Embedding the 'new economy' in Europe: a study in the institutional specificities of knowledge-based growth

Aspirations for a 'new economy' currently feature prominently in the economic policy debate within the EU. So pronounced is elite interest in the 'new economy' that the issue of knowledge-based growth dominated the Special European Council organized for Lisbon in May 2000. However, the Presidential Conclusions to that Council failed to address the question of whether the European economy is institutionally compatible with knowledge-based growth. The 'new economy' is currently most developed within the United States, and the institutional specificities of the American high-tech sector suggest that it may be impossible simply to import the 'new economy' into Europe. The EU may lack both the labour market and the capital market conditions necessary for successfully embedding the 'new economy' in Europe.     

Correspondence

The viability and desirability of a finance-led growth regime is first assessed against the historical evidence about the many alternative regimes that have been proposed as successors to Fordism. A purely hypothetical model is then built by assembling various hypotheses derived from the observation of current American trends. The imposition of financial norms, such as shareholder value, requires a new and coherent architecture for the mode of governance of firms, the form of competition, the wage labour nexus and the objectives of monetary policy, public budget and tax system. According to the model, any requirement for increased profit has a variable macro-economic impact on wages and economic activity according to the size of accelerator effects and the relative importance of wage and profit in income formation. The stability of an equity-based regime depends on monetary policy which controls financial bubbles and thus the diffusion of finance may push the economy into a zone of structural instability. The next major financial crisis may originate in the USA whose economy approximates most closely to the model. But, the so-called American 'new economy' combines diverse but interdependent structural transformations: diffusion of Information and Communication Technologies, search for new rules for competition, increased flexibility in wages and employment, shift from manufacturing to services. Finance is an element in, but not the whole of, this complex emerging regime.     

The global economic crisis and domestic political agendas

There is an ongoing debate within the economic voting literature about whether the economy's salience systematically fluctuates over time or is constant. The recent global economic slowdown provides leverage to test the proposition that voters give greater weight to economic performance when it is weak. Data on voters' issue priorities from 2000 to 2011 shows that voters were more likely to consider the economy an important issue during periods of bad or volatile economic performance. A weak economy also focuses voter attention on corruption and crime while reducing attention to social policy and foreign affairs. Crime rates, terrorist attacks, globalization, and the level of development also affect the economy's place on the electoral agenda. Thus one impact of the recent financial downturn was a shift toward economic voting in countries where it was deepest.     

Colonial governmentality and the ‘economy’

Using Foucault's notion of governmentality, this paper argues that colonial governmentality in India sought to effect a new relationship between resources, population, and discipline. Drawing theoretical insights from the 'critical accounting literature' to bear on the regulation of economic activity in colonial India, the paper shows how the discursive practices of colonial governance, in particular the modalities of measurement, accounting, and classification, enabled the constitution of the 'economy'. Such statistical data generated as part of colonial administration opened up the possibility of a nationalist accounting of the exploitation of India by the colonial power.     

Critical success factors for modernising public financial management information systems in Bosnia and Herzegovina

This article identifies a number of critical factors that have contributed to the successful implementation of a public financial management information system in the Republic of Bosnia and Herzegovina (BiH). The information system, funded by USAID and implemented by Emerging Markets Group from 1999 to 2004, has revolutionised accounting practices and has contributed to a more transparent and effective public sector. This article describes the project's context and purpose, its main features, challenges and obstacles. It continues by outlining the critical success factors that have contributed to the success of the project in a challenging environment. The project was implemented in a rather unique environment since it was initiated not long after the end of the civil war and the creation of the Republic of BiH. The Republic of BiH inherited the former socialist Yugoslavian payment systems. There were no adequate public financial management systems in place, and the project team could essentially start from scratch. The project team designed and implemented an accrual accounting system, and unlike the situation in many countries, relieved the government from having to transform their financial management system from cash‐based accounting to accrual accounting. Copyright © 2005 John Wiley & Sons, Ltd.     

Exchange rate policy modeling and forecasting the exchange rate: Indian rupee vis‐à‐vis the U.S. dollar

The exchange rate is a very important key financial variable that affects decisions made by the foreign exchange investors, exporters, importers, bankers, businesses, financial institutions, policymakers, and tourists in the developed as well as the developing world. Exchange rate fluctuations affect the value of international investment portfolios, competitiveness of exports and imports, value of international reserves, currency value of debt payments, and the cost of tourists. Movements in exchange rates thus have very important implications for any country's economy's business cycle, trade, and capital flows and are therefore crucial for understanding financial developments and changes in economic policy. The study will be looking at the various aspects of country's economic policy with respect to the exchange rate and modeling and forecasting the exchange rate. The study will be analyzing India's exchange rate story and will be discussing the structure of the foreign exchange market in India in terms of participants, instruments, and trading platform as also a turnover in the Indian foreign exchange market and forward premia. The study will be attempting to develop a model for the rupee–dollar exchange rate taking into account variables from monetary and microstructure models as well as other variables including intervention by the central bank. The main focus will be on the exchange rate of the Indian rupee vis‐à‐vis the U.S. dollar, that is, the Re/$ rate. The data will be covering from January 1990 through April 2013. This study will be examining the forecasting performance of the monetary model and various extensions of it in the vector autoregressive and Bayesian vector autoregressive framework.     

The IMF's Rethink of Global Banks: Critical in Theory,Orthodox in Practice

The International Monetary Fund's (IMF) new financial interconnectedness agenda, developed in response to postcrisis calls from G20 to better understand systemic financial institutions, deploys a critical approach that stresses the spatial, political, and institutional dimensions of cross‐border financial networks. It portrays global banks as key nodes in those networks, “super‐spreaders” of systemic risk through complex business models that involve yield search, regulatory and tax arbitrage. Yet this critical view does not translate into its policy advice at country level. In regular surveillance of developing countries, the IMF remains committed to a benign view of transnational banking, even when confronted with growing cross‐border fragilities. During crises of cross‐border banking, the IMF tailors its conditionality to minimize domestic regulatory challenges to cross‐border banking models and to propose crisis measures that create new profit opportunities for transnational banks.     

The social order of Chinese capitalism: socio-economic uncertainty,communist party rule and economic development, 1990–2000

China's financially repressed economy remains characterized by a distinctly resilient political structure (the Chinese Communist Party, CCP) that penetrates both increasingly rational ‘private’ (market) and ‘public’ (state) organizations. How are we to understand the financial system's role in this persistently illiberal yet marketizing political economy? This paper develops a theory of China's financial reform as the management of socio-economic uncertainty by the CCP. Since the early 1990s, the financial system has formed a locus of the CCP's capacity both to manage and to propagate socio-economic uncertainty through the path of reform. The unique path of financial reform in China should thus not be viewed solely in terms of ‘partial’ or ‘failed’ free-market reform, but rather as the product of a more concerted vision of how the financial system enabled a mode of economic growth that combined the drive for accumulation of capital with the distinctive legacies of China's post-1989 socio-political circumstances.     

Shareholder value and Financialization: consultancy promises,management moves

In the pages of the daily financial press, 'shareholder value' is a loose rhetoric. For business consultants who sell financial metrics and implementation, shareholder value is also a product and a promise that purposive management action will be rewarded. This paper begins by considering the consultant's promise and the more guarded academic responses. It then presents empirics on micro performance and the meso limits to shareholder value and argues that most corporate managements cannot easily deliver what consultants promise and the capital markets demand. The paper ends by taking a broader view of value-based management as part of a process of financialization. If the results are contradictory and disappointing, a persistent gap between expectations and outcomes can nevertheless drive management behaviours, which change the world.     

History,Geography and the French National Space: The Question of Alsace‐Lorraine, 1914‐18

The restoration of French authority in Alsace and Lorraine, the regions ceded to the new German Empire following the Franco-Prussian war of 1870, was a major preoccupation of France's political leadership before 1914 and was the principal French war aim during World War I. This paper examines how French politicians and intellectuals sought to reinforce this territorial claim between 1914 and 1918. In the early years of the war, the propaganda campaign was dominated by conservative politicians, business élites and senior figures in the army whose preoccupations were mainly economic and strategic and whose proposals were often unrealistic. Later in the war, moderate and less obviously self-interested geopolitical arguments were developed by leading French academics, particularly the historians and the geographers, with the active support of their government. This campaign emphasised cultural, historical and political questions, drew on the ideas of earlier French theorists of the nation-state, notably Ernest Renan, and had a significant impact on the subsequent development of France's renowned interwar tradition of geo-historical research.     

New public management and the reform of French public hospitals

New public management (NPM) is not only an Anglo‐Saxon debate but also a French one, with some of its elements constituting structural components of the French state apparatus. How did it make its way into French hospitals? What core mechanism was at the center of NPM implementation in hospitals? We discuss the redisorganization of the health system under NPM, as it attempted to reassert the central government's power over regions and how it alienated the medical profession. The paper highlights inherent contradictions and other false promises within NPM. It was unable to contained cost, could no enhance accountability or increase civil participation. We then investigate post‐NPM reforms in French healthcare. Copyright © 2013 John Wiley & Sons, Ltd.     

Parity Reform in France: Promises and Pitfalls

In the 1990s, a new social movement emerged in France to address the underrepresentation of women in elected bodies and to promote womens's and men's equal representation, in French called parité. On the eve of the twenty‐first century, the movement achieved its main goal—a constitutional reform. The purpose of this article is to present both the promises of the parity movement and the limits of the reform. During the 1990s, parity reform appeared as a tool to achieve sex‐based political equality, but it was also seen as an indicator of feminist movement renewal and of improving French democracy. The legal texts adopted in 1999 and 2000 did not keep the promises of the movement. While the legal obligations and financial incentives in the reforms established new mechanisms for achieving parity between the sexes in elected office, they have not yet translated into actual parity in electoral outcomes.     

Science,enterprise and profit: ideology in the knowledge-driven economy

Key policy documents relating to the 'knowledge-driven economy' show that policy makers, university heads and other interested academics have come to view the task of creating science-based industries through the lens of enterprise ideology.Proceeding on the assumption that the scientific fundamentals are already in place, the belief is that industrial applications can be achieved by infusions of enterprise. Such a framing is attractive to those unwilling or unable to engage with the complexities of scientific research or new product development. It offers a surface intelligibility combined with an apparent amenability to straightforward policy interventions. At the same time it is quite unclear, apart from the taking of risks, what attributes and behaviours are actually involved in enterprise. Even the relevance of risk is questionable. Despite the ideological pressure to demonstrate a link between entrepreneurship and risk, none of the relevant research has succeeded in doing so. Nor has risk been a prevalent feature of new venture creation in general and science-based start-ups in particular. The policy is an act of faith, based neither on research nor on experience. Its reliance on enterprise is less a solution than a hope that one will spontaneously appear.     

The Right Mix? Gender Diversity in Top Management Teams and Financial Performance

Recent research has illustrated that demographic diversity influences the outcomes of public sector organizations. Most studies have focused on workforce diversity; by comparison, little is known about how managerial diversity affects organizational outcomes. This article focuses on gender diversity in the top management teams of public organizations and its relationship to financial performance. Theory suggests that management diversity can be a positive asset for organizations, allowing for the use of more diverse knowledge and human skill sets. Results of this study, however, suggest that organizations may only be able to leverage these advantages if they have a supporting management structure. In a longitudinal study of top management teams in Danish municipalities, the authors find that gender diversity in top management teams is associated with higher financial performance, but only in municipalities with a management structure that supports cross‐functional team work. These results are interpreted in light of existing theory, and implications are suggested.     

France and the International Financial Crisis: The Legacy of State‐Led Finance

Despite the far‐reaching liberalization of the French banking system over the past quarter century, French banks suffered far less in the international financial crisis (2007–2009) than banks in the United Kingdom and Germany. However, the French system also suffered far more—at least in the first stages of the crisis—than the banking systems of Southern Europe. By several measures, French banks were world leaders in financial innovation, and the French banking system was highly exposed to international market movements. The limited impact of the crisis, however, owed to the specificities of French “market‐based banking.” Deliberate state action over the two decades prior to the crisis created a specific kind of banking system and encouraged forms of financial innovation, the unintentional consequence of which was the limited exposure to the securitization that caused the damage wrought during the financial crisis.     

Public Financial Management Reform in South African Provincial Basic Education Departments

Since the transition to democracy in 1994, the South African government has engaged in a sustained programme of public financial management (PFM) reform across the national, provincial and local spheres of government. This study evaluates the progress of the nine provincial education departments (PEDs) in implementing the Public Finance Management Act of 1999 and explores the factors that facilitated or impeded reform. A PFM progress (PFMP) index is constructed to track each PED's performance from 1997/1998 to 2013/2014 and then used to benchmark its progress over time and relative to the education sector as a whole. The indicators comprising the PFMP index assess key PFM functions (budgeting, accounting, financial auditing and audits of performance information), financial leadership and the effectiveness of governance institutions such as audit committees. While there has been considerable progress in PFM, distinct differences in the quality and effectiveness of PFM practices across the nine PEDs remain. Stable top administrative leadership, availability of PFM skills, varying degrees of accountability and departmental capacity to establish PFM systems that conform to new accounting standards drive variances in reform outcomes. Copyright © 2016 John Wiley & Sons, Ltd.     

Does Financial Slack Reduce Municipal Short‐Term Borrowing?

Many municipal governments face the challenge of temporary cash deficits due to the mismatched schedules of cash flow‐ins and flow‐outs. To smooth the temporary deficits, they can use either internal financial resources such as financial slack or external financial resources such as short‐term borrowing. This paper applies the pecking order theory to examine municipal governments' financial preference when they experience cash flow problems. Results show that municipal governments prefer accumulated financial slack to short‐term borrowing when both options are available. This finding demonstrates financial slack's role as a convenient cash management tool in municipal financial management. It also suggests the applicability of the pecking order theory in future public financial management research.     

Local government reform in South Africa: An analysis of financial management legislative compliance by municipalities

South African local government has undergone radical transformation. The reform process included a local government financial management best‐practice technical assistance programme (MFMTAP) targeting financial management and especially budget quality reform. Dollery and Graves (2009) earlier examined the efficacy of the South African National Treasury (NT's) municipal budget funding compliance technique for measuring adherence to the Municipal Finance Management Act's (MFMA) budget funding requirements using a single metropolitan municipality case study. This article further evaluates the robustness and validity of the funding compliance instrument as a reform performance measurement tool by comparing the results of four geographically and demographically different municipalities. Also introduced is a performance ‘trend’ instrument similar to a ‘Likert scale’ for comparing municipal performance. Optimal tax revenue theory is invoked to examine this key revenue variable for producing a compliant budget. The article finds the ‘budget funding’ reform component of the Best‐Practice Technical Assistance (BPTA) programme presently ineffective and unsustainable. Copyright © 2009 John Wiley & Sons, Ltd.     

Outsourcing Myths and Workers’ Compensation Claims Administration

The outsourcing of claims administration is a feature of some Australian workers’ compensation jurisdictions. While the benefits of outsourcing in this area of public administration have often been asserted there has been a lack of research into these claims. In this article the South Australian workers’ compensation scheme is used as a case study to address whether the supposed benefits of outsourcing are soundly based. A number of other issues associated with the outsourced claims management environment are also considered as they have had an important bearing on the scheme's performance. The main finding to emerge is that outsourcing has failed to meet financial and other key objectives. Outsourcing has also created new tensions that have added to the complexities of scheme management. In light of these findings, there is a strong case that the scheme's business model should be recalibrated to facilitate a return to in‐sourced claims management.     

Guest editor's introduction

In 1933 the army of the nascent Iraqi state launched an exterminatory attack on members of the Assyrian community who had fled to Iraq during the First World War. 'The Assyrian affair' which at the time sent shock-waves around the world has now been largely forgotten. But an examination of its origins and causation reveals much about the nature and pattern of modern genocide. Levene argues that typecasting genocide as the outcome of prejudice, racism or even xenophobia, while these may be significant ingredients, proves to be insufficient as a comprehensive explanation. Rather, these factors need to be analysed within the context of an emerging international system of nation-states. This itself may be a factor in helping to catalyse the most extreme and radically ideological responses, especially from new and untried national elites seeking to overcome perceived obstacles to their state's development and genuine independence.