Recent Advances in Growth Theory. A Comparison of Neoclassical and Evolutionary Perspectives
Research on economic growth has experienced remarkable progress the last decade. The neoclassical perspective has benefited from development of new mathematical methods and new approaches to market structure, economics of scale and spillover effects. At the same time evolutionary theories on economic development have appeared, partly competing but also complementary to neoclassical theorising. In this paper, the development of the two perspectives on economic growth is reviewed and they are compared with each other. Despite evident differences there seems to be convergence between the two traditions. The two perspectives therefore do not belong to different paradigms in the Kuhnian sense and they can hardly be categorised as two isolated research programmes in the sense of Imre Lakatos. Evolutionary and neoclassical growth economics draw inspiration from similar sources, they are overlapping and to some extent complementary. The two traditions also interact with each other.
Foreign Direct Investment in Norway’s Manufacturing Sector
This report investigates the location advantages of the Norwegian manufacturing industry while focusing on economic as well as institutional factors. The economy relies highly on the exploitation of natural resources and only minor parts of its exports are technology based. Norway as a market for consumer goods is not only small in size but is also located at the periphery of Europe. Since the beginning of industrialisation, policies towards foreign direct investment (FDI) have had two targets: The first has been to keep as much of the resource rent as possible within the country and the second, to develop a domestic manufacturing industry. A variety of political tools has been used to achieve these objectives. Although various international agreements aim to reduce preferences for domestic production, several sectors in the Norwegian manufacturing industry remain protected by governmental policy. Norwegian MNEs have internalised former and present L-advantages into firm-specific assets. Domestic interest groups or the state partly control several of these enterprises. Compared to other small European countries, Norway has a relatively low share of FDI in the manufacturing industry. Nonetheless, over the last decades the country has experienced a substantial increase in FDI. This is partly due to investments of foreign affiliates of Norwegian multinational companies, reinvesting in Norway. In 1996, on an average, 18% of the employment in firms with at least 50 employees was located to foreign controlled firms while the corresponding figures in 1980 and 1991 were 8% and 13%. FDI mainly takes the form of mergers and acquisitions and is particularly significant in sectors with an above average R&D intensity and in other market segments with a relatively high producer concentration. The main industrial clusters as well as the production of consumer goods have experienced the major growth of FDI employment in the period 1991–1996. Often, these are also sectors with a high degree of governmental protection.
Corruption. A review of contemporary research
This report is an overview of contemporary research on corruption. The main objectives of the study have been to organise existing knowledge on corruption, discuss the major controversies within and across disciplines and to identify some areas in most need for further research with an emphasis on questions relevant for development policy. The review has been carried out as a joint study by researchers at the Chr. Michelsen Institute (CMI), Bergen, and the Norwegian Institute of International Affairs (NUPI), Oslo. Special thanks to the CMI and NUPI librarians for their assistance. Financial support from the Norwegian Agency for Development Co-operation, (NORAD) and extra time from our institutes are gratefully acknowledged. The survey may be somewhat biased towards economic approaches, reflecting the fact that the writing and editing have primarily been done by the economists Odd-Helge Fjeldstad (CMI) and Jens Chr. Andvig (NUPI). In addition, Tina Søreide (CMI), also an economist, has contributed to chapter 3. Inge Amundsen(CMI), a political scientist, has written chapter 4 and made several contributions to chapters 2 and 10. Tone Sissener (CMI), a social anthropologist, has written chapter 5. The study focuses on academic research. While a survey of the output from public commissions would be useful, they are not systematically covered here. Moreover, to make the survey accessible to a multidisciplinary readership, efforts have been made to present the more abstract and technical research in a non-technical way. In spite of its limitations we hope this survey will be considered useful – and be used – by researchers, students, development practitioners and aid officials.
Forhandlingsmetodikk i WTO : Teoretiske resonnementer
Notatet klarlegger prinsipielle og praktiske forskjeller mellom de forhandlingsmetoder som har vært og kan komme til å bli brukt i WTO forhandlinger. Resonnementene baserer seg på økonomisk teori og forhandlingsteori. Selv om det gjøres betraktninger i forhold til Norges interesser generelt og fisk spesielt, er notatet mer som et rammeverk som dypere empirisk analyse kan baseres på. Arbeidet med artikkel ble utført på NUPI november 1999–januar 2000, som en del av et prosjekt finansiert av Fiskeridepartementet.
Integration and Regionalization - a political economic analysis
This paper examines the incentives for political integration in a situation with a non-excludable public good. The model emphasizes inter-regional differences in sizes and preferences for the public good. In such a two-country model, Ellingsen (1998)1 characterizes the cases in which integration is an equilibrium. This paper includes a third region, and finds that a whole range of interesting and observable issues arise, which the two-country model is unable to capture. Depending on the relative differences in sizes and preferences among regions, the integration problem may be described as a prisoner’s dilemma, a coordination game or as a hawk-dove game. Multiple equilibria may exist as well as equilibria with no integration; partly integration; conditionally integration and exclusion from the coalition. The extreme case where the public good is global (beneficial to all) is discussed, as well as an extreme where it is local (beneficial only to the closest neighbors).
Globalisation and industrial location: The impact of trade policy when geography matters
The paper shows how industrial location and welfare depends on “most-favoured nation” (MFN) versus distance-related trade barriers, using a monopolistic competition model with regions located along a “Hotelling” line or on a square plain. Manufacturing production will cluster close to the periphery if transport costs are relatively high, but in central areas if MFN barriers are relatively high. The peripheries will be at a disadvantage, which increases when trade barriers are reduced. When countries or trading blocs are formed, a core-periphery pattern emerges within each of them. While lower transport costs create more centralisation within countries, lower MFN barriers between countries have the opposite effect.
Patterns of Trade and Foreign Direct Investment in Africa : A simple test of the new trade theory with multinationals
In this study, we present an empirical survey of the patterns of trade and FDI in Africa based on a sample of 28 countries and their transactions with the OECD countries. These patterns are used to test whether the predictions of the new trade theory with multinationals as described by Markusen and Venables (1995,1998) fit the development in Africa. The theory states that multinational production will gradually outgrow trade as countries converge in terms of income, yet our econometric study gives only week evidence supporting such a pattern. Alternative explanations are also investigated,and it is shown that trade barriers, geographical distance, income per capita and access to ocean explain much of the variation in trade and FDI in Africa.
Foreign Ownership, R&D and Technology Sourcing
This paper explores the relationship between domestic R&D and the inflow of foreign capital through foreign direct investment and foreign ownership. The idea that firms invest in a foreign country in order to more easily absorb the knowledge and technology of foreign firms is tested empirically using a unique firm level data set covering foreign ownership and R&D for all Norwegian firms over the period 1990 to 1996. The study gives no clear evidence supporting the existence of such a motive behind foreign ownership. On the other hand, the econometric study indicates that foreign investors may try to exploit their technological advantages in the Norwegian market. The results also show that the degree of foreign ownership is more volatile when firms are highly R&D intensive. We hypothesize that this is due to the fact that large R&D investments often result in large losses as well as gains to the firms.
Elite perceptions of ethical problems facing the Western oil industry in Azerbaijan
This is a study of the Azerbaijani political elite’s perceptions of Western oil companies and their contribution to – or hindrance of – the development of democracy and human rights. Twenty oppositional figures, including most of the party leaders and presidential candidates, plus some media, NGO and academic personalities, were subjected to an in-depth interview. There was a consensus that the Western oil industry was at best irrelevant and at worst inimical to the cause of democracy and human rights in Azerbaijan. This is because short-term commercial considerations have led it to kowtow to the dictatorship, ignore the political opposition and boycott the free media. There is also pay discrimination against Azerbaijani labour. Above all, it was almost universally agreed that the Western oil industry is aggravating the corruption of Azerbaijani life. Nobody thought Statoil worse than the other foreign oil companies, but only a minority thought it better. The result of this undesirable behaviour is likely to be the severe displeasure of any new government based on the current political opposition, which may prefer Japanese and Chinese investment. At worst, the population’s acute disillusionment with the West and the social misery caused by corruption and mismanagement may override Azerbaijan’s secular and moderate traditions and bring about an Islamic Republic. The elite makes many suggestions for what the Western oil companies can and should do to improve the situation: such as not being bluffed by the president, insisting on transparent accounting, cultivating alternative centres of power, facilitating scientific, educational and cultural exchange and supporting the Azerbaijani cause in the Nagorno-Karabakh conflict.