Contents of issue 5-6/2013
Adam Glapiński - The Methodology of Evolutionary Economics, summary
Marek Lubiński - The Interbank Money Market and Contagion Risk, summary
Rafał Nagaj - The Regulatory Role of the Government on the Polish Market for Telecommunications Services and Electricity, summary
Daniel Wiśniewski - Temporary Brain Drain, Distance to the Frontier, and Welfare at Origin, summary
Konrad Kubacki - The Impact of Industry-Science Collaboration on the Innovative Performance of Companies Listed on the Warsaw Stock Exchange, summary
Artur Wyszyński - The Economic Aspects of Initial Public Offerings Involving Soccer Clubs, summary
Book Review: Joseph Stiglitz, The Price of Inequality
, W.W. Norton & Company, Inc., 2012, 414 pp. - reviewed by Adam Koronowski
Book Review: Ryszard Domański, Ewolucyjna gospodarka przestrzenna
(An Evolutionary Approach to Land Management), Wydawnictwo Uniwersytetu Ekonomicznego w Poznaniu, Poznań 2012, 308 pp. - reviewed by Kazimierz Kuciński
Book Review: Dorota Niedziółka (ed.), Zielona energia w Polsce
(Green Energy in Poland), Wydawnictwo CeDeWu.pl, Warsaw 2012, 350 pp. - reviewed by Stanisław KasiewiczCONFERENCES
Neoliberalism, Ordoliberalism, the Austrian School of Economics and the Capitalist Economic Order - Anna Chmielak
Adam Glapiński - The Methodology of Evolutionary Economics
The article aims to identify and analyze some basic methodological problems related to a rapidly developing approach to economics known as evolutionary economics. The author examines how this approach is likely to evolve in the future and what research potential it holds for modern economics.
According to the author, evolutionary economics is fraught with a number of methodological difficulties. He describes evolutionary economics as classically endogenous in nature.
Evolutionary economics seeks to explain processes related to the internal transformation of knowledge about decision-making, production methods, organizational forms of business, consumer behavior and business psychology. In the neoclassical approach, all these parameters are treated as constant, while in evolutionary economics they are subject to analysis, proceeding from the assumption that they change as a result of evolutionary processes, the author says.
The mechanism of this evolution is the main focus of evolutionary economics. Therefore, when analyzing economic systems, evolutionary economists focus their attention on changes and new elements, Glapiński says.
The main methodological difficulty related to defining the research focus of evolutionary economics is that this approach needs to be set apart from other scientific disciplines studying economic and evolutionary processes, such as sociology, social anthropology, economic history, institutional economics, social psychology, evolutionary psychology, behavioral biology, and evolutionary biology. Evolutionary economics is concerned with the dynamics of past and present processes as well as with the organization and functioning of economies, in particular the origin and functioning of the Western model of capitalism. Evolutionary economists seek to explain economic events by making references to past events and finding causal relationships applying to behaviors as well as the transformation of behaviors and institutions.
Evolutionary economists make assumptions about economic factors and actors, including those about irreversible and spontaneous changes in behavior. These assumptions mean that evolutionary economics has a purely empirical orientation, the author says, and, consequently, its main weakness is that it is difficult to derive simple mathematical models from these assumptions. This breeds a number of further methodological problems. One of them is that evolutionary economics has low capacity for formulating falsified hypotheses, which reduces its credibility and status, according to Glapiński – at least under the widely followed Popperian interpretation of the “scientificality” of theories (Austrian-born British philosopher and economist Karl Popper is known for his attempt to repudiate the classical observationalist/inductivist form of the scientific method in favor of empirical falsification).
Another reason for the criticism against evolutionary economics is that evolutionary theories are eclectic in nature, Glapiński says. This stems from the fact that economic evolution is related to evolutionary processes lying outside the economic system, which prompts attempts by economists to enter “neighboring” disciplines. Yet another weakness results from the basically empiricist and historicist nature of research in evolutionary economics, the author says, which often leads to a situation in which there is no clear distinction between economic theory and economic/business history. These methodological weaknesses and theoretical difficulties explain why a number of competitive theoretical syntheses have emerged over the last century, Glapiński says.
Over the past decade or so, evolutionary economics has departed from the kind of synthesis pursued by the precursors of evolutionism, according to the author. He concludes that evolutionary economics has good prospects for development resulting from the dynamic development of detailed studies of evolutionary processes in various areas of industry, services and consumption as well as from research into the development of export markets and consumer behavior.Keywords
: methodology, evolutionary economics, neo-Schumpeterian approach, ontology, heuristicsJEL classification codes
: B25, B41, B52Article
Marek Lubiński - The Interbank Money Market and Contagion Risk
The article analyzes the role of the interbank money market during financial crises. The research method used by the author includes a critical review of theoretical literature and empirical studies.
Recently various publications have suggested that the failure of some institutions may have been brought about by banks and their excessive reliance on wholesale funds, the author says. Well-functioning interbank markets effectively channel liquidity from institutions with a surplus of funds to those in need, allowing for more efficient financial intermediation. Financial institutions worldwide have increasingly relied on wholesale funding to supplement demand deposits as a source of funds, thus becoming vulnerable to a sudden dry-up of these sources of funds. The reliance of financial institutions worldwide on short-term wholesale funds is among the possible sources of financial linkages, in addition to common portfolio investors and herding. For many years, the unsecured interbank market has been considered the archetype of an efficient market. Nevertheless, during the latest financial crisis, many of the certainties concerning interbank markets suddenly disappeared.
The article reviews the most significant literature on some externalities and their effect on money market malfunctioning. One of the many striking features of the 2007-2009 crisis was a sudden freeze in the market for the rollover of short-term debt due to changes in investor behavior. The common aspects of investor behavior across crisis episodes indicate that they involved Knightian uncertainty (i.e., immeasurable risk) and not merely an increase in risk exposure, the author says. He adds that uncertainties in the financial system were transmitted to the real economy after the collapse of Lehman Brothers as expectations of future credit tightening, higher precautionary savings and the postponement of investment took a sudden and widespread toll on global demand.Keywords
: bank, money market, financial crisis, interbank loans, risk, uncertainty, contagionJEL classification codes
: D85, E44, G01, G21Article
Rafał Nagaj - The Regulatory Role of the Government on the Polish Market for Telecommunications Services and Electricity
The article examines the impact of government regulation on the prices and quality of services provided by companies in Poland’s telecommunications and electricity sectors from 2006 to 2011. The author also attempts to determine if the regulator’s practice of forcing companies in the studied sectors to be predominately based on cost-effectiveness in their operations does not lead to a decline in the quality of services provided. To achieve this objective, descriptive analysis and basic statistical methods, such as the index method, are used in the article.
The analysis showed that price regulation was chiefly based on the government establishing some basic principles for businesses to follow in their pricing policies as well as on approving tariffs and reducing the price expectations of companies, the author says. In the telecommunication services market, pricing policies were predominately focused on the wholesale market in order to reduce the so-called Reference Interconnect Offer (RIO) charges, while in the electricity sector pricing policies focused on network charges and end-user electricity prices (the goal being to reduce their growth).
The analysis found that in the case of the telecommunication services market, the regulator pursued a more effective price control policy, reflected by a decline in prices. By creating an increased competitive pressure on the wholesale and retail markets, along with regulatory activities in relation to the quality of services, the regulator brought about a situation in which falling prices were accompanied by improvements in quality standards. This applies to the level of quality indicators as well as an expanded and more flexible range of services provided.
The opposite effect was observed on the electricity market. Prices rose, although the regulator strongly reduced the price expectations of companies, and the introduction of incentive regulation negatively affected the quality of electricity supply in Poland, making it one of the worst in the European Union, according to Nagaj.
The research has shown that regulators should put more emphasis on the quality of services, the author says. In the case of the telecommunication services market, the tasks of institutions need to be clearly defined and a set of indicators should be adopted in order to adapt the quality and availability of services to market requirements. Meanwhile, in the electricity sector, the quality of services needs to be supervised on a permanent basis rather than subject to ad-hoc inspections, the author says.Keywords
: regulation, pricing policy, quality of services, telecommunications services, electricity sectorJEL classification codes
: L43, L50, L94, L96Article
Daniel Wiśniewski - Temporary Brain Drain, Distance to the Frontier, and Welfare at Origin
The article analyzes the possible impact of a brain drain on the economies of six selected European countries, suggesting that this impact may be positive in the long run due to a combination of factors including temporary migration, an educational effect and increased capability for technology adoption. According to the author, research shows that temporary migration is a widespread trend that involves a significant number of people, especially during an economic crisis. Recent empirical studies also confirm that temporary migration may have a positive effect on the economies of sending countries, improving their total factor productivity (TFP) and speeding up technology adoption, the author says. The article develops a simple two-period model analyzing the possible “brain gain” pattern resulting from return migration. The model is structured so as to show changes in the human capital of both sending and receiving countries in the short and long run. This mathematical structure is then simulated with the use of statistical data from various sources. Each studied country experiences an unexpected shock resulting in either an increase or a decrease of the brain drain, which is then fixed in the subsequent periods. The empirical results indicate that most developed countries are likely to benefit from a brain gain, whereas poorer states usually experience a brain drain in the long run, the author says. The opposite is true of welfare, he adds: the simulations indicate that poorer countries are likely to experience significant economic growth.Keywords
: brain drain, brain gain, return migration, human capital, technology diffusion, total factor productivity (TFP)JEL classification codes
: F22, O15, J61Article
Konrad Kubacki - The Impact of Industry-Science Collaboration on the Innovative Performance of Companies Listed on the Warsaw Stock Exchange
The article looks at the collaboration of companies with the science sector and its impact on the innovation performance of businesses. Variables include the proportion of revenue from the sale of innovative products in total sales, the implementation of product and process innovation, and the number of patent applications. The author examines how science-business collaboration is influenced by the size of companies, their internal research-and-development (R&D) activity, and the type of Warsaw Stock Exchange market they are listed on (main or alternative).
The data was collected through a questionnaire among companies listed on the Warsaw Stock Exchange –on both the main market and the NewConnect alternative market – using the Computer-Assisted Telephone Interviewing (CATI) method. Answers were collected from a total of 104 companies. The analysis was conducted using descriptive statistics, calculating the correlation among the variables, and estimating the parameters using the logit and Ordinary Least Squares (OLS) methods.
The results of the study show that collaboration with the science sector is positively correlated and has a significant impact on company innovation indicators, the author says. However, it has also been observed that the market on which a company is listed has no statistically significant impact on these results, Kubacki adds. For professionals holding top managerial positions as well as those involved in the development of innovation and business strategies in the corporate sector, this is an important signal that collaboration with the science sector can produce tangible benefits in the form of a higher level of innovation, the author concludes.Keywords
: esearch and development (R&D), industry-science collaboration, innovation, business performance, knowledge transferJEL classification codes
: 031, 032Article
Artur Wyszyński - The Economic Aspects of Initial Public Offerings Involving Soccer Clubs
The article discusses issues related to initial price offerings (IPO) involving sports clubs. The author examines the case of Poland’s Ruch Chorzów top-division soccer club, which entered the Warsaw Stock Exchange’s NewConnect alternative market Dec. 4, 2008.
Based on a review of available literature, Wyszyński looks at the potential advantages and disadvantages of an IPO for a sports club as well as the responsibilities involved. Additionally, the author analyzes the economic, financial and sports implications of Ruch Chorzów’s decision to be listed on the stock exchange in two periods: before the IPO (2005-2007) and after the IPO (2008-2010). The analysis shows that the main benefit of the IPO for the club was that it gained access to a new source of funds, the author says.
The IPO was preceded by a private placement of some of the company’s shares (G, H, I, J and K series) from 2008 to 2011. The IPO resulted in an increase in the share capital and improved the club’s financial condition as well as its sports performance. The increased share capital helped reduce financial risk and improve financial liquidity in comparison to other Ekstraklasa top-division clubs, according to Wyszyński. After the IPO, the club achieved its best sports results in the 2009/2010 and 2011/2012 campaigns, finishing 3rd and 2nd in the Ekstraklasa league respectively, the author says.Keywords
: capital market, soccer, initial public offering, professional sports market, sports clubJEL classification codes
: G10, G30Article