Journal articles on the topic 'Capital investments Australia Econometric models'

Abstract:In the past decade, Australia has begun to privatize its irrigation system. Two general models have emerged: a single and a dual ownership structure. This paper examines the trade-offs, costs and benefits, and the attendant efficiencies regarding costs of ownership. In particular, we examine member capital investment incentives and resultant risk-bearing costs related to capital formation. The paper concludes that the dual ownership structure system has significant economic advantages relative to its single-structured counterpart.

The purpose of the article is to theoretically substantiate the leading role of investment in economic growth and development and to confirm the relationship between investment and economic growth on the example of empirical analysis of the agricultural sector of Ukraine’s economy. Research methods. Methods: dialectical method of scientific knowledge, analysis and synthesis, systemic generalization (study of the evolution of theories of economic growth; determining the list of factors for the analysis of economic growth, drawing conclusions), correlation and regression analysis (quantitative measurement of capital investment). in the agricultural sector on the gross value added of the agricultural sector, household income on the volume of investments in the agricultural sector and the rating of investment attractiveness of Ukraine on the gross value added of the agricultural sector). Research results. The leading role of investments in economic growth have been theoretically substantiated. The main factors of economic growth of agrarian economy has been established. A regression models have been built for dependence of gross value added of the agricultural sector on the volume of capital investments; of volume of capital investments in the agricultural sector from household incomes and of gross value added of the agricultural sector from the rating of investment attractiveness of Ukraine (Ease of Doing Business). Scientific novelty. Based on the establishment of the main factors of growth of the agricultural economy, econometric models has been built, which are based on linear regression and allow to determine the degree of dependence between gross value added of the agricultural sector and the volume of capital investment; between volume of capital investments in the agricultural sector and a household incomes, and between gross value added of the agricultural sector and the rating of investment attractiveness of Ukraine (Ease of Doing Business). Practical significance. Conclusions, proposals and practical recommendations can be used in the development of state programs for the development of the agricultural sector of Ukraine's economy. Tabl.: 1. Figs.: 3. Refs.: 20.

Through econometric models construction the author evaluates the effects of capital-labor ratio and human capital, where the latter is characterized by the employees’ educational level, on profits of enterprises and organizations, operating in Russia. In 2009 the capital-labor ratio and the human capital, as estimated by the employees’ educational level, could be considered responsible for no less, than 39% of profitability of enterprises and organizations. For the most part this effect is due to the capital-labor ratio, while the lesser, though essential part of the said effect is due to the employees human capital. It is shown, that the elasticity of profit in terms of employees human capital exceeds manifold the profit elasticity in terms of capital-labor ratio, meaning that the effect of changes in human capital level on the labor productivity exceeds manifold that of changes in capital-labor ratio. Therefore, to enhance the human capital through better education of employees is more beneficial, than to increase investments in basic capital assets.

Alternative lending is one of the largest segments of the financial technology market in the world which is represented by online platforms specializing in organizing the lending process. The purpose of the article is to assess the impact of key factors on the dynamics of venture capital investments in alternative lending platforms. The objectives of this study are to define the concept of alternative lending, build an econometric model to analyze the factors of development of alternative lending in the world, and interpret the results from the point of view of the prospects for the development of alternative lending. Alternative lending has been defined as a segment of the fintech market that can be characterized as parallel financing of economic activities based on digital platforms through the provision of syndicated loans after decentralized business models. To test the hypotheses of the study, an econometric model was built on the analysis of 5,234 investment transactions completed in the period from 2013 to 2019 in 35 countries of the world and included in the CrunchBase database. According to the model, such factors as the availability of venture capital, the number of workforce, the digital competitiveness of the economy (the factor of future readiness), and the availability of credit information have a significant impact on the dynamics of direct and venture capital investments in alternative lending companies. The obtained results can be considered when improving the national strategy for regulating the alternative lending market, which is especially important for Russia, where the segment of alternative lending is at the stage of stagnation.

One of the factors that determine the productivity of labor in modern Russia is employment in the private sector. Employment in the private sector significantly reduces the productivity and efficiency of the economy. This is confirmed by econometric models developed on the basis of the regional statistics for 2001–2011. The negative impact of employment in the private sector proves that the institution of private property is inadequate in this country. The greater the negative effect of the ownership factor, the lower the capital/ labor rate in the region. As a result an institutional trap has emerged. On the one hand, to reduce the negative impact of institution of property imperfectness it is necessary to raise the capital/labor ratio. On the other hand, investments, needed to raise the capital/labor ratio, are inefficient due to that same negative effect of institution of property imperfectness on the productivity of labor. As the econometric analysis reveals, an essential factor which has heavily (up to 70%) contributed to current imperfectness and inefficiency of the private property institution is the federal policy embodied in a set of Federal laws enacted in 2005–2011.

Abstract Migration has become a topic of great interest of the 21st century, as it triggers multiple advantages and downsides, both for the people and communities implicated, depending on the policies in place. International migration should not be perceived as an issue that needs to be solved, but rather a global phenomenon that can reduce poverty and foster inclusive growth and sustainable development, both in origin and destination countries. The most highly-skilled immigrants represent a key factor in enhancing innovation and technological change processes, which are essential aspects of social and economic development. The purpose of the study is to analyse the impact of highly educated immigrants (with tertiary-educated immigrant employees and foreign PhD students) together with R&D investments on innovative activity (proxied by the number of patents applications), in the case of the ten countries which joined the EU in 2004. The evaluated time frame is from 2011 to 2017. For the econometric analysis of the panel data, we developed fixed-effects linear regression models, at the country-level. The indicators computed are relevant to the innovative activity. The econometric estimations highlight a positive correlation between educated migrants and the number of patent applications in all ten countries. This nexus is even strengthened when we take into consideration other relevant impact factors, such as investments in R&D and human capital. Therefore, the more efforts and investments are devoted to R&D and highly educated individuals, the more predictable the innovation is.

Introduction. The role of the importance of higher education in the formation of human capital as a strategic resource of social progress and sustainable development of the country determines the relevance of studies that allow assessing the interdetermination of education and economic growth. The purpose of the article is to identify approaches to assessing the effectiveness of investments in higher education and modeling their impact on the economic growth of post-Soviet countries. Materials and methods. The methodological basis of the study is testing the author's hypothesis and econometric modeling of the influence of macroeconomic indicators characterizing the state of the higher education system on the resulting indicator of gross domestic product per capita as an indicator of economic growth according to data from 15 post-Soviet countries. Methods of economic analysis, statistical and econometric methods were used. For empirical analysis, we used statistical data from the Federal State Statistics Service of the Russian Federation, the World Bank, and the United Nations. Results. The research hypothesis about the positive impact of spending on higher education on the economic growth of the post-Soviet countries has been confirmed. The greatest response to GDP per capita is observed from the indicators "Spending on research and development" and "Admission of high school graduates to higher education". Prediction of the obtained models shows the possibility of a significant increase in GDP per capita with an increase in spending on higher education with a corresponding congruent development of the institutional environment of the post-Soviet countries. Taking into account the identified factors makes it possible to determine priorities for a balanced education and innovation policy in the post-Soviet countries. Conclusions. Empirically substantiated the need to increase investment in the higher education sector to accelerate economic growth and level economic inequality, which must be taken into account when implementing policies in the context of structural reforms in higher education in post-Soviet countries and determining the amount of investment in higher education.

Purpose The purpose of this paper is to validate and uncover the key determinants revolving around the Australian residential market downturn towards the 2020s. Design/methodology/approach Applying well-established time series econometric methods over a decade of data set provided by Australian Bureau of Statistics, Reserve Bank of Australia and Real Capital Analytics, the significant and emerging drivers impacting the Australian residential property market performance are explored. Findings Besides changes in the significant levels of some key traditional market drivers, housing market capital liquidity and cross-border investment fund were found to significantly impact the Australian residential property market between 2017 and 2019. The presence of some major positive economic conditions such as low interest rate, sustainable employment and population growth was perceived inadequate to uplift the Australian residential property market. The Australian housing market has performed negatively during this period mainly due to diminishing capital liquidity, excess housing supplies and retreating foreign investors. Practical implications A better understanding of the leading and emerging determinants of the residential property market will assist the policy makers to make sound decisions and effective policy changes based on the latest development in the Australian housing market. The results also provide a meaningful path for future property investments and investigations that explore country-specific effects through a comparative analysis. Originality/value The housing market determinants examined in this study revolve around the wider economic conditions in Australia that are not new. However, the coalesce analysis on the statistical results and the current housing market trends revealed some distinguishing characteristics and developments towards the 2020s Australian residential property market downturn.

Previous studies have sought to develop econometric models of water supply systems, which can be used to predict future water supply costs; none, however, have investigated the influence of climatic factors. In this paper, climatic and other regional influences on the costs of water supply in the USA are explored using multivariate analysis of water supply costs from water supply utilities located throughout the USA. Results showed that over 90% of the variation in present water supply capital and operating costs for surface and ground water systems can be explained by variations in quantity of water delivered, with other variables, particularly regional climate, playing a negligible role. An analysis of the historic development of water supply in the USA showed that capital expenses for water supply systems are a relatively small component of the present total annual costs because: (1) the original capital expenditures were reduced for utilities due to large public subsidization; (2) repayment of capital expenditures is now complete owing to the long time period since the original investments; and (3) new policies encourage demand management instead of supply expansion. Therefore, the present costs of water supply are not related to climate and thus are not a useful guide to future costs in studies that evaluate climate change impacts.

The sports sector makes a significant multilateral contribution to the development of economic systems. This study examines the scale and structure of the impact of the sports sector on the economy. Direct and indirect effects of such an impact are highlighted. The significance of the indirect socio-economic effects of major sporting events is illustrated by the example of the 2013 Universiade project in Kazan. On the basis of empirical data, the growth of sports activity of the population of the Republic of Tatarstan during the Universiade is shown. Using previously obtained econometric models on the indirect effects of the growth of the sports activity of the population, the indirect socio-economic effects of the Universiade were estimated: the infrastructural effect, a decrease in health care costs, an increase in labor productivity, additional income from tourism, and the creation of additional social capital. An extended model for assessing the payback of large sporting events, including investments in the infrastructure capital of the region and a number of intangible assets, is proposed and tested.

Despite the longevity, scale and importance of northern Australia’s beef industry, recent disruptions to external markets have demonstrated a degree of vulnerability to shocks in the supply chain. Matching the industry’s long-evident resilience to climatic variability with resilience to changes in markets and supply chains requires careful planning. One component of this is how investments in infrastructure will need to be planned to facilitate adaptive responses to market changes. This paper provides an outline of a modelling framework that links strategic and operational dynamic models of logistics along the supply chain from the property to the abattoir or port. A novelty of the methodology is that it takes into account the high granularity of individual livestock transport vehicle movements and the ability to scale up to an almost complete view of logistics costs across the entire beef industry of northern Australia. The paper illustrates how the methodology could be used to examine the effects of changes in logistics infrastructure on efficiency and costs using examples from the states of Northern Territory, Western Australia and Queensland.

Growth rates are one of the leading performance indicators of countries in global competition. Generally, growth leads to an increase in employment rates. Technological investments have a larger share in growth in developed countries. In developing countries the share of infrastructure investments in growth is higher. Infrastructure investments, while stimulating the economy during the investment period, make a very limited contribution to the economy in the period after the investment is over. Industrial investments, on the other hand, contribute to continuous economic growth as they will sell products to the domestic and foreign markets, especially after the investment period. While growth rates follow a more stable course in economically developed countries, they follow a more volatile course in developing countries. If we examine this situation, the economic, social, political, democratic, legal, etc. of the developed countries. They have sufficient progress in these areas and appear as a safe haven in the global capital markets. With this study, the effects of R&D expenditures, number of researchers, scientific publications and obtained patents on national income between 2001 and 2016 in Turkey were investigated. As a method, ARDL and Granger Causality analysis were used by producing different econometric models. According to the results of the causality analysis, it has been determined that there is a one-way causality from economic growth to patent. When the ARDL analysis was examined, it was revealed that there was a positive and 2.5% relationship between R&D and economic growth. In long-term analyzes, however, significant results could not be obtained between R&D and growth.

Purpose – Understanding and simulating construction activities is a vital issue from a macro-perspective, since construction is an important contributor in economic development. Although the construction labor productivity frontier has attracted much research effort, the temporal and regional characteristics have not yet been explored. The purpose of this paper is to investigate the long-run equilibrium and dynamics within construction development under a conditional frontier context. Design/methodology/approach – Analogous to the simplified production function, this research adopts the conditional frontier theory to investigate the convergence of construction labor productivity across regions and over time. Error correction models are implemented to identify the long-run equilibrium and dynamics of construction labor productivity against three types of convergence hypotheses, while a panel regression method is used to capture the regional heterogeneity. The developed models are applied to investigate and simulate the construction labor productivity in the Australian states and territories. Findings – The results suggest that construction labor productivity in Australia should converge to stable frontiers in a long-run perspective. The dynamics of the productivity are mainly caused by the technology utilization efficiency levels of the local construction industry, while the influences of changes in technology level and capital depending appear limited. Five regional clusters of the Australian construction labor productivity are suggested by the simulation results, including New South Wales; Australian Capital Territory; Northern Territory, Queensland, and Western Australia; South Australia; and Tasmania and Victoria. Originality/value – Three types of frontier of construction labor productivity is proposed. An econometric approach is developed to identify the convergence frontier of construction labor productivity across regions over time. The specified model can provides accurate predictions of the construction labor productivity.

Over the last decade, the South African economy has endured prevailing economic challenges, including weak economic growth, unreliable electricity supply, rising fiscal deficits, declining investment inflows and the inexorable rise in government debt alongside the expected impact of the coronavirus pandemic. Credit ratings have significantly evolved, making them key elements in the modern financial markets because of their creditworthiness opinions, as many investors across the globe rely heavily on their opinions. A quantitative research approach was followed using data from 1994Q1 to 2020Q2. The analysis entailed a descriptive and econometric analysis where two models were estimated using the autoregressive distributed lag (ARDL) model. The findings reveal long-run relationships between economic growth (GDP), risk rating index, foreign direct investment (FDI), exchange rate, gross fixed capital formation and lending rates. The results also reveal a bi-directional causality between economic growth and the rating index and between FDI and the rating index. This study’s findings suggest that investments and economic growth in the country need to be stimulated significantly to impact risk rating agencies decisions. Policymakers need to redirect resources towards effective and efficient capital-forming initiatives and development projects to improve the country’s sovereign risk rating to re-ignite growth.

Some of the constructs in the field of performance management are intuitive or not empirically validated. This study provides a data-driven framework for measuring and improving the performance through synchronized strategies. The ultimate goal was to provide support for increasing business performance. Empirical research materializes in an exploratory case study and a statistical analysis with econometric models. The case study revealed that a company can improve its performance, even in periods of growth, being characterized by consistent investments. The statistical analysis, performed on a restricted sample of companies, confirmed the results that were provided by the case study. The measurement of performance was made by capitalizing on financial and non-financial data precisely to intensify the interest for corporate sustainability. The obtained results, contrary to previous research that showed that economic value added (EVA) is negatively influenced by the increase in invested capital, open up new research perspectives to find out whether, at the industry level, performance appraisal that is based on EVA stimulates the development of a business’s economic capital. The research has a double utility: scientific (by providing an overview of the state of the art in the field of performance management) and practical (by providing a reference model for measuring and monitoring performance).

This study is conducted within the framework of a relevant scientific research objective consisting in the accumulation and development of regional human capital. In the conditions of uncertainty, risks and resource scarcity, the regional authorities are facing the task of optimal distribution of the budget between strategic projects, which exert direct or indirect influence upon the development of regional human capital. On the example of Primorksy Krai, the goal of this research consists in structuring and approbation of a dynamic optimization model for formation of an optimal portfolio of regional strategic projects form maximally efficient development of human capital in the region. The authors develop a dynamic model in form of a task of a mathematical programming and describing the impact of regional strategic projects upon the human capital indexes in the region. As the target function, the work uses weighted average of the degree of meeting the objective value of regional human capital development indexes on the examined horizon of planning. The functional dependence of human capital indexes upon the volume and structure of investments, forming from the regional budgetary and private spending on the implementation of the projects and ensuring procedural activity on the regional level, serve as lagged econometric models. Variables for conducting optimization are represented by the Boolean variables of inclusion of the project by one or another vector of investing into the project portfolio in a particular moment in time. The optimal portfolio of strategic projects is proposed in annual dynamics, based on the results of the modeling and quantitative calculations made on the example of Primorsky Krai. Such portfolio provides for maximal efficiency in reaching objective values of development of the regional human capital indexes.

Purpose The purpose of this paper is to examine the issue of high current account deficit (CAD) from various perspectives focussing its behaviour, financing pattern and sustainability for India. Design/methodology/approach To begin with the trends, composition and dynamics of CAD for India are analysed. Next, the influence of capital flows on current account is investigated using Granger non-causality test proposed by Toda and Yamamoto (1995) between current account balance (CAB) to GDP ratio and financial account balance to GDP ratio. Also, the sustainability of India’s current account is examined using different econometrics techniques. In particular, Husted’s (1992), Johansen’s cointegration and vector error correction model (VECM) is applied along with conducting unit root and structural break tests wherever applicable. Further, long-run and short-run determinants of the CAB are estimated using Johansen’s VECM. Findings The study found that the widening of CAD is due to fall in household financial savings and corporate investments. Also, it was found that a large part of India’s CAD has been financed by FDI and portfolio investments which are partly replaced by short-term volatile flows. The unit root and cointegration tests indicate a sustainable current account for India. Further, econometric analysis reveals that India’s current account is driven by fiscal deficit, terms of trade growth, inflation, real deposit rate, trade openness, relative income growth and the age dependency factor. Practical implications Since India’s CAD has widened and is expected to widen primarily due to rise in gold and oil imports, policy makers should focus on achieving phenomenal export growth so that a sustainable current account is maintained. Also, with rising working-age and skilled population, India should focus more on high-value product exports rather than low-value manufactured items. Further, on the structural side it is important to correct fiscal deficit as it is one of the important factors contributing to large CAD. Originality/value The paper is an important empirical contribution towards explaining India’s CAD over time using latest and comprehensive data and econometric models.

Abstract In this article, the index approach to an estimation of situational multifactor economic categories is considered: a level of development of a social and economic infrastructure of region and population living conditions. Author’s mathematical models of formation of the integrated estimated indexes formulated on principles of the factorial analysis of hierarchies are used. The constructed estimated integrated indexes form a basis of ranging of territories, both in an annual cut and in dynamics on years that, in turn, allows to analyse the change in ratings of territories (during 5-10 years): on a level of development of an infrastructure and quality of life of the population. Authors give results of computer modelling of an index of development of a social and economic infrastructure. Here authors use additional parameters for the measurement of an index of capital investments in an infrastructure. Further, authors model an index of quality of life of the population. Here the methods used are the analysis of hierarchies, the factorial analysis and a method of the main things a component. Then the interrelation analysis between tendencies of change of indexes through comparison of ranks of territories is made. Theoretical offers of authors are accompanied by quantitative results of modelling experiments on materials of 30 Chinese provinces for the period of 10 years period.

Purpose: This paper aims to analyze working capital and its impact on the profitability of commercial banks. The other objectives of this study are to analyze the factors that influence the profitability of commercial banks, to find out the relationship between profitability and working capital management. To achieve these research objectives, several research questions have been posited: How much does working capital affect the profitability of commercial banks? What are the relationships between bank profitability and bank size, debt ratio and current ratio? What are the other factors affecting the profitability of commercial banks? Methodology: The empirical data to be used in this research are secondary data and will be based on annual reports of commercial banks and reports of the Central Bank of Kosovo. From these data, some indicators such as return on assets, current ratio, debt ratio and banks’ size will be calculated. This research covers a period of 5 years and the data will be analyzed and interpreted through econometric models. In addition, to analyze the impact of working capital on the profitability of commercial banks in Kosovo, trend analysis will also be applied through the comparative method. Findings: Based on the empirical results, we can conclude that bank size and the current ratio have positively affected the performance of commercial banks in Kosovo, whereas the debt ratio has had a negative effect. All the independent variables in relation to the dependent variable (ROA) are at the standard level of significance P-value = 0.05. Practical implications: Through this study we can recommend all commercial banks in Kosovo to invest much more in working capital, since financial investments in working capital affect the bank's profitability. This means that a high investment in the elements of working capital can lead to increased bank profitability, whereas its profitability decreases when investment in working capital is low. Originality: This paper presents real and sustainable results with respect to the conclusions. The period analyzed (2013-2017) is a persuasive period for drawing competent conclusions and recommendations. Keywords: working capital, debt ratio, current ratio, bank size, return on assets JEL Classification: G2, G20, G21, G3, G32, D24

Objective: to identify the factors that determined the success of investment projects in the field of forest development on the basis of available information about the enterprises – applicants for such projects.Methods: regression analysis of binary choice models, logistic regression.Results: the key constraints of the development of the Russian forest sector are identified. The review of the most relevant scientific research on the topic of investments into forest complex is carried out. Taking into account the identified problems and the analysis of the global experience in solving them, the most promising mechanism in this context was identified – that is, state support for investment projects from the priority list in the field of forest development. Based on a sample of 200 projects, a logit regression model was evaluated, which determines the impact of project parameters on the probability of their successful implementation. The hypothesis that there is a statistically significant impact on the success of investment projects was confirmed for a number of factors: the average revenue and average cost of fixed assets of the enterprise, the absence of employees in the organization, the connection of the enterprise with foreign capital and the fact that the enterprise has been unprofitable for the past three years.Scientific novelty: for the first time, estimates were made of the contribution of the forest complex enterprises’ characteristics to the probability of successful implementation of priority investment projects in the field of forest development.Practical signifi : the high predictive ability of the model allows using information about the project success determinants to adjust the mechanism for providing support, which will enable to increase the share of successfully implemented projects and therefore increase the effectiveness of this measure of stimulating investment in the development of the Russian forestry industry.

An eco-friendly and sustainable power production system constitutes the cornerstone of every country’s strategic plan to tackle climate change and enhance energy resource autonomy. Carbon dioxide abatement in electricity generation, in addition to being a necessary condition for t “green” energy transition, can contribute greatly to cleaner industrial production and sustainable development. Emphasizing this key role of the power sector, the present research focuses on shedding light on the impact of renewable energy resources (RES), per capita gross domestic product (GDP), electricity gross fixed capital formation (GFCF) and urbanization in the CO2 intensity, and the sustainability level of electricity production. The analysis is based on a comprehensive dataset of 31 countries including 26 European countries, U.S.A., Japan, Australia, Canada, and New Zealand from 1995 until 2018. The econometric outcomes revealed the strong statistical significance of all variables and a plethora of causality relationships, upon which several policy suggestions are made. Interestingly, GDP per capita beyond a certain level can gradually become an aggravating factor for the electricity carbon footprint. Similarly, the vital role of RES in clean electricity production was confirmed as expected, yet surprisingly, this effect also appears to reverse after a certain percentage of total RES reliance. In contrast to urbanization, the electricity GFCF parameter is estimated to have an adverse effect on electricity CO2 intensity, indicating that the vast amount of new investments in the power sector concerns carbon-intensive technologies. Finally, a dynamic analysis is carried out, revealing to policy makers the necessary time frame after which the implementation of new energy policies can have the full impact on the carbon emissions of electricity generation.

Abstract Green growth and sustainable development goals (SDGs) are two strategies to improve the productivity and competitiveness of countries with respect to environmental protection. In these strategies, science, technology and innovation (STI) plays an important role in generating new knowledge. Colombia is a highly diversified country that is currently seeking to promote green growth initiatives and the SDGs through five axes: policy, new economic opportunities from the sustainable use of natural resources, the efficient use of natural capital and energy in production, business and human competences and capacities in STI. In this context, this study seeks to analyse the main contributions and adequate measures that determine the relationships between green growth, SDGs and STI in Colombia over recent years using different econometric models. The results of this study suggest the importance of STI in promoting green growth and achieving SDGs. In other words, higher investments in STI promote lower pollution and higher productivity, competitiveness and development, and new knowledge and technologies are found to be important to increasing the sustainable use of natural resources in productive processes. These results suggest policy implications with regard to energy use and conservation, resource efficiency, and the reduction of pollution. It is important to formulate and frequently measure the indicators of STI related to green growth and SDGs from a baseline, as this will allow us to analyse improvements in competitiveness and productivity from a sustainable development perspective.

<p>This article deals with the subject of volatility of financial markets in relation to the US stock market and its volatility index, i.e. the VIX index. The authors analyzed previous studies on the VIX index and based on them, defined a research gap that relates to the problem of market response to emerging macroeconomic information about the US economy. The vast majority of research on the VIX index relates to its forecasting based on mathematical models not taking into account current market data. The authors attempted to assess the impact of emerging macro data on the variability of the VIX index, thus illustrating the magnitude of the impact of individual variables on the so-called US Stock Exchange fear index. The study analysed 80 macroeconomic variables in the period from January 2009 to June 2019 in order to check which of them cause the greatest market volatility. The study was based on correlation study and econometric modeling. The obtained results allowed to formulate conclusions indicating the most important macroeconomic parameters that affect the perception of the market by investors through the pricing of options valuation on the S&amp;P 500 index. The authors managed to filter the most important variables for predicting the change of VIX level. In the eyes of the authors, the added value of the article is to indicate the relationship between macro variables and market volatility illustrated by the VIX index, which has not been explored in previous studies. The analyzes carried out are part of the research trend on market information efficiency and broaden knowledge in the area of capital investments.</p>

Purpose. The identification of factors which have decisive impact on capital structure in the Polish hotel sector. Our aim is to answer the question of whetherthe choice of decision making variables influenced by the location of facilities. Method. We used multiple linear regression analysis to investigate capital structure determinants in hotels. The variables for our model were selected with the use of the forward selection method. In this method, the independent (explanatory) variables are chosen from a group of candidates (starting with the highest R2 variable) and added to the model successively in such a way as to obtain the highest R2 determination coefficient at each step of the selection, and stop the selection process when none of the remaining candidate variables are significant when added to the model. Each constructed econometric model was tested at a significance level of α=0.05 by performing the t-Student and F Fisher-Snedecor tests. The sample selected for our study contains 35 Polish hotels (17 located in large cities and 18 in tourist regions). Findings. The following relations between dependent and independent variables were revealed: the debt ratio (debt versus total capital) of hotels located in tourist regions depends on firm size, and particularly on the ratio of fixed tangible assets to total assets. The equity ratio (equity versus total capital) of hotels located in tourist regions is determined by the return on assets (ROA). The question of how quickly the benefits from the investment project will return the initial capital invested has a fundamental bearing on planning further investments. None of the independent variables have a significant effect on the level of debt capital in hotels located in cities. On the other hand, similarly to hotels located in tourist region, the equity ratio in the capital structure of city hotels depends on ROA, and likewise, the information about the payback period of the capital invested in projects is important. Research and conclusion limitations. Given that models constructed in the course of the study are characterized by a weak correlation to the existing situation, the analysis does not permit more detailed conclusions. Further studies on hotel capital structures and their determinants are needed to explore circumstances other than the location of facilities alone, such as the degree of hotel centralization or the size of hotel chains. Practical implications. The capital structure constructed as a division into equity capital and long-term liabilities dictates the weighted average cost of capital. The target capital structure should set the relation between risk and the rate of return at a level allowing the maximization of company value. Despite this fast growth of the hotel sector in Poland, there are no studies on factors influencing capital structures in hotel companies. This means that we have little knowledge about the variables considered by managers who make decisions regarding the choice of funding sources to build up assets. Originality. There have been no records of studies of those determinants with respect to the hotel industry. World literature contains infrequent examples of such research, however, the reported studies investigating different explaining variables and attempting to construct a statistically significant model have not been successful. Type of paper. The article presents the results of empirical research against the background of world studies on capital structure determinants in the hotel industry.

Foreign Direct Investment (FDI) can bring in much needed capital, particularly to developing countries, help improve manufacturing and trade sectors, bring in more efficient technologies, increase local production and exports, create jobs and develop local skills, and bring about improvements in infrastructure and overall be a contributor to sustainable economic growth. With all these desirable features, it becomes relevant to ascertain the factors which attract FDI to an economy or a group of adjacent economies. This paper explores the determinants of FDI in ten sub-Saharan economies: Liberia, Sierra Leone, Ivory Coast, Ghana, Nigeria, Mali, Mauritania, Niger, Cameroun, and Senegal. After an extensive literature review of theories and empirical research, using a set of cross-sectional data over the period 1990–2017, two econometric models are estimated with FDI/GDP (the ratio of Foreign Direct Investment to Gross Domestic Product) as the dependent variable, and with inflation, exchange rate changes, openness, economy size (GDP), income levels (GNI/capita (Gross National Income) per capita), and infrastructure as the independent variables. Over the period, higher inflows of FDI in relation to GDP appear to be have been attracted to the markets with better infrastructure, smaller markets, and lower income levels, with higher openness and depreciation in the exchange rate, though the coefficients of the last two variables are not significant. These results show the type of FDI attracted to investments in this region and are evaluated from theoretical and practical viewpoints. FDI is an important source of finance for developing economies. On average, between 2013 and 2017, FDI accounted for 39 percent of external finance for developing economies. Policy guidelines are formulated for the enhancement of FDI inflows and further economic development in this region. Such a study of this region has not been made in the recent past.

The article presents fundamental approaches to the study of periods of development of socio-economic indicators and their mutual influence. The forms of influence of indicators on each other are investigated. The dynamic analysis of the standard of living of the population and the factors of social and economic spheres is completed with the tools of econometric modeling and canonical analysis. Birth rate, mortality, employment, unemployment, investments in fixed capital, GRP per capita, the account of resource production, the standard of living of the population and fixed assets according to the data of the Samara Region for the period 20062019, registered in the annual collections of state statistics bodies, are considered as indicators. The predicted values of the standard of living by various methods are calculated, confidence intervals for the studied indicators are constructed. By means of adaptive forecasting using the Brown model, forecast values are calculated and confidence intervals are constructed. Using the tools of canonical analysis, integral indicators are calculated and grouping by time factor is carried out. The spatial grouping of the time factor depending on the standard of living of the population and canonical integral factors is presented. According to the results of the analysis of autoregressive models, it was found that in terms of employment, unemployment, fertility, mortality, investment in fixed assets, GRP per capita, resource production and fixed assets, the impact of the indicator of the previous year is statistically significant, and in terms of the standard of living of the population statistically insignificant. In the second-order autoregression, it was found that all statistical indicators have an impact on the studied indicator, except for indicators of employment and the standard of living of the population. Thus, the forms of models of multiple linear regression, paired linear regression and autoregressive models allow us to assess the numerical impact of all indicators on the studied indicators, as well as their impact on the Standard of living of the population. Visualization of multidimensional data contributes to an in-depth analysis of indicators when grouping, for example, by the time factor.

Abstract The issue of global economic inequality has inspired researchers to explore the potential connection between income inequalities and foreign direct investment (FDI), as it is one of the driving forces of globalization. Although there is a large body of theoretical as well as empirical studies linking these variables, the empirical literature on the relationship between FDI, production factors productivity and income inequalities is not conclusive because most scientists treat FDI as uniform. Therefore there is a lack of reliable empirical evidence on the distributional effects of FDI, especially in emerging countries, such as in Central and Eastern Europe (CEE). The research presented in the article fills this gap. The aim of the study is to analyze the impact of the inflow of foreign direct investment on the productivity of production factors (labor, capital and total factor productivity) and income inequality of households in four Central and Eastern European countries (Poland, the Czech Republic, Slovakia and Hungary) in the period 1990–2016. The four countries were selected for analysis as a classic example of European countries transforming their economic structures and similar in terms of the level of economic development. In turn, the choice of the analysis period was related to the availability of necessary statistical data. According to the theory of economics, the inflow of foreign direct investment should have a positive impact on production factors productivity as well as on income inequalities of households in investment receiving countries. In the study, a research method based on the study of economic literature in macroeconomics and international finance and econometric methods (vector autoregression models—VAR) was used. Results of the research suggest a significant and positive impact of greenfield investment inflow on labor productivity and total factor productivity, as well as a positive impact of brownfield investment inflow (mergers and acquisitions) on capital productivity in countries receiving investments. Moreover, the results also revealed the lack of a statistically significant impact of greenfield and brownfield investment on income inequalities in all of the examined countries. The statistical data used in the study came from the statistical databases of the Organization for Economic Cooperation and Development (OECD), the World Bank (World Development Indicators), World Income Inequality Database (United Nations University World Institute for Development Economics Research) and Total Economy Database (The Conference Board of Canada).

PurposeThe objective of the study is to identify and explore factors affecting the productivity of companies in the Czech Republic with a focus on the role of firm size, firm age, indebtedness and long-term negative equity, efficiency of assets usage, liquidity, legal form, location and sector affiliation.Design/methodology/approachThe study utilizes a large unbalanced panel dataset of 91,257 firms (548,998 observations in total) covering the period 2000–2019. The dependent variable, i.e. total factor productivity (TFP), reflecting the overall firm productivity, was estimated by ordinary least squares (OLS) regression. The main findings were obtained through the estimation of two econometric models explaining the effects of factors on firm-level TFP. First, the OLS regressions together with Nomenclature of Territorial Units for Statistics (NUTS) 3 regions, year dummies and robust standard errors were estimated. Second, as a robustness check, the very same model was estimated with the random effects (RE) generalized least squares (GLS) method.FindingsThe analysis has shown a statistically significant U-shaped relationship (with the turning point of 38, resp. 36 years) between firm age and the overall TFP among the Czech enterprises. The authors provide two key findings in terms of a firm size-productivity relationship. Firms with fewer employees, often officially registered as self-employed individuals/freelancers, report higher levels of productivity. Nevertheless, when it comes to firm property (assets), the authors find a positive relationship between firm size and TFP. A high proportion of debts in the capital structure of analysed companies, or even negative equity, has been negatively associated with TFP levels.Research limitations/implicationsMore research is needed in the deeper exploration of sectoral and regional determinants of firm TFP, as both regional and sectoral heterogeneity were observed in the study. The authors propose the employment of a multi-level modelling approach, including a range of continuous variables and investigation of their role in shaping firm-level productivity.Practical implicationsConcerning the results, managers should be mindful of optimal capital structure principles due to the negative impact of a high level of debts on the productivity level. High indebtedness means high-interest payments drawing earnings off, which may be, especially in the long term, a hindrance to investments. The entrepreneurship and small- and medium-sized enterprise policies may be targeted at the soft policy actions, including advisory services and counselling on business development or risk and on the provision of financial capital allowing firms to strive for growth-oriented projects.Originality/valueTo the best of the authors' knowledge, this is the first attempt to provide insight into the firm-level productivity determinants, based on the large dataset covering enterprises across the whole economy over the long term, representing the structure of the country's entrepreneurial activity.

This study aimed to investigate the potentiality of inflation-protected investments for investors in Iran. The objective of the present study was applied, and the methodology was correlational, which an ex-post facto research design was developed to explore the correlation between variables. Here in this study, the required data (e.g., time series pertaining to the total stock price index, housing, bond, gold, and coin prices as well as dollar prices in the unofficial market) were collected to distribute capital among asset groups and then econometric concepts and models were used to analyze these time series aiming to predict the returns and standard deviations as well as covariances of future periods. To determine the changes and relations between different assets and simulate the rate of return in the presence of macroeconomic factors, Burberry’s (2000) and Campbell et al.’s (2003) methods were used. After static model variables were discovered, Schwartz-Bayesian (SC), Akaike (AIC), and Hannan Quinn (HQ) criteria were employed to determine the interrupt length. Eviews software was used to analyze the data to estimate the VAR model and Matlab software to resolve the mathematical programming problem.

The authors offer conceptual development model of population’s quality of life in the region reflecting interrelations between the public and private investments in improvement of quality of life, quality of life, regional human capital, and social and economic development of the region. The peculiarity of the model is its multiperiodicity, which is used to reflect the influence of certain parameters of the system on other parameters in the dynamic mode. The authors distinguish sets of indicators reflecting population’s quality of life, social and economic development of the region, regional human capital, and demography of the region, as well as describe the factors influencing the formation of the quality of life in the region, and the factors, which are influenced by the quality of life. The following channels of influence are defined, namely, the effect of different areas of investments on the indicators of quality of life of the population and the region's human capital; the influence of indicators of population’s quality of life on regional human capital; the effect of quality of life on indicators of socio-economic development of the region; and the influence of indicators of quality of life and development of the region on demographic parameters of the region. The cluster analysis of the Russian regions in terms of the quality of life of the population is carried out. In total, 32 indicators reflecting the quality of life over 2011-2017 in 81 regions of Russia were used as a data set, which was processed and analyzed by means of STATISTICA software package. The article presents qualitative description of the constructed clusters, defines their characteristic features and differences. In the future, in order to operationalize the conceptual model, it is necessary to carry out a quantitative description of the channels of influence in the form of econometric models.

PurposeThe paper examines the factors that influence the production of cash flows in a sample of Italian farm accountancy data network (FADN) farms to generate information useful for calibrating policies to support farmers' investments.Design/methodology/approachAn econometric analysis on the sample estimates the influence of structural, economic, commercial and financial variables on CAFFE, i.e. the cash flow that includes the payments to the farmer's resources and the free cash flow on equity (FCFE). The econometric problem of endogeneity is treated by adopting the Hausman test to choose between fixed and random effects models. The results for Italian agriculture and its types of farming (TFs) are examined based on the FCFE/capital depreciation ratio, where FCFE subtracts from CAFFE the opportunity cost payments to the farmer's resources. This ratio identifies TFs with problems of sustainability of the production system.FindingsThe results show that increasing the productive dimension, in particular the endowment of farmland and working capital, is still essential to stimulate the production of cash flows of Italian agriculture. Without this growth, increasing the depreciable capital base is ineffective. FCFE does not compensate for depreciation in several TFs, which in various cases could also improve by improving economic efficiency and commercial position.Research limitations/implicationsAssessing the factors that most influence cash flows can help to better calibrate rural development measures to the territories and farming types that most need public support. Our analysis procedure can be applied to all production systems equipped with farm accounting networks; however, the criteria for rewarding farmer resources and calculating the replacement value of agricultural capital need to be better discussed.Originality/valueThe specification of rural development policies rarely takes into account the financial sustainability conditions of farms, as well as the factors that determine them, in defining the support parameters and the selection criteria for funding. Our approach, based on the analysis of FADN data, considers these aspects and provides ideas for better calibrating public support for investments among agricultural territories, sectors and types of farms.

It is commonly believed that developing markets require inflows of foreign capital to achieve their growth targets; however, recent research has shown that these inflows are either ineffective or even harmful to the economy. A surge in foreign inflows, such as foreign aid, remittances, and foreign direct investment, into developing markets, particularly, have been connected to the Dutch disease hypothesis. A sharp rise in such inflows will stimulate real exchange rate in receiving nations due to the uptick in the non-tradable sector and the downturn in the tradable sector. The purpose of this research is to investigate, using quantitative approaches, the variations of real exchange rate adjustments that occur in response to official development assistance, foreign direct investments, and international remittances flowing into developing markets. To investigate the onset of Dutch Disease over the period 2001–2020, this analysis makes use of panel data estimation techniques in the form of fixed and random effect models The findings of a substantial amount of econometric investigation revealed that Dutch Disease is present in developing countries. The scope of the study has been broadened to include an investigation of the expansion of both tradable and non-tradable industries. According to the findings of this study, larger inflows of foreign capital slow growth in the tradable sector (the industrial sector), while simultaneously boosting growth in the non-tradable sector (Service sector).

Background: Economic institutions are considered as the fundamental cause of economic growth. Economic institutions affect economic growth through allocation of resources like physical and human capital. Unfortunately, there is dearth of empirical studies showing the impact of economic institutions on growth of the Economic Community of West African States (ECOWAS).Aim: This study investigates the impact of economic institutions on economic growth of the ECOWAS.Setting and method: The study applied cause and effect relationship. The study used econometric research techniques of unit root and co-integration tests to establish the time series properties of the data; the vector error correction and co-integration regression models to estimate the population parameters. The research data comprised data obtained from the United Nations Conference on Trade and Development (UNCTAD), the Transparency International (TI) and Heritage Foundation databases. The variables employed were the real gross domestic product (GDP) per capita (RGDPPC), corruption perception index (CPI), property rights protection (PROPRGT), private investment per capita (INVESPC), government expenditure per capita (GOEXPPC) and trade openness (TRAOPN).Results: The results of the data analysed showed that economic institutions represented by the property rights index engender RGDPPC growth in ECOWAS. The CPI could not stimulate RGDPPC growth in ECOWAS. The results also show that all the other variables stimulated growth except trade openness.Conclusion: The study concludes that good economic institutions, private investments, and government intervention by providing security, economic and social infrastructural facilities are conducive for economic growth in the ECOWAS region. The study recommended that more efforts be made at curbing corruption in the region.Background: Economic institutions are considered as the fundamental cause of economic growth. Economic institutions affect economic growth through allocation of resources like physical and human capital. Unfortunately, there is dearth of empirical studies showing the impact of economic institutions on growth of the Economic Community of West African States (ECOWAS). Aim: This study investigates the impact of economic institutions on economic growth of the ECOWAS. Setting and method: The study applied cause and effect relationship. The study used econometric research techniques of unit root and co-integration tests to establish the time series properties of the data; the vector error correction and co-integration regression models to estimate the population parameters. The research data comprised data obtained from the United Nations Conference on Trade and Development (UNCTAD), the Transparency International (TI) and Heritage Foundation databases. The variables employed were the real gross domestic product (GDP) per capita (RGDPPC), corruption perception index (CPI), property rights protection (PROPRGT), private investment per capita (INVESPC), government expenditure per capita (GOEXPPC) and trade openness (TRAOPN). Results: The results of the data analysed showed that economic institutions represented by the property rights index engender RGDPPC growth in ECOWAS. The CPI could not stimulate RGDPPC growth in ECOWAS. The results also show that all the other variables stimulated growth except trade openness. Conclusion: The study concludes that good economic institutions, private investments, and government intervention by providing security, economic and social infrastructural facilities are conducive for economic growth in the ECOWAS region. The study recommended that more efforts be made at curbing corruption in the region

Purpose This study aims to investigate a new determinant of corporate cash holdings of Australian energy firms: economic policy uncertainty (EPU). Based on two motives for holding cash: precautionary and speculative motives, the authors argue that EPU increases financing constraints or induces firms to postpone investment projects, thereby increasing their cash holdings. The authors examine whether the Australian policy-related economic uncertainty affects cash holdings of Australian energy companies. Design/methodology/approach This research uses a data set of Australian energy firms from 2010 to 2020 and the Australian EPU index, which measures the uncertainty in economic policy, using news coverage of eight major Australian newspapers. To address the potential endogeneity bias and ensure the robustness of the results, three models are used: ordinary least squares, fixed-effects and dynamic generalized method of moments. Findings The authors find that the EPU index has a significant and positive effect on cash holdings, after controlling for firm-specific factors. While firm size and dividend payments have mixed and insignificant effects, other determinants are significant, such as growth opportunities, net working capital, cash flow, cash flow risk, leverage and capital expenditure. The authors also find that the positive effect of EPU on cash holdings is not the manifestation of EPU affecting corporate investments but rather explained by financing constraints. Practical implications The findings have implications for policymakers and regulators in Australia as the uncertainty of their economic policies plays an important role when Australian energy companies determine their cash holding level to manage liquidity risks. Originality/value This study is the first to document EPU index as the new determinant of corporate cash holdings of Australian energy companies. Firms in this sector have a great need of funding and liquidity for their operations and capital-intensive projects. High EPU index induces them to hold more cash to avoid liquidity shocks.

Introduction It used to be the case that for the mass of workers, work was something that was done in order to get by. A working class was simply the sum total of all those workers and their dependents whose wages paid for the necessities of life, providing the bare minimum for family reproduction, to secure a place and a lineage within the social order. However, work has now become something else. Work has become the privileged sign of a new kind of class, whose existence is guaranteed not so much by work, but by the very fact of holding a job. Society no longer divides itself between a ruling elite and a subordinated working class, but between a job-holding, job-aspiring class, and those excluded from holding a job; those unable, by virtue of age, infirmity, education, gender, race or demographics, to participate in the rewards of work. Today, these rewards are not only a regular salary and job satisfaction (the traditional consolations of the working class), but also a certain capacity to plan ahead, to gain control of one's destiny through saving and investment, and to enjoy the pleasures of consumption through the fulfilment of self-images. What has happened to transform the worker from a subsistence labourer to an affluent consumer? In what way has the old working class now become part of the consumer society, once the privileged domain of the rich? And what effects has this transformation had on capitalism and its desire for profit? These questions take on an immediacy when we consider that, in the recent Federal election held in Australia (November 11, 2001), voters in the traditional working class areas of western Sydney deserted the Labour Party (the party of the worker) and instead voted Liberal/conservative (the party of capital and small business). The fibro worker cottage valleys of Parramatta are apparently no more, replaced by the gentrified mansions of an aspiring worker formation, in pursuit of the wealth and independence once the privilege of the educated bourgeoisie. In this brief essay, I will outline an understanding of work in terms of its changing relation to capital. My aim is to show how the terrain of work has shifted so that it no longer operates in strict subordination to capital, and has instead become an investment in capital. The worker no longer works to subsist, but does so as an investment in the future. My argument is situated in the rich theoretical field set out by Karl Marx in his critique of capitalism, which described the labour/capital relation in terms of a repressive, extractive force (the power of capital over labour) and which has since been redefined by various poststructuralist theorists including Michel Foucault and Gilles Deleuze (Anti-Oedipus) in terms of the forces of productive desire. What follows then, is not a Marxist reading of work, but a reading of the way Marx sets forth work in relation to capital, and how this can be re-read through poststructuralism, in terms of the transformation of work from subordination to capital, to investment in capital; from work as the consequence of repression, to work as the fulfilment of desire. The Discipline of Work In his major work Capital Marx sets out a theory of labour in which the task of the worker is to produce surplus value: "Capitalist production is not merely the production of commodities, it is, by its very essence, the production of surplus-value. The worker produces not for himself, but for capital. It is no longer sufficient, therefore, for him simply to produce. He must produce surplus-value." (644) For Marx, surplus-value is generated when commodities are sold in the market for a price greater than the price paid to the worker for producing it: "this increment or excess over the original value I call surplus-value" (251). In order to create surplus value, the time spent by the worker in making a commodity must be strictly controlled, so that the worker produces more than required to fulfil his subsistence needs: ". . . since it is just this excess labour that supplies [the capitalist] with the surplus value" (1011). In other words, capital production is created through a separation between labour and capital: "a division between the product of labour and labour itself, between the objective conditions of labour and the subjective labour-power, was . . . the real foundation and the starting point of the process of capital production" (716). As Michael Ryan has argued, this separation was forced , through an allegiance between capital and the state, to guarantee the conditions for capital renewal by controlling the payment of labour in the form of a wage (84). Marx's analysis of industrialised capital in Capital thus outlines the way in which human labour is transformed into a form of surplus value, by the forced extraction of labour time: "the capitalist forces the worker where possible to exceed the normal rate of intensity [of work] and he forces him as best he can to extend the process of labour beyond the time necessary to replace the amount laid out in wages" (987). For Marx, capitalism is not a voluntary system; workers are not free to enter into and out of their relation with capital, since capital itself cannot survive without the constant supply of labour from which to extract surplus value. Needs and wants can only be satisfied within the labour/capital relation which homogenises labour into exchange value in terms of a wage, pegged to subsistence levels: "the capital earmarked for wages . . . belongs to the worker as soon as it has assumed its true shape of the means of subsistence destined to be consumed by him" (984). The "true shape" of wages, and hence the single, univocal truth of the wage labourer, is that he is condemned to subsistence consumption, because his capacity to share in the surplus value extracted from his own labour is circumscribed by the alliance between capital and the state, where wages are fixed and controlled according to wage market regulations. Marx's account of the labour/capital relation is imposing in its description of the dilemma of labour under the power of capital. Capitalism appears as a thermodynamic system fuelled by labour power, where, in order to make the system homogeneous, to produce exchange value, resistance is reduced: "Because it is capital, the automatic mechanism is endowed, in the person of the capitalist, with consciousness and a will. As capital, therefore, it is animated by the drive to reduce to a minimum the resistance offered by man, that obstinate yet elastic natural barrier." (527) In the capitalist system resistance takes the form of a living residue within the system itself, acting as an "elastic natural barrier" to the extractive force of capital. Marx names this living residue "man". In offering resistance, that is, in being subjected to the force of capital, the figure of man persists as the incommensurable presence of a resistive force composed by a refusal to assimilate. (Lyotard 102) This ambivalent position (the place of many truths) which places man within/outside capital, is not fully recognised by Marx at this stage of his analysis. It suggests the presence of an immanent force, coming from the outside, yet already present in the figure of man (man as "offering" resistance). This force, the counter-force operating through man as the residue of labour, is necessarily active in its effects on the system. That is to say, resistance in the system is not resistance to the system, but the resistance which carries the system elsewhere, to another place, to another time. Unlike the force of capital which works on labour to preserve the system, the resistive force figured in man works its way through the system, transforming it as it goes, with the elusive power to refuse. The separation of labour and capital necessary to create the conditions for capitalism to flourish is achieved by the action of a force operating on labour. This force manifests itself in the strict surveillance of work, through supervisory practices: "the capitalist's ability to supervise and enforce discipline is vital" (Marx 986). Marx's formulation of supervision here and elsewhere, assumes a direct power relation between the supervisor and the supervised: a coercive power in the form of 'the person of the capitalist, with consciousness and a will'. Surplus value can only be extracted at the maximum rate when workers are entirely subjected to physical surveillance. As Foucault has shown, surveillance practices in the nineteenth century involved a panoptic principle as a form of surveillance: "Power has its principle not so much in a person as in a certain concerted distribution of bodies, surfaces, lights, gazes; an arrangement whose internal mechanisms produce the relation in which individuals get caught up." (202) Power is not power over, but a productive power involving the commingling of forces, in which the resistive force of the body does not oppose, but complies with an authoritative force: "there is not a single moment of life from which one cannot extract forces, providing one knows how to differentiate it and combine it with others" (165). This commingling of dominant and resistive forces is distributive and proliferating, allowing the spread of institutions across social terrains, producing both "docile" and "delinquent" bodies at the same time: "this production of delinquency and its investment by the penal apparatus ..." (285, emphasis added). Foucault allows us to think through the dilemma posed by Marx, where labour appears entirely subject to the power of capital, reducing the worker to subsistence levels of existence. Indeed, Foucault's work allows us to see the figure of man, briefly adumbrated in quote from Marx above as "that obstinate yet elastic natural barrier", but refigured as an active, investing, transformative force, operating within the capitalist system, yet sending it on its way to somewhere else. In Foucauldian terms, self-surveillance takes on a normative function during the nineteenth century, producing a set of disciplinary values around the concepts of duty and respectability (Childers 409). These values were not only imposed from above, through education and the state, but enacted and maintained by the workers themselves, through the myriad threads of social conformity operating in daily life, whereby people made themselves suitable to each other for membership of the imagined community of disciplined worker-citizens. In this case, the wellbeing of workers gravitated to self-awareness and self-improvement, seen for instance in the magazines circulating at the time addressed to a worker readership (e.g. The Penny Magazine published in Britain from 1832-1845; see Sinnema 15). Instead of the satisfaction of needs in subsistence consumption, the worker was possessed by a desire for self-improvement, taking place in his spare time which was in turn, consolidated into the ego-ideal of the bourgeois self as the perfected model of civilised, educated man. Here desire takes the form of a repression (Freud 355), where the resistive force of the worker is channelled into maintaining the separation between labour and capital, and where the worker is encouraged to become a little bourgeois himself. The desire for self-improvement by the worker did not lead to a shift into the capitalist classes, but was satisfied in coming to know one's place, in being satisfied with fulfilling one's duty and in living a respectable life; that is in being individuated with respect to the social domain. Figure 1 - "The British Beehive", George Cruickshank's image of the hierarchy of labour in Victorian England (1840, modified 1867). Each profession is assigned an individualised place in the social order. A time must come however, in the accumulation of surplus-value, in the vast accelerating machine of capitalism, when the separation between labour and capital begins to dissolve. This point is reached when the residue left by capital in extracting surplus value is sufficient for the worker to begin consuming for its own sake, to engage in "unproductive expenditure" (Bataille 117) where desire is released as an active force. At this point, workers begin to abandon the repressive disciplines of duty and respectability, and turn instead to the control mechanisms of self-transformation or the "inventing of a self as if from scratch" (Massumi 18). In advanced capitalism, where the accrued wealth has concentrated not only profit but wages as well (a rise in the "standard of living"), workers cease to behave as subordinated to the system, and through their increased spending power re-enter the system as property owners, shareholders, superannuants and debtees with the capacity to access money held in banks and other financial institutions. As investment guru Peter Drucker has pointed out, the accumulated wealth of worker-owned superannuation or "pension" funds, is the most significant driving force of global capital today (Drucker 76-8). In the superannuation fund, workers' labour is not fully expended in the production of surplus value, but re-enters the system as investment on the workers' behalf, indirectly fuelling their capacity to fulfil desires through a rapidly accelerating circulation of money. As a consequence, new consumer industries begin to emerge based on the management of investment, where money becomes a product, subject to consumer choice. The lifestyles of the old capitalist class, itself a simulacra of aristocracy which it replaced, are now reproduced by the new worker-capitalist, but in ersatz forms, proliferating as the sign of wealth and abundance (copies of palatial homes replace real palaces, look-alike Rolex watches become available at cheap prices, medium priced family sedans take on the look and feel of expensive imports, and so forth). Unable to extract the surplus value necessary to feed this new desire for money from its own workforce (which has, in effect, become the main consumer of wealth), capital moves 'offshore' in search of a new labour pool, and repeats what it did to the labour pools in the older social formations in its relentless quest to maximise surplus value. Work and Control We are now witnessing a second kind of labour taking shape out of the deformations of the disciplinary society, where surplus value is not extracted, but incorporated into the labour force itself (Mules). This takes place when the separation between labour and capital dissolves, releasing quantities of "reserve time" (the time set aside from work in order to consume), which then becomes part of the capitalising process itself. In this case workers become "investors in their own lives (conceived of as capital) concerned with obtaining a profitable behaviour through information (conceived of as a production factor) sold to them." (Alliez and Feher 347). Gilles Deleuze has identified this shift in terms of what he calls a "control society" where the individuation of workers guaranteed by the disciplinary society gives way to a cybernetic modulation of "dividuals" or cypher values regulated according to a code (180). For dividualised workers, the resource incorporated into capital is their own lived time, no longer divided between work and leisure, but entirely "consummated" in capital (Alliez and Fehrer 350). A dividualised worker will thus work in order to produce leisure, and conversely enjoy leisure as a form of work. Here we have what appears to be a complete breakdown of the separation of labour and capital instigated by the disciplinary society; a sweeping away of the grounds on which labour once stood as a mass of individuals, conscious of their rivalry with capital over the spoils of surplus value. Here we have a situation where labour itself has become a form of capital (not just a commodity exchangeable on the market), incorporated into the temporalised body of the worker, contributing to the extraction of its own surplus value. Under the disciplinary society, the body of the worker became subject to panoptic surveillance, where "time and motion" studies enabled a more efficient control of work through the application of mathematical models. In the control society there is no need for this kind of panoptic control, since the embodiment of the panoptic principle, anticipated by Foucault and responsible for the individuation of the subject in disciplinary societies, has itself become a resource for extracting surplus value. In effect, dividualised workers survey themselves, not as a form of self-discipline, but as an investment for capitalisation. Dividuals are not motivated by guilt, conscience, duty or devotion to one's self, but by a transubjective desire for the other, the figure of a self projected into the future, and realised through their own bodily becoming. Unlike individuals who watch themselves as an already constituted self in the shadow of a super-ego, dividuals watch themselves in the image of a becoming-other. We might like to think of dividuals as self-correctors operating in teams and groups (franchises) whose "in-ness" as in-dividuals, is derived not from self-reflection, but from directiveness. Directiveness is the disposition of a habitus to find its way within programs designed to maximise performance across a territory. Following Gregory Bateson, we might say that directiveness is the pathway forged between a map and its territory (Bateson 454). A billiard ball sitting on a billiard table needs to be struck in such a way to simultaneously reduce the risk of a rival scoring from it, and maximise the score available, for instance by potting it into a pocket. The actual trajectory of the ball is governed by a logic of "restraint" (399) which sets up a number of virtual pathways, all but one of which is eliminated when the map (the rules and strategies of the game) is applied to the territory of the billiard table. If surveillance was the modus operandi of the old form of capitalism which required a strict control over labour, then directiveness is the new force of capital which wants to eliminate work in the older sense of the word, and replace it with the self-managed flow of capitalising labour. Marx's labour theory of value has led us, via a detour through Foucault and Deleuze, to the edge of the labour/capital divide, where the figure of man reappears, not as a worker subject to capital, but in some kind of partnership with it. This seems to spell the end of the old form of work, which required a strict delineation between labour and capital, where workers became rivals with capital for a share in surplus value. In the new formation of work, workers are themselves little capitalists, whose labour time is produced through their own investments back into the system. Yet, the worker is also subject to the extraction of her labour time in the necessity to submit to capital through the wage relation. This creates a reflexive snarl, embedded in the worker's own self-image, where work appears as leisure and leisure appears as work, causing labour to drift over capital and vice versa, for capital to drift over labour. This drifting, mobile relation between labour and capital cannot be secured through appeals to older forms of worker awareness (duty, responsibility, attentiveness, self-surveillance) since this would require a repression of the desire for self-transformation, and hence a fatal dampening of the dynamics of the market (anathema to the spirit of capitalism). Rather it can only be directed through control mechanisms involving a kind of forced partnership between capital and labour, where both parties recognise their mutual destinies in being "thrown" into the system. In the end, work remains subsumed under capital, but not in its alienated, disciplinary state. Rather work has become a form of capital itself, one's investment in the future, and hence as valuable now as it was before. It's just a little more difficult to see how it can be protected as a 'right' of the worker, since workers are themselves investors of their own labour, and not right-bearing individuals whose position in society has been fixed by the separation of labour from capital. References Alliez, Eric and Michel Feher. "The Luster of Capital." Zone1/2 (1987): 314-359. Bataille, Georges. 'The Notion of Expenditure'. Visions of Excess: Selected Writings, 1927-1939, Trans. and Ed. Alan Stoekl. Minneapolis: Minnesota UP, 1985. 116-29. Bateson, Gregory. Steps to an Ecology of Mind. New York: Ballantine Books, 1972. Childers, Joseph W. "Observation and Representation: Mr. Chadwick Writes the Poor." Victorian Studies37.3 (1994): 405-31. Deleuze, Gilles. Anti-Oedipus: Capitalism and Schizophrenia. Minneapolis: U of Minnesota P, 1983. --. Negotiations, 1972-1990. Trans. Martin Joughin. New York: Columbia UP, 1995. Drucker, Peter F. Post-Capitalist Society. New York: Harper, 1993. Foucault, Michel. Discipline and Punish: The Birth of the Prison. Trans. Alan Sheridan. Harmondsworth: Penguin, 1977. Freud, Sigmund. "The Ego and the Id". On Metapsychology: The Theory of Psychoanalysis. The Pelican Freud Library, Vol 11. Harmondsworth: Penguin, 1984. 339-407. Lyotard, Jean-Francois. Libidinal Economy. Trans. Iain Hamilton Grant,. Bloomington: Indiana UP, 1993. Marx, Karl. Capital, Vol. I. Trans. Ben Fowkes. Harmondsworth: Penguin, 1976. Massumi, Brian. "Everywhere You Wanted to Be: Introduction to Fear." The Politics of Everyday Fear. Ed. Brian Massumi. Minneapolis: U of Minnesota P, 1993. 3-37. Mules, Warwick. "A Remarkable Disappearing Act: Immanence and the Creation of Modern Things." M/C: A Journal of Media and Culture 4.4 (2001). 15 Nov. 2001 <http://www.media-culture.org.au/0108/disappear.php>. Ryan, Michael. Marxism and Deconstruction: A Critical Introduction. Baltimore: John Hopkins Press, 1982. Sinnema, Peter W. Dynamics of the Printed Page: Representing the Nation in the Illustrated London News. Aldershot: Ashgate Press, 1998. Links http://csf.colorado.edu/psn/marx/Archive/1867-C1/ http://www.media-culture.org.au/0108/Disappear.html http://acnet.pratt.edu/~arch543p/help/Foucault.html http://acnet.pratt.edu/~arch543p/help/Deleuze.html Citation reference for this article MLA Style Mules, Warwick. "That Obstinate Yet Elastic Natural Barrier" M/C: A Journal of Media and Culture 4.5 (2001). [your date of access] < http://www.media-culture.org.au/0111/Mules.xml >. Chicago Style Mules, Warwick, "That Obstinate Yet Elastic Natural Barrier" M/C: A Journal of Media and Culture 4, no. 5 (2001), < http://www.media-culture.org.au/0111/Mules.xml > ([your date of access]). APA Style Mules, Warwick. (2001) That Obstinate Yet Elastic Natural Barrier. M/C: A Journal of Media and Culture 4(5). < http://www.media-culture.org.au/0111/Mules.xml > ([your date of access]).

Economics of Cute There are many ways to study cute: for example, neuro-biology (cute as adaptation); anthropology (cute in culture); political economy (cute industries, how cute exploits consumers); cultural studies (social construction of cute); media theory and politics (representation and identity of cute), and so on. What about economics? At first sight, this might point to a money-capitalism nexus (“the cute economy”), but I want to argue here that the economics of cute actually works through choice interacting with fixed costs and what economists call ”the substitution effect”. Cute, in conjunction with the Internet, affects the trade-offs involved in choices people make. Let me put that more starkly: cute shapes the economy. This can be illustrated with internet animals, which at the time of writing means Grumpy Cat. I want to explain how that mechanism works – but to do so I will need some abstraction. This is not difficult – a simple application of a well-known economics model, namely the Allen-Alchian theorem, or the “third law of demand”. But I am going to take some liberties in order to represent that model clearly in this short paper. Specifically, I will model just two extremes of quality (“opera” and “cat videos”) to represent end-points of a spectrum. I will also assume that the entire effect of the internet is to lower the cost of cat videos. Now obviously these are just simplifying assumptions “for the purpose of the model”. And the purpose of the model is to illuminate a further aspect of how we might understand cute, by using an economic model of choice and its consequences. This is a standard technique in economics, but not so in cultural studies, so I will endeavour to explain these moments as we go, so as to avoid any confusion about analytic intent. The purpose of this paper is to suggest a way that a simple economic model might be applied to augment the cultural study of cute by seeking to unpack its economic aspect. This can be elucidated by considering the rise of internet animals as a media-cultural force, as epitomized by “cat videos”. We can explain this through an application of price theory and the theory of demand that was first proposed by Armen Alchian and William Allen. They showed how an equal fixed cost that was imposed to both high-quality and low-quality goods alike caused a shift in consumption toward the higher-quality good, because it is now relatively cheaper. Alchian and Allen had in mind something like transport costs on agricultural goods (such as apples). But it is also true that the same effect works in reverse (Cowen), and the purpose of this paper is to develop that logic to contribute to explaining how certain structural shifts in production and consumption in digital media, particularly the rise of blog formats such as Tumblr, a primary supplier of kittens on the Internet, can be in part understood as a consequence of this economic mechanism. There are three key assumptions to build this argument. The first is that the cost of the internet is independent of what it carries. This is certainly true at the level of machine code, and largely true at higher levels. What might be judged aesthetically high quality or low quality content – say of a Bach cantata or a funny cat video – are treated the same way if they both have the same file size. This is a physical and computational aspect of net-neutrality. The internet – or digitization – functions as a fixed cost imposed regardless of what cultural quality is moving across it. Second, while there are costs to using the internet (for example, in hardware or concerning digital literacy) these costs are lower than previous analog forms of information and cultural production and dissemination. This is not an empirical claim, but a logical one (revealed preference): if it were not so, people would not have chosen it. The first two points – net neutrality and lowered cost – I want to take as working assumptions, although they can obviously be debated. But that is not the purpose of the paper, which is instead the third point – the “Alchian-Allen theorem”, or the third fundamental law of demand. The Alchian-Allen Theorem The Alchian-Allen theorem is an extension of the law of demand (Razzolini et al) to consider how the distribution of high quality and low quality substitutes of the same good (such as apples) is affected by the imposition of a fixed cost (such as transportation). It is also known as the “shipping the good apples out” theorem, after Borcherding and Silberberg explained why places that produce a lot of apples – such as Seattle in the US – often also have low supplies of high quality apples compared to places that do not produce apples, such as New York. The puzzle of “why can’t you get good apples in Seattle?” is a simple but clever application of price theory. When a place produces high quality and low quality items, it will be rational for those in faraway places to consume the high quality items, and it will be rational for the producers to ship them, leaving only the low quality items locally.Why? Assume preferences and incomes are the same everywhere and that transport cost is the same regardless of whether the item shipped is high or low quality. Both high quality and low quality apples are more expensive in New York compared to Seattle, but because the fixed transport cost applies to both the high quality apples are relatively less expensive. Rational consumers in New York will consume more high quality apples. This makes fewer available in Seattle.Figure 1: Change in consumption ratio after the imposition of a fixed cost to all apples Another example: Australians drink higher quality Californian wine than Californians, and vice versa, because it is only worth shipping the high quality wine out. A counter-argument is that learning effects dominate: with high quality local product, local consumers learn to appreciate quality, and have different preferences (Cowen and Tabarrok).The Alchian-Allen theorem applies to any fixed cost that applies generally. For example, consider illegal drugs (such as alcohol during the US prohibition, or marijuana or cocaine presently) and the implication of a fixed penalty – such as a fine, or prison sentence, which is like a cost – applied to trafficking or consumption. Alchian-Allen predicts a shift toward higher quality (or stronger) drugs, because with a fixed penalty and probability of getting caught, the relatively stronger substance is now relatively cheaper. Empirical work finds that this effect did occur during alcohol prohibition, and is currently occurring in narcotics (Thornton Economics of Prohibition, "Potency of illegal drugs").Another application proposed by Steven Cuellar uses Alchian-Allen to explain a well-known statistical phenomenon why women taking the contraceptive pill on average prefer “more masculine” men. This is once again a shift toward quality predicted on falling relative price based on a common ‘fixed price’ (taking the pill) of sexual activity. Jean Eid et al show that the result also applies to racehorses (the good horses get shipped out), and Staten and Umbeck show it applies to students – the good students go to faraway universities, and the good student in those places do the same. So that’s apples, drugs, sex and racehorses. What about the Internet and kittens?Allen-Alchian Explains Why the Internet Is Made of CatsIn analog days, before digitization and Internet, the transactions costs involved with various consumption items, whether commodities or media, meant that the Alchian-Allen effect pushed in the direction of higher quality, bundled product. Any additional fixed costs, such as higher transport costs, or taxes or duties, or transactions costs associated with search and coordination and payment, i.e. costs that affected all substitutes in the same way, would tend to make the higher quality item relatively less expensive, increasing its consumption.But digitisation and the Internet reverse the direction of these transactions costs. Rather than adding a fixed cost, such as transport costs, the various aspects of the digital revolution are equivalent to a fall in fixed costs, particularly access.These factors are not just one thing, but a suite of changes that add up to lowered transaction costs in the production, distribution and consumption of media, culture and games. These include: The internet and world-wide-web, and its unencumbered operation The growth and increasing efficacy of search technology Growth of universal broadband for fast, wide band-width access Growth of mobile access (through smartphones and other appliances) Growth of social media networks (Facebook, Twitter; Metcalfe’s law) Growth of developer and distribution platforms (iPhone, android, iTunes) Globally falling hardware and network access costs (Moore’s law) Growth of e-commerce (Ebay, Amazon, Etsy) and e-payments (paypal, bitcoin) Expansions of digital literacy and competence Creative commons These effects do not simply shift us down a demand curve for each given consumption item. This effect alone simply predicts that we consume more. But the Alchian-Allen effect makes a different prediction, namely that we consume not just more, but also different.These effects function to reduce the overall fixed costs or transactions costs associated with any consumption, sharing, or production of media, culture or games over the internet (or in digital form). With this overall fixed cost component now reduced, it represents a relatively larger decline in cost at the lower-quality, more bite-sized or unbundled end of the media goods spectrum. As such, this predicts a change in the composition of the overall consumption basket to reflect the changed relative prices that these above effects give rise to. See Figure 2 below (based on a blog post by James Oswald). The key to the economics of cute, in consequence of digitisation, is to follow through the qualitative change that, because of the Alchian-Allen effect, moves away from the high-quality, highly-bundled, high-value end of the media goods spectrum. The “pattern prediction” here is toward more, different, and lower quality: toward five minutes of “Internet animals”, rather than a full day at the zoo. Figure 2: Reducing transaction costs lowers the relative price of cat videos Consider five dimensions in which this more and different tendency plays out. Consumption These effects make digital and Internet-based consumption cheaper, shifting us down a demand curve, so we consume more. That’s the first law of demand in action: i.e. demand curves slope downwards. But a further effect – brilliantly set out in Cowen – is that we also consume lower-quality media. This is not a value judgment. These lower-quality media may well have much higher aesthetic value. They may be funnier, or more tragic and sublime; or faster, or not. This is not about absolute value; only about relative value. Digitization operating through Allen-Alchian skews consumption toward the lower quality ends in some dimensions: whether this is time, as in shorter – or cost, as in cheaper – or size, as in smaller – or transmission quality, as in gifs. This can also be seen as a form of unbundling, of dropping of dimensions that are not valued to create a simplified product.So we consume different, with higher variance. We sample more than we used to. This means that we explore a larger information world. Consumption is bite-sized and assorted. This tendency is evident in the rise of apps and in the proliferation of media forms and devices and the value of interoperability.ProductionAs consumption shifts (lower quality, greater variety), so must production. The production process has two phases: (1) figuring out what to do, or development; and (2) doing it, or making. The world of trade and globalization describes the latter part: namely efficient production. The main challenge is the world of innovation: the entrepreneurial and experimental world of figuring out what to do, and how. It is this second world that is radically transformed by implications of lowered transaction costs.One implication is growth of user-communities based around collaborative media projects (such as open source software) and community-based platforms or common pool resources for sharing knowledge, such as the “Maker movement” (Anderson 2012). This phenomenon of user-co-creation, or produsers, has been widely recognized as an important new phenomenon in the innovation and production process, particularly those processes associated with new digital technologies. There are numerous explanations for this, particularly around preferences for cooperation, community-building, social learning and reputational capital, and entrepreneurial expectations (Quiggin and Potts, Banks and Potts). Business Models The Alchian-Allen effect on consumption and production follows through to business models. A business model is a way of extracting value that represents some strategic equilibrium between market forms, organizational structures, technological possibilities and institutional framework and environmental conditions that manifests in entrepreneurial patterns of business strategy and particular patterns of investment and organization. The discovery of effective business models is a key process of market capitalist development and competition. The Alchian-Allen effect impacts on the space of effective viable business models. Business models that used to work will work less well, or not at all. And new business models will be required. It is a significant challenge to develop these “economic technologies”. Perhaps no less so than development of the physical technologies, new business models are produced through experimental trial and error. They cannot be known in advance or planned. But business models will change, which will affect not only the constellation of existing companies and the value propositions that underlie them, but also the broader specializations based on these in terms of skill sets held and developed by people, locations of businesses and people, and so on. New business models will emerge from a process of Schumpeterian creative destruction as it unfolds (Beinhocker). The large production, high development cost, proprietary intellectual property and systems based business model is not likely to survive, other than as niche areas. More experimental, discovery-focused, fast-development-then-scale-up based business models are more likely to fit the new ecology. Social Network Markets & Novelty Bundling MarketsThe growth of variety and diversity of choice that comes with this change in the way media is consumed to reflect a reallocation of consumption toward smaller more bite-sized, lower valued chunks (the Alchian-Allen effect) presents consumers with a problem, namely that they have to make more choices over novelty. Choice over novelty is difficult for consumers because it is experimental and potentially costly due to risk of mistakes (Earl), but it also presents entrepreneurs with an opportunity to seek to help solve that problem. The problem is a simple consequence of bounded rationality and time scarcity. It is equivalent to saying that the cost of choice rises monotonically with the number of choices, and that because there is no way to make a complete rational choice, agents will use decision or choice heuristics. These heuristics can be developed independently by the agents themselves through experience, or they can be copied or adopted from others (Earl and Potts). What Potts et al call “social network markets” and what Potts calls “novelty bundling markets” are both instances of the latter process of copying and adoption of decision rules. Social network markets occur when agents use a “copy the most common” or “copy the highest rank” meta-level decision rule (Bentley et al) to deal with uncertainty. Social network markets can be efficient aggregators of distributed information, but they can also be path-dependent, and usually lead to winner-take all situations and dynamics. These can result in huge pay-offs differentials between first and second or fifth place, even when the initial quality differentials are slight or random. Diversity, rapid experimentation, and “fast-failure” are likely to be effective strategies. It also points to the role of trust and reputation in using adopted decision rules and the information economics that underlies that: namely that specialization and trade applies to the production and consumption of information as well as commodities. Novelty bundling markets are an entrepreneurial response to this problem, and observable in a range of new media and creative industries contexts. These include arts, music or food festivals or fairs where entertainment and sociality is combined with low opportunity cost situations in which to try bundles of novelty and connect with experts. These are by agents who developed expert preferences through investment and experience in consumption of the particular segment or domain. They are expert consumers and are selling their “decision rules” and not just the product. The more production and consumption of media and digital information goods and services experiences the Alchian-Allen effect, the greater the importance of novelty bundling markets. Intellectual Property & Regulation A further implication is that rent-seeking solutions may also emerge. This can be seen in two dimensions; pursuit of intellectual property (Boldrin and Levine); and demand for regulations (Stigler). The Alchian-Allen induced shift will affect markets and business models (and firms), and because this will induce strategic defensive and aggressive responses from different organizations. Some organizations will seek to fight and adapt to this new world through innovative competition. Other firms will fight through political connections. Most incumbent firms will have substantial investments in IP or in the business model it supports. Yet the intellectual property model is optimized for high-quality large volume centralized production and global sales of undifferentiated product. Much industrial and labour regulation is built on that model. How governments support such industries is predicated on the stability of this model. The Alchian-Allen effect threatens to upset that model. Political pushback will invariably take the form of opposing most new business models and the new entrants they carry. Conclusion I have presented here a lesser-known but important theorem in applied microeconomics – the Alchian-Allen effect – and explain why its inverse is central to understanding the evolution of new media industries, and also why cute animals proliferate on the Internet. The theorem states that when a fixed cost is added to substitute goods, consumers will shift to the higher quality item (now relatively less expensive). The theorem also holds in reverse, when a fixed cost is removed from substitute items we expect a shift to lower quality consumption. The Internet has dramatically lowered fixed costs of access to media consumption, and various development platforms have similarly lowered the costs of production. Alchian-Allen predicts a shift to lower-quality, ”bittier” cuter consumption (Cowen). References Alchian, Arman, and William Allen. Exchange and Production. 2nd ed. Belmont, CA: Wadsworth, 1967. Anderson, Chris. Makers. New York: Crown Business, 2012. Banks, John, and Jason Potts. "Consumer Co-Creation in Online Games." New Media and Society 12.2 (2010): 253-70. Beinhocker, Eric. Origin of Wealth. Cambridge, Mass.: Harvard University Press, 2005. Bentley, R., et al. "Regular Rates of Popular Culture Change Reflect Random Copying." Evolution and Human Behavior 28 (2007): 151-158. Borcherding, Thomas, and Eugene Silberberg. "Shipping the Good Apples Out: The Alchian and Allen Theorem Reconsidered." Journal of Political Economy 86.1 (1978): 131-6. Cowen, Tyler. Create Your Own Economy. New York: Dutton, 2009. (Also published as The Age of the Infovore: Succeeding in the Information Economy. Penguin, 2010.) Cowen, Tyler, and Alexander Tabarrok. "Good Grapes and Bad Lobsters: The Alchian and Allen Theorem Revisited." Journal of Economic Inquiry 33.2 (1995): 253-6. Cuellar, Steven. "Sex, Drugs and the Alchian-Allen Theorem." Unpublished paper, 2005. 29 Apr. 2014 ‹http://www.sonoma.edu/users/c/cuellar/research/Sex-Drugs.pdf›.Earl, Peter. The Economic Imagination. Cheltenham: Harvester Wheatsheaf, 1986. Earl, Peter, and Jason Potts. "The Market for Preferences." Cambridge Journal of Economics 28 (2004): 619–33. Eid, Jean, Travis Ng, and Terence Tai-Leung Chong. "Shipping the Good Horses Out." Wworking paper, 2012. http://homes.chass.utoronto.ca/~ngkaho/Research/shippinghorses.pdf Potts, Jason, et al. "Social Network Markets: A New Definition of Creative Industries." Journal of Cultural Economics 32.3 (2008): 166-185. Quiggin, John, and Jason Potts. "Economics of Non-Market Innovation & Digital Literacy." Media International Australia 128 (2008): 144-50. Razzolini, Laura, William Shughart, and Robert Tollison. "On the Third Law of Demand." Economic Inquiry 41.2 (2003): 292–298. Staten, Michael, and John Umbeck. “Shipping the Good Students Out: The Effect of a Fixed Charge on Student Enrollments.” Journal of Economic Education 20.2 (1989): 165-171. Stigler, George. "The Theory of Economic Regulation." Bell Journal of Economics 2.1 (1971): 3-22. Thornton, Mark. The Economics of Prohibition. Salt Lake City: University of Utah Press, 1991.Thornton, Mark. "The Potency of Illegal Drugs." Journal of Drug Issues 28.3 (1998): 525-40.

Each community’s title deed carries the indelible blood stains of our ancestors. (Watson, "Howard’s End" 2)IntroductionAccording to the Oxford English Dictionary, the term coalition comes from the Latin coalescere or ‘coalesce’, meaning “come or bring together to form one mass or whole”. Coalesce refers to the unity affirmed as something grows: co – “together”, alesce – “to grow up”. While coalition is commonly associated with formalised alliances and political strategy in the name of self-interest and common goals, this paper will draw as well on the broader etymological understanding of coalition as “growing together” in order to discuss the Australian government’s recent changes to land rights legislation, the 2007 Emergency Intervention into the Northern Territory, and its decision to use Indigenous land in the Northern Territory as a dumping ground for nuclear waste. What unites these distinct cases is the role of the Australian nation-state in asserting its sovereign right to decide, something Giorgio Agamben notes is the primary indicator of sovereign right and power (Agamben). As Fiona McAllan has argued in relation to the Northern Territory Intervention: “Various forces that had been coalescing and captivating the moral, imaginary centre were now contributing to a spectacular enactment of a sovereign rescue mission” (par. 18). Different visions of “growing together”, and different coalitional strategies, are played out in public debate and policy formation. This paper will argue that each of these cases represents an alliance between successive, oppositional governments - and the nourishment of neoliberal imperatives - over and against the interests of some of the Indigenous communities, especially with relation to land rights. A critical stance is taken in relation to the alterations to land rights laws over the past five years and with the Northern Territory Emergency Intervention, hereinafter referred to as the Intervention, firstly by the Howard Liberal Coalition Government and later continued, in what Anthony Lambert has usefully termed a “postcoalitional” fashion, by the Rudd Labor Government. By this, Lambert refers to the manner in which dominant relations of power continue despite the apparent collapse of old political coalitions and even in the face of seemingly progressive symbolic and material change. It is not the intention of this paper to locate Indigenous people in opposition to models of economic development aligned with neoliberalism. There are examples of productive relations between Indigenous communities and mining companies, in which Indigenous people retain control over decision-making and utilise Land Council’s to negotiate effectively. Major mining company Rio Tinto, for example, initiated an Aboriginal and Torres Strait Islanders Policy platform in the mid-1990s (Rio Tinto). Moreover, there are diverse perspectives within the Indigenous community regarding social and economic reform governed by neoliberal agendas as well as government initiatives such as the Intervention, motivated by a concern for the abuse of children, as outlined in The Little Children Are Sacred Report (Wild & Anderson; hereinafter Little Children). Indeed, there is no agreement on whether or not the Intervention had anything to do with land rights. On the one hand, Noel Pearson has strongly opposed this assertion: “I've got as much objections as anybody to the ideological prejudices of the Howard Government in relation to land, but this question is not about a 'land grab'. The Anderson Wild Report tells us about the scale of Aboriginal children's neglect and abuse" (ABC). Marcia Langton has agreed with this stating that “There's a cynical view afoot that the emergency intervention was a political ploy - a Trojan Horse - to sneak through land grabs and some gratuitous black head-kicking disguised as concern for children. These conspiracy theories abound, and they are mostly ridiculous” (Langton). Patrick Dodson on the other hand, has argued that yes, of course, the children remain the highest priority, but that this “is undermined by the Government's heavy-handed authoritarian intervention and its ideological and deceptive land reform agenda” (Dodson). WhitenessOne way to frame this issue is to look at it through the lens of critical race and whiteness theory. Is it possible that the interests of whiteness are at play in the coalitions of corporate/private enterprise and political interests in the Northern Territory, in the coupling of social conservatism and economic rationalism? Using this framework allows us to identify the partial interests at play and the implications of this for discussions in Australia around sovereignty and self-determination, as well as providing a discursive framework through which to understand how these coalitional interests represent a specific understanding of progress, growth and development. Whiteness theory takes an empirically informed stance in order to critique the operation of unequal power relations and discriminatory practices imbued in racialised structures. Whiteness and critical race theory take the twin interests of racial privileging and racial discrimination and discuss their historical and on-going relevance for law, philosophy, representation, media, politics and policy. Foregrounding contemporary analysis in whiteness studies is the central role of race in the development of the Australian nation, most evident in the dispossession and destruction of Indigenous lands, cultures and lives, which occurred initially prior to Federation, as well as following. Cheryl Harris’s landmark paper “Whiteness as Property” argues, in the context of the US, that “the origins of property rights ... are rooted in racial domination” and that the “interaction between conceptions of race and property ... played a critical role in establishing and maintaining racial and economic subordination” (Harris 1716).Reiterating the logic of racial inferiority and the assumption of a lack of rationality and civility, Indigenous people were named in the Australian Constitution as “flora and fauna” – which was not overturned until a national referendum in 1967. This, coupled with the logic of terra nullius represents the racist foundational logic of Australian statehood. As is well known, terra nullius declared that the land belonged to no-one, denying Indigenous people property rights over land. Whiteness, Moreton-Robinson contends, “is constitutive of the epistemology of the West; it is an invisible regime of power that secures hegemony through discourse and has material effects in everyday life” (Whiteness 75).In addition to analysing racial power structures, critical race theory has presented studies into the link between race, whiteness and neoliberalism. Roberts and Mahtami argue that it is not just that neoliberalism has racialised effects, rather that neoliberalism and its underlying philosophy is “fundamentally raced and produces racialized bodies” (248; also see Goldberg Threat). The effect of the free market on state sovereignty has been hotly debated too. Aihwa Ong contends that neoliberalism produces particular relationships between the state and non-state corporations, as well as determining the role of individuals within the body-politic. Ong specifies:Market-driven logic induces the co-ordination of political policies with the corporate interests, so that developmental discussions favour the fragmentation of the national space into various contiguous zones, and promote the differential regulation of the populations who can be connected to or disconnected from global circuits of capital. (Ong, Neoliberalism 77)So how is whiteness relevant to a discussion of land reform, and to the changes to land rights passed along with Intervention legislation in 2007? Irene Watson cites the former Minister for Indigenous Affairs, Mal Brough, who opposed the progressive individual with what he termed the “failed collective.” Watson asserts that in the debates around land leasing and the Intervention, “Aboriginal law and traditional roles and responsibilities for caring and belonging to country are transformed into the cause for community violence” (Sovereign Spaces 34). The effects of this, I will argue, are twofold and move beyond a moral or social agenda in the strictest sense of the terms: firstly to promote, and make more accessible, the possibility of private and government coalitions in relation to Indigenous lands, and secondly, to reinforce the sovereignty of the state, recognised in the capacity to make decisions. It is here that the explicit reiteration of what Aileen Moreton-Robinson calls “white possession” is clearly evidenced (The Possessive Logic). Sovereign Interventions In the Northern Territory 50% of land is owned by Indigenous people under the Aboriginal Land Rights Act 1976 (ALRA) (NT). This law gives Indigenous people control, mediated via land councils, over their lands. It is the contention of this paper that the rights enabled through this law have been eroded in recent times in the coalescing interests of government and private enterprise via, broadly, land rights reform measures. In August 2007 the government passed a number of laws that overturned aspects of the Racial Discrimination Act 197 5(RDA), including the Northern Territory National Emergency Response Bill 2007 and the Aboriginal Land Rights (Northern Territory) Amendment (Township Leasing) Bill 2007. Ostensibly these laws were a response to evidence of alarming levels of child abuse in remote Indigenous communities, which has been compiled in the special report Little Children, co-chaired by Rex Wild QC and Patricia Anderson. This report argued that urgent but culturally appropriate strategies were required in order to assist the local communities in tackling the issues. The recommendations of the report did not include military intervention, and instead prioritised the need to support and work in dialogue with local Indigenous people and organisations who were already attempting, with extremely limited resources, to challenge the problem. Specifically it stated that:The thrust of our recommendations, which are designed to advise the NT government on how it can help support communities to effectively prevent and tackle child sexual abuse, is for there to be consultation with, and ownership by the local communities, of these solutions. (Wild & Anderson 23) Instead, the Federal Coalition government, with support from the opposition Labor Party, initiated a large scale intervention, which included the deployment of the military, to install order and assist medical personnel to carry out compulsory health checks on minors. The intervention affected 73 communities with populations of over 200 Aboriginal men, women and children (Altman, Neo-Paternalism 8). The reality of high levels of domestic and sexual abuse in Indigenous communities requires urgent and diligent attention, but it is not the space of this paper to unpack the media spectacle or the politically determined response to these serious issues, or the considered and careful reports such as the one cited above. While the report specifies the need for local solutions and local control of the process and decision-making, the Federal Liberal Coalition government’s intervention, and the current Labor government’s faithfulness to these, has been centralised and external, imposed upon communities. Rebecca Stringer argues that the Trojan horse thesis indicates what is at stake in this Intervention, while also pinpointing its main weakness. That is, the counter-intuitive links its architects make between addressing child sexual abuse and re-litigating Indigenous land tenure and governance arrangements in a manner that undermines Aboriginal sovereignty and further opens Aboriginal lands to private interests among the mining, nuclear power, tourism, property development and labour brokerage industries. (par. 8)Alongside welfare quarantining for all Indigenous people, was a decision by parliament to overturn the “permit system”, a legal protocol provided by the ALRA and in place so as to enable Indigenous peoples the right to refuse and grant entry to strangers wanting to access their lands. To place this in a broader context of land rights reform, the Aboriginal Land Rights (Northern Territory) Act 2006, created the possibility of 99 year individual leases, at the expense of communal ownership. The legislation operates as a way of individualising the land arrangements in remote Indigenous communities by opening communal land up as private plots able to be bought by Aboriginal people or any other interested party. Indeed, according to Leon Terrill, land reform in Australia over the past 10 years reflects an attempt to return control of decision-making to government bureaucracy, even as governments have downplayed this aspect. Terrill argues that Township Leasing (enabled via the 2006 legislation), takes “wholesale decision-making about land use” away from Traditional Owners and instead places it in the hands of a government entity called the Executive Director of Township Leasing (3). With the passage of legislation around the Intervention, five year leases were created to enable the Commonwealth “administrative control” over the communities affected (Terrill 3). Finally, under the current changes it is unlikely that more than a small percentage of Aboriginal people will be able to access individual land leasing. Moreover, the argument has been presented that these reforms reflect a broader project aimed at replacing communal land ownership arrangements. This agenda has been justified at a rhetorical level via the demonization of communal land ownership arrangements. Helen Hughes and Jenness Warin, researchers at the rightwing think-tank, the Centre for Independent Studies (CIS), released a report entitled A New Deal for Aborigines and Torres Strait Islanders in Remote Communities, in which they argue that there is a direct casual link between communal ownership and economic underdevelopment: “Communal ownership of land, royalties and other resources is the principle cause of the lack of economic development in remote areas” (in Norberry & Gardiner-Garden 8). In 2005, then Prime Minister, John Howard, publicly introduced the government’s ambition to alter the structure of Indigenous land arrangements, couching his agenda in the language of “equal opportunity”. I believe there’s a case for reviewing the whole issue of Aboriginal land title in the sense of looking more towards private recognition …, I’m talking about giving them the same opportunities as the rest of their fellow Australians. (Watson, "Howard’s End" 1)Scholars of critical race theory have argued that the language of equality, usually tied to liberalism (though not always) masks racial inequality and even results in “camouflaged racism” (Davis 61). David Theo Goldberg notes that, “the racial status-quo - racial exclusions and privileges favouring for the most part middle - and upper class whites - is maintained by formalising equality through states of legal and administrative science” (Racial State 222). While Howard and his coalition of supporters have associated communal title with disadvantage and called for the equality to be found in individual leases (Dodson), Altman has argued that there is no logical link between forms of communal land ownership and incidences of sexual abuse, and indeed, the government’s use of sexual abuse disingenuously disguises it’s imperative to alter the land ownership arrangements: “Given the proposed changes to the ALRA are in no way associated with child sexual abuse in Aboriginal communities […] there is therefore no pressing urgency to pass the amendments.” (Altman National Emergency, 3) In the case of the Intervention, land rights reforms have affected the continued dispossession of Indigenous people in the interests of “commercial development” (Altman Neo-Paternalism 8). In light of this it can be argued that what is occurring conforms to what Aileen Moreton-Robinson has highlighted as the “possessive logic of patriarchal white sovereignty” (Possessive Logic). White sovereignty, under the banner of benevolent paternalism overturns the authority it has conceded to local Indigenous communities. This is realised via township leases, five year leases, housing leases and other measures, stripping them of the right to refuse the government and private enterprise entry into their lands (effectively the right of control and decision-making), and opening them up to, as Stringer argues, a range of commercial and government interests. Future Concerns and Concluding NotesThe etymological root of coalition is coalesce, inferring the broad ambition to “grow together”. In the issues outlined above, growing together is dominated by neoliberal interests, or what Stringer has termed “assimilatory neoliberation”. The issue extends beyond a social and economic assimilationism project and into a political and legal “land grab”, because, as Ong notes, the neoliberal agenda aligns itself with the nation-state. This coalitional arrangement of neoliberal and governmental interests reiterates “white possession” (Moreton-Robinson, The Possessive Logic). This is evidenced in the position of the current Labor government decision to uphold the nomination of Muckaty as a radioactive waste repository site in Australia (Stokes). In 2007, the Northern Land Council (NLC) nominated Muckaty Station to be the site for waste disposal. This decision cannot be read outside the context of Maralinga, in the South Australian desert, a site where experiments involving nuclear technology were conducted in the 1960s. As John Keane recounts, the Australian government permitted the British government to conduct tests, dispossessing the local Aboriginal group, the Tjarutja, and employing a single patrol officer “the job of monitoring the movements of the Aborigines and quarantining them in settlements” (Keane). Situated within this historical colonial context, in 2006, under a John Howard led Liberal Coalition, the government passed the Commonwealth Radioactive Waste Management Act (CRWMA), a law which effectively overrode the rulings of the Northern Territory government in relation decisions regarding nuclear waste disposal, as well as overriding the rights of traditional Aboriginal owners and the validity of sacred sites. The Australian Labor government has sought to alter the CRWMA in order to reinstate the importance of following due process in the nomination process of land. However, it left the proposed site of Muckaty as confirmed, and the new bill, titled National Radioactive Waste Management retains many of the same characteristics of the Howard government legislation. In 2010, 57 traditional owners from Muckaty and surrounding areas signed a petition stating their opposition to the disposal site (the case is currently in the Federal Court). At a time when nuclear power has come back onto the radar as a possible solution to the energy crisis and climate change, questions concerning the investments of government and its loyalties should be asked. As Malcolm Knox has written “the nuclear industry has become evangelical about the dangers of global warming” (Knox). While nuclear is a “cleaner” energy than coal, until better methods are designed for processing its waste, larger amounts of it will be produced, requiring lands that can hold it for the desired timeframes. For Australia, this demands attention to the politics and ethics of waste disposal. Such an issue is already being played out, before nuclear has even been signed off as a solution to climate change, with the need to find a disposal site to accommodate already existing uranium exported to Europe and destined to return as waste to Australia in 2014. The decision to go ahead with Muckaty against the wishes of the voices of local Indigenous people may open the way for the co-opting of a discourse of environmentalism by political and business groups to promote the development and expansion of nuclear power as an alternative to coal and oil for energy production; dumping waste on Indigenous lands becomes part of the solution to climate change. During the 2010 Australian election, Greens Leader Bob Brown played upon the word coalition to suggest that the Liberal National Party were in COALition with the mining industry over the proposed Mining Tax – the Liberal Coalition opposed any mining tax (Brown). Here Brown highlights the alliance of political agendas and business or corporate interests quite succinctly. Like Brown’s COALition, will government (of either major party) form a coalition with the nuclear power stakeholders?This paper has attempted to bring to light what Dodson has identified as “an alliance of established conservative forces...with more recent and strident ideological thinking associated with free market economics and notions of individual responsibility” and the implications of this alliance for land rights (Dodson). It is important to ask critical questions about the vision of “growing together” being promoted via the coalition of conservative, neoliberal, private and government interests.Acknowledgements Many thanks to the reviewers of this article for their useful suggestions. 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