Larry Willmore

The comparative performance of foreign and domestic firms in Brazil

Abstract This paper analyzes data for 282 pairs of foreign-owned and private Brazilian firms which are matched by sales and by four-digit manufacturing industry. Differences between the two types of firms are surprisingly large and highly significant. Compared to their local counterparts, foreign firms operate fewer plants, have higher ratios of value-added to output, higher levels of advertising and royalty payments, greater exports, higher labor productivity, higher wages and greater capital intensity.

Direct foreign investment in Central American manufacturing

Abstract Transnational enterprises control approximately 30% of the manufacturing output of the Central American Common Market (CACM). This paper examines the phenomenon at the level of the individual firm. A positive relationship is found between the degree of foreign control of leading firms and the degree of seller concentration in local industries. Few significant differences are found between foreign-controlled firms and their domestic counterparts when size and product mix are held constant. Foreign-controlled firms do, however, export more to CACM countries, employ more administrative personnel at higher salaries, and use less capital per unit of output.

Universal age pensions in developing countries: The example of Mauritius

Mauritius, a small developing country located in the Indian Ocean east of Madagascar, has provided older residents with non-contributory age pensions since 1950. The scheme became universal in 1958. Mild income tests were reintroduced in 1965 and again in 2004. Targeting proved to be unpopular, and universality each time was restored. Government added a mandatory, contributory tier in 1978 that does not replace the flat, non-contributory pension. Instead, it promises participants (approximately half the labour force) an income-related benefit to top up the universal pension. The author examines Mauritiuss long experience, drawing lessons from it for other developing countries.

Determinants of industrial structure: A Brazilian case study

Abstract Concentration ratios for 119 Brazilian industries are expressed as a combination of scale effects, the size of the suboptimal sector, and the rate of entry of new firms into the industry. Variables found to be significant determinants of suboptimal capacity and entry, hence of industrial concentration, include foreign ownership, state ownership, exports, tariff protection, minimum efficient scale, capital intensity, advertising, and geographic concentration.

Three Pillars of Pensions? A Proposal to End Mandatory Contributions

The three pillars of a pension system are defined in varied ways. The author focuses on a definition provided by the World Bank in its 1994 Report. He argues that with a universal Pillar 1 (a flat, subsistence pension) there is no need for Pillar 2 (earnings-related pensions). Pillar 3 (voluntary retirement savings) should not receive tax subsidies, which are regressive and in any case have not been shown to have any significant effect on private saving. Such a pension scheme may appear utopian, but it is in effect in New Zealand.

Export Processing in the Caribbean: Lessons from Four Case Studies

The author reviews case studies of four Caribbean countries-the Dominican Republic, Jamaica, Saint Lucia and Trinidad-and briefly discusses an African country, Mauritius. He compares labour legislation, nationality of investors, technology transfer, and linkages with the rest of the economy. Of these five cases, only Trinidad failed to develop a significant export processing sector. Explanations rooted in government policy are suggested for this result.

Basic education as a human right redux

The Universal Declaration of Human Rights promises free elementary education and free choice of schools to children and their parents. International fora emphasise the first right while neglecting the second. This essay examines arguments for limiting school choice and finds each of them to be unconvincing. It then describes three school systems: India, with free choice, but only for those who can afford to pay; Sweden, with taxpayer-funded free choice for everyone; and Finland, which allows parents almost no choice at all in basic education.

Social Security and the Provision of Retirement Income

Social security is increasingly debated in terms of alleged effects of public pensions on economic efficiency. The author reviews the history and rationale for public provision of retirement income, then argues that the efficiency effects of such schemes are negligible. Social security reform in itself is not likely to generate increased savings or growth; it is essentially a zero sum game in which some participants gain at the expense of others. Arguments for reform of social security masquerade as economics, while in reality they are political arguments for changing the distribution of costs and benefits.

Public Sector Performance, Prestige and Promotion

Using cross-country data for 51 countries, including 23 in Africa, the author controls for differences in per capita income and measures the effect of structural variables on a number of outcomes, including the quality, integrity and prestige of public service. He finds merit-based recruitment and promotion to have a positive, independent effect on the quality and the integrity, but not the prestige, of public sector bureaucracies. Better remuneration of high officials increases the quality, integrity and - for non-African countries - the prestige of public sector employment. New Public Management, measured indirectly as the extent to which high officials intersperse private and public sector careers, has no apparent effect on quality or integrity, but it is associated with low prestige of public service, making it difficult to recruit and retain talented professionals. This was prepared as a background paper for the World Public Sector Report 2005 (United Nations, New York, Sales No. E.05.II.H.5).

Health, Hopelessness, and Social Norms

Following the break up of the Soviet Union, Russia experienced a rise in mortality unprecedented in the peacetime history of industrial nations. In just three years, from 1991 to 1994, life expectancy at birth fell six years for males (to 57.6) and three years for females (to 71.2). An important part of the ill health and high mortality of the Russian people can be attributed to feelings of hopelessness during the transition to a market economy, but an even larger part is a result of social norms that result in high consumption of alcohol and cigarettes, diets high in fat and low in fruits and vegetables, and lack of exercise.