Diphtheria (corynebacterium Diphtheriae) :: essays research papers

Diphtheria (Corynebacterium diphtheriae) Corynebacteria are Gram-positive, aerobic, nonmotile, rod-shaped bacteria related to the Actinomycetes. They do not form spores or branch as do the actinomycetes, but they have the characteristic of forming irregular shaped, club-shaped or V-shaped arrangements in normal growth. They undergo snapping movements just after cell division which brings them into characteristic arrangements resembling Chinese letters. The genus Corynebacterium consists of a diverse group of bacteria including animal and plant pathogens, as well as saprophytes. Some corynebacteria are part of the normal flora of humans, finding a suitable niche in virtually every anatomic site. The best known and most widely studied species is Corynebacterium diphtheriae, the causal agent of the disease diphtheria. History and Background No bacterial disease of humans has been as successfully studied as diphtheria. The etiology, mode of transmission, pathogenic mechanism and molecular basis of exotoxin structure, function, and action have been clearly established. Consequently, highly effective methods of treatment and prevention of diphtheria have been developed. The study of Corynebacterium diphtheriae traces closely the development of medical microbiology, immunology and molecular biology. Many contributions to these fields, as well as to our understanding of host-bacterial interactions, have been made studying diphtheria and the diphtheria toxin. Hippocrates provided the first clinical description of diphtheria in the 4th century B.C. There are also references to the disease in ancient Syria and Egypt. In the 17th century, murderous epidemics of diphtheria swept Europe; in Spain "El garatillo" (the strangler"), in Italy and Sicily, "the gullet disease". In the 18th century, the disease reached the American colonies and reached epidemic proportions in 1735. Often, whole families died of the disease in a few weeks. The bacterium that caused diphtheria was first described by Klebs in 1883, and was cultivated by Loeffler in 1884, who applied Koch's postulates and properly identified Corynebacterium diphtheriae as the agent of the disease. In 1884, Loeffler concluded that C. diphtheriae produced a soluble toxin, and thereby provided the first description of a bacterial exotoxin. In 1888, Roux and Yersin demonstrated the presence of the toxin in the cell-free culture fluid of C. diphtheriae which, when injected into suitable lab animals, caused the systemic manifestation of diphtheria. Two years later, von Behring and Kitasato succeeded in immunizing guinea pigs with a heat-attenuated form of the toxin and demonstrated that the sera of immunized animals contained an antitoxin capable of protecting other susceptible animals against the disease. This modified toxin was suitable for immunizing animals to obtain antitoxin but was found to cause severe local reactions in humans and could not be used as a vaccine. In 1909, Theobald Smith, in the U.S., demonstrated that diphtheria toxin

Effective Management of Job in Post Merger and Acquisition Scenario

RAYAT LONDON COLLEGE SUBJECT:- RESEARCH METHODOLOGY COURSE:- MBA SEMESTER 1 LECTURER SUBMITTED BY SUBMISSION DATE DR. LANGESWARAN SUPRAMANIAN ARSHAD MUHAMMAD 14 DECEMBER 2007 â€Å"EFFECTIVE MANAGEMENT OF JOB REDUNDANCIES IN POST MERGER AND ACQUISITION SCENARIO (SERVICE SECTOR)† ASSIGNMENT TOPIC 1 TABLE OF CONTENTS 1. ABSTRACT 2. INTRODUCTION 3. MOTIVATION 4. RATIONALE 5. LITERATURE REVIEW 6. RESEARCH METHODOLOGY 7. FURTHER EVOLUTION 8. CONCLUSION 9. REFERENCES AND BIBLIOGRAPHIES Page NO 3 4 6 9 12 19 19 22 22 1. ABSTRACT This report introduces a practical model of training and development needs assessment to reduce redundancies stress on employees after merger and acquisition. The proposed model is competency-based, which allows for the incorporation to reduce redundancies in post merger situation. When redundancy is the only route available, employers invariably feel obliged to assist those affected with positive planning measures for what, at the time, can seem an uncertain future. However, this is not an easy task. Redundancy can be a difficult ordeal, hitting hard both mentally and emotionally and unless professionally implemented, employers will invariably fall short of ? having done enough‘ to really help. Everyone deals with redundancy in a different way. Being made redundant can provoke a range of emotions at different times, including shock, anger, loss, fear, denial or acceptance. Redundancy after M&A is a risk to all employees, and needs careful handling and counselling. Less recognised are the needs of those left behind. On the analogy of major disasters, they too demand meticulous attention to avoid deleterious effects both to themselves and to their organisations. The management of restructuring, redeployment or redundancy is important, not simply to be humanitarian, or for good public relations, but also because the effectiveness, vision and mission of the organisation that survives is at stake. Survival tips for both the individual and the organisation are indicated. 2. INTRODUCTION Since the late 1980s, the total number of mergers and acquisitions (M&As) has far surpassed the number that occurred throughout the 1960s. Whereas the M&As throughout the 1960s were mainly due to unions between conglomerates, the 1980s and 1990s has witnessed an increase in M&As between firms of different sizes and different industry types, Merger and acquisition would have corporate strategies directed at gaining competitive advantage and satisfying customers? eeds always have human resource implications, and tactics such as job redesign, multi-skilling, redeployment, training, paying for performance, layoffs and downsizing should be specifically directed at implementing the human resource strategies of organisations. Unfortunately, however, the strategic considerations which should accompany the use of these tactics are often absent. The primary purpose of merging and acquiring new firms is usually to improve overall performance by achieving synergy, or the more commonly described as the ? + 2 = 5? effect between two business units that will increase competitive advantage (Weber, 1996). Recent research indicates that these M&As have a negative impact on the economic performance of the new entity because of human resource implications mostly redundancies (Tetenbaum, 1999). Therefore, although M&As are usually extremely well planned out in terms of financial and legal aspects, the conclusion that has to be drawn is that these poor results have come to be attributed to poor human resource planning. Redundancies after M&As can be a difficult ordeal, hitting hard both mentally and emotionally and unless professionally implemented, employers will invariably fall short of ? having done enough‘ to really help. Redundancy is probably the most evocative and fear inducing form of organisational change for many workers. Each year in the UK, there are over 200,000 notified redundancies. What is perhaps of more concern is that many organisation merger and acquisition change programmes have relied heavily on redundancy even though they have been articulated as downsizing or, more euphemistically as rightsizing or business process eengineering (Champy, 1995). 4 The essence of research is to explore how well human resources are being managed within organisations and better to understand the impacts of organisational change in different sectors and at levels in the organisational hierarchy after merger and acquisition. Have pre-existing human resources strategies to cope with redundanci es after M&As would reduce the stress on employee and also on organisation. Human resources strategies like open up consultative and participative organisationwide discussion to seek out possibilities that minimise redundancies, establish sound two-way means of communication which permit employees to freely vent their feelings, with a guaranteed right of reply from the organisation, communicate constantly and effectively, actively evaluate impact, exercise effective leadership from the top, ensuring that the pain is shared, provide a clear reconciliation of the market and financial situation, offer immediate counselling and assistance to all those identified for redundancy set up a mutual support network for those made redundant and continue to offer human resources help where required are the core tools which can organisations should implement after redundancies in merger and acquisition situation. Mergers are not without their downsides. They can consume an incredible amount of time and money, legal and tax complications, and problems with mixing corporate cultures and last but not least the redundancies. It has been estimated that fully 50 percent never achieve the initial financial and market goals projected. Decisions to merge assume that synergy will develop between two organisations that combine resources and talent and achieve economies of scale and integrated technologies. Whenever two separate organisations merge, they want synergy. Each side hopes to benefit from the merger and initially willingly attribute benefit to the other. However, synergy does not occur easily or without effort. A merger may change the name of the company and management, but the real benefits occur when people ascribe to merged goals and ideals. There were more than 36,700 transactions with a combined value of more than US$3. 49 trillion (Thomson Financial, 2001). The number of jobs that these mergers impacted on has not been estimated, but conservatively it must run into the hundreds of thousands. For instance, at least 130,000 finance jobs have 5 disappeared in western Europe alone as a result of mergers and acquisitions in the 1990s (International Labour Organization, 2001). 3. MOTIVATION Post-merger depression begins the day top executives declare that the merger, of which the most obvious is losing one‘s job. But redundancy after M&A can be an opportunity for positive change. Time could be spent on self discovery and re-focusing e. g. advancement new people and forming new working opportunities, meeting merger is done. Employees often expressive many fears they are confronted with following a relationships, learning new skills, getting over the pain caused by the merger, and setting new goals as well as creating an organisation that is better than the two original separate organisations. Building on valuable training, experience, skills, talents and past achievements. While accommodating new work / life balance considerations and identifying new and as yet unrealised opportunities that only a fresh start can afford. Explores redundancy after M&A as a significant and pervasive outcome of organisational change. The need to manage the redundancy transition has provoked the development of new HRM policies and practices. Highlights interventions such as redundancies are often used by companies with little rigorous evaluation of their utility or benefit, yet their continued proliferation would suggest that they appear to have assumed essential credibility and value. The pervasive and complex nature of current changes dictates not only the need for a better understanding of the practices that exist but also an exploration of how HRM theory of redundancies can contribute to and enhance that understanding. The complexity of the situation for the survivors of redundancy after M&As means that no simple formula exists. The variables at play are diverse. It is often difficult to provide cause and effect data, reflected in an overall lack of evaluation. It appears that there have been few reported successful attempts to implement intervention strategies which support and assist the framework of organisational change after 6 redundancies due to M&As and personal transition for both those leaving and the survivors of a redundancy experience. One prime example is BBC model to deal with redundancies, considering that everyone's future at the BBC was uncertain during the 2004, including members of the HR department. BBC worked to build in the flexibility to provide as many courses as were needed and to ensure that those you were going to made redundant had sufficient clarity about their own careers first, to help them to provide the objectivity that those they were working with would need. Suggestions for managing redundancies would be to encourages organisations to develop strategies which reduce, avoid or limit redundancy after M seeks to ensure that if redundancy occurs, it is handled in accordance with the law seeks to raise awareness of strategies which assist those affected to retain self-respect and enhance employability. Redundancy is one of the most traumatic events an employee may experience. Announcement of redundancies will invariably have an adverse impact on morale, motivation and productivity. The negative effects can be reduced by sensitive handling of redundant employees and those remaining. If possible, it is preferable for an organisation to establish a formal procedure on redundancy after merger. In many organisations a formal agreement may have been negotiated and agreed between management and trade union or employee representatives. Some organisations deal with redundancies by an informal arrangement with a practice which varies for each redundancy or they may only start to consider the appropriate procedure for the first time when a redundancy situation arises. At the very least in order to plan and implement a redundancy situation properly, the following stages will be followed in most redundancies: o Planning o Invitation of volunteers o Consultation, both collective and individual o Use of objective selection criteria 7 Compliance with all three stages of statutory dismissal procedures o Advance notice of individual consultation meeting o Permitting a colleague to be present at consultation meetings o Opportunity to appeal o Allowing seeking of suitable alternat ive employment o Statutory or other redundancy payment o Relocation expenses o Helping redundant employees obtain training or alternative work. Of course the exact procedure varies according to the timescale and size of the redundancy after M. Mergers and acquisitions (M) are increasingly prevalent, powerful and risky corporate events. The resistance or support of people in the integration of two previously separate organisations plays a key role for their success or failure. As ? merged‘ corporations integrate previously separate organisations, they can often dis-integrate individual careers with lay-offs, reduced advancement opportunities, upset or changed career plans, and other resistance-generating changes. This is the poorest means of mobilizing motivation, experience, commitment and competence, all of which are usually seen as critical justifications for M in the first place. Organisations face opportunity to select new combinations and integrate work in ways that individual careers can be re-integrated into the goals of the M with the goals and motivations of participants affected by it, by recognizing and effectively supporting different motivational and competence profiles. Senior management who had been involved in M identified talent retention as their biggest challenge in leading a successful merger or acquisition, followed by making the deal generate long term value. Less skilled firms in the art of M also focused on talent management but failed to create the fundamental climate of ownership that recognised the value of staff. 8 Managing and developing talent will prove instrumental for organisations to retain their competitive position and deal with the twin challenges of leadership and growth. According to new research by Mercer Human Resource Consulting, France, the Netherlands, and the UK have the worst redundancy pay. Based on minimum statutory paid notice and severance pay for a white-collar employee aged 40, made redundant after 10 years on a salary of ? 20,000, the average redundancy pay across the EU was ? 11,163. But using the same comparison the redundancy pay would be just ? 5,000 in France and the Netherlands and ? 5,128 in the UK. In Spain and Italy the payment would be ? 25,464 and ? 18,276 respectively, and ? 15,000 for both Belgium and Austria. 4. RATIONALE The rationale for M activity is a key value-added role that the board can and should play. A value-based analysis can be strategic rationale of a deal, revealing its true underlying economics. For an acquisition to deliver improved financial performance, it must enhance the strategic position of the acquirer‘s businesses or the target‘s businesses. More precisely, it must improve either market economics or competitive position of the business units. No brainer deals that provide great returns by simply eliminating redundancies, achieving a lower cost of capital or lowering tax rates are virtually a thing of the past. So mergers and acquisitions must be justified through the strategic benefits that will be realised. Signs of human stress are present in all combinations, even the friendliest and bestmanaged ones. Manifestations of the merger syndrome appear in all varieties of corporate combination, be they mergers or acquisitions, friendly or hostile, domestic or international, involving companies of similar or different sizes and so on. Personal involvement in organisational mergers and acquisitions has served to foster an awareness of the various symptoms of the ? merger syndrome?. Twelve such indicators are preoccupation; imagining the worst; stress reactions; crisis management; constricted communication; illusion of control; clash of cultures; we vs. 9 they; superior vs. inferior; attack and defend; win vs. lose; and decisions by coercion, horse trading and default. (Schweiger et al. 1987) cite job security as the most important factor for employees during a merger, followed by pay and benefits, work autonomy, and performance feedback. Research has also indicated that the organisational change process in mergers is usually tightly controlled by management and decisions on job losses are driven solely by the need to reduce numbers (Kanter, 1986). Thus employees are commonly concerned not only with job security but also with how selection decisions are made. Related to this, a number of researchers have shown that perceptions of procedural fairness are a key factor in determining staff attitudes to, and experience of, merger change. In particular, the perceived fairness of redundancy procedures is reported to impact significantly on the attitudes of the staff that remain in the organisation (Brockner and Greenberg, 1990; Schweiger et al. , 1987, 1994). A number of organisations using a compulsory approach to redundancy selection made the point that once change is known to be about to occur there is more to be gained in terms of gaining the commitment of key players than in leaving these employees ? in the dark?. One organisation held briefing sessions for all its senior managers before the advent of a redundancy programme in order to provide reassurance, and to talk through strategic plans after the redundancies, with all main board directors present to field questions. This was designed to be open in nature so that these managers could in turn return to their staff to counter any ? doom and gloom? suggestions. Managers such as these have been used as the ? ears? of the organization in order to feed back issues which arise during this period of uncertainty, so that a response can be made by the organization in order to minimize any adverse effects. In spite of these benefits, other organisations stated that they did not reveal plans to anyone outside a very select planning group, fearful that leakage of such information might have more significant negative effects. However, these particular organisations tended to be the ones who bypassed any prior, general notification about intended redundancies, thereby moving to ? phase two? , which is the actual notification of 10 those affected. The disadvantage of this closed and compulsory strategy is the type of situation referred to at the start of this article. Indeed, this particular organisation did not repeat its experience when it faced the need to undertake a further round of redundancies: this time it declared the need to make further workforce reductions, requested volunteers and stated that it would only declare compulsory redundancies if there were insufficient volunteers. Reactions related to disbelief, betrayal, loss of motivation, lower morale, mistrust, uncertainty, insecurity and lower commitment to the organization and so on are undoubtedly more pronounced where there is no announcement or indication before the actual notification of those to be made redundant. To summarised the rationales of this report would be, Job redundancies are common phenomena in post merger, lack of secondary data, there is no support, continuity or implementation of the programs like this in any organisation, Collecting information in real time from both participating and non-participating employee groups after redundancies is a challenging task, the mono-method bias is another limitation of this study and last but not least the time limit. 11 5. LITERATURE REVIEW Author Year Bob Moore 2002 Surviving Title Authors Evaluation Report Evaluation a to compulsory redundancy and Several factors contribute to A number of organisations Thriving During successful M. The first is using a Merger or instilling a positive mindset approach Acquisition among all employees – and this selection made the point can only start at the top. Senior that once change is known management alignment and to be about to occur there is partnership sets the tone, as more to be gained in terms employees managers look for to their of gaining the commitment and of key players than in direction assurance during this important leaving these employees ? n time. Getting people and the dark?. One organization processes to work together is held briefing sessions for all the only way to make the new its senior managers before company work. A successful the advent of a redundancy management evaluate team should programme in order to each company‘s provide reassurance, and to ?personal best practices? and talk through strategic plans incorporate them into the newly after the redundancies, with combined organization. all main board directors Although 75 percent of M present to field questions. don‘t reach their stated goals of greater financial results, there is a formula designed to encourage success. Attention, time and financial resources must be applied to employees and their work processes, so the new company ends up with a motivated, ? can-do? workforce. 12 Christiane Demers 1999 Merger acquisition and Communication‘s critical role in Poor communication and in the implementation of change is mergers often cited in the literature. intensifies acquisitions stress for announcements as corporate wedding narratives Communication is presented as organisational a tool for diffusing members top because of the uncertainty their future. The management intentions and for about preparing context of minds action to a new communication strategies Managers serve to reduce uncertainty, egitimate change to encourage in which both management employee commitment to and employees can voice their opinions, and concerns, provide imminent transformations. desires information. Adrian Furnham 2006 Deciding on One of the occasional tasks of a Senior management who promotions and manager is to de cide on who in had been involved in M redundancies their reporting staff to promote identified talent retention as as well as, where applicable, their biggest challenge in who to make redundant. In large leading a successful merger organisations guidelines factors there may be or acquisition, followed by concerning to take which making the deal generate into long term value. Less skilled some firms in the art of M also on talent both consideration. Further organisations keep records on focused performance designed to which reduce are management but failed to the create the fundamental subjectivity in these sorts of climate of ownership that decisions. Nevertheless this is recognised always because a of difficult the decision staff. and the value of many powerful consequences not only for the individual involved, but also his/her working colleagues and the organisation as a whole. 13 Stephen A. W 1994 Downsizing Improve Strategic Position to Planned large scale reductions A successful merger is all in head-count, or redundancies, about cost savings, right? ave become commonplace in Wrong. The most important many industries worldwide. In thing is making sure that the practice many downsizings fail valuable talent from both to achieve desired long-term companies doesn't simply results. Presents results of a march out the door. survey among large Canadian Ma nagers behind the most firms which suggests Examination management some successful mergers and reasons. strategic of acquisitions spend as much of time addressing â€Å"people† downsizing reveals weaknesses issues such as integrating of both planning and cultures, managing talent, knowledge and implementation. management of Effective sharing human retaining key people as they esources is a prerequisite but do on cost savings, merging failures often arise from processes, technologies and inattention to other important divisions. aspects of organizational change. Suggests that a wellthought-out strategy should be accompanied innovation, by process re- business engineering and organizational learning. Bob Moore 2004 Surviving and Several factors contribute to Suggestions for managing Thriving During successful M&As. The first is redundancies would be to a Merger or instilling a positive mindset encourages organisations to strategies avoid or which limit M&As that if is among all employees – and this develop can only start at the top. Senior reduce, management alignment Acquisition and redundancy after ensure artnership sets the tone, as seeks to employees look to their redundancy occurs, it 14 managers for direction and handled in accordance with law seeks of to raise assurance during this important the time. Getting people and awareness strategies processes to work together is which assist those affected the only way to make the new to retain self-respect and company work. A successful enhance management evaluate team each employability. should Redundancy is one of the company‘s most traumatic events an ?personal best practices? and employee may experience. incorporate them into the newly Announcement combined of organization. redundancies will invariably Although 75 percent of M&As have an adverse impact on don‘t reach their stated goals of morale, motivation and greater financial results, there is productivity. a formula designed to encourage success. Attention, time and financial resources must be applied to employees and their work processes, so the new company ends up with a motivated, ? can-do? workforce. Adrian Thornhill 1995 The positive For those organizations which Redundancies after M&A management of declare redundancy survivors: issues lessons redundancies without can be an opportunity for prior warning, the effect may positive change. Time could come as a shock to all be spent on self discovery re-focusing e. g. nd employees – those who are not and to be made redundant as well as advancement those who are to go. This has opportunities, particularly been the case in meeting new people and non-unionized organisations forming new working where there has not been the relationships, legal requirement to undertake learning new skills, getting prior consultation. One financial over the pain caused by the 15 services organisation stated that merger, and setting new this led to a period of shock for goals as well as creating an 24 hours during which work organisation that is better effectively ground to a halt. The than the two original management of the organization separate organisations. hen had to work quickly to overcome this effect, through company-wide communication and by demonstrating that those to be made redundant would indeed be fairly in treated. unionized prior However, even organisations, where consultation occurs, there may be the feeling that ? little attention has been given to the survivors of redundancy?. Beth Taylor 2002 The right way to There is a growing awareness Human resources strategies handle redundancies among business leaders that the like open up consultative way an organisation handles and participative redundancies sends out a very organisation-wide strong messag e about its discussion to seek out corporate ethics and values. possibilities that minimise redundancies, establish ound two-way means of communication which permit employees to freely vent their feelings, with a guaranteed right of reply from the organisation, communicate constantly and effectively. 16 Ridha Khayyat 1998 Al- Training and The more organizations seek This report excellence, employees‘ the training and and introduces a development needs assessment: more practical model of training development to needs reduce on a education becomes imminent. In assessment organisation redundancies practical model contemporary for institutes partner information stress dissemination by employees after merger and itself leads to little or no results. acquisition. The proposed It is the ability to that of the model is competency- organization knowledge disseminate based, which allows for the leads to incorporation to reduce employees‘ skills and abilities redundancies in post merger development. What matters is situation converting technology through people into better organisational performance. One thing which is true about the twenty-first century is that the development of human resources is no longer an option but a must. Joseph Cangemi 2004 P. Exit strategies Job losses that are the result of A number of organisations mergers, sale of a company, using restructuring, and downsizing as approach organizations profitability in struggle a a to compulsory redundancy or selection made the point highly that once change is known competitive corporate world are to be about to occur there is common. The reduction process more to be gained in terms forces organisations to employ a of gaining the commitment variety of exit strategies as they of deal with the most key players than in difficult leaving these employees ? in aspect of downsizing – the the dark?. reduction of personnel from their organisation as a means of rapid reduction of expense to 17 the company. Considers some employee-sensitive strategies exit Bryn Jones, 2001 How Redundancies Worsen Inequality Collective redundancy (CR) is The complexity of the erhaps the most central but situation for the survivors of acknowledged employment factor redundancy in means formula that after no M&As simple The are Social least shaping contemporary Britain. exists. at play The ease with which employers variables can execute CR allows not only diverse. It is often difficult to fairly rapid and to and also of far-reaching provide cause and effect business data, reflected in an overall working lack of evaluation. It changes organisational practices, restoration but prompt appears that there have few reported to companies‘ been financial deficits, as well as succes sful changes in the skill and implement of strategies attempts intervention which support demographic workforces. profiles nd assist the framework of organisational change after redundancies due to M&As and personal transition for both those leaving and the survivors of a redundancy experience. 18 6. RESEARCH METHODOLOGY The primary data would be collected through, principally involving in-depth questioners and interviews with senior human resource practitioners and staff those who made redundant after M&As in the organisations. Before interviews occurred, these practitioners were supplied with a list of the questions. The ranged from the reasons for redundancies after M&As through to the impact of redundancies on organisational survivors, and organisational learning points for the future management of redundancies. A comprehensive assessment after redundancies can reveal how a company has emerged from the combination and how ready it is to achieve future goals. Secondary data would be collected by using publicly available information, public domino, Newspapers, Articles on Redundancies after M&A and International Journals on this topic. 7. FURTHER EVOLUTION The need to reduce costs is an opportunity critically to review current ways of doing things, to make major improvements using new technology or better methods and build strengths for the future. Reasons for the design of existing work flows are often buried in history and reflect yesterday? s crises. Many organisations have found that simply the exercise of mapping their major business processes can suggest dramatic improvements. Redundancies, duplications, inefficiencies and ? disconnects? are common in most processes or systems which have been in operation for a while. Massive reductions after M&As radically change managerial and workforce attitudes. Individuals no longer trust organisational commitment to long-term employment and morale has suffered in many cases. Corporate psyches have been forced to confront the possibility that growth may not return, and decline may be inevitable. Dealing with these issues effectively is the difference between a company that will continue to suffer the redundancy hangover long after the event and one that can 19 move on swiftly. Companies that manage the process of redundancies after M&As well in terms of being fair and transparent and in terms of giving a level of support to the employees when they‘re leaving, create an environment in which the people who are left behind say: ? Well, at least they treated them fairly, and it had to happen for a business reason – at least they looked after them and didn‘t just shove them out the door. The high level of consultation required makes good management sense. ?Two things: once the decision has been taken, how an employer conducts himself after that is going to be critical. It‘s about being responsive to employees — giving them an opportunity to have discussions; making sure information is available to them. All of that will be seen by employees who remain behind as well. Secondly, the communication process for those who remain is important, making sure they‘re not ignored or sidelined just because they‘re not part of the programme. They may well feel left out. To this end the following are some of the approaches that may assist: ? Have pre-existing human resources strategies to cope with such a situation. These should be open and transparent, subject to widespread consultation, and equitable. ? An organisation needs to provide a career management structure which enhances self-directed skill development. The opportunity to learn the transition skills necessary to career change are thereby created. ? In facing an experience, an organisation has to consider the impact on the symbols it has previously used to motivate staff, particularly its sense of mission. ? The management of restructuring, redeployment or redundancy is important, not simply as a humanitarian gesture, or for the sake of good public relations, but also because the effectiveness of the organisation that survives is at stake. ? Open up consultative and participative organisation-wide discussion as soon as danger signs appear. Seek out possibilities that minimise redundancies after merger. 20 ? Establish sound two-way means of communication which permit employees to freely vent their feelings, with a guaranteed right of reply from the organisation. Communicate constantly and effectively, and actively evaluate impact. ? Exercise effective leadership from the top, ensuring that the pain is shared, such as through voluntary salary cuts and the non-awarding or take-up of bonuses. ? Provide a clear reconciliation of the market and financial situation, options for amelioration, and the need for job cuts within this. ? Use clear and published criteria to determine the basis for redundancy, arrived at through consultation. ? Set up a mutual support network for those made redundant after M&As and continue to offer human resources help where required. Offer immediate counselling and assistance to all those identified for redundancy. Organisations should always attempt to avoid redundancies in post merger situation. Ways of doing this include: ? ? ? ? ? ? Natural wastage Recruitment freeze Stopping or reducing overtime Offer early retirement to volunteers (subject to age discrimination issues) Retraining or redeployment Offering existing employee‘s sabbaticals and secondments. 21 8. CONCLUSION Handling redundancies after M&As is a difficult task where decisions have to be made as to numbers, timing and criteria. The detail should be fully discussed with employee representatives, with the objective of getting agreement about the way matters should be handled. A successful merger is all about cost savings, right? Wrong. The most important thing is making sure that the valuable talent from both companies doesn't simply march out the door or made redundant. Managers behind the most successful mergers and acquisitions spend as much time addressing â€Å"people† issues such as integrating cultures, managing talent, sharing knowledge and retaining key people as they do on cost savings, merging processes, technologies and divisions. 9. REFERENCES AND BIBLIOGRAPHIES 1. 2. 3. Furnham, A. (2001), Management Competency Frameworks, CRF, London. Greenberg, J. (1996), The Quest for Justice on the Job, Sage, London. Sessa, V. , Taylor, J. (2000), Executive Selection: A Systematic Approach for Success, Jossey-Bass, New York, NY. 4. Lynch, J. G. , Lind, B. (2002), â€Å"Escaping merger and acquisition madness†, Strategy & Leadership, Vol. 30 No. 2, pp. 5-12. 5. Anderson, H. A. 1993), Successful Training Practice: A Manager‘s Guide to Personnel Development, Basil Blackwell, Oxford. 6. 7. 8. Hoke, W. (2002), â€Å"What's your exit strategy? â€Å", The edge, pp. 5-12. Business Week (2002), ? Exit strategies discussed?. Fowler, A ( 1993), Redundancy, Institute of Personnel Management, London. 22 9. Charlesworth, K (1996), Are Managers Under Stress? , Institute of Management, London. 10. Nathan, R. (2007), Colleagues turn counsellors in BBC's pioneering program Human Resource Management International Digest, Volume 15 Number 5 pp. 11-13. 11. 12. 13. Kanter, c (1986), Managing HRM risk in a merger, London. Business Week (1994), â€Å"The pain of downsizing†, Business Week. Doherty, N. Horsted, J. (1995), â€Å"Helping survivors to stay on board†, People Management, No. 12 January, pp. 26-31. 14. Institute of Personnel and Development (1996), The IPD Guide on Redundancy, IPD, London. 15. Schlesinger, L. (2002), UK offers worst redundancy pay in Europe, Financial Director. 16. Yehuda, B. (2000), ? Survivor syndrome? – a management myth? , Journal of Managerial Psychology Volume 15 Number 1 2000 pp. 29-45, Emerald. 17. Steven, H. (2000), Anatomy of a merger: behaviour of organizational factors and processes throughout the pre- during- post- stages, Management Decision, Volume 38 Number 10 2000 pp. 674-684, Emerald. 18. Noeleen, D. 2005), The role of outplacement in redundancy management, Volume 27 Number 4 1998 pp. 343-353, Emerald. 19. Shay, S. (2006), Downsizing and the impact of job counselling and retraining on effective employee responses, Career Development International, Volume 11 Number 2 2006 pp. 125-144, Emerald. 20. Stephen, A. (2001), Downsizing to Improve Strategic Position, Volume 32 Number 1 1994 pp. 4-11, Emerald. 23 21. Gerald, V. (2002), Counselling remaining employees in redundancy situations, Volume 7 Number 7 2002 pp. 430-437, Emerald. 22. Al-Khayyat, R. (1998), Training and development needs assessment: a practical model for partner institutes, Volume 22 Number 1 1998 pp. 18-27, Emerald. 24

Gender Roles In A Dolls House - 1270 Words

During the nineteenth century, the common European play that centered around families focused on the values and portrayal of a happy marriage. Rarely was this normality challenged. â€Å"The father of modern drama†, Henrik Ibsen, broke away from this by exposing the stories of scandalous family secrets. His play A Doll’s House, acts on this idea as readers get a peek into the lives of a nineteenth century, middle class husband and wife, Torvald and Nora Helmer. Ibsen goes in depth on the issues that a typical couple face behind closed doors and brings to light some of the social factors that shape and alter people’s behaviors and lives. Ibsen strategically uses the marriage of the Helmers’ as a way to illustrate the social constructs and†¦show more content†¦Also, the way Torvald calls Nora by comparing her to little animals is degrading because it signifies that she has a lack of intelligence and must depend on him to survive. This puts him on a pedestal which he believes is correct as men will always be better than women. It also demonstrates how Ibsen discreetly informs us that all Nora is to Torvald is a doll much like true European history where men controlled and oversaw almost every aspect in society. Women may depend on men to survive, but a driving force for all characters is money. This entity is a necessity, but has become a fixation of those living in Europe during the nineteenth century. Most conversations that occur in the play seem to arise from a conflict related to money and many serious decisions and actions the characters decide to take are based off of this fixation. Kristine Linde, growing up in poverty, leaves her true love to marry a richer man so that she could care for her family. Similarly, Krogstad is willing to go to great lengths in order to maintain his position at the bank. If he loses his source of income, he will no longer be able to care for his children and he is willing to sabotage the He lmers’ lives for his. Anne-Marie, the nanny, sacrificed and gave away her own child and happiness, so that she could uphold a sustainable lifestyle with Nora’s wealthier family. For Nora, money is her life. She illegallyShow MoreRelatedGender Roles : A Doll s House1807 Words   |  8 PagesRabab Abouahmad Dr.K.Zelinksy English 201 Section 09 17 November 2015 Gender roles in A Doll’s House Gender roles are socially constructed and direct a specific group to conform to roles that are expected of them. In A Doll’s House, Henrik Ibsen draws attention to the roles set towards women during the nineteenth century and demonstrates society’s expectation that women are inferior and dependent on a male figure. In the novel, women are portrayed as being in a vulnerable position, and have noRead MoreGender Roles Of A Doll House By Henrik Ibsen1706 Words   |  7 PagesGender roles in dramatic works have seen as polarizing and stereotypical since the beginning of dramatic theatre. During the Greek festival of Dionysia, Greek male actors would don masks and other adornments, portraying male and female characters in performances. The female characters were typically written as mothers or wives, exhibiting flaws that made them inferior to their male counterparts. Aristophanes broke this trend with his feminist driven comedy Lysistrata. The Greek playwright built compli catedRead MoreGender Roles Of A Doll s House And Ghosts Essay2281 Words   |  10 PagesGender Roles in A Doll’s House and Ghosts Throughout much of English language literature, gender and sex are equated with specific human traits. Strength is male and weakness is female. Men are stable and women are capricious. Logic is masculine and imagination is feminine. Ibsen uses stereotypical gender attributes in his characterization of Nora and Torvald throughout A Doll House, and then abruptly reverses the stereotypes in the final moments of the play to show that inner strength and weaknessRead MoreGender And Gender Roles Have Radically From The Time Henrick Ibsen s A Doll House1203 Words   |  5 Pages The idea of gender and gender roles have evolved minimally from the time Henrick Ibsen â€Å"A Doll House,† was first published. In the late 1800s, just before the beginning of the first wave of feminism in the United States and Europe, women were looking for ways to gain independence from their â€Å"duty† to marry a man, have children, and live a life to home and yearned for the freedom to choose wh at kind of lives they wanted to live, what they wanted to do, etc. In the beginning of the play, the viewsRead MoreChanging The World : One Play At A Time1644 Words   |  7 Pagesabout one hundred years ago, gender roles were still very specific and consisted of the man working and supporting the family, and the woman taking care of the home and the family. Women had very little voice in that time and were often treated with little respect due to the cultural norm that men were superior. Two historically influential plays that were written during the birth of feminism are quintessential to the rise of free expression among women. A Doll House by Henrik Ibsen, and TriflesRead MoreHow Gender Roles Are Predetermined by the Environment1305 Words   |  6 PagesHow gender roles are predetermined by the environment What is male? What is female? The answers to these questions everyone may depend on the types of gender roles they were exposed to as a child. Gender roles can be defined as the behaviours and attitudes expected of male and female members of a society by that society. Basically to make it clear the pattern of masculine or feminine behaviours of an individual that is defined by a particular culture and that is largely determined by a childsRead MoreToys Are Not Pop Out Of The Womb With Ideas Of Gender Roles797 Words   |  4 PagesChildren do not pop out of the womb with ideas of gender roles, nor do they have any expectations about their future careers. It is of interest to many that the gender stereotypes and gender roles seen in toys marketed for children highly resembles those seen in adult life. At an early age, many children, especially those in the western world, have already developed ideas about careers and lifestyles suitable for boys or girls. It is obvious that these ideas can be learned through interactions withRead MoreA Doll s House By Henrik Ibsen1544 Words   |  7 Pagesbeen questions generated on the gender roles of the society. Expectations can differentiate upon the behaviors and attitudes that affect men and women within tho se societies. In A Doll’s House, the gender roles match those that are consistent to the real world expectations of women’s rights. Henrik Ibsen, author of A Doll’s House, uses his play to represent the traditional gender roles of the time and even go further in depth to explain the reality of it all. Gender roles are supposed to be the way malesRead MoreAnalysis Of Henrik Ibsen s A Doll House Essay981 Words   |  4 Pages Gender expectation and stereotypes are common in the United States today, although many men and women are working hard to alert them. According to our traditional stereotypes, men are strong and dominant, while women are weak and submissive. There are moments in the person’s life when men do not appreciate their wives and go across their limits. This view sounds a lot like what Henrik Ibsen wrote about in his play, A Doll House. Ibsen presented gender roles through social roles, identityRead MoreHenrik Ibsen s A Doll s House13 02 Words   |  6 Pages A Doll s House by Norwegian playwright Henrik Ibsen is a play about the story of Nora Helmer, a childish woman who once borrowed money from a worker named Krogstad for the sole purpose of saving the life of her husband, Torvald Helmer. Her husband treated her like a child throughout their entire marriage due to his gender superiority and due to this treatment she leaves him at the end of the play. Most people view Nora Helmer as a feminist heroine due to her ability to stand up and break free from

Introduction. Gestational Diabetes Mellitus (Gdm)By...

Introduction Gestational Diabetes Mellitus (GDM) by definition is a carbohydrate intolerance that is developed or recognized for the first time during pregnancy (Chen, Chuang, Fang, Kuo, Lee, Li, Lin, NIen,Wu, 2017). With a drastic increase of GDM in recent years, attention and concern has been brought to the topic. GDM is linked to poor pregnancy outcomes including but not limited to; hypertension, macrosomia, maternal depression, neonatal hypoglycemia and stillbirth (Jagiello Chertok, 2015). With these negative pregnancy outcomes, there is a much greater chance of NICU (Neonatal Intensive Care Unit) admission and that comes with the potential for further issues. To avoid these issues, proper detection of GDM is necessary for all age†¦show more content†¦Overall, the main focus of the study was to examine the experiences of these women with breastfeeding in the three month postpartum period (Jagiello Chertok, 2015). The women who participated in this study were asked to do so by medi cal professionals upon diagnosis of GDM. In order for their interviews to be used in the final data analysis, they had to have delivered a child within the last year, delivered a healthy term infant, and had to be older than eighteen years old (Jagiello Chertok, 2015). If they did not fit this criteria, they were not asked to be apart of the study. Once the twenty seven participants were chosen, they completed a series of focus groups and individual interviews. The transcripts from the interviews and focus groups were analyzed and three large themes emerged in the study (Jagiello Chertok, 2015). These themes included breastfeeding challenges and support, milk supply challenges, and concern for their infant’s health. The majority of the women interviewed expressed that they were encouraged to solely breastfeed upon delivery of their child. Although most attempted to breastfeed initially, many had difficulties doing so and it was concluded this may have been because of their GDM (Jagiello Chertok, 2015). Neonatal hypoglycemia, jaundice, and cesarean births led to a decrease in skin to skin contact following delivery and in result led to difficulty with feedings. Many of these women also experienced delayed breast milkShow MoreRelatedPre- Pregnancy Body Mass Index and Weight Gain During Pregnancy1992 Words   |  8 Pageswith Gestational Diabetes and Hypertension, and Birth Outcomes’ theorized in their introduction that â€Å"maternal obesity at conception increases the risk of maternal and or/ fetal complications in pregnancy, and labor and birth† (Heude , et al., 2012). In addition, they also confer that â€Å"the fetal complications that may result in the fetus will adversely affect the fetus after birth† (Heude, et al., 2012). The operational definitions of medical terminology used in this study are that Gestational DiabetesRead MoreFactors That Influences Blood Glucose Control2932 Words   |  12 PagesAbstract Background: Diabetes is the most dangerous and common life long-health condition which affects mankind irrespective of age. Diabetes is a boon for the health care provider as it is a very demanding and complex disease. It is very essential that this killer disease must be identified early and significant treatment must be entitled to the patient as soon as it is detected. By creating a good awareness of this disease and its manifestations, the increasing number of mortality and morbidity

Major Challenges to Piagets Theory of Cognitive Development

What are the major challenges to Piagets theory of cognitive development and what aspects still have value? To answer this question, Piagets theory of development should be explained along with Vygotskys theory and the connectionist theory of development, and then each should be compared with the others. Once this has been achieved the main similarities and differences will be summarized, and finally the areas of Piagets theory that have not been undermined by other theories will be reiterated. In Piagets opinion, Intelligence is not how we would class it today, he believed that intelligence covered all mental thought. He did believe however that the development of intelligence was an evolutionary matter not something that†¦show more content†¦During this stage the child starts to use symbolism so the development of language is very fast during this period, but they can not see other points of view, it is all from their own perception. Piaget believed that the child in this stage was not capable of logical thought (Lee and Gupta). In the concrete operational stage between the ages of seven and twelve, children become capable of logical thought, they also start to be able to think abstractly. However they are best suited to visible or concrete objects and things they can see (Lee and Gupta). Once the child has reached the formal operations stage from twelve years onwards it becomes more practiced at abstract processing, carrying out problem solving systematically and methodically thus completing the cognitive development process. Once a new stage is reached the learning from the previous stages is not discarded, it is used as a base for the new learning, like a scaffold to build from. It has been found that some children pass through the stages at different rates (Crain 1992), but all the stages are believed to be passed through in the same order and unless there is a medical problem to prevent the progression all the stages will be passed through before the adult brain is formed. Piaget believed that there were three processes involved in moving from one stage to the next these were assimilation accommodation and equilibrium. Assimilation is the process of converting new information soShow MoreRelatedJean Piaget s Theory Of Cognitive Development943 Words   |  4 PagesJean Piaget’s theories of cognitive development broke new ground in the field of Psychology leading to the extension of further research into the area of developmental psychology. In this essay I seek to examine these theories whilst considering their current relevance to modern psychology and society. A major part of Piaget’s theory focuses around the idea of schemas; a set of linked mental representations used to make sense of the world. According to Piaget (1952), we are born with a small setRead MoreThe Critique of Piagets Theories Essay1620 Words   |  7 PagesCritique of Piagets Theories Jean Piaget (1896 – 1980) was a constructivist theorist. He saw children as constructing their own world, playing an active part in their own development. Piaget’s insight opened up a new window into the inner working of the mind and as a result he carried out some remarkable studies on children that had a powerful influence on theories of child thought. This essay is going to explain the main features and principles of the Piagetian theory andRead MorePiagets Theory of Cognitive Development Essays1715 Words   |  7 Pagesa lifelong interest in how individuals, especially children, use cognitive development to adapt to the world around them. Piaget published his first paper by the age of 10, completed his bachelor’s degree by the age of 18, and at the age of 22 received his PhD from the University of Neuchatel. Piaget spent many years of his life researching the developmental and cognitive knowledge of children. The Theory of Cognitive Development places focus on human intelligence and developmental thinking. â€Å"InfluencedRead MoreJean Piaget s Theory Of Knowing921 Words   |  4 Pageswas a developmental psychologist and philosopher from Switzerland. He is known for his epistemological studies with children. He was the first to make a systematic study of cognitive development. Piaget was also the Director of the International Bureau of Education. He was â€Å"the great pioneer of the constructivist theory of knowing.† He was known as the second best psychologist after Skinner by the end of the 20th century. Throughout his career, Jean Piaget declared that â€Å"only education is capableRead MorePiagets and Vygotskys Theories in the Classroom Essays1371 Words   |  6 PagesSince the early 1900’s psychologists have developed theories about how the human brain develops and how humans learn. Cognitive development is the construction of thought processes, including remembering, problem solving, and decision-making, from childhood through adolescence to adulthood (Wells, 2011). There are many factors that play vital roles in how we learn, some of which are intelligence, reasoning and memory. There are different theories as to how children learn. Some believe that babiesRead MoreEssay on Psychology1023 Words   |  5 Pagesbehaviour in an objective way. †¢social learning theory/cognitive behaviourism †¢attachment theory †¢evolutionary theory †¢behavioural genetics †¢Piaget’s theory of cognitive development †¢Erikson’s theory †¢developmental systems Define and describe the following research methods †¢correlational study †¢experimental study †¢cross sectional study †¢longitudinal study Study Questions 1. Define cohort and briefly summarize at least one major difference in how different cohorts, past andRead MoreConstructivism1400 Words   |  6 PagesConstructivism Learning Theory Constructivism learning theory is a philosophy which enhances students logical and conceptual growth. The underlying concept within the constructivism learning theory is the role which experiences-or connections with the adjoining atmosphere-play in student education. The constructivism learning theory argues that people produce knowledge and form meaning based upon their experiences. Two of the key concepts within the constructivism learning theory which create the constructionRead MoreVygotsky And Vygotsky s Theory Of Choice908 Words   |  4 PagesSingleton, 2010). Jean Piaget and Lev Vygotsky are two well-known cognitive psychologist who each had theories regarding language development and cognition. Both Piaget and Vygotsky had similarities in their theories as well as differences between them. While they were both conveyed great contributions into the development of current psychology, Vygotsky’s ideas are notably the theory of choice in development. Jean Piaget’s theory suggested that children progressed through stages while they wereRead MorePiaget vs. Vygotsky1120 Words   |  5 PagesThe theory of cognitive development is defined as the development of the ability to think and reason. There are many theorists who have studied cognitive theories and the most famous is Jean Piaget. Cognitive development covers the physical and emotional stages of a child. The basic premise for cognitive development is to show the different stages of the development of a child so you can understand where the child might be in their development. Understanding cognitive development will betterRead MoreThe Development Of The Cognition1013 Words   |  5 PagesThe development of the cognition in the early years of life (2-6 year olds) is the assembly of the thought processes. The thought processes are comprised of memory, problem solving, and decision-making (Encyclopedia of Children’s Health). Universally all children’s thought processes consist of these three abilities; however, there are cases where the child doesn’t have the ability or can be impaired in one or more of these abilities. Several theories of how a child in the early years thinks have

Chile Economic History Free Essays

This PDF is a selection from an out-of-print volume from the National Bureau of Economic Research Volume Title: Reform, Recovery, and Growth: Latin America and the Middle East Volume Author/Editor: Rudiger Dornbusch and Sebastian Edwards, eds. Volume Publisher: University of Chicago Press Volume ISBN: 0-226-15745-4 Volume URL: http://www. nber. We will write a custom essay sample on Chile Economic History or any similar topic only for you Order Now org/books/dorn95-1 Conference Date: December 17-18, 1992 Publication Date: January 1995 Chapter Title: Trade Policy, Exchange Rates, and Growth Chapter Author: Sebastian Edwards Chapter URL: http://www. nber. rg/chapters/c7649 Chapter pages in book: (p. 13 – 52) 1 Trade Policy, Exchange Rates, and Growth Sebastian Edwards 1. 1 Introduction After decades of protectionist policies, most of Latin America began to open up to the rest of the world in the late 1980s. This process, pioneered by Chile, is perhaps the most impressive achievement of the structural adjustment programs of the last decade. It has effectively put an end to more than four decades of generalized import substitution policies aimed at encouraging an industrial sector, that turned out to be largely inefficient. The process leading to these trade reforms has not been easy. As recently as in the mid-1980s the protectionist view was still dominant in many parts of Latin America. In fact, the debt crisis of 1982 pr ovided a new impetus to the protectionist paradigm. Initially, many analysts interpreted the crisis as a failure of â€Å"the world economic order† and argued that the only way for Latin America to avoid the recurrence of this type of shocks was to further isolate itself from the rest of the world, through selective protectionism and government intervention. This sentiment was compounded by the fact that a number of observers considered the experiences of the Southern Cone countries-Argentina, Chile, and Uruguay-with liberalization reforms during the 1970s as Sebastian Edwards is chief economist for Latin America and the Caribbean at the World Bank. He is also the Henry Ford I1 Professor of International Business Economics at the Anderson Graduate School of Management, University of California, Los Angeles, and a research associate of the National Bureau of Economic Research. The author is grateful to discussants at the conference for helpful comments and to participants at a seminar at the Instituto Tecnologico Autonorno de Mexico (ITAM), Mexico City, for helpful discussions. He thanks Fernando Losada for excellent research assistance. 1. Even though the experiences of the individual Latin American countries varied during 195080, in the majority of them some variant of inward-looking development was the dominant policy. Since the early 1960s a number of trade liberalization attempts have taken place in the region. Almost every one of them has ended in frustration. In fact, until the late 1970s-1980s very little progress was made in this area. 13 14 Sebastian Edwards a failure. This view has been clearly synthesized by Lance Taylor (1991, 119), who has argued that the â€Å"trade liberalization strategy is intellectually moribund† and that there are â€Å"no great benefits (plus some costs) in following open trade and capital market strategies† (141). From here he goes on to say that â€Å"development strategies oriented internally may be a wise choice towards the century’s end† (141). Immediately following the eruption of the debt crisis, it seemed that increased protectionism was indeed the path that Latin American countries had chosen as a possible way out of their problems. Even Chile, the strongest supporter of free trade, tripled its import tariffs. * As a result of this, in the mid1980s Latin America had one of the most distorted external sectors in the world, with extremely high import tariffs and, in some cases, quantitative restrictions that covered every single import item (see table 1. 1). However, by 1987-88 it became increasingly apparent that a permanent solution to the region’s conomic problems would require a fundamental change in its development strategy. In particular, policymakers began to realize that the long-standing protectionist trade policy was central to the region’s problems. The poor performance of the Latin American countries offered a dramatic contrast to the rapidly growing East Asian countries that had aggressively imp lemented outward-oriented strategies. With the help of the multilateral institutions, a larger and larger number of countries began to reduce their levels of protection during the late 1980s and early 1990s. This trade reform process has been supplemented with broad deregulation and privatization, and is proceeding at an increasingly rapid pace. Tariffs have been drastically slashed, in many cases import licenses and prohibitions have been completely eliminated, and a number of countries are actively trying to sign free trade agreements with the United States. Latin America’s long tradition with protectionist policies molded the region’s economic structure in a fundamental way, creating a largely inefficient manufacturing sector. Tariffs and prohibitions also generated a severe antiexport bias that discouraged both growth and diversification of exports4 This process took place through two main channels. First, tariffs and other forms of protection increased the cost of imported intermediate materials and capital goods used in the production of exportable goods, reducing their effective rate of protection. Second, and perhaps more important, the maze of protectionist policie s resulted in massive real exchange rate â€Å"overvaluation† that reduced 2. However, as I argued in Edwards (1988a), in many countries this increase in protectionism was dictated by necessity. 3. There has long been a literature documenting the consequences of protectionism in the Latin American economies. For recent studies, see the Latin American cases covered in the Michaely, Choski, and Papageorgiou (1991) project. 4. In the 1960s some countries decided to implement export promotion schemes based on government support and adjustable exchange rates. To some extent this was partially successful in Brazil. However, as Fishlow (1991) has pointed out, this development did little to reduce Brazil’s vulnerability to foreign shocks. 15 Trade Policy, Exchange Rates, and Growth Import Protection in the Developing World, 1985 (%) Total Tariff Protection= South America Central America Caribbean North Africa Other Africa West Asia Other Asia 51 Table 1. 1 Non-tariff Barriers Coverageb 60 100 23 85 86 I1 21 66 17 39 36 5 25 Source; Erzan et al. (1989). Note; The data on both tariffs and NTBs reported here are weighted averages. ‘Includes tariffs and paratariffs. bMeasures as a percentage of import lines covered by NTBs. the degree of competitiveness of exports. s Paradoxically, the policies that were supposed to reduce Latin America’s dependency on the worldwide business cycle ended up creating a highly vulnerable economic structure, where the sources of foreign exchange were concentrated on a few products intensive in natural resources (Fishlow 1985). The trade liberalization programs implemented during the last decade have two basic policy objectives. First, these reforms have sought to reduce the antiexport bias of commercial policies. It is expected that, once negative effective rates of protection and overvalued exchange rates are eliminated, exports will not only grow rapidly but will also become more diversified. The second fundamental objective of trade reforms is to transform international trade into â€Å"the engine of growth. † The new literature on â€Å"endogenous† growth has stressed the role of openness in explaining cross-country growth differentials over the long run. For example, Romer (1989) has argued that more open economics can take advantage of larger markets, increasing their degree of efficiency and their rate of growth. Other authors, including Grossman and Helpman (1991a, 1991b) and Edwards (1992b), have recently argued that openness affects the speed and efficiency with which small countries can absorb technological innovations developed in the industrial world. This idea, based on an insigh t first proposed by John Stuart Mill, implies that countries 5. Krueger (1978) documents these developments for a large number of countries. DiazAlejandro (1975, 1978) argues that real exchange rate overvaluation was one of the most negative economic developments in Argentina. For an analysis of a large number of Latin countries, see Bianchi (1988). For an early discussion on the Chilean case, see Behrman (1976). Since 1967 Colombia pursued a crawling-peg exchange rate policy explicitly aimed at avoiding overvaluation. The overall degree of protection, however, remained high (Garcia-Garcia 1991). 6. Traditional neoclassical growth models concentrated on the effect of national economic policies on the level of income per capita. The new generation of endogenous growth models have shifted attention to the relationship between different policies and the rate of growth of the economy. See Lucas (1988). 16 Sebastian Edwards with a lower level of trade distortions will experience faster total factor productivity growth and thus will grow faster than countries that inhibit international competition. ’ The purpose of this paper is to explore, from different perspectives, the relationship between trade liberalization and growth. The analysis deals with both long-mn and transitional issues. I first concentrate (section 1. 2) on the longrun relation between trade regimes and productivity growth. I use a broad fiftyfour-country data set to investigate the way in which trade distortions have affected productivity growth in the 1971-82 period. The results obtained support the view that more open economies tend to have faster rates of productivity growth than countries that have distorted international trade. In sections 1. 3 and 1. 4, I discuss some of the most important problems faced during the transition by ountries engaged in trade liberalization programs. While in section 1. 3 I focus on general transitional issues at an analytical level, in section 1. 4 I deal with the recent Latin American trade reforms. I first document the extent of trade liberalization. Second, I investigate whether, as predicted by some authors, these reforms have been associated with faster productivity growth. In section 1. 5 I discuss the recent behavior of real exchange rates in Latin America , emphasizing the way in which they are likely to affect the sustainability of the trade reforms. Finally, in section 1. 6 I present a summary of the paper, and I discuss some of the unresolved issues related to Latin American trade policy. 1. 2 Openness and Growth: Cross-Country Evidence 1. 2. 1 A Simple Model A number of researchers have found that factor accumulation explains between one-half and two-thirds of long-run growth (Fischer 1988). The large unexplained residual in growth accounting exercises has been attributed to â€Å"technological progress† or â€Å"productivity gains. From a policy perspective a key question is what determines these productivity improvements. In particular, it is important to understand whether national domestic policies-including financial and trade policies-can affect the pace of productivity growth. If this is the case, policymakers will have additional degrees of freedom to pursue those avenues that will enhance long-run performance. The recent interest on â€Å"endogenous† growth models has generated a revival in applied rese arch on the determinants of growth. Some authors have empha- 7. In chapter 17 of his Principles ofPolitical Economy (1848) Mill said that â€Å"a country that produces for a larger market than its own can introduce a more extended division of labor, can make greater use of machinery, and is more likely to make inventions and improvements in the process of production. † Arthur Lewis makes a similar proposition in his 1955 classic book on economic growth. See Tybout (1992) for a survey on the early empirical work in this area. 17 Trade Policy, Exchange Rates, and Growth sized the role of openness in determining the pace at which countries can absorb technological progress originating in the rest of the world. Edwards (1992), for example, has recently assumed that there are two sources of total factor productivity (TFP) growth: (1) a purely domestic source stemming from local technological improvements (innovation); and (2) a foreign source related to the absorption of inventions generated in other nations (imitation). More specifically, assu me that the country’s ability to appropriate world technical innovations (or to imitate) depends on two factors: positively on the degree of openness of the economy and, also positively, on the gap between the country’s level of TFP and â€Å"the world’s’’stock of TFP. The first channel is the â€Å"openness effect† discussed by Lewis (1955): more open countries have an advantage in absorbing new ideas generated in the rest of the world. In this context â€Å"more open† should be interpreted as refemng to a less distorted foreign trade sector. The second channel is a â€Å"catch-up† effect, common to growth models based on â€Å"convergence† notions. If the aggregate production function is defined as y , = Af(K,,L,),then TFP is A, = yj’. ), and total productivity growth is (AIA). The role of the two sources of technical progress discussed above-innovation and immitation-can be captured by the following simple expression: A = (Y + [pw + ? A ) , ( T ] where and y are positive parameters, A* is the level of world’s (appropriable) TFP, and w is the rate of growth of world’s TFP (that is, A(* = Aie†Ã¢â‚¬Ëœ). P is a parameter between zero and one that measures the country’s ability to absorb productivity improvements originating from the rest of the world, and is assumed to be a negative function of the level of trade distortions in the economy (6). where 6 is an index of trade distortions that takes a higher value when international trade, both in imports and/or exports, becomes more distorted. Parameter a is the basic rate of domestic productivity growth or innovation, which for simplicity is assumed to be exogenous. On the other hand, (y(A* – A)/A) is the â€Å"catch-up† term that says that domestic productivity growth will be faster in nations whose stock of knowledge lags further behind the world’s accumulated stock of appropriable k n ~ w l e d g e . ~ In this setting the path through time of domestic TFP will be given byâ€Å"’ 8. Grossman and Helpman (1991a) provide a series of elegant models along these lines. 9. I assume that not all inventions generated in the world can be freely appropriated. In that sense, A* could be interpreted as the accumulated stock of innovations in the more advanced countries that have spilled over to the rest of the world. 10. This, of course, is the solution to differential equation (1). 18 Sebastian Edwards (3) It follows from equation (3) that the long-run rate of growth of domestic TFP will depend on whether (y – a – pw) 5 0. If (y – a – pw) 0, in the steady-state TFP will grow at the rate of worlds productivity w. This means that the level of domestic TFP (and of GDP) will be a function of the degree of trade intervention, with higher trade distortions resulting in a lower level of real income. A key implication of this result is that countries that engage in trade liberalization programs will be characterized, during the transition between two steady states, by higher rates of productivity growth and thus by faster rates of GDP growth. A second case appears when (y – a – pw) 0. Long-run TFP growth (AIA)will depend on how large the world’s rate of growth of TFP (w) is relative to the domestic rate of productivity improvement. If w (a-S)/(l – p), domestic TFP will grow in the steady state at the world rate w. If w ( a – y ) / (1 – p), and (y – LY – Po) 0, however, the long-run equilibrium rate of TFP growth will be equal to ( a + p w – S)ll and will depend negatively on 6, the country’s level of trade distortions. That is, in this case more open countries (those with low 6) will grow faster during steady-state equilibrium. This is because in this case the domestic source of technological inventions is strong enough to drive, even in the steady state, the aggregate rate of technological innovations. 2 The model developed above suggests that TFP growth will depend on the degree of trade distortions in the economy, and on a catch-up term that measures the gap between the country’s and â€Å"the world’s’’ level of productivity. I constructed a cross-country data set to test these implications of the model. More specifically, I esti mated equations of the following type: (4) P = b, + bl6, , + b2g, + C a , xzn + Pâ€Å", where p, is the average rate of growth of TFP in country n; 6,, is, as before, an index of trade distortions; g, is the catch-up term; the x, are other possible determinants of TFP growth; and JA is an error term. Recently, Barro (1991), Edwards (1992), and Roubini and Sala-i-Martin (1992), among others, have suggested that, in addition to the degree of openness, productivity growth will also be affected by the following factors: (1) human capital, usually measured by schooling attainment; (2) the importance of government in the economy measured by schooling attainment; (2) the im11. Of course, in this case, (a + Po – 6 ) w. 12. In Grossman and Helpman’s (1991a) micromodel of technological progress, it is also possible that, under some circumstances, more open economics will exhibit higher long-run growth. 9 Trade Policy, Exchange Rates, and Growth portance of government in the economy measured by the ratio of government expenditure to GDP; (3) the degree of political instability; and (4) the inflation rate. 13 In the estimation of equation (4) reported below, I have incorporated these variables as possible determinants of productivity growth. 1. 2. 2 Data Definitions and Source s TFP growth. A problem faced in the estimation of equations of the type of (4) refers to the measurement of TFP growth. In particular, it is difficult to obtain long time series of capital stocks for a large number of countries. In this paper I deal with this problem by constmcting three measures of TFP growth from the residuals of country-specific GDP growth regressions. These indices are denoted TFP1, TFT2, and TFP3. The specific methodology used in constructing each of these indices is presented in appendix A. I4 Trade distortions. Traditionally, studies that have investigated the relationship between trade policy and economic performance have had difficulties measuring the extent of trade distortions. In this paper I tackle this problem by using two variables. In most of the basic estimates I use the ratio of total revenue from taxes on foreign trade-import tariffs plus export taxes-over total trade as a proxy for trade distortions. This variable is measured as an average for 1971-82. Since this variable, denoted TRADETAX, measures the â€Å"true† extent of trade distortions with error, in the estimation of the TFP growth equation I also use an instrumental variable technique that tries to correct for rneasurement error. The second proxy I use is the 1971-82 average trade dependency ratio-imports plus exports as a percentage of GDP. These two indices of trade distortions were constructed with raw data obtained from the International Monetary Fund (IMF). Catch-up term. Following the recent literature on endogenous growth (Barro 1991; Edwards 1992), I use initial GDP per capita-for year 1971 in this case-as a measure of the gap between a particular country’s level of productivity and that of the world. This variable is denoted as GDP71; the data were obtained from Summers and Heston (1988). The coefficient of this variable is expected to be negative, indicating that countries with a lower initial per capita GDP have more â€Å"catching up† to do and thus will grow aster. Human capital. I use two indices. The first one is the attainment of secondary education in 1981. The second one is the increase in secondary education coverage between 1961 and 1981. When alternative indices, such as secondary and higher education, were used, the results obtained were not altered. The 13. See, for example, Barro (19 91). 14. Naturally, these indices are at best proxies for TFF’ growth. formally, we can think that they measure TFP growth with error. To the extent that this measurement error term is additive, it can be collapsed into disturbance p in equation (4). 20 Sebastian Edwards data were obtained from the World Bank’s World Development Report. The coefficient of this variable is expected to be positive. Role of government. This index is defined as the share of government over GDP and is taken from Summers and Heston ( 1 988). Barro (1991) has argued that this coefficient should be negative, capturing the effect that greater government activities tend, in general, to crowd out the private sector. Political instability. This variable is defined as the average perceived probability of government change and is obtained from Cukierman, Edwards, and Tabellini ( 1992). 5 Its coefficient in the TFP growth equations is expected to be negative, reflecting the fact that in politically unstable situations economic agents do not devote their full energies to pursue economic objectives. Injation tax. This variable is defined as the average collection of inflation tax for 1971-82 and is computed as Tm, where T is the rate of inflation and m is the ratio of MI to GDP. The coefficient of this variable is expected to be negative, reflecting the effects of higher inflation on uncertainty and economic activity. . 2. 3 Econometric Results Tables 1. 2 and 1. 3 summarize the results obtained from the estimation of several versions of equation (4). Table 1. 2 contains weighted least squares estimates-with population in 1971 as weight-for all three measures of TFP growth;lb table 1. 3 presents instrumental variables regressions for the TFPl definition of productivity growth. (When the other two indices were used, the results were not altered significantly. ) As can be seen from these tables, the results are highly satisfactory. Almost every coefficient has the expected sign and is significant at conventional levels. Particularly important for the discussion pursued in this paper is that in every regression the proxies for trade distortions and openness are highly significant. Moreover, the computation of standardized beta coefficients indicate that trade impediments are the second most important explanatory variable of TFP growth, after the catch-up term. † As pointed out above, both the TRADETAX coefficient and the trade dependency ratio are imperfect proxies of trade distortions. In particular, they do not capture directly the role of quantitative restrictions on trade. In order to deal with this measurement error problem I estimated instrumental-variables ver15. These authors computed this index from a probit analysis on government change using pooled data for 1948-8 1. 16. In simple ordinary estimates, least squares heteroskedasticity was detected. Barro (1911) and Edwards (1992). among others, also used weighted least squares in equations of this type. 17. In equation (4. 1) the standardized beta coefficient of TRADETAX is -0. 5; that of GDWl is -0. 78. 21 Trade Policy, Exchange Rates, and Growth Table 1. 2 Total Factor Productivity Growth Regressions: Cross-Country Results (weighted least squares) Eq. 4. 1 Eq. 4. 2 Eq. 4. 3 Eq. 4. 4 Eq. 4. 5 Eq. 4. 6 Definition of TFP growth† Constant GDP7 1 TRADETAX Trade dependency Government Education TFP 1 -0. 013 (- 1. 041) – 1. 9E-06 (-3. 433) -0. 076 (-3,033) TFP 1 -0. 012 (- 1. 326) -7. 3E-07 (- 1. 92 9) – TFP2 -0. 018 (-1,418) -1. 8E-06 (-2. 960) -0. 074 (-2. 620) – TFP2 -0. 005 (-0. 439) -1. lE-06 (-2. 451) – TFP3 0. 074 (6. 163) -3. E-06 ( – 3. 673) -0. 199 (-4. 902) TFP3 0. 030 (1. 772) -1. 5E-06 ( -2. 187) – -6. lE-04 ( – 2. 429) I . 19E-04 (1. 536) 0. 017 (3. 147) -4. 2E-04 (- 1. 708) 1 S6E-07 (2. 130) – -6. 5E-04 (-2. 292) 5. 90E-05 (0. 675) – 0. 025 (3. 9 10) -4. 1E-04 (- 1. 433) 1. 30E-04 (1. 560) – – 2. OE-03 (-5. 157) – 0. 025 (2. 480) -2. OE-03 (-4. 827) 1. 20E-04 (0. 895) A Education Political instability Inflation tax – 1. 60E-04 (1. 453) -0. 014 ( – 1. 607) – – -0. 017 ( -2. 1 17) 0. 400 54 R’ N -0. 017 (-2. 480) 8. 3E-05 (0. 540) 0. 35 1 52 -0. 026 (-2. 846) 0. 492 54 – -0. 43 (-5. 253) 8. 8E-05 (0. 487) 0. 487 52 -0. 023 ( – 1. 802) 0. 598 52 -2. 7E-05 (-0. 921) 0. 416 52 Notes: t-statistics in parentheses. N is the number of observations; R2 is the coefficient of determination. See appendix B for a list of the countries considered in this regression. â€Å"or exact explanations on how TFPI, TFP2, and TFP3 were constructed, see appendix A. sions of some of these equations. In reestimating equation (4) I used the trade penetration ratio of imports to GDP as instruments for TRADETAX. I8 The results obtained are presented in table 1. 3. As can be seen, they confirm those discussed previously and provide additional support to the view that, after controlling for other factors, countries with more open and less distorted foreign trade sectors have tended to exhibit a faster rate of growth of TFP, over the long run, than those nations with a more distorted external sector. The results presented in tables 1. 2 and 1. 3, however, provide no information on the transition from a closed economy to one that is more open and integrated to the rest of the world. I turn to those issues in sections 1. 3-1. 5. 18. The instruments themselves don’t have to be measured free of error. Of course, the use of instrumental variables is not the only way of dealing with measurement error. In Edwards (1992) I use reversed regressions to construct intervals for a different proxy of openness in standard growth equations for a group of thirty countries. 22 Sebastian Edwards Table 1. 3 Total Factor Productivity Growth Regressions: Instrumental Variables (dependent variable TFPl) Eq. 4. 7 Constant GDF’7 1 Eq. 4. 8 TRADETAX Government Education Political instability Inflation tax R 2 N 0. 036 (1. 689) -3. 4E- 06 (-2. 766) -0. 171 (-2. 32) -4. 9E-04 (- 1. 708) 3. 00E -05 (2. 130) -0. 029 (-2. 333) -8. 1E- 05 (-0. 776) 0. 248 52 0. 050 (2. 037) -3. 7E-06 (-2. 677) -0. 185 (-2. 314) -5. 5E-04 (-2. 292) 4. 808-05 (0. 675) -0. 040 (-2. 823) -2. 58-05 (-0. 939) 0. 392 52 Notes: t-statistics in parentheses. N is the number of observations; RZis the coefficient of determination. The following instruments were used a constant, GDP71, government, education, trade dependency, imports/GDP ratio, political instability, and inflation tax. These equations were weighted by population in 1971. 1. 3 Policy Issues during a Trade Liberalization Transition The analysis presented in section 1. 2 provides support for the hypothesis that in the long run more open economies have experienced faster productivity growth than countries that distort international trade. However, as the former communist countries have recently found out, designing a strategy for moving from a controlled to a liberalized economy is not an easy task. Two fundamental problems have to be addressed in the transition toward freer trade. First, it is important to determine what is the adequate speed of reform. For a long time analysts argued for gradual iberalization programs (Little, Scitovsky, and Scott 1970; Michaely 1985). According to these authors gradual reforms would give firms time for restructuring their productive processes and thus would result in low dislocation costs in the form of unemployment and bankruptcies. These reduced adjustment costs would, in turn, provide the needed political support for the liberalization program. Recently, however, the gradua list position has been under attack. There is increasing agreement that slower reforms tend to lack credibility, inhibiting firms from actually engaging in serious restructuring. Moreover, the experience of Argentina in the 1970s has shown that a gradual (and preannounced) reform allows those firms negatively affected by it to (successfully) lobby against the reduction in tariffs. According to this line of reasoning, faster reforms are more credible and thus tend to be sustained through time (Stockman 1982). 23 Trade Policy, Exchange Rates, and Growth The thinking on the speed of reform has also been influenced by recent empirical work on the short-run unemployment consequences of trade liberalization. Contrary to traditional conventional wisdom, a study directed by Michaely, Choski, and Papageorgiou (1991) on liberalization episodes in nineteen countries strongly suggests that, even in the short run, the costs of reform can be small. Although contracting industries will release workers, those expanding sectors positively affected by the reform process will tend to create a large number of employment positions. The Michaely, Choski and Papageorgiou study shows that in sustainable and successful reforms the net effectthat is, the effect that nets out contracting and expanding sectors-on shortrun employment has been negligible. A key question, then, is what determines a successful reform? Most historical studies on the subject have shown that maintaining a â€Å"competitive† real exchange rate during the transition is one of the most, if not the most, important determinants of successful trade reforms. A competitive, that is depreciated, real exchange rate encourages exports, and helps maintain external equilibrium at the time the reduction in tariffs has made imports cheaper. The second problem that has to be addressed when designing a liberalization strategy refers to the sequencing of reform (Edwards 1984). This issue was first addressed in the 1980s in discussions dealing with the Southern Cone experiences, and emphasized the macroeconomic consequences of alternative sequences. It was generally agreed that resolving the fiscal imbalance and attaining some degree of macroeconomic reform should constitute the first stage of a structural reform. On subsequent steps, most agreed that the trade liberalization reform should precede the liberalization of the capital account, and that financial reform should be implemented simultaneously with trade reform. The behavior of the real exchange rate is at the heart of this policy prescription. The central issue is that liberalizing the capital account would, under most conditions, result in large capital inflows and in an appreciation of the real exchange rate (McKinnon 1982; Edwards 1984; Harberger 1985). The problem with an appreciation of the real exchange rate is that it will send the â€Å"wrong† signal to the real sector, frustrating the reallocation of resources called for by the trade reform. The effects of this real exchange rate appreciation will be particularly serious if, as argued by Edwards (1984), the transitional period is characterized by â€Å"abnormally† high capital inflows, and the economy is characterized by high adjustment costs. If the opening of the capital account is postponed, however, the real sector will be able to adjust, and the new allocation of resources will be consolidated. According to this view, only at this time should the capital account be liberalized. More recent discussions on the sequencing of reform have expanded the analysis and have included other markets. An increasing number of authors have argued that reform of the labor market-particularly removal of distortions that discourage labor mobility-should precede trade reform, as well as relaxation of capital controls. It is even possible that liberalization of trade 24 Sebastian Edwards in the presence of highly distorted labor markets will be counterproductive, generating overall welfare losses in the country in question (Edwards 1992b). As the preceding discussion has suggested, there is little doubt that the behavior of the real exchange rate is a key element during a trade liberalization transition. According to traditional manuals on â€Å"how to liberalize,† a large devaluation should constitute the first step in a trade reform profess. Bhagwati (1978) and Krueger (1978) have pointed out that in the presence of quotas and import licenses a (real) exchange rate depreciation will reduce the rents received by importers, shifting relative prices in favor of export-oriented activities and thus reducing the extent of the antiexport bias. † Maintaining a depreciated and competitive real exchange rate during a trade liberalization process is also important in order to avoid an explosion in imports growth and a balance-of-payments crisis. Under most circumstances a reduction in the extent of protection will tend to generate a rapid and immediate surge in imports. On the other hand, the expansion of exports usually takes some time. Consequently, there is a danger that a trade liberalization reform will generate a large trade balance disequilibrium in the short run. This will not happen, however, if there is a depreciated real exchange rate that encourages exports and helps maintain imports in check. However, many countries have historically failed to sustain a depreciated real exchange rate during the transition. This failure has mainly been the result of expansionary macroeconomic policies, and has resulted in speculation, international reserves losses, and, in many cases, the reversal of the reform effort. In the conclusions to the massive World Bank project on trade reform, Michaely, Choski, and Papageorgiou (1991) succinctly summarize the key role of the real exchange rate in determining the success of liberalization programs: â€Å"The long term performance of the real exchange rate clearly differentiates ‘liberalizers’ from ‘nonliberalizers†Ã¢â‚¬â„¢ (1 19). Edwards (1989) used data on thirty-nine exchange rate crises and found that in almost every case real exchange rate overvaluation gave rise to drastic increases in the degree of protectionism. 1. 4 Recent Trade Liberalization Reforms in Latin America During the last few years trade liberalization reforms have swept through Latin America; every country in the region has today a significantly more open trade sector than in the early and mid-1980s. The pioneer in the iberalization process was Chile, which between 1975 and 1979 unilaterally eliminated quantitative restrictions and reduced import tariffs to a uniform level of 10%. After a brief interlude with higher tariffs (at the uniform level of 30%) Chile currently has a uniform tariff of l l % and no licenses or other forms of quantitative controls. Uruguay implemented a reform in 1978 and, after a brief reversal, pushed forward once again in 1986. Bolivia and Mexico embarked on their 19. See Krueger (1978, 1981) and Michaely, Choski , and Papageorgiou (1991). 25 Trade Policy, Exchange Rates, and Growth eforms in 1985-86, followed by a series of countries in the late 1980s. At the current time a number of countries, including Brazil, are proceeding steadily with scheduled rounds of tariff reduction and the dismantling of quantitative restrictions. However, it is still unclear whether all these reforms will be sustained, becoming a permanent feature of the Latin economies, or whether some of them will be reversed. Developments in Argentina in October 1992 indeed suggest that in some countries higher tariffs may be implemented, once again, in the near future. The Latin American trade reforms have been characterized by four basic elements: (1) the reduction of the coverage of nontariff barriers (NTBs), including quotas and prohibitions; (2) the reduction of the average level of import tariffs; (3) the reduction of the degree of dispersion of the tariff structure; and (4) the reduction or elimination of export taxes. In this section I document the extent of the recent liberalization programs, and I provide a preliminary evaluation of the effects of these reforms on productivity growth and exports expansion. 1. 4. 1 The Policies Nontariy Barriers A fundamental component of the trade reform programs has been the elimination, or at least the severe reduction, of NTBs coverage. During the early and mid-1980s in some countries, such as Colombia and Peru, more than 50% of import positions were subject to licenses or outright prohibitions. In Mexico NTBs coverage reached almost 100% of import categories in 1984, as was the case in most of Central America in 1984 (table 1. 1). Table 1. 4 contains data on protectionism in 1985-87 and 1991-92, and shows that in almost every country the coverage of NTBs has been dramatically reduced. † In a number of cases NTBs have been fully eliminated. The process through which NTBs have been eased has varied from country to country. In some cases, such as Honduras, they were initially replaced by (quasi) equivalent import tariffs and then slowly phased out. In other countries, like Chile, NTBs were rapidly eliminated without a compensating hike in tariffs. As table 1. 4 shows, in spite of the progress experienced in the last few years, significant NTBs coverage remains in a number of countries. In most cases these NTBs correspond to agricultural products. For example, in Mexico approximately 60%of the agriculture’s sector tariff positions were subject to im20. These are unweighted averages and thus are not comparable to those presented in table 1. 1. There has been a long discussion in applied international trade theory on whether tariffs and NTBs should be measured as weighted or unweighted averages. Both views have some merits and some limitations. An obvious problem of the weighted average approach (where the weights are the import shares) is that more restrictive distortions will tend to have a very small weight. In the extreme case, prohibitive tariffs that effectively ban the importation of a particular item will have a zero weight! Corden (1969)provides an early and still highly relevant discussion on these issues. Table 1. 4 The Opening of Latin America: Selected Countries Tariff Protection (tariffs plus paratariffs, unweighted averages) Coverage of Nontariff Barriers (unweighted averages) Range of Import Tariffs 1980s Min. Max. (%o) Current Min. Year 1991 1991 1992 1992 1991 1992 1991 1992 1992 1990 1991 1992 1992 1991 Max. (%) Country Argentina Bolivia Brazil Chile Colombia Costa Rica Ecuador Guatemala Mexico Nicaragua Paraguay Peru Uruguay Venezuela 1985 28. 0 20. 0 80. 0 36. 0 83. 0 92. 0 50. 0 50. 0 34. 0 54. 0 71. 7 64. 0 32. 0 30. 0 1991-92 15. 0 8. 0 21. 1 11. 0 6. 7 16. 0 18. 0 19. 0 4. 0 n. a. 16. 0 15. 0 12. 0 17. 0 1985-87 31. 9 25. 0 35. 3 10. 1 73. 2 0. 8 59. 3 7. 4 12. 7 27. 8 9. 9 53. 4 14. 1 44. 1 1991-92 8. 0 0. 0 10. 0 0. 0 1. o 0. 0 n. a. 6. 0 20. 0 n. a. 0. 0 0. 0 Year 1987 1985 1987 1987 1986 1986 1986 1986 1985 1986 I984 1987 1986 1987 (%I 0. 0 (%I 0. 0 5. 0 0. 0 0. 0 0. 0 0. 0 1. o 0. 0 1 . o 0. 1. O 0. 0 0. 0 10. 0 0. 0 5. 0 0. 0 ~ 55. 0 20. 0 105. O 20. 0 200. 0 100. 0 290. 0 100. 0 100. 0 100. 0 44. 0 120. 0 45. 0 135. 0 0. 0 11. 0 0. 0 5. 0 2. 0 5. O 0. 0 0. 0 3. 0 5. 0 10. 0 0. 0 22. 0 10. 0 65. 0 11. 0 15. 0 20. 0 40. 0 20. 0 20. 0 10. 0 86. 0 15. 0 30. 0 50. 0 Source: World Bank, International Economics Department database; UNCTAD (1987); Erzan et al. (1989). 27 Trade Policy, E xchange Rates, and Growth port licenses in mid-1992. In fact, an important feature of the region’s liberalization programs is that they have proceeded much more slowly in agriculture than in industry. This has largely been the result of the authorities’ desire to isolate agriculture from fluctuations in world prices and of unfair trade practices by foreign countries. 2‘However, as a recent study by Valdes has shown (1992), this approach based on NTBs entails serious efficiency costs. Slowly, however, more and more countries are addressing these concerns by replacing these quantitative restrictions by variable levies (see Valdes 1992). TarifSDispersion The import substitution development strategy pursued for decades in Latin America created highly dispersed protective structures. According to the World Development Report (1987), Brazil, Chile, and Colombia had some of the broadest ranges of effective rates of protection in the world during the 1960s. Also, Heitger (1987) shows that during the 1960s Chile had the highest rate of tariff dispersion in the world-with a standard deviation of 634%closely followed by Colombia and Uruguay. Cardoso and Helwege (1992) have pointed out that highly dispersed protective structures generate high welfare costs, by increasing uncertainty and negatively affecting the investment process. These highly dispersed tariffs and NTBs were the result of decades of lobbying by different sectors to obtain preferential treatment. As the relative power of the different lobbies changed, so did their tariff concessions and the protective landscape. An important goal of the Latin trade reforms has been the reduction of the degree of dispersion of import tariffs. Table 1. 4 contains data on the tariff range for a group of countries for two points in time-mid-1980s (1985-87) and 1991-92-and clearly documents the fact that the reforms have indeed reduced the degree of tariff dispersion. In many cases reducing tariff dispersion has meant increasing tariffs on goods that were originally exempted from import duties. In fact, table 1. 4 shows that in many countries the minimum tariff was 0% in the mid-1980s. Generally, zero tariffs have been applied to intermediate inputs used in the manufacturing process. 22 From a political economy perspective the process of raising some tariffs, while maintaining a proliberalization rhetoric, has not al21. The issue of protecting local producers from dumping is important in the design of the new liberalized trade regimes. The crucial problem is to enact legislation that is able to distinguish true cases of unfair trade practices from simple cases of increased foreign competition stemming from more efficient productive processes. At this time the approval of a dynamic and flexible antidumping legislation should be high in the region’s agenda for legal and institutional reform. 22. This system with very low (or zero) tariffs on intermediate inputs and high tariffs on final goods generated very high rates of effective protection or protection to domestic value added. In recent years a number of authors have argued that the use of effective protection is misleading. The reason for this is that effective rates of protection (ERPs) are unable to provide much information on the general equilibrium consequences of tariff changes (Dixit 1986). In spite of this, ERP measures are still useful, since they provide an indication on the degree of â€Å"inefficiency† a country is willing to accept for a particular sector. 28 Sebastian Edwards ways been easy. Those sectors that had traditionally benefited from the exemptions suddenly saw their privileged situation come to an end and tried to oppose them strongly. An important question addressed by policymakers throughout the region is, by how much should tariff dispersion be reduced? Should the reforms implement a uniform tariff, or is some (small) degree of dispersion desirable? From a strict welfare perspective uniform tariffs are only advisable under very special cases. However, they have a political economy appeal. More specifically, a uniform tariff system is very transparent, making it difficult for the authorities to grant special treatments to particular firms or sectors (Harberger 1990). Average Tariffs Reducing the average degree of protections is, perhaps, the fundamental policy goal of trade liberalization reforms. Traditional policy manuals on the subject suggest that once the exchange rate has been devalued and quantitative restrictions have been reduced or eliminated, tariffs should be slashed in a way such that both their range and average is reduced. 23Table 1. 4 contains data on average total tariffs (tariffs plus paratariffs) in 1985 and 1991-92. As can be seen, the extent of tariff reduction has been significant in almost every country. Even those nations that have acted somewhat cautiously in the reform front, such as Brazil and Ecuador, have experienced important cuts in import tariffs, allowing a more competitive environment and reducing the degree of antiexport bias of the trade regime. Countries that have embarked on trade liberalization in recent years have moved much faster than those nations that decided to open up earlier. There has been a clear change in what is perceived to be our abrupt and rapid removal of imports impediments. What only fifteen years ago were seen as brutally fast reforms are now looked at as mild and gradual liberalizations. When Chile initiated the trade reform in 1975, most analysts thought that the announced tariff reduction from an average of 52% to 10% in four and a half years was an extremely aggressive move that would cause major dislocations, including large increases in unemployment. The view on the speed of reform has become very different in the early 1990s, when an increasing number of countries have been opening up their external sectors very rapidly. For instance, Colombia slashed (total) import tariffs by 65% in one yea reducing them from 34% in 1990 to 12% in 1991. This fast approach to liberalization has also been followed by Argentina and Nicaragua, who eliminated quantitative restrictions in one bold move and slashed import tariffs from an average of 110% in 1990 to 15% in March of 1992. As suggested previously, the speed of trade reforms has been directly related to the belief that faster reforms are more credible and thus more likely to be sustained through time. 23. However, â€Å"tariffs† is sometimes a misleading term, since many countries have traditionally relied on both import duties (that is, tariffs proper) and import duty surcharges, or paratariffs. 9 Trade Policy, Exchange Rates, and Growth Exchange Rate Policy In the vast majority of the countries the first step in the trade reform process was the implementation of large (nominal) devaluations. In many cases this measure represented a unification of the exchange rate market. Most countries implemented large exchange rate adjustments as early as 1982 in order to face the u rgencies of the adjustment process. The purpose of these policies was to generate real exchange rate devaluations, as a way to reduce the degree of antiexport bias of incentives systems. Many countries adopted crawling-peg regimes to protect the real exchange rate from the effects of inflation. Although these systems helped avoid the erosion of competitiveness, they also added fuel to the inflationary process. They introduced a certain degree of inflationary inertia, and have contributed in many countries to the slow reduction of the rate of inflation. More recently, a number of countries have begun to use the exchange rate as an anchor in order to bring down inflation. This has resulted in the slowing down of the rate of crawl below inflation differentials or, in some cases, in the fixing of the exchange rate, as in Argentina. Table 1. 5 contains data on real exchange rates for a group of Latin American countries for 1970, 1980, 1987, and 1991. As is customary in Latin America, an increase in the index represents a real exchange rate depreciation and thus an improvement in the degree of competitiveness. As can be seen between 1980 and 1987 almost every country in the sample experienced very large real depreciations. In many cases, however, these have been partially reversed in the last few years. This has been the consequence of a combination of factors, including the inflow of large volumes of foreign capital into these countries since 1990, and the use of the exchange rate as the cornerstone of the disinflation policies. This issue is addressed in greater detail in section 1. 5. Table 1. 5 Real Exchange Rates in Selected Latin American Countries (1985 = 100) Country Argentina Bolivia Brazil Chile Colombia Costa Rica Ecuador Mexico Paraguay Peru Uruguay Venezuela 1970 78. 98. 3 51. 9 29. 4 86. 1 58. 4 118. 6 86. 1 104. 6 59. 3 73. 0 80. 3 1980 35. 8 88. 1 70. 7 55. 3 79. 2 65. 8 105. 6 83. 3 74. 4 77. 1 49. 7 84. 2 1987 80. 7 107. 9 78. 0 94. 8 115. 9 94. 9 153. 3 123. 9 111. 4 46. I 77. 2 134. 8 1991 44. 0 112. 1 51. 4 83. 0 126. 3 97. 2 173. 7 77. 0 114. 3 23. 1 62. 0 132. 8 Source: International Financial Statistics, International Monetary Fund. 30 Sebastian Edwards 1. 4. 2 Adjustment and Pr oductivity The relaxation of trade impediments has had a fundamental impact on the region’s economies. Suddenly, Latin America’s industry, which to a large extent had developed and grown behind protective walls, was forced to compete. Many firms have not been able to survive this shock and have become bankrupt. Others, however, have faced the challenge of lower protection by embarking on major restructuring and by increasing their level of productivity. The ability (and willingness) of firms to implement significant adjustment depends on two main factors: the degree of credibility of the reform, and the level of distortions in the labor market. If entrepreneurs believe that the reform will not persist through time, there will be no incentives to incur the costs of adjusting the product mix and of increasing the degree of productive efficiency. In fact, if the reform is perceived as temporary, the optimal behavior is not to adjust; instead it is profitable to speculate through the accumulation of imported durable goods. This was, as Rodriguez (1982) has documented, the case in Argentina during the failed Martinez de Hoz reforms. 24 Labor market conditions affect the adjustment process in several ways. First, in order to survive, firms facing stiffer foreign competition have to increase labor productivity, which in many cases means reducing the number of workers. This reduction in employment will tend to be offset by new hires in expanding firms in the sectors with comparative advantage. Many times, however, existing labor market regulations are extremely cumbersome, inhibiting the adjustment process and forcing out of business firms that are structurally viable in the long run. Additionally, labor market distortions negatively affect the investment process, including direct foreign investment (see CoxEdwards 1992). In their studies on the interaction between labor markets and structural reforms, Krueger (1980) and Michaely, Choski, and Papageorgiou (1991) found that most successful trade reforms have indeed resulted in major increases in labor productivity. This has been the case in some of the early Latin American reforms for which there are data. For example, according to Edwards and CoxEdwards (1991) labor productivity in the Chilean manufacturing sector increased at an average annual rate of 13. 4% between 1978 and 1981. On the other hand, the available evidence suggests that the increases in labor productivity in the Mexican manufacturing sector in the postreform period have been moderate. According to World Bank (1992) data, labor productivity in Mexico barely increased between 1988 and 1991-the index went from 92. 7 to 105. 1. In a recent study Ibarra (1992) has calculated that labor productivity in the Mexican manufacturing sector-excluding the maquiladora sector-has increased at an average rate of 2. 3% per annum. 24. See Corbo, Condon, and de Melo (1985) for a detailed microeconomic account of the process of adjustment in a large group of Chilean manufacturing firms. 31 Trade Policy, Exchange Rates, and Growth As discussed in section 1. 2, recent models of growth have suggested that countries that are more open to the rest of the world will exhibit a faster rate of technological improvement. From an empirical point of view this means that countries that open up their external sectors and engage in trade liberalization reforms, will experience an increase in TFP growth relative to the prereform period. Table 1. 6 contains data on the change in TFP growth in the period following the implementation of trade liberalization reform in six Latin countries. 25 As can be seen, Chile and Costa Rica, two of the earlier reformers, experienced very large increases in T I T growth in the postreform period. The results for Chile coincide with those obtained by Edwards (1983, who found that in the late 1970s, after the trade reforms had been completed, TFP growth was approximately three times higher than the historical average. 2hAlthough the outcome has been less spectacular, Argentina and Uruguay still exhibit substantial improvements in productivity growth in the period following the opening up. Bolivia, on the other hand, presents a flat profile of TFP growth. Sturzenegger (1992) argues that the very slow improvement in Bolivian productivity growth has been, to a large extent, the result of negative terms of trade shocks and, in particular of the collapse of the tin market. Perhaps the most interesting and puzzling result in table 1. 6 is the slight decline in aggregate TFP growth in Mexico after the reforms. Martin (1992) shows that this finding is robust to alternative methods of measuring TFP growth, including different procedures for correcting for capacity utilization. Also, Harberger (1992) finds a slowing down of TFP growth in Mexico in 1986-90 relative to 1975-82. However, the aggregate nature of the TFP growth data in table 1. 6 tends to obscure the actual sectoral response to the trade reform. According to new theories on endogenous growth, faster productivity will be observed in those sectors where protectionism has been reduced, and not in those still subject to trade bamers or other forms of regulations. A distinctive characteristic of the Mexican reform is that, contrary to the Chilean case, it has been uneven. In particular, while most of the manufacturing sector-with the exception of automobiles-has experienced a significant reduction in protection, agriculture continues to be subject to relatively high tariffs and substantial NTBs. Moreover, until very recently the Mexican land tenure system was subject to substantial distortions that, among other things, 25. The original TFP growth data comes from Martin’s (1992) study on sources of growth in Latin America. The countries in table 1. 6 are those that initiated the reform before 1988. In order to compute series on TFP growth, Martin (1992) analyzed the contributions of capital and labor and explicitly incorporated the role of changes in the degree of capital utilization. The countries considered in this study are Argentina, Bolivia, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Peru, Uruguay, and Venezuela. Harberger (1992) presents data on TFP growth before and after a series of historical trade reform episodes. He finds that in the majority of the cases productivity growth increased after the liberalization process. 26. It may be argued, however, that the major increase in TFP growth in Chile has been the result of the complete structural reform package implemented in that country. 32 Sebastian Edwards Changes in Total Factor Productivity Growth ~ Table 1. 6 Argentina Bolivia Chile I 91 0 11 496 Costa Rica Mexico UNgUaY 3 25 -0 32 2 02 Source: Martin (1992). Note: For all countries but Chile, computed as the difference of TFP growth for 1987-91 and 1978-82. For Chile the prereform period is 1972-78. everely restricted the market for land-the ejido system. Additionally, during much of the post-debt crisis period large fragments of services sector-including telecommunications and financial services- were under direct government control and subject to distortions. Table 1. 7 contains data on TFP growth in Mexico’s manufacturing sector for 1 940-89. 27 Interestingly enough, these figures indicate that in the post-trade reform period the rate of productivity growth in the Mexican manufacturing sector has exceeded every subperiod since 1940 for which there are data. This provides some evidence in favor of the view that, once the sectors actually subject to increased competition are considered, Mexican productivity growth has indeed improved after the trade reform. It should be noted, however, that recent TFP growth in manufacturing in Mexico (see table 1. 8 for disaggregated data) has not been as large as in Chile’s postreform period, where some sectors experienced growth in TFP of the order of 15% in 1978-82 (Fuentes 1992). There are a number of possible explanations for this marked difference in behavior, including the uncertainties about North American Free Trade Agreement approval, which resulted in the postponement of investment in some of the key manufacturing sectors subject to increased foreign exposure. By and large, however, the data analyzed in this subsection provides broad support to the position that TFP growth has tended to increase in the period following major trade reforms in Latin America. 1. 4. Trade Reforms and Exports An important goal of the reforms has been to reduce the traditional degree of antiexport bias of Latin American trade regimes, and to generate a surge in exports. This reduction of the bias is expected to take place through three channels: a more competitive-that is more devalued-real exchange rate; a reduction in the cost of imported capital goods and intermediate inputs used in the production of exportable goods; and a direct shift in relative prices in favor of expo rts. The volume of international trade in Latin America, and in particular of 27. Since these figures come from two different sources, they may not be fully comparable and thus should be interpreted with care. 33 Trade Policy, Exchange Rates, and Growth Table 1. 7 Total Factor Productivity Growth in Manufacturing in Mexico, 1940-90 (%) ~~~~ 1940-SO 1950-60 1960-70 1970-80 1985-89 0. 46 0. 53 3. 00 N. A. 3. 40 Sources: The data for 1940-80 are from Elias (1992). The figure for 1985-89 is from Ibarra (1992). Table 1. 8 Division DisaggregatedProductivity Growth, in Mexico’s Manufacturing Sector, 1985-90 (%) Labor Productivity Total Factor Productivity Food, beverages, and tobacco Textiles and apparel Wood products Paper and printing Chemicals, rubber, and plastics Nonmetallic products Metal products Machinery Other manufacturing Total manufacturing Source: Ibarra (1992). 1. 7 0. 7 0. 2 2. 3 2. 3 1. 1 7. 5 4. 4 –4. 8 2. 3 3. 4 0. 4 3. 4 4. 8 2. 3 3. 5 3. 5 4. 1 N. A 3. 4 exports, increased significantly after the reforms were initiated. z8For example, while for the region as a whole the volume of exports grew at an annual rate of only 2. 0% between 1970 and 1980, it grew at a rate of 5. 5% between 1980 and 1985, and at a rate of 6. % between 1986 and 1990. 29 Although, strictly speaking, it is not possible to fully attribute this export surge to the opening-up reforms, there is significant country-specific evidence suggesting that a more open economy, and in particular a more depreciated real exchange rate, has positively affected exports growth. 3oSome countries, especially Costa Rica, have accompanied the opening-up proces s with the implementation of a bat28. Trade liberalization aims at increasing a country’s total volume of trade. Under textbook conditions it is expected that at the end of the reform trade will be balanced. However, there are a number of circumstances, including the need to pay the country’s foreign debt, under which trade will not grow in a balanced way after a reform. This has been the case in the majority of the Latin American countries. 29. The real value of exports, however, has evolved at a somewhat slower pace. The reason for this is that terms of trade have experienced, in every subgroup of countries, a significant deterioration during 1980-91 (see CEPAL 1991). These data are from CEPAL (1991). 30. See, for example, Nogues and Gulati (1992). 34 Sebastian Edwards ery of export promotion schemes, including tax credits-through the Certificad0 de Abono Tributario-duty-free imports, and income tax exemptions. However, some authors, including Nogues and Gulati (1992), have argued that these systems have not been an effective way of encouraging exports. Table 1. 9 presents detailed country-level data on the rate of growth of the total value of exports (in constant dollars) for t hree periods. Table 1. 10, on the other hand, contains information on the evolution of exports volume throughout the period. A number of facts emerge from these tables. First, while there has been a rapid growth in exports for the region as a whole, there are nontrivial variations across countries; in some cases there has even been a decline in the real value of exports-this is the case, for example, of Peru. Second, exports performance during two of the subperiods (1982-87 and 1987-91) has not been homogeneous. In the majority of the countries exports performed significantly better during 1987-9 1, than in the previous five years, reflecting, among other things, the fact that it takes some time for exports to actually respond to greater incentives. An interesting fact that emerges from these tables is that in the country that has lagged behind in terms of trade reform-Ecuador-the performance of exports volume has been in recent years below the 1970-80 historical average. On the other hand, in two of the early reformers-Bolivia and Chile-exports had a very strong behavior in the 1987-91 subperiod. The case of Chile is particularly interesting. Since most of its liberalization effort was undertaken prior to 1980, there are enough data points to provide a Table 1. 9 Value of Exports of Goods and Nonfactor Services: Annual Growth Rates (%) Country Argentina Bolivia Brazil Chile Colombia Costa Rica Ecuador Mexico Paraguay Peru Uruguay Venezuela 1972-80 7. 1 -1. 8 8. 8 15. 2 4. 9 4. 3 6. 7 7. 9 6. 7 2. 6 10. 0 -7. 3 1982-87 2. 6 0. 6 9. 7 6. 5 10. 2 3. 8†² 3. 3 6. 0 4. 8 -3. 7 4. 2 3. 6 1987-9 I 10. 3 11. 4 3. 4 10. 5 6. 6 9. 1 9. 2 5. 1 20. 2 0. 9 7. 1 5. 6 Sources: World Bank, International Economics Department database; ECLAC, Sfarisrical Yeur- book for Latin America, several issues. Note: Based on constant 1990 prices (U. S. dollars).