Essays on international lending and increasing returns to scale

Standard economic theory suggests that capital should flow from rich countries to poor countries. However, capital has predominantly flowed to rich countries. The three essays in this dissertation attempt to explain this phenomenon. The first two essays suggest theoretical explanations for why capital has not flowed to the poor countries. The third essay empirically tests the theoretical explanations.^ The first essay examines the effects of increasing returns to scale on international lending and borrowing with moral hazard. Introducing increasing returns in a two-country general equilibrium model yields possible multiple equilibria and helps explain the possibility of capital flows from a poor to a rich country. I find that a borrowing country may need to borrow sufficient amounts internationally to reach a minimum investment threshold in order to invest domestically.^ The second essay examines how a poor country may invest in sectors with low productivity because of sovereign risk, and how collateral differences across sectors may exacerbate the problem. I model sovereign borrowing with a two-sector economy: one sector with increasing returns to scale (IRS) and one sector with diminishing returns to scale (DRS). Countries with incomes below a threshold will only invest in the DRS sector, and countries with incomes above a threshold will invest mostly in the IRS sector. The results help explain the existence of a bimodal world income distribution.^ The third essay empirically tests the explanations for why capital has not flowed from the rich to the poor countries, with a focus on institutions and initial capital. I find that institutional variables are a very important factor, but in contrast to other studies, I show that institutions do not account for the Lucas Paradox. Evidence of increasing returns still exists, even when controlling for institutions and other variables. In addition, I find that the determinants of capital flows may depend on whether a country is rich or poor.^

Crossing boundaries to education: Haitian transnational families and the quest to raise the family up

Nearly 175, 000 Haitian immigrants have settled in South Florida since the 1970s. Their lives are often lived transnationally with persistent connections and obligations to family members in Haiti. Yet, traditional theories of immigrant assimilation focus on the integration of immigrants into host countries, giving little consideration to relationships and activities that extend into migrants' countries of origin. Conversely, studies of transnational families do not explicitly address incorporation into the receiving country. This dissertation, through the experiences of Haitian immigrants in South Florida, reveals a transnational quest "to raise the family up" through migration, remittances, and the pursuit of higher levels of education. I argue that familial duties and obligations, which have cultural foundations in the Haitian lakou, structure the activities of Haitian transnational families as they pursue socioeconomic advancement through migration and education. With the support of transnational families, many students cross boundaries to academic achievement and improve their opportunities for socioeconomic mobility in the US. With higher levels of education, these individuals contributed to a more favorable incorporation into the United States for their extended families, as well. The data were collected through participant observation and 78 in-depth interviews documenting the migration histories of 27 Haitian immigrant families in South Florida. This dissertation contributes to the existing literature on Haitian immigrants in the United States and to an understanding of the transnational dimensions of immigrant incorporation more broadly.

Education, earnings, and rates of return: The case of Taiwan

Educational planners and economists have long recognized the importance of education as a form of productive investment in both advanced countries and developing countries. In the case of Taiwan, along with impressive economic growth, there was an even faster rate of growth of the government's investment in education. This leads some to question whether education has any role in economic development. ^ The purpose of this study is to provide a broad overview of the role of education, in terms of private rates of return to education, in Taiwan. In the process, a variety of hypotheses about human capital theory are examined and an empirical study of Taiwan's earnings functions are tested to show that education can be an important instrument to increase private rate of return, even under conditions of scarcity of natural and physical resources. Data was collected using the Manpower Survey and Manpower Utilization Survey, conducted by the government. Research questions were analyzed using descriptive statistics, frequencies, and regression analysis. ^ Results indicated that the Manpower Development Plans have been the decisive influence in allowing Taiwan to develop its human resources and achieve success in meeting the needs of Taiwan's economy. The structure of age-earnings profiles showed a strong relationship between earnings and education, and the profiles that successively shift upward are associated with higher levels of education. In the cross-sectional results of the rate of return in 1997, each additional year of schooling leads to a 6.2% increase in income. As to the private rates of return to different levels of education, the results found that the private rates of return are 2.88%, 4.85% and 10.05% for primary, secondary and higher education respectively. In an intertemporal comparison for 1980, 1985, 1990 and 1997, the results showed no significant trend except the private rates of return for primary education have been falling from 3.9% to 2.88%. ^ On the basis of this study, for individual student or family in Taiwan, there is likely to be a strong demand for education, particularly at the higher level. Therefore, a well-developed higher educational level becomes essential and the content of curriculum in higher education becomes another crucial question facing planners in Taiwan if they are going to use education as a means to foster economic development. ^

Employer participation in Florida school -to -work initiatives

This study used a cross-sectional design and descriptive research methodology to assess the characteristics and practices of employers participating in Florida school-to-work (STW) initiatives, the factors influencing their participation, and their STW partnerships with schools. The study also examined the relationships between employer characteristics and participation. ^ A sampling frame of 15,202 employers from the 28 Florida STW regions was constructed. Data were collected via a mail survey with a random sample of employers, using a researcher-designed questionnaire. Data were analyzed using descriptive statistics, correlational analysis, and analysis of variance. ^ At the 95% confidence level, it was estimated that the mean establishment size in the population is between 25 and 51 employees and that employers have been involved in STW partnerships between five and seven years. ^ The study revealed broad-based employer participation in three of four areas: Working with Students, Working with Educators, and Internal Company Practices Supporting STW. A fourth area, Building a System, showed generally low participation. Data indicate that workforce needs are important incentives to employer STW participation beyond their desire to contribute to education or the community. Data also indicate that lack of information on STW is the greatest barrier to employer participation. ^ Sample employers have more positive perceptions of the value of their partnerships with schools than of the quality of the partnerships. Ninety-four percent agreed that students are better prepared for work and careers as a result of the partnership's activities. More than half agreed that a sense of trust and good communication exist between educators and employer partners. ^ Employer variables found to have a significant, positive relationship with participation include size (coefficient of determination r2 = .116), years in STW partnerships (r2 = .128), and perceptions of partnership quality (r2 = .092) and value (r2 = .112). ^ A major conclusion based on the findings of this study is that employer participation is optimized in initiatives that achieve important STW outcomes for students and build long-term relationships between employers and schools. Another that in Florida, the STW Opportunities Act of 1994 has not resulted in substantially greater employer involvement in building a STW system. ^