Early Investment Research Articles

Venture Capital and Innovation: Evidence from European Economic Area Countries

The paper examines the long-run relationship between venture capital and innovation in the 19 European Economic Area (EEA) countries over the period 1989–2014. We use three different indicators of venture capital (VC), such as VC at early stage investment, VC at later stage investment, and VC total investment, and seven different indicators of innovation, such as patents-residents, patents-nonresidents, patents-total, research and development expenditure, researchers in research and development activities, high-technology exports, and scientific and technical journal articles, to examine this long-run relationship. Using cointegration technique, the study warrants the support of long-run relationship between venture capital and innovation in few cases, typically with reference to a particular VC indicator and innovation indicator. Expending the Granger causality test, the study finds the presence of both bidirectional and unidirectional causality between venture capital and innovation. However, these results vary from country-to-country within the EEA countries, depending upon the types of VC indicator and innovation indicator that we use in a particular empirical exploration process. The policy implication of this study is that the economic policies should recognize the differences in the venture capital and innovation in order to maintain the sustainable development in these EEA countries.

Engines of growth: essays in Swedish economic history

Sweden experienced a remarkable economic transformation between the 18th century and the outbreak of World War I. This dissertation consists of four self-contained papers that uses a quantitative empirical approach to identify key drivers of this transformation by analyzing the contribution of the potato to economic growth, the determinants of the early investments in mass schooling, and how the rollout of the national railroad network shaped rural and urban growth patterns from the mid-19th century to the present day. Together, the findings of this dissertation contribute novel evidence on the causal determinants of Sweden’s acceleration in growth and also shed light on the historical roots of contemporary patterns of regional and urban development.

Birth Order and College Major in Sweden

Previous research on birth order has consistently shown that later-borns have lower educational attainment than first-borns, however it is not known whether there are birth order patterns in college major. Given empirical evidence that parents disproportionately invest in first-born children, there are likely to be birth order patterns attributable to differences in both opportunities and preferences, related to ability, human capital specialization through parentchild transfers of knowledge, and personality. Birth order patterns in college major specialization may shed light on these explanatory mechanisms, and may also account for long-term birth order differences in educational and labour market outcomes. Using Swedish population register data and sibling fixed effects we find large birth order differences in university applications. First-borns are more likely to apply to, and graduate from, medicine and engineering programs at university, while later-borns are more likely to study journalism and business programs, and to attend art school. We also find that these birth order patterns are stronger in high SES families, and that differences in college major explain approximately half of the within-family birth order differences in long-term earnings. These results indicate that early life experiences and parental investment shapes sibling differences in ability, preferences, and ambitions even within the shared environment of the family.

Comparison of Rooting Strategies to Explore Rock Fractures for Shallow Soil-Adapted Tree Species with Contrasting Aboveground Growth Rates: A Greenhouse Microcosm Experiment.

For tree species adapted to shallow soil environments, rooting strategies that efficiently explore rock fractures are important because soil water depletion occurs frequently. However, two questions: (a) to what extent shallow soil-adapted species rely on exploring rock fractures and (b) what outcomes result from drought stress, have rarely been tested. Therefore, based on the expectation that early development of roots into deep soil layers is at the cost of aboveground growth, seedlings of three tree species (Cyclobalanopsis glauca, Delavaya toxocarpa, and Acer cinnamomifolium) with distinct aboveground growth rates were selected from a typical shallow soil region. In a greenhouse experiment that mimics the basic features of shallow soil environments, 1-year-old seedlings were transplanted into simulated microcosms of shallow soil overlaying fractured bedrock. Root biomass allocation and leaf physiological activities, as well as leaf δ13C values were investigated and compared for two treatments: regular irrigation and repeated cycles of drought stress. Our results show that the three species differed in their rooting strategies in the context of encountering rock fractures, however, these strategies were not closely related to the aboveground growth rate. For the slowest-growing seedling, C. glauca, percentages of root mass in the fractures, as well as in the soil layer between soil and bedrock increased significantly under both treatments, indicating a specialized rooting strategy that facilitated the exploration of rock fractures. Early investment in deep root growth was likely critical to the establishment of this drought-vulnerable species. For the intermediate-growing, A. cinnamomifolium, percentages of root mass in the bedrock and interface soil layers were relatively low and exhibited no obvious change under either treatment. This limited need to explore rock fractures was compensated by a conservative water use strategy. For the fast-growing, D. toxocarpa, percentages of root mass in the bedrock and interface layers increased simultaneously under drought conditions, but not under irrigated conditions. This drought-induced rooting plasticity was associated with drought avoidance by this species. Although, root development might have been affected by the simulated microcosm, contrasting results among the three species indicated that efficient use of rock fractures is not a necessary or specialized strategy of shallow-soil adapted species. The establishment and persistence of these species relied on the mutual complementation between their species-specific rooting strategies and drought adaptations.

The potential of marine energy technologies in the UK – Evaluation from a systems perspective

Accelerated technological change plays a crucial role in enabling the low-carbon energy transition. Quantitative energy modelling exploring alternative long-term decarbonisation pathways can support policy-makers in choosing the most important areas for technology promotion. This study analyses the potential contribution of marine energy in the UK from an energy systems perspective considering the trade-offs between local lead markets and global learning, the uncertainty in the learning potential, competition with alternative technologies and impacts on system balancing. The results indicate that only under very favourable conditions, i.e. with learning rates above 15% and high global deployment, marine energy will have a significant contribution to the UK decarbonisation pathway. Alternatively, marine energy could constitute a hedging strategy against multiple failure in other low-carbon options. The early strategic investments into marine energy lead, in most cases, to a slight rise in societal welfare costs compared to the respective cases without attempts to induce marine learning and brings benefits to the electricity system. Thus, on the whole, we conclude that marine energy has the potential to contribute to the UK energy system, but there is a substantial risk that strategic investments in a national lead market will not directly pay off in the long term.

Liquidity default, liquidity management and smooth dividends policy

ABSTRACTOur article models liquidity financing constraints with the real options framework. By conducting a comprehensive investigation of the effects of shocks to liquidity constraints on the firm’s optimal investment, financing and dividend policies, our model highlights the importance of liquidity management and extends the liquidity management approach to hedge liquidity default risk. We find that being concerned about liquidity default risk will significantly change a firm’s behaviours, including those related to investment and the optimal capital structure. A firm that is concerned about its liquidity default risk will become more cautious: it will choose to delay investment and have higher leverage when internal liquidity is very low, but choose earlier investment and lower leverage when liquidity is high enough. The dividends policy can alleviate risks from both the external market and internal project volatility and provides an alternative explanation for the ‘smooth dividends policy puzzle’ commonly reported in empirical research.

Early investment: the use of Action Research in developing the role of an educational psychologist in an early years setting

This research considers the role an educational psychologist could play within one early years setting over an academic year, using an Action Research and a Research and Development in Organisations framework. A model of practice was developed based on the needs of the setting that included being more frequently involved with casework and conducting work aimed at supporting early years practitioners and parents/carers. This research suggests there is a greater role for educational psychologists within early years, involving more than conducting casework, through providing a more holistic and intensive approach to supporting practitioners, parents/carers and children. This supports the existing literature as well as advocating a more extensive role within early intervention services.

The Contemporaneous Distributional Effects of Investments on Early Childhood Nutrition: A Panel Quantile Approach

This article examines the distributional effects of early nutritional investments on contemporaneous child health endowment measurements. Depending on whether investments made in child nutrition at different times complement or substitute, the return from early childhood nutritional investments can differ across the health endowment distribution. To establish a causal inference, I merge village-level rainfall data with a child-level longitudinal survey — the Ethiopian Rural Household Survey — and apply a Correlated Random Effect quantile regression for panel data model. The findings suggest that the return derived from a standard deviation increase in a village-level precipitation z-score is stronger at the lower end of the weight-for height and weight-for age z-score distributions. Given that inequalities present at an early age widen over time, the equalizing benefits of a standard deviation increase in a village-level precipitation z-score imply that scaling up investments on early childhood nutrition will not only increase long term efficiency but will also reduce inequality.

From Childhood to Adult Inequality: Parental Investments and Early Childhood Development

Macroeconomic analysis of inequality and intergenerational mobility typically abstracts from the role of endogenous childhood development. This paper shows that this omission is not innocuous. It extends the standard general-equilibrium heterogeneous-agent life-cycle model with earnings risk and credit constraints to incorporate endogenous early childhood investments (parental time and money), family transfers, and college education. Agents cannot invest in their own childhood development or pay their parents to do so, which can lead to inefficiently low levels of investments. Estimating the model to match key moments of the data (e.g., average childhood investments and returns to skills), we find that a government program that funds early childhood investments would reduce inequality by 20% and improve mobility by 60%, as well as yield a three times larger welfare increase than a government transfer that uses the equivalent revenue. Introducing these investments in the model as a short-run small-scale policy—as in an RCT—would underestimate the benefits by two-thirds. Long-run distribution changes are the main drivers of the differences in welfare and mobility outcomes, while general-equilibrium is important for the reduction of inequality. The paper also shows that by taking a temporary deficit to afford these investments in the transition, the government is able to increase the welfare of every new generation.

Reducing Inequality through Dynamic Complementarity: Evidence from Head Start and Public School Spending

We compare the adult outcomes of cohorts who were differentially exposed to policy-induced changes in Head Start and K–12 spending, depending on place and year of birth. IV and sibling-difference estimates indicate that, for poor children, these policies both increased educational attainment and earnings, and reduced poverty and incarceration. The benefits of Head Start were larger when followed by access to better-funded schools, and increases in K–12 spending were more efficacious when preceded by Head Start exposure. The findings suggest dynamic complementarities, implying that early educational investments that are sustained may break the cycle of poverty. (JEL H52, H75, I21, I26, I28, I32, I38)

Early childhood education and investment in human capital formation: the case of Turkey in global perspective

ABSTRACTDrawing on cognitive science, child psychology, education and economics literature, this paper investigates the significance of early childhood development and highlights the value of investment in early childhood education (ECE). The young child requires adequate psycho-stimulation for the optimal development of the brain, which subsequently helps her to accomplish at school and achieve in adulthood. It has been previously emphasized that for all young children who start life at an equal footing, governments should provide equal opportunities for ECE and care where families are not able to provide. In this paper, we contrast the current status of early childhood and pre-primary education in Turkey with that of Nordic countries, which have advanced far in this level of education. Despite the striking evidence on affirmative effects, early childhood and pre-primary education is not considered a priority in the education system in Turkey and has a lot of room for improvement.

Child Development Accounts, parental savings, and parental educational expectations: A path model

Parents' expectations for their children's education, and efforts to foster suitably positive expectations, are worthy of policy attention. Previous research indicates that early saving for a child's postsecondary education can foster and sustain high parental expectations, yet little is known about the operative mechanisms. This study presents analyses from a randomized experiment with Child Development Accounts (CDAs), a policy to encourage early financial investments for education and to shape parents' expectations concerning their young children's educational goals. Our research provides key evidence on whether parental account holding for children's college (a) has a positive impact on parents' expectations for their children's educational attainment and (b) mediates the CDA's effect on their educational expectations at an early stage in their child's development. We employ data from the SEED for Oklahoma Kids (SEED OK) experiment, the first randomized social experiment to test universal and progressive CDAs. We conduct a path analysis and a supplemental analysis with marginal structural models (n=2160). We find that holding a college-savings account has a significant effect on parents' educational expectations for their children and that whether one holds an account mediates the effect of CDAs on such expectations. Findings suggest that CDAs may promote early parental financial investment and high expectations. Research and policy implications are discussed.

Sixteen-year population-based cohort study of main class International Classification of Diseases associated with psychiatric disorders in a sample under the age of two years

IntroductionThis paper illustrates the use of cohort data from a population to describe the early life prevalence and odds ratios (ORs) of the main classes of International Classification of Diseases (ICD) associated with any mental disorder arising at any time during the 16 year study period.ObjectivesThe main ICD disorder classes were examined in relation to psychiatric disorders over 16 years in a cohort under the age of two years between April 1st, 1993, and January 1st, 1995.AimsTo demonstrate the utility of studying the complete profile of associated diagnoses over time in a population cohort.MethodsThe total number of individuals under the age of two years before 1995 (n = 17,603) were tallied within each main class of ICD disorder by year and expressed as ORs of those with and without any 16-year psychiatric disorder.ResultsThe greatest annual rates observed in the early years of life were for the following main ICD classes of disease: respiratory system, sense organs, symptoms signs ill-defined conditions, no diagnosis, injury poisoning, and skin subcutaneous tissue disorders. These disorders also had the highest ORs in early life given the presence of a mental disorder at any time during the study period.DiscussionKnowing the early life main class diagnoses associated with psychiatric disorders could guide both basic science research as well as early intervention social and health investment policies.Disclosure of interestThe authors have not supplied their declaration of competing interest.

Private Equity and Devaluation in Emerging Countries

Abstract: Using a comprehensive database with 51 emerging countries studied over a 13 year period, we find that devaluation increases the PE investment. More years of annual devaluation have a higher impact in promoting PE investment. Conclusions are confirmed for total and high technology PE investments, but not for early stage PE investments. Devaluation does not benefit PE investment in firms in the early stages of development. Devaluation itself is not sufficient to encourage the appetite of investors; however, some country-level competitiveness variables are indispensable for making a country more fertile for PE investment when a devaluation occurs – the high relevance of competiveness increasing in the long term.

Providing Efficient Network Access to Green Power Generators: A Long-Term Property Rights Perspective.

Coordinating the timing of new production facilities is one of the challenges of liberalized power sectors. It is complicated by the presence of transmission bottlenecks, oligopolistic competition and the unknown prospects of low-carbon technologies. We build a model encompassing a late and early investment stage, an existing dirty (brown) and a future clean (green) technology and a single transmission bottleneck, and compare dynamic efficiency of several market designs. Allocating network access on a short-term competitive basis distorts investment decisions, as brown firms will preempt green competitors by investing early. Dynamic efficiency is restored with long-term transmission rights that can be traded on a secondary market. We show that dynamic efficiency does not require the existence of physical rights for accessing the transmission line, but financial rights on receiving the scarcity revenues generated by the transmission line suffice.

Report: Early Maternal Time Investment and Early Child Outcomes

Report: Early Maternal Time Investment and Early Child Outcomes

Investment Flexibility as a Barrier to Entry

This paper presents a model of investment in a duopoly with firms that choose the scale and timing of investment. Decision-making flexibility and the costs saved by investing in large steps rather than sequences of small steps determine an incumbent's ability to deter entry by a potential competitor. Entry occurs when these cost savings are very small or very large, because the effect of increased industry capacity on the incumbent's assets-in-place is the same regardless of which firm invests. In intermediate cases, the incumbent is able to deter entry by making a smaller, earlier investment than the potential entrant. The smaller investment scale protects the incumbent's assets-in-place, which offsets the incumbent's cost disadvantage from investing in smaller steps than the entrant would choose. Nevertheless, the threat of entry constrains the incumbent's investment behavior and limits its profitability. The model is solved using a combination of best-response iteration and the projected successive over-relaxation method.

Re-analyse the Early Stage American Railway Investment System from the Land Use and Privatization Double-guided Perspective: the Drawbacks and warnings

Abstract The Chinese railway infrastructure investment has come to a new developing phase with the feature of privatization and land double-oriented. Most domestic literatures recommend the experiences of the “private investment & land grant” model of American railway investment system. However, the growth trajectory of private capital and land system in china are considerably different from that of the United States. The paper reveals the role of the various stakeholders in the railway development, re-analyzing the drawbacks of American railroads development model and proposing the warnings to policy options of the current and future Chinese Railway development.

A tale of two sovereign funds: China's exceptionalism in sovereign wealth management through CIC and SAFE

China is the only country in the world with two sovereign investment vehicles dedicated to managing excess foreign reserves for return, not just safety and liquidity. As the investment profile and behaviour of both funds align with the aims of the government's economic agenda, it is tempting to view China's two sovereign funds as part of a coordinated effort to further state investment policy. However, analysis of the origin of China's multi-sovereign investor regime shows that this approach is primarily a product of intense bureaucratic rivalry within the Chinese public service, rather than a considered strategy of the sponsoring government. This rivalry had a detrimental impact on aspects of the CIC's institutional design and early investment decision making. Comparison of the CIC, China's flagship sovereign investor, to its peer Asian funds in Korea and Singapore reveals that relative to regional reserve investment corporations, the CIC lacks robust mechanisms to achieve effective arms-length governance from its state sponsor. Reforms to the Chinese sovereign fund to ensure greater clarity of mission and alignment of purpose with internal decision making would ensure Chinese exceptionalism in sovereign investment transitions from cautionary to exemplary.

浅析安阳市通用航空产业的发展

通用航空产业自身的产业链较长，产业链上游产业包含飞机的研发设计、航空设备制造、机场建设等，下游产业包括教育培训、体育娱乐、私人及公务飞行、机场服务、维修服务等等。另外，通用航空产业向外包括回顾效应、旁侧效应和前瞻效应。回顾效应如基础设施建设、航空设备建设、维修服务、教育事业和机场建设，旁侧效应如其他装备制造业、餐饮业、影视业、航模和医疗救护，前瞻效应如航空运输/物流、旅游产业、工农林业和其他产业建设。安阳市发展通用航空产业，无论从自然地理位置优势，还是从人文历史文化优势看，都是其他地区不可比拟的。但是就目前来看，安阳市的通航产业的发展存在一些问题。国家出于空域安全考虑，飞行管制较多，飞行业务量也相对较少；低空经济和通用航空产业的发展是在摸索中前进，前期投入大、收益慢、经验不足；缺乏配套的机场和起降点；专业型人才培养较慢、成本投入较大，资金不足，企业宣传力度也有待提高；通航飞行服务属于高消费，多数人民的消费水平达不到，社会普遍认识也不足。同时，在实地调查当中，当地居民也反应航空器飞行对他们生活产生较大影响，没有处理好与当地居民之间关系。安阳市发展通用航空产业应立足于“突出优势、扩大规模、搭建网络、提升宣传”，把握正确方向才能得以发展。 General aviation industry’s own industrial chain is long. The upstream industry chain includes aircraft R & D design, aviation equipment manufacturing, airport construction, downstream in-dustry, including education and training, sports and entertainment, private and official flight, airport services, maintenance services and so on. In addition, the general aviation industry includes retrospective effects, side effects and forward-looking effects. Retrospective effects include infrastructure construction, aviation equipment construction, maintenance services, education and airport construction. Side effects include other equipment manufacturing, catering, film and television industry, model aircraft and medical rescue. Forward-looking effects include air transport/logistics, tourism industry, agriculture, forestry and other industries. In Anyang City, the development of general aviation industry, both from the physical and geographical advantages, or from the human history and cultural advantages, is unmatched in other regions. But for now, there are some problems about the development of navigation industry in Anyang city, such as the more flight control, the relatively small flight traffic on the country for airspace security considerations. Due to early investment, low income, lack of experience, low-cost economy, the development of general aviation industry is moving forward with exploration. Navigation lacks matching airports and landing points; navigation professional personnel training is slow; the cost of investment is high, while funding is insufficient; corporate propaganda efforts have to be improved; navigation flight services are in high consumption; most people’s consumption level is not reached; the community generally lacks understanding. At the same time, in the field survey, local residents also respond that aircraft flight has impact on their lives. The general aviation industry did not handle the relationship with the local residents. In Anyang City, the development of general aviation industry should be based on “outstanding advantages, expanding the scale, building the network, enhancing publicity” to grasp the correct direction to be able to develop.