Innovation sources and productivity in Catalonian firms: a quantile regression analysis

This paper explores the effects of two main sources of innovation - intramural and external R&D— on the productivity level in a sample of 3,267 Catalonian firms. The data set used is based on the official innovation survey of Catalonia which was a part of the Spanish sample of CIS4, covering the years 2002-2004. We compare empirical results by applying usual OLS and quantile regression techniques both in manufacturing and services industries. In quantile regression, results suggest different patterns at both innovation sources as we move across conditional quantiles. The elasticity of intramural R&D activities on productivity decreased when we move up the high productivity levels both in manufacturing and services sectors, while the effects of external R&D rise in high-technology industries but are more ambiguous in low-technology and knowledge-intensive services. JEL codes: O300, C100, O140 Keywords: Innovation sources, R&D, Productivity, Quantile Regression

A randomized controlled clinical trial evaluating the performance and safety of platelets treated with MIRASOL pathogen reduction technology.

BACKGROUND: Pathogen reduction of platelets (PRT-PLTs) using riboflavin and ultraviolet light treatment has undergone Phase 1 and 2 studies examining efficacy and safety. This randomized controlled clinical trial (RCT) assessed the efficacy and safety of PRT-PLTs using the 1-hour corrected count increment (CCI(1hour) ) as the primary outcome. STUDY DESIGN AND METHODS: A noninferiority RCT was performed where patients with chemotherapy-induced thrombocytopenia (six centers) were randomly allocated to receive PRT-PLTs (Mirasol PRT, CaridianBCT Biotechnologies) or reference platelet (PLT) products. The treatment period was 28 days followed by a 28-day follow-up (safety) period. The primary outcome was the CCI(1hour) determined using up to the first eight on-protocol PLT transfusions given during the treatment period. RESULTS: A total of 118 patients were randomly assigned (60 to PRT-PLTs; 58 to reference). Four patients per group did not require PLT transfusions leaving 110 patients in the analysis (56 PRT-PLTs; 54 reference). A total of 541 on-protocol PLT transfusions were given (303 PRT-PLTs; 238 reference). The least square mean CCI was 11,725 (standard error [SE], 1.140) for PRT-PLTs and 16,939 (SE, 1.149) for the reference group (difference, -5214; 95% confidence interval, -7542 to -2887; p<0.0001 for a test of the null hypothesis of no difference between the two groups). CONCLUSION: The study failed to show noninferiority of PRT-PLTs based on predefined CCI criteria. PLT and red blood cell utilization in the two groups was not significantly different suggesting that the slightly lower CCIs (PRT-PLTs) did not increase blood product utilization. Safety data showed similar findings in the two groups. Further studies are required to determine if the lower CCI observed with PRT-PLTs translates into an increased risk of bleeding.

Product differentiation, competitive pressure and the effects of innovation on the success and survivability of firms in oligopoly markets

In a recent paper Tishler and Milstein (2009) fi…nd that increased competition may increase aggregate R&D spending while market output decreases. Therefore, they obtain the surprising result that R&D spending is excessive when competition becomes intense. Their result is based on the standard linear demand function for differentiated products introduced by Bowley (1924) where decreased product differentiation is interpreted as more competitive pressure. In this paper I show that at an aggregate level this interpretation is problematic because equilibrium effects are dominated by a demand reduction effect. A slight modifi…cation of the standard demand function eliminates this effect. For the Tishler and Milstein (2009) setting it is shown that then increased competition increases both R&D spending and aggregate market output. Therefore, at least for consumers, more intense competition increases welfare. Journal of Economic Literature Classi…fication Numbers: D43, L1, O3. Keywords: Oligopoly markets, Product differentiation, Competitive pressure.

Innovation or Imitation? The effect of spillovers and competitive pressure on firms' R&D strategy choice

This article provides a theoretical and empirical analysis of a firm's optimal R&D strategy choice. In this paper a firm's R&D strategy is assumed to be endogenous and allowed to depend on both internal firms. characteristics and external factors. Firms choose between two strategies, either they engage in R&D or abstain from own R&D and imitate the outcomes of innovators. In the theoretical model this yields three types of equilibria in which either all firms innovate, some firms innovate and others imitate, or no firm innovates. Firms'equilibrium strategies crucially depend on external factors. We find that the efficiency of intellectual property rights protection positively affects firms'incentives to engage in R&D, while competitive pressure has a negative effect. In addition, smaller firms are found to be more likely to become imitators when the product is homogeneous and the level of spillovers is high. These results are supported by empirical evidence for German .rms from manufacturing and services sectors. Regarding social welfare our results indicate that strengthening intellectual property protection can have an ambiguous effect. In markets characterized by a high rate of innovation a reduction of intellectual property rights protection can discourage innovative performance substantially. However, a reduction of patent protection can also increase social welfare because it may induce imitation. This indicates that policy issues such as the optimal length and breadth of patent protection cannot be resolved without taking into account specific market and firm characteristics. Journal of Economic Literature Classification Numbers: C35, D43, L13, L22, O31. Keywords: Innovation; imitation; spillovers; product differentiation; market competition; intellectual property rights protection.

Profitability, uncertainty and multi-product firm product proliferation: The Spanish car industry

This article studies how product introduction decisions relate to profitability and uncertainty in the context of multi-product firms and product differentiation. These two features, common to many modern industries, have not received much attention in the literature as compared to the classical problem of firm entry, even if the determinants of firm and product entry are quite different. The theoretical predictions about the sign of the impact of uncertainty on product entry are not conclusive. Therefore, an econometric model relating firms’ product introduction decisions with profitability and profit uncertainty is proposed. Firm’s estimated profits are obtained from a structural model of product demand and supply, and uncertainty is proxied by profits’ variance. The empirical analysis is carried out using data on the Spanish car industry for the period 1990-2000. The results show a positive relationship between product introduction and profitability, and a negative one with respect to profit variability. Interestingly, the degree of uncertainty appears to be a driving force of entry stronger than profitability, suggesting that the product proliferation process in the Spanish car market may have been mainly a consequence of lower uncertainty rather than the result of having a more profitable market. Keywords: Product introduction, entry, uncertainty, multiproduct firms, automobile JEL codes: L11, L13

Speech by Mr Micheál Martin TD at Launch of Pre-Registration Nursing Degree Programme

Good afternoon ladies and gentlemen. I am very pleased that you were all able to accept my invitation to join me here today on this landmark occasion for nursing education. It is fitting that all of the key stakeholders from the health and education sectors should be so well represented at the launch of an historic new development. Rapid and unpredictable change throughout society has been the hallmark of the twenty-first century, and healthcare is no exception. Regardless of what change occurs, no one doubts that nursing is intrinsic to the health of this nation. However, significant changes in nurse education are now needed if the profession is to deliver on its social mandate to promote people´s health by providing excellent and sensitive care. As science, technology and the demands of the public for sophisticated and responsive health care become increasingly complex, it is essential that the foundation of nursing education is redesigned. Pre-registration nursing education has already undergone radical change over the past eight years, during which time it has moved from an apprenticeship model of education and training to a diploma based programme firmly rooted in higher education. The Secretary General of my Department, Michael Kelly, played a leading role in bringing about this transformation, which has greatly enhanced the way students are prepared for entry to the nursing profession. The benefits of the revised model of education are clearly evident from the quality of the nurses graduating from the diploma programme. The Commission on Nursing examined the whole area of nursing education, and set out a very convincing case for educating nursing students to degree level. It argued that nurses of the future would be required to possess increased flexibility and the ability to work autonomously. A degree programme would provide nurses with a theoretical underpinning that would enable them to develop their clinical skills to a greater extent and to respond to future challenges in health care, for the benefit of patients and clients of the health services. The Commission has provided a solid framework for the professional development of nurses and midwives, including a process that is already underway for the creation of clinical nurse specialist and advanced nurse practitioner posts. This process will facilitate the transfer of skills across divisions of nursing. In this scenario, it is clearly desirable that the future benchmark qualification for registration as a nurse should be a degree in nursing studies. A Nursing Education Forum was established in early 1999 to prepare a strategic framework for the implementation of a nursing degree programme. When launching the Forum´s report last January, I indicated that the Government had agreed in principle to the introduction of the proposed degree programme next year. At the time two substantial outstanding issues had yet to be resolved, namely the basis on which nurse teachers would transfer from the health sector to the education sector and the amount of capital and revenue funding required to operate the degree programme. My Department has brokered agreements between the Nursing Alliance and the Higher Education Institutions for the assimilation of nurse teachers as lecturers into their affiliated institutions. The terms of these agreements have been accepted by all four nursing unions following a ballot of their nurse teacher members. I would like to pay particular tribute to all nurse teachers who have contributed to shaping the position, relevance and visibility of nursing through leadership, which embodies scholarship and excellence in the profession of nursing itself. In response to a recommendation of the Nursing Education Forum, I established an Inter-Departmental Steering Committee, chaired by Bernard Carey of my Department, to consider all the funding and policy issues. This Steering Committee includes representatives of the Department of Finance and the Department of Education and Science as well as the Higher Education Authority. The Steering Committee has been engaged in intensive negotiations with representatives of the Conference of Heads of Irish Universities and the Institutes of Technology in relation to their capital and revenue funding requirements. These negotiations were successfully concluded within the past few weeks. The satisfactory resolution of the industrial relations and funding issues cleared the way for me to go to the Government with concrete proposals for the implementation of degree level education for nursing students. I am delighted to announce here today that the Government has approved all of my proposals, and that a four-year undergraduate pre-registration nursing degree programme will be implemented on a nation-wide basis at the start of the next academic year, 2002/2003. The Government has approved the provision of capital funding totalling £176 million pounds for a major building and equipment programme to facilitate the full integration of nursing students into the higher education sector. This programme is due to be completed by September 2004, and will ensure that nursing students are accommodated in purpose built schools of nursing studies with state of the art clinical skills and human science laboratories at thirteen higher education sites throughout the country. The Government has also agreed to make available the substantial additional revenue funding required to support the nursing degree programme. By 2006, the full year cost of operating the programme will rise to some £43 million pounds. The scale of this investment in pre-registration nursing education is enormous by any yardstick. It demonstrates the firm commitment of myself and my Government colleagues to the full implementation of the recommendations of the Commission on Nursing, of which the introduction of pre-registration degree level education is arguably the most important. This historic decision, and it is truly historic, will finally put the education of nurses on a par with the education of other health care professionals. The nursing profession has long been striving for parity, and my own involvement in the achievement of it is a matter of deep personal satisfaction to me. I am also pleased to announce that the Government has approved my plans for increasing the number of nursing training places to coincide with the implementation of the degree programme next year. Ninety-three additional places in mental handicap and psychiatric nursing will be created at Athlone, Letterkenny, Tralee and Waterford Institutes of Technology. This will yield 392 extra places over the four years of the degree programme. A total of 1,640 places annually on the new degree programme will thus be available. This is an all-time record, and maintaining the annual student intake at this level for the foreseeable future is a key element of my overall strategy for ensuring that we produce sufficient “home-grown” nurses for our health services. I am aware that the Nursing Alliance were anxious that some funding would be provided for the further academic career development of nurse teachers who transfer to one of the six Universities that will be involved in the delivery of the degree programme. I am happy to confirm that up to £300,000 in total per year will be available for this purpose over the first four years of the degree programme. In line with a recommendation of the Commission on Nursing, my Department will have responsibility for the administration of the nursing degree budget until the programme has been bedded down in the higher education sector. A primary concern will be to ensure that the substantial capital and revenue funding involved is ring-fenced for nursing studies. It is intended that responsibility for the budget will be transferred to the Department of Education and Science after the first cohort of nursing degree students have graduated in 2006. In the context of today´s launch, it is relevant to refer to a special initiative that I introduced last year to assist registered nurses wishing to undertake part-time nursing degree courses. Under this initiative, nurses are entitled to have their course fees paid by their employers in return for a commitment to continue working in the public health service for a period following completion of the course. This initiative has proved extremely popular with large numbers of nurses availing of it. I want to confirm here today that the free fees initiative will continue in operation until 2005, at a total cost of at least £15 million pounds. I am giving this commitment in order to assure this year´s intake of nursing students to the final diploma programmes that fee support for a part-time nursing degree course will be available to them when they graduate in three years time. The focus of today´s celebration is rightly on the landmark Government decision to implement the nursing degree programme next year. As Minister for Health and Children, and as a former Minister for Education, I also have a particular interest in the educational opportunities available to other health service workers to upgrade their skills. I am pleased to announce that the Government has approved my proposals for the introduction of a sponsorship scheme for suitable, experienced health care assistants who wish to become nurses. This new scheme will commence next year and will be administered by the health boards. Successful applicants will be allowed to retain their existing salaries throughout the four years of the degree programme in return for a commitment to work as nurses for their health service employer for a period of five years following registration. Up to forty sponsorships will be available annually. The new scheme will enable suitable applicants to undertake nursing education and training without suffering financial hardship. The greatest advantage of the scheme will be the retention by the public health service of staff who are supported under it, since they will have had practical experience of working in the service and their own personal commitment to upgrading their skills will be informed by that experience. I am confident that the sponsorship scheme will be warmly welcomed by health service unions representing care assistants as providing an exciting new career development path for their members. Education and health are now the two pillars upon which the profession of nursing rests. We must continue to build bridges, even tunnels where needed to strengthen this partnership. We must all understand partnerships donâ?Tt just happen they are designed and must be worked at. The changes outlined here today are powerful incentives for those in healthcare agencies, academic institutions and regulatory bodies to design revolutionary programmes capable of shaping a critical mass of excellent practitioners. You have an opportunity, greater perhaps than has been granted to any other generation in history to make certain those changes are for the good. Ultimately changes that will make the country a healthier and more equitable place to live. The challenge relates to building a seamless preparatory programme which equally respects both education and practise as an indivisible duo whilst ensuring that high tech does not replace the human touch. This is a special day in the history of the development of the Irish nursing profession, and I would like to thank everybody for their contribution. I want to express my particular appreciation of two people who by this stage are well known to all of you – Bernard Carey of my Department and Siobhán O´Halloran of the National Implementation Committee. Bernard and Siobhán have devoted considerable time and energy to the project on my behalf over the past fourteen months or so. That we are here today celebrating the launch of degree level education is due in no small part to their successful execution of the mandate that I gave them. We live in a rapidly changing world, one in which nursing can no longer rely on systems of the past to guide it through the new millennium. In terms of contemporary healthcare, nursing is no longer just a reciprocal kindness but rather a highly complex set of professional behaviours, which require serious educational investment. Pre-registration nurse education will always need development and redesign to ensure our health care system meets the demands of modern society. Nothing is finite. Today more than ever the health system is dependent on the resourcefulness of nursing. I have no doubt that the new educational landscape painted will ensure that nurses of the future will be increasingly innovative, independent and in demand. The unmistakable message from my Department is that nursing really matters. Thank you.

Conceptual models for designing information systems supporting the strategic analysis of technology environments

1 6 STRUCTURE OF THIS THESIS -Chapter I presents the motivations of this dissertation by illustrating two gaps in the current body of knowledge that are worth filling, describes the research problem addressed by this thesis and presents the research methodology used to achieve this goal. -Chapter 2 shows a review of the existing literature showing that environment analysis is a vital strategic task, that it shall be supported by adapted information systems, and that there is thus a need for developing a conceptual model of the environment that provides a reference framework for better integrating the various existing methods and a more formal definition of the various aspect to support the development of suitable tools. -Chapter 3 proposes a conceptual model that specifies the various enviromnental aspects that are relevant for strategic decision making, how they relate to each other, and ,defines them in a more formal way that is more suited for information systems development. -Chapter 4 is dedicated to the evaluation of the proposed model on the basis of its application to a concrete environment to evaluate its suitability to describe the current conditions and potential evolution of a real environment and get an idea of its usefulness. -Chapter 5 goes a step further by assembling a toolbox describing a set of methods that can be used to analyze the various environmental aspects put forward by the model and by providing more detailed specifications for a number of them to show how our model can be used to facilitate their implementation as software tools. -Chapter 6 describes a prototype of a strategic decision support tool that allow the analysis of some of the aspects of the environment that are not well supported by existing tools and namely to analyze the relationship between multiple actors and issues. The usefulness of this prototype is evaluated on the basis of its application to a concrete environment. -Chapter 7 finally concludes this thesis by making a summary of its various contributions and by proposing further interesting research directions.

Three essays in international finance

Executive Summary The first essay of this dissertation investigates whether greater exchange rate uncertainty (i.e., variation over time in the exchange rate) fosters or depresses the foreign investment of multinational firms. In addition to the direct capital financing it supplies, foreign investment can be a source of valuable technology and know-how, which can have substantial positive effects on a host country's economic growth. Thus, it is critically important for policy makers and central bankers, among others, to understand how multinationals base their investment decisions on the characteristics of foreign exchange markets. In this essay, I first develop a theoretical framework to improve our knowledge regarding how the aggregate level of foreign investment responds to exchange rate uncertainty when an economy consists of many firms, each of which is making decisions. The analysis predicts a U-shaped effect of exchange rate uncertainty on the total level of foreign investment of the economy. That is, the effect is negative for low levels of uncertainty and positive for higher levels of uncertainty. This pattern emerges because the relationship between exchange rate volatility and 'the probability of investment is negative for firms with low productivity at home (i.e., firms that find it profitable to invest abroad) and the relationship is positive for firms with high productivity at home (i.e., firms that prefer exporting their product). This finding stands in sharp contrast to predictions in the existing literature that consider a single firm's decision to invest in a unique project. The main contribution of this research is to show that the aggregation over many firms produces a U-shaped pattern between exchange rate uncertainty and the probability of investment. Using data from industrialized countries for the period of 1982-2002, this essay offers a comprehensive empirical analysis that provides evidence in support of the theoretical prediction. In the second essay, I aim to explain the time variation in sovereign credit risk, which captures the risk that a government may be unable to repay its debt. The importance of correctly evaluating such a risk is illustrated by the central role of sovereign debt in previous international lending crises. In addition, sovereign debt is the largest asset class in emerging markets. In this essay, I provide a pricing formula for the evaluation of sovereign credit risk in which the decision to default on sovereign debt is made by the government. The pricing formula explains the variation across time in daily credit spreads - a widely used measure of credit risk - to a degree not offered by existing theoretical and empirical models. I use information on a country's stock market to compute the prevailing sovereign credit spread in that country. The pricing formula explains a substantial fraction of the time variation in daily credit spread changes for Brazil, Mexico, Peru, and Russia for the 1998-2008 period, particularly during the recent subprime crisis. I also show that when a government incentive to default is allowed to depend on current economic conditions, one can best explain the level of credit spreads, especially during the recent period of financial distress. In the third essay, I show that the risk of sovereign default abroad can produce adverse consequences for the U.S. equity market through a decrease in returns and an increase in volatility. The risk of sovereign default, which is no longer limited to emerging economies, has recently become a major concern for financial markets. While sovereign debt plays an increasing role in today's financial environment, the effects of sovereign credit risk on the U.S. financial markets have been largely ignored in the literature. In this essay, I develop a theoretical framework that explores how the risk of sovereign default abroad helps explain the level and the volatility of U.S. equity returns. The intuition for this effect is that negative economic shocks deteriorate the fiscal situation of foreign governments, thereby increasing the risk of a sovereign default that would trigger a local contraction in economic growth. The increased risk of an economic slowdown abroad amplifies the direct effect of these shocks on the level and the volatility of equity returns in the U.S. through two channels. The first channel involves a decrease in the future earnings of U.S. exporters resulting from unfavorable adjustments to the exchange rate. The second channel involves investors' incentives to rebalance their portfolios toward safer assets, which depresses U.S. equity prices. An empirical estimation of the model with monthly data for the 1994-2008 period provides evidence that the risk of sovereign default abroad generates a strong leverage effect during economic downturns, which helps to substantially explain the level and the volatility of U.S. equity returns.

Innovation strategies in the presence of technology markets: evidence from spanish innovative firms

The development of markets for technology has eased the acquisition of technology and reshaped the innovation strategies of firms that we classify as producers of innovations or as imitators. Innovative activities of firms include research, acquisition of technology and downstream activities. Within an industry, firms producing innovations tend to conduct more research and downstream activities than those imitating innovations. Acquisition of technology is equally important for both. To implement innovation strategies, firms producing innovations require both the capability to scan the external environment for technology and the capability to integrate new technology. Firms producing innovations require both, while firms imitating innovations require scan capabilities only

Direct and indirect subsidies in markets with system goods in the presence of externalities. Preliminary version

This paper derives a model of markets with system goods and two technological standards. An established standard incurs lower unit production costs but causes a negative externality. The paper derives the conditions for policy intervention and compares the effect of direct and indirect cost-reducing subsidies in two markets with system goods in the presence of externalities. If consumers are committed to the technology by purchasing one of the components, direct subsidies are preferable. For a medium-low cost difference between technological standards and a low externality cost it is optimal to provide a direct subsidy only to the first technology adopter. As the higher the externality cost raises, the more technology adopters should be provided with direct subsidies. This effect is robust in all extensions. In the absence of consumers commitment to a technological standard indirect and direct subsidies are both desirable. In this case, the subsidy to the first adopter is lower then the subsidy to the second adopter. Moreover, for the low cost difference between technological standards and low externality cost the fi rst fi rm chooses a superior standard without policy intervention. Finally, a perfect compatibility between components based on different technological standards enhances an advantage of indirect subsidies for medium-high externality cost and cost difference between technological standards. Journal of Economic Literature Classi fication Numbers: C72, D21, D40, H23, L13, L22, L51, O25, O33, O38. Keywords: Technological standards; complementary products; externalities; cost-reducing subsidies; compatibility.

The Outlook for Asian Dairy Markets: The Role of Demographics, Income, and Prices, June 2005

The paper first presents a 10-year outlook for major Asian dairy markets (China, India, Indonesia, Japan, South Korea, Malaysia, the Philippines, Thailand, and Vietnam) based on a world dairy model. Then, using Heien and Wessells’s technique, dairy product consumption growth is decomposed into contributions generated by income growth, population growth, price change, and urbanization and these contributions are quantified. Using the world dairy model, the paper also analyzes the impacts of alternative assumptions of higher income levels and technology development in Asia on Asian dairy consumptions and world dairy prices. The outlook projects that Asian dairy consumption will continue to grow strongly in the next decade. The consumption decomposition suggests that the growth would be mostly driven by income and population growth and, as a result, would raise world dairy prices. The simulation results show that technology improvement in Asian countries would dampen world dairy prices and meanwhile boost domestic dairy consumption.

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.

A New Model for Designing a Product Line Using TURF Analysis

This paper introduces the approach of using TURF analysis to design a product line through a binary linear programming model. This improves the efficiency of the search for the solution to the problem compared to the algorithms that have been used to date. Furthermore, the proposed technique enables the model to be improved in order to overcome the main drawbacks presented by TURF analysis in practice.

An Analysis of the Link between Ethanol, Energy, and Crop Markets, November 2006

This study analyzes the impact of price shocks in three input and output markets critical to ethanol: gasoline, corn, and sugar. We investigate the impact of these shocks on ethanol and related agricultural markets in the United States and Brazil. We find that the composition of a country’s vehicle fleet determines the direction of the response of ethanol consumption to changes in the gasoline price. We also find that a change in feedstock costs affects the profitability of ethanol producers and the domestic ethanol price. In Brazil, where two commodities compete for sugarcane, changes in the sugar market affect the competing ethanol market.