Neoclassical Theory Research Articles

How population ageing affects FDI flows: a tale of South Korea

The neoclassical theory predicts that population ageing would reduce net FDI inflows, which would nullify government efforts to attract FDI. There is a complete paucity of literature on the dynamic relation between population ageing and FDI flows for South Korea. This is a distinctive attempt to test the hypothesis that population ageing reduces net FDI flows (% of GDP) in South Korea. The results of the ARDL bounds testing approach to cointegration analysis under structural breaks provide clear evidence of non-linearity between population ageing and net FDI flows (% of GDP). Support for the neoclassical hypothesis is established only in the short-run.

Paradojas dialécticas del modelo de competencia perfecta de la teoría económica neoclásica

Neoclassical economic theory holds, with apparent certainty, that the model of perfect competition is an idealized form of real markets. Although difficult to find, it is of enormous importance as a scientific concept and as a guide to practice. In this article we propose that this statement is partially incorrect. Neither is perfect competition an idealized form of real markets, nor can it serve as an adequate guide for an economic policy on the ordering of markets. Instead, perfect competition and other similar concepts are topological variants of spontaneous order. From the two previous considerations, a set of paradoxes and inconsistencies derive that, however, do not totally invalidate the search for transcendental concepts, if we correctly locate their place in the social sciences.

The Mediating Effect Of Market Liquidity On The Relationship Between Financial Liberalization And Stock Market Returns Among East Africa Community Member Countries

The motivation for this study stems from the critical role of financial markets in economic development and the need to understand the factors influencing stock market performance in the East African Community (EAC) member countries. Financial liberalization, market liquidity, and macroeconomic stability are pivotal in shaping stock market returns. However, empirical studies examining these relationships within the EAC context are limited, prompting this comprehensive analysis. The general objective of this study was to investigate the effect of financial liberalization, market liquidity, and macroeconomic factors on stock market returns among EAC member countries. The study was anchored on the theory of financial liberalization, neoclassical theory, efficient market hypothesis, behavioral finance theory, and the general theory of employment, interest, and money. Data were collected from secondary sources, including financial reports, stock exchange databases, and relevant economic databases, covering the period from 2002 to 2021.The study employed fixed-effects regression models, chosen based on the Hausman specification test, to control for unobserved heterogeneity across countries. Baron and Kenny’s approach was used to test for mediation and moderation effects. The analysis involved examining the direct and, mediating relationships between the key variables. The findings revealed that financial liberalization significantly and positively affects stock market returns. Conversely, market liquidity was found to mediate this relationship, enhancing the positive effects of financial liberalization. The study concludes that financial liberalization is a crucial determinant of stock market performance in the EAC region. Market liquidity plays a significant role in amplifying the benefits of financial liberalization. For policymakers, the study recommends policymakers in EAC should focus on developing infrastructure that supports efficient trading systems. This recommendation is based on the finding that higher market liquidity significantly boosts the positive effects of foreign assets and liabilities on stock market returns

‘The economics of singularities’ by Lucien Karpik: debts and criticisms

This article examines ‘the economics of singularities’ by Lucien Karpik, which is a sociological theory explaining the functioning of markets for a specific type of goods, labeled as ‘singularities’, defined according to three criteria: the plurality of qualities, quality uncertainty and the primacy of quality. According to Lucien Karpik, singularities complement the typology of goods traditionally used by economists, consisting of homogeneous and differentiated goods. He argues that singularities represent a ‘blind spot’ of what he calls ‘neoclassical economic theory.’ According to him, while neoclassical economic theory is adequate for studying homogeneous and differentiated goods, an autonomous framework is indispensable for studying singularities. In this article, we propose a comprehensive overview of the economics of singularities, and we formulate a critique of Karpik’s positioning in relation to neoclassical economic theory.

Neoclassical realism(s) vis-à-vis other theories of foreign policy: taking the indistinguishability problem seriously

Neoclassical realism (NCR)’s opponents have considered it an incoherent and indistinctive approach because of its interest in addressing ideational and institutional factors. Specifically, they have denounced NCR’s fuzzily established internal and external conceptual boundaries, corresponding to central dimensions of this approach’s ‘indistinguishability’ problem. Even though NCR has responded in a sophisticated manner to its critics, such a response still falls short of advancing some subtle strategies to forge NCR’s theoretical identity and research design. To fill this gap, I distinguish several neoclassical realist theories (Types I, II, IIA, IIB and III) to clarify NCR works’ common ground and the several options available to the analyst to cope with the indistinguishability problem’s internal dimension. Furthermore, I compare neoclassical realist theories with organizational, bureaucratic, realist, liberal and constructivist approaches to foreign policy to discuss the indistinguishability problem’s external dimension. Dealing with this dimension entails acknowledging that neoclassical realist theories provide a top-down, as compared to a bottom-up approach to explain foreign policy as a policy rather than a process. It also provides a thorough explanation rather than a parsimonious account aimed at distinguishing independent and intervening variables. With different intensities, neoclassical realist theories embrace specific, refined logics of consequentialism rather than appropriateness to explain distinct state preferences rather than assuming power maximization or security seeking as pre-fixed state goals.

On the limited damp-proofing of residential buildings: do social norms matter?

PurposeThis study draws on neoclassical and behavioural economics theories to provide an empirical insight into the effect of knowledge, costs, and social norms on damp-proofing residential buildings in Ghana.Design/methodology/approachThis study used the quantitative approach involving survey data. A sample size of 242 participants was involved in the study. Applying principal component analysis on the responses from the participants, an index for damp-proofing, cost, knowledge, and social norms was derived. After generating the indexes, the ordinary least squares (OLS) regression was applied to estimate the impact of knowledge, costs, and social norms on damp-proofing.FindingsThe results from the OLS regression revealed that knowledge has a significant positive effect on damp-proofing while costs and social norms have significant negative effect on damp-proofing in Ghana. This study, therefore, concludes that although neoclassical economic factors such as knowledge and cost affect behaviour (damp-proofing), behavioural factors such as social norms also matter.Practical implicationsThe outcome of this study calls for policymakers to consider putting in place measures that increase knowledge and promote the use of damp-proofing techniques during the construction of buildings. In addition, the study calls for scholars to partake in collaborative research amongst disciplines such as economics, psychology, and the construction industry in order to provide more innovative solutions, the key of which is finding innovative ways to damp proof buildings.Originality/valueThis study is original in its context as it draws on neoclassical and behavioural economics theories to provide an empirical insight into the effect of knowledge, costs, and social norms on damp-proofing of residential buildings in Ghana. This is an area that has received less attention in the areas of building biology and building pathology globally.

Performance management in the prosocial market economy: a new paradigm for economic performance and sustainability

Purpose The purpose of this multi-voiced paper is to propose a prosocial paradigm for the field of performance management and management control systems. This new paradigm suggests cultivating prosocial behaviour and prosocial groups in organizations to simultaneously achieve the objectives of economic performance and sustainability. Design/methodology/approach The authors share a common concern about the future of humanity and nature. They challenge the influential assumption of economic man from neoclassical economic theory and build on evolutionary science and the core design principles of prosocial groups to develop a prosocial paradigm. Findings Findings are based on the premise of the prosocial paradigm that self-interested behaviour may outperform prosocial behaviour within a group but that prosocial groups outperform groups dominated by self-interest. The authors explore various dimensions of performance management from the prosocial perspective in the private and public sectors. Research limitations/implications The authors call for theoretical, conceptual and empirical research that explores the prosocial paradigm. They invite any approach, including positivist, interpretive and critical research, as well as those using qualitative, quantitative and interventionist methods. Practical implications This paper offers implications from the prosocial paradigm for practitioners, particularly for executives and managers, policymakers and educators. Originality/value Adoption of the prosocial paradigm in research and practice shapes what the authors call the prosocial market economy. This is an aspired cultural evolution that functions with market competition yet systematically strengthens prosociality as a cultural norm in organizations, markets and society at large.

Neoclassical Gravitational Field Theory

This Neoclassical Gravitational Field Theory offers a potential alternative perspective on the nature of gravity by expanding upon Newton’s classical law of gravitation. It seeks to address fundamental questions, such as why gravity functions as it does and why nothing in the universe can escape its influence. This paper explores some of the long-standing mysteries of gravity, including why masses are multiplied in Newton's gravitational formula and why objects accelerate at the same rate in a local gravitational field, regardless of their structure or composition. By presenting a classical framework, this research aims to provoke discussion and encourage further exploration of alternative explanations for gravity, potentially leading to a deeper understanding of both gravity and the universe itself.

The impact of minimum wage increases on unemployment in the V4 countries: Assessing the recommendations of the European Commission

The European Commission has recently implemented legislative measures to improve worker protection through an adequate minimum wage set by national laws or collective agreements. A recommended benchmark for minimum wage calculation is 60% of the gross median wage or 50% of the mean wage. However, the Kaitz index, a ratio indicator, shows lower values in most EU countries, raising concerns about potential negative impact on the labour market. This study aims to identify the impact of the Kaitz index and several other selected variables on unemployment in the V4 countries. Using multiple linear regression, we concluded that the Kaitz index’s growth does not uniformly impact unemployment in the V4 countries. Specifically, in Slovakia and the Czechia, the Kaitz index growth appeared to increase unemployment, in line with neoclassical economic theory. In contrast, Hungary and Poland did not register significant effects. Gender differences were also noted, with the Kaitz index affecting female unemployment in the Czechia and Hungary, and male unemployment in Slovakia. The research results suggest that increasing the minimum wage in the V4 countries is feasible if its growth rate is higher than that of unemployment benefits and the living minimum, but lower than the average wage growth, and if it is supported by economic growth.

Formation of the prerequisites of the analysis of investment activities to the era of the establishment of the market economy

The paper is devoted to the study of the prerequisites for the development of investment activity analysis before the era of the formation of a market economy in the countries of European civilization. In the 21st century, investment activity has gained particular importance, and understanding the historical aspects of economic relations and accounting practices is crucial for its effective analysis. For this purpose, the paper systematizes and periodizes the stages of development of accounting and economic analysis, starting from the early civilizations up to the end of the 19th century. The research employs a comprehensive set of methods, including dialectical, historical, abstract-logical, methods of induction and deduction, as well as expert evaluation and comparison methods. The application of these methods allowed for the identification of patterns in the development of accounting and economic activity analysis in connection with the evolution of socio-economic relations. Significant attention is given to the analysis of the stages of accounting development, starting from its primitive forms in a natural economy to the emergence of complex accounting and analysis systems in the context of expanding commodity-money relations and the establishment of capitalist relations. The development of economic theory concepts, particularly mercantilism, physiocracy, classical and neoclassical theories, which influenced the formation of approaches to accounting and analysis, is also examined. The research results indicate that the development of investment activity was closely linked with the evolution of economic relations, the growth of production scales, trade, and financial market services. Important prerequisites for the formation of investment analysis included the emergence of the institution of property, the development of commodity-money relations, and the need to account for and analyze capital to manage resources effectively. The paper also systematizes information about the formation of investment analysis, which initially had an empirical nature and, with the development of accounting and economic theory, adopted a systematic approach. This laid the foundation for modern investment analysis, which is an important tool for making managerial decisions in a market economy. Overall, the paper emphasizes the importance of a historical approach to studying the development of accounting and analysis, which allows for a better understanding of modern trends and challenges in the field of investment activity.

Markets and Public Goods: Integrity, Trust, and Climate Change

Public goods are an anomaly in neoclassical economics, a form of ‘market failure’. They exist outside the efficient and equitable optimality of market exchange. It can be shown however that competitive markets are only efficient in short product cycles. Long-term objectives require social support. Corruption arises from the consequent private public interaction. Integrity, the absence of corruption, is a public good. Corruption has risen since the 1980s with privatization and outsourcing. How did European governments become honest in the first place? In the century after the 1770s, they moved from regarding public office as a form of private property to a conception of serving the public good. This integrity revolution was facilitated by Weberian bureaucracies, selected by academic merit and committed to impartiality by long-term incentives. The neoliberal revolution of the 1980s regarded bureaucracies as obstructive and slow. It admired the business corporation with its opaque procedures and charismatic leadership. Concurrently economics moved from neoclassical harmony theory to an asymmetric information model of ‘opportunism with guile’, providing doctrinal legitimacy for corruption. Corporate advertising is deliberately deceptive, and undermines the public good of trustworthiness. Digital platforms, powered by advertising, have subverted public discourse. Misinformation and disinformation have become prime risk factors for current societies. The practical operation of markets undermines the public goods of integrity and trustworthiness. The public good of a habitable climate cannot be achieved by market methods. For long-term payoffs, ‘free markets’ are a harmful delusion, inefficient, corrupt, impossible to achieve, and not sustainable.

Driving Factors Affecting the Migration of Young Nursing Care Professionals from Pokhara in a Globalized World: A Hospital Ethnography

Due to unfulfilled expectations in local health-care industry, the participating nurses working in private hospitals in Pokhara were willing to migrate abroad where their aspirations could be met. The irritation, worry, and unhappiness with their career were revealed by the focused-group discussion, in-depth interview, and kuragraphy methods utilized in this study among young nurses in Pokhara. Some of the nurses had already registered for overseas studies and jobs while still working in hospitals and awaiting their visas. As globalization has stimulated the movement of people, the concept of globalization in association with neo-classical and new economic theory of migration, transnationalism, neoliberalism and world-systems from an anthropological standpoint has been applied to analyze the reasons of participant nurses to migrate where the study found that the main reasons for them to migrate were low pay, an uncertain future, a lack of career opportunities, job pressure, and the trend of out-migration. These competent nurses desired to work in core nations have considered semi-periphery as a secondary option. Through the stories of young nurses, this study exposes the dire condition in Nepal’s health-care industry which is motivating nurses to relocate in destination countries resulting brain-drain.

Cross Country Study of Human Capital Formation and USFDI Inflows

Purpose: The neo-classical theory of economic growth features the positive impact of the human capital of an economy on its growth. The inflow of foreign direct investment is one of the main components to carry forward the growth effect, this study investigates the impact of country-specific institutional quality and human capital on the cross-country variations of US-Foreign Direct Investment (FDI) inflows. Our core hypothesis is that Countries with better Human capital will attract more FDI if they have good quality institutions in terms of less risk in investment opportunities. Method: Using a set of panel data of US-Foreign Direct Investment (FDI) inflows for both developed and developing countries over the period 1984-2021. Result: The country-specific quality of institutions reinforces the impact of human capital on the inflow of US foreign direct investment in this study. Using two-dimensional panel data we find strong support for our hypothesis using a two-way fixed effects model. Our results are robust to the alternative measures of institutional quality. Implications: The strength of our approach is that in contrast to the previous works (1) we have used the USFDI inflow across countries that have been widely neglected in the related literature and (2) emphasis has been given to the conditional or joint impact of human capital and country-specific institutional quality in determining the cross-country variations in USFDI inflows.

Impurity transport study based on measurement of visible wavelength high-n charge exchange transitions at W7-X

A recently installed high-speed charge exchange diagnostic at the W7-X stellarator has been used to identify several high-n Rydberg emission lines near 500 nm following impurity injections. The wavelengths of observed high-n Rydberg transitions are independent of the impurity species and originate from ions with ionization states ranging from 14+ to 45+ suggesting that this approach can be applied to a variety of heavy impurities. Moreover, little to no passive signal is observed since the high-n energy levels are unlikely to be populated by electron impact excitation. The combination of the newly developed diagnostic and the observation of high-n Rydberg states provides spatially resolved, high-speed measurements of multiple charge states which are analyzed in a Bayesian inference framework to determine both impurity diffusion and convection profiles. Measurements from the 2023 experimental campaign conclusively show high diffusion and an inward pinch in the core, well above predictions by neoclassical theory.

Effect of Tax Policy Changes on Corporate Investment Decisions in Saudi Arabia

Purpose: The aim of the study was to assess the effect of tax policy changes on corporate investment decisions in Saudi Arabia. Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries. Findings: The study indicated that reductions in corporate tax rates generally lead to increased investment by companies. Lower taxes can free up funds that businesses then use for capital expenditures, research and development, and expansion projects. Conversely, higher tax rates may discourage investment, as they reduce after-tax profits and make certain projects less economically viable. However, the relationship between tax policy and investment decisions is complex and can vary depending on factors such as the overall economic environment, industry dynamics, and the specific details of the tax changes. Overall, though, there is evidence to suggest that tax policy plays a substantial role in shaping corporate investment behavior. Implications to Theory, Practice and Policy: Pecking order theory, agency theory and neoclassical investment theory may be used to anchor future studies on assessing the effect of tax policy changes on corporate investment decisions in Saudi Arabia. Policymakers and corporate leaders should collaborate to design tax policies that align with strategic investment objectives, fostering economic growth, innovation, and market competitiveness. The findings from research studies on the effect of tax policy changes on corporate investment decisions can inform evidence-based policymaking aimed at optimizing tax frameworks for economic resilience and dynamism.

Between law and economics: about the scientific heritage of R. A. Posner

The author analyzes the life and scientific heritage of the famous American lawyer and federal judge R.A. Posner. The emergence of the scientific direction and academic discipline “economic analysis of law” is associated with his name. Attention is drawn to the ideological, theoretical and methodological foundations of this direction, associated with the extension of the basic postulates of neoclassical economic theory to the law. This is partly due to Posner’s ignorance of traditional legal issues of justice and his disdainful attitude towards the rule of law. Significant attention is paid to the evolution of the scientist’s views in the 21st century, which is clearly insufficiently paid attention to in domestic literature, especially economic literature. This evolution went in the direction of revaluing the role of the influence of the free market on economic processes and law enforcement practice, recognizing the more important role of irrational principles in human behavior. It is noted that modern researchers of the problems of interaction between law and economics, including the son of the hero of the article, Eric Posner, adhere to more moderate positions based on the equal interaction of law and economics.

Revisiting the interest rate-investment nexus in India: fresh perspective from non-parametric analysis

PurposeIt is generally believed that business spending on capital expenditure tends to decrease as interest rates rise, and vice versa, this is not always the case. The previous literature produces inconclusive results vis-à-vis the interest rate and investment nexus. This study analyzes the responsiveness of investment to changes in high and low levels of interest rates in India through a quantile-based, non-parametric method utilizing annual data from 1980 to 2022.Design/methodology/approachThis study uses Quantile-on-quantile (QQ) technique proposed by Sim and Zhou (2015) to examine the impact of interest rate quantiles on quantiles of investment. In addition, long-term association and the direction of causality are estimated through the Cho et al. (2015) test of quantile cointegration and the Jeong et al. (2012) Granger causality in quantile (GCQ) test, respectively.FindingsThe empirical evidence validates that the linkage between investments and interest rate is not consistently negative and varies from quantile to quantile. The study finds a negative impact at median quantiles and a positive impact at extreme higher quantiles. Conversely, the impact at lower quantiles is negligible, which is also observed from quantile cointegration, indicating the presence of a statistically significant association above the median quantiles. Additionally, the study finds one interesting finding that there exists unidirectional causality from investment to interest rates in India rather than other way around.Research limitations/implicationsThe study provides significant implications for policymakers as it suggests that during extreme economic conditions, the effectiveness of traditional monetary policy tools to boost capital formation is restricted. Policymakers may consider alternative measures to stimulate investment during these time periods. The study additionally posits that the neoclassical theory of investment may not be readily applicable in emerging economies in its unaltered state, mostly due to the lack of well-developed financial markets.Originality/valueThere is a limited literature available on non-linear linkage between interest rates and investment. The present study adds to the existing knowledge by investigating how investment responds differently to fluctuations in interest rates, while incorporating the complete distribution of both the variables.

Coupons versus Rebates: An Economic–Mathematical Comparative Analysis with Policy Implications

It is very important to understand how promotions offered by sellers to consumers influence consumer and seller behaviors because it helps us study how consumers make their purchase decisions and how sellers determine their sale strategies. Unlike past studies which utilized the classical price discrimination dilemma and focused on sellers’ aspect to divide consumers into two types (higher/lower reservation prices), we focused on the consumers’ perspective and applied neoclassical consumer choice theory to develop a two-period mathematical utility-maximization model to study how different promotions influence consumer and seller behaviors. This mathematical study uncovered several key findings: (1) coupons offer consumers a greater discount compared to rebates with identical discount rates; (2) impatient consumers exhibit a preference for coupons over rebates; (3) coupons generate higher sales than rebates; and (4) sellers may adopt the coupon policy for low-ticket products and the rebate policy for high-ticket products.

China's Health Diplomacy Strategy During COVID-19 Crisis 2020-2022

In time of crisis like COVID-19 outbreak, China’s health diplomacy has become a spotlight in terms of its international momentum in dealing the virus. This research is important to know how health diplomacy can be used as an effective foreign policy. The research question in this paper asks how did China conduct health diplomacy during the COVID-19 crisis from 2020 to 2022. This research used descriptive and literature research methods by collecting secondary data from related research and international organization, WHO, as main source for COVID-19 data. The data were analyzed using neoclassical realism theory. Not to mention, there is not much literature that analyzes China's before until the recent "New Normal" situation. When COVID-19 emerge, it simultaneously transforms its health diplomacy into vaccine diplomacy that begins from the first outbreak of the virus. It underwent scrutiny and criticism from other countries as they were sceptical about whether it is purely on conducting global health diplomacy or China's way of promoting a strategic framework. It also has a clear intention that its action is also to appease the world view toward its role since the virus is from Wuhan, a city in China. This research concludes international system can affect state behaviour toward its relations with other countries by examining China's health diplomacy. Keywords: China’s Foreign Policy, Global Health Diplomacy, Vaccine Diplomacy

TOWARDS AN EVOLUTIONARY ECONOMIC THEORY

Today, the neoclassic economic theory still dominates the economic analysis, prediction, and even public economic policy, encouraged, unfortunately, by the career criteria in science and education fields. In such a context, the objectives of the paper are: (1) to systematize the findings related to the unrealism and theoretical and methodological mistakes of the economic neoclassic model; (2) to argue about the desirability, reliability, realism, and efficaciousness of an evolutionary model of the economy (and of Economics); (3) to draw the basic lines which an evolutionary economic theory could be edified on, starting from both the statu quo in the matter and the logical examination of the question. The approach of research is a mix between logical and historical (but not empirical) views regarding the evolutionary economic model/theory. The main results are: (a) arguing on the possibility of crystalizing the basic concepts of an evolutionary economic model; (b) making proposals for the evolutionary economic mechanism (in its abstract understanding – as cybernetic system of order 3); (c) warning on the risks of a tale quale taking over of the evolutionary concepts from Biology; (d) identifying the principles to be followed in building up of an evolutionary economic theory.