. Among athletic adolescents, consumption frequency is higher for dairy products and ready to eat (RTE) cereals, for fruit, fruit juices and salad (P<0.05 at least). Thus the athletic adolescent's food brings more micronutrients than the diet of their non-athletic counterparts. Within the subgroup (ancillary study), mean energy intake corresponds to requirements for age/gender group. CONCLUSIONS: Athletic adolescents display healthier food habits than non-athletic adolescents: this result supports the idea that healthy behavior tends to cluster and suggests that prevention programs among this age group should target simultaneously both sports activity and food habits.

Ecologic correlations of selected food groups with disease incidence and mortality in Switzerland.

Background: There is little information regarding the impact of diet on disease incidence and mortality in Switzerland. We assessed ecologic correlations between food availability and disease.Methods: In this ecologic study for the period 1970-2009, food availability was measured using the food balance sheets of the Food and Agriculture Organization of the United Nations. Standardized mortality rates (SMRs) were obtained from the Swiss Federal Office of Statistics. Cancer incidence data were obtained from the World Health Organization Health For All database and the Vaud Cancer Registry. Associations between food availability and mortality/incidence were assessed at lags 0, 5, 10, and 15 years by multivariate regression adjusted for total caloric intake.Results: Alcoholic beverages and fruit availability were positively associated, and fish availability was inversely associated, with SMRs for cardiovascular diseases. Animal products, meat, and animal fats were positively associated with the SMR for ischemic heart disease only. For cancer, the results of analysis using SMRs and incidence rates were contradictory. Alcoholic beverages and fruits were positively associated with SMRs for all cancer but inversely associated with all-cancer incidence rates. Similar findings were obtained for all other foods except vegetables, which were weakly inversely associated with SMRs and incidence rates. Use of a 15-year lag reversed the associations with animal and vegetal products, weakened the association with alcohol and fruits, and strengthened the association with fish.Conclusions: Ecologic associations between food availability and disease vary considerably on the basis of whether mortality or incidence rates are used in the analysis. Great care is thus necessary when interpreting our results.

Plasmodium falciparum: nitric oxide modulates heme speciation in isolated food vacuoles.

Nitric oxide (NO) and NO-derived reactive nitrogen species (RNS) are present in the food vacuole (FV) of Plasmodium falciparum trophozoites. The product of PFL1555w, a putative cytochrome b(5), localizes in the FV membrane, similar to what was previously observed for the product of PF13_0353, a putative cytochrome b(5) reductase. These two gene products may contribute to NO generation by denitrification chemistry from nitrate and/or nitrite present in the erythrocyte cytosol. The possible coordination of NO to heme species present in the food vacuole was probed by resonance Raman spectroscopy. The spectroscopic data revealed that in situ generated NO interacts with heme inside the intact FVs to form ferrous heme nitrosyl complexes that influence intra-vacuolar heme solubility. The formation of heme nitrosyl complexes within the FV is a previously unrecognized factor that could affect the equilibrium between soluble and crystallized heme within the FV in vivo.

New trends in the kitchen: propellants assessment of edible food aerosol sprays used on food.

New products available for food creations include a wide variety of "supposed" food grade aerosol sprays. However, the gas propellants used cannot be considered as safe. The different legislations available did not rule any maximum residue limits, even though these compounds have some limits when used for other food purposes. This study shows a preliminary monitoring of propane, butane and dimethyl ether residues, in cakes and chocolate after spraying, when these gases are used as propellants in food aerosol sprays. Release kinetics of propane, butane and dimethyl ether were measured over one day with sprayed food, left at room temperature or in the fridge after spraying. The alkanes and dimethyl ether analyses were performed by headspace-gas chromatography-mass spectrometry/thermal conductivity detection, using monodeuterated propane and butane generated in situ as internal standards. According to the obtained results and regardingthe extrapolations of the maximum residue limits existing for these substances, different delays should be respected according to the storage conditions and the gas propellant to consume safely the sprayed food.

Ecological correlations between food availability and mortality: more than you can eat?

Introduction: There is little information regarding the impact of diet on disease incidence and mortality in Switzerland. Objectives: We aimed at assessing the associations between food availability and disease using ecological correlations. Methods: Time-trend ecologic study for period 1970 to 2009. Food availability was measured through the FAO food balance sheets. Standardized mortality rates (SMRs) were obtained from the Swiss Federal Office of Statistics. Cancer incidence data was obtained from the WHO Health for all database and the Vaud cancer registry. Association between food availability and mortality/incidence was assessed at lags 0, 5, 10 and 15 years by Spearman correlation. Results: Alcoholic beverages and fruit availability were positively associated with SMRs from all types of cardiovascular disease, while fish availability was negatively associated. Animal products, meat and animal fats were positively associated with SMR from ischemic heart disease only. For cancers, opposite results were found whether the association used SMRs or incidence rates. For all cancers, alcoholic beverages and fruits were positively associated with SMRs but negatively associated with incidence rates. Similar findings were obtained for all other foods, with the exception of vegetables, which were weakly and negatively associated with SMRs and incidence rates. Finally, a 15 years lag time reversed the association for animal and vegetal products, weakened the association for alcohol and fruits and strengthened the association for fish. Conclusion: Ecologic associations between food availability and disease vary considerably whether mortality or incidence rates are used. Great care should be taken when interpreting the results.

Health effects of occupational exposure in a dairy food industry, with a specific assessment of exposure to airborne lactic acid bacteria

OBJECTIVE:: Lactic acid bacteria (LAB) are used in food industries as probiotic agents. The aim of this study is to assess the potential health effects of airborne exposure to a mix of preblend (LAB and carbohydrate) and milk powder in workers. METHODS:: A medical questionnaire, lung function tests, and immunologic tests were carried out on 50 workers. Occupational exposure to inhalable dust and airborne LAB was measured. RESULTS:: Workers not using respiratory masks reported more symptoms of irritation than workers using protection. Workers from areas with higher levels of airborne LAB reported the most health symptoms and the immune responses of workers to LAB was higher than the immune responses of a control population. CONCLUSIONS:: Measures to reduce exposure to airborne LAB and milk powder in food industries are recommended.

Low compliance with dietary recommendations for food intake among adults.

BACKGROUND & AIMS: To assess the adherence to the national dietary recommendations and to identify factors contributing to dietary compliance in Switzerland. METHODS: Population-based cross-sectional study in Lausanne, Switzerland (CoLaus study), 2009-2012. Dietary intake was assessed using a validated food frequency questionnaire. Participants were dichotomized according to whether they followed the national recommendations for fruits, vegetables, meat, fish and dairy products. RESULTS: Data from 4371 participants (54% women, mean age ± SD: 57.6 ± 10.5 years) were analyzed. Compliance with the recommendations was low: only 39.4%, 7.1%, 61.3%, 66.4%, and 8.4% complied with the Swiss recommendations for fruit (≥2/day), vegetables (≥3/day), meat (≤5/week), fish (≥1/week) and dairy products (≥3/day), respectively. In multivariate analyses, gender, age, smoking status, Swiss-born status, education, being on a diet and body mass index were associated with dietary compliance, while no difference was found between women before and after menopause. Factors specifically associated with fruits, vegetables, meat, fish or dairy products recommendations were identified. CONCLUSION: The low degree of compliance with dietary recommendations calls for a continued effort to increase the population awareness of the importance of a healthy and balanced diet, especially for vegetables and dairy products. This study identified determinants that should guide this effort.

Habitudes alimentaires et image corporelle chez des étudiants de deuxième année de gymnase à Lausanne [Food habits and body image of students in Lausanne]

During adolescence, nutrition needs are high; however the literature shows that few adolescents are following standardized nutritional requirements. A few weeks before an intervention about nutrition to high school adolescents in Lausanne, they were invited to fill in a self-reported questionnaire about their nutrition modes and habits, and their self-image satisfaction (N = 198). Results show that only 5% of youth are eating 5 fruits and vegetables per day and only 29% 3 to 5 dairy products. 21% of female and 6% of boys are not satisfied about their self-image, and those exhibiting a poor self-image tend to adopt health compromising eating patterns in a higher proportion. During adolescence it is important not only to investigate the nutritional habits but also one's self image.

Aliments et boissons allégés: qu'en penser [Light food and beverages: what to think about?].

Light food and beverages are increasing on the market for many years, first for economic reasons and, more and more for aesthetisme, however without aimed a defined population. The interest of these products is not evident, reason why it is difficult to get a clear and objective opinion without being influenced by marketing messages. Under what circumstances can they be a solution? Can we advise them? Do they have an influence in the loss or weight control? This article offers some thoughts and suggestions on the use of these specific products.

Consommation d'aliments riches en calcium dans la population adulte de Suisse romande et du Tessin. [Consumption of calcium-rich food in the adult population of French-speaking Switzerland and of Tessin].

Food intake high in calcium content is important in the development of skeleton and the prevention of osteoporosis. From a public health perspective, it is therefore important to know the dietary calcium intake of a population. Two population surveys in the French and Italian parts of Switzerland (MONICA, 1988-1989, and Geneva, 1991), were combined to study nutritional habits related to calcium intake. A random population sample, aged 35 et 65 years, answered to a 24 hour recall questionnaire, either self-administered (MONICA, cantons of Vaud, Fribourg and Tessin, N = 2734) or by phone (canton of Geneva, N = 475). In the 4 cantons, for the previous day, 60% of participants ate dairy products, particularly whole milk and cheese. They drunk 3-4 dl/day of milk. A significant proportion (10%) of french and italian speaking Swiss did not consume any food high in calcium content. In Geneva, the mean daily calcium intake was 656 mg in men and 489 mg in women. In conclusion 1) eating habits related to calcium intake are similar across cantons; 2) women consume dairy products more frequently than men, but in smaller quantities; 3) about 60% of men and 80% of women do not get the daily amount of calcium recommended for the prevention of osteoporosis.