Financial market efficiency in an Agrarian economy: Microeconometric analysis of the Pakistani Punjab

The shadow price of capital in production is a useful indicator of the efficacy of the rural financial system. Using data on participants and non‐participants in a small farm credit programme from the Pakistani Punjab, this article estimates the shadow price of capital. Endogenous switching regressions techniques are employed to control for the likely heterogeneity of borrowers versus non‐borrowers. Results indicate that an individual selected at random from the population of small farmers would experience a 200 per cent rate of return on the first rupee borrowed from the small farm credit programme, indicating a high shadow price of capital and a prima facie case for small farm credit programmes.     

Varieties of capitalism and the Estonian economy: Institutions,growth and crisis in a liberal market economy

This article examines Estonia's economic institutions, performance and vulnerability to the global economic crisis in the context of the varieties of capitalism framework. It shows that Estonia shares many characteristics of a liberal market economy, but that there are also some features which do not fit the classical model, notably its corporate governance institutions. It also suggests that the varieties of capitalism framework can account for key features of Estonia's economic performance, including its growth trajectory and adjustment to the global financial crisis. The article also reflects on the broader significance of these findings for understanding post-communist capitalism.     

The Russian health crisis and the economy

Russia experienced a severe health crisis in the 1990s, as reflected by a drop in life expectancy. It has been suggested in literature that this poor state of health is likely to endure and will significantly retard economic growth in the country. This paper uses evidence from other former Communist countries and studies of income–health relationship across economies to evaluate these claims. It concludes that the mortality increases of 1988–94 and 1999–2000 were the effects, rather than causes, of the economic recession. The state of health is unlikely to put a brake on future economic growth.     

Transition to a market economy and sustained growth. Implications for the post-Washington consensus

Transition to a market economy is a lengthy process comprised of various spheres of economic activities. The belief that a market economy can be introduced by “shock therapy” is wrong, and in several cases has caused more problems than it has solved. Since a market economy requires adequate institutional structures, transition can be executed only in a gradual manner. Despite the fact that so-called Washington consensus, i.e. a set of policies aiming to shift from stabilization to growth, was developed without concern for post-socialist transformation, these ideas have significantly influenced the path of thought and action in Eastern Europe and the former Soviet Union. After a decade of transition and lasting depression, a new, post-Washington consensus is developing. Major policy conclusions suggest that the core of emerging consensus, also based on the lessons from transitions, is institutional building. Only with strong institutions can liberalization and privatization put emerging post-socialist markets on the path of sustainable growth. Yet, to accomplish such a task the policy reforms must also take into consideration the need for equitable growth and the new role of the state. The latter must not retire from economic activities, but ought to change its role to support the reforms and integration of the post-socialist countries into the world economy in the era of globalization, of which the post-communist transition is an important part.     

The labour market in a dual economy: Another look at colonial Rhodesia

A labour market model is developed for the formal sector of a labour surplus economy, allowing for monopsony power by firm owners and an inelastic supply of labour with respect to the wage rate. This inelasticity arises even though the wage rate in the traditional sector may be ‘fixed’ due to surplus land, and the supply of labour to the traditional sector responds quite positively to an exogenous increase in the (implicit) wage rate there. This labour supply function is derived from a simple utility maximisation model incorporating the spatial aspects of temporary migration to the formal sector.     

Sustainable small enterprise development in a Cuban transition economy

This article examines the status of small business development in Cuba through 1999, and evaluates the potential future of small enterprises in a Cuban transition to democracy and capitalism. In any transition to democracy and capitalism, small enterprise development is highly desirable, if not essential, for creating a growing and sustainable economy. We attempt to elucidate the complex issues that will shape the development of small enterprises in Cuba's eventual transition to a market economy, as well as outline the relevant experiences of other economies in similar situations and provide suggestions for future internal and external policymakers working to further small business interests in Cuba. Special emphasis is placed on the obstacles grounded in human behaviors that are incompatible with a globally competitive market economy. J. Antonio Villamill, former U.S. undersecretary of commerce and director of Florida's Office of Tourism, Trade and Economic Development, is president of Washington Economics Group, Inc.     

A land full of opportunities? Agrarian frontiers,policy narratives and the political economy of peace in Colombia

Abstract

In many post-war countries, the relative security brought to rural areas is construed by government officials and business actors as an opportunity for development. This is particularly true for marginal areas, where opportunities for economic development had previously been hindered by the threat of violence. This provides a favourable context for the construction of commodity frontiers. Through the case of Colombia, I show that one of the main challenges faced by frontier policy narratives amounts to differentiating wartime dispossession from peacetime legitimate accumulation. This poses intractable challenges to policymakers and business actors, as it fuels the contradictions between peace consolidation and post-war development.     

A comparative analysis of the impact of the 1997 Asian crisis and the contemporary global economic crisis on the Korean political economy

The 1997 Asian crisis created a political space for neo-liberal reformers within the Korean state to advance a set of policies that had previously been frustrated. This agenda is widely seen to have stalled following an initial burst of neo-liberal reform in the post-crisis period. Several scholars have argued that a partial reconstruction of an economy dominated by a closed nexus between the state and leading domestic firms is taking place in contemporary Korea. Compared to the 1997 crisis the macroeconomic impact of the contemporary crisis on Korea has been limited. However, Korea initiated the largest fiscal stimulus (in relation to GDP) in the Organisation for Economic Co-operation and Development. In terms of the policy environment the impact of the contemporary crisis has been considerable. This paper argues that key aspects of the Korean state's response to the crisis represent a selective limited retreat from neo-liberalism, the significance of which should not be overstated.     

The education skills trap in a dependent market economy. Romania's case in the 2000s

We discuss the political economic development of Romania since 1989, with a focus on the evolution of higher education (HE). First, we place this evolution in the context of demand for HE by prospective students and employers, focusing on the low demand for skills in the MNC-dominated Romanian economy. Second, we provide empirical insight on indicators of quality, enrolment, and funding as key features of the HE system. We argue that Romania has evolved into a dependent market economy entrenched in a low-skills equilibrium, and that the weakness of the HE system is a key element in this process.     

Cointegration and market integration: An application to the Indonesian rice market

This article suggests improvements in the use of regression analysis to measure spatial market integration. The procedure pioneered by Ravallion is still widespread but is valid only under certain conditions of exogeneity. The alternative offered here is an error‐correction mechanism which makes it possible to test for exogeneity as well as indicating the direction and strength of causality in price formation between markets. The method is illustrated with data on rice prices in different parts of the Indonesian market. The results confirm, among other things, that supply sources are more important than demand sources in driving prices.