Scarce Factor Of Production Research Articles

Economic Rents and the Contours of Conflict in the Data-Driven Economy

In the era of continuous and steadily accelerating technological change that started with the industrial revolution, economies and societies were repeatedly transformed in ways that can be linked to ownership of the essential and scarce factor of production of the day and command of the economic rents that flow to that factor. While history allows many narratives to be spun, the contours of conflict, both internal and between states, can be seen as aligned with the contest over rents – from the wars of territorial acquisition of the feudal era when land was the main source rents, to the wars of mercantilist expansion when the economies of scale generated by the machinery of mass production became the main source of rent, to the resource-rent-fuelled oil wars of the modern era, and in recent decades the proliferating conflicts over intellectual property. With the digital transformation we are seeing the emergence of a new type of economy – the data-driven economy, in which data is the essential factor of production. Data generates massive rents, fuels the rise of superstar firms, and generates powerful incentives for strategic trade and investment policy. The emergence of this new economy signals a new era of conflict, on new battlegrounds, with new tools or weapons, between new coalitions within and amongst countries. This conflict is already upon us. The vast rents prospectively at play in the data-driven economy arguably constitute a major (perhaps the major) trigger for the open trade and technology war between the United States and China. They also are at the heart of the brewing conflicts over taxation of digital platform firms. This note describes the contours of the conflicts that are to be expected with the digital transformation as it realigns interests, compares these expectations with actual developments, and comments on the implications for the rules-based system of international commerce.

Sector -Wise Performance of FDI Equity Inflows in India

Foreign Direct Investment (FDI) plays an important role in the development process of a country. It has the potential for contributing to the development through the transfer of financial resources, technology and innovative and improved management techniques along with raising productivity. Developing countries like India need substantial foreign inflows to achieve the required investment to accelerate economic growth and development. It can act as a catalyst for domestic industrial development. Further, it helps in speeding up economic activity and brings with it other scarce productive factors such as technical knowledge and managerial experience, which are equally essential for economic development. India has been the most significant beneficiary of remote direct interest in most of its various segments. It likewise assumes a significant job in the advancement of a nation. India is the biggest popularity based nation with the second biggest populace on the planet, with the standard of law and exceedingly instructed English talking work power, the nation is considered as a sheltered spot of assurance for outside financial specialists. The study covers the performance of FDI Equity inflows in India and the sector-wise performance of FDI Equity inflows in India. The samples of sector-wise FDI inflows in India are selected based on the convenient sampling method. A Sample of 10 sectors has been selected based on the availability of data. The inflow of FDI in the media transmission and Constrictions utilizing combined example t’ test P worth is 0.049 (Less than the estimation of 0.05). Henceforth we may accept the invalid speculation with 95% certainty. The Construction (foundation) exercises and Power utilizing combined example t’ test. P worth is 0.016 (Less than the estimation of 0.05). Subsequently, we may accept the invalid theory with 95% certainty

Multidimensional trade and Ramsey effects: Sustainable growth versus volatility

In this paper, the following research question is answered: How can the potential impact of the optimal policies of externalities trade to uncouple growth and volatility in order to generate sustainable growth and clean production be explored by the means of Agent-based modeling (ABM)?At this end, I attempt, to generalize the trade of everything to realize the steady state. By considering any human action as causing positive or negative externalities, the intergenerational and international generalized trades become possible. Only this generalized trade conform to the complex hypotheses of the neoclassical model whose operationalisation immediately leads to the steady state, foundation of a sustainable economy, without fluctuations and without destruction of the environment and where all the productions are clean.I find, generations import from other generations productive factors intensively used in the production of goods and services highly consumed in the current generations and export productive factors intensively used in the production of goods and services weakly consumed in the same generations. Indirectly, generations import goods and services that use a high proportion of technically scarce productive factors and a low proportion of technically abundant productive factors and export goods and services that use the reverse proportions of the same productive factors. Thus, positive externalities (unnatural resources) are exchanged against negative externalities (overconsumption of natural resources). A productive factor is technically scarce in a generation if the part of this productive factor imparted to this generation is insufficient to produce as much of these goods and services that it wishes to consume. A productive factor is technically abundant if its proportion existing in this generation is superior to its production needs. Under these conditions, I show, at the equilibrium level, each productive factor and each good or service has the same price in each generation. This realizes an efficient trade of externalities decoupling thus growth and volatility. That is why I conclude the policies to uncouple growth and volatility are also those of sustainable growth and clean production, ensuring to each generation an equivalent use of natural and unnatural resources. In contrast to AK model, I find, through widened evidence that, a greater willingness to hoard or an improvement in the level of technology shows up in the long run that higher levels of capital (unnatural resources) and output per effective worker are achieved, with no change in per capita growth rate. The steady state results in diminishing returns to inputs in the technology production. At this end, I propose, countries or generations with a high price deviation should pay to the World Environmental Bank (WEB) a tax that would be proportional to its price deviation or its growth volatility path.

The Mechanism of the Links between Growth and Volatility

This paper has investigated the signs of the relationship between growth and volatility in a new environment set by changes in assumptions of the Ramsey model to allow technological progress to become endogenous.
 A generation’s utility maximization is obtained through externalities trade named “multidimensional trade”. In contrast to the effects on long-run growth in the AK model where an improvement in the level of technology, A, which raises the marginal and average products of capital, also raises the growth rate and alters the saving rate, we found a greater willingness to hoard down or an improvement in the level of technology shows up in the long-run as higher levels of capital (unnatural resources) and output per effective worker but in no change in per capita growth rate. The steady state results of the working of diminishing returns to inputs in technology production function. This has leaded to a reformulation of Heckscher-Ohlin trade model: Productive factors that exist in abundance in a generation and that are not intensively used to produce goods and services in that generation are exported to other generations in exchange for scarce productive factors intensively used to produce goods and services that should be scarce in the generation. The goods and services with weak consumption are indirectly exported from one generation to others, whereas goods and services with high consumption are indirectly imported from other generations. Therefore Ramsey model becomes a particular case of multidimensional trade (when externalities are internalized). In that case, the tendency for saving rates to rise or fall with economic development affects the traditional dynamics, that is why, in our framework, intergenerational and international leveling out of all prices (goods and productive factors include techniques) should restore neoclassical assumptions: this is the main mechanism of the links between growth an volatility.

Reallocation effects in the specific factors and Heckscher–Ohlin models under firm heterogeneity

We set up a two countries two sectors model with firm heterogeneity that nests both the Heckscher Ohlin model and the specific factor model. We use this model to study: (a) to what extent the analytical and numerical results in Bernard et al. (2007) on firm heterogeneity and factor abundance extend to the specific factor model; (b) the robustness of the numerical results in Bernard et al. (2007); (c) the determinants of the magnification of productivity differences between the comparative advantage and comparative disadvantage sector. We get the following results. (1) The magnification of productivity differences in the Heckscher–Ohlin model does not hold for trade cost reductions from all levels of trade costs. (2) The scarce factor of production does not unambiguously gain from trade liberalization in the Heckscher–Ohlin model, especially for larger differences in relative factor abundance. (1) and (2) differ from Bernard et al. (2007). (3) Also in the specific factor model both magnification and demagnification are possible and the scarce production factor can both gain and lose with trade liberalization. (4) In the general model and the nested models the magnification effect rises when the forces of comparative advantage are more pronounced.

Application of organisational homeostasis as an emerging paradigm for knowledge management

The new mantra for global organisations in terms of survival and wealth is the effective management of an organisation’s knowledge competency. Every organisation requires knowledge to generate quantifiable and qualitative value for its use and for the benefits of a global community. Beazley et al. (2002, p.12) assert that “knowledge has replaced capital as the scarce factor of production and so has become the dominant economic force in business. It is the new source of wealth – an asset category to be invested as carefully as capital itself”. This paper reviews key literatures on knowledge management and explores how theoretical concepts have elevated knowledge relativism. It asserts that ‘intelligent knowledge’ is differential, associative, progressive, evaluative and pragmatic. Most significantly, the paper draws attention to an emerging paradigm – organisational homeostasis; and its application to global, local, and service organisations via a novell conceptual model which creates ‘intelligent knowledge’.

The Effects of Terrorism on Trade: A Factor Supply Approach

This article reconsiders the effects of terrorism on trade. The conventional wisdom is that trade with a nation affected by terrorism involves higher risks. The consequent rise in the transaction costs is akin to a rise in transportation costs, which tend to reduce trade. Based on such an argument, Nitsch and Schumacher (2004) and Blomberg and Hess (2006) find evidence that terrorism indeed tends to depress a nation’s trade. However, terrorism not only affects transaction costs for a trading nation, but also can deplete a nation’s supply of scarce productive factors. This depletion may result from terrorist groups drawing the nation’s radicalized elements into terrorism activities or terrorist groups directing attacks on the nation’s people or productive capital. Negative impacts on the economy may also stem from foreign investors being dissuaded from investing because of potential terrorist activities. The literature in this area has already documented these effects, 1 but there has been no analysis of how these factor supply effects may influence the pattern of trade. This is an important gap because once factor supply effects are considered, the predictions of how terrorism may affect trade may be reversed. 2 When terrorism affects a nation’s factor supplies, its production possibility frontier will shift and The conventional view of terrorism is that it raises risks and, as a result, reduces trade. The authors use a factor supply approach to show that this hypothesis is not necessarily correct. They use a twogood, two-factor, small open economy model to show that terrorism can either reduce or raise trade depending on critical factors, such as the impact of terrorism on the intensive factor of the export or the import sector. They then extend the analysis to models with several goods and factors and identi fy conditions under which trade may rise or fall with a greater incidence of terrorism. Finally, they pro vide an analysis of the effects of terrorism on trade in the presence of an optimal counterterrorism policy. The authors find that a nation’s adjustment of its counterterrorism level in response to a greater terrorist threat may moderate the impact of terrorism on trade. (JEL F11, F52, H56) Federal Reserve Bank of St. Louis Review , Third Quarter 2014, 96 (2), pp. 229-41.

Trade, Technology, Income Distribution and Growth

The standard Hecksher-Ohlin model predicts that trade liberalization leads to a decline in the rate of return of the scarce factor of production. However, the empirical evidence of the falling labor share in some developing countries contrasts with the theory. We show that if a simple change in technology is introduced into the standard model, conditions exist for the rate of return of the scarce factor of production to increase. In particular, the price of the exported good and the amount of capital the country owns can serve as determinants whether the rate of return of the abundant factor will increase.

Adolphe Landry's Theory of Profits

The paper provides a critical assessment of Adolphe Landry's contributions to the theory of capital and interest. His analysis represents one among several variants of marginal productivity theory. The distinguishing feature of his variant is that he considers entrepreneurship a scarce factor of production alongside with the usual factors labour, land and capital. He thus tries to put entrepreneurship - the innovative agens, as Schumpeter saw it - into the Procrustean bed of marginalist theory. It is not clear whether Landry's combination of various ideas to be found in the contemporary literature generates a coherent whole, because his argument is often suggestive and vague and lacks analytical rigour.

Some Thoughts on the Economic History of Early Colonial Mexico

AbstractCompetitive markets reward the scarce factor of production. As a result of the Spanish Conquest, Indian labor became the scarce factor of production relative to land. But the whole point of conquest was to enrich the Spaniards, not the Indians. Therefore, the Spaniards resisted the use of the market as a device to accomplish productive economic activities. The result was an inefficient allocation of resources and a suboptimal rate of growth, not to say the structural economic distortions that resulted. The development of the economy in colonial Mexico was, in effect, given over to wholesale rent‐seeking, the allocation of resources by the use of political power. If there is a conceptual basis for understanding colonial development, it is this rather than dependent capitalism.

TRADE, FOREIGNINVESTMENT, ANDSECURITY

▪ Abstract Trade interdependence does not always reduce hostility between states. It depends on whether the trade represents vulnerability or sensitivity interdependence. Portfolio investment also does not represent a tie that binds politically. Even more important, foreign direct investment (FDI) represents a link that is costly (and time-consuming) to break. Thus, FDI links between countries are more likely to reduce conflict than trading links. Evidence shows that symmetrical FDI is the most stable guarantor of low conflict between countries. One factor generating conflict may be that scarce factors of production are in political command. Abundant factors, now more generally in power among developed states, may be partly responsible for the diminishment of conflict among these states in recent years.

REVEALED PREFERENCE TESTS OF THE STOLPER?SAMUELSON THEOREM

This article conducts revealed preference tests of the Stolper-Samuelson theorem. If the Stolper?Samuelson theorem holds, one would expect to find a country's relatively scarce factor of production (in this case labor) harmed from trade liberalization and thus opposing trade liberalization. The reverse would be true for its relatively abundant factor of production (in this case capital). Therefore, this article examines representations made before the Canadian House of Commons committee studying the Canadian?U.S. Free Trade Agreement. Assuming representations coincide with the self-interest of the presenters, the effects of trade liberalization on factor returns are inferred. It finds strong support for the proposition that labor behaves as the Stolper?Samuelson theorem would predict and qualified support for capital behaving as the Stolper?Samuelson theorem would predict.

The Real Wage and the Marginal Product of Labor

As I see it, the errors in Keynes's analysis in Chapter Two of the General Theorv were his acceptance of diminishing returns in the short-period relation between output and labor employed and of perfect competition in the product market. These errors, however, are easily corrected and do not alter Keynes's basic and correct ideas -- that employment is determined by aggregate demand, that real wages are determined by aggregate demand given the degree of competition and the level of capital utilization and other determinants of the productivity of labor, and that the supply of labor, at least below full employment, has no effect on either employment or real wages. I would like to reiterate that the formulation we have established here is Ricardian rather than neoclassical. Basically all we have said is that the mark-up represents a deduction from the product of labor and that since the mark-up is certainly not procyclical and productivity probably is procyclical, as the of production is extended, real wages rise. Sraffa (1960, pp. v-vi) has argued that such a use of the term is spurious, since the true application of the term requires attention to be focused on change, while this use of the term, as in Ricardo's discussion of the margin of cultivation, need only be a matter of differences in quality among existing productive facilities rather than changes in scale or in input proportions. We have come a long way from the neoclassical idea of a marginal product of labor, but this should not make either us or Keynes embarrassed about Chapter Two of the General Theory, one of the most interesting and important chapters in the book. Lawlor, Darity, and Horn (1987) noted that Sraffa (1926) had pointed out that the determination of prices and quantities by the interaction of supply and demand necessitates an independence between supply and demand which does not obtain except under very restrictive conditions. Sraffa (1960) extends this argument by showing that scarcity, as in scarce factors of production, is not necessary to determine value and in fact cannot determine value independently of income distribution. Keynes's and Kalecki's work shows that when we take effective demand into account, output is determined solely by demand and distribution by the conditions of competition. Kalecki's and Keynes's work can thus be taken as an Hegelian supersession of classical and neoclassical economics when we realize that workers cannot bargain in terms of a real wage and that output not saleable will soon no longer be produced.

Skewed distributions of firm sizes—an evolutionary perspective

The fact that business firms sizes show long-term stable skewed distributions is a well-established ‘stylized fact’ of industrial demography. One of the plausible explanations of this phenomenon is based on Gibrat's law of proportionate effect. Other explanations focus on optimal allocation of scarce factors of production. This paper proposes a different explanation, based on evolutionary mechanisms of industrial development, especially those related to search for innovation and selection. The outline of the evolutionary model of industrial dynamics is presented in the first section of the paper. In the second, part a simulation study of the model, focused on the necessary conditions of emergence of skewed firm size distributions, is presented. It is shown how skewed size distributions emerge if we allow firms to search for innovation and allow for entry of new firms.

International trade and domestic politics: improving on Rogowski's model of political alignments

Ronald Rogowski's work offers valuable insight into the impact of changing trade exposure on domestic politics. Exploring the political implications of the well-known factor endowments model of international trade theory, Rogowski argues that owners of relatively abundant productive factors will form a free-trading coalition against owners of relatively scarce productive factors, who will align in favor of protection. Rogowski's parsimonious three-factor version of the factor endowments theory—although offering valuable insight into the politics of less developed economies, including today's developed economies in earlier centuries—produces significant anomalies when applied to advanced economies. Intuitive logic and empirical research, especially the Leontief paradox, suggest that the highly complex division of labor found in developed countries will confound the simplicity of the three-factor model. Edward Learner's multifactor model suggests solutions to the anomalies that afflict Rogowski's simpler model when applied to recent politics in the United States and Europe.

Public Research Resource Allocation in Chinese Agriculture: A Test of Induced Technological Innovation Hypotheses

Technological change is one of the most important factors underlying agricultural growth. In modern societies, new agricultural technology is mainly developed as a product of active search by scientists in either public or private research institutions. Research itself requires costly resources and produces valuable information or material demanded by other parts of the economy. Research is thus an economic activity and can be subjected to economic analysis.' It has been proposed that in a market economy the efficient allocation of research resources requires the resources to be allocated to develop new technology that saves the increasingly scarce factors of production or to technology that can be applied to commodities that have larger market demand. Further, it has been postulated that a decentralized public research system will be able to allocate research resources efficiently in accordance with the above two hypotheses of induced technological innovation.2 There have been many studies to verify these three propositions separately in market economies.3 In this article I attempt to test the above two hypotheses of induced technological innovation simultaneously and examine the effectiveness of a decentralized research system with empirical data collected from China's public agricultural research institutes.

LOCATION AND ENTERPRISE CHOICE: A TANZANIAN CASE STUDY

Some of the assumptions of the theory of enterprise choice with respect to location, associated with von Thünen, require modification when labour, not land, is the scarce factor of production. Using these modified assumptions, and farm level data on grain and charcoal enterprises, a model of the local economy around the town of Dodoma in central Tanzania is constructed. At a distance of some 24 kilometres from the town grain replaces charcoal. Information on grain purchases by government‐registered villages suggests that this description of the spatial economy is a plausible one. The implications of this description for pricing and extension policies are also considered.

Trade liberalization and factor prices: An application to the U.S. manufacturing sector

The effects of a trade policy on the prices of productive factors have important policy implications, particularly with regard to trade liberalization and protection. This paper examines the empirical evidence of the Stolper-Samuelson theorem for 16 major U.S. manufacturing industries. The theorem asserts that international trade reduces the prices of scarce productive factors and hence decreases their shares of income. The elasticities of prices of finished goods with respect to factor prices are estimated and then rearranged in the form of the row stochastic P-matrix in accordance with the proposition of Uekawa. The inverse of this matrix seems to confirm the weak version of the Stolper-Samuelson theorem.

General Equilibrium and the Heckscher-Ohlin Theory of Trade: The Multi- Country Case

IN THE PURE HECKSCHER-OHLIN (H-O) TRADE MODEL in which the number of produced goods exceeds the number of productive factors it has been recognized that general equilibrium which prevails with international factor-price equalization leaves the exact pattern of world production and trade indeterminate.1 In general, under conditions sufficient to guarantee factor-price equalization2 there exist many efficient production configurations in the world consistent with the equilibrium factor prices and a given distribution of factor endowments among countries. Therefore, the traditional H-O theory is incapable of predicting the pattern of commodity trade in the significant instance of factor-price equalization when the number of goods exceeds the number of factors. However, Travis [7, (143)] appears to be the first writer to discover that the pattern of trade in factor services that are embodied in produced commodities is still determinate in this instance, suggesting the possibility of fruitful reformulation of the traditional theory along the line of factoral content of trade. Specifically, in a twofactor, three-commodity case Melvin [5] demonstrated that a country will export on balance via the commodity trade the services of the factor of production which it possesses in relative abundance in exchange for those of the scarce factor of production. Subsequently, Vanek [8] extended the analysis to include many factors in a two-country world and demonstrated that there will be a breaking point in the rankinig of relative factor endowments between the two countries such that the country better endowed with a class of factors on one side of the ranking will export the net services of those factors, importing in return the net services of the other (relatively scarce) factors. There remains an unresolved issue in the trade literature concerning the extent that H-O hypothesis as it is now generally formulated shotuld hold with respect to any pair of countries when more than two countries are admitted. Bhagwati [2, (20)] wrote in his survey article:

On Verbal Economy

The JEE has attained, in not much more than a year, a circulation of close to 3,000. But, as will surprise no one in our inflationary world, its cost has run much in excess of the original estimate. In the future, therefore, the size of the Journal will have to be closely controlled. Rather than publishing fewer articles, the Editorial Board hopes to publish shorter articles. Part of the reason is to enable us to cover more facets of the large field which is our concern. But we also believe that economy in the use of words makes a direct contribution to economic education. Economists have long recognized the importance of economy in the use of scarce productive factors, but economy in the use of words is something else again! Two suggestions are in order. First, references to the literature in general, and especially to literature summarized in recent issues of the Journal, should be minimized. The author should instead start with a succinct statement of where he thinks we now