Knowledge that Transforms

Industrial firms in low income countries face somewhat different incentives for investment in R&D than do firms in industrialized countries.In particular, they are at a competitive disadvantage with respect to selling technology upstream in the industrialized countries.Technology supplied from upstream industrial firms provides them with a strong incentive to purchase technology in various forms as opposed to engaging in their own R&D.In this study an econometric analysis of the decisions of Indian firms to invest in their own R&D and to purchase technology (through licensing agreements) is undertaken.These decisions are treated as being jointly determined by characteristics of Indian industries, Indian prices, and the supply of purchasable foreign technology.The study finds that industrial structure, firm size, and public and private ownership influence the mix of own R&D and technology purchase.The pool of purchasable foreign technology induces both increased adaptive R&D and technology purchase by Indian firms.-.

The informational content of different forecasts can be compared by regressing the actual change in a variable to be forecasted on forecasts of the change. We use the procedure in Fair and Shiller (1987) to examine the informational content of three sets of ex ant. forecasts: the American Statistical Association and National Bureau of Economic Research Survey (ASA), Data Resources Incorporated (DRI), and Wharton Economic Forecasting Associates (UEFA). We compare these forecasts to each other and to quasi ex ante forecasts generated from a vector autoregressive model, an autoregressive components model, and a large-scale structural model (the Fair model).

The income elasticity of calories generally is substantially smaller than the income elasticity of food expenditure. One reason may be an increasing concern for food variety as incomes increase. Food variety can be linked with two characteristics of food indifference curves: (1) curvature and (2) location of the curves relative to the axes. Estimates suggest increasing taste for variety as food budgets increase. Therefore, such taste for variety apparently underlies in part the low income elasticities for calorie demand, which in turn cast doubt on the World Bank assertion that the nutrient intakes of poor populations will improve rapidly with income. Copyright 1989 by MIT Press.

An examination of the changing country pattern of dumping and subsidy complaints by U.S. companies over time suggests that exchange rate fluctuations are a significant factor in determining case filings, especially against Japanese companies. The inverse relationship observed between filings and the real external value of the U.S. dollar is consistent both with the traditional (or technical) interpretation of dumping and subsidy cases, and with the view that they are promoted by rent-seeking activities of lawyers and economists representing petitioners. While this result says nothing about the merits of any particular case, it cautions that the prevalence of "unfair trade" is not exogenous with respect to broader macroeconomic considerations. Copyright 1989 by MIT Press.

Nadeem U. Haque, Peter Montiel, Consumption in Developing Countries: Tests for Liquidity Constraints and Finite Horizons, The Review of Economics and Statistics, Vol. 71, No. 3 (Aug., 1989), pp. 408-415

A multinomial logit model of household location choice, in which families choose from a number of mutually exclusive residential location, is estimated. Regression results indicate that the locational choices of white and black households are importantly, but differently, affected by their socioeconomic characteristics; in that regard, black suburbanization patterns are little influenced by large simulated changes in household characteristics. Findings suggest that policies which focus on the educational and earnings opportunities of blacks would likely be largely ineffectual in fostering the integration of predominantly white suburban communities. Copyright 1989 by MIT Press.

The causes of the wide variation in growth rates between countries have been debated by theorists of economic growth. Different studies have shown these disparities between growth rates largely to have been caused by different rates of increase in productivity per unit of factor input. The observed comovement between productivity and export growth suggest a direct link between these two variables. The paper explores the causal relationship between productivity and exports based on Austrian data using time series analysis. The causality analysis indicates no causal link from exports to productivity while the null of no causality from productivity to exports has to be rejected at conventional levels. Copyright 1989 by MIT Press.

In recent years, nursing home care expenditures have approached one percent of GNP. Their growth is a major contributor to the escalating costs of health care. In this article, the authors analyze a sample of nursing homes from Wisconsin to determine the characteristics of the efficiently operated nursing homes. Data envelopment analysis is used to calculate efficiency scores for the various nursing homes in the sample. The authors then use regression analysis to investigate the determinants of efficiency, holding constant the characteristics of the output. They find that for-profit firms have significantly higher efficiency scores. Copyright 1989 by MIT Press.

The relative importance of amenity and productivity differences in explaining wage differentials across metropolitan areas is estimated by utilizing the land and labor market clearing conditions for locational equilibrium of household and firms. Estimates of equilibrium wages and rents, along with estimates of households' budget shares and national income to land and labor rations, are used to identify amenity and productivity components of wages for each metropolitan area in the sample. While both components are found to be important, the productivity component, on average, accounts for a larger share of the intermetropolitan wage differentials. Copyright 1989 by MIT Press.

Subal C. Kumbhakar, Basudeb Biswas, DeeVon Bailey, A Study of Economic Efficiency of Utah Dairy Farmers: A System Approach, The Review of Economics and Statistics, Vol. 71, No. 4 (Nov., 1989), pp. 595-604