Historical Shocks Research Articles

Historical shocks and community-based enterprises: the slave trades, family dynamics, and social entrepreneurship in Africa

ABSTRACT This study investigates how exposure to traumatic historical shocks shapes the emergence of community-based enterprises across geographic regions in Africa. Leveraging a family embeddedness theoretical lens in the context of the traumatic background of the historic African slave trades, we theorize that the extent of slave exports is adversely related to cohesion and trust in family institutions in the affected regions, thereby reducing the likelihood of community-based enterprises in the modern era. Nevertheless, we also conjecture that this legacy of social structure disintegration and mistrust created by historical trauma from the slave trades can be relieved through contemporary family embeddedness in entrepreneurial activity. Empirically, we test these hypotheses by merging slave export data from 500 years of the African slave trades with data on 4,685 modern social enterprises across 49 African countries. The results corroborate the main hypothesis and show that the effect of slave exports on the likelihood of community-based enterprises is contingent on family funding and female involvement in social enterprises. These findings highlight the central role of familial dynamics in the link between historical trauma and modern entrepreneurial strategy.

Is Europe prepared to live without emissions? A dynamic analysis of the energy transition in economic sectors

Europe has experienced the adverse effects of climate change due to the human footprint on a scale never seen before. The region's future appears challenging as it persistently adheres to conventional practices. To address this, social movements in Europe must advocate for policymakers to earnestly undertake the widely advocated energy transition within the existing socioeconomic model. A crucial aspect for governments is to comprehend the status along the trajectory of this transition. In this study, we investigate the intricate relationship between emissions, economy, and energy spanning the years 1990 to 2019 across 32 European countries. Our analysis differentiates among major polluting sectors, utilizing a dynamic model that accounts for potential structural breaks. Our findings confirm the presence of ruptures in the stability of the parameters, revealing three distinct periods marked by historical shocks. While the majority of European countries exhibit a decoupling between emissions and economic growth, a contrasting trend is observed between emissions and energy consumption. Notably, the energy supply and residential sectors emerge as the most problematic due to their high carbon intensity. However, the decoupling process remains distant in terms of energy, underscoring the imperative shift toward renewable energy sources over conventional fossil-based fuels. This study emphasizes the urgency of adopting sustainable practices to mitigate climate change and encourages a revaluation of current energy paradigms.

Exogenous Shocks And The Dynamics Between Geopolitics And Global Trade

In this study, we seek to uncover how exogenous shocks shape the dynamics between geopolitics and global trade. By using coupling theory, we propose that the intricate interplay between politics and trade can occur with different nuances and degrees of coupling. We introduce four different situations of coupling, based on historical shocks. We also propose a new form of coupling, that we label as semi-coupling that can occur from shocks such as the COVID-pandemic, and possible future large climate disasters or migration flows. Global trade, geopolitics, coupling theory, exogenous shocks, COVID-pandemic

Rural forested community shocks as perceived by in-migrants versus long-term residents

Rural communities face challenges and opportunities through changing relationships to natural resources that they depend on socially and culturally. Structural shifts in community-natural resource interactions may be expressed as “shocks”, or disruptions that create community change across multiple scales. These shocks may be isolated or connected events, and frequently have associated ripple effects. Our objectives were to (1) identify community shocks based on local resident perspectives, (2) evaluate regional variability of resident-perceived shock events, and (3) assess variation in perceptions of shocks between newer in-migrant and long-term residents. We used a mail survey to collect data from residents in rural New York, Ohio, Maine, and West Virginia (USA). Rather than starting with designated perspectives from past research, we used an inductive approach to identify shock events and their impacts. Categories of major shock events included, but were not limited to, employment loss, land transfers and designations, infrastructure development, loss of institutions, and natural disasters. Each community's history, shocks, and outcomes were uniquely place-dependent. Shocks identified and perception of them varied by residential tenure. Although identified similarly in a general sense by all respondents, details about individual shocks were more elaborately described by long-term residents, and in-migrants conveyed awareness of historical shocks. Conceptualizations of discrete, identifiable, and individual “shock” events are too simple and narrow for elucidating ongoing community perturbations that accumulate, counteract, and influence each other.

Sustaining enrolment when rains fail: School feeding, rainfall shocks and schooling in Malawi

Emerging evidence suggests that rural children, especially older girls in low-income countries, are at risk of being withdrawn from school when adverse weather-related events occur. Identifying actions that mitigate the adverse effects of weather shocks on schooling, therefore, is critical for sustaining equitable human capital formation. In this paper, we use four waves of household and community panel survey data, merged with long-term, spatially explicit rainfall data to investigate whether access to school feeding programmes (SFP) in Malawi supports primary school enrolment when negative rainfall shocks occur. We find some evidence that access to SFP increases enrolment for older children when their households experience anomalously low rainfall conditions compared to those without SFP. The positive associations of SFP on enrolment persist when we consider historical shocks over longer periods. When we disaggregate by sex, however, there are no differentials. The findings suggest that SFPs, already a common intervention in many contexts, may have modest potential for improving primary school completion rates, educational advancement and human capital formation in the context of a rapidly changing climate.

Social Capital Contributions to Resilience in an Entrepreneurial Ecosystem in Nepal

Tourism is an important sector for many people in Nepal. There have been a number of damaging shocks in the last decade, including the 2015 earthquake and the COVID-19 pandemic, that have stopped the industry in its tracks. The effects of slow onset climate change are also impacting the industry and are forecast to get worse. An entrepreneurial ecosystem in Nepal has been established to foster resilience among participating businesses. This research addresses whether social capital contributes to the resilience of tourism startups in Nepal and whether an entrepreneurial ecosystem fosters that social capital. Further, it asks whether renewable energy and energy efficient practices have impacted resilience. And, finally, whether there is evidence of transformative change within the businesses studied. Results suggest that relationships generated through enduring historical shocks in the tourism economy in Nepal have fostered social capital, and that the entreprenuerial ecosystem has itself cultivated elements of social capital and resilience in the participating businesses. While firm conclusions could not be drawn as to whether transformative change has occurred in the businesses, the foundation for realising transformational opportunities has been established. This study suggests that resilience can be reframed from its historically ecological confines to be a more fluid and adaptable concept of human agency affected socio-ecological systems and may eventually allow, and be a driver of, transformational change in businesses participating in an entrepreneurial ecosystem.

THE EFFECT OF BUSINESS OWNER DEMOGRAPHICS ON LOAN FORGIVENESS IN A PANDEMIC

Generally, crisis situations entail economic hardship for entrepreneurs and their businesses. As such, historical crisis events may be accompanied by government policy to lessen the adverse effects for business owners and their employees. By analyzing a sample of 139,006 U.S. businesses that received Paycheck Protection Program (PPP) loans of $150,000 or more from the United States Treasury, we empirically show that female, racial and ethnic minority business owners will be at a disadvantage in receiving loan forgiveness relative to their peers. These findings advance the literature by highlighting post funding gender, racial and ethnic disparities in accessing venture resources. Practically, the results highlight how governmental intervention during a historical shock may disproportionately increase constraints on female, racial and ethnic minority business owners.

Persistence and volatility spillovers of Bitcoin to other leading cryptocurrencies: a BEKK-GARCH analysis

PurposeThis paper aims to investigate the effects of volatility transmission among Bitcoin and other leading cryptocurrencies, namely, Binance USD, BNB, Cardano, Dogecoin, Ethereum, Polkadot, Polygon, Solana, Tether, USD Coin and XRP.Design/methodology/approachThe multivariate BEKK-GARCH model is used with the daily data set from 1 January 2017 to 31 March 2023. The data set is analysed in its entirety and is also the COVID-19 epidemic period.FindingsThe study reveals that while the volatility of cryptocurrency prices is influenced by their own historical shocks and volatility, there is proof of the effects shock transmission among Bitcoin and other notable cryptocurrencies. Furthermore, the authors identify the spillover effects of volatility among all 11 pairs and provide evidence that conditional correlations with varying time constants are present, and predominantly positive for both the entire and COVID-19 outbreak periods.Practical implicationsThe findings will be helpful to market experts who want to avoid losses in traditional assets. To develop the best risk management and hedging strategies, businesses might use the information to build asset portfolios or personalise payment methods. The use of such data by investors and portfolio managers could aid in the development of investment opportunities, risk insurance plans or hedging strategies for the management of financial portfolios.Originality/valueTo the best of the authors’ knowledge, the use of the BEKK-GARCH model for examining the effects of volatility spillover among Bitcoin and the other eleven top cryptocurrencies has not been previously documented.

The Slaughter of the Bison and Reversal of Fortunes on the Great Plains

Abstract In the late nineteenth century, the North American bison was brought to the brink of extinction in less than two decades. We demonstrate that the loss of the bison had immediate, negative consequences for the Native Americans who relied on them and ultimately resulted in a persistent reversal of fortunes. Once amongst the tallest people in the world, the generations of bison-reliant people born after the slaughter lost their entire height advantage. By the early twentieth century, child mortality was 16 percentage points higher and the probability of reporting an occupation 19 percentage points lower in bison nations compared with nations that were never reliant on the bison. Throughout the latter half of the twentieth century and into the present, income per capita has remained 25% lower, on average, for bison nations. This persistent gap cannot be explained by differences in agricultural productivity, self-governance, or application of the Dawes Act. We provide evidence that this historical shock altered the dynamic path of development for formerly bison-reliant nations. We demonstrate that limited access to credit constrained the ability of bison nations to adjust through re-specialization and migration.

Famine, Inequality, and Conflict

Abstract This paper employs newly collected historical data from Finland to present evidence of historically contingent, long-run consequences of a famine. We document high levels of local inequality in terms of income and land distribution until a violent uprising in 1918. These inequalities partly originated from the famine of 1866–1868, which increased the concentration of land and power to large landowners. We further show that regions with more exposure to the famine had more labor coercion by the early 1900s. These inner tensions led to violent conflict following the Russian Revolution and the Finnish independence from the Russian Empire. Using microdata on all the casualties of the 1918 Finnish Civil War, we demonstrate that the famine plausibly contributed to local insurgency participation through these factors. Although unsuccessful in replacing the government, the insurgency led to significant policy changes, including radical land redistribution and a full extension of the franchise. These national reforms led to a more drastic shift toward equality in locations more affected by the famine with greater pre-conflict inequality. Our findings highlight how historical shocks can have large and long-lasting, but not straightforward impacts.

The Effects of the Volatility Changes in Exchange Rates and Interest Rates from Historical Shocks on the Non-Performing Loans in Turkish Economy

Historical shocks (Lehman Brothers bankruptcy (15 September 2008), the FED?s tapering decision (18 December 2013), the CBRT?s interest rate decision (28 January 2013)) had significant impact on global and domestic financial markets, especially nonperforming loans (NPLs). In this context, main aim of this study is to analyze how volatility changes in exchange rates and interest rates triggered by these historical shocks affect consumer and industrial nonperforming loans in Turkish economy by using quantile regression techniques. The results showed that shocks that cause volatility changes in foreign exchange rates and interest rates have important effects on NPLs in the Turkish banking industry.

Initial conditions and regional performance in the aftermath of disruptive shocks: the case of East Germany after socialism

Abstract We investigate how specific regional conditions found in East Germany at the end of the socialist regime impact development during the turbulent shock transition to a market economy. Both the self-employment rate (an indicator of a pre-socialist entrepreneurial tradition) and the share of the workforce with a university degree (as measure of the general qualification of the workforce) have a strong positive effect on regional development. Our results show that entrepreneurship and knowledge are key regional resources for mastering disruptive historical shocks.

Calling Baumol: What telephones can tell us about the allocation of entrepreneurial talent in the face of radical institutional changes

Calling Baumol: What telephones can tell us about the allocation of entrepreneurial talent in the face of radical institutional changes

Monopsony Power and Wages: Evidence from the Introduction of Serfdom in Denmark

Abstract We exploit a large historical shock to the Danish labour market to provide evidence of how restrictions on labour mobility increase monopsony power and thereby reduce wages. By severely limiting the possibility of the rural population to work beyond their place of birth, the reintroduction of serfdom in 1733 aimed to increase monopsony power and secure cheaper labour in the countryside. Using a unique data source based on the archives of estates from the eighteenth century, we test whether serfdom affected the wages of farmhands more strongly than other groups in the labour market, and results based on a difference-in-differences approach reveal evidence consistent with a strong negative effect following its introduction. This is confirmed when we use a different control group from the Swedish province of Scania. We also investigate whether one mechanism was that boys with rural backgrounds were prevented from taking up apprenticeships in towns and find suggestive evidence that this was indeed the case.

Характеристики и аспекты моделей управления нефтяными доходами в Иране и Российской Федерации

Oil revenue management is one of the most important economic issues for Iran and Russia. The importance of studying this issue is due to the fact that in recent years, the national economies of Iran and Russia have become highly dependent on oil revenues, and therefore the mechanism of their domestic economy has become highly sensitive to global fluctuations in oil prices. Therefore, macroeconomic policymakers of the two countries in recent decades have tried to increase the resilience of their national economy in the face of sharp fluctuations in world oil prices. The purpose of this article is to examine the situation of the economies of Iran and Russia during various historical oil shocks and also to discuss the strategies of the two countries in reducing dependence on oil revenues and managing oil revenues as well. The results of the study show that despite the implementation of various policies (such as the establishment of the National Development Fund of Iran in 2010 or the Stabilization Fund in Russia in 2004) both countries have weaknesses in oil revenue management. Therefore, policymakers in both countries should pay more attention to this economic challenge, especially now that they are experiencing the COVID-19 negative consequences as well as fighting Western sanctions.

Roots of Mistrust: The Legacy of the Slave Trade on Social Entrepreneurship in Africa

The community interest is often at the center of social entrepreneurial action. Yet, few social enterprises invoke the community development approach in attending to social problems. Why do some social enterprises focus on community development, while others do not? Tensions related to the nature of ownership, leadership, and operating environment offer some insight. Yet, few studies consider the influence of historical context of the operating environment, in particular how age-long trauma can define patterns of modern entrepreneurial activity. We hypothesize that exposure to significant historical shocks might tend to fracture social cohesion and trust in societies, and thus will reduce the likelihood of community development enterprises. Leveraging the empirical background of the historic African slave trade that occurred between 1400 and 1900 AD, which resulted in the forced migration of indigenous Africans, we analyze the historical impact of slavery on the pattern of social enterprise in Africa. Our findings highlight how the impact of this historical shock is contingent on family and female embeddedness in the new venture. Given the importance of social enterprises in efforts to develop communities in least developed regions around the world, our research reveals the roots of inhibiting forces in modern societies and identify important caveats in these relationships. We conclude by parsing out implications for research, entrepreneurs, and policy makers.

Historical roots of entrepreneurship in different regional contexts—the case of Poland

Entrepreneurship is often found to be highly persistent over time. Although the historical roots of persisting effects of entrepreneurship are partially uncovered, their mechanisms remained largely unclear. To understand the historical roots of contemporaneous regional entrepreneurship, we exploit different types of historical self-employment in regions of Poland, a country that experienced different types of disruptive developments. In contrast to previous studies on other countries, we do not find a persistent effect of the general level of historical private sector self-employment. There is, however, a pronounced positive relationship between high regional levels of knowledge-intensive entrepreneurship in the 1920s and current start-up activity in general, even in areas where large parts of the local population were displaced after World War II. We find that the magnitude of this effect is independent of the mobility and an exchange of the local population. Our main conclusion is that the historical regional knowledge stock, as reflected by knowledge-intensive entrepreneurship, can be an important and stable historical root of modern entrepreneurship despite disruptive historical shocks and population discontinuities.

One partition, many divisions? Ethnicities and education in Pakistan

If historical shocks influence educational outcomes, how long does the effect last, and does it differ among ethnic groups? This study answers these questions by exploiting the historical experiment of partition—that is the splitting of the British Raj into India and Pakistan—and by presenting a theoretical model that explains the trade-offs such a shock uncovers for different ethnic groups that have to decide between assimilation through education and maintaining their ethnic specificity. We use different rounds of Pakistan social and living standard measurement (PSLM) survey and analyze the educational outcomes of the grandchildren of partition (i.e., whose grandparents were born during the partition). We show that the scar from partition is long-lasting, as the present generation is still living under its influence. More importantly, our results reveal the different adaptation strategies of ethnic and cultural groups in the long run.

Money and Ideology: Evidence from Candidate Manifestos

Do campaign contributions influence politicians? In this article, we study the impact of corporate donations on ideology and political discourse. We construct a novel dataset that combines the campaign manifestos issued by every candidate running for a seat in the French parliament with data on the amount and origin of their campaign contributions. We exploit an exogenous historical shock on corporate donations to estimate their causal impact on the content of campaign communication. Combining a difference-in-differences approach with computational text analysis, we show that receiving more donations from small and local corporate donors encourages candidates to advertise their local presence over national politics during the campaign. We also find evidence that donations lead candidates from extreme parties to moderate their rhetoric—including shifts in the policy topics they advertise. Our findings may reflect a quid-pro-quo effect between donors and politicians, but they may also result from an electoral effect: receiving expressive contributions from corporate donors affects the content of campaign messages because it changes candidates' perception of which issues matter most to voters. According to our findings, campaign finance regulations may alter the information made available to voters through their impact on candidates' rhetoric.

Shocks and the spatial distribution of economic activity: The role of institutions

Abstract Why do some historical shocks permanently impact local development, while others do not? This paper examines how institutions influence local recovery to population shocks, using a model with multiple regions and increasing returns to economic activity within regions. Extractive institutions crowd out productive activity, making its spatial coordination more difficult in the aftermath of large, negative shocks. Hence, when one region experiences such a shock, extractive institutions can hinder recovery, ensuring a redistribution of productive activity away from that region over the long-run. Using a dataset of major earthquakes and 1860 world cities from 1973 to 2018, I find sustained negative effects of earthquakes on city population growth, with effects being driven by cities located outside of stable democracies, consistent with the theory.