Showing papers by "London School of Economics and Political Science published in 2009"

The Impact of Uncertainty Shocks

Abstract: Uncertainty appears to jump up after major shocks like the Cuban Missile crisis, the assassination of JFK, the OPEC I oil-price shock, and the 9/11 terrorist attacks. This paper offers a structural framework to analyze the impact of these uncertainty shocks. I build a model with a time-varying second moment, which is numerically solved and estimated using firm-level data. The parameterized model is then used to simulate a macro uncertainty shock, which produces a rapid drop and rebound in aggregate output and employment. This occurs because higher uncertainty causes firms to temporarily pause their investment and hiring. Productivity growth also falls because this pause in activity freezes reallocation across units. In the medium term the increased volatility from the shock induces an overshoot in output, employment, and productivity. Thus, uncertainty shocks generate short sharp recessions and recoveries. This simulated impact of an uncertainty shock is compared to vector autoregression estimations on actual data, showing a good match in both magnitude and timing. The paper also jointly estimates labor and capital adjustment costs (both convex and nonconvex). Ignoring capital adjustment costs is shown to lead to substantial bias, while ignoring labor adjustment costs does not.

The Environment and Directed Technical Change

Abstract: This paper introduces endogenous and directed technical change in a growth model with environmental constraints and limited resources. A unique final good is produced by combining inputs from two sectors. One of these sectors uses "dirty" machines and thus creates environmental degradation. Research can be directed to improving the technology of machines in either sector. We characterize dynamic tax policies that achieve sustainable growth or maximize intertemporal welfare, as a function of the degree of substitutability between clean and dirty inputs, environmental and resource stocks, and cross-country technological spillovers. We show that: (i) in the case where the inputs are sufficiently substitutable, sustainable long-run growth can be achieved with temporary taxation of dirty innovation and production; (ii) optimal policy involves both "carbon taxes" and research subsidies, so that excessive use of carbon taxes is avoided; (iii) delay in intervention is costly: the sooner and the stronger is the policy response, the shorter is the slow growth transition phase; (iv) the use of an exhaustible resource in dirty input production helps the switch to clean innovation under laissez-faire when the two inputs are substitutes. Under reasonable parameter values (corresponding to those used in existing models with exogenous technology) and with sufficient substitutability between inputs, it is optimal to redirect technical change towards clean technologies immediately and optimal environmental regulation need not reduce long-run growth. We also show that in a two-country extension, even though optimal environmental policy involves global policy coordination, when the two inputs are sufficiently substitutable environmental regulation only in the North may be sufficient to avoid a global disaster.

Institutions, resources, and entry strategies in emerging economies

Abstract: We investigate the impact of market-supporting institutions on business strategies by analyzing the entry strategies of foreign investors entering emerging economies. We apply and advance the institution-based view of strategy by integrating it with resource-based considerations. In particular, we show how resource-seeking strategies are pursued using different entry modes in different institutional contexts. Alternative modes of entry—greenfield, acquisition, and joint venture (JV)—allow firms to overcome different kinds of market inefficiencies related to both characteristics of the resources and to the institutional context. In a weaker institutional framework, JVs are used to access many resources, but in a stronger institutional framework, JVs become less important while acquisitions can play a more important role in accessing resources that are intangible and organizationally embedded. Combining survey and archival data from four emerging economies, India, Vietnam, South Africa, and Egypt, we provide empirical support for our hypotheses.

Measuring Economic Growth from Outer Space

Abstract: GDP growth is often measured poorly for countries and rarely measured at all for cities or subnational regions. We propose a readily available proxy: satellite data on lights at night. We develop a statistical framework that uses lights growth to augment existing income growth measures, under the assumption that measurement error in using observed light as an indicator of income is uncorrelated with measurement error in national income accounts. For countries with good national income accounts data, information on growth of lights is of marginal value in estimating the true growth rate of income, while for countries with the worst national income accounts, the optimal estimate of true income growth is a composite with roughly equal weights. Among poor-data countries, our new estimate of average annual growth differs by as much as 3 percentage points from official data. Lights data also allow for measurement of income growth in sub- and supranational regions. As an application, we examine growth in Sub Saharan African regions over the last 17 years. We find that real incomes in non-coastal areas have grown faster by 1/3 of an annual percentage point than coastal areas; non-malarial areas have grown faster than malarial ones by 1/3 to 2/3 annual percent points; and primate city regions have grown no faster than hinterland areas. Such applications point toward a research program in which "empirical growth" need no longer be synonymous with "national income accounts."

Is Gold a Safe Haven? International Evidence

Abstract: The aim of this paper is to examine the role of gold in the global financial system. We test the hypothesis that gold represents a safe haven against stocks of major emerging and developing countries. A descriptive and econometric analysis for a sample spanning a 30 year period from 1979-2009 shows that gold is both a hedge and a safe haven for major European stock markets and the US but not for Australia, Canada, Japan and large emerging markets such as the BRIC countries. We also distinguish between a weak and strong form of the safe haven and argue that gold may act as a stabilizing force for the financial system by reducing losses in the face of extreme negative market shocks. Looking at specific crisis periods, we find that gold was a strong safe haven for most developed markets during the peak of the recent financial crisis.

Job Polarization in Europe

Abstract: The structure of employment is always changing, and economists are always trying to understand those changes. In the 1990s the idea of skill-biased technological change (SBTC) was used to understand the shift in employment toward more educated workers (see David H. Autor and Lawrence F. Katz 1999, for a survey). However, in recent years, it has become appar ent that a more nuanced approach is needed. The idea of SBTC might lead one to predict a uni form shift in employment away from low-skilled and toward high-skilled occupations, but studies for the United States (Autor, Katz, and Melissa S. Kearney 2006) and the United Kingdom (Goos and Manning 2007) have shown that there is growth in employment in both the high est-skilled (professional and managerial) and lowest-skilled (personal services) occupations, with declining employment in the middle of the distribution (manufacturing and routine office jobs). This is what Goos and Manning (2007) term job polarization (although see the introduc tion to Goos and Manning 2007 for antecedents of these ideas). There are several hypotheses about the rea sons for job polarization. First, the "routiniza tion" hypothesis (first put forward by Autor, Frank Levy, and Richard Murnane 2003) sug gests that the effect of technological progress is to replace "routine" labor which tends to be clerical and craft jobs in the middle of the wage distribution. Second, there is the view that globalization in general, and offshoring in par ticular, is an important source of change in the job structure in the richest countries (see, for example, Alan S. Blinder 2007). Third, there may be a link between job polarization and

Innovation and Institutional Ownership

Abstract: We find that institutional ownership in publicly traded companies is associated with more innovation (measured by cite-weighted patents). To explore the mechanism through which this link arises, we build a model that nests the lazy-manager hypothesis with career-concerns, where institutional owners increase managerial incentives to innovate by reducing the career risk of risky projects. The data supports the career concerns model. First, whereas the lazy manager hypothesis predicts a substitution effect between institutional ownership and product market competition (and managerial entrenchment generally), the career-concern model allows for complementarity. Empirically, we reject substitution effects. Second, CEOs are less likely to be fired in the face of profit downturns when institutional ownership is higher. Finally, using instrumental variables, policy changes and disaggregating by type of owner we find that the effect of institutions on innovation does not appear to be due to endogenous selection.

Inequality and Unemployment in a Global Economy

Abstract: This paper develops a new framework for examining the distributional consequences of international trade that incorporates firm and worker heterogeneity, search and matching frictions in the labor market, and screening of workers by firms. Larger firms pay higher wages and exporters pay higher wages than non-exporters. The opening of trade enhances wage inequality and raises unemployment, but expected welfare gains are ensured if workers are risk neutral. And while wage inequality is larger in a trade equilibrium than in autarky, reductions of trade impediments can either raise or reduce wage inequality.

The Origins of State Capacity: Property Rights, Taxation, and Politics

Abstract: Economists generally assume that the state has sufficient institutional capacity to support markets and levy taxes. This paper develops a framework where "policy choices" in market regulation and taxation are constrained by past investments in legal and fiscal capacity. It studies the economic and political determinants of such investments, demonstrating that legal and fiscal capacity are typically complements. The results show that, among other things, common interest public goods, such as fighting external wars, as well as political stability and inclusive political institutions, are conducive to building state capacity. Some correlations in cross-country data are consistent with the theory.

Sensitivity and specificity of multimodal and ultrasound screening for ovarian cancer, and stage distribution of detected cancers: Results of the prevalence screen of the UK Collaborative Trial of Ovarian Cancer Screening (UKCTOCS)

Abstract: Background: Ovarian cancer has a high case–fatality ratio, with most women not diagnosed until the disease is in its advanced stages. The United Kingdom Collaborative Trial of Ovarian Cancer Screening (UKCTOCS) is a randomised controlled trial designed to assess the effect of screening on mortality. This report summarises the outcome of the prevalence (initial) screen in UKCTOCS. Methods: Between 2001 and 2005, a total of 202 638 post-menopausal women aged 50–74 years were randomly assigned to no treatment (control; n=101 359); annual CA125 screening (interpreted using a risk of ovarian cancer algorithm) with transvaginal ultrasound scan as a second-line test (multimodal screening [MMS]; n=50 640); or annual screening with transvaginal ultrasound (USS; n=50 639) alone in a 2:1:1 ratio using a computer-generated random number algorithm. All women provided a blood sample at recruitment. Women randomised to the MMS group had their blood tested for CA125 and those randomised to the USS group were sent an appointment to attend for a transvaginal scan. Women with abnormal screens had repeat tests. Women with persistent abnormality on repeat screens underwent clinical evaluation and, where appropriate, surgery. This trial is registered as ISRCTN22488978 and with ClinicalTrials.gov, number NCT00058032. Findings: In the prevalence screen, 50 078 (98·9%) women underwent MMS, and 48 230 (95·2%) underwent USS. The main reasons for withdrawal were death (two MMS, 28 USS), non-ovarian cancer or other disease (none MMS, 66 USS), removal of ovaries (five MMS, 29 USS), relocation (none MMS, 39 USS), failure to attend three appointments for the screen (72 MMS, 757 USS), and participant changing their mind (483 MMS, 1490 USS). Overall, 4355 of 50 078 (8.7%) women in the MMS group and 5779 of 48 230 (12·0%) women in the USS group required a repeat test, and 167 (0·3%) women in the MMS group and 1894 (3·9%) women in the USS group required clinical evaluation. 97 of 50 078 (0·2%) women from the MMS group and 845 of 48 230 (1·8%) from the USS group underwent surgery. 42 (MMS) and 45 (USS) primary ovarian and tubal cancers were detected, including 28 borderline tumours (eight MMS, 20 USS). 28 (16 MMS, 12 USS) of 58 (48·3%; 95% CI 35·0–61·8) of the invasive cancers were stage I/II, with no difference (p=0·396) in stage distribution between the groups. A further 13 (five MMS, eight USS) women developed primary ovarian cancer during the year after the screen. The sensitivity, specificity, and positive-predictive values for all primary ovarian and tubal cancers were 89·4%, 99·8%, and 43·3% for MMS, and 84·9%, 98·2%, and 5·3% for USS, respectively. For primary invasive epithelial ovarian and tubal cancers, the sensitivity, specificity, and positive-predictive values were 89·5%, 99·8%, and 35·1% for MMS, and 75·0%, 98·2%, and 2·8% for USS, respectively. There was a significant difference in specificity (p<0·0001) but not sensitivity between the two screening groups for both primary ovarian and tubal cancers as well as primary epithelial invasive ovarian and tubal cancers. Interpretation: The sensitivity of the MMS and USS screening strategies is encouraging. Specificity was higher in the MMS than in the USS group, resulting in lower rates of repeat testing and surgery. This in part reflects the high prevalence of benign adnexal abnormalities and the more frequent detection of borderline tumours in the USS group. The prevalence screen has established that the screening strategies are feasible. The results of ongoing screening are awaited so that the effect of screening on mortality can be determined. Funding: Medical Research Council, Cancer Research UK and the Department of Health, UK; with additional support from the Eve Appeal, Special Trustees of Bart's and the London, and Special Trustees of University College London Hospital.

Effects of Privatization and Ownership in Transition Economies

Abstract: The paper evaluates the effects of privatization in the post-communist economies and China. In post-communist economies privatization to foreign owners results in a rapid improvement in performance of firms, while performance effects of privatization to domestic owners are less impressive and vary across regions, coinciding with differences in policies and institutional development. In China relatively more estimates suggest that privatization to domestic owners improves the level of performance. Concentrated private ownership has a stronger positive effect on performance than dispersed ownership in the post-communist economies, but foreign joint ventures rather than wholly owned foreign firms have a positive effect in China. Worker or collective ownership does not have a negative effect. In the post-communist economies new firms are equally or more efficient than firms privatized to domestic owners, and foreign start-ups are more efficient than domestic ones. Privatization is not associated with lower employment. When accompanied by complementary reforms, privatization has a positive effect on economic growth. Three factors appear to drive the more positive effect of privatization to foreign than domestic owners. Domestic managers have more limited skills and access to world markets, domestically privatized firms have been more subject to tunneling and in some countries new large shareholders artificially decreased performance. The important policy implication is that privatization per se does not guarantee improved performance, at least not in the short- to medium-run. Type of private ownership, corporate governance, access to know-how and markets, and the legal and institutional system matter for firm performance.

A review of the IT outsourcing literature: Insights for practice

Abstract: This paper reviews research studies of information technology outsourcing (ITO) practice and provides substantial evidence that researchers have meaningfully and significantly addressed the call for academics to produce knowledge relevant to practitioners. Based on a review of 191 IT outsourcing articles, we extract the insights for practice on six key ITO topics relevant to practitioners. The first three topics relate to the early 1990s focus on determinants of IT outsourcing, IT outsourcing strategy, and mitigating IT outsourcing risks. A focus on best practices and client and supplier capabilities developed from the mid-1990s and is traced through to the late 2000s, while relationship management is shown to be a perennial and challenging issue throughout the nearly 20years under study. More recently studies have developed around offshore outsourcing, business process outsourcing and the rise, decline and resurrection of application service provision. The paper concludes by pointing to future challenges and developments.

The Stock Market and Corporate Investment: A Test of Catering Theory

Abstract: We test a catering theory describing how stock market mispricing might influence individual firms’ investment decisions. We use discretionary accruals as our proxy for mispricing. We find a positive relation between abnormal investment and discretionary accruals; that abnormal investment is more sensitive to discretionary accruals for firms with higher RD that firms with high abnormal investment subsequently have low stock returns; and that the larger the relative price premium, the stronger the abnormal return predictability. We show that patterns in abnormal returns are stronger for firms with higher R&D intensity or share turnover. (JEL G14, G31) In this paper, we study whether mispricing in the stock market has consequences for firm investment policy. We test a “catering” channel, through which deviations from fundamentals may affect investment decisions directly. If the market misprices firms according to their level of investment, managers may try to boost short-run share prices by catering to current sentiment. Firms with ample cash or debt capacity may have an incentive to waste resources in negative NPV projects when their stock price is overpriced and to forgo positive investment opportunities when their stock price is undervalued. Managers with shorter shareholder horizons, and those whose assets are more difficult to value, should cater more.

The Evolution of International Security Studies

Abstract: International Security Studies (ISS) has changed and diversified in many ways since 1945. This book provides the first intellectual history of the development of the subject in that period. It explains how ISS evolved from an initial concern with the strategic consequences of superpower rivalry and nuclear weapons, to its current diversity in which environmental, economic, human and other securities sit alongside military security, and in which approaches ranging from traditional Realist analysis to Feminism and Post-colonialism are in play. It sets out the driving forces that shaped debates in ISS, shows what makes ISS a single conversation across its diversity, and gives an authoritative account of debates on all the main topics within ISS. This is an unparalleled survey of the literature and institutions of ISS that will be an invaluable guide for all students and scholars of ISS, whether traditionalist, ‘new agenda’ or critical. • The first book to tell the post-1945 story of International Security Studies and offer an integrated historical sociology of the whole field • Opens the door to a long-overdue conversation about what ISS is and where it should be going • Provides a detailed institutional account of ISS in terms of its journals, departments, think tanks and funding sources

Democratic capital: The nexus of political and economic change

Abstract: We study the dynamics of economic and political change, theoretically and empirically. Democratic capital measured by a nation's historical experience with democracy, and the incidence of democracy in its neighborhood, appears to reduce exit rates from democracy and raise exit rates from autocracy. Higher democratic capital stimulates growth by increasing the stability of democracies. Heterogeneous effects of democracy induce sorting of countries into political regimes, which helps explain systematic differences between democracies and autocracies. Our results suggest the possibility of a virtuous circle, where accumulation of physical and democratic capital reinforce each other, promoting economic development and consolidation of democracy.

State Capacity, Conflict and Development

Abstract: We report on an on-going project, which asks a number of questions relevant to the study of state capacity. What are the main economic and political determinants of the state’s capacity to raise revenue and support private markets? How do risks of violent conflict affect the incentives to invest in state building? Does it matter whether conflicts are external or internal to the state? When are large states associated with higher income levels and growth rates than small states? What relations should we expect between resource rents, civil wars and economic development? The paper is organized into three main sections: 1. The origins of state capacity, 2. Sate capacity and the genius of taxation, and 3. State capacity and the strategy of conflict. Each of these begins with a specific motivation. A simple model is formulated to analyze the determinants of state capacity in the first section, and modified to address the new issues that arise in subsequent sections. The theoretical results are summarized in a number of propositions. We discuss the implications of the theory, comment on its relation to existing literature, and briefly mention some empiric applications.

On the mediation of everything: ICA presidential address 2008

Abstract: As our field moves beyond the traditional dualism of mass and interpersonal forms of communication to encompass new, interactive, networked forms of communication whose influence may be traced across multiple spheres of modern life, it is commonly claimed that ‘everything is mediated’ and that this represents a historically significant change. This article inquires into these rhetorically grand claims, first noting the parallels with other processes of mediation (e.g. language, money, myths), second raising questions of value since, unlike for other forms of mediation, the media’s role is typically construed as negative than positive and, third observing that the difficulties of translating ‘mediation’ into a range of languages reveals some conceptual confusions. As a step towards clarification, I contrast the terms ‘mediation’ and ‘mediatization’, these roughly, mapping onto situational and historical influences, conceived primarily at micro and macro levels of analysis respectively. I then argue for a broad conception of mediation that encompasses those processes variously referred to as mediatization, mediazation or medialization. The analysis is illustrated by unpacking the claim that ‘childhood is mediated’, before concluding that distinct aspects of the concept of mediation invite communication scholars to attend to the specific empirical, historical and political implications of the claim that ‘everything is mediated’.

Sparsistency and Rates of Convergence in Large Covariance Matrix Estimation

Abstract: This paper studies the sparsistency and rates of convergence for estimating sparse covariance and precision matrices based on penalized likelihood with nonconvex penalty functions. Here, sparsistency refers to the property that all parameters that are zero are actually estimated as zero with probability tending to one. Depending on the case of applications, sparsity priori may occur on the covariance matrix, its inverse or its Cholesky decomposition. We study these three sparsity exploration problems under a unified framework with a general penalty function. We show that the rates of convergence for these problems under the Frobenius norm are of order (s(n) log p(n)/n)(1/2), where s(n) is the number of nonzero elements, p(n) is the size of the covariance matrix and n is the sample size. This explicitly spells out the contribution of high-dimensionality is merely of a logarithmic factor. The conditions on the rate with which the tuning parameter λ(n) goes to 0 have been made explicit and compared under different penalties. As a result, for the L(1)-penalty, to guarantee the sparsistency and optimal rate of convergence, the number of nonzero elements should be small: sn'=O(pn) at most, among O(pn2) parameters, for estimating sparse covariance or correlation matrix, sparse precision or inverse correlation matrix or sparse Cholesky factor, where sn' is the number of the nonzero elements on the off-diagonal entries. On the other hand, using the SCAD or hard-thresholding penalty functions, there is no such a restriction.

Sparsistency and rates of convergence in large covariance matrix estimation

Abstract: This paper studies the sparsistency and rates of convergence for estimating sparse covariance and precision matrices based on penalized likelihood with nonconvex penalty functions. Here, sparsistency refers to the property that all parameters that are zero are actually estimated as zero with probability tending to one. Depending on the case of applications, sparsity priori may occur on the covariance matrix, its inverse or its Cholesky decomposition. We study these three sparsity exploration problems under a unified framework with a general penalty function. We show that the rates of convergence for these problems under the Frobenius norm are of order (sn log pn/n)1/2, where sn is the number of nonzero elements, pn is the size of the covariance matrix and n is the sample size. This explicitly spells out the contribution of high-dimensionality is merely of a logarithmic factor. The conditions on the rate with which the tuning parameter λn goes to 0 have been made explicit and compared under different penalties. As a result, for the L1-penalty, to guarantee the sparsistency and optimal rate of convergence, the number of nonzero elements should be small: at most, among parameters, for estimating sparse covariance or correlation matrix, sparse precision or inverse correlation matrix or sparse Cholesky factor, where is the number of the nonzero elements on the off-diagonal entries. On the other hand, using the SCAD or hard-thresholding penalty functions, there is no such a restriction.

Property Rights and Economic Development

Abstract: This chapter develops a unified analytical framework, drawing on and extending the existing literature on the subject, for studying the role of property rights in economic development. It addresses two fundamental and related questions concerning the relationship between property rights and economic activity. (i) What are the mechanisms through which property rights affect economic activity? (ii) What are the determinants of property rights? In answering these, it surveys some of the main empirical and theoretical ideas from the extensive literature on the topic.

The risk management of nothing

Abstract: This essay challenges core elements of enterprise risk management (ERM) and suggests that an impoverished conception of ‘risk appetite’ is part of the ‘intellectual failure’ at the heart of the financial crisis. Regulators, senior management and boards must understand risk appetite more as the consequence of a dynamic organizational process involving values as much as metrics. In addition, ERM has operated as a boundary preserving model of risk management subject to the ‘logic of the audit trail’, rather than a boundary challenging practice which confronts and addresses the complex realities of interconnectedness. The security provided by ERM is at best limited to certain states of the world and at worst it is illusory – the risk management of nothing. In contrast, Business continuity management (BCM) may provide clues about how risk management might be reconstructed.

Dynamic Mean-Variance Asset Allocation

Abstract: Mean-variance criteria remain prevalent in multi-period problems, and yet not much is known about their dynamically optimal policies. We provide a fully analytical characterization of the optimal dynamic mean-variance portfolios within a general incomplete-market economy, and recover a simple structure that also inherits several conventional properties of static models. We also identify a probability measure that incorporates intertemporal hedging demands and facilitates much tractability in the explicit computation of portfolios. We solve the problem by explicitly recognizing the time-inconsistency of the mean-variance criterion and deriving a recursive representation for it, which makes dynamic programming applicable. We further show that our time-consistent solution is generically different from the pre-commitment solutions in the extant literature, which maximize the mean-variance criterion at an initial date and which the investor commits to follow despite incentives to deviate. We illustrate the usefulness of our analysis by explicitly computing dynamic mean-variance portfolios under various stochastic investment opportunities in a straightforward way, which does not involve solving a Hamilton-Jacobi-Bellman differential equation. A calibration exercise shows that the mean-variance hedging demands may comprise a significant fraction of the investor's total risky asset demand.

Social Connections and Incentives in the Workplace: Evidence from Personnel Data

Abstract: We present evidence on the effect of social connections between workers and managers on productivity in the workplace. To evaluate whether the existence of social connections is beneficial to the firm's overall performance, we explore how the effects of social connections vary with the strength of managerial incentives and worker's ability. To do so, we combine panel data on individual worker's productivity from personnel records with a natural field experiment in which we engineered an exogenous change in managerial incentives, from fixed wages, to bonuses based on the average productivity of the workers managed. We find that when managers are paid fixed wages, they favor workers to whom they are socially connected irrespective of the worker's ability, but when they are paid performance bonuses, they target their effort towards high ability workers irrespective of whether they are socially connected to them or not. Although social connections increase the performance of connected workers, we find that favoring connected workers is detrimental for the firm's overall performance.

Ethno-Symbolism and Nationalism: A Cultural Approach

Abstract: Anthony D. Smith is Emeritus Professor of Nationalism and Ethnicity at the London School of Economics, and is considered one of the founders of the interdisciplinary field of nationalism studies. Anthony Smith has developed an approach to the study of nations and nationalism called ethno-symbolism, which is concerned with the nature of ethnic groups and nations, and the need to consider their symbolic dimensions. This text provides a concise statement of an ethno-symbolic approach to the study of nations and nationalism and at the same time, embodies a general statement of Anthony Smith’s contribution to this approach and its application to the central issues of nations and nationalism. The text: sets out the theoretical background of the emergence of ethno-symbolism in a sustained and systematic argument explains its analysis of the formation of nations, their persistence and change and the role of nationalism demonstrates that an ethno-symbolic approach provides an important supplement and corrective to past and present intellectual orthodoxies in the field and addresses the main theoretical criticisms levelled at an ethno-symbolic approach. Drawing together and developing earlier brief resumes of Anthony Smith’s approach, this book represents a summary of the theoretical aspects of his work in the field since l986. It will be useful to students and to all those who are interested in the issues raised by a study of ethnicity, nations and nationalism.

On Crop Biodiversity, Risk Exposure, and Food Security in the Highlands of Ethiopia

Abstract: This paper investigates the effects of crop genetic diversity on farm productivity and production risk in the highlands of Ethiopia. Using a moment-based approach, the analysis uses a stochastic production function capturing mean, variance, and skewness effects. Welfare implications of diversity are evaluated using a certainty equivalent, measured as expected income minus a risk premium (reflecting the cost of risk). We find that the effect of diversity on skewness dominates its effect on variance, meaning that diversity reduces the cost of risk. The analysis also shows that the beneficial effects of diversity