Showing papers by "Stockholm School of Economics published in 1992"

What Explains Developing Country Growth

Abstract: Among developing countries, there was no gross relationship between real income per capita in 1960 and subsequent growth in per capita income However, once other significant influences, such as education, changes in labor force participation rates, inflows of foreign investment, price structures, and fixed investment ratios are taken into account, the lower the 1960 income level, the faster the income growth This "conditional" convergence was particularly strong among the poorest half of the developing countries, contradicting the idea of a "convergence club" confined to relatively well-off countries Inflows of direct investment were an important influence on growth rates for higher income developing countries, but not for lower income ones For the latter group, secondary education, changes in labor force participation rates, and initial distance behind the United States were all major factors

Knowledge of the Firm, Combinative Capabilities, and the Replication of Technology

Abstract: Explores the theory of firm knowledge and how firms create new knowledge. Knowledge is considered to be in one of two categories: information or know-how. Firms exist, it is argued, because they are better than markets at sharing and transfer of knowledge. Information, which is often proprietary, includes facts, axiomatic propositions, and symbols. Information is the knowledge to know what something means, while know-how is the knowledge to know how to do something. A further characteristic of knowledge that must be considered is the persisting difference in capabilities, i.e. the difficulty in their transfer and imitation. New learning within a firm results from the combinative capabilities of that firm. Combinative capabilities are a firm's ability to exploit its knowledge and the unknown potential of its technology through both internal and external learning. Firms must consider the tradeoffs between short-term survival and long-term development of capabilities. To illustrate the proposed theory, the make-buy question faced by many firms is analyzed. This decision is dependent on how good the firm is currently doing something, how good it is at learning specific capabilities, and the value of these capabilities as platforms into new markets. As a result, firms will make the product if it requires a production knowledge similar to their current organizing principles and information. Firms will develop internally products that build on existing capabilities and that will push them into new markets. Firms will seek joint ventures when the capabilities are not closely related to those already possessed. The existing capabilities of the firm will likely dictate the direction in which the firm moves. (SRD)

Host Country Competition and Technology Transfer by Multinationals

Abstract: This paper examines whether rivalry in host country markets may force multinational films to increase the technology transfer to their foreign affiliates Such technology flows should be interesting from the perspective of the host country and its firms, since they would increase the potential for "spillovers" Using detailed (unpublished) industry data from Mexican manufacturing industry we find that indicators for local competition are positively related to the technology imports of foreign owned affiliates The effects appear to be strong in consumer goods industries, which suggest that foreign multinationals are especially sensitive to the local market environment when barriers to entry in the form of complex technology or high capital requirements are relatively low

A pooled cross-section analysis of the health care expenditures of the OECD countries

Abstract: This paper has two purposes. The first, empirical purpose is to estimate and evaluate the effects of aggregate income, institutional and socio-demographic factors on health care expenditures in the OECD countries. The second purpose is methodological, and comprises assessment of temporal instability, the choice of functional form, and misspecification of the estimated relationships. Data compiled over three years (1974, 1980 and 1987) from 19 OECD countries are used in a pooled cross-section regression analysis. Like previous studies, this one concludes that aggregate income measured by Gross Domestic Product per capita is the statistically most important factor in cross-national variation in health care expenditures, and that the aggregate income elasticity exceeds one. However, the data analyzed in this study also show some evidence that public financing of health care services is associated with lower expenditures per capita, and that countries with fee for service as the dominant form of remuneration have higher expenditures. The examined relationships appear to be temporally stable over the three years except for upward shifts, and there is no indication of statistical misspecification. This does not necessarily imply a correct specification, and we do note the presence of measurement errors in some of the variables. Moreover, the selected log-linear functional form appears to be non-optimal according to a likelihood criterion, and is rejected against a quadratic form. Based on the analyses from this study the results do not appear to be sensitive to use of the quadratic form specification.

Dual-class shares: a review

Abstract: The majority of firms traded in the World's three largest stock exchanges (London, New York, and Tokyo) follow the one share/one vote principle. However, in other countries, dual classes of shares are common place. For example, 50 percent of the publicly-traded Dutch firms have non-voting equity, and approximately 75 percent of the publicly-traded Danish, Finnish, and Swedish firms have shares that differ in their voting rights. This paper reviews the arguments as to why firms create dual classes of shares, their effect on firm value, and the relative prices of shares that differ only in their voting rights. Copyright 1992 by Oxford University Press.

Pooling international health care expenditure data

Abstract: The purpose of this paper is twofold. The first is to analyse the statistical relationship between real health care expenditure per capita and aggregate income, public share in finance, age-dependency ratio and inflation. The second purpose deals with methodological problems involved in pooling health care expenditure data. The empirical work is based on pooled cross-sectional, time-series data for 22 OECD countries from 1972 to 1987. Public finance share and inflation were found to be associated with lower per capita health care expenditure. No consistent correlation was found between the age-dependency ratio and health care expenditure. Contrary to results of earlier studies, we found that health care expenditure does not appear to be income (GDP) elastic. However, the results do not appear to be robust to changes in the time periods and countries included.

A health-economic comparison of diet and drug treatment in obese men with mild hypertension.

Abstract: Objective: To compare dietary and antihypertensive drug treatment in obese men with mild hypertension in economic terms.Design: A 6-week run-in period followed by randomization to either diet or drug treatment, lasting for 1 year. Blood pressure was measured blindly and serum lipid concentrations as

Altruism in cost-benefit analysis

Abstract: It has recently been argued that altruistic motives for paying for a public sector project should be ignored in a cost-benefit analysis. The reason is that including altruism would mean a kind of double counting of the project's benefits. This paper takes a look at these arguments, and derives cost-benefit rules which cover different kinds of altruism. The paper also provides some recommendations for the treatment of altruism in studies using the contingent valuation method.

Differentiated bids for voting and restricted voting shares in public tender offers

Abstract: This paper develops a model for takeover bid premiums of voting and restricted voting shares when the bidder wants 100% of the target firm. For this special case, a higher bid premium may be offered either to the voting or to the restricted voting shareholders. We also analyze consequences of the equal offer and one share/one vote principles and investigate the model's explanatory power on Swedish data.

Cost-effectiveness of misoprostol in Sweden.

Abstract: Based on an American multicenter study, an economic evaluation of prophylactic misoprostol was undertaken in Sweden. The study included 420 patients with osteoarthritis and nonsteroidal anti-inflammatory drug (NSAID)-associated abdominal pain, but no gastric ulcer at inclusion. The frequency of ulcer development with and without prophylactic misoprostol was assessed at 21.7% and 5.6%, respectively, for a 3-month period. All costs for drugs, ambulatory care, hospital care, loss of production, as well as other factors such as dosage and compliance, were transferred to Swedish conditions. It was concluded that in patients with osteoarthritis and NSAID-induced abdominal pain, prophylaxis with misoprostol is cost-effective in Sweden, which is similar to what is found for other countries. A prerequisite for this result is a frequency of ulcer development of 15%. A patient compliance to prophylactic treatment of more than 60% is also presupposed (79% was observed in the above study). Due to the high age of the osteoarthritis patient population, the cost-effectiveness is influenced to only a minor extent by whether indirect costs are included in the calculation.

A review of cost-effectiveness analyses of hypertension treatment.

Abstract: In this paper cost-effectiveness analyses of hypertension treatment are reviewed. Nine studies using life-years gained or quality-adjusted life-years gained as outcome measure are identified, summarised, and their results analysed. It is noted that there is a lack of methodological conformity between the studies, which makes comparisons difficult. The only consistent finding among the studies is that the cost-effectiveness increased with higher pretreatment blood pressure. The studies also indicated that treatment of hypertension is more cost-effective in younger men than in younger women, and that cost-effectiveness increases with age for both men and women. It is impossible at present to draw any policy conclusions from the cost-effectiveness analyses comparing different drugs, owing to poor methodology and insufficient data. For the future it is important to upgrade the quality of the cost-effectiveness analyses in this area by improving both the data and the methodology used. There is also a need to complement cost-effectiveness analysis with other approaches, for example willingness to pay.

On the Discounting of Gained life-Years in Cost-Effectiveness Analysis

Abstract: A controversial issue in cost-effectiveness analysis is the discounting of gained life-years. What has not been realized, however, is that the different methods used for discounting this measurement provide fundamentally different results. The method used is seldom explicitly stated. In the present article the four main methods for the discounting of gained life-years are reviewed and compared. The conclusion is that if we wish to continue comparing results, researchers must employ the same methodology.

Economic evaluation of hypertension treatment.

Abstract: A computer simulation model shows that the cost-effectiveness of treating hypertension is highly sensitive to different assumptions about the effectiveness of treatment, the outcome measure, the cost concept, the discounting of effects, and the duration of therapy. Cost-effectiveness analysis should be supplemented by another approach–cost-benefit analysis based on the contingent valuation (CV) method (the measurement, by survey, of willingness to pay). The CV method is tested in two empirical applications that indicate that it is possible to use the method in this area. Its results should be interpreted with caution, however, since the reliability and validity of the method is not yet established.

Economic evaluation of drug therapy: a review of the contingent valuation method.

Abstract: The aim of this paper is to review the use of the contingent valuation (CV) method in economic evaluation of drug therapy. With the CV method, willingness to pay for a project ‘treatment’ is measured with survey methods, which makes it possible to carry out traditional cost-benefit analysis. The CV method has been developed in environmental economics and is now the most commonly used method of measuring environmental benefits. Due to the limitations of existing methods, empirical applications are starting to appear in the health field as well. From the empirical applications with respect to drug treatment it is evident that it is possible to achieve acceptable response rates. The methodological problems encountered when measuring willingness to pay with survey methods are similar to the problems encountered when measuring utility and quality of life in cost-utility analysis. It is concluded that further studies with the CV method are necessary to further explore questions concerning the reliability and validity of the method in this field.

The social construction of projects. A case study of organizing an extraordinary building project—The Stockholm globe arena

Abstract: The modernization of western cities and societies is often pursued in the form of big projects. In this article it is argued that part of the explanation why some projects are realized and not others is to be found in the processes of project organizing. The Stockholm Globe Arena project illustrates two different strategies for pursuing big projects. One is the clarity strategy. This is the kind of strategy often outlined in the normative literature. This strategy is based on the idea that intentions, preferences and conditions can be kept stable during the process and will steer the outcome of it. The analyzed case illustrates how the differing and changing intentions, preferences and conditions presented difficulties in pursuing the clarity strategy. The other way of pursuing the project is a sharp contrast to the clarity strategy and is here summarized as the ambiguity strategy. In this strategy, the complexity, ambiguity and the changing conditions are not seen as problematic but are emphasized and ma...

Gender discrimination and compensating differentials in Sweden

Abstract: The determinants of the unexplained component of the male–female wage difference in Sweden are examined. The hypothesis that there is a compensating wage differential associated with undesirable job charcteristics is tested. Hedonic wage equations are estimated using data collected in the 1981 Swedish Level of Living Survey The estimation takes into consideration possible sample selection bias due to the non-randomness takes of employment and the potential endogeneity of job choice variables in wage offer equations. Overall, the analysis indicates that compensating wage differentials are not a major determinant of the male–female wage difference in Sweden.

External Influences in Nordic Business Cycles 1870-1988

Abstract: This paper considers the relationship of the Nordic business cycle to the world business cycle using annual output data spanning 1870–1988. The paper studies the Nordic and a set of non-Nordic countries separately and finds evidence for both a Nordic and a world business cycle. Output movements in the individual Nordic countries are connected through the Nordic business cycle and are less affected by the world business cycle. There is no significant change in the behavior of the business cycle in the Nordic countries between 1873–1913 and 1948–1988.

Natural resources damages from Chernobyl

Abstract: In this note, we have reported a simple attempt to examine the stability over time of willingness-to-pay measures. By running a simple regression equation, we are able to explain why the average willingness to pay fell between two consecutively hunting seasons. The most important explanation is that hunting in the second hunting season was affected by the nuclear radiation accident at Chernobyl. Almost 10 percent of the hunters stated that their willingness to pay was affected due to the fact that their moose meat was contaminated. Since there are 24,000 moose hunters in the county of Vasterbotten, we arrive at a yearly loss of about SEK 2 million for the county. Assuming that our figures apply also at the national level, Swedish moose hunters suffered a loss of almost SEK 30 million in the 1986 hunting season. If the same impact on hunters was felt for, say, 3 to 4 years, the present value of the loss caused by the Chernobyl accident could amount to over SEK 100 million (assuming a discount rate of 5 percent). This is a considerable amount, given that Swedish moose hunters constitute only a small fraction of all those who were affected by the Chernobyl accident.

A framework for recognizing patterns when reshaping business processes

Abstract: Reshaping business processes is an extensive field of current interest This article is based on the idea that there are a number of frameworks or frames we can use as a basis for recognizing patterns that will improve our ability to reshape business processes A combined, conceptual framework based on a framework for perceiving situations, a framework for perceiving processes, and relationships between these frameworks is presented Examples of patterns that can be recognized using this framework are given Finally, the article discusses briefly how recognizing such patterns can help you in your work with reshaping business processes

The Haitian Economy Facing the 1990S

Abstract: The article provides an analysis of the state of the Haitian economy at the beginning of the 1990s, with a view to the possibilities of changing the downward course in the future. The interaction of population growth with erosion makes for decreasing production and incomes in agriculture. Protection of import-competing manufacturing has led to high costs and inefficient production, while assembly industries producing for exports have been more successful. Tourism has had to cope with political unrest and fear of AIDS. The macroeconomic policies implemented since the beginning of the 1980s are also analyzed: the breakdown of fiscal and monetary discipline during the last six years of the presidency of Baby Doc, the reforms of 1986–87 that attempted to wipe out the fiscal deficit, liberalize foreign trade and dissolve the “political” monopolies created by the Duvaliers, as well as the results of the political disturbances from mid-1987 onwards.