Showing papers on "Purchasing power published in 2004"

Creating an Urban Middle Class: Social Engineering in Beijing

Abstract: Dogs on a leash are a common sight in Hopetown,1 one of Beijing's "new cities", residential compounds for the professional middle class. Hairy and generally noisy, dogs are not allowed to grow beyond the 35cm limit set by the city government for the inner suburbs. Nonetheless, residents here are ready to pay a registration fee of 5,000 yuan plus a 2,000 yuan annual "management" fee to the city and to spend between 800 and 10,000 yuan to buy full-blooded puppies from the zifa (self-organized) market that rural breeders set up every Sunday in the eastern county of Tongxian. Dog food, dog health magazines2 and dog clothes fill the shelves of supermarkets.3 Dogs become attached to the household registration of their owners and obtain a document with a colour photo. In what is almost a metaphor of today's urban China, non-residents are not entitled to the privilege of walking a dog. Until a decade ago, there were ordinances against the possession of pet dogs, in recognition of China's poverty and because of a concern for urban health issues. Their recent reappearance indicates new affluence, embodied in an item that-unlike the modern electric appliances of previous years-can be showcased in the neighbourhood's playground, as a way of displaying who has "made it". For the purposes of this article, dogs help to introduce four questions: Who are their owners and where do a growing number of Beijing residents get the money to afford exuberant consumption in a society where average disposable income remains very low? What drives them upward? And what is the role played by housing reform, the growing residential segregation it creates and the rise of yuppie neighbourhoods in shaping status enhancement among the new wealthy groups? Hopetown is one such neighbourhood in northeastern Beijing. It is in Chaoyang District and has officially been described as a quarter developed "with the support of the central authority". The planning of the whole area is therefore influenced by the directives of the city planners. The housing-project developer of its two enormous gated communities is one of the largest state-owned construction corporations in the country.4 The long succession of high-rise buildings where Hopetown is nestled, just outside of the fourth ring road, is scheduled to become what is publicized as the largest residential development in Asia and is expected to be home to around 250,000 people by the second half of this decade. It is a very concentrated residential area, covering only about 3 per cent of the city's total area, but in 1999 accounted for about 13 per cent ofthat year's housing construction in the capital.5 Hopetown itself is a small area encompassing these two gated communities and, thus far, a total of about 25,000 people. The first neighbourhood of 26 buildings-each containing 20 to 29 floors-was completed in 1997 and hailed as the first fully commercial high-standard apartment block at the disposal of the increasing purchasing power of the Beijing middle class. The largest part of the almost 6,000 units in this housing development-which I will call Hopetown 1-had been sold on the free market by the end of 1998 to people who did not need bank mortgages, as these did not exist at the time.6 They had the money in hand to pay an average price of 5,017 yuan (around US$600) per square metre. Despite this being fairly high in absolute terms, housing prices here are around the city's average (4,764 yuan per square metre in 2002). The second neighbourhood (Hopetown 2), completed in 1999 by the same developer, is smaller (around 3,000 units) and includes both market-price "commodity" apartments (shangpin fang) and "economy apartments" (jingji shiyong fang) sold at a subsidized price. The prices of these units vary from around 4,000 yuan per square metre for the subsidized units to 5,500 yuan for the "commodity" units, despite a remarkable similarity in quality, location and services. …

Globalisation: a study of the poultry‐meat supply chain

Abstract: Increasing globalisation of the poultry‐meat supply chain has led to consolidation and evolution of transnational companies, whether by vertical or horizontal integration, and the development of business clusters There are significant benefits in these economies of scale, especially improved purchasing power and greater intellectual, technological and production resources for organizations to draw upon to provide products that meet differentiated customer needs The consumer has seen the benefit of globalisation in lower commodity food prices, wider product choice and the advent of “convenience” food Seeks to review the key factors that have led to the globalisation of the poultry supply chain and the impact of these changes The poultry supply chain was chosen because it is highly integrated and the research includes a literature review and an evaluation to determine how it specifically relates to the poultry supply chain Identifies the factors that affect current and future developments in food globalisation, including: relative strength of currencies; speed of technology transfer to developing countries; tax and regulatory burden in nation states or trading groups; cost of capital and labour and its effect on competitiveness; continuing production specialization and greater differentiation between domestic and international meat trade; and concerns over production methods, food safety and hygiene standards Analyses the impact of globalisation of the food supply chain to all sectors and will be of interest to academics and those working in food supply

Consumer-led demand side financing in health and education and its relevance for low and middle income countries.

Abstract: There is increasing awareness that supply subsidies for health and education services often fail to benefit those that are most vulnerable in a community. This recognition has led to a growing interest in and experimentation with, consumer-led demand side financing systems (CL-DSF). These mechanisms place purchasing power in the hands of consumers to spend on specific services at accredited facilities. International evidence in education and health sectors suggest a limited success of CL-DSF in raising the consumption of key services amongst priority groups. There is also some evidence that vouchers can be used to improve targeting of vulnerable groups. There is very little positive evidence on the effect of CL-DSF on service quality as a consequence of greater competition. Location of services relative to population means that areas with more provider choice, particularly in the private sector, tend to be dominated by higher and middle-income households. Extending CL-DSF in low-income countries requires the development of capacity in administering these financing schemes and also accrediting providers. Schemes could focus primarily on fixed packages of key services aimed at easily identifiable groups. Piloting and robust evaluation is required to fill the evidence gap on the impact of these mechanisms. Extending demand financing to less predictable services, such as hospital coverage for the population, is likely to require the development of a voucher scheme to purchase insurance. This suggests an already developed insurance market and is unlikely to be appropriate in most low-income countries for some time. Copyright © 2004 John Wiley & Sons, Ltd.

The poverty dilemma in Africa: toward policies for including the poor:

Abstract: Poverty in Africa is multifaceted. It is characterized by, among other things, a lack of purchasing power, rural predominance, exposure to risk, insufficient access to social and economic services and few opportunities for formal income generation. On average, 45-50% of sub-Saharan Africans live below the poverty line - a much higher proportion than in any other region of the world. This article assesses the socio-economic dilemma of poverty in Africa and suggests an alternative policy framework for improving the well-being of the region’s poor. The premise of the article is that including the poor is a necessary and progressive step in any attempt to sustain growth, development and socio-economic transformation in Africa.

Not Your Father's Auto Industry? Aging, the Automobile, and the Drive for Product Innovation

Abstract: A distinctly American business, the automobile industry produces a product that is more than transportation-it is a lifestyle. It is a lifestyle defined by fashion, speed, mobility, comfort, and, above all, individual choice. The car became a physical extension of how the vast majority of Americans, regardless of age, have chosen to live. Similar to other business sectors, the automobile industry grew dramatically after World War Π. Young GIs coming home to begin new families in new suburbs became the growth platform for car companies. The resulting baby boom not only picked up where the now-aging World War II generation left off, it perpetuated and cultivated a youth culture around the car for nearly sixty years (Flink, 1975). Our fathers' auto industry catered to a seemingly endless market of young (mostly male) buyers far more numerous than their parents to build the nation's largest industry. DISRUPTIVE DEMOGRAPHICS AND PRODUCT INNOVATION Today, the youngest of the baby boomers are age 40-plus, and the bumper crop of youth in the United States, Europe, and Japan is young no more. Not only has the bumper crop aged, but the sheer number of new buyers-young people of driving age with the incomes necessary to buy a new car-has declined. J.D. Power and Associates forecasts the market for new cars and trucks will grow less than 1 percent annually over the next decade. In sharp contrast, the number of consumers who are no longer considered 'Young" has exploded. A new generation of older consumers, at the peak of their economic power, are now the single largest market for luxury automobiles-car models that most often provide the highest profit margins to manufacturers. The boomers alone are nearly 40 percent of the large luxury-car market. Most older adults continue to rely on the car for transportation (Collia, Sharp, and Giesbrecht, 2003). Nearly 90 percent of people age 65-plus use the automobile compared to other options. Although older adults may not drive as many miles or make as many trips as younger people, the notion that retirement is a period of relaxing at home in one's favorite recliner is a myth. A real decline in trip-making by car from the lifetime peak travel years of 35-54 is not really seen until age 75-plus, when the number of trips drops from nearly 4.5 trips per day to fewer than 3 trips per day (Bureau of Transportation Statistics, 2003). Moreover, forecasts indicate that as the boomers age, they are more likely to drive and make more trips, and they add an entirely new generation of older women drivers who, unlike their mothers, have commanded the steering wheel, not the passenger seat (Bush, 2005). At 50 years old, most people have half of their adult years still ahead of them, and this segment of the population controls over half of the nation's purchasing power. For the auto industry, this statistic translates into future purchases of four or five new vehicles (many in the higher-end or luxury category) as well as influence on the buying decisions of a spouse or child. Nissan's chief product specialist, Shinjiro Yukawa, noted the coming shift of market share, predicting that the "over 50$ will be the core Volume' generation in the future" (NYSE Magazine, 2002). The disruptive demographics of today's aging marketplace are challenging the most basic assumptions of product development and innovation. After six decades of success focusing on the younger consumer, how does the auto industry retool itself to develop innovative product strategies that excite and delight both the younger consumer and the new generation of older car buyers? Product innovation can be described in three dimensions. The first dimension is how a business defines its market. In short, who is the company's customer and what does their customer value? This definition affects far more than advertising. It also affects the types of products a firm believes will appeal to and satisfy the market, through what channels they will be delivered, and at what standards and costs. …

Toward a social policy for Argentina's infrastructure sectors - evaluating the past and exploring the future

Abstract: Argentina was a pioneer of infrastructure reform in the early 1990s The social dimension of infrastructure services was typically overlooked in the reform process However, social sensitivities often resurfaced in the years that followed, leading to a series of ad hoc social policy measures that cumulatively amount to US$200 million a year Foster quantifies and prioritizes the social challenges faced by the Argentine infrastructure sectors, evaluates how well existing social policies are functioning, and provides illustrative simulations of how certain changes in the design of social policy could improve the performance of current social policies The author's findings are that current social policies do not prove to be very effective in targeting resources to the poor They have no real impact on the distribution of income across customers An important reason for this targeting failure is the tendency to allocate resources to all households resident in a particular geographical area, irrespective of socioeconomic status A series of simulations that limit subsidies to households reaching a minimum score on a multidimensional poverty index show that individual targeting of this kind potentially leads to a more progressive distribution of subsidies However, the greatest improvements in targeting performance would be achieved if efforts switched from subsidizing the use of infrastructure services to subsidizing connections to those services

Software system for real monetary instruments

Abstract: A data processing method for introducing an asset-backed fixed-income security that will function as a master real currency unit with a constant value. The method consists of the steps of tracking by means of a digital computer: 1) the flow of quantitative data generated by originating financial instruments denominated in a real currency unit and amortized with a real rate of interest; 2) pooling the real financial instruments for the purpose of establishing a tax conduit to issue asset-backed securities; and 3) the flow of quantitative data generated by using structured financing, such that the conduit issues a class of regular certificates and a residual class of certificates; and then denominating Class “A” certificates in a master real currency unit which can then be used by the holders to represent and transfer purchasing power in a constant monetary unit.

Liberalisation of rural poverty : the Indian experience

Abstract: A price rise signifies a fall in purchasing power, if there is no commensurate increase in income. Thus the pertinent question in the face of the phenomenal rise during the 1990s in the prices of the food articles, which account for a major chunk of the total expenditure of the poor, is whether there has been a corresponding increase in the incomes of the poor. The present paper is a modest attempt at analysing the answer to this question. Our focus is on the agricultural workers, for whom wages constitute the principal source of income and the important channel affecting poverty. There is evidence that rural poverty at the all-India level and across several States increased significantly especially during the first 18 months of the reform period. It is argued that the phenomenal administered price inflation of food articles, thanks to liberalisation measures, has had much to do with this situation. We show that the subsidy cuts and the consequent price rises, unless followed by compensating measures, will perforce reduce the consumption level of the vulnerable group of the population; in fact, subsidy cut is found to entail higher costs in compensation to keep their consumption at least at the same level. Moreover, expressing the consumption changes of the poor in terms of the relative compensation for the rich, we find from empirical facts that the poor are left as a losing lot. We also estimate State-specific rural poverty line wage rates for the 1990s and find that by 1998-99, only three States in India, Kerala, Haryana and Himachal Pradesh, had a sufficient real income, that is, a nominal wage rate higher than the rural poverty line wage rate; the agricultural wage rates in all other 13 States could not catch up with even the minimum possible poverty line wage rate.

Public e-Procurement: Determinants of attitudes towards adoption

Abstract: The paper discusses the need for more research on the adoption of public e-procurement and what factors influences this adoption. A number of European countries have developed and implemented solutions for public e-procurement at a national level. Despite major initiatives from state level and claims of reduced cost through wider choice and higher efficiency these have been adopted to a less extent than expected by the public sector in some of the countries. Lack of adoption may be due to a number of reasons. Technical problems, costly solutions and competing electronic marketplaces (Somasundaram 2004b) are causes often suggested. Henriksen et. al. (2004) suggests that decentralisation of purchasing power conflicting with centralised solutions may be an important cause in Denmark. In Norway, the governemnts project manager for implementation of e-procurement suggests lack of organisational change as a cause for lack of adoption (Computerworld 2004). We need to identify the reasons for the lack of adoption so that public spending is not wasted. We suggest that institutional theory may help understand the different attitudes towards adoption, and that community goals expressed as concern for the regional business community may be an important institutional factor. The paper outlines a research agenda and presents a tentative research model and a design to test this. The study itself will start early autumn 2004, and preliminary results will be available late 2004.

Public e-Procurement: Determinants of attitudes towards adoption

Abstract: The paper discusses the need for more research on the adoption of public e-procurement and what factors influences this adoption. A number of European countries have developed and implemented solutions for public e-procurement at a national level. Despite major initiatives from state level and claims of reduced cost through wider choice and higher efficiency these have been adopted to a less extent than expected by the public sector in some of the countries. Lack of adoption may be due to a number of reasons. Technical problems, costly solutions and competing electronic marketplaces (Somasundaram 2004b) are causes often suggested. Henriksen et. al. (2004) suggests that decentralisation of purchasing power conflicting with centralised solutions may be an important cause in Denmark. In Norway, the governemnts project manager for implementation of e-procurement suggests lack of organisational change as a cause for lack of adoption (Computerworld 2004). We need to identify the reasons for the lack of adoption so that public spending is not wasted. We suggest that institutional theory may help understand the different attitudes towards adoption, and that community goals expressed as concern for the regional business community may be an important institutional factor. The paper outlines a research agenda and presents a tentative research model and a design to test this. The study itself will start early autumn 2004, and preliminary results will be available late 2004.

The Impact of Participation in Cooperatives on the Success of Small Farms

Abstract: This study identifies and analyzes factors that contribute to the success of small farms. Particular attention is given to the effect of participation in marketing and supply cooperatives on the success of small farms. Using modified net farm income per dollar of assets and operator’s labor and management income as measures of success, results show participation in marketing and supply cooperatives is positively correlated with success. Further, analysis findings indicate farm size, controlling for variable and fixed costs, type of ownership, management strategies used, working off the farm, and age of the operator are important factors that influence profitability (modified net farm income per dollar of assets and operator’s labor and management income) and success. Farmers routinely face considerable risk of income variability, and that income variability affects the financial performance of many farms. Particularly vulnerable are marginal operations with low production efficiency and small farms (farms with farm sales of $250,000 or less). During the past several decades, small family farms have frequently experienced difficulties in maintaining profitability. Local patterns of production, distribution, and consumption of food have been increasingly replaced by global operations and interests. Small family farms are regularly squeezed out of business by high input costs, low prices for their products, and limited access to markets. Small farm operators face a number of problems (such as limited purchasing power, availability of markets, access to resources, etc.) as they attempt to develop and operate profitable farm businesses. Some of the limitations facing small farm operators may be overcome by participation in cooperatives (supply or marketing) through a sharing of goals, activities, and objectives of the members of the group. There are many important benefits to membership in a cooperative. For example: (a) members

Purchasing Power: Consumer Empowerment and Adaptation to the Free Market in Russia

Abstract: This article explores adaptations in Russian consumer behavior to market capitalism, impediments to that process, and the effects citizens’ survival strategies may have on Russia’s continued political and social evolution. Capitalism not only brought Russians a market economy of unenforced legislation, insufficient regulatory institutions, and widespread corruption, but also new ideas including individual rights, self-reliance, and increased expectations for market transactions, which contribute to public mobilization and legal reform designed to protect and empower consumers. Despite the ambivalence many citizens feel toward the market and the difficulties associated with the struggling economy and widespread mafia influence, emerging consumer advocacy groups have begun holding businesses and the government accountable. Evidence suggests that consumer concerns are serving as a vehicle for public mobilization in areas that are broadly significant to Russia’s lingering problems. Finally, though the focus of this paper is on Russian consumers, it is believed that many of the conclusions generated could be extended to other countries with emerging markets.

Capital Gains Taxes

Abstract: The capital gains tax is assessed when certain assets1 are sold at a “profit.” For example, let’s say that an individual (or corporation) bought 100 shares of stock in 1975 for $1,000 and sold the stock in 1993 for $1,500. The “profit” on the. sale is $500. If the capital gains tax is 30%,2 then the tax liability is $150 (30% of $500). But has there really been a gain? If inflation between 1975 and 1993 has been 300%, then the purchasing power of $1,000 in 1975 dollars would be the equivalent of $3,000 in 1993 dollars. So, in fact, the owner of the stock incurred a real loss of $1,500 on the sale of the stock — the difference between the $3,000 purchasing power equivalent in 1993 dollars and the $1,500 received on the sale. But although there has been a real loss of $1,500 on the sale — the difference between the $3,000 purchasing power equivalent and the $1,500 proceeds from the sale — the shareholder has to pay a tax.

Erosion of purchasing power and labor supply

Abstract: This paper presents three studies on the labor market in Italy, carried out using questionnaires over the course of time (1990–2002). The main result is that, if real wages decline to a certain extent, employed workers increase their labor supply, in order to recoup their lost purchasing power and to redress, perhaps unconsciously, the decline in their economic and social hierarchical position. As long as real wages grew at a satisfactory rate, in the early 90s, workers were unwilling to change their work schedules in either direction—exchanging income for leisure time at the current hourly wage or vice versa—whatever were their work time and wages. During the last decade workers—who suffered a decrease in real wages—have been willing to work more hours. As a result, workers did not demand more leisure time despite the fact that it had become cheaper as predicted by traditional theory. Thus, employers may expect a not-insignificant increase in labor supply if real wages decrease.

International Tourism Marketing in Africa: An Assessment of Price Competitiveness Using the Purchasing Power Parities of the ICP

Abstract: Price of tourism is one of the major determinants of demand for international tourism. This paper assessed the relative price competitiveness of African countries in the international tourism market. It used a measure of price assessment that is based on the purchasing power parities of the ICP to ensure adequate comparability. Ethiopia, Malawi, and Zimbabwe were found to be the most price competitive; while the least price competitive countries proved to be Botswana, Tanzania, and Egypt. Changes in price competitiveness between 1985 and 2000 were analyzed according to sources of such changes. Policy and managerial implications of findings are discussed, and directions for future research are given.

TRIPS Compliance: Dealing with the Consequences of Drug Patents in India

Abstract: I. INTRODUCTION II. RESPONDING TO THE THREAT OF INCREASED DRUG PRICES A. Will Drug Prices Actually Rise? B. Drug Price Controls C. Governmental Purchasing Power D. Compulsory Licenses E. Lax Enforcement of Patent Rights F. Public-Sector Drug Development G. Summary III. RESPONDING TO THE THREAT TO INDIAN INDUSTRY A. India Possesses Local Capacity B. Presence of a Skilled Scientific Workforce C. Anticipatory Behavior of Indian Pharmaceutical Firms D. Alignment of Regulatory Regimes E. Development of a Venture Capital Industry F. Summary IV. CONCLUSION I. INTRODUCTION "The idea of a better-ordered world is one in which medical discoveries will be free of patents and there will be no profiteering from life and death." (1) The sentiment expressed by Indira Gandhi some twenty years ago has come to the fore of the public consciousness in recent months. Skyrocketing healthcare costs in the United States have been attributed to the rising prices of prescription drugs. (2) Stories of senior citizens who must make daily choices between food and life-saving medicines are commonly reported in the media, (3) and the debate about the legality of drug reimportation from Canada continues to rage. (4) The high costs of HIV/AIDS drugs in countries of sub-Saharan Africa--some of which have HIV infection rates that approach or exceed twenty--five percent among their adult populations--mean that people are suffering and dying despite the fact that medicines have been developed against this modern scourge. (5) The villains in all of these stories are the firms that produce drugs--pharmaceutical and biotechnology companies--and the system of intellectual property rights (in particular, patent rights) that enables the companies to charge what some consider to be exorbitant prices for their products for an extended period of time. A patent, as embodied in American law, is a government-issued grant that confers upon the patent owner "the right to exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing the invention into the United States" for a period of twenty years beginning from the filing date of the patent application. (6) A patent effectively grants the patent owner a limited monopoly on the patented invention. (7) While the inventor can collect monopoly rents on sales of her product until the time of patent expiration, this inefficiency is justified on utilitarian or consequentialist grounds--that is, without patent protection, inventors would not invent, or would invent only to a level that would be considered sub-optimal. This concern is particularly salient in the world of medicines, where a substantial capital investment is required to bring products to market. (8) Significant funds are needed for drug research for two reasons: first, new drugs are exposed to extensive regulatory scrutiny and must be tested in expensive clinical trials in order to prove their safety and efficacy; and second, medical research is inherently uncertain and risky in nature, with a number of failures typically preceding any valuable breakthroughs. (9) Without the prospect of a limited monopoly, it appears unlikely that many investors would be willing to place tens or even hundreds of millions of dollars at risk on early-stage biomedical research. The trade-off with drug patents, then, involves weighing the creation of incentives for research and development against the temporary high costs for consumers and the associated economic inefficiency that result. The granting of patents, to be sure, comes at a price. The central question is: When does that price become too high? The Indian government decided some thirty years ago that the price is always too high. The 1970 Patent Act simply prohibited the granting of patents on pharmaceutical products (in other words, on drug compounds themselves). …

Exposing the real infrastructure cost drivers

Abstract: A benchmarking study was conducted by ProRail in the Netherlands to compare the costs of infrastructure maintenance, renewals and new products in 25 different countries The study showed that life-cycle infrastructure costs (LCCs) were five times lower in the USA than in the Netherlands, but were 50-200% higher in Japan and Hong Kong The QM4C model, developed for forecasting the LCC maintenance and renewal costs for new and existing lines, is described The model consists of six modules, including a cost template linked to a calculation model for running sensitivity analyses The model was used to recalculate the Dutch railway as if it had network characteristics applicable to the Far East and US railways The major influences explaining the fact that costs were lower in the USA than in the Netherlands were the less complex infrastructure, more favourable conditions, lower material costs, lower technical specifications, differences in purchasing power, and professionalism of management Cost drivers in the Far East included higher utilisation, less favourable conditions and differences in purchasing power

Socio-economic Development in India: A Regional Analysis

Abstract: Development is a multi-dimensional phenomenon. Some of its major dimensions include: the level of economic growth, level of education, level of health services, degree of modernization, status of women, level of nutrition, quality of housing, distribution of goods and services, and access to communication. In India, the progress of socio-economic development among major states is not uniform. This study examines the existing variability of inter-state development and thereby identifying the indicators responsible for the diversity in development. Instead of studying the variability of a particular variable across states, a composite index based on several indicators has been developed using principal component analysis and states are arranged according to the indices derived using four broadly accepted components: (a) economic production and economic condition or in other words level of economic development; (b) common minimum needs; (c) health and health-related services and (d) communication. The findings of the analysis support the general perception about the states. The states in India are marked with wide disparity in socio-economic development. The factors, which are found out to be more important for the overall development process, relate to basic needs like education, availability of food, minimum purchasing power and facilities like safe drinking water, health care infrastructure, etc. It is also found that enrollment ratio cannot be raised unless minimum needs of the common people are satisfied. Therefore, true development requires government action to improve elementary education, safe drinking water facilities and health care, and to remove barriers against social minorities, especially women. The role of social development such as literacy (and particularly of female literacy) in promoting basic capabilities emerges as the prerequisite to overall development. These results clearly emphasize the role of well-functioning public actions in improving the overall living conditions of the people. Although economic growth in the sense of expanding gross national product and other related variables is one of the most fundamental input to the overall development process, the basic objective of development should focus on the expansion of human capabilities which has been neglected for long in India.

EU Accession and the Catching Up of the Central and East European Countries

Abstract: This chapter explores the consequences of the enlargement of the European Union (EU) with the Central and Eastern European Countries (CEECs). We examine the consequences of the CEECs’ entitlement for Structural Funds support and the impact of economic integration as such. We are interested in the question whether EU accession helps these countries to catch up to EU income levels. On average, income per capita in purchasing power terms is hardly a third of that in the EU. In the 1990s this gap has not been reduced. The question is whether the accession to the EU could be a help in closing this gap.

The specification of cross exchange rate equations used to test Purchasing Power Parity

Abstract: The Article considers the specification of models used to test Purchasing Power Parity when applied to cross exchange rates. Specifically,conventional dynamic models used to test stationarity of the real exchange rate are likely to be misspecified, except when the parameters of each exchange rate equation are the same.

L�introduzione dell�euro e la divergenza tra infl azione rilevata e percepita

Abstract: Following the introduction of euro banknotes and coins many Italians perceived a much sharper increase in the price level than the moderate rise registered by the National Institute of Statistics. The paper shows that the apparent contradiction between the publici?½s perceptions and officially measured inflation stems mainly from the fact that the former often refer to phenomena not captured by the inflation rate calculated for the average basket of goods and services for the whole population. The rise in perceived inflation can be largely explained by the generally stronger influence that large, upward, and frequently observed price movements exert on consumersi?½ perceptions, together with the actual behaviour of prices in the period following the currency changeover, which saw many price changes, with larger increases for the more frequently purchased products and exceptional rises for some items. The reciprocal influence between inflation perceptions and the mediai?½s unusually extensive coverage of price developments on the occasion of the changeover also appears to have been important. Lastly, the perception of a substantial loss of purchasing power, especially on the part of the least-well-off households, can be traced to economic phenomena that do not bear directly on official inflation but which it is hard for households to consider separately, such as the evolution of incomes and increases in the price of housing, not included in the official index.

China and Socialism: Contradictions of China's Transformation: International

Abstract: China has become a major regional and global economic force. It has not only recorded double-digit real GDP growth for most of the decade 1985–95, but also maintained rapid growth of over 7 percent per year during and after the 1997–98 East Asian crisis. According to Stephen Roach, chief economist for Morgan Stanley, "China’s growth rate is now strong enough to have accounted for 17.5 percent of the growth in world gross domestic product [in 2002]—second only to the growth contribution of the United States." By 2002, China’s shares of Asian GDP and exports stood at over 17 percent and 20 percent, respectively. Some purchasing power estimates have China accounting for half of Asia’s GDP. This article can also be found at the Monthly Review website , where most recent articles are published in full. Click here to purchase a PDF version of this article at the Monthly Review website.

Assessing Non-Tariff Barriers in Syria

Abstract: International trade in Syria is highly regulated through a combination of tariffs and non-tariff barriers At 8 percent on average, effective tariffs are relatively low However, non-tariff barriers to trade actually make Syria’s trade restrictiveness very high Non-tariff barriers to trade take two forms: quantitative restrictions (QRs) and technical barriers to trade (TBTs) QRs are mostly negative import lists and licenses that restrict imports of certain products to selected entities Comparing world and domestic prices of imports indeed suggests that non-tariff barriers increase the domestic prices of imported goods by an average of 19 percent, and tariffs add another 8 percentage points The objective of this paper is to estimate the costs of QRs on the Syrian economy using a computable general equilibrium model (CGE) Our simulations indicate that welfare gains resulting from a complete removal of QRs range between 04 and 48 percent of GDP, depending on the extent of technological upgrading triggered by greater competition and access to foreign markets and technology Furthermore, our results suggest that eliminating quantitative restrictions to trade could potentially have a large impact on households’ purchasing power and Syria’s output The removal of non-tariff barriers would also favor particularly the private sector and initiate a shift of financial and human resources towards it State-owned enterprises would not necessarily lose from the reform in absolute terms; this depends on the extent to which the removal of QRs could entail a modernization of the Syrian economy, notably through the acquisition of adapted foreign technologies In the event, State-owned enterprises could indirectly benefit from a higher demand for their products and maintain their levels of activity and employment

New Effective Exchange Rate Index for the Portuguese Economy

Abstract: Effective exchange rates are indicators of the purchasing power of currencies and, when properly deflated, their change is an indicator of developments in the external competitiveness of the economy. This paper presents an updated nominal effective exchange rate index for Portugal (NEERIP), which corresponds to an international goods trade structure encompassing a higher number of countries than those considered for the calculation of the previous index(1). This update was necessary due to changes in the international trade structure on which the previous version of the index (dating from 1990) was based. In addition, two real indices are presented, using consumer price indices and GDP price indices to deflate nominal changes in exchange rates. With the implementation of Stage Three of Economic and Monetary Union a number of institutions started to calculate euro effective exchange rates, namely the European Central Bank publishes, on a regular basis, in its Monthly Bulletin effective exchange rates, in nominal and real terms, for the euro area as a whole(2). However, for each participating country it remains important to obtain national effective exchange rate indices, which replace the previous effective exchange rates of their currencies, given that their individual behaviour is different from that of the euro area as a whole. In fact, each country has a different external trade structure, namely regarding the relative importance of the several intra and extra-euro area trading partners, different domestic developments in terms of prices and production costs, different institutions and different ways to conduct national economic policies. Moreover, if in nominal terms the change in the effective exchange rate indices translates exchange rate developments of the euro against the currencies of extra-euro area trading partners (which in the case of the Portuguese economy have a minority part on external trade(3)), in real terms, the change in the effective exchange rate index also reflects changes in the relative behaviour of inflation and production costs between national economies belonging to the euro area. Thus, the real effective exchange rate index is still important as an indicator of the external competitiveness of the economy. However, a real effective exchange rate index is an external competitiveness indicator in the narrow sense, given that competitiveness is assessed only in terms of the relative change in prices or costs. In fact, this index does not reflect other qualitative factors relevant for the overall competitiveness of the economy, such as the ability to innovate, the quality of the product or the ability to adapt to market demands.

Wirtschaftlicher Strukturwandel in der Region Stuttgart

Abstract: Economic structural change in the Stuttgart region. The Stuttgart region is one of the most highly developed regions in the EU. Growth rates, competitiveness and purchasing power are far more dependent than in other regions of the EU on the basic and export activities of the industrial sector, especially on the region’s closeley knit cluster of activities around the automobile industry. However, Baden-Wurttemberg’s economically strongest region is no longer the fastest growing one. Economy and population are certainly continuing to grow but structural weaknesses are evident in the below average growth of value added in both the producing and services sectors. These weaknesses are also evident in the labour market despite the relatively low rate of unemployment and the difficulties associated with finding new growth areas. in contrast to the industrial sector with its outstanding national and and international companies, there is a lack of basic and export activities in the services sector in the Stuttgart region. The polarised structure of employment, a large share of highly qualified employees and, at the Same time, a large share of those with few skills can be explained by the economic structure which is atypical for urban regions of highly developed countries. Because of the structural weaknesses and the strong interregional competition, development of the region and improvement in the research and education infrastructure have priority as fields for policy action.

Optimum Design for Networks of Beijing Olympic Temporary Supermarkets

Abstract: In this thesis, we firstly utilize a function concerning the frequency people pass each commercial zone to reflect the regulation of people flowing. Secondly, we establish a Point Matrix Model to circulate the result. Thirdly, we introduce the concept of Purchasing Power in so as to cover both factors of the flowing quantity of people and their purchasing desire. Through modifying the percentage value of the model, the purchasing ability of each commercial zone becomes clear. Fourthly, relevant maths methods are adopted to concrete the scale of MS and to fulfill the three basic requirements. In this step, Balance Extent is created to depict the balance the title referred to. Furthermore, we target on commercial benefits to establish a Compound Integral Programming Model based on the limitations of purchasing needs of spectators and the balance. Subsequently, another result is got via computer search method.

Symbolic Interactionism Approach to Study Socio-Economic Development in Slovenia

Abstract: Introduction At 17,000 USD, Slovenia's GDP per capita is already higher than that of Greece or Portugal and considerably higher than the GDP per capita in other former socialist countries (Schwab, Porter, Sachs, 2002). Most observers do not hesitate to explain that Slovenia's positive legacy accounts for its prosperity. In 1952, the per capita social product (methodologically close to the GDP) in Slovenia was 1.7 times higher than the average of the former Yugoslavia. In 1990, before its independence, it was already twice as high as the average, despite many official programs to develop less developed republics in Yugoslavia. Though there are huge problems in comparing statistics of capitalist and socialist economies, we think it is significant that using comparisons of the social product by the internal purchasing power shows that by 1985, the former Yugoslavia's purchasing power amounted to, on average, 44% of Austria's, and lagged behind Portugal (the least developed country of the European Union at the time) by 7 percentage points. Whereas Slovenia's internal purchasing power amounted to 85% of Austria's per capita social product and was higher than in Portugal, Spain, Greece and Ireland (Potocnik et al., 1996, p.13). Inheriting such assets, it is hardly surprising that Slovenia encounters fewer problems in its transitional period. It is the underlying hypothesis that Slovenia's relative success must be explained by those factors that enable different social groups within and between business enterprises to co-operate. This cooperation takes place despite growing political divisions and dramatic shifts in government and ideology, as well as strong reductions in home markets, supply chains and in the internal and external division of labour in enterprises. We propose to explain this situation of social cohesion, which enables different social groups to continuously play surprisingly identical economic roles despite political transitions, to be a consequence of the close relationship between village communities and industrial enterprises. Rather than viewing economic actors as atomistic/individualistic, facing games within abstract categories, such as markets and hierarchies, we see them as strategically interacting with other agents. Paradoxically for some, Adam Smith in his "The Theory of Moral Sentiments" writes about how external spectators interactively socialise actors to favour certain actions over others (Smith, 1969). The most developed vision of aligning social action across many agents can be found in the tradition of "symbolic interactionism" (e.g. Mead, 1934, Blumer, 1969). According to Blumer (1969), the organisation of a human society is the framework inside of which social action takes place. Action is produced by action units instead of just being released by external forces. However, this process of self-indication always takes place in a social context. Blumer explains: "Fundamentally, group action takes the form of a fitting together of individual lines of action. Each individual aligns his action to the action of others by ascertaining what they are doing or what they intend to do--that is by getting a meaning of their acts." For Mead (1934), this is done by the individual taking the role of others. "In assuming such roles the individual seeks to ascertain the intention or direction of the acts of others. This is the fundamental way in which group action takes place in human society." The third way to "optimising" and "satisfying" can also be found in the Sabel's and Zeitlin's (1997) use of "strategizing." They say that actors define their individuality by creating particular places for themselves in a community whose larger destiny was the frame for the plot of their working lives. They suggest the relaxation of the distinction between historical periods of stability and transition; in the same way as the distinction between maximising actors and constraining context should be relaxed. …

Relative to What? Cross-national Picture of European Poverty Measured by Regional, National and European Standards

Abstract: The starting point in the paper is the relative concept of poverty. We will study how our picture of poverty will change if we accept a very relative concept of poverty. The first problem we encountered was the selection of the benchmark. A couple of alternative ways to conduct relativizations were selected. First, we applied the conventional poverty approach. The poor were those whose income remained below 60% of the national equivalent disposable income. Second, we collapsed European nations together into one data pool and calculated a common poverty line for the EU. This EU line was then applied in subsequent analyses. Thirdly, we decomposed nation states into smaller units representing the poorest and richest areas in respective countries. Data were compiled from the Luxembourg Income Study. If we apply the conventional nation-based ways of operationalizing poverty (poverty line 60% of median income) the poverty rate varies from 7,1% in Sweden to 20,5% in Italy. The shift to the common European poverty line will expand that gap. The variation is from 0,7% in Luxembourg to 43,1% in Spain. Numerically and methodologically the most interesting issues are revealed when we compare regional, national and EU level relativizations. Our exercise indicates that within-nation differences are sometimes more pronounced than differences between nations. Therefore, very often national means tend to obscure more than they reveal. The seriousness of the problem varies between groups of countries. In the egalitarian Nordic countries incomes between regions as well as between individuals are more evenly distributed and consequently, the national means are more representative for these countries. Moreover, the Scandinavian cluster is more or less robust against the mode of comparison. The low poverty rates in the Nordic countries do not essentially change even if we change from national to regional or cross-national poverty lines. The change in the method of relativization does not alter our understanding of Scandinavian poverty but it has a substantial impact upon our picture of the Mediterranean countries. The use of the European poverty line leads to two to three times higher poverty rates than analyses based on purely national data. Also, the regional variation in these countries is the widest. Therefore, conclusions based on national means may in some cases be severely misleading. The results also have some bearing for our use of purchasing power parities. In societies with large socio-economic and regional variation in income, and consequently in consumption capacities, purchasing power parities implicitly assuming homogenous consumption patterns over society may give a distorted picture of the price levels in a country in question. When it comes to the Central European countries, to some extent the same story as was told in the Scandinavian case is valid. The countries are not that sensitive to changes in the calibration of the measurement instruments. Also the results for the UK are pretty robust but the main difference between the UK and Central-Europe is that the poverty rate is about 10 percentage points higher in the former.