Thursday, February 6, 2014

Winter 2014 Journal of Economic Perspectives is Live!

The Winter 2014 issue of the Journal of Economic Perspectives is now freely available on-line, courtesy of the publisher, the American Economic Association. Indeed, not only this issue but all previous issues back to 1987 are available. (Full disclosure: I've been the Managing Editor since the journal started, so this issue is #107 for me.) I'll probably blog about some of these articles in the next week or two. But for now, I'll first list the table of contents, and then below will provide abstracts of articles and weblinks.

Symposium: Manufacturing
"US Manufacturing: Understanding Its Past and Its Potential Future," by Martin Neil Baily and Barry P. Bosworth
"Competing in Advanced Manufacturing: The Need for Improved Growth Models and Policies," by Gregory Tassey
"Management Practices, Relational Contracts, and the Decline of General Motors," by Susan Helper and Rebecca Henderson

Symposium: Agriculture
"Global Biofuels: Key to the Puzzle of Grain Market Behavior," by Brian Wright
"Agricultural Biotechnology: The Promise and Prospects of Genetically Modified Crops," by Geoffrey Barrows, Steven Sexton and David Zilberman
"Agriculture in the Global Economy," by Julian M. Alston and Philip G. Pardey
"American Farms Keep Growing: Size, Productivity, and Policy," by Daniel A. Sumner

"From Sick Man of Europe to Economic Superstar: Germany's Resurgent Economy," by Christian Dustmann, Bernd Fitzenberger, Uta Schönberg and Alexandra Spitz-Oener
"When Ideas Trump Interests: Preferences, Worldviews, and Policy Innovations," by Dani Rodrik
"An Economist's Guide to Visualizing Data," by Jonathan A. Schwabish

"Recommendations for Further Reading," by Timothy Taylor
"Correspondence: The One Percent,"  Robert Solow, N. Gregory Mankiw, Richard V. Burkhauser, and Jeff Larrimore


And here are the abstracts and links:

Symposium: Manufacturing

US Manufacturing: Understanding Its Past and Its Potential Future
Martin Neil Baily and Barry P. Bosworth
The development of the US manufacturing sector over the last half-century displays two striking and somewhat contradictory features: 1) the growth of real output in the US manufacturing sector, measured by real value added, has equaled or exceeded that of total GDP, keeping the manufacturing share of the economy constant in price-adjusted terms; and 2) there is a long-standing decline in the share of total employment attributable to manufacturing. The persistence of these trends seems inconsistent with stories of a recent or sudden crisis in the US manufacturing sector. After all, as recently as 2010, the United States had the world's largest manufacturing sector measured by its valued-added, and while it has now been surpassed by China, the United States remains a very large manufacturer. On the other hand, there are some potential causes for concern. First, though manufacturing's output share of GDP has remained stable over 50 years, and manufacturing retains a reputation as a sector of rapid productivity improvements, this is largely due to the spectacular performance of one subsector of manufacturing: computers and electronics. Second, recently there has been a large drop in the absolute level of manufacturing employment that many find alarming. Third, the US manufacturing sector runs an enormous trade deficit, equaling $460 billion in 2012, which is also very concentrated in trade with Asia. Finally, we consider the future evolution of the manufacturing sector and its importance for the US economy. Many of the largest US corporations continue to shift their production facilities overseas. It is important to understand why the United States is not perceived to be an attractive base for their production.
Full-Text Access | Supplementary Materials

Competing in Advanced Manufacturing: The Need for Improved Growth Models and Policies
Gregory Tassey
The United States has underinvested for several decades in a set of productivity-enhancing assets necessary for the long-term health of its manufacturing sector. Conventional characterizations of the process of bringing new advanced manufacturing products to market usually leave out two important elements: One is "proof-of-concept research" to establish broad "technology platforms" that can then be used as a basis for developing actual products. The second is a technical infrastructure of "infratechnologies" that include the analytical tools and standards needed for measuring and classifying the components of the new technology; metrics and methods for determining the adequacy of the multiple performance attributes of the technology; and the interfaces among hardware and software components that must work together for a complex product to perform as specified. If the public–private dynamics are not properly aligned to encourage proof-of-concept research and needed infratechnologies, then promising advances in basic science can easily fall into a "valley of death" and fail to evolve into modern advanced manufacturing technologies that are ready for the marketplace. Each major technology has a degree of uniqueness that demands government support sufficiently sophisticated to allow efficient adaptation to the needs of its particular industry, whether semiconductors, pharmaceuticals, computers, communications equipment, medical equipment, or some other technology-based industry.
Full-Text Access | Supplementary Materials

Management Practices, Relational Contracts, and the Decline of General Motors
Susan Helper and Rebecca Henderson
General Motors was once regarded as the best-managed and most successful firm in the world. However, between 1980 and 2009, GM's US market share fell from 46 to 20 percent, and in 2009 the firm went bankrupt. We argue that the conventional explanation for this decline—namely high legacy labor and healthcare costs—is seriously incomplete, and that GM's share collapsed for many of the same reasons that many highly successful American firms of the 1960s were forced from the market, including a failure to understand the nature of the competition they faced and an inability to respond effectively once they did. We focus particularly on the problems GM encountered in developing the relational contracts essential to modern design and manufacturing, and we discuss a number of possible causes for these difficulties. We suggest that GM's experience may have important implications for our understanding of the role of management in the modern, knowledge-based firm and for the potential revival of manufacturing in the United States.
Full-Text Access | Supplementary Materials

Symposium: Agriculture

Global Biofuels: Key to the Puzzle of Grain Market Behavior
Brian Wright
In the last half-decade, sharp jumps in the prices of wheat, rice, and corn, which furnish about two-thirds of the calorie requirements of mankind, have attracted worldwide attention. These price jumps in grains have also revealed the chaotic state of economic analysis of agricultural commodity markets. Economists and scientists have engaged in a blame game, apportioning percentages of responsibility for the price spikes to bewildering lists of factors, which include a surge in meat consumption, idiosyncratic regional droughts and fires, speculative bubbles, a new "financialization" of grain markets, the slowdown of global agricultural research spending, jumps in costs of energy, and more. Several observers have claimed to identify a "perfect storm" in the grain markets in 2007/2008, a confluence of some of the factors listed above. In fact, the price jumps since 2005 are best explained by the new policies causing a sustained surge in demand for biofuels. The rises in food prices since 2004 have generated huge wealth transfers to global landholders, agricultural input suppliers, and biofuels producers. The losers have been net consumers of food, including large numbers of the world's poorest peoples. The cause of this large global redistribution was no perfect storm. Far from being a natural catastrophe, it was the result of new policies to allow and require increased use of grain and oilseed for production of biofuels. Leading this trend were the wealthy countries, initially misinformed about the true global environmental and distributional implications.
Full-Text Access | Supplementary Materials

Agricultural Biotechnology: The Promise and Prospects of Genetically Modified Crops
Geoffrey Barrows, Steven Sexton and David Zilberman
For millennia, humans have modified plant genes in order to develop crops best suited for food, fiber, feed, and energy production. Conventional plant breeding remains inherently random and slow, constrained by the availability of desirable traits in closely related plant species. In contrast, agricultural biotechnology employs the modern tools of genetic engineering to reduce uncertainty and breeding time and to transfer traits from more distantly related plants. Critics express concerns that the technology imposes negative environmental effects and jeopardizes the health of those who consume the "frankenfoods." Supporters emphasize potential gains from boosting output and lowering food prices for consumers. They argue that such gains are achieved contemporaneous with the adoption of farming practices that lower agrochemical use and lessen soil. The extensive experience with agricultural biotechnology since 1996 provides ample evidence with which to test the claims of supporters and opponents and to evaluate the prospects of genetic crop engineering. In this paper, we begin with an overview of the adoption of the first generation of agricultural biotechnology crops. We then look at the evidence on the effects of these crops: on output and prices, on the environment, and on consumer health. Finally, we consider intellectual property issues surrounding this new technology.
Full-Text Access | Supplementary Materials

Agriculture in the Global Economy
Julian M. Alston and Philip G. Pardey
The past 50-100 years have witnessed dramatic changes in agricultural production and productivity, driven to a great extent by public and private investments in agricultural research, with profound implications especially for the world's poor. In this article, we first discuss how the high-income countries like the United States represent a declining share of global agricultural output while middle-income countries like China, India, Brazil, and Indonesia represent a rising share. We then look at the differing patterns of agricultural inputs across countries and the divergent productivity paths taken by their agricultural sectors. Next we examine productivity more closely and the evidence that the global rate of agricultural productivity growth is declining—with potentially serious prospects for the price and availability of food for the poorest people in the world. Finally we consider patterns of agricultural research and development efforts.
Full-Text Access | Supplementary Materials

American Farms Keep Growing: Size, Productivity, and Policy
Daniel A. Sumner
Commercial agriculture in the United States is comprised of several hundred thousand farms, and these farms continue to become larger and fewer. The size of commercial farms is sometimes best-measured by sales, in other cases by acreage, and in still other cases by quantity produced of specific commodities, but for many commodities, size has doubled and doubled again in a generation. This article summarizes the economics of commercial agriculture in the United States, focusing on growth in farm size and other changes in size distribution in recent decades. I also consider the relationships between farm size distributions and farm productivity growth and farm subsidy policy.
Full-Text Access | Supplementary Materials


From Sick Man of Europe to Economic Superstar: Germany's Resurgent Economy
Christian Dustmann, Bernd Fitzenberger, Uta Schönberg and Alexandra Spitz-Oener
In the late 1990s and into the early 2000s, Germany was often called "the sick man of Europe." Indeed, Germany's economic growth averaged only about 1.2 percent per year from 1998 to 2005, including a recession in 2003, and unemployment rates rose from 9.2 percent in 1998 to 11.1 percent in 2005. Today, after the Great Recession, Germany is described as an "economic superstar." In contrast to most of its European neighbors and the United States, Germany experienced almost no increase in unemployment during the Great Recession, despite a sharp decline in GDP in 2008 and 2009. Germany's exports reached an all-time record of $1.738 trillion in 2011, which is roughly equal to half of Germany's GDP, or 7.7 percent of world exports. Even the euro crisis seems not to have been able to stop Germany's strengthening economy and employment. How did Germany, with the fourth-largest GDP in the world transform itself from "the sick man of Europe" to an "economic superstar" in less than a decade? We present evidence that the specific governance structure of the German labor market institutions allowed them to react flexibly in a time of extraordinary economic circumstances, and that this distinctive characteristic of its labor market institutions has been the main reason for Germany's economic success over the last decade.
Full-Text Access | Supplementary Materials

When Ideas Trump Interests: Preferences, Worldviews, and Policy Innovations
Dani Rodrik
Ideas are strangely absent from modern models of political economy. In most prevailing theories of policy choice, the dominant role is instead played by "vested interests"—elites, lobbies, and rent-seeking groups which get their way at the expense of the general public. Any model of political economy in which organized interests do not figure prominently is likely to remain vacuous and incomplete. But it does not follow from this that interests are the ultimate determinant of political outcomes. Here I will challenge the notion that there is a well-defined mapping from "interests" to outcomes. This mapping depends on many unstated assumptions about the ideas that political agents have about: 1) what they are maximizing, 2) how the world works, and 3) the set of tools they have at their disposal to further their interests. Importantly, these ideas are subject to both manipulation and innovation, making them part of the political game. There is, in fact, a direct parallel, as I will show, between inventive activity in technology, which economists now routinely make endogenous in their models, and investment in persuasion and policy innovation in the political arena. I focus specifically on models professing to explain economic inefficiency and argue that outcomes in such models are determined as much by the ideas that elites are presumed to have on feasible strategies as by vested interests themselves. A corollary is that new ideas about policy—or policy entrepreneurship—can exert an independent effect on equilibrium outcomes even in the absence of changes in the configuration of political power. I conclude by discussing the sources of new ideas.
Full-Text Access | Supplementary Materials

An Economist's Guide to Visualizing Data
Jonathan A. Schwabish
Once upon a time, a picture was worth a thousand words. But with online news, blogs, and social media, a good picture can now be worth so much more. Economists who want to disseminate their research, both inside and outside the seminar room, should invest some time in thinking about how to construct compelling and effective graphics.
Full-Text Access | Supplementary Materials


Recommendations for Further Reading
Timothy Taylor
Full-Text Access | Supplementary Materials

Correspondence: The One Percent
Robert Solow, N. Gregory Mankiw, Richard V. Burkhauser, and Jeff Larrimore
Full-Text Access | Supplementary Materials