Our press review features the latest publications by UNU-MERIT and its School of Governance. Output for October includes seven journal articles, six working papers, three discussion papers and three PhD dissertations: covering nanotech cancer therapy, firm investment behaviour, and young entrepreneurs in rural Africa, among many others.
‘Natural Resources and Violent Conflict’ discusses the rich and multifaceted literature, both theoretical and empirical, on the complex relations between natural resources and violent conflict. The article finds that the mechanisms linking resources to conflict are ill understood, particularly the conditions in which natural resource wealth heightens or lessens civil conflict and about the channels via which such processes happen. By Dr. Eleonora Nillesen et al.
‘Path-breaking Directions of Nanotechnology-based Chemotherapy and Molecular Cancer Therapy’ tackles a basic question in technological forecasting: how to detect likely fruitful technological trajectories in new research fields such as nanomedicine. The study maps new nanotechnology-based chemotherapy and molecular cancer therapy in new treatments for breast, lung, brain and colon cancers. These ground-breaking technological trajectories are paving new directions in biomedicine and generating a revolution in clinical practice that may lead to more effective anticancer treatments in the not-too-distant future. By Dr. Lili Wang et al.
‘Institutions, Foreign Direct Investment, and Domestic Investment: Crowding Out or Crowding In?‘ revisits the empirical relationship between FDI and domestic investment levels and shows that FDI inflows contribute positively to domestic investment levels. The article also finds weak evidence that “good governance”, proxied with the Worldwide Governance Indicators, encourages investment. Theoretical arguments support either positive or negative interaction effects of good governance and FDI on investment, invoking either technological spillovers or rent seeking behaviour. The article suggests that the negative rent seeking effect is dominant. By Dr. Kristine Farla, Prof. Bart Verspagen et al.
‘Learning by Exporting versus Self-Selection: New Evidence for 19 Sub-Saharan African Countries’ examines manufacturing and services firms across the African continent. By comparing several outlier-robust estimators, the study provides evidence for positive effects in the manufacturing sector when using the MM estimator, but not in the services sector. By Dr. Neil Foster-McGregor et al.
‘Industrial Policy for Growth’ presents an empirical investigation of the extent to which countries’ perceived industrial policy package is successful in stimulating economic growth. The analysis builds on a perception based database with 22 variables that describe industrial policy-related aspects. The data suggests that high income countries are perceived to implement relatively more pro-business and pro-market policies than middle income countries. On the basis of fixed effects analysis, the article concludes that the pro-business policy indicator is positively associated with economic growth in middle income countries but not in high income countries. The authors find no clear evidence of a relation between pro-market policy and economic development. By Dr. Kristine Farla.
‘The Antecedents of Creativity Revisited: A Process Perspective‘ considers employee creativity within organisations in terms of: (1) personality; (2) rewards; (3) the role of co-workers; (4) leadership; and (5) organisational resources. By analysing 22 case studies, the article finds that “antecedents of creativity” have various roles in different stages of the creative process, and that antecedents that are helpful in one stage of the creative process can be detrimental for another stage. These results highlight the importance of seeing creativity as a process, rather than an outcome. By Prof. Marjolein Caniëls et al.
‘Determinants of Firms’ Investment Behaviour: A Multilevel Approach’ investigates micro and macro determinants of firms’ investment behaviour using firm data from 101 developing and emerging economies. Although the study finds that both micro and macro determinants explain investment behaviour, firms’ investment behaviour is heterogeneous in nature and has little dependency on a country’s macroeconomic setting. The author also finds that, on average, firms which are completely foreign owned have a relatively lower investment to sales ratio. The study suggests that the probability of investing is higher for firms located in countries with more property rights protection and control of corruption. It also finds some evidence suggesting that foreign owned firms located in countries with “good” institutions invest relatively more. By Kristine Farla.
‘Means to Improve Access to Justice and Legally Empower Victims of Domestic Violence: An Empirical Legal Study on Legislation and Legal Offices in Buenos Aires, Argentina’ aims to understand how recent legal reforms and the creation of legal offices in Argentina may improve access to justice and legally empower victims of domestic violence. The working paper looks into the way the judicial system developed to provide suitable options for victims of domestic violence to gain access to justice and solve their conflicts. The paper takes a comprehensive approach and provides reflections on what aspects of the laws and institutions are actually being of benefit for victims of domestic violence. By PhD fellow Julieta Marotta.
‘The Role of Industry and Economic Context in Open Innovation: Evidence from Nigeria’ analyses service and manufacturing firms in one of Africa’s largest economies and looks at the relationship between external search strategies and firm-level innovative performance. Reconsidering the Laursen and Salter model in a developing context, the paper finds that a wider range of innovation obstacles implies broader external search and more intense obstacles require deeper search. The authors explore the implications of these results for management research and theory. By visiting researcher Abiodun Egbetokun et al.
‘Do Remittances and Social Assistance have Different Impacts on Expenditure Patterns of Recipient Households? The Moldovan Case’ investigates whether non-contributory social assistance provided by governments and remittances sent by family members and friends have the same impacts on household expenditure patterns (expenditure on food, clothes and utility bills). The paper shows that social assistance and remittances have different impacts on expenditure patterns. This research highlights that income source matters and that different incomes may have different poverty impacts. The paper concludes that the fact that the two transfers are spent in different ways means that, to some extent, social assistance and remittances are complements rather than substitutes. By PhD fellow Jennifer Waidler, Dr. Jessica Sabine Hagen-Zanker, Drs. Franziska Gassmann and Melissa Siegel.
‘The Deposit Financing Gap: Another Dutch Disease’ looks at the specific phenomenon observed in the Netherlands, the deposit financing gap, which forces the banking sector to finance its outstanding long‐term commitments, in particular mortgages, with short‐term funding or bonds, mainly taken from abroad. The paper argues that traditional macroeconomic models cannot analyse this phenomenon appropriately since they lack a proper model of the financial sector and underestimate the potential for interactions between the monetary and the real sphere. The authors present a stock‐flow consistent approach developed by Godley and Lavoie as a valuable alternative to traditional and new Keynesian macroeconomic models and use this approach to analyse the deposit financing gap for the Netherlands. By Dr. Huub Meijers, Prof. Joan Muysken et al.
‘Analysing Global Value Chains Using Input-output Economics: Proceed with Care’ argues that there are several problems related to the aggregated nature of the input-output table that may lead to large distortions and biases in the aggregate picture about global value chains that is obtained by input-output analysis. The paper identifies three main sources behind the distortion obtained in static decompositions of value chains. The authors provide an overview of how these distortions work, and argue that under a wide range of circumstances, input-output methods tend to overstate the contribution of the final sector to the value chain. They also show that this bias does not vanish when they compare input-output decompositions at two different points in time. By Dr. Önder Nomaler and Prof. Bart Verspagen.
‘Innovation and Productivity in Services: Empirical Evidence from Latin America’ analyses and compares the determinants of innovation in the service industry and its impact on labour productivity at the firm level in three Latin America countries (Chile, Colombia and Uruguay). The paper shows that, similar to what is observed in the manufacturing industry, service firms that invest the most in innovation activities are more likely to introduce changes or improvements in their production process and/or product mix, and those firms that innovate have higher labour productivity than non-innovative firms. Yet, large differences in statistical significance and size of the coefficients of explanatory variables among the countries studied suggest that the framework conditions where a firm operates have an important role in innovation decisions. By PhD fellows Fernando Vargas and Ezequiel Tacsir et al.
‘Young Entrepreneurs in Rural Africa: Prevalence, Determinants, Productivity’ aims to provide a better understanding of rural non-farm entrepreneurship, particularly with regard to the role of young adults in this sector. Using the World Bank’s recent LSMS-ISA database that covers six countries in Sub-Saharan African, the authors find that young adults present a lower share of enterprise owners and derive less income from it. The paper concludes that policies to support young entrepreneurs in rural Africa should not only focus on creating conditions that attract young adults to start enterprises, but also on enabling young entrepreneurs to improve productivity in already existing enterprises. If these enterprises grow and survive, they can provide a part of the growing number of nonfarm jobs that will be needed in Africa’s rural areas. By PhD fellow Paula Nagler and Prof. Wim Naudé.
‘Non-Farm Enterprises in Rural Africa: New Empirical Evidence’ looks at the little researched topic of non-farm enterprises in rural Sub-Saharan Africa and examines the motivation for households to operate enterprises, how productive they are, and why they exit the market. The paper finds that rural enterprises are ‘small businesses in a big continent’ where large distances, rural isolation, low population density, and farming risks limit productivity and growth. By PhD fellow Paula Nagler and Prof. Wim Naudé.
‘Labor Productivity in Rural African Enterprises: Empirical Evidence from the LSMS-ISA’ analyses the determinants of labor productivity in rural African enterprises and provides an exploratory overview of this sector using the World Bank’s recent LSMS-ISA data set . The paper looks at the productivity of non-farm enterprises in rural Sub-Saharan Africa and provides estimates of laboor productivity in enterprises for Ethiopia, Malawi, Nigeria, and Uganda. It finds that rural enterprises are on average less productive than those in urban areas, and that female-owned enterprises are less productive than male owned enterprises. The study shows that education and access to credit are associated with higher labour productivity, while households that experience shocks operate less productive enterprises. Furthermore it provides evidence that enterprises that operate throughout the year are more productive. The authors conclude that gender, education, shocks, access to finance, and location matter for labour productivity in rural Africa, and that policy decisions tackling the shortcomings could significantly contribute to a better business environment and increased labor productivity. By PhD fellow Paula Nagler and Prof. Wim Naudé.
‘Bureaucracies for Development: Oxymoron or Reality? Studies on State Capacity in Challenging Governance Contexts’ presents innovative empirical tools and evidence to capture how bureaucracies impact socio-economic outcomes, and the extent to which policy experts are victim of politicisation. Two main policy fields are covered: the Millennium Development Goals and the fight against corruption. The study also illustrates how certain governance arrangements such as the functioning of Congress or the party system can improve or hinder the quality of the civil service. By Dr. Luciana Cingolani.
‘Green Politics in Latin American Cities, Sustainable Transport’ examines the conditions that determine variations in urban transport sustainability outcomes in metropolitan areas of Latin America. Deviating from previous studies that have focused on analyzing urban sustainability technically, and at the local level, this study develops an empirical characterisation of transport sustainability for Latin American metropolitan areas, and maps the political determinants of urban sustainability. By Dr. Carlos Cadena Gaitán.
‘The Evolution of Knowledge Systems’ provides mathematical and statistical models to help understanding the dynamics and organisation of knowledge systems. Theoretically, it studies how innovation and knowledge diffusion can take place in a stable, self-sustaining way. It also examines data on real-world knowledge systems, such as citations among scientific articles or the classification of technologies, and finds that knowledge systems exhibit important structural transformations as they grow, questioning their viability. By affiliated researcher Dr. François Lafond.
Flickr / Sandia Lab; BDOInternational; VC4Africa