Sectoral Allocation Research Articles

Autonomous negotiation for resource allocation of multiple sectors in the TFT-LCD manufacturing industry

In a global TFT-LCD manufacturing enterprise, a central planning sector promises orders to maximize profit, while the production sector is responsible for minimizing costs and meeting delivery deadline. The two sectors frequently struggle with different preferences. The contradictory objectives raise conflict between the two sectors when developing an entire resource allocation plan for the enterprise. This study presents a novel negotiation framework and develops a mutually acceptable resource allocation plan via autonomous negotiation between sectors with different preferences. A mathematical model considering the major characters of the TFT-LCD industry is formulated. Individual sectors can employ preferred negotiation tactics to achieve their objectives with an acceptable level of trade-off. This study examines various negotiation tactics and compares the proposed decentralized model with a centralized solution. Negotiation experiments demonstrate a good resource allocation plan over a short time and the conflict between sectors can be resolved efficiently. The proposed autonomous negotiation facilitates smart operations management.

Allocating Subsidies for Private Investments to Maximize Jobs Impacts

Governments often aim to influence the amount and sectoral allocation of private investments through explicit or implicit subsidies. The rules used to select projects to benefit from subsidies may vary, depending on the policy objective. This paper develops a general framework to allocate subsidies to private investments in the presence of jobs-linked externalities (JLEs). JLEs emerge when wages exceed the opportunity cost of labor (labor externalities), or when there are social gains from creating better jobs for some classes of worker, such as women or youth (social externalities). Like all externalities, JLEs create a gap between private and social rates of return. Investments can be socially profitable (once the corresponding JLEs are internalized) but the private returns may be too low for the firm to go ahead. JLEs help to explain why many developing countries see insufficient investment in projects that would reallocate labor towards better jobs. The concept of JLEs is well established in economic literature, but there is a need for better operational approaches to address them. Like other externalities, JLEs can be corrected using a variety of possible subsidies (such as: grants, subsidized infrastructure, credit, training, technical assistance and tax exemptions). But doing this efficiently and at scale this requires mechanisms to (a) estimate the value of the externality and (b) discover the amount of subsidy needed to trigger the private investment. This paper shows that the optimal way to allocate subsidies to offset JLEs is through a competitive bidding process which selects projects based on the estimated amount of JLEs per dollar of subsidy. The bidding process provides an incentive to investors to reveal the subsidy needed for a project to become privately viable. We show that the proposed approach maximizes the jobs impacts of a given amount of fiscal resources that has been allotted to support better jobs outcomes

The catch-22 in pre-set budgetary allocations: the case of 2001 Abuja Declaration

The concept of pre-set national budgets is gaining significance worldwide. In pre-setting budgets, policy-makers recommend budgetary allocations' percentages for certain tasks. In this paper a review of the Abuja Declaration of 2001 in which African Union countries' pledged to allocate at least 15% of annual budget towards improving the health sector is done. By 2010, only one country had implemented the requirement. Several had moved slightly towards the target whilst others had, as if in protest, reduced their health sector allocations. Accordingly, this paper interrogates the pre-set budget phenomenon in the context of standardisation exposing its implications to the legislative role, countries' priorities, among other things with the understanding of universalism and relativism precepts of international human rights law. Findings, point to the erosion of state sovereignty on one side whilst on the other signal the commitment to regularise states' approaches to fundamental drivers of pertinent developmental goals.

COVID-19 Impact and Mitigation Policies: A Didactic Epidemiological-Macroeconomic Model Approach

We develop an integrated epidemiological-macroeconomic model to analyze the interplay between the COVID-19 outbreak and economic activity, as a tool for capacity building purposes. We illustrate a workhorse framework that combines a rich epidemiological model with an economic block to shed light on the tradeoffs between saving lives and preserving economic outcomes under various mitigation policies and scenarios calibrated for emerging market and developing economies. In our benchmark setup, we link the effective contact frequency and labor supply decisions to the current state of the disease progression, allowing for relevant behavioral responses that introduce multiple feedback channels. We showcase the effects of various 'smart' mitigation measures, e.g. improved quarantine capacity or targeted labor market restrictions, to alleviate the tradeoffs between health-related outcomes and economic activity, including in response to a second infection wave. The discovery of treatment or vaccine, and the possibility of temporary immunity for the recovered individuals are also considered. The model is further extended to a multisector framework to analyze the sectoral allocation effects of the COVID-19 shock.

Determinants of the Size of Private Sector Credit Disbursement in Ghana

The paper examines the antecedence of the size of private sector credit disbursement in Ghana using symmetric and asymmetric ARDL processes. We find that the treasury bill rates have both a direct and an indirect impact on the amount of credit channelled to the private sector with positive shocks dominating the stimulating effect of the treasury bill rate. Similarly, negative shocks in the average lending rates have a detrimental effect on the credit to the private sector which supports the view that banks use interest rates to ration credit. Also, the saving rates have a direct and indirect effect on private sector credit but positive shocks in the savings rate have a detrimental effect on the amount of credit to the private sector. Moreover, we found a dominance positive effect of the shocks in foreign currency deposits on private sector credit disbursement. Finally, a rise in crude oil prices induces private sector allocation in Ghana even though the effect of oil prices on credit appears mixed.

Foreign Aid, Institutional Quality and Income Inequality in Developing Countries

This study examines the role of institutional quality as a complementary factor on the effectiveness of sectoral allocations of foreign aid (i.e. aid to social sectors, aid to economic sectors, aid to production sectors and aid to multi sectors) on income inequality in selected foreign aid recipient countries. This study utilizes System-Generalized Method of Moment on a panel data of 50 of foreign aid recipient countries during the period 1995 to 2017. The empirical findings revealed that the interaction variables between sectoral allocations of foreign aid with institutional quality have a negative and statistically significant effect on income inequality during the period of study. This finding indicates that institutional quality is one the conditional factor for the effectiveness of sectoral foreign aid allocations in narrowing income inequality in developing countries.

Measurement and Analysis of Oil Price Fluctuations and Trends of Government Expenditure on Agriculture and Industry in Iraq for the Period (2006-2016)


 Abstract
 The objective of the study: is to identify the reality of the relationship between the fluctuations in international oil prices and their reflection on the trends of government spending on agriculture and industry.
 The study finds that there is no joint integration between the two variables. The independent variable (oil price) has no effect on the dependent variable (expenditure on the agricultural sector) through the calculated value of F (1.906385) A significant level of 5%, which is smaller than the table value of the minimum parameter of 3.62 at a significant level of 5% This is because most of these expenses are operating expenses, which are inflexible and insufficiently responsive to the change in oil prices, since the investment expenditure on the agricultural sector did not exceed 10% of the total public expenditure during the study period. The allocation of the industrial sector out of the total public expenditure was very low, where it reaches an verage rate of this sector over 11 years (1.1%) reflected the low allocation of this sector of total public expenditure, which negatively reflected on the level of domestic production.
 The study recommends promotion of private sector, its development, providing necessary support and facilities to improve this sector to relieve pressure on the public sector through the employment of labor and thus reduce public expenditure, mostly salaries, wages of working staff, and prioritize investment expenditures of the total public expenditure of sectors that contribute to the construction of the economy that achieves the ambition to promote the economy, such as the industrial sector, in order to absorb the large numbers of the unemployed. The interest in the agricultural sector is crucial to the provision of food commodities and ensuring that these goods are not imported from abroad. These imports with negative effects on the country's economy.

Development of a Fuzzy Multi-Objective Heuristic Model for Optimum Water Allocation

A challenging issue in optimal allocating water resources is uncertainty in parameters of a model. In this paper, a fuzzy multi-objective model was proposed to maximize the economic benefits of consumers and to optimize the allocation of surface and groundwater resources used for optimal cropping pattern. In the proposed model, three objective functions were optimizing farmer’s maximum net profit, groundwater stability and maximizing the reliability of water supply considering uncertainties in water resources and economic parameters in a basin. The optimal Pareto trade-off curves extracted using Non-dominated Sorting Genetic Algorithm- II. The best point on the Pareto trade-off curves was determined by using five decision-making approaches which combined by Breda aggregation method. Then, analyzing the credibility level of the optimization parameters and nonlinearity condition of objective functions revealed that by non-linearization of objective functions and increasing the fuzziness of the water demand and economic parameters, the model achieves more desirable values. Having been applied under uncertain conditions of objective functions and the input parameters, the results indicate an average increase of 17% and 54% in the allocation of agriculture and urban sectors, respectively. According to the annually optimal allocation results, the groundwater resources show higher sensitivity rather than surface water resources to the uncertainties in the parameters. Moreover, the optimal operation policies are more efficient than the deterministic model Consequently, the suggested model can facilitate optimizing water resources allocation policies, providing the optimal cropping pattern under uncertainty conditions, and can be used for the similar uncertain condition in other basins.

The impact of economic crisis on regional disparities and the allocation of economic branches in Greek regions

Abstract The objective of this paper is to analyse the changes that occurred in the regional disparities and sectoral specialisation of the Greek regions due to the economic crisis. The research problem is to identify the effect that the crisis had on the developmental perspectives of the regions and on regional policy priorities. In this framework, we explore the regional disparities, along with the allocation and specialisation of economic sectors in two separate time periods: the pre-crisis period (2000–2007) and the crisis period (2008–2014). The variable used is regional employment in the branches of economic activity. The methods used are Coefficient of Variation, Location Quotients and Shift-Share Analysis. According to the results, we classify the spatial units into categories and we propose means of regional policy. The results show that the disparities increased during the first period of the crisis and declined in the next, without, however, reaching the levels of 2000. In the first period the dynamic economic sectors are concentrated mainly in the metropolitan region of Attica and in the island region of South Aegean, while local advantages are shown in several regions except Attica. During the period of crisis, Attica and South Aegean lost their sectoral dynamism, while a few regions resisted. Regarding the local share effects, the more urbanised regions show negative local shares. The rest of the regions exhibit local advantages. Thus, according to these results, a concluding remark is that the more traditional activities seem to be more resilient, unlike the modern activities, which seem more sensitive to the crisis and are located mainly in the large cities and the most urbanised regions of the country. Regarding the proposed regional policy means, infrastructure improvement is indicated for most of the urbanised regions in order to improve their developmental environment. For the other regions, a more balanced sectoral structure must be promoted. Of course, in order to propose more targeted policy measures, it is important that regional development features (according to the classification of the regions and the proposed policy measures) be adapted to smaller areas and to a greater number of narrower economic sectors, rather than simply applying them at the regional level. This is also true of the effect that some other factors such as human capital and innovative capacity have on regional resilience. Future research will focus on this.

Aid Targeting to Fragile and Conflict-Affected States and Implications for Aid Effectiveness

While significant amounts of foreign aid have been allocated to the group of so-called fragile and conflict-affected states in recent years, it is not clear whether that aid is targeted to where it is most needed. This article extends recent work by Carment and Samy (2017, in press), and focuses on aid targeting in fragile states by using the Country Indicators for Foreign Policy fragility index together with sectoral aid flows from the OECD Creditor Reporting System. Specifically, it considers six country-cases from a three-fold typology of states and evaluates the performance of these countries in terms of their fragility relative to the types of aid that they have received. The article argues that aid is poorly targeted in fragile states and by considering the sectoral allocation of aid it also contributes indirectly to the related issue of aid effectiveness.

Automated Assessment of the Value of Private Equity Funds on the Basis of an Optimization Software Package

With the development of private equity market in Russia, the creation of a private equity fund (PEF) optimizing the distribution of investment resources in it remains a relevant task. The object of the study in this paper is PEF, the subject is an automated assessment of the value of PEF on the basis of the author’s economic-mathematical model (EMM). The aim of this paper is to study the possibility of using the optimization software for this assessment and its application to the real PEF portfolio of projects. The optimization-based economic- mathematical model underlying the calculations makes it possible to identify the economic potential of the fund’s portfolio (in the form of its net present value), which makes it possible to optimally allocate investments in projects of the real sector of the economy, taking into account the state of the regulatory environment and the interests of investors. As methods of the study in this paper are used: economic-mathematical modeling; numerical experiment using an optimization financial-analytical package of applied programs. The results of the research can be used by fund managers to solve operational, investment and financial problems from the standpoint of increasing the value of funds and optimal investment allocation in various sectors of the economy.

Portfolio Allocations Using Fundamental Ratios: Are Profitability Measures Effective in Selecting Firms and Sectors?

Our study assesses the performance of portfolios formed using out-of-sample sector forecasts and past firm fundamental ratios in real time from 1980.1-2014.4. Portfolio allocations based on profitability measures -- gross profit, operating profit, and EBITDA -- generate performance substantially better than a buy-and-hold benchmark. Long/short portfolio allocations using these fundamentals possess alphas over 14% and increase Sharpe ratios by over 60%. These portfolio strategies consistently beat a buy-and-hold benchmark two-thirds of the time over thirty-five years and over each of the last three decades. A composite variable of profitability measures provides the highest payoff for firm allocations, while strategies using EBITDA are the most profitable for out-of-sample sector allocations. Our results demonstrate that profitability metrics, which use a measure of earnings above net income, are superior indicators of sustainable economic performance, since they are more strongly linked to both future returns and cash flows than net income.

Practical Applications of Adding Value in Student-Managed Funds: Benchmark and Sector Selection

Practical Applications Summary In Adding Value in Student-Managed Funds: Benchmark and Sector Selection, from the Winter 2018 issue of The Journal of Trading, authors J. Christopher Hughen, Jack Strauss, and J.P. Tremblay (all of the Daniels College of Business at the University of Denver) propose a low-risk approach for portfolio management that offers significant opportunities for alpha generation. They focus on midcap stocks and propose a formal sector allocation strategy to identify mispriced sectors. The authors recommend using the ratio of enterprise value (EV) to EBITDA to determine which sectors to over- and underweight in portfolio allocation.

China in Africa: Competition for traditional development finance institutions?

Abstract Official development finance from China has risen tremendously in the past two decades across the globe, including in the world’s poorest continent Africa. How has this sudden increase in development resources affected the two major multilateral development banks (MDBs) in the region, the World Bank and the African Development Bank (AfDB)? One might expect that the MDBs would compete with China to maintain influence in Africa. This study uses statistical tests and interviews with government officials in three recipient countries to see if this is the case. The results indicate that total MDB finance by country change little over time in response to Chinese activity. The sectoral allocation of concessional lending to the poorer countries does not show any responsiveness either. In contrast, shifts in levels and sector allocation can be observed for non-concessional countries. Overall, the study suggests that while China’s role in African development finance is indeed substantial and growing, it has not had the “game changing” impact on traditional development finance as popular perception might lead one to believe. This may change, however, once more recipient countries develop economically and move to non-concessional lending.

Structural Changes in the Allocation of Livestock Farming Sectors in the Central Black Earth Economic Region in the Postreform Period

This paper analyzes the state of main sectors of livestock farming, identifies trends in their allocation, and discusses factors and directions of their development.

Analysis and comparison of the two sectoring approaches in elevator traffic systems

Sectoring is a group control algorithm that is used in elevator traffic control systems by grouping passengers that have common destinations or common origins into elevator cars that serve these floors. The building is split into sectors usually comprising contiguous floors. Two different alternative algorithms for sectoring are discussed in this paper. The first approach is based on dynamic allocation with equal sector allocation. The second approach is based on static allocation with unequal sector sizes. Under static allocation, the same elevator car is allocated to the same sector in every round trip. Under dynamic allocation, each elevator car is allocated to a different sector in each round trip. Under the dynamic allocation scheme suggested in this paper, the elevator cars are sequenced to the various sectors in the buildings in a round-robin fashion. It is important to note that under both schemes, the provided (relative) handling capacity of different sectors is equalised. Five different buildings have been analysed using the two suggested sectoring algorithms. The building is first designed by finding the required number and speed of elevators assuming conventional control. Each building is then analysed using one of the two suggested sectoring algorithms. In order to compare the performance of the two sectoring algorithms, the provided (relative) handling capacity is calculated. The provided (relative) handling capacity of the two suggested algorithms is then compared. Very little difference was found between the two algorithms. The dynamic sectoring with equal sector sizes offers the convenience of having equal sector sizes. The static sectoring with unequal sector sizes is more convenient for passengers that are familiar with the building. Practical application: This paper analyses two different options for sectoring the control system of an elevator system in a building. Each of the two sectoring methods is suitable for different situations. The dynamic allocation method is more suitable for destination group control systems and offers the group controller more flexibility. The static allocation method with unequal sector sizes ensures that the passengers remain familiar with the elevators that they use to get to their floors. The programmer of the elevator group controller can programme both methods in the controller and allow it to switch to the most suitable algorithm depending on the prevailing conditions.

Heterogeneity and asymmetric effects in energy resources allocation of the manufacturing sectors in China

Using the trans-log cost function and elasticity model, this paper pioneered the analysis of the elasticity and characteristics of the substitution between energy consumption and capital in China's manufacturing industry between 1995 and 2014. Firstly, the research revealed significant differences in the magnitude and direction of the substitution between coal, electricity, petroleum, and capital, thus demonstrating heterogeneity in the substitution. Secondly, the analysis, based on the Morishima Elasticity of Substitution (MES) model showed that: 1) depending on what triggers changes in factor prices, the manufacturing sector shows a reverse asymmetry whereby capital substituted energy and energy complemented capital 2) a significant asymmetry exists in the direction and magnitude of substitution in capital- and labor-intensive sectors. This asymmetric effect indicates that China can attain overall energy conservation and apply energy-saving technologies in the manufacturing industry by implementing the substitution of capital for energy. However, the differences with regards to the forms of energy consumption among sectors, as well as the heterogeneity and asymmetry in capital–energy substitution should be considered in research on energy policies for the manufacturing industry. This should also involve the integration of energy sources to ensure that such policies are targeted and effective.

Productivity and Sectoral Allocation: The Labor Market of School Principals

We study whether differences in management can explain variation in productivity and how more effective managers can be recruited in absence of high-powered incentives. To investigate this, we first extend the canonical teacher value-added model to account for school principals, and we document substantial variation in their ability to improve students’ learning. Teachers’ survey responses and quasi-experimental designs based on changes in school management validate our measure of principal effectiveness. Then, we leverage the timing of adoption of a civil service reform and show that despite having relatively rigid wages, public schools were able to attract more effective managers after increasing the competitiveness and transparency of their personnel selection process.

Trainspotting: 'Good Jobs', Training and Skilled Immigration

While skilled immigration ceteris paribus provides an immediate boost to GDP per capita by adding to the human capital stock of the receiving economy, might it also reduce the number of 'good jobs', i.e. those with training, available to indigenous workers? This paper analyzes this issue theoretically and empirically. The theoretical model shows how skilled immigration may affect the sectoral allocation of labor and how it may have a positive or negative effect on the training and social mobility of native born workers. The empirical analysis uses UK data from 2001 to 2018 to show that training rates of UK born workers have declined in a period where immigration has been rising strongly, and have declined significantly more in high wage non-traded sectors. At the sectoral level however this link is much less strong but there is evidence of different effects of skilled immigration across traded and non-traded sectors and evidence that the hiring of UK born workers in high wage non-traded sectors has been negatively affected by skilled immigration, although this effect is not large. Taken together the theoretical and empirical analyses suggest that skilled immigration may have some role in allocating native born workers away from 'good jobs' sectors but it is unlikely to be a major driver of social mobility.

Sectoral Credit Allocation of Deposit Money Banks and Poverty Reduction in Nigeria

The nature of relationship between deposit money banks loan to certain sector of the economy and its possible effect of reducing poverty rate in Nigeria is controversial and significant. As such, this study set out to examine the extent to which deposit money bank loan and advances to SMEs, agricultural, and manufacturing sectors in Nigeria has helped in reducing poverty rate. To achieve the objective of the study, unit root test, auto regressive distributive lag estimate and causality test were employed. Result shows that deposit money bank loan to SMEs and agricultural sector seem to be inversely related to poverty rate in Nigeria while sectoral allocation to the manufacturing sector is not capable of reducing poverty rate in Nigeria. This inherent relationship between loans to manufacturing sectors and poverty reduction in Nigeria could be attributed to some structural factors cited in the body of the paper. In the light of these findings, this study concluded that (i) Poverty rate in Nigeria is significantly sensitive to deposit money bank credit to agricultural sector; (ii) Within the context of the study, deposit money bank allocation to SMEs has helped in reducing poverty rate in Nigeria to the tune of 1.821 unit. On this premises, it is recommended that bank ordinances and financial institution act should be review to ensure that more credit is allocated to agricultural and SMEs sector as this will help in reducing the ever teaming trend of poverty in Nigeria through the window of job creation.