Demand-based structural change and balanced economic growth

[eng] We analyze the equilibrium of a multi-sector exogenous growth model where the introduction of minimum consumption requirements drives structural change. We show that equilibrium dynamics simultaneously exhibt structural change and balanced growth of aggregate variables as is observed in US when the initial intensity of minimum consumption requirements is sufficiently small. This intensity is measured by the ratio between the aggregate value of the minimum consumption requirements and GDP and, therefore, it is inversely related with the level of economic development. Initially rich economies benefit from an initially low intensity of the minimum consumption requirements and, as a consequence, these economies end up exhibiting balanced growth of aggregate variables, while there is structural change. In contrast, initially poor economies suffer from an initially large intensity of the minimum consumption requirements, which makes the growth of the aggregate variables unbalanced during a very large period. These economies may never exhibit simultaneously balanced growth of aggregate variables and structural change.

International Expansion, Diversification and Regulated Firm Nonmarket Strategy

Previous studies have shown that regulated firms diversify for reasons that are different than for unregulated firms. We explore some of these differences by providing a theoretical model that starts by considering the firm-regulator relationship as an incomplete information issue, in which a regulated incumbent has knowledge that the regulator does not have, but the firm cannot convey hard information about this knowledge. The incumbent faces both market and nonmarket competition from a new entrant. In that context, we show that when the firm faces tough nonmarket competition domestically, going abroad can create a mechanism that makes information transmission to the regulator more credible. International expansion can thus be a way to solve domestic nonmarket issues in addition to being a catalyst for growth.

Metsäpalveluyritysten menestyminen ja siihen vaikuttavat tekijät

Tutkimuksessa kartoitettiin metsäpalveluyritysten toimintaympäristöä sekä menestymistä ja siihen vaikuttavia tekijöitä. Tutkimusta varten haastateltiin 27 metsäpalveluyrittäjää kesäkuussa 1999. Heikommin menestyneiden ja Menestyneimpien metsäpalveluyritysten löytämiseksi luotiin kaksi menestyspistejärjestelmää: KASKARA (KASvu, KAnnattavuus & RAhoitus) -mittaristo ja Tasapainotettu (Balanced Scorecard) mittaristo. KASKARA-mittaristossa tarkastelun kohteena olivat yrityksen kasvu (yrityksen liikevaihdon kasvuprosentti ja investoinnit) ja kannattavuus sekä rahoituksellinen tila (maksuvalmius ja vakavaraisuus) yrittäjän itsensä arvioimana. Toisaalta käytettäessä Tasapainotettua mittaristoa KASKARA-mittaristoon liitettiin vielä neljä muuttujaa: yrityksen tärkeimmän asiakkaan antama palaute yrittäjälle, yrittäjän hankkima täydennyskoulutus, kovien kilpailijoiden lukumäärä yrityksen nykyisellä toiminta-alueella ja yrittäjän oma arvio yrityksensä paremmuudesta kilpailijoihin nähden. Tutkimuksen Menestyneimpiä yrityksiä voitiin kuvata seuraavasti: yrittäjä kertoi olleensa luottavainen yritystä perustaessaan; yhtenä tärkeimmistä motiiveista yrityksensä perustamiseen yrittäjä piti pyrkimystä ansiotulojen kasvattamiseen; hieman alle puolet yrityksistä oli hakkuuseen painottuneita yrityksiä - muut päätoimialat olivat puukauppa, metsätalouden suunnittelupalvelut sekä mittauspalvelut; yrittäjän lisäksi yritykseen on palkattu keskimäärin kaksi vakinaista työntekijää; yrityksen kirjanpidosta huolehtii joku muu (useimmiten tilitoimisto) kuin yrittäjä; yrityksen kaluston määrä on kasvanut yrityksen perustamisvuodesta, mutta yrityksen asiakaskunta on pysynyt lähes samana; yrityksen tärkeimmän asiakkaan osuus yrityksen liikevaihdosta on 90%; tulevaisuudessa yrittäjä haluaa ylläpitää nykyisiä asiakassuhteita; ja kartoitettaessa yrittäjän halukkuutta ryhtyä uudelleen yrittäjäksi saamien kokemustensa pohjalta valtaosin yrittäjät sanoivat varmasti ryhtyvänsä uudelleen metsäpalveluyrittäjäksi. Vastaavasti Heikommin menestyneitä yrityksiä ja niiden toimintaa voitiin luonnehtia seuraavien tekijöiden avulla: yrittäjä oli ollut iältään yli 40-vuotias, kun hän oli perustanut metsäpalveluyrityksensä; yrittäjä oli toiminut maanviljelijänä ennen metsäpalveluyrittäjäuraansa; lähes puolet yrittäjistä olivat olleet melko epävarmoja yritystä käynnistäessään; yrityksen päätoimiala on useimmiten hakkuu; yrityksessä ei ole yrittäjän lisäksi palkattua, vakinaista henkilöstöä; yrityksen toiminta-alueen säde on alle 40 kilometriä; valtaosin yrittäjät hoitavat itse yrityksensä kirjanpidon; yrityksen kaluston määrä ei ole kasvanut yrityksen perustamisvuodesta; yrityksellä on nykyisin alle viisi asiakasta; tärkeimmän asiakkaan osuus yrityksen liikevaihdosta on noin 60%; tulevaisuudessa yrittäjä suunnittelee hankkivansa uusia asiakkaita nykyisten asiakassuhteiden ylläpidon lisäksi; ja jos yrittäjä saisi tehdä uudelleen yrityksensä perustamispäätöksen, runsas kaksi kolmasosaa yrittäjistä kertoi harkitsevansa tarkkaan perustamispäätöstä, mutta perustavansa uudelleen metsäpalveluyrityksen.

Labor market experience and well-being after firm closure. Survey evidence on displaced manufacturing workers in Switzerland

This study examines how plant closure affected individuals' careers and lives about two years after they lost their job. We analyze the displaced workers' reemployment prospects and study for reemployed workers the characteristics of their new jobs in terms of reemployment sectors, wages, and job quality. Additionally, we inquire how workers' sociability and subjective well-being were affected by job loss. Our analysis is based on our own survey conducted in Switzerland in 2011. The survey included the workforce of five manufacturing companies that had closed down two years earlier. We addressed the risk of biases typically prevailing with observational data by complementing it with register data from the public unemployment insurance. Moreover, we use a control group based on matched data from the Swiss Household Panel. We find that workers experience strongly diverging outcomes after plant closure: on the one hand, high proportions of the workers experience a smooth transition after plant closure. More than two-thirds of the workers returned to employment, more than half of them within less than six months. With respect to their social lives, we find that positive changes in relationships with their spouse, family and friends are more frequent than negative changes. On the other hand, for a small group of workers plant closure had a detrimental effect. Close to twenty percent remained unemployed. About ten percent of the workers were long-term unemployed and subsequently often were reemployed in jobs of lower quality. Unemployed workers and workers who dropped out of the labor force were particularly prone to find their subjective well-being decreasing. The most vulnerable subgroup in our study were workers over 55. This result stands in striking contrast to a large body of literature that considers labor market institutions to be primarily biased against young workers. Our findings show that older workers not only take longer to find a job but are also less likely to return to employment. Moreover, if they manage to find a job, they experience the severest cuts in wages and job quality of all cohorts. From a life-course perspective this result is remarkable since it shows that workers are not protected from hardship in their late careers. In light of the current demographic changes this finding may have important policy implications. -- Cette étude analyse l'impact des fermetures d'entreprises sur les travailleurs licenciés. Plus précisément, nous examinons les chances de réinsertion des travailleurs dans le marché du travail et - pour ceux qui l'ont fait avec succès - dans quels secteurs, pour quels salaires et avec quelle qualité d'emploi ils sont réengagés. Nous nous intéressons également aux répercussions engendrées par la perte de l'emploi sur la sociabilité et le bien-être subjectif des travailleurs concernés. Notre analyse se base sur les données d'une enquête que nous avons menée en 2011. Cette enquête cible le personnel de cinq entreprises industrielles suisses qui avaient fermé leurs portes deux ans auparavant. Pour dépasser les biais typiques liés aux données d'observation, nous utilisons en complément des données administratives issues de l'assurance chômage publique. De plus, nous utilisons un groupe de contrôle basé sur des données appariées provenant du Panel Suisse de Ménage. Nos analyses montrent des résultats fortement contrastés. D'un côté, la majeure partie des travailleurs ont vécu une transition professionnelle plutôt facile : plus des deux tiers des personnes ont retrouvé un travail et parmi elles plus de la moitié en moins de six mois. Par rapport aux relations sociales, tant avec leur partenaire, qu'avec les membres de leur famille et leurs amis, les changements expérimentés étaient plus fréquemment positifs que négatifs. De l'autre côté, cependant, pour une petite partie de travailleurs la fermeture de leur entreprise a eu des conséquences très négatives sur leur carrière et leur bien-être. Au moment de notre enquête, presque vingt pourcents des travailleurs étaient au chômage. Les personnes au chômage et celles qui avaient quitté le marché du travail ont été particulièrement affectées par une diminution de leur bien-être subjectif. Les plus vulnérables parmi les travailleurs licenciés étaient ceux qui étaient âgés de plus de 55 ans. Notre analyse montre que les travailleurs âgés ont beaucoup moins fréquemment retrouvé un travail. Pour les personnes de plus de 55 ans qui ont tout de même retrouvé un emploi, la réinsertion a durée plus longtemps, les pertes de salaire étaient plus conséquentes et la diminution de la qualité de l'emploi plus grande que pour les autres cohortes. Au vu des changements démographiques actuels, ce résultat interpellant peut avoir des implications politiques importantes.

The Role of Railways in Export-Led Growth: The Case of Uruguay, 1870-1913

The social saving literature has highlighted the indispensable role that railways played before 1914 in several Latin American export-oriented economies, such as Mexico, Brazil and Argentina. The article analyses the case of Uruguay, a country that, by 1914, had built one of the densest railway networks in Latin America. The article shows that, in contrast to what happened in other economies of the region, the resource saving effects of the Uruguayan railways during the first globalisation were tiny due to the small share that railway output accounted for within the country's gross domestic product (GDP). Three complementary reasons are suggested to explain that result, namely: the geographical structure of the country; its sectoral specialisation; and the small scale of the Uruguayan economy. Due to these three characteristics, Uruguay was unable to benefit from railways in the way that other export-oriented Latin American economies did during the first period of globalisation. This conclusion draws attention to the geographic-specific character of railway technology.

Corporate Social and Regional Responsibility - The View of Small and Medium-sized Enterprises

The objective of this research was to understand and describe what corpo-rate social and regional responsibility is in SMEs and define the meaning of these concepts to the community and region. Corporate social respon-sibility (CSR) creates a basis for regional responsibility. Regional respon-sibility is a new concept and this research examines it from SMEs’ view-point. This is a theoretical research and the aim is to create a theoretical framework of SMEs’ corporate social and regional responsibility. This framework supports the future research on the subject. The research results show that CSR of SMEs is practical, informal and dependent on the scarce resources of SMEs. CSR is a complex and deep concept and SMEs have their own way of interpreting it. It can be stated that CSR-practises in SMEs are closely connected to employment, envi-ronment, community and supply chain. The challenge is to find motivation to socially and regionally responsible behaviour in SMEs. Benefiting from responsible behaviour and the attitude of SME’s owner-manager are the key reasons for SMEs to involve in CSR and regional responsibility. The benefits of this involvement are for example improved image, reputation and market position. CSR can also be used in SMEs as risk management tool and in cost reduction. This study indicates also that creation of strate-gic partnerships, local government participation, a proper legal system and financial support are the basic issues which support CSR of SMEs. This research showed that regional responsibility of SMEs includes active participation in regional strategy processes, L&RED initiatives and regional philanthropy. For SMEs regional responsibility means good relationships with the community and other related stakeholders, involvement in L&RED initiatives and acting responsibly towards the operating environment. In SMEs’ case this means that they need to understand the benefits of this kind of involvement in order to take action and participate. As regional responsibility includes the relationships between firm and the community, it can be stated that regional responsibility extends CSR’s view of stakeholders and emphasises both, the regional stakeholders and public-private partnerships. Community engagement and responsible be-haviour towards community can be seen as a part of SMEs’ social and regional responsibility. This study indicates that social and regional re-sponsibility of SMEs have a significant influence on the community and region where they are located. Better local and regional relationships with regional and community actors are the positive impacts of social and re-gional responsibility of SMEs. Socially and regionally responsible behav-iour creates a more positive environment and deepens the involvement of SMEs to community and L&RED initiatives.

Prospective evaluation of circulating VEGF in patients with advanced non-small cell lung cancer treated with bevacizumab, pemetrexed and cisplatin in the trial SAKK19/09.

Aim: Bevacizumab is a monoclonal antibody directed against the vascular endothelial growth factor (VEGF). The previous phase II trial ABIGAIL (Reck, 2010) suggested circulating VEGF as a prognostic, but not predictive, biomarker for patients (pts) with non-small cell lung cancer (NSCLC) treated with bevacizumab. We prospectively measured VEGF in the multicenter phase II trial SAKK19/09 (NCT01116219). Methods: SAKK19/09 enrolled 77 evaluable patients (pts) with previously untreated, advanced nonsquamous NSCLC and EGFR wild type. Pts received 4 cycles of cisplatin 75mg/m2 (or carboplatin AUC5), pemetrexed 500mg/m2 and bevacizumab 7.5mg/kg, followed by maintenance therapy with pemetrexed and bevacizumab until progression by RECIST1.1. Follow-up CT scans were performed every 6 weeks until week 54 and every 12 weeks thereafter. Baseline EDTA blood samples were sent by same-day courier to the central laboratory for centrifugation, aliquoting, and freezing. Upon completion of enrollment, aliquots were thawed, and VEGF quantification was performed centrally using Luminex® Performance Assay Human Base Kit A (R&D Systems, Abingdon, UK). The mean value was used to stratify pts into two groups (low versus high VEGF). Best response rate assessed by RECIST1.1 (CR + PR versus SD + PD). Results: Clinical results of the SAKK19/09 trial were reported previously (Gautschi, 2013). Baseline plasma VEGF was detectable in 71 of 77 (92%) evaluable patients treated with chemotherapy and bevacizumab. The mean value was 74.9 pg/ml, the median 47.5 pg/ml, and the range 3.55 to 310 pg/ml. Using the mean as a predefined cutoff value, 50 patients had low VEGF levels and 21 patients had high VEGF levels. High VEGF was significantly associated with shorter PFS (4.1 vs 8.3 months, HR = 2.56; 95%CI: 1.43- 4.57; p = 0.0015) and OS (8.7 vs 17.5 months, HR = 2.67; 95% CI: 1.37-5.20; p = 0.0041), but not with best response rate ( p = 0.2256). Conclusions: Consistent with the ABIGAIL trial, circulating VEGF was prognostic, but not predictive for response, in the current trial. Further work is ongoing to identify potentially predictive biomarkers for bevacizumab, using comprehensive proteomic analyses. Disclosure: S.I. Rothschild: I received honoraria for the participation in advisory boards from Eli Lilly and Roche and for presentations at scientific symposiums sponsored by Roche; O. Gautschi: Honoraria for advisory boards of Eli Lilly and Roche; R. Cathomas: Advisory board member: Eli Lilly. All other authors have declared no conflicts of interest.

Human Capital Composition and Economic Growth at a Regional Level

With this paper we build a two-region model where both innovation and imitation are performed. In particular imitation takes the form of technological spillovers that lagging regions may exploit given certain human capital conditions. We show how the high skill content of each region’s workforce (rather than the average human capital stock) is crucial to determine convergence towards the income level of the leader region and to exploit the technological spillovers coming from the frontier. The same applies to bureaucratic/institutional quality which are conductive to higher growth in the long run. We test successfully our theoretical result over Spanish regions for the period between 1960 and 1997. We exploit system GMM estimators which allow us to correctly deal with endogeneity problems and small sample bias.

Investigating the impact of small versus large firms on economic performance of countries and industries

Following earlier work by Audretsch et al. (2002), we assume that an optimal size-class structure exists, in terms of achieving maximal economic growth rates. Such an optimal structure is likely to exist as economies need a balance between the core competences of large firms (such as exploitation of economies of scale) and those of smaller firms (such as flexibility and exploration of new ideas). Accordingly, changes in size-class structure (i.e., changes in the relative shares in economic activity accounted for by micro, small, medium-sized and large firms) may affect macro-economic growth. Using a unique data base of the EU-27 countries for the period 2002-2008 for five broad sectors of economic activity and four size-classes, we find empirical support which suggests that, on average for these countries over this period, the share of micro and large firms may have been ‘above optimum’ (particularly in lower income EU countries) whereas the share of medium-sized firms may have been ‘below optimum’ (particularly in higher income EU countries). This evidence suggests that the transition from a ‘managed’ to an ‘entrepreneurial’ economy (Audretsch and Thurik, 2001) has not been completed yet in all countries of the EU-27. Keywords: small firms, large firms, size-classes, macro-economic performance

The Role of Firm Size in Training Provision Decisions: evidence from Spain

The level of training provided by small firms to their employees is below that provided by their larger counterparts. The provision of firm-related training is believed to be associated to certain characteristics of the firm. In this paper we argue that small firms provide fewer training opportunities as they are less likely to be associated with these characteristics than large firms. The suitability of estimating training decisions as a double-decision process is examined here: first, a firm has to decide whether to provide training or not and, second, having decided to do so, the amount of training to provide. The differences in training provision between small and large firms are decomposed in order to analyse the individual contribution of these characteristics to explaining the gap. The results show that small firms face greater obstacles in accessing training and that the main reasons for that are related to their technological activity and the geographical scope of the market in which they operate.

Decomposing differences in total factor productivity across firm size

This paper investigates the extent to which the gap in total factor productivity between small and large firms is due to differences in the endowment of factors determining productivity and to the returns associated with these factors. We place particular emphasis on the contribution of differences in the propensity to innovate and in the use of skilled labor across firms of different size. Empirical evidence from a representative sample of Spanish manufacturing firms corroborates that both differences in endowments and returns to innovation and skilled labor significantly contribute to the productivity gap between small and large firms. In addition, it is observed that the contribution of innovation to this gap is caused only by differences in quantity, while differences in returns have no effect; in the case of human capital, however, most of the effect can be attributed to increasing differences in returns between small and large firms.

Knowledge misallocation and growth

We develop a growth model where knowledge is embodied in individuals and diffused across sectors through labor mobility. The existence of labor mobility costs constrains mobility and, thus, generates labor misallocation. Different levels of labor misallocation imply different levels of exploitation of available knowledge and, therefore, different total factor productivity across countries. We derive a positive relationship between growth and labor mobility, which is consistent with the empirical evidence, by assuming aggregate constant returns to capital. We also analyze the short and long run effects of labor mobility costs in the case of decreasing returns to capital. It turns out that changes in mobility costs have larger economic effects when different types of worker have small rather than large complementarities. Finally, we show that different labor income taxes or labor market tightness imply different rates of labor mobility and, therefore, can explain differences in Gross Domestic Product across countries.

Business opportunities in power sector of Ukraine : focus small-scale hydro and wind power sectors

In the last few years, the Ukrainian investment market has constantly shown strong performance and significant growth. This is primarily due to the investment attractiveness of Ukraine. From the perspective of investments in energy sector, Ukraine can be described as a country providing significant number of opportunities to multiply invested funds. But there are numbers of risks which hamper large investments. The work objective was to discover opportunities in small-scale hydropower and wind power sectors of Ukraine and more importantly to prove economic expediency of such investments. Thesis covers major of issues, concerning entering the Ukrainian power market as a foreign investor. It provides basic information about the structure of power market, the state of renewables sector in Ukraine, development of power sector in the regions, functioning of Wholesale Electricity Market, formation of electricity prices, possibilities for implementing joint Implementation mechanism, while the most attention, nevertheless, is concentrated on the opportunities in small-scale hydro and wind power sectors. Theoretical part of the study disclosed that Crimea peninsula has perfect wind conditions and could be a prospective area for wind project development. Investment analysis revealed that project profits will be excellent if green tariff for renewable energy is adopted. By the moment uncertainties about green law adoption bring additional risk to the projects and complicate any investment decision.

The influence of strategic entrepreneurship on firm performance

In the study the recently developed concept of strategic entrepreneurship was addressed with the aim to investigate the underlying factors and components constituting the concept and their influence on firm performance. As the result of analysis of existing literature and empirical studies the model of strategic entrepreneurship for the current study is developed with the emphasis on exploration and exploitation parts of the concept. The research model is tested on the data collected in the project ―Factors of growth and success of entrepreneurial firms in Russia‖ by Center for Entrepreneurship of GSOM in 2007 containing answers of owners and managers of 500 firms operating in St. Petersburg and Moscow. Multiple regression analysis showed that exploration and exploitation presented by entrepreneurial values, investments in internal resources, knowledge management and developmental changes are significant factors constituting strategic entrepreneurship and having positive relation to firm performance. The theoretical contribution of the work is linked to development and testing of the model of strategic entrepreneurship. The results can be implemented in management practices of companies willing to engage in strategic entrepreneurship and increase their firm performance.

Application of Open Innovation Paradigm in Small and Medium Enterprises in Russia

The objective of this study is to explore how the Open Innovation paradigm is applied in by small and medium-size enterprises in Russia. The focus of the study is to understand how the processes of research and development and commercialization proceed in these kind of companies and to which extent they apply open innovation principles. Russian leadership makes certain steps for transition from the export of raw materials to an innovative model of economic growth. The research aims to disclose actual impact of these attempts. The closed innovation model and the erosion factors which lead to the destruction of an old one and emergence of new model are described. Features of open innovation implementation and intellectual property rights protection in small and medium enterprises are presented. To achieve the objective, a qualitative case study approach was chosen. Research includes facts and figures, views and opinions of management of studied companies related to innovation process in the company and in Russia in general. The research depicts the features of Open Innovation implementation by SMEs in Russia. A large number of research centers with necessary equipment and qualified personnel allow case companies to use external R&D effectively. They cooperate actively with research institutes, universities and laboratories. Thus, they apply inbound Open Innovation. On the contrary, lack of venture capital, low demand for technologies within the domestic market and weak protection of intellectual property limit the external paths to new markets. Licensing-out and creation of spin-off are isolated cases. Therefore, outbound Open Innovation is not a regular practice.