Scarce Factor Research Articles

Limited (energy) supply, monetary policy, and sunspots

In a simple New Keynesian open economy setting, we analyze how local input shortages influence policy transmission and equilibrium determinacy. Shortages increase the elasticity of the local price of the scarce factor to domestic economic activity, affecting the cyclicality of marginal costs and incomes. As a result, the slope of both the Phillips and the IS curve is altered, crucially influencing monetary and fiscal policy transmission. These changes are affected by factor ownership and propensities to consume. Theoretically, shortages can also raise the risk of self-fulfilling fluctuations if a rising price of the constrained factor boosts incomes for agents with high propensities to consume. We illustrate these channels for the 2022 German energy crisis.

Limited (Energy) Supply, Monetary Policy, and Sunspots

In a simple New Keynesian open economy setting, we analyze how local input shortages influence policy transmission and equilibrium determinacy. Shortages increase the elasticity of the local price of the scarce factor to domestic economic activity, affecting the cyclicality of marginal costs and incomes. As a result, the slope of both the Phillips and the IS curve is altered, crucially influencing monetary and fiscal policy transmission. These changes are affected by factor ownership and propensities to consume. Theoretically, shortages can also raise the risk of self-fulfilling fluctuations if a rising price of the constrained factor boosts incomes for agents with high propensities to consume. We illustrate these channels for the 2022 German energy crisis.

Können höhere Löhne zur Überwindung des Fachkräftemangels beitragen?

Abstract Germany faces an intense debate around labor and skills shortages. The authors argue that increased competition in the labor market and consequently higher wages and better working conditions are a crucial factor to address labor scarcity. This does not mean that other measures to combat labor scarcity, such as reforms to the immigration system, provision of childcare, or tax disincentives are redundant. However, as the demographic transition will dramatically reduce labor supply, increased competition for labor is important to allocate a scarce factor more efficiently.

Understanding national-government policies regarding globalization: A trade-finance analysis

Why different national governments have different policies regarding globalization? This is an important research topic of government and economics. In the paper, I analyze how different income groups have different attitudes towards globalization; and how such attitudes shape government policy. A standard example is that more openness in trade benefits the owners of a country's abundant factor, while reducing the income of the owners of the scarce factor. Welfare-state policy depends on which income group is politically dominant. The paper adopts the framework of a small open economy trading in goods and financial securities with the rest of the world, to provide a general-equilibrium analysis of income-based globalization attitudes for national welfare-state government policies. The analysis shows that different income groups have varied attitudes towards globalization, depending on trade-related and macro-related fundamentals. They are: (i) the degree of trade border frictions, (ii) the degree of international finance frictions, (iii) the relative factor abundance that determines the capital intensity of the country's exports; and, (iv) the domestic saving propensity on one hand, and the productivity of domestic investment, on the other hand-determining whether the country is a financial capital exporter or importer.

Tratamento de Água Cinza em Unidade de Produção Agrícola Controlada associada a Hidrociclone

A água é um recurso determinante para o desenvolvimento urbano, industrial e agrícola, principalmente na região semiárida, em que é um fator escasso. Além do problema da quantidade de água disponível para a população, alguns fatores prejudicam ainda mais a sua disponibilidade, como o despejo de esgoto sem tratamento ou tratados inadequadamente, efluentes industriais e agrícolas e produtos químicos como, por exemplo, fertilizantes. Nessa esteira, pontua-se que a água cinza, em regiões semiáridas, tende a ser exacerbadamente utilizada, por ser uma alternativa viável e sustentável para o tratamento da água. Cabe destacar que os parâmetros analisados das águas cinza coletadas dos pontos de observação das unidades foram: Condutividade Elétrica (CE), pH, Turbidez e Oxigênio Dissolvido (OD). Assim, ante o exposto o presente artigo busca avaliar Unidades de Produção Agrícola Controlada/UPAC com e sem a presença de hidrociclone no processo de tratamento da água cinza gerada em uma lavanderia pública no município de Cabaceiras, no Estado da Paraíba, visando o reuso de água.

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.

The impact of international trade on emigration in developing countries

ABSTRACTThis paper studies how international trade affects emigration in developing countries. This is a new aspect as previous studies investigated the impact of immigration on trade from host countries perspective. However, there are also reasons to believe that trade may affect the propensity to emigrate in the home countries, leading to potential brain drain in developing countries, especially given the theoretical hypothesis in Stolper–Samuelson (S–S) theorem within Heckscher–Ohlin (H–O) factor-proportion model that more educated workers are more likely to emigrate due to an increase in international trade. When low-skill abundant developing countries liberalize trade, the reward of the scarce factor (skilled labor) is reduced in these countries, but it increases in the high-skill abundant developed countries. Therefore, skilled workers in the developing countries see a strong incentive to migrate to developed countries. To test this hypothesis, this paper utilizes a panel of 133 developing countries for the period of 1980–2010 and finds that high-skilled workers are more likely to emigrate with trade while there appears to be no effect of trade on low-skilled workers.

Allocative Efficiency of Agrifood Traders: Shrimp Traders in Indonesia

Shrimp is one of Indonesia's most important agricultural export commodities, with an annual export value exceeding $1 billion. If this high-value sector is to remain competitive and continue to grow, rural traders must be able to efficiently allocate scarce labour and factor inputs to trade shrimp. This study tests for factors leading to allocative inefficiency in the shrimp trade, by estimating a stochastic cost frontier on the basis of data from a survey of 200 shrimp traders in Central Java and South Sulawesi. Our results show that larger firms have a distinct cost advantage in trade and, owing in part to greater access to factor markets, are more efficient in allocating factors. Small firms can improve their allocative efficiency and become more competitive by specialising in trading one shrimp variety and by using output contracts to mitigate risk in the output market.

The Structure of Agricultural Technology in Russia: A Multioutput Cost Function Approach

Economic and institutional reforms implemented in Russia during the 1990s have had an immense impact on the country’s agricultural sector. The liberalization of trade and the move towards a market economy induced major adjustments in the production structure of Russian agriculture. This paper examines the effects of these adjustments on the productivity and performance of Russian agriculture in the period from 1999 to 2011. To account for considerable shifts in the agricultural output structure and factor use, a multioutput cost function formulation is employed. Our estimation results indicate substantial improvements in Russia’s agricultural productivity which were driven by labor and materials-using and capital-saving technical change. They also suggest the presence of economies of scale and economies of scope on Russian farms. While labor allocative inefficiencies were diminishing, capital turned to become a scarce factor on Russian farms. The paper concludes by deriving potential implications of the Russia’s policies of self-sufficiency and import-substitution.

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.

Political Cleavages and Economic Sanctions: The Economic and Political Winners and Losers of Sanctions

We develop and test a theory, based on the Stolper–Samuelson Theorem, of the effectiveness of sanctions. We treat sanctions as exogenously imposed changes in a country's exposure to international markets. In a country with an open-trade regime, owners and intensive users of the abundant factor of production hold economic and political power. In a country closed to trade, however, economic and political power rests with owners and intensive users of scarce factors. Thus, if real rates of return to the abundant factor decline during sanctions against a trade-open country, or real rates of return to the scarce factor decline during sanctions against a trade-closed country, we expect these economically and politically powerful segments of the targeted country to push hard for policy changes that would bring about an end to sanctions. Statistical analysis of sanctions episodes initiated between 1971 and 2000 provides support for the paper's expectations.

Hog badger (Arctonyx collaris) latrine use in relation to food abundance: evidence of the scarce factor paradox

Many carnivores use latrines, and investigations of latrine use have typically been concerned with territorial defense, often at the expense of fully evaluating other, not mutually exclusive, functions. In particular, the relationship between food abundance and latrine use patterns has been explored inadequately, where latrine location may be used to aid spatial memory, to stake a claim on access to temporally variable food resources, or to signal the local depletion of resources. Little is known about the hog badger (Arctonyx collaris), however the consensus is that they are solitary, but nonetheless deposit their feces in latrines, but without any group‐territory defense function. This provides an ideal study system to investigate how temporal and spatial variation in latrine use strategy is associated with food resource availability throughout the year. We use generalized linear mixed models (GLMM) and an information‐theoretic approach to test the hypothesis that seasonal latrine use patterns signal the resources most valued (i.e., the foraging book keeping hypothesis). We found that latrine use showed significant seasonal and habitat‐related variations, where the number of feces per latrine reached seasonal maxima in early summer but was lowest in autumn, and was significantly higher in logged forest and selectively logged forest but lowest in farmland. The intensity of latrine use exhibited a significant negative relationship with environmental food abundance, and was related to dietary output (fecal contents). That is, hog badgers invested most in ‘marking' those more limited resources, concurring with the scarce factor paradox, which asserts that the value of any commodity is a function of its rarity.

In Search of Labor Demand

We propose and estimate a novel specification of labor demand which encompasses search frictions and the role of entrepreneurs in new firm creation. Using city-industry variation over four decades, we estimate the wage elasticity of employment demand to be close to −1 at the industry-city level and −0.3 at the city level. We argue that the difference between these estimates reflects the congestion externalities predicted by the search literature. Our estimates also indicate that entrepreneurship should be treated as a scarce factor in the determination of labor demand. We use our estimates to evaluate the impact of large changes in the minimum wage on employment. (JEL J23, J31, J38, L26, M13, R23)

The perioperative management of haemophilia: easier said than done Joint assessment in haemophilia – current physiotherapist practice in the UK

Abstarct Haemophilia is the oldest known rare genetic bleeding disorder that disrupts the blood clotting process. Although the level of haemophilia care has improved substantially, the problems of management in developing countries are poor awareness, high costs of treatment, inadequate diagnostic and coagulation screening facilities and scarce factor concentrates for therapy. We present here the problems in the perioperative management of a case of haemophilia A in India. It portrays the current picture of haemophilia management in many developing countries around the world.

Industrial Restructuring and Export Competitiveness of the Textiles and Clothing Sector in SAARC in the Context of MFA Phase-Out

Traditionally, the textiles and clothing industry has been considered as one of the relatively more labour-intensive manufacturing industries in which developing countries have had comparative advantage mainly on account of cheap labour. Through econometric explorations the present paper observes a situation characterized as factor intensity reversal in South Asian countries necessitated by structural transformation within the industry due to increasing use of their scarce factor. The paper argues that implementing such a change in the production process in these countries would not be easy, especially in the post-MFA regime and thus regional cooperation in this sector could be one of the ways of meeting the post-MFA challenges. In this context, the paper explores the prospects for horizontal specialization and industrial restructuring with the help of strengthening trade-investment linkages in this sector in the SAARC region along with adopting some other policy measures.

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’.

Остеопороз і гемофілія

Гемофілія — це спадкова коагулопатія, при якій процес гіпокоагуляції обумовлений генетичним дефіцитом та зниженням прокоагулянтної активності факторів зсідання крові VІІІ (ІХ). Найбільш важким проявом гемофілії є розвиток хронічної гемофілічної артропатії, тяжкість якої напряму залежить від рівня дефіцитного фактора та адекватності замісної терапії. Клінічний перебіг гемофілічної артропатії розпочинається з гострого гемартрозу, проходить стадію хронічного вільозного синовіїту і в кінцевому результаті призводить до деформуючого остеоартрозу, фіброзного анкілозу та розвитку вторинного навколосуглобового остеопорозу. Метою нашого дослідження було визначити фактори ризику розвитку остеопенії та остеопорозу в метаепіфізах кісток, утворюючих суглоб, а також прослідкувати залежність зниження мінеральної щільності кісткових тканин від рівня дефіцитного фактора зсідання крові VІІІ (ІХ) у хворих на гемофілію.

From an empty to a full world: a nova natureza da escassez e suas implicações

Este trabalho tem como objetivo principal discutir uma nova representação econômica da natureza da escassez dos recursos representada pela passagem de um empty world para um full world no qual o capital natural é o recurso escasso e limitante do desenvolvimento econômico. Acrescenta-se, ainda, a esta análise, uma avaliação do papel do capital natural enquanto fornecedor de serviços ecossistêmicos úteis ao bem-estar humano. À luz desta nova interpretação sobre a escassez, são discutidas as implicações que este fato encerra para as ciências econômicas em termos da necessidade de em um novo modelo de desenvolvimento, aqui chamado de full world economics ou green consensus, cujo objetivo principal é a preservação e alocação eficiente do capital natural. Acredita-se que esta nova interpretação a respeito da natureza da escassez traga implicações não negligenciáveis tanto para a redefinição dos propósitos de política econômica quanto para a definição de sustentabilidade nas ciências econômicas.

Democracy and the Skill-Bias in Trade Policy in Developing Countries

A growing body of research suggests that democracy promotes trade liberalization in developing countries. We argue that democracy in developing countries generates a skill bias in trade policy where democratic incumbents have incentives to increase tariffs on high skilled goods but reduce trade barriers on low skilled goods. Our model analyzes how electoral competition and interest group politics in the Heckscher-Ohlin economy of a democratic developing country affects trade protection on low and high skilled goods. It predicts that electoral competition induces the government to reduce trade barriers for low skilled goods to maximize the utility of the abundant factor, namely the low skilled median voter, who optimally prefers a reduction in tariffs for low skilled goods. At the same time, electoral politics also engenders lobbying pressure and campaign contributions from the scarce factor in the polity – the owners of skill-intensive industries (the interest group) – who prefers more trade protection for high skilled goods. The government rationally responds to contributions and electoral dividends generated by protecting skill-intensive industries from import competition by increasing tariffs on high skilled goods. Empirical tests conducted on a novel disaggregated industry-level dataset of trade protection for 92 developing countries from 1978-2004 provides robust statistical support for our theoretical predictions.

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.