The authority of complexity

The assertion about the unique 'complexity' or the peculiarly intricate character of social phenomena has, at least within sociology, a long, venerable and virtually uncontested tradition. At the turn of the last century, classical social theorists, for example, Georg Simmel and Emile Durkheim, made prominent and repeated reference to this attribute of the subject matter of sociology and the degree to which it complicates, even inhibits the development and application of social scientific knowledge. Our paper explores the origins, the basis and the consequences of this assertion and asks in particular whether the classic complexity assertion still deserves to be invoked in analyses that ask about the production and the utilization of social scientific knowledge in modern society. We present John Maynard Keynes' economic theory and its practical applications as an illustration. We conclude that the practical value of social scientific knowledge is not dependent on a faithful, in the sense of complete, representation of social reality. Instead, social scientific knowledge that wants to optimize its practicality has to attend and attach itself to elements of social situations that can be altered or are actionable.

The unique complexity of social phenomena and the uses of social science knowledge

The assertion about the peculiarly intricate and complex character of social phenomena has, in much of social discourse, a virtually uncontested tradition. A significant part of the premise about the complexity of social phenomena is the conviction that it complicates, perhaps even inhibits the development and application of social scientific knowledge. Our paper explores the origins, the basis and the consequences of this assertion and asks in particular whether the classic complexity assertion still deserves to be invoked in analyses that ask about the production and the utilization of social scientific knowledge in modern society. We refer to one of the most prominent and politically influential social scientific theories, John Maynard Keynes' economic theory as an illustration. We conclude that, the practical value of social scientific knowledge is not necessarily dependent on a faithful, in the sense of complete, representation of (complex) social reality. Practical knowledge is context sensitive if not project bound. Social scientific knowledge that wants to optimize its practicality has to attend and attach itself to elements of practical social situations that can be altered or are actionable by relevant actors. This chapter represents an effort to re-examine the relation between social reality, social scientific knowledge and its practical application. There is a widely accepted view about the potential social utility of social scientific knowledge that invokes the peculiar complexity of social reality as an impediment to good theoretical comprehension and hence to its applicability.

Evaluating corporate performance:a critique of economic value added

There has been a revival of interest in economic techniques to measure the value of a firm through the use of economic value added as a technique for measuring such value to shareholders. This technique, based upon the concept of economic value equating to total value, is founded upon the assumptions of classical liberal economic theory. Such techniques have been subject to criticism both from the point of view of the level of adjustment to published accounts needed to make the technique work and from the point of view of the validity of such techniques in actually measuring value in a meaningful context. This paper critiques economic value added techniques as a means of calculating changes in shareholder value, contrasting such techniques with more traditional techniques of measuring value added. It uses the company Severn Trent plc as an actual example in order to evaluate and contrast the techniques in action. The paper demonstrates discrepancies between the calculated results from using economic value added analysis and those reported using conventional accounting measures. It considers the merits of the respective techniques in explaining shareholder and managerial behaviour and the problems with using such techniques in considering the wider stakeholder concept of value. It concludes that this economic value added technique has merits when compared with traditional accounting measures of performance but that it does not provide the universal panacea claimed by its proponents.

Directions for a troubled discipline:strategy research, teaching and practice introduction to the dialog

This Dialog responds to a growing debate about the relevance of business schools generally and the value of strategy theory and research for strategic management practice. The authors propose that academic theory and management practice can be better connected through management education. The academy researches practice, derives theory, and returns it to practice through the development of teaching materials and the teaching of current and future practitioners. The three articles in this Dialog examine how different approaches to strategy research inform strategy teaching and its application to practice. Joseph Bower explains the rise of business policy and the process research approach that informed that teaching tradition at Harvard Business School. Robert Grant responds by emphasizing the economic theory underpinnings of strategic management research and its impact on teaching. Paula Jarzabkowski and Richard Whittington conclude by proposing a strategyas-practice perspective and suggesting ways to better incorporate strategy-as-practice research into strategy teaching.

Predicting returns in U.S. financial sector indices

This study focuses on: (i) the responsiveness of the U.S. financial sector stock indices to foreign exchange (FX) and interest rate changes; and, (ii) the extent to which good model specification can enhance the forecasts from the associated models. Three models are considered. Only the error-correction model (ECM) generated efficient and consistent coefficient estimates. Furthermore, a simple zero lag model in differences which is clearly mis-specified, generated forecasts that are better than those of the ECM, even if the ECM depicts relationships that are more consistent with economic theory. In brief, FX and interest rate changes do not impact on the return-generating process of the stock indices in any substantial way. Most of the variation in the sector stock indices is associated with past variation in the indices themselves and variation in the market-wide stock index. These results have important implications for financial and economic policies.

The side effects of quantitative easing:evidence from the UK bond market

We examine the returns to UK government bonds before, during and between the phases of quantitative easing to identify the side effects for the market itself. We show that the onset of QE led to a sustained reduction in the costs of trading and removed some return regularities. However, controlling for a wide range of market activity, including issuance and QE announcements, we find evidence that investors could have earned excess returns after costs by trading in response to the purchase auction calendar. Drawing on economic theory, we explore the implications of these findings for both the efficiency of the market and the costs of government debt management in both the short and long run.

The efficiency of multivariate macroeconomic forecasts

We examine the efficiency of multivariate macroeconomic forecasts by estimating a vector autoregressive model on the forecast revisions of four variables (GDP, inflation, unemployment and wages). Using a data set of professional forecasts for the G7 countries, we find evidence of cross‐series revision dynamics. Specifically, forecasts revisions are conditionally correlated to the lagged forecast revisions of other macroeconomic variables, and the sign of the correlation is as predicted by conventional economic theory. This indicates that forecasters are slow to incorporate news across variables. We show that this finding can be explained by forecast underreaction.

Primary production, financial constraints and economic instability:Zambia since independence.

A systematic analysis is presented of the economic consequences of the abnormally high concentration of Zambia's exports on a commodity whose price is exceptionally unstable. Zambian macro-economic variables in the post-independence years are extensively documented, showing acute instability and decline, particularly after the energy price revolution and the collapse of copper prices. The relevance of stabilization policies designed to correct short-term disequilibrium is questioned. It is, therefore, a pathological case study of externally induced economic instability, complementing other studies in this area which use cross-country analysis of a few selected variables. After a survey of theory and issues pertaining to development, finance and stabilization, the emergence of domestic and foreign financial constraints on the Zambian economy is described. The world copper industry is surveyed and an examination of commodity and world trade prices concludes that copper showed the highest degree of price instability. Specific aspects of Zambia's economy identified for detailed analysis include: its unprofitable mining industry, external payments disequilibrium, a constrained government budget, potentially inflationary monetary growth, and external indebtedness. International comparisons are used extensively, but major copper exporters are subjected to closer scrutiny. An appraisal of policy options concludes the study.

On the opportunism-independent theory of the firm

Previous developments in the opportunism-independent theory of the firm are either restricted to special cases or are derived from the capabilities or resource-based perspective. However, a more general opportunism-independent approach can be developed, based on the work of Demsetz and Coase, which is nevertheless contractual in nature. This depends on 'direction', that is, deriving economic value by permitting one set of actors to direct the activities of another, and of non-human factors of production. Direction helps to explain not only firm boundaries and organisation, but also the existence of firms, without appealing to opportunism or moral hazard. The paper also considers the extent to which it is meaningful to speak of 'contractual' theories in the absence of opportunism, and whether this analysis can be extended beyond the employment contract to encompass ownership of assets by the firm. © The Author 2005. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved.

The production of fructose from carbohydrate feedstocks

A review of the general chromatographic theory and of continuous chromatographic techniques has been carried out. Three methods of inversion of sucrose to glucose and fructose in beet molasses were explored. These methods were the inversion of sucrose using the enzyme invertase, by the use of hydrochloric acid and the use of the resin Amberlite IR118 in the H+ form. The preferred method on economic and purity considerations was by the use of the enzyme invertase. The continuous chromatographic separation of inverted beet molasses resulting in a fructose rich product and a product containing glucose and other non-sugars was carried out using a semi-continuous counter-current chromatographic refiner (SCCR6), consisting of ten 10.8cm x 75cm long stainless steel columns packed with a calcium charged 8% cross-linked polystyrene resin Zerolit SRC 14. Based on the literature this is the first time such a continuous separation has been attempted. It was found that the cations present in beet molasses displaced the calcium ions from the resin resulting in poor separation of the glucose and fructose. Three methods of maintaining the calcium form of the resin during the continuous operation of the equipment were established. Passing a solution of calcium nitrate through the purge column for half a switch period was found to be most effective as there was no contamination of the main fructose rich product and the product concentrations were increased by 50%. When a 53% total solids (53 Brix) molasses feedstock was used, the throughput was 34.13kg sugar solids per m3 of resin per hour. Product purities of 97% fructose in fructose rich (FRP) and 96% glucose in the glucose rich (GRP) products were obtained with product concentrations of 10.93 %w/w for the FRP and 10.07 %w/w for the GRP. The effects of flowrates, temperature and background sugar concentration on the distribution coefficients of fructose, glucose, betaine and an ionic component of beet molasses were evaluated and general relationships derived. The computer simulation of inverted beet molasses separations on an SCCR system has been carried out successfully.

Exchange rate economic exposure and hedging:the significance of currency options

This thesis focuses on the theoretical examination of the exchange rate economic (operating) exposure within the context of the theory of the firm, and proposes some hedging solutions using currency options. The examination of economic exposure is based on such parameters as firms' objectives, industry structure and production cost efficiency. In particular, it examines an hypothetical exporting firm with costs in domestic currency, which faces competition from foreign firms in overseas markets and has a market share expansion objective. Within this framework, the hypothesis is established that economic exposure, portrayed in a diagram connecting export prices and real exchange rates, is asymmetric (i.e. the negative effects depreciation are higher than the positive effects of a currency depreciation). In this case, export business can be seen as a real option, given by exporting firms to overseas customer. Different scenarios about the asymmetry hypothesis can be derived for different assumptions about the determinants of economic exposure. Having established the asymmetry hypothesis, the hedging against this exposure is analysed. The hypothesis is established, that a currency call option should be used in hedging against asymmetric economic exposure. Further, some advanced currency options stategies are discussed, and their use in hedging several scenarios of exposure is indicated, establishing the hypothesis that, the optimal options strategy is a function of the determinants of exposure. Some extensions on the theoretical analysis are examined. These include the hedging of multicurrency exposure using options, and the exposure of a purely domestic firm facing import competition. The empirical work addresses two issues: the empirical validity of the asymmetry hypothesis and the examination of the hedging effectiveness of currency options.

A techno-economic assessment of the use of fast pyrolysis bio-oil from UK energy crops in the production of electricity and combined heat and power

This thesis investigates the cost of electricity generation using bio-oil produced by the fast pyrolysis of UK energy crops. The study covers cost from the farm to the generator’s terminals. The use of short rotation coppice willow and miscanthus as feedstocks was investigated. All costs and performance data have been taken from published papers, reports or web sites. Generation technologies are compared at scales where they have proved economic burning other fuels, rather than at a given size. A pyrolysis yield model was developed for a bubbling fluidised bed fast pyrolysis reactor from published data to predict bio-oil yields and pyrolysis plant energy demands. Generation using diesel engines, gas turbines in open and combined cycle (CCGT) operation and steam cycle plants was considered. The use of bio-oil storage to allow the pyrolysis and generation plants to operate independently of each other was investigated. The option of using diesel generators and open cycle gas turbines for combined heat and power was examined. The possible cost reductions that could be expected through learning if the technology is widely implemented were considered. It was found that none of the systems analysed would be viable without subsidy, but with the current Renewable Obligation Scheme CCGT plants in the 200 to 350 MWe range, super-critical coal fired boilers co-fired with bio-oil, and groups of diesel engine based CHP schemes supplied by a central pyrolysis plant would be viable. It was found that the cost would reduce with implementation and the planting of more energy crops but some subsidy would still be needed to make the plants viable.

Knowledge, technological catch-up and economic growth

‘The literature on economic growth has needed for a long time a simple, but rigorous, textbook exposition of the role of knowledge in the growth process, suitable for undergraduates and policymakers. Mark Rogers’s new book provides an excellent introduction, combining clear and succinct theory with up-to-date empirical evidence on this important topic.’ – A.P. Thirlwall, University of Kent, UK Knowledge, Technological Catch-up and Economic Growth investigates the relationship between knowledge diffusion and economic growth. Using a broad definition of knowledge – encompassing technology, production skills, know-how and firm capabilities – the central argument of the book is that the extent of knowledge diffusion is an important determinant of economic growth.

A techno-economic comparison of power production by biomass fast pyrolysis with gasification and combustion

This paper presents an assessment of the technical and economic performance of thermal processes to generate electricity from a wood chip feedstock by combustion, gasification and fast pyrolysis. The scope of the work begins with the delivery of a wood chip feedstock at a conversion plant and ends with the supply of electricity to the grid, incorporating wood chip preparation, thermal conversion, and electricity generation in dual fuel diesel engines. Net generating capacities of 1–20 MWe are evaluated. The techno-economic assessment is achieved through the development of a suite of models that are combined to give cost and performance data for the integrated system. The models include feed pretreatment, combustion, atmospheric and pressure gasification, fast pyrolysis with pyrolysis liquid storage and transport (an optional step in de-coupled systems) and diesel engine or turbine power generation. The models calculate system efficiencies, capital costs and production costs. An identical methodology is applied in the development of all the models so that all of the results are directly comparable. The electricity production costs have been calculated for 10th plant systems, indicating the costs that are achievable in the medium term after the high initial costs associated with novel technologies have reduced. The costs converge at the larger scale with the mean electricity price paid in the EU by a large consumer, and there is therefore potential for fast pyrolysis and diesel engine systems to sell electricity directly to large consumers or for on-site generation. However, competition will be fierce at all capacities since electricity production costs vary only slightly between the four biomass to electricity systems that are evaluated. Systems de-coupling is one way that the fast pyrolysis and diesel engine system can distinguish itself from the other conversion technologies. Evaluations in this work show that situations requiring several remote generators are much better served by a large fast pyrolysis plant that supplies fuel to de-coupled diesel engines than by constructing an entire close-coupled system at each generating site. Another advantage of de-coupling is that the fast pyrolysis conversion step and the diesel engine generation step can operate independently, with intermediate storage of the fast pyrolysis liquid fuel, increasing overall reliability. Peak load or seasonal power requirements would also benefit from de-coupling since a small fast pyrolysis plant could operate continuously to produce fuel that is stored for use in the engine on demand. Current electricity production costs for a fast pyrolysis and diesel engine system are 0.091/kWh at 1 MWe when learning effects are included. These systems are handicapped by the typical characteristics of a novel technology: high capital cost, high labour, and low reliability. As such the more established combustion and steam cycle produces lower cost electricity under current conditions. The fast pyrolysis and diesel engine system is a low capital cost option but it also suffers from relatively low system efficiency particularly at high capacities. This low efficiency is the result of a low conversion efficiency of feed energy into the pyrolysis liquid, because of the energy in the char by-product. A sensitivity analysis has highlighted the high impact on electricity production costs of the fast pyrolysis liquids yield. The liquids yield should be set realistically during design, and it should be maintained in practice by careful attention to plant operation and feed quality. Another problem is the high power consumption during feedstock grinding. Efficiencies may be enhanced in ablative fast pyrolysis which can tolerate a chipped feedstock. This has yet to be demonstrated at commercial scale. In summary, the fast pyrolysis and diesel engine system has great potential to generate electricity at a profit in the long term, and at a lower cost than any other biomass to electricity system at small scale. This future viability can only be achieved through the construction of early plant that could, in the short term, be more expensive than the combustion alternative. Profitability in the short term can best be achieved by exploiting niches in the market place and specific features of fast pyrolysis. These include: •countries or regions with fiscal incentives for renewable energy such as premium electricity prices or capital grants; •locations with high electricity prices so that electricity can be sold direct to large consumers or generated on-site by companies who wish to reduce their consumption from the grid; •waste disposal opportunities where feedstocks can attract a gate fee rather than incur a cost; •the ability to store fast pyrolysis liquids as a buffer against shutdowns or as a fuel for peak-load generating plant; •de-coupling opportunities where a large, single pyrolysis plant supplies fuel to several small and remote generators; •small-scale combined heat and power opportunities; •sales of the excess char, although a market has yet to be established for this by-product; and •potential co-production of speciality chemicals and fuel for power generation in fast pyrolysis systems.