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Showing papers on "Purchasing power published in 2006"


Journal ArticleDOI
TL;DR: This article showed that the prosperous parts of Asia between 1500 and 1800 look similar to the stagnating southern, central and eastern parts of Europe rather than the developing northwestern parts of the world, contrary to the claims of Pomeranz, Parthasarathi and other world historians.
Abstract: Contrary to the claims of Pomeranz, Parthasarathi and other ‘world historians’, the prosperous parts of Asia between 1500 and 1800 look similar to the stagnating southern, central and eastern parts of Europe rather than the developing northwestern parts. In the advanced parts of India and China, grain wages were comparable to those in northwestern Europe, but silver wages, which conferred purchasing power over tradable goods and services, were substantially lower. The high silver wages of northwestern Europe were not simply a monetary phenomenon, but reflected high productivity in the tradable sector. The ‘Great Divergence’ between Europe and Asia was already well underway before 1800.

372 citations



Journal ArticleDOI
TL;DR: In this paper, the authors construct a set of (rural, urban, total) provincial level spatial price deflators for the years 1984-2004 that can be used to obtain provincial-level income measures adjusted for purchasing power.
Abstract: Prices differ across space: from province to province, from rural (or urban) areas in one province to rural (or urban) areas in another province, and from rural to urban areas within one province. Systematic differences in prices across a range of goods and services in different localities imply regional differences in the costs of living. If high‐income provinces also have high costs of living and low‐income provinces have low costs of living, the use of nominal income measures in explaining such economic outcomes as inequality can lead to misinterpretations. Income should be adjusted for costs of living. We are interested in the sign and magnitude of the adjustments needed, their changes over time, and their impact on economic outcomes in China. In this article, we construct a set of (rural, urban, total) provincial‐level spatial price deflators for the years 1984–2004 that can be used to obtain provincial‐level income measures adjusted for purchasing power. We provide illustrations of the sign...

307 citations


01 Jan 2006
TL;DR: The role of children in making decisions concerning the entire family unit has prompted researchers to direct attention to the study of influence of children as mentioned in this paper, and the amount of influence exerted by children varies by product category and stage of the decision making process.
Abstract: EXECUTIVE SUMMARY Children constitute an important target market segment and merit attention from a marketing perspective. The role that children play in making decisions concerning the entire family unit has prompted researchers to direct attention to the study of influence of children. The amount of influence exerted by children varies by product category and stage of the decision making process. For some products, they are active initiators, information seekers, and buyers; whereas for other product categories, they influence purchases made by the parents. The purchasing act is governed by how they have been socialized to act as consumers. Family, peers, and media are key socializing agents for children wherein family-specific characteristics such as parental style, family's Sex Role Orientation (SRO), and patterns of communication play key roles. More so, changes taking place in the socio-cultural environment in India (such as emergence of dual-career, single parent families) entail that dimensions of children's influence in family purchase decision making be investigated in a specific context. Indian society vastly differs from the West in terms of family composition and structure, values, norms, and behavior, which affect the role that children play in purchase decision making in families. Hence, the aim of this paper is not only to explore the dimensions already investigated by previous researchers in India and Western countries but also to identify directions for future research. ********** Research on family decision making has been largely confined to spouses, who have been considered as the relevant decision making unit in a family. However, the role of third party influences, such as children, on decision making strategies and negotiations is essential to taking a broader view of the relevant unit of analysis. Traditionally, women were seen to be the purchasing agents for the family. Nonetheless, increasing participation of women in the workforce has prompted a shift in this role as children are increasingly the "buyers" for the entire family. Even in families where women do not work, children are observed to share this role with their mothers. Children enjoy greater discretion not only in making routine consumption decisions for the family but also in pestering their parents to buy other products desired by them. Contemporary researchers express that children constitute a major consumer market, with direct purchasing power for snacks and sweets, and indirect purchase influence while shopping for big-ticket items (Halan, 2002; Singh, 1998). Indian children have recently attracted considerable attention from marketers because the market for children's products offers tremendous potential (pegged at Rs. 5000 crore/$1110mn) and is rapidly growing. According to available industry data, the chocolate and confectionary market is estimated at Rs. 1300 crore/$290mn, the apparel market at Rs. 480 crore/$110mn and kids footwear at Rs. 1000 crore/$220mn (Bhushan, 2002). In addition to this, 54% of India is estimated to be under the age of 25 (Bansal, 2004). Children constitute three different markets: the primary, the influencer, and the future market (Figure 1). Certain products are simply children's products for which they are the primary users/buyers. They sometimes either purchase a product themselves or select the product before it is purchased by the parents. For other products, such as ones which are used by the entire family unit, they may influence purchases made by the parents. There are some products where children wield direct influence or pester power by overtly specifying their preferences and voicing them aloud. For other products, parents' buying patterns are affected by prior knowledge of the tastes and preferences of their children. This 'passive dictation' of choice is prevalent for a wide variety of daily consumed product items as well as products for household consumption. …

121 citations


Journal ArticleDOI
TL;DR: In this article, the drivers behind small-scale retailers' collective success, even after a decade of sustained growth of the “modern” retail sector in Latin America, were examined along with selected ratios from the strategic resource model.
Abstract: Purpose – To understand the drivers behind small‐scale retailers' collective success, even after a decade of sustained growth of the “modern” retail sector in Latin America.Design/methodology/approach – The study described in this paper was sponsored by the Coca‐Cola Retailing Research Council – Latin America. Consumer research for this study was based both on primary and secondary sources. To understand the drivers behind small‐scale retailers' collective success, standard frameworks were adapted for evaluating their value proposition and business model. Customer‐facing value drivers were examined along with selected ratios from the strategic resource model.Findings – In spite of being “poor,” emerging consumers have a substantial purchasing power as a group. They work with a very specific set of products, categories and store format needs that distinguish them from other consumers. These distinct needs imply that it is not “just a matter of money and time” for them to change their purchasing patterns ov...

93 citations


Posted Content
TL;DR: In this article, a complex gravity-iceberg model of U.S. exports is proposed to explain the success of the American film industry facing rising costs of production, foreign protectionism, and liberal trade policies at home.
Abstract: The global success of the American film industry facing rising costs of production, foreign protectionism, and liberal trade policies at home is an enigma. The basis for American dominance is found in market size and structure. In turn, market characteristics and microdata explain protectionist strategies-leading to a complex gravity-iceberg model of U.S. exports. Besides purchasing power and spatial distance, cultural variables as well as protectionist strategies are important influences on U.S. motion pictures trade. Competitors nonetheless fail to match the magical American combination of movie stars, economies of scale, and popularity of English speech. (JEL F14, C33, Z10)

75 citations


Journal ArticleDOI
TL;DR: This article showed that a 10 percent increase in the share of low-skilled immigrants in the labor force decreases the price of immigrant-intensive services, such as housekeeping and gardening, by 1.3 percent and other non-traded goods by 0.2 percent.
Abstract: While an extensive literature examines the impact of low-skilled immigration on US native wages, there has been almost no research on the parallel question of how immigration affects the price of goods and services. A standard small open economy model suggests that low-skilled immigration should reduce the relative price of non-traded goods by decreasing the wages of low-skilled workers. Treating US cities as small open economies and using confidential price data on goods and services to estimate reduced-form price effects, I find that, at current immigration levels, a 10 percent increase in the share of low-skilled immigrants in the labor force decreases the price of immigrant-intensive services, such as housekeeping and gardening, by 1.3 percent and of other non-traded goods by 0.2 percent. Structural estimates suggest that lower wages are a likely channel through which these effects take place. However, wage effects are significantly larger for low-skilled immigrants than for low-skilled natives because the two are imperfect substitutes. Overall, the results imply that the low-skilled immigration wave of the 1990s increased the purchasing power of high-skilled natives living in the 25 largest cities by 0.65 percent but decreased the purchasing power of native high school dropouts by 2.66 percent.

61 citations


Journal ArticleDOI
TL;DR: In this paper, the significance of kerosene and electricity subsidies in relation to the purchasing power of Ethiopian urban households is examined, and the results indicate that subsidies on keroene prices and electricity tariffs do not significantly change the overall costs for households.

46 citations


Journal ArticleDOI
22 Sep 2006
TL;DR: In this paper, the authors evaluated China's GDP at current exchange rates and did not take account of differences in the purchasing power of currencies, and concluded that China is already the world's second largest economy with almost $9 trillion in output, nearly three quarters that of the United States.
Abstract: IN 1978, AT THE outset of its economic reform, China was the world’s tenthlargest economy, with a GDP of about $150 billion, or less than 6 percent of U.S. GDP at the time. By 2005, however, China’s economy, at $2.2 trillion, had grown to become the fourth largest in the world, behind only the United States at $12.5 trillion, Japan at $4.5 trillion, and Germany at $2.8 trillion. The above figures, which come from the World Bank, evaluate GDP at current exchange rates and do not take account of differences in the purchasing power of currencies. When measured instead at purchasing power parity (PPP), China is already the world’s second-largest economy, with almost $9 trillion in output, nearly three quarters that of the United States. It has been suggested that, at current growth rates, China’s GDP stated in PPP terms could exceed that of the United States as early as 2010. 1 When China’s GDP converted at current exchange rates does match that of the United States, assuming that China’s population remains four times the U.S. population, Chinese income per capita will then be but one quarter that of the United States. By comparison, the purchasing power of the average Chinese resident will substantially exceed one quarter that of the average U.S. resident, perhaps rising to the vicinity of one half.

41 citations


Journal ArticleDOI
TL;DR: In this paper, the authors examined possible modus operandi of time valuation according to the Shari`ah precepts vis-a-vis the concept of money, and whether any value can be attributed to time while considering money's value.
Abstract: The time value of money is a basic investment concept and a basic element in the conventional theory of finance. The Shari`ah does not rule out this consideration, for it does not prohibit any increment in a loan given to cover the price of a commodity in any sale contract to be paid at a future date. What is prohibited, however, is making money’s time value an element of any lending relationship that considers it to have a predetermined value. Here, the Shari`ah requires that a loan be due in the same currency in which it was given. The value (i.e., purchasing power) of paper currencies varies due to changes in many variables over which the two parties of a loan contract usually have no control. This study examines possible modus operandi of time valuation according to the Shari`ah’s precepts vis-a-vis the concept of money, and whether any value can be attributed to time while considering money’s value. For this purpose, it investigates the juristic views on such relevant issues as the permissibility of difference between a commodity’s cash and credit prices and an increase and reduction of the loan’s amount in return for early repayment.

35 citations


Journal ArticleDOI
08 Jun 2006-BMJ
TL;DR: The next generation of leaders must embrace sustainable development and reduce their ecological footprints to contribute towards sustainable development.
Abstract: Advocates for action on climate change face two main challenges. The first is to make everyone aware of the enormity of the problem. The second is to persuade anyone that anything can be done about it. Ignorance is bad enough, but inertia—induced by despair, denial, or the hope of a miraculous technical fix—is even more dangerous. Climate change, as Robin Stott argues in this week's BMJ,1 poses grave risks to health.2 It threatens the essentials of life. It brings drought, floods, storms, and extremes of heat and cold that can lead to famine, homelessness, dislocation, destruction of communities, the spread of disease, and even mass migrations and armed conflict as people vie with each other for land, water, food, and energy. And let's not forget the effects on mental health of anxiety, insecurity, and a sense of powerlessness as we watch the grass wither and the ice-caps melt. If medicine is about saving lives, not just by last ditch interventions but by trying to avert illness, then working to alter patterns of behaviour that contribute to climate change could arguably become a priority for clinicians—as an urgent preventive measure. Debating the health implications of climate change may also be the best way to get the general public to take the problem seriously. Concepts such as “sustainable development” and “global warming” can strike the average person as either too daunting to consider or too distant to concern them. But we can all relate to the idea of risks to health that may affect ourselves, our children, and grandchildren. So there are good reasons to put climate change at the heart of the health agenda. Likewise, the climate change debate belongs at the heart of health service management. The institutions of health care have enormous power to do good or harm to the natural environment and to increase or diminish carbon emissions. This applies particularly to the NHS, with its sheer bulk—still growing year on year. In 2006-7 the annual NHS budget in England is expected to be £83bn (€121bn, $156bn), with a total UK health expenditure of £97bn.w1 NHS purchasing power is estimated at £17bn a year.w2 It is one of the largest employers in the world, beaten only by the likes of Wal-Mart and the Chinese army. It employs more than 1.3 million peoplew3 and runs 259 NHS trusts.w4 Consider the huge amounts of food; furniture; medical, cleaning, and office equipment; road vehicles; and building materials the NHS has to buy—directly or indirectly—to keep itself going. Consider the great expanses of land it occupies, the vast amounts of energy and water it consumes, and the mountains of waste it produces every year. Ideally, an organisation committed to safeguarding health would deploy its powers and resources in ways that help reduce carbon emissions. In truth, most decisions are made with scarcely a nod to the needs of the natural environment. The Royal Society for Nature Conservation has assembled the evidence on the NHS's consumption of energy, materials, and water; generation of waste; and travel (see details on bmj.com).w5 w6 There are some exceptions. For example, hospitals in Cornwall have set up a project to purchase food from local suppliers; Addenbrooke's Hospital in Cambridge has a “green travel plan” that encourages walking, cycling, and using public transport; a trust in North Glamorgan has cut carbon emissions and saved money by creative energy management. Such examples are chronicled in a web based guide on good corporate citizenship recently launched by the Department of Health to help doctors and managers in the NHS use their resources more wisely.3,4 But good practice still depends on highly committed individuals innovating against the odds. Mean-while, the largest capital development programme in the history of the NHS has brought on a rash of largely unsustainable building. By 2010, more than £11bn is expected to have been spent on 100 new hospitals and more than £1bn on new primary care buildings.w7 w8 Most of the new hospitals will have large car parks and energy intensive air conditioning, heating, and lighting. They will often involve costly demolitions of buildings that might have been adapted at less cost in financial and environmental terms. Many will encroach on green field sites beyond urban centres, where access depends heavily on private cars. They will routinely use construction materials from unrenewable sources. They will produce almost unimaginable amounts of waste. And they may not ultimately be necessary, as demographic, technological, and policy changes alter the patterns of health care.w9 The truth is that, despite an impressive array of official guidance,w10-w12 incentives in the NHS run in the opposite direction. “Efficiency” is what matters most, and it is still defined as what works best for the financial bottom line. “Value for money” is a limited concept that does not yet recognise virtue in farsightedness. NHS targets are geared towards improving clinical performance and cutting waiting times. No one gets fired for failing to reduce the carbon footprint of a hospital or clinic. And so, in the name of health care, gargantuan sums of public money continue to be spent in ways that are careless of the physical and mental wellbeing of future generations. A longer term perspective suggests that this makes poor sense, not only for population health, but also for the business of running a national health service.

Journal ArticleDOI
TL;DR: The ComparableWage Index (CWI) as mentioned in this paper measures uncontrollable variations in educator pay by observing systematic variations in the earnings of comparable workers who are not educators and reveals substantial variation in purchasing power both across school districts and across time.
Abstract: A ComparableWage Index (CWI) is an attractive mechanism for measuring geographic variations in the cost of education. A CWImeasures uncontrollable variations in educator pay by observing systematic variations in the earnings of comparable workers who are not educators. Together, the 2000 census and the Occupational Employment Statistics survey support the construction of just such an index. The resulting panel of index values measures wage levels in all parts of the United States from 1997 through 2004 and reveals substantial variation in purchasing power both across school districts and across time. Such inequalities undermine the equity and adequacy goals of school finance formulas. If states were successfully directing additional resources to school districts in high-cost environments, then measured inequality within states should fall when differences in purchasing power are taken into account. Instead, cost adjustment widens the spending gap in all but a handful of states.

Journal ArticleDOI
TL;DR: In this article, a comparison of consumer price index-proxied price levels with direct evaluations of regional price levels (i.e., Surinov spatial price indexes and the costs of a purchasing power basket), biases that distort the qualitative pattern of inter-regional differences are identified.
Abstract: Lacking data on price levels across locations (countries, national regions, etc.) for crossspace comparisons, researchers resort to local consumer price indexes (CPIs) over time to evaluate these levels.This approach unfortunately fails to specify, even generally, the exactness of such proxies.Worse, the method is silent on whether the results are consistent, at least qualitatively, with those obtained using actual price levels.This paper aims to find an answer empirically, using data across Russian regions.Through comparison of CPIproxied price levels with direct evaluations of regional price levels (i.e.Surinov spatial price indexes and the costs of a purchasing power basket), biases that distort the qualitative pattern of inter-regional differences are identified.Cross-region distributions for real income (calculated with CPI-proxied and directly evaluated price levels) for several points in time are estimated and compared.The CPI-induced biases are found to generally overstate inter-regional disparities. JEL Classification: C43, E31, P22, R19 Keywords: consumer price index, spatial price index, real income, nonhomothetic preferences, Russia, Russian regions

Posted Content
TL;DR: In a survey of 211 company managers of firms younger than 30 years, the authors found that the most popular mission is improving the environment; the primary vehicle to creating social change is by means of aproduct or service; the least-used vehicle is outright philanthropy.
Abstract: This study looks at the new breed of companyknown as the "for-profit social venture;" it seeks to understand thekinds of social value being created, the challenges faced, the successesachieved, and the kinds of financing and help needed to grow and succeed. Thecommunity of social entrepreneurs should benefit from knowing what really doesand does not work when creating social value through a for-profit firm. For this analysis, a social venture is one that seeks to effect social andenvironmental change through a business; from its beginning, it intends tocreate social or environmental value for other stakeholders, in addition tomaking a profit. These ventures are able to define their actual or potentialsocial impact in concrete ways. The study is based on survey results of 211 company managers of firmsyounger than 30 years. CEOs reported that to be a social venture meant having acommitment to creating social value, articulating a mission, adopting specificoperational business practices, and continually refining the commitment tosocial outcomes. The emerging field of social ventures is fragmented and diverse. Difficultaspects of running a social venture included struggling with best definitionsand labels, dealing with higher costs of mission-related items, raising money,and helping customers toappreciate company values. The rewards includedinspiring and rewarding employees, acting in accord with company values, andencouraging customers to use their purchasing power to change the world. Fourtypes of CEOs are identified: activists, change agents, market pioneers, andmarket influencers. Seven industry segments are identified: agriculture, health, and food;consumer products and retail; energy, environmental technology, and utilities;financial, consulting, and services; manufacturing, construction, andtransportation; media, education, and communications; and software andinformation technology. Each segment is characterized by company culture,social value creation, and financial value creation. Within each segment thereis a marked tendency to favor social or equal (social and financial) values.Trends in attitudes and practices, vehicles used to achieve goals, explicitnessto stakeholders, evaluation, financing, growth, and exits are detailed. Although primarily based on the US coasts, the ventures had national,international, and global scale. The most popular mission is improving theenvironment; the primary vehicle to creating social change is by means of aproduct or service; the least-used vehicle is outright philanthropy. Most CEOs believe that growth and size do not threaten achieving theirmission. Only half the CEOs believe that claiming social value helps theircompany succeed. Most past funding was from non-institutional sources; and mostCEOs plan to keep their ventures private. Assistance with fundraising is citedas the biggest need. (TNM)

Journal ArticleDOI
TL;DR: In this article, the authors examined possible modus operandiof time valuation according to the Shari`ah precepts vis-a-vis the concept of money, and whether any value can be attributed to time while considering money's value.
Abstract: The time value of money is a basic investment concept and a basic element in the conventional theory of finance. The Shari`ah does not rule out this consideration, for it does not prohibit any increment in a loan given to cover the price of a commodity in any sale contract to be paid at a future date. What is prohibited, however, is making money’s time value an element of any lending relationship that considers it to have a predetermined value. Here, the Shari`ah requires that a loan be due in the same currency in which it was given. The value (i.e., purchasing power) of paper currencies varies due to changes in many variables over which the two parties of a loan contract usually have no control. This study examines possible modus operandiof time valuation according to the Shari`ah’s precepts vis-a-vis the concept of money, and whether any value can be attributed to time while considering money’s value. For this purpose, it investigates the juristic views on such relevant issues as the permissibility of difference between a commodity’s cash and credit prices and an increase and reduction of the loan’s amount in return for early repayment.

Journal ArticleDOI
TL;DR: The Commission on Intellectual Property, Innovation and Public Health was given the task of reviewing existing research and development efforts, examining the role of intellectual property in stimulating innovation, and to make concrete proposals for action by national and international stakeholders, both public and private, to encourage R&D for diseases that disproportionately affect developing countries.
Abstract: The Commission on Intellectual Property, Innovation and Public Health (CIPIH) was given the task of reviewing existing research and development (R&D) efforts, examining the role of intellectual property (IP) in stimulating innovation, and to make concrete proposals for action by national and international stakeholders, both public and private, to encourage R&D for diseases that disproportionately affect developing countries. The Commission focussed exclusively on the application of IP to pharmaceuticals, and did not address the public health implications of copyright law, or genomic patents, which are covered elsewhere in this issue. The report (1) presents a wealth of evidence and analysis in support of the view that the current system of drug development is fundamentally flawed and leaves huge health needs unmet, because of its reliance on patents and commercial incentives for the priority-setting and financing of medical R&D. The report calls for improved mechanisms that promote research that responds to patients' needs, and that ensure access to innovations for all. However, it fails to provide alternatives and concrete new proposals. Many of the data presented in the report illustrate the urgent need for change. I will discuss some of the Commissions more salient conclusions, on intellectual property rights, international trade, access to medicines, and global frameworks. Intellectual property rights The report recognizes that IP is a means and not an end. It concludes that IP is irrelevant in stimulating innovation in developing countries where markets have limited purchasing power, confirming the same finding by the UK Commission on Intellectual Property Rights in September 2002. (2) The report says: "There is no evidence that the implementation of the TRIPS Agreement in developing countries will significantly boost R&D in pharmaceuticals on Type II and particularly Type III diseases. Insufficient market incentives are the decisive factor." (1) The report also points out that even in regions with strong IP protection, innovation results are declining. In the USA for example, medical R&D spending has doubled between 1995 and 2002, while in the same period, the registration of new products has declined, as well as the therapeutic significance of products reaching the market. In other words, although worldwide patent standards have been strengthened since 1995 as a result of the TRIPS Agreement, and global spending on medical R&D has increased, pharmaceutical innovation has declined both in quantity and quality. Furthermore, the report draws attention to the fact that patents can actually hamper innovation, by blocking follow-on research or access to research tools. The CIPIH identifies patent pools, compulsory licensing, and the application for research exemptions as potential solutions to overcome barriers caused by patenting. International trade and competition The report warns against trade agreements that include so-called "TRIPS-plus" measures. The Commission concludes: "Bilateral trade agreements should not seek to incorporate TRIPS-plus protection in ways that may reduce access to medicines in developing countries." (Recommendation 4.21). (1) "Data exclusivity" is one example of a TRIPS-plus provision often included in bilateral trade agreements with the US. The report offers much awaited clarity on issues related to the protection of data submitted by companies to obtain marketing approval for new medicines. WTO Members are obliged to protect undisclosed test or other data against unfair commercial use. But this does not imply property rights, nor a right to prevent others from using the data, or from relying on the data for the marketing approval of the same product by a third party--except where unfair, dishonest commercial practices are involved. Developing countries have been pressured during bilateral talks to accept TRIPS-plus provisions including data exclusivity rules that would delay the introduction of generic medicines. …

Posted Content
TL;DR: In this article, the authors make a comparison of industry output, inputs and productivity growth and levels between seven advanced economies (Australia, Canada, France, Germany, Netherlands, UK and U.S.).
Abstract: In this paper, we make a comparison of industry output, inputs and productivity growth and levels between seven advanced economies (Australia, Canada, France, Germany, Netherlands, UK and U.S.). Our industry-level growth accounts go up to 2003, and make use of input data on labour quantity (hours) and quality (schooling levels), and distinguish between six different types of capital assets (including three ICT assets). The comparison of levels relies on multilateral, industry-specific purchasing power parities (PPPs) for output and inputs, within a consistent input-output framework for the year 1997. Our results show that differences in productivity growth and levels can mainly be traced to market services, not to goods-producing industries. Some of the strong productivity growth in market services in Anglo-Saxon countries may be related to relatively low productivity levels compared to the U.S. In contrast, services productivity levels in continental European countries were on par with the U.S. in 1997, but growth in Europe was much weaker since then. In terms of factor input use, the U.S. is very different from all other countries, mostly because of its more intensive use of ICT capital.

Journal ArticleDOI
TL;DR: In this article, the authors examined the economic growth prospects of China over the next two decades by extrapolating past real GDP growth rates into the future and showed that the size of the Chinese economy surpasses that of the U.S. in purchasing power terms around 2010.
Abstract: Views of the future China vary widely. While some believe that the collapse of China is inevitable, others see the emergence of a new economic superpower that increasingly poses a threat to the U.S. This paper examines the economic growth prospects of China over the next two decades. Extrapolating past real GDP growth rates into the future, the size of the Chinese economy surpasses that of the U.S. in purchasing power terms around 2010. Such extrapolations can be supported by standard growth patterns identified in economic development and trade theories (structural change, catching up, and factor price equalization). They can also be supported by an explanation of China's past GDP growth through growth of various labor variables, with a subsequent derivation of future GDP growth based on reliable information about future labor quantity and quality. China's demographic changes and economic growth have a number of implications for China and the world.

01 Jan 2006
TL;DR: There are 4 billion poor living on 2 dollars or less per day that make up the bottom of the economic pyramid (BOP), and if a company calculates their aggregated purchasing power they could be a huge an...
Abstract: There are 4 billion poor living on 2 dollars or less per day that make up the bottom of the economic pyramid (BOP). If a company calculates their aggregated purchasing power they could be a huge an ...

Journal ArticleDOI
TL;DR: The first graph in Diagram 1 demonstrates that today there exist extremely large differences in real income per capita between highly developed and less developed countries, especially some of the least developed ones in sub-Saharan Africa.
Abstract: The first graph in Diagram 1 demonstrates that today there exist extremely large differences in real income per capita between highly developed and less developed countries, especially some of the least developed ones in sub-Saharan Africa. Because the underlying domestic currency figures of GDP have been recalculated into US dollars by using purchasing power parities, the distorting effects of exchange rates in such comparisons between developed and underdeveloped economies cannot be responsible for the fact that, for example, the GDP per capita of Ethiopia in 2004 was only two per cent of America's and Ghana's a mere five per cent. Thus the diagram truly shows how poor many African countries are, even in relation to less developed countries on other continents.

Journal ArticleDOI
TL;DR: Commercial electronic communities are groups of consumers that participate in the marketplace as a single unit that have the potential to facilitate the creation of novel marketplaces, and even radically change the buyer-seller interaction.
Abstract: Electronic communities can be designed to organize consumers, to pool their purchasing power, and to guide their purchasing decisions. Such commercial electronic communities have the potential to facilitate the creation of novel marketplaces, and even radically change the buyer-seller interaction, as physical communities did throughout the history. Commercial electronic communities are groups of consumers that participate in the marketplace as a single unit. In addition to bargaining power gained from such bundling, such communities can expand markets by reducing market uncertainty, and they have the potential to drastically reduce consumers' transaction costs, by facilitating group transactions and bulk purchasing. Communities are characterized by their size, their pricing strategy, and their membership characteristics. Analytical models and numeric analysis is utilized to compute the optimum size of a community for given market characteristics. Two major community pricing strategies are analyzed to improve the community design, and the conditions are derived where one dominates the other. Finally, market segmentation techniques are introduced to control the membership characteristics of the community to further improve the design.


Journal ArticleDOI
TL;DR: In this paper, the authors examined the link between energy and economic development by collecting primary data from two Bangladesh communities which use solar energy and found that providing electricity through solar energy has a multidimensional affect on rural livelihood.
Abstract: Bangladesh has been suffering from acute shortages of energy and the gap between demand and supply of energy has been gradually increasing. As the country has very limited natural resources, except natural gas, it largely depends on imported fuel. But due to financial and technical inability, it is almost impossible for Bangladesh to extend fossil fuel based power distribution networks to the rural community. Moreover, the low purchasing power is also a limiting factor for the rural population to have access to the formal energy market. As a result, rural society is in a most vulnerable situation from the side of energy consumption. Against this background, this study aims to examine the link between energy and economic development by collecting primary data from two Bangladesh communities which use solar energy. The study made an attempt to find out the economic and social impacts of sustainable rural energy on poor people and governance and management of these infrastructure projects. The study found that providing electricity through solar energy has a multidimensional affect on rural livelihood. It not only improves the living standard of the rural people but also improves access to information, better health for women and children and an extension of indoor income generating activities. However, poor maintenance, lack of technical knowledge, and training hampered the operation and repairing functions of solar energy technology in the rural community. For improving effective management of solar energy technologies, there is a need to increase end user awareness of system use, end-user capacity to troubleshoot problems, and level of service, quality and timeliness of repairs. The local government should come forward to increase awareness among beneficiaries and ensure the effective functioning of these systems.

01 Jan 2006
TL;DR: The Federal Earned Income Tax Credit (EITC) provides cash-strapped and credit-constrained rural working families the opportunity to increase their purchasing power.
Abstract: The Federal Earned Income Tax Credit (EITC) provides cash-strapped and credit-constrained rural working families the opportunity to increase their purchasing power. Qualitative and quantitative methods were used to analyze data from a sample of 237 rural working mothers who participated in a multi-state study. Two-thirds of those eligible claimed the EITC. The rural families used the EITC to pay bills and loans, improve access to transportation, purchase various consumer durables and non-durables, establish savings and build assets, engage in leisure activities, and make human capital investments.

Posted Content
TL;DR: In this article, the authors argue that the current design of the public distribution system and price-based subsidies to bring out the perversities, and argue that a complete replacement is called for.
Abstract: The distortions in price based subsidisation are very severe. The direct fiscal cost of ensuring that a rupee of value is delivered to all household users of kerosene is as high as Rs.3 and when the consideration is the benefit that finally reaches the poor “below the poverty line” consumers it is much more. This is well known. This excludes the indirect costs in the form of negative externalities imposed by adulteration, and environmental costs. Worse still are the “third order” effects of entrenched rent seeking and corruption of distribution networks and the conversion of retailing to patronage. In such situation reform and deregulation become problematic. At the core of all these failures in the “price arbitrage” that arises when price based subsidies are resorted to. The total fiscal losses on account of kerosene subsidisation are in excess of Rs. 24,000 crore far above the conventional estimates (around Rs. 8000 – 10,000 crore) which do not recognise the fiscal cost of diversion and adulteration. This paper studies the current design of the public distribution system and price based subsidisation to bring out the perversities, and argues that a complete replacement is called for. The Public Distribution System (PDS) which had value in an era of shortage and rationing has no role today. Market based distribution can bring down the direct costs since now kerosene distribution could then enjoy the synergies of oil and provisions distribution channels. There is clear evidence that a significant percentage (about 40) of kerosene is diverted out of the PDS and sold at higher prices. The commission paid to the distribution channel, in particular to the retailers of kerosene does not make the business financially viable. The rents being earned by those associated with the distribution channel for kerosene are very large. The rent extractors have become so well entrenched over time that it is plausible that other agencies in the system and even the regulatory process itself may be hostage today to their influences. The indirect losses from use of sub-optimal fuel mix, product mix and investment decisions are very large and may harm the economy significantly in the long term. The subsidy through uniform low pricing of kerosene, though intended for the poor, is in fact not reaching them as they are in no position to buy much of the kerosene allotted to them even at the low issue prices being charged by the fair price shops. It is imperative to bring into play information and communication technologies so as to break the stranglehold of the distribution channel by capturing information at the point of sale and thereby creating a permanent audit trail of all relevant transactions. Only by empowering the target segment, the BPL families, by providing them with the freedom to choose the manner in which they would like to consume the subsidy intended for them can the problem be overcome. The well-documented failure of TPDS (Targeted Public Distribution System), implemented on an experimental basis, clearly demonstrates that tinkering with the existing system would not achieve the twin goal of benefiting the really poor and not-benefiting the non-poor. The direct subsidy scheme, which is based on free market pricing of kerosene, and therefore a radical departure from the current method of uniform low pricing is the answer for achieving effectiveness of subsidization. The subsidy is to be disbursed to the poor through smart cards and the accounting of disbursal is to be done using systems similar to those used by credit card companies. The purchasing power put in the hands of the beneficiaries would allow them to use it for spending on their choice of commodities and services and thereby not only enhance the use of subsidy to the full but would also add greatly to their welfare. The proposed system would almost completely eliminate the indirect losses arising from distorted choices since the price of kerosene would be market determined and therefore not relatively cheap compared to alternate fuels. A task force (TF) must be set-up for implementation, with wide-ranging powers and full financial backing of the government of India so as to be able to function autonomously. The task force should consist of eminently qualified individuals with diverse skills and known for their integrity and appreciation for the significance of the task to be performed. The critical task of identifying the beneficiaries at micro-level should be done using all possible sources of data and information (outlined in the report) so as to minimize both, Type I and Type II errors, that is, chance of exclusion of genuine beneficiary and chance of inclusion of spurious beneficiary in the list of target beneficiaries. There are interesting ways by which private information can be brought to bear, and incentive compatibility ensured in correct identification. The disbursement of subsidy should be such that the disbursement is recorded at the point of transaction and get immediately captured in a large centralized database, thereby creating a permanent audit trail, akin to operation of credit cards (details outlined in the report). The activities associated with initial identification of beneficiaries, disbursement of subsidies and updating the list of beneficiaries is to be done by well-qualified private agencies. The operations of the system should be monitored by an SPV to be specially created for the purpose and working under the broad supervision and direction of the task force. The SPV and the TF should ensure full transparency of operation of the private vendor and the scheme by making public all relevant information on the operation of the system and opting for periodic audit of operations. The appropriate organisation design and policy framework for the same is elaborated. The immediate gain to the exchequer from the proposed system, due to market based pricing of kerosene would be an estimated inflow of Rs. 14000 crore per year by way of additional taxes. This gain from additional taxes, based on certain assumptions, is expected to rise to over Rs. 37000 crore in 2010-11, at Jan. 2006 petroleum prices. The gain to the economy and society at large from elimination of indirect losses due to sub-optimal choices of fuel-mix, product-mix, and asset mix would be immense as they would be completely eliminated in the new system. The most important gain however is that the beneficiaries would be in a position to fully utilize their entitlements and spend the same on products and services of their choice, significantly enhancing thereby the utility of their consumption. This should also make direct subsidies politically rewarding.

01 Jan 2006
TL;DR: The Combi-Pack as mentioned in this paper is a box containing enough maize seed, herbicide, and fertilizer to plant 1/4 hectare of maize for smallholder farmers in KwaZulu-Natal and Mpumalanga.
Abstract: Despite having the largest economy in Africa, many of South Africa's citizens grapple with poverty. For rural residents especially, poverty is pervasive, and hunger a very real threat. Government efforts to improve the lives of smallholder farmers and other rural residents are slow to bear fruit. Enter the private sector, specifically Monsanto South Africa, with the Combi-Pack, a box containing enough maize seed, herbicide, and fertilizer to plant 1/4 hectare of maize. Combi-Packs are part of the phenomenon known as marketing to the bottom of the pyramid. Large corporations design and sell products and services to very low-income consumers, billions of individuals who as a group have substantial purchasing power. Farmers in KwaZulu-Natal and Mpumalanga provinces who use Combi-Packs along with no-till, or minimum-till, agriculture have increased maize yields. Now, the farmers raise enough maize that they can feed their families and then sell the excess, earning money to fix homes, buy clothes, and pay school fees. Furthermore, Combi-Packs combined with no and minimum till agriculture have had beneficial effects for the environment, reducing erosion, and conserving water. Swelekile Alina Nkosi, a farmer in Mlondozi in rural Mpumalanga, enjoys these benefits. I'm so happy with this way of farming. What will happen when I'm old I don't know, but one thing is good, and that is now there's no water cutting through, so my soil is conserved. Combi-Packs will not solve all the problems of rural poverty. Land tenure insecurity, high banking costs, and rigid labor laws continue to plague the farmers. However by creating and selling the Combi-Pack, Monsanto is doing something that critics of globalization might find surprising: a multinational company is helping to drive away hunger and better the lives of the rural poor.

Journal ArticleDOI
TL;DR: In this article, the authors examined to what extent recent inflation trends are attributable to the constraints imposed by Monetary Union, namely negative demand disturbances in certain Greek regions, and investigated the impact of seasonal effects on inflation, in the context of the Greek so-called traditional "petitbourgeois capitalism."
Abstract: Apart from its widely accepted direct advantages, the introduction of euro has been accompanied by a surge of inflation in most of the EU member-States. At the same time, wages of the unskilled in particular, are relatively losing ground while the purchasing power of the average European seems also to have weakened since the introduction of the single currency. In this paper we deal with five relevant central issues to interpret "expensiveness" in Greece in particular. First, we examine to what extent recent inflation trends are attributable to the constraints imposed by Monetary Union, namely negative demand disturbances in certain Greek regions. Second, we investigate to what extent these patterns are also due to the adoption of the euro - including conversion period effects - over domestic rigidities such as product market rigidities. Third, we investigate the impact of seasonal effects on inflation, in the context of the Greek so-called traditional "petit-bourgeois capitalism." Fourth, we explore the extent to which unemployment is another factor that drives wages and purchasing power down. Fifth, we apply the Balassa-Samuelson effect to see whether it constitutes the culprit for non-tradable products price hikes in particular. We find that all the aforementioned factors contribute to the Greek expensiveness.

Posted Content
TL;DR: In this article, the authors investigated the causal relationship between imported investment goods (investment and intermediate) and foreign exchange rate, export, and gross national product, between export and GNP during import substitution and export-oriented industrialization periods in Turkey, and the existence of causal relationships between the domestic or foreign terms of trade (FTOT), realized foreign direct investment and GNPs, export and imported production goods during the 1982-2004 period.
Abstract: This study aims to investigate the existence of causal relationships between imported production goods (investment and intermediate) and foreign exchange rate, export, and gross national product, between export and gross national product (GNP) during import substitution and export-oriented industrialization periods in Turkey, and the existence of causal relationships between the domestic or foreign terms of trade (FTOT), realized foreign direct investment and GNP, export, and imported production goods during the 1982-2004 period. It discusses associations and controversies between theoretical statements and real world with the aims of economic policies. The models are estimated based on existing causality to show the signs, the magnitudes of causal variables on endogenous variables, and approves long run relationships between variables in addition to Granger causations. The imported production goods affect GNP positively in all periods. Export increases production goods import during the import substitution period, but the imported production goods supply causes export increases during the export-oriented industrialization period. Increases in domestic prices and GNP reduced value of Turkish Liras against US Cents in all periods, associated with exchange rate determination theories of the Monetary and the Purchasing Power. Devaluation of domestic currency led to increases in export earnings during the export-oriented period, but export earnings directed the exchange rate level during the import subtitution period. Increases in export revenues led to increases in investment goods import, On the other hand, increases in the supply of imported intermediate goods brought about higher export revenues in all periods, but its magnitude was found higher during the export-oriented period. The foreign exchange rate directs export, export directs GNP, and GNP directs the foreign exchange rates after 1980. Deteriotions in TOT increase export earning and reduce investment goods import and GNP significantly, but its effect is found insignificant on export and intermediate goods import in cointegaration analysis. The significance of TOT effect on investment goods import and GNP is found contraversial to the weak causality. The increases in GNP and in the supply of imported production goods attract foreign direct investment inflow into Turkey.

Journal ArticleDOI
TL;DR: In this article, the authors test for evidence in support of the purchasing power parity (PPP) in the bilateral real exchange rate series of the South African rand against the US dollar.
Abstract: This paper tests for evidence in support of the purchasing power parity (PPP) in the bilateral real exchange rate series of the South African rand against the US dollar. The importance of consideri...

01 Jan 2006
TL;DR: In this paper, the authors analyse the impact of exports and foreign direct investments on exchange rates and prices in a dynamic open economy and show that the mode of foreign market access plays a key role in the international transmission of productivity and policy shocks.
Abstract: This contribution introduces multinational production and trade costs in a dynamic open economy in the tradition of the new open macroeconomics, so as to analyse the impact of exports and foreign direct investments on exchange rates and prices. The mode of foreign market access is shown to play a key role in the international transmission of productivity and policy shocks, such as changes in transport costs and the global monetary stance. A generalised policy of trade liberalisation, by deteriorating the terms of trade of host relative to source countries, is shown to favour consumers in the developed (investing) world. Similarly, an easing of the global monetary stance has asymmetric e¤ects in borrowing and investing countries. A depreciation of the home currency reduces the purchasing power of domestic consumers in open economies that mainly host foreign direct investments.