Exchange rate policies, patterns of specialization and economic development: theory and evidence in developing countries

The objectives of this paper are twofold. First, it intends to provide theoretical elements to analyze the relation between real exchange rates and economic development. Our main hypothesis is very much in line with the Dutch disease literature, and states that competitive currencies contribute to the existence and maintenance of the anufacturing sector in the economy. This, in turn, brings about higher growth rates in the long run, given the existence of increasing returns in the industrial sector, and its importance in generating echnological change and increasing productivity in the overall economy. The second objective of this paper is empirical. It intends to analyze examples of successful exchange rate policies, such as Chile and Indonesia in the eighties, as a benchmark for comparison with countries where currency overvaluation has taken place, such as Brazil. In the latter case, the local currency is being inflated by large capital inflows, due to high domestic interest rates and to a boom in demand and prices of commodities in the international markets. It will be argued that the industrial sector bears most of the burden when the currency appreciates, and that Brazil risks at deindustrialization if there are no changes in the exchange rate regime

Financial constraints on economic development: Theory and policy for developing countries

This article contains a theoretical and policy analysis of the financial constraints on economic development in developing countries. Following a Keynesian interpretation, it concludes that financial policies are needed to relieve these constraints, given the natural tendency of financial systems to operate in ways that are dysfunctional to economic development. It then proposes three lines of policy that take account of the special characteristics of developing countries: resource allocation policies targeted at segments of strategic importance for economic and financial development; policies to control financial and external fragility; and compensatory policies of a more interventionist cast, in particular directed credit programmes for both public- and private-sector lending to complement resource allocation policies, and countercyclical regulatory barriers so that fragility can be better controlled.

Intellectual property and development : theory and practice

Since the 1960s, many developing countries have introduced IP laws to help them in their social and economic development. Introducing these laws was considered as a civilised act and a precondition of developing countries‘ progress from being =under-developed‘ to becoming =developed‘. In 2004, Brazil and Argentina presented a comprehensive proposal on behalf of developing countries to establish the Development Agenda in the World Intellectual Property Organisation (WIPO). They put forward a view that IP laws in their current form are not helping those countries in their development, as is constantly being suggested by developed countries, and that there is a need to rethink the international IP system and the work of WIPO. The research undertaken examines the correlation between IP and social and economic development. It investigates how IP systems in developing countries could work to advance their development, especially in the context of the internet. The research considers the theory and practice of IP and development, and proposes a new IP framework which developing countries could employ to further their social and economic development.

Intellectual Property and Development : Theory and Practice

The book examines the correlation between Intellectual Property Law – notably copyright – on the one hand and social and economic development on the other. The main focus of the initial overview is on historical, legal, economic and cultural aspects. Building on that, the work subsequently investigates how intellectual property systems have to be designed in order to foster social and economic growth in developing countries and puts forward theoretical and practical solutions that should be considered and implemented by policy makers, legal experts and the Word Intellectual Property Organization (WIPO).

Cooperativism, entrepreneurship and economic development: a linking theoretical model

Cooperatives, as a kind of firms, are considered by many scholars as an remarkable alternative for overcoming the economic crisis started in 2008. Besides, there are other scholars which pointed out the important role that these firms play in the regional economic development. Nevertheless, when one examines the economic literature on cooperatives, it is detected that this kind of firms is mainly studied starting from the point of view of their own characteristics and particularities of participation and solidarity. In this sense, following a different analysis framework, this article proposes a theoretical model in order to explain the behavior of cooperatives based on the entrepreneurship theory with the aim of increasing the knowledge about this kind of firms and, more specifically, their contribution to regional economic development.

Making development simple. The genetic deterministic hypothesis for economic development

This paper discusses the dangers inherent in allempting to simplify something as complex as development. It does this by exploring the Lynn and Vanhanen theory of deterministic development which asserts that varying levels of economic development seen between countries can be explained by differences in 'national intelligence' (national IQ). Assuming that intelligence is genetically determined, and as different races have been shown to have different IQ, then they argue that economic development (measured as GDP/capita) is largely a function of race and interventions to address imbalances can only have a limited impact. The paper presents the Lynne and Vanhanen case and critically discusses the data and analyses (linear regression) upon which it is based. It also extends the cause-effect basis of Lynne and Vanhanen's theory for economic development into human development by using the Human Development Index (HDI). It is argued that while there is nothing mathematically incorrect with their calculations, there are concerns over the data they employ. Even more fundamentally it is argued that statistically significant correlations between the various components of the HDI and national IQ can occur via a host of cause-effect pathways, and hence the genetic determinism theory is far from proven. The paper ends by discussing the dangers involved in the use of over-simplistic measures of development as a means of exploring cause-effect relationships. While the creators of development indices such as the HDI have good intentions, simplistic indices can encourage simplistic explanations of under-development. (c) 2005 Elsevier B.V. All rights reserved.

Can British multinational enterprises finance economic development in South East Asia?

Purpose – The purpose of this paper is to shed new light on the debate about the role of foreign direct investment (FDI) and public policy in fostering economic development. Specifically, can the capital inflow of multinational enterprises (MNEs) and the ability of the subsidiaries to raise funds locally help promote development? This paper addresses this issue by examining the capital structure and financing sources of foreign subsidiaries of MNEs. Design/methodology/approach – This paper integrates the capital structure theories in finance with internalization theory in international business. It uses an original primary dataset collected by a survey of 101 foreign subsidiaries of British MNEs in six emerging economies in the ASEAN region. Findings – There are three significant findings. First, these subsidiaries rely heavily on internal funds generated within the MNEs and less on external debts raised in the host countries. Second, the foreign subsidiary's capital structure is influenced by the home country of origin of the parent firm and the parent firm's financing sources. Third, these subsidiaries have used the financial resources to develop business networks with local small and medium enterprises (SMEs) which contribute to economic development of the host countries. Originality/value – This paper examines the internal capital market within the MNE. It provides theoretical and empirical support for the capital structure theory of the hierarchy financing approach and also for internalization theory by addressing FDI inflows by MNEs and the raising of funds locally. These findings have important implications for public policy, namely the facilitation of MNE entry to encourage economic development.

Creativity, entrepreneurship and economic development: city-level evidence on creativity spillover of entrepreneurship

We examine the black box of creativity, entrepreneurship and economic development by asking about the mechanisms through which creativity can influence economic development in cities. We propose that, like the knowledge spillover theory of entrepreneurship, creativity spillovers occur and can be slowed by a creativity filter. We examine how creativity and entrepreneurship, and creativity and a melting pot environment, interact to influence urban economic development. Using data on 187 cities in 15 European countries for the period 1999–2009, we advance the extant literature by providing evidence on the existence and dynamics of a creativity filter.

A new broad composite model of regional economic development as a framework for research

The mechanism of regional economic development has been studied extensively by economists, geographers, town planners and other academics. The existing wide varieties of theories into regional economic development are insufficient on their own in explaining how a region can develop and prosper. Each theory has evaluated a few facets of regional economic development. Research from these different perspectives is narrow and prevents any cross-fertilization of research from all these diverse
theories.

Recognition of multiple factors affecting the development process has led the author to create a new broad composite model of regional economic development. The paper first sets out to describe and explain this broad composite model. Each of the components of this new model draws heavily upon seminal work in the field. This model proposes three rings. Each ring is at a different level of abstraction. The determinants of development described in each ring can influence each and every other determinant of development shown in the three ring structure. This model recognises that development in any centre, regional or urban, nascent or established is a composite end result of the complex interplay of all the determinants of development.

The paper then goes on to show how this model can provide a broad holistic approach to regional economic development that can assist researchers in their attempts to understand and link the various theories of regional economic development.

An integrated model of subnational regional and urban economic development : framework of analysis

The mechanism of subnational regional and urban economic development has been studied extensively by economists, geographers, town planners and other academics. The existing widely varying theories of regional economic development are insufficient on their own in explaining how a region can develop and prosper. Each theory has evaluated a few facets of regional economic development. Research from these different perspectives is narrow and prevents any cross-fertilization of research from these diverse theories. Recognition of multiple factors affecting the development process has led the author to create an integrated model of regional and urban economic development. The essay first sets out to describe and explain this integrated model. Each of the components of this new model draws heavily upon seminal work in the field. This model proposes three rings. Each ring is at a different level of abstraction. The determinants of development described in each ring can influence each and every other determinant of development shown in the three-ring structure. This model recognizes that development in any centre, be it regional or urban, nascent or established, is a composite end result of the complex interplay of all the determinants. The essay then goes on to show how this model can provide a broad holistic approach to regional economic development that can assist researchers in their attempts to understand and link its various theories.

New Zealand's perfect storm of entrepreneurship and economic development

Applying a grounded-theory approach to analyzing the Global Entrepreneurship Monitor (GEM) data, we attempt to explain why New Zealand exhibits only a moderate level of economic development despite its high level of entrepreneurship. By statistically analyzing why 34 other countries in the 2005 GEM dataset exhibit small deviations from the classical quadratic curvilinear relationship between entrepreneurship and economic development, we develop a better understanding of the entrepreneurial framework conditions underlying New Zealand’s large deviation from this trend line. Based on our findings from the GEM data we make policy recommendations that could aid in moving New Zealand (and other countries) closer toward the trend line and thus promote economic development.

The implications of embodiment and Putty-Clay to economic development

In this paper we construct and analyze a growth model with the following three ingredients. (i) Technological progress is embodied. (ii) The production function of a firm is such that the firm makes both technology upgrade as well as capital and labor decisions. (iii) The firm’s production technology is putty-clay. We assume that there are disincentives to the accumulation of capital, resulting in a divergence between the social and the private cost of investment. We solve a single firm’s problem in this environment. Then we determine general equilibrium prices of capital goods of different vintages. Using these prices we aggregate firms’ decisions and construct the theoretical analogues of National Income statistics. This generates a relationship between disincentives and per capita incomes. We analyze this relationship and show the quantitative and qualitative roles of embodiment and putty-clay. We also show how the model is taken to data, quantified and used to determine to what extent income gaps across countries can be attributed to disincentives.

Manual on economic development projects

In this study, projects are not regarded as isolated economic units; they are considered within the context of the entire economic system of which they will form a part. Thus the Manual presents both macroeconomic and microeconomic concepts. From this it must not be inferred that the Manual attempts to offer a combined microeconomic and macroeconomic theory. It seeks to contribute more to an appreciation of the problem than to its solution, thus widening the outlook of those who prepare projects so that they may make the greatest possible compilation of useful data for their economic appraisal.