Procurement Of Inputs Research Articles

Outward Foreign Direct Investment, Interindustry Networks, and U.S. Trade Politics

This article investigates how outward foreign direct investment by U.S. multinational corporations influences industry lobbying for trade protection in the United States, focusing on interindustry structure of goods sales networks between upstream and downstream sectors and also on the multinationals’ input procurement patterns. If foreign affiliates of U.S. multinationals switch input sources from U.S. to host-country suppliers, U.S. suppliers should receive a negative demand shock, ceteris paribus. An empirical test finds that those U.S. upstream sectors that are highly dependent upon U.S. multinationals for goods sales tend to lobby more as the multinationals’ overseas production and sales increase.

Revisiting the Make-or-Buy Decision: Conveying Information by Outsourcing to Rivals

ABSTRACTThe textbook make-or-buy decision is typically described as choosing the cheaper of the two sourcing options. However, research in accounting has consistently demonstrated that strategic and informational considerations often complicate such seemingly straightforward criteria. In a similar vein, this paper shows that when a firm becomes privy to accounting information pertaining to its profitability, its sourcing choice has powerful informational reverberations. This is because input procurement from an outsider serves to convey both profitability information and strategic positioning. Conveying profitability information refers to the fact that the size of the input order provides the supplier a credible signal of the firm's internal accounting information and, thus, its relative ability to compete in the marketplace. Conveying strategic positioning refers to the fact that the upfront placement of the input order also informs the supplier about the firm's chosen strategic choices in the marketplace. We demonstrate that both sources of information conveyance together can point to a firm preferring to buy inputs from a retail rival even when it can make them internally at a lower cost. This penchant for outsourcing to a rival is more pronounced the more accurate the firm's accounting system.

SWOC Analysis on Precision Farming System

The adoption of precision farming (PF) in India is yet to take a firm ground primarily due to its unique pattern of landholdings, poor infrastructure and lack of farmers’ inclination to take risk, socio-economic and demographic conditions. The study attempted to analyse the strengths, weaknesses, opportunities and challenges on PF in the western and north-western zones of Tamil Nadu. Increased crop yield, increased area under cultivation, economised use of water, high economic efficiency, effective and efficient pest management, enhancing bulk procurement of inputs, technical support from stakeholders and sharing of information with the forum members were expressed as major strengths by more than 80% of the respondents. High initial investment cost, additional maintenance cost, lack of technical know-how, no initiative for assessing in-field variations, selectivity in usage of PF technologies (72.50%), requirement of skilled labour, etc., were observed as weaknesses and reported by nearly three-fourth of the sample. Provision of bank loan, availability of subsidies, increased agricultural commodity prices, more free time, attracting the farm youth and improvising of extension services were projected as opportunities of the sample. High cost of water-soluble fertilisers, more time period to realise the return on investment and viability of PF tools for larger enterprises were the challenges expressed by more than half of the sample.

Agglomeration, Related Variety, and Vertical Integration

Several recent studies have investigated the relationship between the geographic concentration of production and vertical integration, based on the hypothesis that the spatial agglomeration of firms in the same industry facilitates input procurement, thereby reducing the degree of vertical integration. This article contributes to this debate in two ways: first, we focus on interindustry vertical integration, and second, we consider the effects on vertical integration of unrelated and vertically related variety at the local level. The latter was measured using information from input-output tables and captured the opportunities for outsourcing within the local system. A data set of 24,663 Italian business groups in 2001 was used to estimate Tobit models to investigate the influence of vertically related variety and other agglomeration forces on the degree of vertical integration of groups. We found that vertical integration is influenced by industry specialization at the local level and that higher vertically related variety reduces the need for firms to integrate activities, since they have more opportunities to acquire intermediate goods and services within the local system. We analyze the manufacturing and different macroareas and show that this relationship is also influenced by technology and differences in the organization of economic activities at the local level.

Islamic structured trade finance: a case of cotton production in West Africa

PurposeThe purpose of this paper is to show a creative way to fulfill financing needs of entities involved in pre‐ and post‐harvest production activities in extreme cases while mitigating inherent risks by Islamic structured trade finance from the real‐life case of cotton production in Burkina Faso.Design/methodology/approachThe existing Islamic structured finance design for SOFITEX was analyzed in details so as to provide clear understanding of the subject matter. This structure was evaluated and a new design is proposed to better accommodate the financing need of SOFITEX.FindingsThere are some inherent drawbacks, explained in details, of the existing Islamic finance structure. Salam contract for pre‐harvest input financing in favor of farmers can, unlike existing structure, accommodate the complete supply chain financing solution, hence, support the whole production cycle from input procurement to the exports of cotton fiber. That is, it fits better for financing the agricultural sector.Research limitations/implicationsThe case and the structure studied in depth are limited to the cotton sector. This could be widened in subsequent researches.Practical implicationsIslamic finance instruments provide us enough room to fulfill financing needs in extreme cases as a better alternative to conventional financing tools. A method of mark‐up calculation for structured cotton trade finance is developed for Murabaha and Salam contracts.Originality/valueThe paper sheds new light on how to finance the agricultural sector starting from input procurement to the sale/export by Islamic finance instruments. It also shows how to get guarantees in the form of commodities in warehouse rather than bank guarantees, mortgage, sovereign guarantees, etc.

Emerging Policy issues in the Special Crop Productions Programme of Benue State

This study was carried out to examine the characteristics of the Special Crop Production Programme of the Benue State Ministry of Agriculture, Makurdi and highlight the emerging policy issues. Primary data were collected through structured questionnaire from 120 respondents who were randomly selected. Analysis of data was carried out using percentages and mean scores. Results showed that, procurement and distribution of inputs (improved seeds, fertilizer and herbicides) were insufficient and untimely provided. The situation forced farmers to acquire most of their input from the open market at exorbitant prices. Farmers were not involved in the planning of the programme and the extension personnel attached to the programme were not sufficient for effective delivery of extension services to farmers. The recommendations are that policy should be put in place to ensure early procurement and distribution of inputs at affordable prices, organize farmers into farmers associations and co-operatives to help pool farm lands, input procurement, and access to the use of machinery and providing market outlets for disposing farmers’ outputs. This way a veritable extension policy for crop production will be ensured in Nigeria

Factor Demand and Price Sensitivity of Forest-Based Biomass in the European Energy and Forest Sectors

Abstract An increasing utilization of biomass is, in the short-term, one of the most realistic alternatives to meet the energy and the environmental goals established by the European Union. As a result, the demand for forest-based products from European forests will increase. However, glaringly little research effort has been made towards analyzing the price effect resulting from the increasing demand for forest-based biomass and how the relevant industry sectors adjust their input demands due to these price changes. The purpose of this paper is thus to provide a disaggregated and detailed empirical estimation and analysis of the various input demand elasticities, as well as of the relevant substitution elasticities. The model is estimated using a panel of 23 European countries for the period between 1999 and 2005, thus allowing for specific country effects. The results indicate that the energy sector is relatively more price sensitive in its input demand for fossil fuels compared to the fibrous fuel categories. Thus, higher fibrous input prices will have a relatively small effect on the quantity of fibrous inputs that the energy sector demands. The forest industry is comparatively more price sensitive in its procurement of fibrous inputs than the energy sector, and will therefore reduce its input demand relatively more as a consequence from a fibrous input price increase. Furthermore, the cross-price elasticities reveal some interesting findings. In general, the energy sector will increase its utilization of fossil fuels as a result of increasing fibrous input price. Conversely, the energy sector will increase the utilization of fibrous input relatively less as a consequence of increasing fossil fuel prices.

Optimal Input Usage in Layer Hen Enterprises in Afyonkarahisar Province

The present study was conducted to determine the precautions which can be taken to increase the degree of efficiency and productivity of input usage in layer hen enterprises in Afyonkarahisar Province. The material for the study was obtained from the data gathered through questionnaires in 82 enterprises in the year 2005. Cobb-Douglas production function was used in the productivity analysis and a multiple regression model was developed for this purpose. According to the estimation results of the model, a yield increase relative to scale was determined in the enterprises (1.046). For each of the input factors, the marginal value productivity was calculated as 1.16 TL for egg-type pullet 0.92 TL for feed, -1.41 TL for labor cost, -5.58 TL in veterinary-health and 2.96 TL for other expenditures. In conclusion, in this research study which was implemented in Afyonkarahisar Province, it was determined that, although there was an important difference in productivity among the enterprises, the production of feed and egg-type pullet breeding in the same enterprise increased the productivity. Moreover, it is concluded that, with a strong and healthy finance, in case of getting adequate support both in the period of production and input procurement, the enterprises would behave more efficiently in resource utilization.

Economic implications on management earnings of substituting traditional for improved cassava varieties in mix cropping farms in Cross River State.

Information through questionnaires and farm records were obtained from farms across the fourteen Local Government Areas of Cross River State between April and October 1990 and 1992, to investigate the economic impact on management earning associated with the adoption of structure on mixed crop farms in Cross River State. A sample of one thousand heads of farms family household across the State were interviewed and their records obtained were analysed following the residual claimant procedures. The result reveal that 5% of the farms operators who had adopted both improved Cassava varieties and applied fertilizers on their farms had earned incomes in excess of N 20, 000 while operators who had not adopted this practice could not make similar income. Seventy percent of farms operators who had adopted both improved varieties and applied fertilizers earn incomes between N5, 000 and N19, 000. Only 16.6% of non-adopter earned incomes within this range. Overall, 83.33% of the non-adopters earned incomes of less than N 15, 000 while only 30% of the adopters fell in this category. A critical problem uncovered in the study was that there were serious instability problems in the supply/procurement sources of these inputs, which could create problems of sustainability of this new technology. The study, therefore, recommends the adoption effective strategies that will enhance and stabilize input procurement. Resources structure in these class of farms is changing but at a relatively very slow rate. The notable significant changes are in substitution of hired labour for family and addition of cassava enterprises in all the farm enterprise combinations in the state.Journal of Applied Chemistry and Agricultural Research Vol. 2 1995: pp. 3-10

VERTICAL CONTRACTING WHEN COMPETITION FOR ORDERS PRECEDES PROCUREMENT*

This paper reverses the standard order between input supply negotiations and downstream competition and assumes that competition for orders takes place prior to procurement of inputs in a vertical chain. It is found that oligopolistically competitive outcomes will result despite the presence of an upstream monopolist. Here, vertical integration is a means by which the monopolist can leverage its market power downstream to the detriment of consumers. However, it does so, not by foreclosing on independent downstream firms, but by softening the competitive behaviour of its own integrated units.

Interacting Supply Chain Distortions: The Pricing of Internal Transfers and External Procurement

This paper examines the impact of distortions wrought by transfer pricing when a firm is engaged in both internal production and external procurement of inputs. In particular, we demonstrate that a firm can actually glean benefits from often-discussed transfer-pricing problems in dealing with an external supplier. Though transfer prices above marginal cost introduce inter-division coordination problems, they also introduce a lower willingness to pay to outside suppliers. Knowing that costly internal transfers will eat into demand, the supplier is more willing to set lower prices. Such supplier discounts can make decentralization worthwhile for the firm. This benefit of decentralization is shown to be robust to variations in both downstream and upstream competition.

Vertical Contracting when Competition for Orders Precedes Procurement

This paper reverses the standard order between input supply negotiations and downstream competition and assumes that competition for orders takes place prior to procurement of inputs in a vertical chain. In an environment where procurement negotiations involve no private information and no restrictions on the form of pricing, it is found that oligopolistically competitive outcomes will result despite the presence of an upstream monopolist. It is demonstrated that vertical integration is a means by which the monopolist can leverage its market power downstream to the detriment of consumers. However, it does so, not by foreclosing on independent downstream firms, but by softening the competitive behaviour of its own integrated units. Thus, the paper provides a simple rationale for anti-competitive vertical integration in an environment that respects the usual Chicago school assumptions.

Structural Changes in International Industrial Linkages and Export Competitiveness in the Asia‑Pacific Region

I. Introduction After the second half of the 1980s, developing countries in the Asia-Pacific region have achieved remarkable economic growth, by adopting export-led strategies, with inflows of huge amounts of foreign direct investment (FDI), mainly from Japan. This has made the degree of economic interdependence in this region much deeper, and has changed the industrial structure of each country--and the whole region--especially in the manufacturing sector. One of the concrete phenomena arising has been the globalization of demand, inducing production and procurement of raw materials or intermediate inputs for production, especially in the electric/electronics sector. This article shows this globalization process in a quantitative form, based on an international input-output analysis, with the use of the Asian international input-output tables for 1985 and 1995. The electric/electronics sector and the transportation equipment sector are used here as illustrative examples. From the analysis, two results emerge. First, the electric/electronics sector in Asian countries heavily depends on the demand of the developed countries, especially the United States, and second, the transportation equipment sector depends on Japan for intermediate inputs, since the local supporting industries for the transportation equipment sector have not been sufficiently nurtured. The globalization of demand and procurement patterns for production indicates the importance of export competitiveness among countries. In this regard, the Asian countries have been competitive with each other in the same sector, rather than complementary in terms of production, even after the recent economic crisis. Indeed, the players sometimes compete in the same field, irrespective of their comparative advantage. This will be shown by indicators such as the Revealed Comparative Advantage (RCA) and Trade Specialization Coefficient (TSC), and will suggest that setting up a reasonable international division of labour is indispensable for sustainable growth in the Asia-Pacific region. II. Data and Methodology In this article, the main methodological approach is an international input-output (I/O) analysis, based on Asian international input-output (Asian I/O) tables compiled by the Institute of Developing Economies (IDE). The framework of the Asian Input-Output table is introduced first. (1) The whole picture of the Asian International Input-Output Table 1995 is given in Figure 1. Looking at Figure 1 according to the columns, each cell in the table shows input compositions of the industries of respective countries. [A.sup.II], for example, shows the input compositions of Indonesian industries vis-a-vis domestically produced goods and services. [A.sup.MI], on the other hand, shows input compositions of Indonesian industries for the imported goods and services from Malaysia. The cells [A.sup.PI], [A.sup.SI], [A.sup.TI], [A.sup.CI], [A.sup.NI], [A.sup.KI], [A.sup.JI], and [A.sup.UI] allow the same interpretation for the imports from other countries. The transaction values thus tabulated are all given at producers' prices of the countries of origin. International freight and insurance paid by Indonesian industries for these imported transactions are all recorded in the row vector B[A.sup.I]. H[A.sup.I] and W[A.sup.I] are input compositions of Indonesian industries vis-a-vis imported goods and services from Hong Kong and those from the rest of the world, and they are given in cost, insurance, and freight (CIF) value. Import duties and import sales taxes levied on all Indonesian imports are recorded in the row vector D[A.sup.I]. The value-added items of Indonesian industries are shown in [V.sup.I]. The bottom of the column gives [X.sup.I], the gross inputs of Indonesian industries. Turning to the eleventh column from the left side of the table, it shows the compositions of goods and services that have gone to final demand sectors of Indonesia. …

Restructuring in manufacturing: Case studies of Chile, Mexico and Venezuela

The economies of Latin America have undergone important transformations during the past years. Yet, while there have been many studies on the macroeconomic changes that have taken place in Latin America, studies on the microeconomic changes are relatively scarce. The purpose of this paper is to provide evidence that leads to a better understanding of how firms respond to new circumstances. The research on Latin American manufacturing firms presented here shows that the new state of the economic environment has led to a substantial change in firms’ behaviour. Innovative firms have adopted flexible forms of behaviour and are upgrading their production and marketing capabilities, and they have introduced significant changes in terms of vertical integration, input procurement, technological innovation, incentive pay systems and management techniques, training, subcontracting, distribution and retailing. At least for the most innovative consumer goods manufacturing firms, their core activities have shifted from being mainly concerned with production to combining the manufacture of goods with their distribution, and often also the distribution of other domestic and imported goods as well. This provides them with a better chance of simultaneously increasing their profits and defending their market share. Finally, the investigation also showed that uncertainty surrounding economic policy leads to a substantial decrease in investment by firms. Such uncertainty explains why more firms do not change, or why they do not change faster. It has a twofold negative effect on entrepreneurs’ decisions to modernize their firms: they are uncertain about what they should do, as well as about the sustainability of the economic policy. There is therefore an important role for policies that redound in programmes that seek to encourage firms to upgrade. At the same time, it must be stressed that the most important role for policy is that of creating a stable economic environment in which firms can plan long-term investment.

An Experimental Economics Approach to Analyzing Price Discovery in Forward and Spot Markets

AbstractLaboratory experiments are used to generate data that facilitate investigation of pricing behavior in forward and spot markets. Results suggest a tendency for prices in a spot market to converge to levels higher than those in a forward market. The difference in these market environments is the supply schedule. Buyers in a spot market are aware that supply is inelastic and become relatively aggressive bidders. Forward markets have a relatively elastic supply schedule and buyers fare better. This may motivate firms to promote forward markets and/or vertically integrate in the procurement of inputs.

Food processing: an industrial powerhouse in transition

Brief History of the Industries. Processing in the U.S. Food System. Industrial Structure and Business Organization. Industry Growth. Geographic Location. Input Utilization. Input Procurement Strategies. Household Demand for Food. Distribution Channels for Food. Product and Promotion Strategies. Technological Change. The Globalization of Food Processing. The Futures of Food Processing. Appendices. Bibliography. Index.

Agricultural problems of small states, with special reference to commonwealth Caribbean countries

For purposes of this paper, states are grouped by total population size, those with less than five million inhabitants being classified as small. Small states do not necessarily have smaller farms. However, external economies of scale in research, extension, training, procurement and distribution of inputs, and the transportation and marketing of output may be missed. Product specialisation and regional co-operation offer some scope for alleviating these problems. Foreign trade is important for the development of small economies; and for those well-endowed with natural resources, may be based on primary production. For those less well-endowed, increasing dependence on industry and other sectors is necessary, and agriculture must undergo adjustment. The plantation system, common in the Caribbean and other island economies, imposes a rigid structure and obstructs the change to family farming, food production and more intensive methods of cropping, appropriate to the development process. For those small countries with high man:land ratios, land reform is crucial. This highlights the need for sector planning and sector-based development finance. Island small states can often encourage tourism in place of manufacturing which is limited by market size constraints. Tourism increases the demand for food and agriculture must adjust to meet this demand and prevent over rapid emigration to the tourist sector. The location of small countries can influence agricultural development prospects, adversely in the case of remote islands and favourably when near to large industrialised countries with markets for high value market garden crops.

Activity optimization games with complementarity

This paper presents a general class of cooperative games, activity optimization games with complementarity, and explores their attributes and diverse applications. These games involve interactions by a number of players controlling complex systems of complementary activities. Examples include a general welfare game; a game with procurement of inputs for production; a game with investment and production; and an activity selection game. Every game in this class is a convex game and hence has a nonempty core. Optimal activity levels and certain game solutions have well-behaved qualitative properties. Attractive computational features are noted.

The Market for Agricultural Economists: Discussion

The three papers contribute to a greater understanding of the educational and research services industry with which many of us are directly or indirectly involved. Each author addresses the topic assigned with a different perspective. In Schrimper's paper the industry is defined as Ph.D.-producing institutions and the characteristics regarding their output of doctoral graduates. Schrimper discusses numerous trends that have been occurring in the number and characteristics of Ph.D. recipients in agricultural economics in the United States in recent years. This paper is an update of his previous work, which now covers ten years. The results are particularly useful for university administrators and departmental planners, as the analysis is particularly revealing about what factors are associated with the supply of resources which eventually become the firms' output of the Ph.D.-producing institutions. Schrimper should be encouraged to broaden his descriptive analysis of the characteristics associated with the demand for agricultural economics. Procurement of inputs is only one essential element in analyzing a value-added industry. The Huffman/Orazem (HO) paper introduces the results of the first model of the market for postgraduate-trained individuals in agricultural economics. HO make some innovative improvements to models used for other professions and then estimate supply/demand schedules for masters degree students, supply function for new Ph.D.s and a demand function for agricultural economics faculty. The results are consistent with traditional ecoomic hypotheses but, as in the case of Schrimper, the topic of market demand for agricultural economists is not addressed. The French/Erven paper is an ambitious attempt to address a complex demand related issue-the demand for terminal masters degree students. With refinement, this piece could serve as the classic for terminal agribusiness masters degree-granting institutions. The shared experience of a large land grantoriented teacher and the director of an agribusiness program in a small, flexible, liberal arts college provides the right blend for the development of some innovative and radical thinking the profession so desperately, but unknowingly, needs. Particularly stimulating is the first half of the paper and the questions posed and partially answered. The session adds to our knowledge and whets our appetite for much more. A profession which markets itself as particularly strong in analytical and empirical analysis knows very, very little about the demand for its own product. Michael Cook is president of the Rice Growers Association.