Showing papers on "Purchasing power published in 1994"

National health expenditures: a global analysis.

Abstract: As part of the background research to the World development report 1993: investing in health, an effort was made to estimate public, private and total expenditures on health for all countries of the world. Estimates could be found for public spending for most countries, but for private expenditure in many fewer countries. Regressions were used to predict the missing values of regional and global estimates. These econometric exercises were also used to relate expenditure to measures of health status. In 1990 the world spent an estimated US$ 1.7 trillion (1.7 x 10(12) on health, or $1.9 trillion (1.9 x 10(12)) in dollars adjusted for higher purchasing power in poorer countries. This amount was about 60% public and 40% private in origin. However, as incomes rise, public health expenditure tends to displace private spending and to account for the increasing share of incomes devoted to health.

Central Bank Independence

Abstract: To many Americans, the idea that a central bank should make crucial economic policy decisions with no direct political accountability either to the citizenry or to their elected representatives seems the antithesis of democracy. Central bank independence, however, is but one solution to a problem endemic to fiat money. Because fiat money has no intrinsic value, the willingness of individuals to hold it depends solely on their faith that the government will not depreciate its purchasing power. Uncertainty about the long-term value of money arises because inflation generates government revenues and, according to some economic theories, can lead to a temporary surge in employment and output.

The Differential‐Productivity Hypothesis and Purchasing‐Power Parties: Some New Evidence*

Abstract: The structure of prices of goods entering into international trade relative to those that do not plays a key role in the Balassa-Samuelson explanation of why countries ‘exchange rates differ systematically from their currencies’ purchasing power. the B-S analysis leads to the proposition that the tradable-nontradable price difference is lower for rich countries than for poor. This paper examines the gap, using prices collected by the International Comparison Programme. A variety of regressions were run to see if indeed the difference between tradable and nontradable price parities moved with income in the way B-S expected. They did.

Experience Effects and International Expansion: Strategies of Service MNCs in the Asia-Pacific Region

Abstract: Key Results The Asia and Pacific region has assumed increasing importance in the global strategies of MNCs in a broad range of service industries. Introduction The Asia-Pacific region has become the largest recipient of foreign direct investment (FDI) among developing countries, accounting for about half of all flows to the Third World. During the 1970s and 1980s, the level and composition of FDI in the developing countries of the Asia-Pacific region changed considerably. The growing interest in the Asia-Pacific region as a host to FDI during the 1980s reveals the importance of certain factors that make it attractive to foreign investors: economic growth, the size of domestic markets, the availability of natural resources, the growth of trade, the existence of adequate infrastructure, and the quality of human capital. The rapid economic growth of most countries in Asia and the Pacific in relation to other developing countries has been perhaps the most important factor in attracting foreign investors to the region (UNCTC 1992). While export-oriented investments remain popular, the growth of consumer purchasing power in the region in recent years has led to an increasing number of investments to service domestic markets. The recent increase in the volume of FDI in Asia and the Pacific reflects not only these locational advantages, but also the strategies of MNCs from developed countries, especially from Japan. Such companies have been working to establish a network of foreign affiliates in the region from which to supply both domestic and foreign markets. The need to support MNC activities in manufacturing through the provision of related service activities in trade, transportation and communication led, initially, to foreign investment in the service sectors. Downstream integration into distribution and marketing activities became a widely practiced strategy. FDI in services has become the most dynamic component of FDI in general, with finance- and trade-related services representing the most active areas in service MNC expansion. More importantly, service MNCs as a group are considerably less internationalized than industrial MNCs, which implies that there is a considerable potential for further growth of FDI in services (OECD 1989). Little is known about the pattern and determinants of international expansion strategies in service industries. As Davidson (1980) has shown, knowledge of an experience in the target market are critical to the international expansion, with firms more likely to invest where they or their competitors in the same industry have invested before. The importance of learning and experience in international expansion and operation has been explored in a number of previous studies, but these studies have focused primarily on the experience effect in international expansion strategies of manufacturing industries. The purpose of this study is to examine key factors affecting international expansion strategies of service multinational firms. The paper will examine the effects of international and regional experience on investment decisions of firms in the Asia-Pacific region. Culture difference and firm size, two factors that may limit or enhance expansion, are also examined. Two strategies for expansion, 'following the client' and 'follow the leader' or oligopolistic reaction, will also be examined. The paper is organized as follows. In the first section, we review literature on international expansion of service MNCs. In the next section, we develop hypotheses relating experience effects and other key factors such a cultural differences, firm size, client following strategy, and "follow the leader" patterns, to the international expansion strategies of service MNCs in the Asia-Pacific region. The next sections discuss the data and research design. The results and conclusions are included in following sections. Background International expansion strategies of service MNCs may differ from those of manufacturing MNCs due to the unique characteristics of service industries. …

Market-Oriented Strategies to Improve Household Access to Food: Experience from Sub-Saharan Africa

Abstract: The objectives of this report are to identify market-oriented strategies to alleviate both chronic and transitory food insecurity, and to examine the interactions between short-run targeting mechanisms and longer-run strategies designed to alleviate the chronic causes of inadequate access to food. The main premise of the report is that sustained improvements in household access to food in Sub-Saharan Africa require the development of more reliable food and input markets that (a) create incentives to adopt cost-reducing investments at various stages in the food system; and (b) offer incentives for rural households to shift from a subsistence-oriented pattern of production and consumption to more productive systems based on specialization and gains from exchange. Sustained productivity growth in most parts of the world has typically entailed some form of structural transformation, which, in the historical development processes of other regions, has been a prerequisite for broad-based and sustained growth in productivity, real incomes and purchasing power throughout society. Structural transformation involves a movement away from subsistence-oriented, household-level production toward an integrated economy based on specialization and exchange. But specialization makes households dependent on the performance of exchange systems. The ability to capture the productivity gains from new technology and specialization thus depends on reducing the risks and uncertainty of market-based exchange, thereby facilitating greater participation in the types of specialized production and consumption patterns involved in the process of structural transformation. Section 3 presents empirical evidence from research conducted in Africa to draw conclusions about how the design of agricultural policies and transfer programs have affected household access to food in both rural and urban areas. Based on the foregoing, section 4 presents the following guidelines for the design of strategies to promote access to food in Africa: (1.) Focus on achieving productivity gains in the food system. (2.) Focus on how food and income transfer programs can be designed to promote the long-run development of the food system- the basis for providing food for most people over the long run in addition to providing food to people in the short run. (3.) Focus on reducing consumer food costs by expanding the range of products available to produce and consume. (4.) Focus on the cost and reliability of food supplies to rural areas as a component of non-farm, livestock, and other income diversification strategies designed to promote access to food over the longer run. (5.) Focus on developing local analytical expertise to help guide food system development.

Working-Class Consumer Power

Abstract: Research by labor historians on the acquisition of power by the working class tends to focus on labor relations (acquisition of power in businesses) or on political relations (power through elections, with the government, and so on). This approach overlooks the third source of labor's power, which is based on patterns of consumption resulting from the collective use of purchasing power. This essay examines this source of power. Because the topic is a virtual terra incognita, I will merely discuss a few observations and some very provisional hypotheses that are not always well substantiated.

The Inflation Tax and the Marginal Welfare Cost in a World of Currency and Deposits

Abstract: OW HIGH IS THE OPTIMAL rate of inflathin? The answer depends on the range of benefits and costs associated with inflation that are considered by the monetary authority in choosing the inflation rate. For example, if one considers the effects of inflation on the distribu~ tions of income and wealth, its interactions with the tax code or the transition cost of changing the expected rate of inflation, or if one adopts the alternative perspectives of different economic agents, the benefits and costs can be relatively large and difficult to assess. This article abstracts from transitory and largely avoidable aspects of inflation, and focuses instead on the fundamental public finance aspects of the monetary authority’s problem. In this case, the net benefits and costs are those associated with an inflation rate that is perfectly anticipated; the benefit of inflation that accrues to the monetary authority (typically the government) is the revenue from inflationary money creation. This benefit is analogous to the revenue arising from a specific tax on any other good or service.

Changes in exchange rates and oil prices for Saudi Arabia and other OPEC members

Abstract: When the U.S. dollar weakens significantly against currencies of other major trading nations, oil-exporting countries often become concerned about both loss of purchasing power for their imports as well as capital losses on dollar-denominated assets. This paper addresses these issues by (1) examining previous studies, (2) reviewing the historical oil price movements of oil denominated in different G-7 currencies, (3) performing a causality test between changes in exchange rates and the price of oil, (4) using an analytical model to relate changes in exchange rates and the price of oil through the world oil market; and (5) evaluating the gains and losses in terms of purchasing power of Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries for selected historical periods.

The fundholding fandango.

Abstract: General practitioner fundholding allows flexible use of resources at the coal-face, provides incentives to alter practice such as prescribing within cash limits and forces hospitals to be more responsive to general practitioner demands. However, the additional administrative costs both in time and money, the fragmentation of purchasing power compounded by a lack of expertise and experience in contracting, and the poor information and financial systems which exist in the National Health Service are severe constraints. A suggested way forward is to delegate responsibility for running the scheme, including the contracting and billing, to district health authorities offering more flexible budgets to all practices and extending the scheme as local information systems allow. This will reduce fragmentation of purchasing power and administrative costs and re-establish local accountability. It will also give the general practitioner more time to see and treat patients, who will see the system as being fairer.

Japan's Consumption and Saving in International Perspective*

Abstract: The postwar Japanese economy provides the world's first example of an economy showing a sustained period of double-digit growth of real gross national product (GNP). As a result of this remarkable growth, Japan was able to recover from its defeat in the Second World War and to join the upper ranks of the developed countries within a few short decades. One objective of this article is to determine the extent to which Japanese consumers were able to reap the benefits of this rapid economic growth and to analyze changes in the level and composition of consumption and saving in Japan from an international perspective. The other objective of the article is to illustrate some of the problems that arise when making international comparisons of income, consumption, and saving. The organization of the article is as follows. In Section II, I demonstrate the dangers of using market exchange rates to convert the figures for each country to a common currency when making international comparisons. In Section III, I conduct an international comparison of consumption levels and, learning a lesson from Section II, convert the figures for each country to a common currency using purchasing power parities rather than market exchange rates. In Section IV, I conduct an international comparison of the composition of consumption with particular emphasis on the Engel coefficient (the share of food in total consumption). In Section V, I conduct an international comparison of household saving, and in Section VI, I summarize my findings. Both Alan H. Gleason and I have conducted detailed analyses of the ratio of Japanese consumption levels to those of the United States,1 but the analysis in this article expands on those studies in at least two

Is There a Paradox of Indirect Convertibility

Abstract: A paradox allegedly plagues systems in which money is only indirectly, not directly, convertible (or redeemable; we use the words interchangeably). Knut Wicksell, W. William Woolsey, John Whittaker and Norbert Schnadt, Tyler Cowen and Randall Kroszner, and Hans-Michael Trautwein have described scenarios in which indirect convertibility would have catastrophic consequences [21; 23; 17; 18; 19; 3; 20]. Currency, deposits, and checks are indirectly convertible when they are not redeemed directly in the medium of account. (The latter term is Niehans's; it means the commodity or commodity bundle of which some specified quantity defines the unit of account [16, 1].) Money is redeemable, instead, in some redemption medium-some other commodity or even some security-in amounts equal in value to the quantity of medium of account defining the unit. Recent proposals combine indirect convertibility with free banking, promising to stabilize the price level and avoid monetary disequilibrium that would disturb income and employment [13; 12; 25; 26; 27; 28; 4]. In this BFH system (so named, perhaps misleadingly, to acknowledge ideas borrowed, altered, and recombined from writings of Fischer Black, Eugene Fama, and Robert Hall), government money is forbidden. Only competing private banks issue notes, coins, and checking accounts. Earlier proposals assumed government issue of currency. Simon Newcomb and Aneurin Williams advocated money convertible into whatever variable amount of gold, as redemption medium, had a fixed general purchasing power [15; 22]. Irving Fisher, citing their proposals, argued that the dollar could be stabilized through convertibility into an amount of gold equal in value to a bundle of goods [10, 331-2]. (Indirect convertibility is not the same as Fisher's betterknown proposal for a "compensated dollar" [8, 337-47; 10, 494-502; 11, 95-7]. In place of his earlier brief suggestion for indirect convertibility, Fisher later envisaged periodic discrete adjustments in the gold content of the dollar, that is, in the official price of gold, prompted by deviations

El atractivo de las ciudades medias

Abstract: The first part of this work explains that concepts and ideas around the classification of cities as medium are relative. The text establishes the relationship between medium size cities and the principal city in a country. It also perceives the attraction of residents of the latter to the former as a political motive to justifiy why governments should grant them more attention. In the second part, the document underlines the geographic advantajes of cities in the central part or northern Mexico. It suggests that U.S. senior citizens represent a potential market as they have a growing purchasing power, and the region, the paper adds, could capture a section of this market. This would increase employment and offer opportunities for investors as well as for Mexican federal, state and local governments in the area. This work stresses the need for studies that cross disciplinary boundaries and use knowledge to solve problems that currently affect regional societies.

Domestic Food Aid Programs

Abstract: This chapter presents facts about various food aid programs, their costs, the number of people they serve, and controversial policy issues surrounding the individual programs. It discusses the benefits to direct recipients, producers, and to society and explores future expectations for food aid. Since prices that are reasonable to most households may not allow low income households to secure adequate nutritious food, special food aid programs are designed to prevent hunger and suffering and to invest in human capital. The original objective of US food aid programs, in the 1930s, was to provide a way to dispose of surplus agricultural commodities purchased by the government in order to stabilize farm prices and incomes. Food aid programs in the United States are a mixture of the last two, delivering food and/or purchasing power. Domestic food aid is largely financed through federal programs which are administered at the state and local levels.

Food Security in the Sudan

Abstract: The Sudan, with an area of one million square miles has a population of 26 million people, an annual GNP growth rate of 1 percent, and an inflation rate of over 70 percent. The country is heterogeneous in many respects including climate, geography, history, languages, and people. Eighty-five percent of the labor force is in the agricultural sector and agriculture contributes 30 percent to GNP. Ninety percent of the exports are agricultural raw materials that include: cotton, livestock, sesame, groundnuts, and gum arabic. Despite these exports, the country faces an acute balance of payment deficits, large budget deficits, and government expenditures. Sudan's external debt rose from $ 3.8 billion in 1978 to $ 13.5 billion in 1990. The depth of poverty determines the impact of the famine. The effects of food shortages, and purchasing power collapse are not felt in higher income groups with good asset bases. The poor face long-term constraints in food production, access to education, health care, markets, credit, improved inputs, and information. Over half a million people have died between 1984 and 1990 due to starvation. The situation is worse in

Managing in a changing environment

Abstract: The changes that have impinged on society over the period since 1945, and more particularly since the 1960s, in turn impinge on the management of organisations. These changes may be summarised as: Technological, affecting all social, economic and business activities; rendering many occupations obsolete and creating new ones; and opening up new spheres of activity, bringing travel, transport, distribution, telecommunication, industry, goods and services on to a global scale Social, the changing of people’s lives, from the fundamentals of life expectancy and lifestyle choice, to the ability to buy and possess items; to travel; to be educated; to receive ever-increasing standards of health-care, personal insurance and information; to be fed; to enjoy increased standards of social security and stability, increased leisure time and choice of leisure pursuits; and all commensurate with increases in disposable income and purchasing power, and choices of purchase; Eco-political, resulting in changes in all governmental forms; the state of flux of the EC, and the adoption of super-national laws and directives, and the single market; the collapse of the communist bloc and the USSR; the fragmentation of the former Yugoslavia into its component states; the emergence of Taiwan, South Africa, Korea and Vietnam as spheres of political and economic influence, taking their place in the business sphere Expectational, in which the changes may be expressed as from stability to a state of change itself, a state of flux; the change from the expectation of working for one company or organisation, to working for many, and the realisation that the former is increasingly unlikely; change in occupation, training and profession; change in political governance, and the instruments of state; organisations change their business (e.g. Virgin, from music into air travel) and expect their staff to change with them; hospitals in the UK are (1992–95) being reconstituted as ‘business units’ and offering medical services at a price or charge, and are expecting staff and patients to go along with this; business is indeed ‘thriving on chaos’, and ‘learning to love change’, and this is increasingly expected by those who manage it.

Bargaining For Competitive Advantage

Abstract: An oft-overlooked instrument of industry policy is the purchasing power of the state. States can use their purchasing power as a means to influence the activities of multinational enterprises (MNEs) and to foster innovation, technology transfer and exports. The principal means of achieving this is through the vehicle of offsets. The paper analyses the evolution of Australia's civil offsets policy from its inception in 1970 when it was first used as a tool of industry development. ‘More recently, the Australian government has used its state purchasing power in the Partnerships for Development scheme, a programme designed to promote strategic alliances between MNEs and domestic firms in the information industries. These programs highlight the changing relationship between states and MNEs and demonstrate a continuing role for the state in bargaining over the conditions which shape competitive advantage in and inter-dependent global economy.

The impact of changes in purchasing power on food consumption of an urban population in Guatemala City

Abstract: Repeated measures were obtained in a sample of 200 poor urban households in Guatemala to evaluate the impact of changes in their purchasing power on food consumption patterns. The sample was divide...

A gap in transition models?: A reply

Abstract: ALEC NOVE'S COMMENTS go to the heart of the ongoing debate concerning the role of economic policy in influencing the depth of the transformational recession and the start of any subsequent recovery. He is careful to make no firm propositions about the precise causes of decline. Nevertheless, he maintains that the observed deep falls in activity have been 'stimulated' by 'monetarist' deflation of demand and suggests that the state desertion of the real side of the economy has been excessive. He also argues, and this is his key proposition, that in order to halt decline and achieve stabilisation by the shock therapy route, it is vital to have and implement urgently a governmentcoordinated and co-financed investment strategy. Data for Russia are given in his Table 1 to support the first suggestion. The declines reported in the table unfortunately include large falls in 1991, the last pre-transition year, thus exaggerating significantly the impact of post-1991 policies. More importantly, Nove's interpretation of the figures fails to note that price liberalisation could not have been the only cause of the decline in real purchasing power. In fact, whenever there is a fall in output-of crude oil, arms, investment goods or exportables-the real revenue of the producing enterprises falls and, consequently, the real purchasing power of their workforces falls too. The initial falls of this kind are further magnified by the multiplier effect through the chain of suppliers. A large part of these falls takes place because, owing to limited mobility of resources, the product composition of the supply side cannot adjust instantly in the face of rapidly changing prices and demands during transition. Moreover, the official statistics in Nove's Table 1 fail to reflect unmeasured output. Goskomstat data on Russian consumer expenditure show that actual, survey-based, expenditure has fallen significantly less.1 According to these Goskomstat household survey data, 'by the second half of 1992, real expenditure on food had recovered to its average 1991 level; the real declines were in the consumption of non-food items like clothing and footwear, which were nearly halved'.2 Most importantly, to judge the role of economic policy in causing declines, one should seek a different type of evidence than that provided by Nove's Table 1. The relevant evidence is the strength of the relationship between the variation in GDP falls among countries and the variation in macroeconomic policy. The cumulative falls in measured GDP in transition countries vary significantly, from about 17% in Poland to about 50% in some republics of the former Soviet Union (FSU). However, to my knowledge there is no clear-cut evidence that the falls were lower when and where macroeconomic policies have been less restrictive. A link between the two probably exists, but it has been weak and dominated by other causes of decline. Some of the

Macroeconomic Policy Implications of Oil in Colombia

Abstract: This paper develops and applies a small econometric model to illustrate the likely short-term macroeconomic effects on the economy of Colombia resulting from the recent discovery and planned development of new oil resources. In performing the analysis, the paper considers various assumptions concerning government fiscal, monetary, and exchange-rate policies so as to assess the ability of policy to influence the effects that the oil discovery will have on the economy. Comparisons of these alternative policy simulations strongly suggest that appropriate macroeconomic policies can reduce significantly the negative consequences of the 'Dutch disease,' the symptoms of which are reflected in an over-valued exchange rate and declining non-oil export and import-competing sectors. The simulations also demonstrate, however, that some degree of relative price adjustment will be needed for the Colombian economy. In particular, attempts to limit relative price adjustment through the real exchange rate simply force the requisite relative price adjustment to occur through domestic price inflation in reducing the real purchasing power of the peso. Managing this tradeoff between domestic price inflation and real appreciation of the exchange rate should be the overriding concern of macroeconomic policy.

Exchange Rates, Inflation and Purchasing Power Parity in Eastern Europe

Abstract: This paper analyses the impact of changes in exchange rate policy in Eastern Europe during the period of economic transformation. It is argued that there may exist an anti-inflationary drift for East European economies during periods of repressed inflation and financial liberalisation due to purchasing power disparities. The hypothesis is verified through the formulation and estimation of a model explaining a long run relationship between free market exchange rates, neutral prices and world prices, where neutral prices are defined as prices which allows long run purchasing power parity to hold. An anti-inflationary feedback mechanism is found to exist in prices for Czechoslovakia, Hungary and Poland. While for Hungary this feedback takes the form of a rather moderate drift, for Czechoslovakia and Poland its dynamics have been more volatile.

Can We Afford Grandma and Grandpa

Abstract: According to S Jay Levy, explanations put forth thusfar insufficiently resolve the question of why consumption declined during the 1980s for so many working households. Levy notes that the nation's standard of living is measured by the total of available consumer goods and services. Any cohort's standard of living is measured by its share of these goods and services its slice of the "economic pie." After looking at the available consumer goods and services and at how they are apportioned among households, he finds that the retiree cohort has been consuming an increasingly large share at the expense of the working cohort. His results indicate that "the declining purchasing power of the wages and salaries of the lower-income half of the population was, at least to a large degree, the result of the rising consumption of the retired cohort of the population."