Showing papers on "Capital accumulation published in 2014"
TL;DR: In this paper, the authors examined the relationship between private capital flows and economic growth in Africa during the period 1990-2007 and found that foreign direct investment, foreign equity portfolio investment and private debt flows all have a negative impact on economic growth.
143 citations
TL;DR: Li et al. as mentioned in this paper found that between 1992 and 2007, the average real wage increased by 202%, accompanied by a sharp rise in wage inequality, which was attributed to higher pay for basic labor, rising returns to human capital, and increases in the state-sector wage premium.
Abstract: Using a national sample of Urban Household Surveys, we document several profound changes in China's wage structure during a period of rapid economic growth. Between 1992 and 2007, the average real wage increased by 202%, accompanied by a sharp rise in wage inequality. Decomposition analysis reveals 80% of this wage growth to be attributable to higher pay for basic labor, rising returns to human capital, and increases in the state-sector wage premium. By employing an aggregate production function framework, we account for the sources of wage growth and wage inequality amid fast economic growth and transition. We find capital accumulation, skill-biased technological change, and rural–urban migration to be the major forces behind the evolving wage structure in urban China.
136 citations
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TL;DR: In this article, the authors used data on UK banks' minimum capital requirements to study the interaction between monetary policy and capital requirement regulation, and found that small banks react more to capital requirement changes than large banks to monetary policy changes.
Abstract: We use data on UK banks’ minimum capital requirements to study the interaction of monetary policy and capital requirement regulation. UK banks were subject to both time-varying capital requirements and changes in interest rate policy. Tightening of either capital requirements or monetary policy reduces the supply of lending. Lending by large banks reacts substantially to capital requirement changes, but not to monetary policy changes. Lending by small banks reacts to both. There is little evidence of interaction between these two policy instruments. The differences in the responses of small and large banks, and the lack of interaction between capital requirement changes and monetary policy, have important policy implications. Our results confirm the theoretical consensus view that monetary policy should focus on price stability objectives and that capital requirement changes are a more effective tool to achieve financial stability objectives related to loan supply. We also identify important distributional consequences within the financial system of these two policy instruments. Finally, our findings do not corroborate theoretical models that raise concerns about complex interactions between monetary policy and macroprudential variation in capital requirements.
132 citations
TL;DR: In this article, an econometric model for analyzing the interrelationship between foreign direct investment and domestic capital and economic growth in 13 MENA countries by using a growth model framework and simultaneous-equations models estimated by the Generalized Method of Moments (GMM) during the period 1990-2010.
118 citations
TL;DR: In this article, the authors use Social Security earnings records for workers in the Veneto region of Italy linked to detailed financial data for their employers to find strong evidence of rent-sharing, with an elasticity of wages with respect to potential rents per worker of around 4%, arising mainly at larger firms with higher price-cost margins.
Abstract: Rent-sharing by workers can reduce the incentives for investment if some of the returns to sunk capital are captured in higher wages. We propose a simple measure of this “holdup” effect based on the size of the wage offset for firm-specific capital accumulation. Using Social Security earnings records for workers in the Veneto region of Italy linked to detailed financial data for their employers, we find strong evidence of rent-sharing, with an elasticity of wages with respect to potential rents per worker of around 4%, arising mainly at larger firms with higher price-cost margins. On the other hand, we find little evidence that bargaining lowers the return on investment. Instead, firm-level bargaining appears to split the rents after deducting the full cost of capital.
111 citations
01 Jan 2014
TL;DR: In this article, the UK government's plans to create a social investment market is analysed, and the authors argue that the policies that empower local communities, actually foster further financialisation and a deepening of capitalist disciplinary logics into the social fabric.
Abstract: The paper analyses the UK government’s plans to create a social investment market. The Big Society as political economy is understood as a response to three aspects of a multi-faceted, global crisis: a crisis of capital accumulation; a crisis of social reproduction; and, a fiscal crisis of the state. While the neoliberal state is retreating from the sphere of social reproduction, further off-loading the costs of social reproduction onto the unwaged realms of the home and the community, it is simultaneously engaging in efforts to enable this terrain of social reproduction to be harnessed for profit. Key to this process are specific government policies, the creation of new financial institutions and instruments and the introduction of the metric of ‘social value’. Policies ostensibly aimed at resolving the crisis in ways that empower local communities, actually foster further financialisation and a deepening of capitalist disciplinary logics into the social fabric.
105 citations
TL;DR: In this article, an efficiency-adjusted public capital stock series and re-examine the public capital and growth relationship was constructed and the effects of four specific stages of the public investment process on capital accumulation and growth were examined.
103 citations
TL;DR: In a major recent intervention Costas Lapavitsas argues that what was thrown into relief was the sheer penetration of the financial process into all facets of everyday life as discussed by the authors, which represents a historic transformation in the structural process of capital accumulation itself: one which has been globally unfolding and locally evolving over the last three to four decades.
Abstract: Over half a decade has passed since the first global financial crisis of the 21st Century, and political economists are still trying to make sense of its causes and ramifications. In a major recent intervention Costas Lapavitsas argues that what was thrown into relief was the sheer penetration of the financial process into all facets of everyday life. Financialisation represents, Lapavitsas says, nothing less than a historic transformation in the structural process of capital accumulation itself: one which has been globally unfolding and locally evolving over the last three to four decades, and has now installed itself at all levels and dimensions of everyday life. At the centre of this argument is an analysis which focuses on the way financial intermediaries have been able to draw people, and the social infrastructure people depend on, deep into the circuit of financial accumulation. To a considerable degree this thesis backs up Lefebvre and Harvey's analysis made some four decades earlier: that financia...
99 citations
TL;DR: In this article, the authors argue that debt has a central place in the history of humanity and the class struggle, and that it has been a powerful force in the development of the world economy.
Abstract: Introduction. Financialization and the rise of the ‘debt economy' Debt, as David Graber so powerfully reminded us, [1] has a central place in the history of humanity and the class struggle.…
99 citations
TL;DR: Piketty as mentioned in this paper provides a unified theory of the functioning of the capitalist economy by linking theories of economic growth and functional and personal income distributions, and argues, based on the long-run historical data series, that the forces of economic divergence (including rising income inequality) tend to dominate in capitalism.
Abstract: Capital in the Twenty-First Century by Thomas Piketty provides a unified theory of the functioning of the capitalist economy by linking theories of economic growth and functional and personal income distributions. It argues, based on the long-run historical data series, that the forces of economic divergence (including rising income inequality) tend to dominate in capitalism. It regards the twentieth century as an exception to this rule and proposes policies that would make capitalism sustainable in the twenty-first century. ( JEL D31, D33, E25, N10, N30, P16)
93 citations
TL;DR: In this article, the authors develop a numerical approach for approximating the value of capital that integrates estimates from ecology and economics, and employ the method to recover credible accounting prices for a pound of Gulf of Mexico reef fish as a capital asset under real-world management conditions.
Abstract: Current efforts to value ecosystem services have contributed little to the valuation of natural capital, suggesting that in practice “nature is capital” primarily serves as a metaphor. We provide a theoretically motivated approach for recovering natural capital prices that expands beyond idealized management to encompass current, likely inefficient, management institutions. Theoretically consistent capital valuation requires adjusting for the net marginal productivity of the natural capital asset and price appreciation. We develop a numerical approach for approximating the value of capital that integrates estimates from ecology and economics. We employ the method to recover credible accounting prices for a pound of Gulf of Mexico reef fish as a capital asset under real-world management conditions. Our approach reveals the interdisciplinarity of natural capital valuation and the importance of understanding the feedbacks between the state of natural capital stocks, human behavior affecting these sto...
TL;DR: This paper explored career capital development of self-initiated expatriates in the Middle East, reporting on data gathered in Qatar from 20 in-depth semi-structured interviews.
Abstract: This paper explores career capital development of self-initiated expatriates (SIEs) in the Middle East, reporting on data gathered in Qatar from 20 in-depth semi-structured interviews. The findings challenge the notion that self-initiated expatriation always leads to career capital accumulation, arguing instead that contextual features impact individuals' agentic efforts towards career capital accumulation and lead them to experience ‘career capital stagnation’. Qatarisation is the overarching influence on the status of SIEs in the country and places structural constraints that translate into limited organisational opportunities and support for SIEs. Individually, SIEs reside rhetorically within complex dualities characterised by feelings of cosmopolitanism and isolation. Whilst individuals narrate the context in utilitarian terms as a means to a broader aim of global experience, everyday practicalities of their work and life are problematised. Narratives of career capital development are organised in thr...
TL;DR: The dominant political economy of Mozambique is focused on three fundamental and interlinked processes, namely the maximisation of inflows of foreign capital without political conditionality, the development of linkages between these capital inflows and the domestic process of accumulation and the formation of national capitalist classes; and the reproduction of a labour system in which the workforce is remunerated at below its social cost of subsistence and families have to bear the responsibility for maintaining (especially feeding) the wage-earning workers by complementing their wages or trying to maintain... as discussed by the authors.
Abstract: The Mozambican economy has been growing at an annual average of 7.5% for the best part of two decades, and has become one of the three most attractive economies for foreign direct investment (FDI) in sub-Saharan Africa. Yet, it has been ineffective and inefficient at reducing poverty and providing a broader social and economic basis for development. It is argued here that the dominant political economy of Mozambique is focused on three fundamental and interlinked processes, namely the maximisation of inflows of foreign capital – FDI or commercial loans – without political conditionality; the development of linkages between these capital inflows and the domestic process of accumulation and the formation of national capitalist classes; and the reproduction of a labour system in which the workforce is remunerated at below its social cost of subsistence and families have to bear the responsibility for maintaining (especially feeding) the wage-earning workers by complementing their wages or trying to maintain ...
TL;DR: In this paper, the effect of corruption on the effciency of capital investment is investigated using firm-level data from the World Bank enterprise surveys, covering 90 developing and transition economies, and the authors find that bribery decreases investment efficiency, as measured using both absolute and relative metrics of investment returns.
Abstract: This paper considers the effect of corruption on the effciency of capital investment. Using firm-level level data from the World Bank enterprise surveys, covering 90 developing and transition economies, we consider whether the cost of informal bribe payments distorts the efficient allocation of capital by reducing the marginal return per unit investment. Using country estimates of fractionalization and legal origin as instruments, and controlling for censoring, we find that bribery decreases investment efficiency, as measured using both absolute and relative metrics of investment returns. The negative effect is strongest for domestic small and medium-sized enterprises while there is no significant effect on foreign and large domestic firms. We conclude that reducing the level and incidence of bribery by public officials would facilitate a more efficient allocation of capital. This in turn would support economic growth and development, particularly for small and medium-sized enterprises.
TL;DR: In this article, the authors show that human capital must reflect the economic structure to foster the economic growth, otherwise it might only cause higher level of unemployment due to crowding out effect and imbalances on the labor market.
Abstract: Human capital is usually viewed as one of the key determinants of competitiveness and economic growth. However, recent statistical data about unemployment and growth in EU have revealed some weak spots of this traditional view. The human capital itself seems not to be a guarantee of economic stability and presumable quick recovery from crisis. On the contrary we see countries like Spain or Cyprus where the level of human capital, expressed as a percentage of tertiary educated population, is relatively very high but the unemployment reaches critical levels and economic growth is weak or negative. In this article we continue with our previous research and show that human capital must reflect the economic structure to foster the economic growth. Otherwise it might only cause higher level of unemployment due to crowding out effect and imbalances on the labor market. We also deal with responses of regional economies on recent economic crisis, when we show asymmetric responses based on structural differences and human capital endowment.
TL;DR: The importance of offspring development for dictating strategies for financing offspring production is discussed, and it is shown that increased food availability, increased seasonality, and, to a lesser extent, increased unpredictability can all favor the emergence of capital breeding.
Abstract: An aspect of life history that has seen increasing attention in recent years is that of strategies for financing the costs of offspring production. These strategies are often described by a continuum ranging from capital breeding, in which costs are met purely from endogenous reserves, to income breeding, in which costs are met purely from concurrent intake. A variety of factors that might drive strategies toward a given point on the capital–income continuum has been reviewed, and assessed using analytical models. However, aspects of food supply, including seasonality and unpredictability, have often been cited as important drivers of capital and income breeding, but are difficult to assess using analytical models. Consequently, we used dynamic programming to assess the role of the food supply in shaping offspring provisioning strategies. Our model is parameterized for a pinniped (one taxon remarkable for the range of offspring-provisioning strategies that it illustrates). We show that increased food availability, increased seasonality, and, to a lesser extent, increased unpredictability can all favor the emergence of capital breeding. In terms of the conversion of energy into offspring growth, the shorter periods of care associated with capital breeding are considerably more energetically efficient than income breeding, because shorter periods of care are associated with a higher ratio of energy put into offspring growth to energy spent on parent and offspring maintenance metabolism. Moreover, no clear costs are currently associated with capital accumulation in pinnipeds. This contrasts with general assumptions about endotherms, which suggest that income breeding will usually be preferred. Our model emphasizes the role of seasonally high abundances of food in enabling mothers to pursue an energetically efficient capital-breeding strategy. We discuss the importance of offspring development for dictating strategies for financing offspring production.
TL;DR: In this paper, four options to make the social security sustainable under the coming demographic shift are presented; increase payroll taxes by 6 percentage points, reduce replacement rates by one-third, raise the normal retirement age to 73, or means-test the benefits and reduce them in income.
TL;DR: This article showed that the stock market may fail to aggregate information even if it appears to be efficient, and that the resulting decrease in the information content of prices may drastically reduce welfare, and they showed that when prices reflect less information, the conditional variance of stock returns rises, causing an increase in uncertainty and costly distortions in consumption, capital accumulation and labor supply.
Abstract: We show that the stock market may fail to aggregate information even if it appears to be efficient, and that the resulting decrease in the information content of prices may drastically reduce welfare. We solve a macroeconomic model in which information about fundamentals is dispersed and households make small, correlated errors when forming expectations about future productivity. As information aggregates in the market, these errors amplify and crowd out the information content of stock prices. When prices reflect less information, the conditional variance of stock returns rises, causing an increase in uncertainty and costly distortions in consumption, capital accumulation, and labor supply.
TL;DR: In this paper, the effects of stock markets and banks on the sources of economic growth, productivity and capital accumulation, using a large cross country panel that includes high- and low-income countries, were studied.
Abstract: This paper studies the effects of stock markets and banks on the sources of economic growth, productivity and capital accumulation, using a large cross country panel that includes high- and low-income countries. Results show that, in low-income countries, banks have a sizable positive effect on capital accumulation. We find that stock markets, however, have not contributed to capital accumulation or productivity growth in these countries. Given the emphasis that has been placed in developing equity markets in developing countries, these findings are somewhat surprising. Conversely, in high-income countries, stock markets are found to have sizable positive effects on both productivity and capital growth, while banks only affect capital accumulation.
TL;DR: In this article, the authors investigated the relationship between women's economic and political rights and economic development by focusing on a key economic right for women: property rights, and they explored the empirical validity of their theoretical predictions by using cross-state variation in the US in the timing of married women obtaining property and earning rights between 1850 and 1920.
Abstract: Why has the expansion of women’s economic and political rights coincided with economic development? This paper investigates this question by focusing on a key economic right for women: property rights. The basic hypothesis is that the process of development (i.e., capital accumulation and declining fertility) exacerbated the tension in men’s conflicting interests as husbands versus fathers, ultimately resolving them in favor of the latter. As husbands, men stood to gain from their privileged position in a patriarchal world whereas, as fathers, they were hurt by a system that afforded few rights to their daughters. The model predicts that declining fertility would hasten reform of women’s property rights whereas legal systems that were initially more favorable to women would delay them. The theoretical relationship between capital and the relative attractiveness of reform is non-monotonic but growth inevitably leads to reform. I explore the empirical validity of the theoretical predictions by using cross-state variation in the US in the timing of married women obtaining property and earning rights between 1850 and 1920.
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01 Jan 2014
TL;DR: In this paper, the effects of enlargement on Germany were analyzed analytically and through numerical simulations, finding small effects from trade, but more pronounced labor market effects from migration.
Abstract: Eastern enlargement of the EU promises gains, but also imposes fiscal costs on incumbent countries. A sensitive issue concerns immigration, jobs and wages. We address these issues in a general equilibrium framework, both analytically and through numerical simulations. Analytical results identify capital accumulation as a prime transmission channel. Using a dynamic CGE model with search unemployment of high- and low-skilled labor, we simulate the effects of enlargement on Germany finding small effects from trade, but more pronounced labor market effects from migration.
TL;DR: In this article, the authors focus on the relationship between human capital and the firm's resource base, and emphasize the need to simultaneously consider both human capital scarcity and complementarities, and reinforce that scarce human capital can indeed be general human capital.
TL;DR: In this paper, the authors employed the augmented Solow human-capital-growth model to investigate the impact of human capital development on national output, a proxy for economic growth, using quarterly time-series data from 1999-2012.
Abstract: This study employs the augmented Solow human-capital-growth model to investigate the impact of human capital development on national output, a proxy for economic growth, using quarterly time-series data from 1999-2012. Empirical results show that human capita development, in line with theory, exhibits significant positive impact on output level. This implies that human capital development is indispensable in the achievement of sustainable economic growth in Nigeria, as there is an increase in economic performance for every increase in human capital development. The results further reveal a relatively inelastic relationship between human capital development and output level. Going forward, government and policy makers should make concerted and sincere efforts in building and developing human capacity through adequate educational funding across all levels. This remains the major way of attaining sustainable economic growth and development in any economy.
TL;DR: The authors show that uncertainty about the level of government spending and tax rates on consumption, wages, capital income, and investment can cause large declines in consumption, investment, and output when the zero lower bound (ZLB) binds, but has modest effects when the monetary authority is not constrained by the ZLB.
Abstract: Using a new-Keynesian model with endogenous capital accumulation, I show that uncertainty about fiscal policy can cause large declines in consumption, investment, and output when the zero lower bound (ZLB) binds, but has modest effects when the monetary authority is not constrained by the ZLB. I study uncertainty about the level of government spending and uncertainty about tax rates on consumption, wages, capital income, and investment. In my model, uncertainty about government spending and the wage tax rate has particularly large effects. I show that the effects of fiscal policy uncertainty are largest when the nominal interest rate is on the cusp of the ZLB and also that delaying fiscal policy uncertainty diminishes its effects only if the resolution of uncertainty occurs after ZLB no longer binds.
TL;DR: In this paper, the authors used a Ramsey model with two types of capital to analyze the optimal transition to clean capital when polluting investment is irreversible, and investigated inter-and intra-generational distributional impacts and the political acceptability of climate change mitigation policy instruments.
Abstract: This paper uses a Ramsey model with two types of capital to analyze the optimal transition to clean capital when polluting investment is irreversible. The cost of climate mitigation decomposes as a technical cost of using clean instead of polluting capital and a transition cost from the irreversibility of pre-existing polluting capital. With a carbon price, the transition cost can be limited by underutilizing polluting capital, at the expense of a loss in the value of polluting assets (stranded assets) and a drop in income. In contrast, policy instruments that focus on redirecting investments -- such as feebates or environmental standards -- prevent underutilization of existing capital, avoid stranded assets, and reduce short-term losses; but they reduce emissions more slowly and increase the intertemporal cost of the transition. The paper investigates inter- and intra-generational distributional impacts and the political acceptability of climate change mitigation policy instruments.
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TL;DR: The authors reviewed the literature on the benefits and costs of developing local capital markets, and described the challenges faced in the development of such markets, concluding with a set of policy recommendations emerging from this literature.
Abstract: Capital markets can improve risk sharing and the efficiency with which capital is allocated to the real economy, boosting economic growth and welfare. However, despite these potential benefits, not all countries have well developed capital markets. Moreover, government-led initiatives to develop local capital markets have had mixed success. This paper reviews the literature on the benefits and costs of developing local capital markets, and describes the challenges faced in the development of such markets. The paper concludes with a set of policy recommendations emerging from this literature.
TL;DR: The role of Egyptian finance capital in acquiring (and attempting to acquire) agricultural land in southern neighbouring countries since the 2007-2008 food-fuel-financial crisis represents in part the southward expansion of the frontier in Egypt, or new socio-ecological spaces for heightened capital accumulation as mentioned in this paper.
Abstract: The role of Egyptian finance capital in acquiring (and attempting to acquire) agricultural land in southern neighbouring countries since the 2007–2008 food-fuel-financial crisis represents in part the southward expansion of the frontier in Egypt, or new socio-ecological spaces for heightened capital accumulation. This expansion, heralded by processes of financialisation, is the latest wave of corporate consolidation of the country's agri-food system. This paper offers an historical analysis of frontier making in modern-day Egypt and how it has been shaped by relations between Egypt and Sudan within a restructuring hegemonic state system, from the nineteenth century to present-day revolutionary times. Then, a case study of one Egyptian financial firm, Citadel Capital, is detailed to demonstrate that the ‘global land grab’ reflects food regime restructuring with the end of cheap food and oil – and greater food insecurity and political instability in Egypt and in southern neighbouring countries.
TL;DR: In this paper, the concept of a "territorial fix" is introduced, whereby territory is conceptualized as a technology of market-making geared to putting in place and optimizing the conditions for capital accumulation.
Abstract: The article heeds recent calls for closer attention to the geographies of markets. Speaking primarily to a rich tradition of geographical political economy, it argues that such geographies are highly material to value and profit creation and realization. In developing this argument, the article invokes the concept of a ‘territorial fix’, whereby territory is conceptualized as a technology of market-making geared to putting in place and optimizing the conditions for capital accumulation. The article draws selectively and critically on studies of territorialized market formation and pricing in two globalized industries – pharmaceuticals and television – to formulate this argument.
TL;DR: In this paper, the authors investigate the determinants of capital structure using a cross-section sample of 1,481 non-financial firms listed on the Chinese stock exchanges in 2011, and find that large firms favor debt financing while profitable firms rely more on internal capital accumulation.
Abstract: Purpose: The purpose of this paper is to investigate the determinants of capital structure using a cross-section sample of 1,481 non-financial firms listed on the Chinese stock exchanges in 2011.
Design/methodology/approach: Employing four leverage measures (total leverage and long-term leverage in terms of both book value and market value, respectively) this study examines the effects of factors with proven influences on capital structure in literature, along with industry effect and ownership effect.
Findings: The authors find that large firms favour debt financing while profitable firms rely more on internal capital accumulation. Intangibility and business risk increase the level of debt financing but tax has little impact on capital structure. The authors also observe strong industrial effect and ownership effect. Real estate firms borrow considerably more and firms from utility and manufacturing industries use more long-term debt despite compared with commercial firms. On the other hand, firms with state ownership tend to borrow more, while firms with foreign ownership choose more equity financing.
Research limitations/implications: The study uses cross-section data to avoid any potential time effects, which allows the authors to focus on their main research question – to identify the determinants of capital structure for Chinese firms. Future research may gain more insights using panel data and considering other factors such as crisis and financial reforms.
Practical implications: These results may provide important implications to investors in making investment decision and to firms in making financing decisions.
Originality/value: This paper uses by far the largest and latest cross-section sample from the Chinese stock markets, offering a more complete picture of the financing behaviours in the Chinese firms, with known characters and the impact of ownerships.
TL;DR: In this article, a small macro model for Pakistan economy focusing on the impact of investment in human capital on the key macroeconomic variables is presented, where the demand side is modeled along the Keynesian lines while the supply side is modelled as per neoclassical theory of production.