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.

Essays on Economic Integration and Labour Demand

This dissertation consists of an introductory section and three essays investigating the effects of economic integration on labour demand by using theoretical models and by empirical analysis. The essays adopt an intra-industry trade approach to specify a theoretical framework of estimation for determining the effects of economic integration on employment. In all the essays the empirical aim is to explore the labour demand consequences of European integration. The first essay analyzes how labour-demand elasticities with own price have changed during the process of economic integration. As a theoretical result, intensified trade competition increases labour-demand elasticity, whereas better advantage of economies of scale decreases labour-demand elasticity by decreasing the elasticity of substitution between differentiated products. Furthermore, if integration gives rise to an increase in input-substitutability and/or outsourcing activities, labour demand will become more elastic. Using data from the manufacturing sector from 1975 to 2002, the empirical results provide support for the hypothesis that European integration has contributed to increased elasticities of total labour demand in Finland. The second essay analyzes how economic integration affects the impact of welfare poli-cies on employment. The essay considers the viability of financing the public sector, i.e. public consumption and social security expenses, by general labour taxation in an economy which has become more integrated into international product markets. The theoretical results of the second essay indicate that, as increased trade competition crowds out better economies of scale, it becomes more costly to maintain welfare systems financed by labour taxation. Using data from European countries for the years 1975 to 2004, the empirical results provide inconsistent evidence for the hypothesis that economic integration has contributed to the distortion effects of welfare policies on employment. The third essay analyzes the impact of profit sharing on employment as a way to introduce wage flexibility into the process of economic integration. The results of the essay suggest that, in theory, the effects of economic integration on the impact of profit sharing on employment clearly depend on a trade-off between intensified competition and better advantage of economies of scale. If product market competition increases, the ability of profit sharing to improve employment through economic integration increases with moderated wages. While, the economic integration associating with market power in turn decrease the possibilities of profit sharing with higher wages to improve employment. Using data from the manufacturing sector for the years 1996 to 2004, the empirical results show that profit-sharing has a positive impact on employment during the process of European integration, but can have ambiguous effects on the stability of employment in Finland.

Sustainable bioenergy for India: Technical, economic and policy analysis

India's energy challenges are multi-pronged. They are manifested through growing demand for modern energy carriers, a fossil fuel dominated energy system facing a severe resource crunch, the need for creating access to quality energy for the large section of deprived population, vulnerable energy security, local and global pollution regimes and the need for sustaining economic development. Renewable energy is considered as one of the most promising alternatives. Recognizing this potential, India has been implementing one of the largest renewable energy programmes in the world. Among the renewable energy technologies. bioenergy has a large diverse portfolio including efficient biomass stoves, biogas, biomass combustion and gasification and process heat and liquid fuels. India has also formulated and implemented a number of innovative policies and programmes to promote bioenergy technologies. However, according to some preliminary studies, the success rate is marginal compared to the potential available. This limited success is a clear indicator of the need for a serious reassessment of the bioenergy programme. Further, a realization of the need for adopting a sustainable energy path to address the above challenges will be the guiding force in this reassessment. In this paper an attempt is made to consider the potential of bioenergy to meet the rural energy needs: (I) biomass combustion and gasification for electricity; (2) biomethanation for cooking energy (gas) and electricity; and (3) efficient wood-burning devices for cooking. The paper focuses on analysing the effectiveness of bioenergy in creating this rural energy access and its sustainability in the long run through assessing: the demand for bioenergy and potential that could be created; technologies, status of commercialization and technology transfer and dissemination in India; economic and environmental performance and impacts: bioenergy policies, regulatory measures and barrier analysis. The whole assessment aims at presenting bioenergy as an integral part of a sustainable energy strategy for India. The results show that bioenergy technology (BET) alternatives compare favourably with the conventional ones. The cost comparisons show that the unit costs of BET alternatives are in the range of 15-187% of the conventional alternatives. The climate change benefits in terms of carbon emission reductions are to the tune of 110 T C per year provided the available potential of BETs are utilized.

Essays on Russia's Economic Transition

This study comprises an introductory section and three essays analysing Russia's economic transition from the early 1990s up to the present. The papers present a combination of both theoretical and empirical analysis on some of the key issues Russia has faced during its somewhat troublesome transformation from state-controlled command economy to market-based economy. The first essay analyses fiscal competition for mobile capital between identical regions in a transition country. A standard tax competition framework is extended to account for two features of a transition economy: the presence of two sectors, old and new, which differ in productivity; and a non-benevolent regional decision-maker. It is shown that in very early phase of transition, when the old sector clearly dominates, consumers in a transition economy may be better off in a competitive equilibrium. Decision-makers, on the other hand, will prefer to coordinate their fiscal policies. The second essay uses annual data for 1992-2003 to examine income dispersion and convergence across 76 Russian regions. Wide disparities in income levels have indeed emerged during the transition period. Dispersion has increased most among the initially better-off regions, whereas for the initially poorer regions no clear trend of divergence or convergence could be established. Further, some - albeit not highly robust - evidence was found of both unconditional and conditional convergence, especially among the initially richer regions. Finally, it is observed that there is much less evidence of convergence after the economic crisis of 1998. The third essay analyses industrial firms' engagement in provision of infrastructure services, such as heating, electricity and road maintenance. Using a unique dataset of 404 large and medium-sized industrial enterprises in 40 regions of Russia, the essay examines public infrastructure provision by Russian industrial enterprises. It is found that to a large degree engagement in infrastructure provision, as proxied by district heating production, is a Soviet legacy. Secondly, firms providing district heating to users outside their plant area are more likely to have close and multidimensional relations with the local public sector.

Key drivers of the economic burden of community-associated Methicillin-resistant Staphylococcus aureus in Australia

Estimates of the economic cost of community-associated Methicillin-resistant Staphylococcus aureus(CA-MRSA) in the United States (US) are substantial, ranging from $1.4-13.8 billion. In Australia, it has been shown that rates of CA-MRSA are increasing, and individual studies have looked at the morbidity and mortality associated with CA-MRSA, however, it is not clear what is driving the economic burden of CA-MRSA at a national level. This study presents preliminary findings about the key drivers of the economic cost of CA-MRSA infections in Australia

Essays on Finnish Economic Growth and Productivity, 1860-2005

This study examines Finnish economic growth. The key driver of economic growth was productivity. And the major engine of productivity growth was technology, especially the general purpose technologies (GPTs) electricity and ICT. A new GPT builds on previous knowledge, yet often in an uncertain, punctuated, fashion. Economic history, as well as the Finnish data analyzed in this study, teaches that growth is not a smooth process but is subject to episodes of sharp acceleration and deceleration which are associated with the arrival, diffusion and exhaustion of new general purpose technologies. These are technologies that affect the whole economy by transforming both household life and the ways in which firms conduct business. The findings of previous research, that Finnish economic growth exhibited late industrialisation and significant structural changes were corroborated by this study. Yet, it was not solely a story of manufacturing and structural change was more the effect of than the cause for economic growth. We offered an empirical resolution to the Artto-Pohjola paradox as we showed that a high rate of return on capital was combined with low capital productivity growth. This result is important in understanding Finnish economic growth 1975-90. The main contribution of this thesis was the growth accounting results on the impact of ICT on growth and productivity, as well as the comparison of electricity and ICT. It was shown that ICT s contribution to GDP growth was almost twice as large as electricity s contribution over comparable periods of time. Finland has thus been far more successful as an ICT producer than a producer of electricity. Unfortunately in the use of ICT the results were still more modest than for electricity. During the end of the period considered in this thesis, Finland switched from resource-based to ICT-based growth. However, given the large dependency on the ICT-producing sector, the ongoing outsourcing of ICT production to low wage countries provides a threat to productivity performance in the future. For a developed country only change is constant and history teaches us that it is likely that Finland is obliged to reorganize its economy once again in the digital era.

Universalization of access to modern energy services in Indian households-Economic and policy analysis

Provision of modern energy services for cooking (with gaseous fuels)and lighting (with electricity) is an essential component of any policy aiming to address health, education or welfare issues; yet it gets little attention from policy-makers. Secure, adequate, low-cost energy of quality and convenience is core to the delivery of these services. The present study analyses the energy consumption pattern of Indian domestic sector and examines the urban-rural divide and income energy linkage. A comprehensive analysis is done to estimate the cost for providing modern energy services to everyone by 2030. A public-private partnership-driven business model, with entrepreneurship at the core, is developed with institutional, financing and pricing mechanisms for diffusion of energy services. This approach, termed as EMPOWERS (entrepreneurship model for provision of wholesome energy-related basic services), if adopted, can facilitate large-scale dissemination of energy-efficient and renewable technologies like small-scale biogas/biofuel plants, and distributed power generation technologies to provide clean, safe, reliable and sustainable energy to rural households and urban poor. It is expected to integrate the processes of market transformation and entrepreneurship development involving government, NGOs, financial institutions and community groups as stakeholders. (C) 2009 Elsevier Ltd. All rights reserved.

Juggling priorities: Balancing economic and social drivers to address the LLN needs of students in the VET sector

Economic success, and a commitment to the social benefits of inclusive training opportunities are important goals for public vocational education and training (VET). Currently, in Australia, VET policy is a shared responsibility between the Commonwealth and the States and Territories. Priorities for investment are juggled between: a) improving efficiency and responsiveness; and b) providing societal prosperity. Amid recent VET educational reforms and policy directives the authors of this paper undertook a pilot study examining language, literacy and numeracy support and inclusive teaching and learning practices in a Diploma of Nursing course. The data highlighted implications arising from new market driven education reforms. This article reports on identified factors that influenced inclusive learning opportunities, noticeably associated with two recent policy developments: the release of the FSK Foundation Skills Training Package (IBSA 2014); and the Queensland's Higher Skills Program Policy 2014-15.

Exploring the economic business case for incorporating biophilic urbanism

Linking sustainability, ecology and economics, this dissertation explored the decision making process for incorporating biophilic urbanism. Biophilic urbanism refers to the use of natural elements, or biophilic elements, as functional design features in urban landscapes to address climate change issues in rapidly growing economies. Informed by five global case studies, this dissertation introduced a novel term, ‘biophilic services’ to describe various characteristics that link the impact of biophilic elements to value. A model is also presented outlining underlying decision making logic for incorporating biophilic urbanism. These findings have immediate and practical implications for integrating biophilic urbanism into the fabric of the built environment.

Governing child care in neoliberal times: Discursive constructions of children as economic units and early childhood educators as investment brokers

At any given time in the field of early childhood, there are discourses at play, producing images of children, and these ways of seeing children might be competing, colliding and/or complementing each other. It is fairly widely accepted that in many countries there are versions of dominant discourses that shape and are shaped by current practices in the field of early childhood. These include (1) romantic notions of children running free and connecting with nature and (2) the ‘Bart Simpson’ version of the naughty, cute or savage child, untamed and in need of civilising. These are far from being the only two discursive constructions of children present in current policies and practices. If early childhood professionals are to be active in shaping and implementing policies that affect their work and workforce, it is important that they are aware of the forces at play. In this article, we point to another powerful discourse at play in the Australian context of early childhood education, the image of children as economic units: investments in the future. We show how a ‘moment of arising’ in contemporary policy contexts, dominated by neoliberal principles of reform and competition, has charged early childhood educators in Australia with the duties of a ‘broker’, ensuring that young children are worth the investment. In this article, we begin with (1) a key policy document in early childhood education in Australia and examine the discursive affordances which shape the document. Next, (2) we pinpoint the shifts in how the work of child care is perceived by interrogating this key policy document through a methodology of discursive analysis. We then turn attention (3) to the work of this policy document along with other discourses which directly affect images of children and the shaping role these have on the work of educators. We conclude with (4) a consideration of how the work of early childhood professionals has come to be shaped by this economic discourse, and how they are being required to both work within the policy imperatives and likely to resist this new demand of them.

Is economic valuation of ecosystem services useful to decision-makers? Lessons learned from Australian coastal and marine management

Economic valuation of ecosystem services is widely advocated as a useful decision-support tool for ecosystem management. However, the extent to which economic valuation of ecosystem services is actually used or considered useful in decision-making is poorly documented. This literature blindspot is explored with an application to coastal and marine ecosystems management in Australia. Based on a nation-wide survey of eighty-eight decision-makers representing a diversity of management organizations, the perceived usefulness and level of use of ecosystem services economic valuation in support of coastal and marine management are examined. A large majority of decision-makers are found to be familiar with economic valuation and consider it useful - even necessary - in decision-making, although this varies across decision-makers groups. However, most decision-makers never or rarely use it. The perceived level of importance and trust in estimated dollar values differ across ecosystem services, and are especially high for values that relate to commercial activities. A number of factors are also found to influence respondent’s use of economic valuation. Such findings concur with conclusions from other existing works, and are instructive to reflect on the issue of the usefulness of ESV in environmental management decision-making. They also confirm that the survey-based approach developed in this application represents a sound strategy to examine this issue at various scales and management levels.

Do inventory management practices affect economic performance? An empirical evaluation of the machine tool SMEs in Bangalore

Inventory management (IM) has a decisive role in the enhancement of manufacturing industry's competitiveness. Therefore, major manufacturing industries are following IM practices with the intention of improving their performance. However, the effort to introduce IM in SMEs is very limited due to lack of initiation, expertise, and financial constraints. This paper aims to provide a guideline for entrepreneurs in enhancing their IM performance, as it presents the results of a survey based study carried out for machine tool Small and Medium Enterprises (SMEs) in Bangalore. Having established the significance of inventory as an input, we probed the relationship between IM performance and economic performance of these SMEs. To the extent possible all the factors of production and performance indicators were deliberately considered in pure economic terms. All economic performance indicators adopted seem to have a positive and significant association with IM performance in SMEs. On the whole, we found that SMEs which are IM efficient are likely to perform better on the economic front also and experience higher returns to scale.

Building economic capability to improve the management of marine resources in Australia: Final report

FRDC project 2008/306 Building economic capability to improve the management of marine resources in Australia was developed and approved in response to the widespread recognition and acknowledgement of the importance of incorporating economic considerations into marine management in Australia and of the persistent undersupply of suitably trained and qualified individuals capable of providing this input. The need to address this shortfall received broad based support and following widespread stakeholder consultation and building on previous unsuccessful State-based initiatives, a collaborative, cross-jurisdictional cross-institutional capability building model was developed. The resulting project sits within the People Development Program as part of FRDC’s ‘investment in RD&E to develop the capabilities of the people to whom the industry entrusts its future’, and has addressed its objectives largely through three core activities: 1. The Fisheries Economics Graduate Research Training Program which provides research training in fisheries/marine economics through enrolment in postgraduate higher degree studies at the three participating Universities; 2. The Fisheries Economics Professional Training Program which aims to improve the economic literacy of non-economist marine sector stakeholders and was implemented in collaboration with the Seafood Cooperative Research Centre through the Future Harvest Masterclass in Fisheries Economics; and, 3. The Australian Fisheries Economics Network (FishEcon) which aims to strengthen research in the area of fisheries economics by creating a forum in which fisheries economists, fisheries managers and Ph.D. students can share research ideas and results, as well as news of upcoming research opportunities and events. These activities were undertaken by a core Project team, comprising economic researchers and teachers from each of the four participating institutions (namely the University of Tasmania, the University of Adelaide, Queensland University of Technology and the Commonwealth Scientific and Industrial Research Organisation), spanning three States and the Commonwealth. The Project team reported to and was guided by a project Steering Committee. Commensurate with the long term nature of the project objectives and some of its activities the project was extended (without additional resources) in 2012 to 30th June 2015.

Is it the economy, stupid? The role of social versus economic factors in people’s support for hosting the Olympic Games: Evidence from 12 democratic countries

Public referenda have gained momentum as a democratic tool to legitimize public mega projects such as hosting the Olympic Games. Interest groups in favour of hosting the Olympics therefore try to influence voters through public campaigns that primarily focus on economic benefits. However, recent studies find no or hardly any economic impact of hosting the Olympics, instead providing evidence for a positive social impact. This raises the question whether citizens consider economic or social factors when deciding on hosting the Olympics. Based on representative survey data from 12 countries, our results suggest that economic factors can influence voting behaviour, although the influence of social factors is stronger.