Chronic Budget Deficit Research Articles

Technical, scale and allocative efficiencies of Turkish banking industry

This paper investigates input and output efficiency in the Turkish banking industry to understand the impact of size, international variables, ownership, control and governance on profit, cost, allocative, technical, pure technical and scale efficiency measures. Employing a non-parametric approach along with a parametric approach, we estimate the efficiency of Turkish banks over the 1988–1996 period. This period allows us to account for the changes in the macro economy and regulatory treatment of the Turkish banking industry over time. Our results suggest that the heterogeneous characteristics of banks have significant impact on their efficiency. Moreover, cost and profit efficiencies of the Turkish banks have exacerbated over time. Results also indicate that the dominant source of inefficiency in Turkish banking is due to technical inefficiency rather than allocative inefficiency, which is mainly attributed to diseconomies in scale. To the extent that they chose an inefficient level of production, bank management is responsible for scale inefficient operations. However, increasing demand for banking services in the nineties, fueled by the state's increasing demand for funds to finance chronic budget deficits and high growth policies, and the oligopolistic nature of the Turkish banking market do not justify scale adjustments. Our policy suggestions are that the government implement financial reform packages that foster competition in the banking market, and that the industry devise incentive schemes to improve managerial efficiency.

Leadership Styles in Saudi‐Arabia: Public and Private Sector Organisations Compared

This study compares leadership styles and employee reactions in public and private sector organisations in Saudi‐Arabia. The results both confirm and contradict media reports of conservatism and inefficiency in the Saudi‐Arabian public service. The practical and theoretical implications of the findings are discussed. Saudi‐Arabia is popularly regarded as a wealthy country. Yet whilst some individuals enjoy extreme riches, the nation as a whole is ranked by the World Bank as a middle income nation. The future, moreover, is potentially bleak. Faced with a chronic budget deficit, the government's immediate priority is to identify new sources of income whilst simultaneously seeking to reduce expenditure. There is also the added pressure of needing to develop new industries as oil reserves become exhausted. Although Saudi‐Arabia's economic difficulties reflect the effects of Gulf War and the current depression of oil prices, the real cause of the apparent malaise may rest with the performance of its government executive: Saudi Arabia is not facing an economic crisis…but is suffering from over‐centralised government ministries best noted for the opportunities they have missed… Too many ministers have been too long at their posts for the good of the country. Clearly the suggestion is that an injection of entrepreneurial enthusiasm, ability and cosmopolitan outlook is required in order to make progress not least because many of Saudi Arabia's industrial and service organisations are in total or substantial government control. Although such claims of malaise in government and government controlled organisations are based upon media reports, empirical studies suggest that they may be alid. Saudi‐Arabian managers are apparently averse to innovation and risk, restrained by fear of failure. Such caution is reflected in relatively high reliance upon authority and relatively low delegation compared to north American organisations. The evidence is conflicting, however, as some enquiries suggest a high preference for consultation and participation amongst Saudi‐Arabian managers. We wish to suggest two weaknesses in the existing corpus of knowledge. First, existing studies concentrate upon the perceptions of the leaders rather than the led. A manager may perceive himself, (it is invariably him in Saudi‐Arabia), as participative or authoritative but there is no guarantee that this perception is shared by his subordinates. Second, existing studies fail to allow for the possibility of variation in leadership styles between different organisations. Whilst it may be true that Saudi‐Arabian managers are generally risk averse when compared to their north American counterparts, this does not mean that all Saudi‐Arabian managers are equally cautious and reactive. Such a broad brush approach may mask important differences between organisations. The present study seeks to explore such issues by comparing leadership styles in a range of Saudi‐Arabian organisations from the subordinates' standpoint. The theoretical rationale for the choice of organisations is explained in more detail later in this article. Here it is sufficient to note that the basis of comparison is the assumed level of bureaucratic formality. The research organisations range from the nearest equivalent to a European or North American private company, to the Saudi Civil Service.

Economic policy and budgets in Ottoman Turkey, 1876–1909

Budgetary deficits need not always worry a government; in fact, they can even be a positive blessing under certain circumstances.' For the Ottomans, however, chronic budget deficits did constitute an important problem throughout the nineteenth century.2 Government revenues lagged behind expenditure, and finding the means to pay the ever increasing expenditures occupied Ottoman statesmen continuously. During the 'Reform' (Tanzimat) period (1839-71/6), 'cash' in itself was seen as the remedy to the problem. The Grand Vezir Fuad Pasha once commented that the Ottoman Empire was the sick man of Europe all right, but there was a cure for his sickness: money.3 Money, the reformers did find. They borrowed it liberally from wealthy West European countries for the principal purpose of covering budget deficits, but not to improve the productive capacity of the country. Thus, they put a burden on future generations without bequeathing equivalent benefits. Having shouldered such a burden, the statesmen of Abdulhamid II's reign (1876-1909) had to operate from a disadvantaged position; Nevertheless, they benefited from the mistakes of their predecessors.4 They realized the importance of increasing the productive capacity of the country and that this necessitated the building of a modern economic infrastructure. Respectable progress was achieved in this area. The taxable capacity of the producers increased towards the end of Abdulhamid's reign, but not enough to cure the chronic budget deficit. Borrowing from Europe remained the inevitable measure of last resort. Budgetary problems plagued the next generation of Ottomans as well. The Young Turks, that is, the driving group of the Second Constitutional period (1908-18), borrowed heavily, but they also spent large sums on infrastructural projects. Farsighted as they were, however, the Young Turks too failed to raise the Ottoman lands from economic backward-

Policy implications of alcohol and tobacco demand in Poland

Demand models for alcohol and tobacco have been estimated from annual data providing point elasticity estimates. The results indicate that vodka and tobacco consumption are price-inelastic. The importance of revenues from alcohol and tobacco to the government budget was emphasized because of a chronic budget deficit. The results suggest that revenue from tobacco sales would increase following cigarette price increases. However, the long-run solution should lead to increased economic activity that lowers the importance of alcohol and tobacco sales and achieve a socially desired decrease in consumption of alcohol and tobacco.

Planning in Crisis

as it is being carried out in many developing countries is in in two respects. First, skepticism is growing both in these countries and among outside observers about the usefulness of planning per se. Albert Waterston, for example, after reviewing experience in more than 100 countries since 1958 for the World Bank, feels compelled to conclude: Among developing nations with some kind of market economy and a sizable private sector, only one or two countries seem to have been consistently successful in carrying out plans.... Experience shows that countries with well-prepared projects coordinated by sound budgetary procedures and controls can dispense with comprehensive (Waterston 1966). Few would dispute the first part of this statement, but in my opinion the second part is not based on a sound diagnosis of experience. Planning in crisis also has another meaning which in turn provides a partial explanation for the failure of many plans and the growing skepticism about their usefulness: Many of the economies which are being planned are themselves in crisis, both economically (inflation, balanceof-payments disequilibrium, chronic budget deficits) and institutionally (weak administrations, ineffective policy instruments, political instability). It is no accident that the examples Waterston cites of successful development without comprehensive planning (Mexico, Germany, Puerto Rico) are also countries which enjoy relative economic and institutional stability and effectiveness. The same can be said of his example of a country (Pakistan) which has developed successfully with planning. Does this imply that relative economic and institutional stability and effectiveness are preconditions for planning, without which comprehensive planning is not only irrelevant but also at times counterproductive ? On the