Asymmetric Technology Diffusion, Nominal Wage Rigidity, and the “New Normal” in China
Issue:
Volume 5, Issue 3, June 2016
Pages:
27-45
Received:
14 May 2016
Accepted:
30 May 2016
Published:
23 June 2016
Abstract: This paper is based on a growth model that is consistent with salient features of the recent “New Normal” growth experience in China: slowdown of growth rate, low level of inflation and unemployment, decreasing returns on capital investment, extensive reallocation among agriculture, manufacturing and modern service sectors, rising share of consumption, improvement of wealth distribution, and reduced foreign surplus. The building blocks of the theory are asymmetric technology diffusions from FDI firms among various sectors and nominal wage rigidity in the labor market. Due to the asymmetric technology diffusion among different sectors, manufacturing firms enjoy a more rapid productivity progress via the process of learning by doing in a processing on order economy. Thus manufacturing sectors serve as the engine in the past years’ economic growth in China. Through the competition in labor market, trends of wage equalization drive the migration of residents from agriculture to manufacturing and modern service sectors. Moreover, with a larger share of processing on order firms, China tends to further enlarge her foreign surplus in a faster pace. However, the result of this paper shows that since the exchange rate reform on July 21st 2005, RMB has appreciated accumulatively by 35%, combined with the wage rigidity in labor market, FDI firms in manufacturing sectors face an increasing level of cost in terms of increasing wage expenditure. Incumbent low profitable firms exit and potential entrants with new technology no more settle down. Thus, rapid productivity progress ceases in manufacturing sector. Not only the growth rate slows down, but also large number of unemployed population reallocates back to modern service and agriculture sectors. Dwindling share of manufacturing sectors reduced the foreign surplus by the drops of processing on order infra-firm trade of FDI firms.
Abstract: This paper is based on a growth model that is consistent with salient features of the recent “New Normal” growth experience in China: slowdown of growth rate, low level of inflation and unemployment, decreasing returns on capital investment, extensive reallocation among agriculture, manufacturing and modern service sectors, rising share of consumpt...
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Economic Valuation of Improved Irrigation Water in Bahir Dar Zuria Woreda, Ethiopia
Issue:
Volume 5, Issue 3, June 2016
Pages:
46-55
Received:
19 April 2016
Accepted:
29 April 2016
Published:
29 June 2016
Abstract: This study attempts to determine the economic value of improved irrigation water by eliciting farmers’ willingness to pay (WTP) using contingent valuation method in Bahir Dar Zuria Woreda, Ethiopia. Single bounded and double bounded dichotomous choices with a follow up open ended questions were employed. Primary data obtained from 197 randomly sampled household heads was analyzed using both descriptive statistics and Econometric models. The descriptive analysis indicates that the mean annual income of the irrigators is twice more than that of non-irrigators. In this study, Probit and Bivariate Probit models were used to measure WTP and to determine the factors that influence the variation in WTP. To identify the basic determinants of maximum WTP, the author also used Tobit model. The mean willingness to pay for the provision of improved irrigation water is found to be birr 674.5 and 579 per year/0.25 ha from the double bounded dichotomous choice and open-ended questions, respectively. Consequently, the aggregate willingness to pay for improved irrigation water supply using the double bounded dichotomous choice and open ended questions is estimated about birr 15,703,709 and 13,480,278 per year, respectively. Among the surveyed households, 99 percent have shown their willingness to pay if there is an improvement in existing irrigation water supply. Thus, the result of this study suggests that it may be a good indicator for investment to expand the current irrigation projects and introducing irrigation water pricing.
Abstract: This study attempts to determine the economic value of improved irrigation water by eliciting farmers’ willingness to pay (WTP) using contingent valuation method in Bahir Dar Zuria Woreda, Ethiopia. Single bounded and double bounded dichotomous choices with a follow up open ended questions were employed. Primary data obtained from 197 randomly samp...
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