Showing papers by "Leo Paul Dana published in 1990"

Saint Martin/Sint Maarten: A Case Study of the Effects of Culture on Economic Development

Abstract: SAINT MARTIN/SINT MAARTEN: A CASE STUDY OF THE EFFECTS OF CULTURE ON ECONOMIC DEVELOPMENT Government policy plays a strategic role in directing the economic development of a country. This international note compares the development efforts of two nations that coexist on the island of St. Martin--at 37 square miles, the smallest land mass in the world which is divided into two countries; nowhere else do two distinctly separate governments rule a smaller island. Consequently, this study reflects what is almost a controlled experiment in economic development. A remote island, with limited natural resources, has been divided into two sectors, each influenced by its respective culture, for a substantial number of years. The difference in development can thus be partially attributed to the differences in culture, as well as differences in government and policy. Each nation has its own official language, currency, predominant religion, and distinct culture, but most striking is the fact that differences in culture have resulted in contrasting policies on small business and consequently significantly different environments for entrepreneurship. Although both governments attempt to encourage economic development, the role of the state in small business formation in these two island economies differs greatly. "American business sometimes thinks that government can best help business by not interfering with it; many believe laissez-faire is the best policy because they feel that it is dangerous to have the government in business. In France, the attitude is the opposite. There, business wants government intervention in the business sector, for the purpose of keeping potential danger out" (Dana 1988). In French Saint Martin, the state has succeeded in regulating to the extent of keeping danger out, but entrepreneurship as well; in Dutch Sint Maarten, by contrast, policymakers have created an environment supportive of entrepreneurship under the assumption that entrepreneurs emerge in favorable environmental circumstances. Indeed, they have. Peterson (1988) has developed a typology to classify government policy into three categories: (1) laissez-faire-ist; (2) limited environmental approach; and (3) strategic interventionist approach. The "laissez-faire-ists" are content with natural processes within a market economy, with no assistance or interference from the government. Such an approach is pursued by those who view state intervention as an impediment to spontaneous private, entrepreneurial development. The limited environmental approach holds that government aid is legitimate so long as it is limited to ensuring a proper tax climate and positive stimulation of economic conditions. The strategic interventionist approach favors even greater government support such as deregulation, educational enhancement, and direct financial aid. Dutch Sint Maarten has taken what Peterson describes as the limited-environmental policy approach, thereby creating a supportive environment(*) in which entrepreneurship can flourish. The result is a thriving business community characterized by sophisticated entrepreneurial activity. In contrast, French Saint Martin, a subprefecture of Guadeloupe, which in turn is an overseas department of France, has an abundance of restrictions, regulations, and paperwork requirements (Peterson and Peterson 1981) as well as some regulated prices (Levi and Dexter 1983). While many of its citizens commute illegally to Dutch Sint Maarten for work, much of French Saint Martin has remained largely rural and agricultural. Sint Maarten has a larger population than Saint Martin. In some instances a difference in population can be an explanatory variable for the propensity to entrepreneurship; in the case of Sint Maarten, however, it can be argued that an environment conducive to entrepreneurship appears to be attracting more people. The birth rate is higher in Saint Martin where the official religion does not condone contraception; yet demand for housing is growing faster in Sint Maarten, suggesting a higher rate of population growth. …

The Canada-United States Free Trade Agreement and Its Implications for Small Business

Abstract: The Canada-United States Free Trade Agreement and Its Implications for Small Business National policy necessarily affects small business policy directions. On October 4, 1987, national policy on trade for Canada and the U.S. embarked on a new path, triggering off changes in both countries, with major implications for all parties concerned. The Canada-United States Free Trade Agreement is the most comprehensive ever concluded between two nations, inevitably affecting small business; still, little academic literature has yet been published on the implications of free trade for the small business. The following pages include an examination of particular sections of the agreement which are especially relevant to those involved with this sector. The Agreement: Objectives The Canada-United States Free Trade Agreement is one of a long list of agreements intended to foster international trade cooperation. It is divided into eight parts, each of which is further subdivided into chapters. The first chapter sets the tone of the accord, its objectives emphasizing the extent to which this agreement moves beyond other free trade agreements. Specifically, the Canada-United States Free Trade Agreement is broader in scope than other free trade agreements negotiated under the General Agreements on Tariffs and Trade. Whereas the Canada-United States Agreement provides for liberalization in all sectors of the economy, even agriculture, none of the other trade agreements currently in force between countries includes binding commitments on trade in services, business, travel, or investment. Given the concentration of small business in service industries, and in consideration of the entrepreneur's need to travel, these provisions are of particular interest to small business. The objectives of the Canada-United States Agreement are to: * Eliminate barriers to trade in goods and services between the territories of the Parties; * Facilitate conditions of fair competition within the free trade area; * Liberalize significantly conditions for investment within this free trade area; * Establish effective procedures for the joint administration of this Agreement and the resolution of disputes; and * Lay the foundation for further bilateral and multilateral cooperation to expand and enhance the benefits of this agreement. Whereas research has found that small business is burdened by government regulation and paperwork requirements (Dana 1987), it is expected that small business will flourish in an environment of lower levels of restrictions (Bulloch 1987). The Canada-United States Agreement will eliminate all tariffs on trade between Canadian and U. S. goods and services traded between these countries as of January 1, 1998. In addition, the agreement facilitates conditions of fair competition within the free trade area and expands liberalization of conditions for cross-border investment. The result should be an environment conducive to entrepreneurial activity; when the national economic policy environment is positive, consumers spend and the small business sector is healthy (Johnston 1983). Much literature is already available on the environment and entrepreneurship. (*1) General Rules The Canada-United States Free Trade Agreement eliminates tariffs on trade between the two parties involved, but does not affect existing tariffs on imports from other countries. In order to qualify for duty-free treatment within the scope of this agreement, goods must be of Canadian or U. S. origin. Chapter Three specifies that goods originate in a country if they are wholly obtained or produced in that country. Additionally, merchandise may be deemed to originate in a country after having been transformed there. This is of particular help to the small manufacturer which lacks the facilities to produce an item from new materials, and therefore assembles components, most of which may be imported from overseas. …