Search Results (4)

Given their increasing engagement with the global economy, emerging countries such as Peru depend on their export sector. This research evaluates the level of efficiency of Peruvian exports (EF) and the impact of four regional trade agreements (RTAs) (MERCOSUR, the EU, the European Free Trade Association (EFTA), and the Andean Community of Nations (CAN)), twelve bilateral agreements (BAs), the World Trade Organization (WTO), institutional distance (ID), cultural distance (CD), foreign direct investment (FDI), trade freedom (TF), and traditional (TX) and nontraditional exports (NTX) by sector on the export efficiency of Peru. This non-experimental study used a dataset of 38 countries from 1995 to 2019. An extended stochastic frontier gravity (SFGM) ten-variable model with the one-step estimation method was applied to estimate export efficiency. Poisson’s PML estimator was used to investigate the factors that impact export efficiency (EF). The results showed that the export efficiency of Peru was moderate, ranging between 0.462 and 0.458, with a stationary trend, indicating considerable export potential between Peru and its trading partners. The major contributors to this efficiency are ID (voice and accountability, corruption control, nonadherence to the rule of law), NTX (chemicals and metal mechanics), and BA with American countries. On the other hand, CD (indulgence, long-term orientation, individualism, uncertainty, and lack of a culture of achievement), TF, agreements with MERCOSUR and the EU, FDI, and TX weakened the efficiency of exports. Finally, CAN, EFTA, BA with Asian countries, FDI, TX, and WTO did not have a significant effect on the EF. Recommendations to policy makers are presented. Full article

Electricity sector reforms have transformed the structure and organization of the sector worldwide. While outcomes of reforms in developed and developing countries have been extensively examined, there is limited analysis of the reforms in sub-Saharan Africa (SSA). This paper analyses the performance of electricity sector reforms in 37 SSA countries between 2000 and 2017. We use a stochastic frontier analysis approach to estimate a multi-input multi-output distance function to assess the impact of reform steps and institutional features on indicators of investment and technical efficiency. Results indicate a positive correlation between reforms and installed generation capacity per capita, plant load factor, and technical network losses. The presence of an electricity law, sector regulator, vertical unbundling, and private participation in the management of assets were positively correlated with reform performance. Perceptions of non-violent institutional features such as corruption, regulatory quality and governance effectiveness do not seem to have had a significant effect, but perceptions of political stability, violence, and terrorism influenced reform outcomes. We conclude that a workable reform in SSA involves vertical unbundling with an electricity law, a regulator, and private ownership and management of assets where feasible. However, positive outcomes go hand in hand with higher technical network energy losses which indicates higher investment in the generation segment than in the network segment. Hence, emphasis should be placed on decoupling the energy losses from power generation. Full article

Games of inspection and corruption are well developed in the game-theoretic literature. However, there are only a few publications that approach these problems from the evolutionary point of view. In previous papers of this author, a generalization of the replicator dynamics of the evolutionary game theory was suggested for inspection modeling, namely the pressure and resistance framework, where a large pool of small players plays against a distinguished major player and evolves according to certain myopic rules. In this paper, we develop this approach further in a setting of the two-level hierarchy, where a local inspector can be corrupted and is further controlled by the higher authority (thus combining the modeling of inspection and corruption in a unifying setting). Mathematical novelty arising in this investigation involves the analysis of the generalized replicator dynamics (or kinetic equation) with switching, which occurs on the “efficient frontier of corruption”. We try to avoid parameters that are difficult to observe or measure, leading to some clear practical consequences. We prove a result that can be called the “principle of quadratic fines”: We show that if the fine for violations (both for criminal businesses and corrupted inspectors) is proportional to the level of violations, the stable rest points of the dynamics support the maximal possible level of both corruption and violation. The situation changes if a convex fine is introduced. In particular, starting from the quadratic growth of the fine function, one can effectively control the level of violations. Concrete settings that we have in mind are illegal logging, the sales of products with substandard quality, and tax evasion. Full article

This paper explores the link between voters’ information, corruption, and efficiency in the context of a career concern model, where politically connected local monopolies are in charge of the provision of a local public service. We find that both a corrupt environment and a low level of voters’ information on managerial actions induce managers to reduce effort levels, thereby contributing to drive down efficiency. We test our predictions using data on solid waste management services provided by a large sample of Italian municipalities. We estimate a stochastic cost frontier model that provides robust evidence that services produced in more corrupted regions with low voters’ information are substantially less cost-efficient. Full article