Process Of Capital Formation Research Articles

Regional Identity in Regional Development and Planning1

This paper analyses the regional identity and social capital formation process and components. Regional identity is the special kind of phenomenon, which forms throughout historical and territorial socialization. The great ambition of this paper is to interrelate Anssi Paasi (1986) and other cultural geographers' and sociologists' ideas with recent regional economic development and planning discussion and to enhance regional identity as a planning tool. The theoretical part describes components and the process of regional identity formation. We assume that regional identity correlates with people's volition in achieving common goals, raises their personal activity and influences due to that regional development and planning. The regional identity is crucial in securing public participation in planning. The empirical part of the paper is based on mass survey analysis.

Construction and capital formation in less developed economies: unravelling the informal sector in an African city

Sub-Saharan Africa is the poorest and least developed region in the world today. It is also the most rapidly urbanizing, with the greatest need for investment in new infrastructure and buildings. In Kenya, as well as in a number of other countries, the adoption of economic adjustment programmes has led to a sharp decline in publicly funded construction projects. What activity there is takes place in the private sector. The shift from public to private investment has been accompanied by a noticeable fall in the volume of work passing through the more formally organized construction system and an increase in activity in the ‘informal’ system. The informal construction system is characterized by a much closer relationship between building owners and building labour, with owners purchasing materials as and when they have the funds and engaging directly the services of small enterprises and self-employed workers. In Nairobi (Kenya) substantial multi-storey projects are now being implemented in this way by a myriad of small firms. This paper examines these devel8 opments and assesses their implications for our understanding of ‘the construction industry’ and the process of capital formation.

Social capital and community development

There is growing recognition of social capital as a resource which can both facilitate and constrain social action. Focussing on a North Indian village community in its historical context, the paper examines the processes of social capital formation, impact of changes in macro-structure on social capital and its role in development. The paper finds that processes of change exert opposing pressures on social capital some strengthening and others eroding it. An important observation is that formal institutions, if in conflict with informal institutions, would severely constrain collective action. It seems possible, however, to design a purposive action to make the relationship between the two types of institutions complementary and synergetic to harness social energy for development.

Comptes rendus

We examine the relationship between disadvantaged social status and adverse health outcomes within a context-contingent thesis of relative deprivation. We argue that the health effect of low relative status depends on contextual status homogeneity, which is measured as income inequality and group diversity. Applying mixed-effect modeling to the pooled 2011–2013 Chinese General Social Survey and exploring the cross-level interactions, we found that 1) people in the bottom socioeconomic quartile report significantly better health when contextual income inequality is lower; 2) racial-ethnic minorities report significantly better health when contextual ethnic diversity is higher; and 3) religious minorities also report significantly better health when contextual religious diversity is higher. Ethnic minorities and Muslims even report better health than the majorities in highly diverse contexts. Thus, contextual status homogeneity can modify or even eliminate the health disparities caused by relative deprivation. The context-level moderation of relative deprivation may be explained by the processes of social comparison, institutional resources, and social capital formation. Our findings suggest that health disparities are an interactive product of contextual homogeneity and individual's relative deprivation, and underscore the importance of the nature of the social environment where relative deprivation occurs. In this way, we contribute to knowledge about reducing health disparities along the social gradient.

Generating savings for Latin American development

The authors of this volume examine the contribution of savings to the process of capital formation, the relationship between domestic savings and domestic investment, and the effects of foreign investment on savings and capital investment in Latin America.

The information asymmetry and valuation effects on health care technology

The asymmetry in information between the managers of a health care firm and the rest of the market is of particular importance in corporate finance. This paper studies the effect that information asymmetry has on the financial behaviour of for-profit hospitals during the processes of capital structure formation and accumulation of the wealth needed to advance their health technology. The results indicate that information asymmetry matters in the formulation of a health firm's external and internal capital formation and thereby the extent of its ability to acquire technology. Risk of the market and abnormal cashflow returns are key measures of information asymmetry. As expected, the level of information asymmetry increases the drop observed in the stock price of the firm at or near the announcement date.

Financial Innovation and the Post Keynesian Approach to the “Process of Capital Formation”

(1997). Financial Innovation and the Post Keynesian Approach to the “Process of Capital Formation”. Journal of Post Keynesian Economics: Vol. 19, No. 3, pp. 461-487.

Human capital and economic growth in an overlapping generations model

The paper describes an aggregative optimal growth model, the essential features of which are that individuals are mortal and obtain their labor skill through educational training. The process of human capital formation is described by an education function which relates the pass rate to the educational expenditure per student. Two alternative scenarios, private and public education regimes, are separately investigated. Under the decentralized education regime, risk-neutral individuals borrow to finance their education when young. Under the centralized education regime, the cost of education is financed by taxes imposed on the workers in the economy, and the central government maximizes a long-term social target function. The equilibria of both regimes are analyzed and various comparative static results derived. It is shown that educational investment in a decentralized equilibrium is higher than that in the centralized steady state. We also establish that there exists a time discount rate at which or above which the decentralized per capita consumption exceeds that of the centralized steady state whereas for time rates of discount sufficiently near the population growth rate, the above result will be reversed.

Permanent International Productivity Growth Differentials in an Integrated Global Economy

The paper analyzes the role of differences in household behavior as a source of persistent and even permanent differences between national or regional productivity growth rates, when there are constant static returns to scale in production and costless international diffusion of technology. A binding self-financing constraint on human capital formation can account for permanent international productivity growth differentials. An alternative mechanism is the nontradedness of an essential input, such as human capital, in the growth process. Differences in national policies toward private saving (whether through lump-sum intergenerational redistribution or through the taxation of financial asset income), toward the subsidization of human capital formation (student loans) and toward the free provision of public sector inputs in the human capital formation process also influence the long-run growth differentials.

Historical returns and security market development, 1872–1925

Annual holding returns are reported for a broad range of the assets available to investors in the security market between 1872 and 1925. A generally favorable picture of asset performance is revealed when these returns are compared to those on similar investments in the modern era. Two changes in the patterns of returns around 1900 occurred—a decline in inflation adjusted debt returns and an increase in the volatility of stock returns (especially industrial stock). The structure of asset returns after 1900 was distinctly modern and has persisted to the present. The emergence of the modern structure of returns is linked to institutional changes in the security market between 1890 and World War I, and to the process of industrial capital formation.

Union Power in the Long Run

The emerging general-equilibrium models of union-ridden economies are static or short run; they abstract altogether from the processes of capital accumulation and population change. (See the symposium in The Scandinavian Journal of Economics 87 (2), 1985.) In the present paper we offer a model of a growing union-ridden economy in which union policies and the process of growth are allowed to interact. In the context of such a model it is possible to pose several novel questions. How does the pursuit of union objectives affect the path of economic development; in particular, does a union-ridden economy move towards a nontrivial steady-state and, if so, is the steady state characterized by unemployment? The question may be turned about: If unionists understand the implications of alternative policies for the process of capital formation, how does that understanding affect the choice of union policy? The salient features of our model may be mentioned at once. First, it is assumed that labourers earn only wages; that is, they are pure labourers. This implies that labourers do not save and raises the possibility that, collectively, they may find it to their advantage to moderate their claims on the current pie in order to ensure that the future pie is larger. Symmetrically, capitalists earn no wages; that is, capitalists are pure capitalists.' Second, there is a single union to which all workers belong regardless of whether or not they are

A Development Model of a Dualistic Economy: The Italian Case

The paper sets out a macrodynamic model of the Italian economy describing the supply and demand for goods, the distribution of income, the balance of payments on current accounts and the current account budget of the public sector. The model focuses mainly on the impact of the dualistic character of the Italian economy on the labour market, inflation, the process of capital formation and its cyclical behavior. Quantitative and qualitative analysis have been carried out on the model. This has been estimated as a continuous time model, using the full information maximum likelihood method. We have also analysed its stability properties and its predictive performance, and performed some experiments of sensitivity analysis. Finally, some policy simulations over the sample period are given.

Human Capital, Minimum Wage and Unemployment: A Harris-Todaro Model of a Developed Open Economy

In many developed countries unemployment is a serious and persistent problem. Although the character of this problem is highly complex, one of its features which can easily be observed is the substantially higher incidence of unemployment among unskilled workers than among those who are skilled. A possible explanation for this is the existence of an institutionally given minimum wage, which exceeds the market-clearing wage for unskilled labour but lies below the equilibrium wage for skilled labour. Moreover, for those who find themselves unemployed because of the minimum wage, the principal source of job opportunities tends to be the services sector of the economy, which is relatively intensive in its use of unskilled labour. The objective of this paper is to develop a simple model of a small, open economy based on these observations and to examine the policy implications that emerge from it in connection with the unemployment problem. The focus of the analysis, however, is not on the cyclical aspects of this problem but rather on its steady-state nature. The basic structure of the model is as follows. Our economy has two sectors engaged in the production of consumption goods. One of these goods is assumed to be traded internationally and the other is non-traded. Following Rodriguez (1975), I draw a further distinction between the two sectors: nontraded goods, which may be regarded as services, are assumed to require the use of only capital and unskilled labour as inputs, while the traded-goods sector uses only capital and skilled labour. Skills are viewed as productive human capital which can be acquired through formal training. In order to sharpen the focus of our analysis on the process of human capital formation, I will ignore the problems of physical capital accumulation and population growth.' The economy is assumed to be small, facing a given world price of traded goods as well as a given rental at which the supply of capital from abroad is infinitely elastic. In contrast with the assumption of perfect capital mobility, neither type of labour is mobile internationally. With only one traded commodity and one mobile factor, international trade for this economy amounts to an exchange of the single traded consumption good for the services of capital at fixed terms of trade. Section I of the paper presents the model and solves for the stationary composition of the labour force (i.e. skilled v. unskilled) and the equilibrium values of relative factor and commodity prices. Section II introdluces an institutionally given minimum wage which is binding only in the market for unskilled labour. In the spirit of Harris and Todaro (1970), it is assumed that

Foundations of Supply-Side Economics

Foundations of Supply-Side Economics: Theory and Evidence is composed of a series of papers containing both theoretical and empirical analyses of a set of issues in government fiscal policy. The type of analysis employed in the book is standard neoclassical economics, and this analysis is used to study the macroeconomic incentive effects of taxation. The book contains contributions that cover the analysis of the effects of taxes imposed purely for generating revenues; the process of capital formation; and an attempt to integrate supply-side analysis into a traditional macroeconomic framework. Reports on the empirical evidence on taxation and economic activity and the estimation of a small macroeconomic model of the United States for the postwar period; description of a method of calculating effective marginal tax rates on factor incomes using available U.S. data; and the estimation of the effect of fiscal policy on private investment in plant and equipment are presented as well. Economists will find the book highly insightful.

Charakterisierung dynamischer leontief- systeme bei unbestimmten koeffizientenmatrizen

By abstracting mathematically dynamic Leontief-systems with inaccurate knowledge of the matrices of technology, of capital and consumption coefficients, we are led to point-to-set correspondences whose mathematical properties permit a characterization of the dynamic production model under uncertainty. The matrices representing the processes of technology and capital formation are to be classified in such a way that the domain of uncertainty for the production output at time t + 1 is contained in the one at time t. This invariance problem will be investigated for different topologies defined on the (n—1)-simplex. We suggest the application of a metric which is based on a concept measuring entropies on convex polyhedra, and sufficient conditions for the invariance property of the production paths are given.

The socialist labor-managed firm and bank-financed investment: Some theoretical issues

Under a labor-managed system of the Yugoslav type of 1965–1971, the process of capital formation is subject to special difficulties, linked to the structure of property rights. Workers possess neither permanent nor transferable claims on capital assets but are, nevertheless, required by law to maintain the value of the firm's initial capital stock and of any additions to it. The law is intended to protect the nation's capital stock but is ill designed for this purpose. Its immediate effect is to reduce the collective's willingness to undertake bank-financed investment, and thus it promotes inefficient intertemporal allocation.

TAXES, INFLATION AND CAPITAL FORMATION

IT that would taxes not and be other an exaggeration government to fiscal say that axes and other overnmen fi cal policies affect the process of capital formation in a myriad of ways. Perhaps because I have been studying the relation between the fiscal system and capital formation for more than a decade, I find it too difficult to deal with this very broad subject in the fifteen minutes that I have been allotted. I have therefore decided to limit my remarks to one particular aspect of this subject that has been a focus of some of my recent research and that I believe currently represents one of the most important challenges to tax policy. I will discuss the ways in which inflation has distorted the taxation of the income

HUMAN CAPITAL PRODUCTION: LIFE-CYCLE PRODUCTION WITH DIFFERENT LEARNING TECHNOLOGIES

This paper investigates the human capital formation process when the learning situation is not neutral but is instead biased either to the market or to the production process. In the case of a production bias, human capital is more productive when generating additional human capital than when generating market activity. In the case of a market bias, the reverse holds. Implications from the model are used to explain the occurrence of different shaped earnings profiles of equal net present value as well as income profiles of unequal present value.

An Efficient Program of Water Resource Development in a Framework of Growth and Trade

W ATER resource development programs frequently involve a commitment of vast economic resources for long periods of time, thus giving rise to significant interactions with the growth of the economy and its pattern of trade. Decisions concerning investment programs in water systems, therefore, must be taken with reference to the general capital formation process, anticipated technological changes, population growth, demand behavior, present and future trade opportunities, interregional resource movements, and expected changes in the industrial composition of output and income. Hitherto, economic evaluations and analyses of these relationships have been mostly in the form of a cost-benefit analysis in which market prices and interest rates have served as indicators of consumer preferences, production constraints, and trade opportunities. A benefit-cost analysis is based essentially on a partial equilibrium approach dealing primarily with inputs and outputs closely related to the water resource system. Relations with more remote sectors of the economy are assumed to be reflected in the prices used in the analysis. Several economists have stressed the idea that optimal public investment programs should be defined with reference to the objective functions of policy-makers, and that this should be represented in the benefit-cost analyses [4, 7, 8]. Specifically, a benefit-cost analysis is conducive to an optimal water resource development program if the prices (and interest rates) used in the analysis correspond to the shadow prices and interest rates associated with the maximization of the policy objectives under the prevailing constraints. It is widely accepted that, in a fully employed and competitive economy, market prices in effect may satisfy this requirement. However, it is also generally recognized that market imperfections, externalities, and other distorting factors may create significant divergences between observed market prices and the appropriate shadow prices. Furthermore, since water resource development plans ordinarily span long time periods, forecasts of future prices must be used in addition to current ob-

GLEICHGEWICHTSWACHSTUM UND OPTIMALES WACHSTUM IN DER NEOKLASSISCHEN WACHSTUMSTHEORIE

SUMMARYAccording to the neo‐classical theory of economic growth, the rate of growth of output tends towards a value which is independent of the proportion of the national income saved. If the proportion of saving changes, the rate of economic growth reaches—after an adjustment process—its original level, which (with a constant labour force) is alone determined by technical progress and the elasticity of the output in respects to changes in the use of the factor capital. Amongst the infinity of possible proportions of investment there must be one, which leads to a maximazition of consumption. It can be shown, that consumption is maximized, if the proportion of investment equals the elasticity of the output to the factor capital.The theorem that the rate of economic growth is independent of the proportion of investment is only valid, if technical progress is autonomous. The equilibrium system postulated in this theorem is indeterminate to the extent that technical change is induced by the process of capital formation. Under these conditions saving and investment decisions again become the determining parameters of the growth rate. Now technical progress may be partly independent of capital formation, but this does not mean that it is totally autonomous. It would be more correct to say that it is a function of, for example the level of technical knowledge and expenditure on education, even if these factors do not enter the analysis explicitly as factors of production. The neo‐classical theory of equilibrium, however, is based on the assumption that technical progress is simply a function of time; thus this theory of equilibrium is based upon the choice an inappropriate underlying production function.Moreover, only the rate of economic growth is dependent upon investment activity but not the level of output. With an increasing proportion of investment the level of output increases, tending to a new equilibrium path.There exists a determinable proportion of investment which leads to a maxi‐mazition of consumption. Pearce has shown recently, that this is valid only under the condition, that several economies which are on the equilibrium path of growth, are compared. If the optimum path is left temporarily (through an increase in the proportion of investment), a (temporary) increase of consumption, which exceeds the consumption foregone, is obtained. Beyond it, it can be shown, that the optimal proportion of investment must be higher, the more technical progress is induced. If technical progress is not autonomus, the system is again open: in the long run the greater the accumulation of capital the greater the possible consumption level. It is the subsistence minimum which determines the proportion of investment.