The international potential of traditional resource systems in marginal areas

Marginal areas of the world, including tropical highlands, tropical coastal zones, and arid lands, are problematical for development. They are ecologically special areas, often of vital consequence to the stability of more populated regions nearby. Commonly, their peoples are culturally distinct. To develop marginal areas it is suggested that “transformational” development may be appropriate. Transformational development recognizes the importance of equity and of working with existing resource systems already ecologically and culturally appropriate to the area. In marginal areas, a special application of transformational development could include incremental changes in existing systems and their connection to modern international systems so as to benefit the inhabitants of marginal areas and to supply commodities and goods demanded in the rest of the world. By rethinking ideas about resources, an exploratory framework for such transformation is examined. This framework uses the concept of “resource system”, a concept which might play an important part in the application of equitable future global development efforts.     

Appropriation,Formal and Informal Sectors,and Efficient Endowment Distribution

By adding an informal sector whose output is not subject to appropriative interactions and assuming complementarity in the inputs for market production, this paper investigates how possible asymmetries in conflict affect the allocation of resources. It is shown that when the existing gap in relative appropriative skills is being closed, more resources are allocated to appropriative activities in the economy. We are, in this case, more likely to see a reduction in market activities but an increase in home activities. A poorer party is a natural producer rather than a natural fighter, which is the usual characterization of a less endowed party in the conflict analysis. By conducting a welfare analysis, this paper shows that a market-output-maximizing initial distribution of resources endowment is such that when one party has a comparative advantage in market production over appropriation, its initial fraction of total resource endowment should be greater than its relative productivity in market production.     

Conflict diamonds

‘Conflict diamonds’ refer to the fatal role that diamonds are believed to have played in several African conflicts. The article analyzes the impact of diamond rents on economic growth in light of the broader, previously discovered empirical finding of a ‘curse of natural resources.’ By extending the theory of appropriative conflict, a predator–prey game is outlined in which a rebel chooses between peaceful production and predation on natural resources controlled by the ruler. It is shown that whereas an increase in natural resources will increase the ruler's public utility investments, it might also lead to a crowding-out of labor from the formal sector to the appropriative struggle, which depresses growth. As predicted by the model, a cross-country regression analysis suggests that diamond abundance has a negative relationship with economic growth in countries with weak institutions.     

Experimental technology assessment: Explorations in processes of interdisciplinary team research

Technology assessment (TA) is team research that entails the cooperative effort of professionals from diverse disciplines. Whether this effort can be truly integrated into an interdisciplinary assessment is problematic, based on analyses of 24 actual TAs. To probe the situational and process factors that impinge on this interdisciplinary research process, we have performed laboratory simulations on TA-like problems. By controlling several key factors, these sessions have yielded insights into small group interactions and offer suggestive evidence for the conduct of future TAs. In these exercises the role of expertise was downplayed as groups preferred to operate in a “common-group learning” mode; epistemological differences emerged in the form of a “pecking order” favoring more quantitative sciences; and performing the leadership role reduced an individual's intellectual contribution to the problem-solving process. These exploratory TA simulations suggest merit in further efforts at controlled study of complex interdisciplinary processes.     

The mature region building a practical model for the transition to the sustainable society

The demographic shift from the northeast to the “sunbelt” has resource implications that will span several decades. Early in the 21st century, today's “boom” regions will be significantly affected by declining petro-energy and an aging population and infrastructure. The northeast is now in an analogous situation.The transition to the sustainable society is unlikely to occur in the sunbelt while the boom is on, but the need for sustainability is immediate in the northeast. For the mature industrial states, economic survival is tied to the level of self-sufficiency they can achieve in the 1980s and 1990s. The efforts toward greater regional sustainability can offer practical models to regions yet to encounter cyclical decline. The transition to the sustainable society will be built on the aggregated efforts of regions to bring their unique circumstances into balance.New England is presented as the case study of a mature region, no longer growing, but embarking in measurable ways on a path toward regional sustainability. The model focuses on the recapture of resources that have traditionally sustained the region—the landscape, the 19th century settlement pattern, and the educational establishment.The inquiry is directed to practical efforts now being made by the private sector to readapt these traditional resources and increase New England's self-sufficiency. The paper will examine the significance of New England private sector endeavors, for effects on other regions, demonstration value and transferability, and conditions that merit continuing investigation as models for the transition to the sustainable society.     

Does monitoring decrease work effort?: The complementarity between agency and crowding-out theories

Agency theory assumes that tighter monitoring by the principal should motivate agents to increase their effort, whereas the “crowding-out” literature suggests that the opposite may occur. These two assertions are not necessarily contradictory provided that the nature of the employment relationship is taken into account [Frey, B., 1993. Does monitoring increase work effort? The rivalry between trust and loyalty. Econ. Inquiry 31, 663–670]. Results from controlled laboratory experiments show that many principals engage in costly monitoring, and most agents react to the disciplining effect of monitoring by increasing effort. However, we also find some evidence that effort is crowded out when monitoring is above a certain threshold. We identify that both interpersonal principal–agent links and concerns for the distribution of output payoff are important for the emergence of this crowding-out effect.     

On the escalation and de-escalation of conflict

We introduce three extensions of the Hirshleifer–Skaperdas conflict game to study experimentally the effects of post-conflict behavior and repeated interaction on the allocation of effort between production and appropriation. Without repeated interaction, destruction of resources by defeated players can lead to lower appropriative efforts and higher overall efficiency. With repeated interaction, appropriative efforts are considerably reduced because some groups manage to avoid fighting altogether, often after substantial initial conflict. To attain peace, players must first engage in costly signaling by making themselves vulnerable and by forgoing the possibility to appropriate the resources of defeated opponents.     

Government funding strategy in technology programs

Industrial R&D in a market economy is mainly implemented in the private sector, therefore public funding is a very important tool of government to guide private R&D activities. This paper investigates the experience of funding national programs in a number of industrialized countries, and reaches some preliminary conclusions: (a) To reduce opportunistic behavior and ingrain intrinsic incentive in firms, both competition and cost-sharing principles should be used concurrently in underwriting firms' R&D projects. (b) Competition principles can be applied across many candidate projects around the same time or a series of one-of-a-kind projects over a longer time horizon. (c) The major threat to application of competition principles is that there is no “real competition” due to few qualified candidates in specific technological fields or in some, especially small, countries. (d) In practice, the appropriate cost-sharing level is difficult to determine. Fifty-fifty is used as a rule of thumb in many countries to simplify the decision making and circumvent “bounded rationality.” (e) Full cost endorsement may be another “quantum” alternative for projects urged by government but not felt to be very relevant by firms.     

Escaping Poverty: Risk-Taking and Endogenous Inequality in a Model of Equilibrium Growth

Recent macroeconomic models of income distribution generate equilibria characterized as poverty traps. These models specify a production indivisibility such that, due to problems of asymmetric information in credit or capital markets, poor agents are never able to acquire the resources necessary to overcome the indivisibility. In the context of an equilibrium growth model, this paper demonstrates that faced with such constraints, poor, risk-averse agents have incentives to voluntarily take on risk in the hopes of exiting poverty. Each period they remain in poverty, they sacrifice a small amount of current consumption to pool resources for this risky activity. Risk-taking, economic mobility, and the distribution of income are generated endogenously. Furthermore, beginning from identical endowments, “initial” inequality also emerges endogenously. It is shown that voluntary risk-taking eliminates many potential steady-state equilibria of this and other models—those that exhibit individual poverty traps. All agents (or dynasties) expect to escape at some future date, perhaps after an extended spell in poverty.     

A reliability engineering approach for forecasting technological breakthroughs

One of the major attributes determining system reliability, the one that has received the most thorough and systematic study for many years, is system survival function. A “survival function” is a mathematical formula relating the probability of satisfactory performance of a system to time. Here, probability of satisfactory performance is synonymous with probability of nonfailure or probability of survival of a performing system.In breakthrough analysis of complex technological systems, the situation is somewhat similar but opposite to the above system reliability case. For breakthrough forecasting, the problem is to determine the probability of occurrence of success of a nonperforming system. Thus this paper presents a quantitative methodology for forecasting technological breakthroughs using a new concept of “attainability function,” derived in a similar fashion as the “reliability function.”     

Globalisation, capital mobility and tax competition: theory and evidence for OECD countries

Are the predictions of tax competition theory wrong? While the tax competition literature predicts that taxes on income from capital decrease with increasing globalisation, past empirical studies on various data find contradicting evidence. By using different data and additional elements of economic theory, this paper aims to challenge the empirical contributions. For a panel of 14 OECD countries and for the period 1967–1996, we find that globalisation has indeed a negative and significant impact on corporate taxes. Furthermore, globalisation tends to raise labour taxes and social expenditures. As a consequence, the so-called “efficiency” and “compensation” hypotheses of globalisation are not competing, but rather, both appear to apply at the same time. Efficiency has an impact on the tax-mix, whereas compensation is provided through increased social expenditures.     

Afterword on the Five-Year Outlook: Problems and promises

The editors offer a synthesis that reflects the motivations and concerns that underlie this volume and present “some reasonably tempered hopes and future prospects”. Among the former, they discuss “political/ institutional issues” impinging on the Outlook—its purpose, production, users, and feedback—as well as “technical/intellectual” ones. Among the latter, they note that for Outlook reports beyond the second, current signals are that the science policy community will be involved more substantially, and that contributions in general will be decentralized. They foresee the Outlook evolving into a forum for discussion and advocacy of future science-technology priorities.     

Sovereign rents and quality of tax policy and administration

Windfall revenues from foreign aid or natural resource exports can weaken governments’ incentives to design or maintain efficient tax systems. Cross-country data for developing countries provide evidence for this hypothesis, using a World Bank indicator on “efficiency of revenue mobilization.” Aid’s negative effects on quality of tax systems are robust to correcting for potential reverse causality, to changes in the sample, and to alternative estimation methods. Revenues from natural resources are also associated with lower-quality tax systems, but results are somewhat sensitive to the choice of resource dependence indicators, and to a few extreme values in the data. Disaggregating by resource type, revenues from fuel exports are found to be more strongly associated than revenues from metals and ores exports with inefficient tax systems.     

Anticipating the future high-tech competitiveness of nations: Indicators for twenty-eight countries

This article presents some of the major results obtained during the third phase of a continuing research effort to develop and implement national indicators of competitiveness in high technology industries. The first phase, begun in 1987, developed a conceptual model of the processes by which industrializing nations gain access to external technology and technical information, absorb that technology/information effectively, and institutionalize a science-based development and manufacturing capability leading to export-led growth in high technology products. Four “input” or leading indicators of a nation's future capacity (15-year time horizons) to compete in international markets in high technology products were developed, as were three “output” indicators of a nation's current international competitiveness. During this first phase, the seven indicators were applied to data for twenty countries representing a range of regions and extent of industrialization. The second phase used 1990 data on an expanded set of countries to examine in detail the indicators' reliability and validity. The third phase of indicators work (1992–1995): (1) developed seven indicators whose definitions were recommended in our 1991 final report to the Science Indicators Unit of the National Science Foundation, and (2) collected the necessary data (1993) and applied them to generate a set of indicators for 28 countries using these recommended formulations.This article focuses on the input indicators for the 28 countries and compares these 1993 results with those from 1990. We discuss the implications of these results for technology-based development theory and for development policy. A separate, companion article published elsewhere presents the output indicator results.     

Using resources in R&D policy planning: Brazil, the Amazon and biotechnology

Brazil's research and development (R&D) policies are examined in light of changes in economic direction especially as it pertains to competition. In a competitive environment, regions should develop industrial applications and expertise in areas that coincide with their resources. These could be human resources but could, as in the focus of this paper, be useful resources that differentiate the region from others in the world. This differentiation provides an advantage to the region. Brazil and its Amazon region has the large majority of the world's rare genes. In biotechnology, genes are “green gold,” and Brazil is slowly developing a biotechnology industry and beginning to tap into the Brazilian Amazon region's economic biotech potential. This region has enormous potential for the development of biotech-related technologies and products. This paper discusses the relationship between resources and an R&D strategy using as an example the recent developments in biotechnology research in Brazil and the role of the Amazon region in the development of a Brazilian biotechnology industry. It recommends a number of policy initiatives that will enhance Brazil's focus on biotechnology.     

On the value of human resources

One challenge for planners is to discover conditions under which a society has a positive and growing “net worth” in terms of its human resources and to bring about and maintain those conditions. We discuss the utility and validity of the concept of people as “assets” or “liabilities”, the structure and cultural contexts for a proposed model of the dynamics of value that account for opportunity costs; and links between information technologies and human resources management, including planned development of these resources.     

Stable alliance formation in distributional conflict

This paper develops a positive analysis of alliance formation, building on a simple economic model that features a “winner-take-all” contest for control of some resource. When an alliance forms, members pool their efforts in that contest and, if successful, apply the resource to a joint production process. Due to the familiar free-rider problem, the formation of alliances tends to reduce the severity of the conflict over the contestable resource. Despite the conflict that arises among the winning alliance's members over the distribution of their joint product, under reasonable conditions, this effect alone is sufficient to support stable alliance formation in a noncooperative equilibrium.     

Does consumption respond to predicted increases in cash-hand availability?: Evidence from the Italian “severance pay”

We examine whether Italian household consumption exhibits excess sensitivity to “severance pay”, a sizable lump-sum that workers receive at job termination. We find no evidence of excess sensitivity of non-durable expenditure to this anticipated cash-in-hand change.     

Relative consumption and renewable resource extraction under alternative property-rights regimes

This paper presents a simple model of resource extraction where preferences are defined over the individual’s consumption level, her effort and the comparison of her consumption with that of other members of the community. Our specification captures the intuition that lies behind the growing body of empirical evidence that places interpersonal comparisons as a key determinant of well-being. We consider the effect of consumption externalities under two alternative property-rights regimes: perfect property rights and open access. We identify two dimensions along which consumption externalities distort the efficient exploitation of resources, or, in the case of open access, aggravate the over-exploitation of resources: (i) the static trade-off between consumption and leisure, and (ii) the dynamic trade-off between current and future consumption. In general, envious agents over-exploit the natural resource stock, resulting in a steady-state stock lower than the efficient level chosen by a central planner. We propose a tax mechanism to induce the first-best outcome.