Public-Private Sector Partnerships in Developing Countries: Prospects and Drawbacks

Many developing countries are searching positive impacts on the efficiency, equity and quality provision of the public services through increasing competition and active participation of the private sector, considering public-private partnerships (PPPs) as the appropriate instrument to attain such endeavour. Accordingly, PPPs have been used for many and widespread purposes, ranging from the construction of physical infrastructure, to the provision of health and social services, to public administration. But, while the idea of a PPP in general is theoretically appealing, its practical implementation in developing countries is not so easy as theory suggests. Perhaps partly for that reason, a large number of implemented PPPs have left the contractual parties dissatisfied, which may indicate that, either developing country authorities, or investors (or both) may have had too high expectations to what could be attained. Though some contracts have been granted under circumstances that made them susceptible to changes in the political environment, the large majority of the others have also suffered from inflated or unrealistic expectations. So, the need for a legal and regulatory framework, which can guarantee a transparent and credible relationship between the different actors, is critical. Unfortunately many, if not all, regulators in developing countries lack one, or more, qualities required for an effective regulation.Contracting out, public services, market/government failure, infrastructures, public-private partnership

Externalities, clusters and economic growth: The Cluster Policy Paradox

The literature on clustering has highlighted several advantages of industrial agglomerations. Persons and firms benefit from the production and innovation activities of neighbouring companies in the same and related industries. Considering such benefits, which are viewed as positive externalities, Michael Porter argues that clustering is an important way for firms fulfilling their competitive advantages and for rising regional and national competitiveness. So, it is opportune to ask: what is the appropriate policy for maximizing the benefits of CE (cluster externalities)? There are basically two possible replies to the above question: on the one hand, the traditional optimal-policy perspective recommends providing a subsidy to firms generating CE, with the subsidy adjusted for equalizing the strength of the externality; on the other, a more pragmatic perspective based on Porter’s policy prescriptions. However, the evidence shows a paradox: policy makers use the competitiveness rhetoric inspired in the competitive advantages of Porter but, in practice, they go on using the industrial targeting that was also criticized by Porter. In this paper we deal with this paradox proving that despite the extensive amount of externalities is the traditional comparative advantage approach that must guide policy. This finding is congruent with the Porter’s policy prescriptions and has clear implications in regional policy allowing to support the answer to the following question: Must policy be focused on creation of new clusters in activities that have verified large positive effects elsewhere or, conversely, on developing the traditional activities in region, which allegedly have shown lower externalities? But the answer to this question depends on our comprehension of industrial aggregation processes, which implies the full understanding of concepts as clusters and externalities. So, the remainder of this paper is organized as follows. After reflecting on the concept of cluster in section 2, section 3 deals with the different type of externalities present in industrial agglomerations. Section 4 considers the existence of dynamic externalities and relates them with the advantages of backwardness. Section 5 uses a model that includes various types of externalities in order to draw lessons for guiding clustering policy. Finally, section 6 concludes.

FDI and Host Country Productivity: A Review

This paper reviews arguments and empirical findings on positive effects of FDI on host country firms. With the exception of the only unambiguous result of microeconometric studies, which is the superior productivity of foreign firms, the main conclusion extracted from empirical studies is the diversity of results. This diversity suggests that FDI will have different effects depending on the ‘technological congruence’ and ‘social capability’ of the host economy, as well as the familiarity of indigenous firms to products and technology of a given multinational corporation.Economic Growth, Foreign Direct Investment, Multinational Corporations, Spillovers, Technology Transfer

Foreign direct investment and total factor productivity in OECD countries: evidence from aggregate data

Foreign direct investment (FDI) can be a source not just of capital, but also of new technology and intangibles such as organizational and managerial skills, and marketing networks. In this study, a panel data approach is used to study the effects of FDI on aggregate Total Factor Productivity in a sample of 16 OECD countries. We have implemented a statistical descriptive model that allows us to show that FDI has a positive impact on TFP, possibly because FDI is a channel through which technologies are transferred internationally.Foreign direct investment, total factor productivity, royalties and license fees, spillovers

Reviewing PPP Performance in Developing Economies

The current wave of PPPs in developing economies was not determined by an endogenous process; on the contrary, it was due to a coincidence of interests between international organizations that shared the view of the Washington Consensus and a set of countries that have considered divestiture the best way to alleviate the public deficit constraints. After the euphoria of the middle 1990s, some disenchantment about the capacity of PPI policy to overcome the existent big gaps between high-income countries and developing economies appeared. Although a high interconnection between foreign companies and domestic firms has resulted from PPI policy, and this interrelationship has allowed an expansion and upgrading of some domestic firms in developing economies; these economies go on being characterized by a lack of institutional capacity, weak governance systems, and unclear or unsuitable rules and regulations, all of which increase transaction costs and risks, making PPI arrangements more ineffective in practice than in theory. In the meanwhile, poor people in poorer countries caught in poverty traps need to be served and the rationale underling the PPI approach cannot give a positive answer to these people. Here, the government and the ODA must play a more extensive role than they have played since the emergence of the PPP fashion.Developing economies, infrastructure, PPI, public-private partnership

A Neural Network Model of 3-D Lightness Perception

A neural network model of 3-D lightness perception is presented which builds upon the FACADE Theory Boundary Contour System/Feature Contour System of Grossberg and colleagues. Early ratio encoding by retinal ganglion neurons as well as psychophysical results on constancy across different backgrounds (background constancy) are used to provide functional constraints to the theory and suggest a contrast negation hypothesis which states that ratio measures between coplanar regions are given more weight in the determination of lightness of the respective regions. Simulations of the model address data on lightness perception, including the coplanar ratio hypothesis, the Benary cross and VVhite's illusion.Air Force Office of Scientific Research (F49620-92-J-0334); Office of Naval Research (N00014-91-J-4100); HNC SC-94-00

The Euro Area sovereign debt crisis: Some implications of its systemic dimension

After the beginning of the euro area, countries in its periphery engaged in weighty borrowing from foreign private investors, allowing domestic spending to outpace incomes. Now, these countries face debt crises reflecting a loss of creditor confidence in the sustainability of their finances from which results an abrupt end in private foreign lending to these economies. The debt crisis made evident the asymmetry between core and periphery countries, which is visible in trends in saving, consumption and investment. These divergent patterns have contributed to view the debt crisis as a problem of the PIIGS (Portugal, Ireland, Italy, Greece, Spain) that can be contained in the periphery, or as a new version of the fable of the Grasshopper and the Ant. We dispute this reductionism showing that the debt crisis is systemic and its solution cannot be found with more fiscal rules and austerity in peripheral countries alone. It will imply, if not an increase in fiscal and political integration, at least a higher coordination at the political and economic front and a new governance structure.Debt crisis; Euro Area; EFSF; ESM; Fiscal rules; PIIGS; Systemic crisis; Solvency

A Simple Cell Model with Multiple Spatial Frequency Selectivity and Linear/Non-Linear Response Properties

A model is described for cortical simple cells. Simple cells are selective for local contrast polarity, signaling light-dark and dark-light transitions. The proposed new architecture exhibits both linear and non-linear properties of simple cells. Linear responses are obtained by integration of the input stimulus within subfields of the cells, and by combinations of them. Non-linear behavior can be seen in the selectivity for certain features that can be characterized by the spatial arrangement of activations generated by initial on- and off-cells (center-surround). The new model also exhibits spatial frequency selectivity with the generation of multi-scale properties being based on a single-scale band-pass input that is generated by the initial (retinal) center-surround processing stage.German BMFT grant (413-5839-01 IN 101 C/1); CNPq and NUTES/UFRJ, Brazi

On the Omori-Yau Maximum Principle and Geometric Applications

We introduce a version of the Omori-Yau maximum principle which generalizes the version obtained by Pigola-Rigoli-Setti 21. We apply our method to derive a non-trivial generalization Jorge-Koutrofiotis Theorem 15 for cylindrically bounded submanifolds due to Alias-Bessa-Montenegro 2, we extend results due to Alias-Dajczer 5, Alias-Bessa-Dajczer 1 and Alias-Impera-Rigoli 6