Labor in the Puerto Rican Economy: Postwar Development and Stagnation

By Carlos E. Santiago | Go to book overview
6.
Among the early proponents of this view are Hymer ( 1976), Kindleberger ( 1969), and Caves ( 1971).
7.
There is a major difference between the concept of market power as discussed in the industrial organization literature and the concept appearing in the development-cum-trade literature. Industrial organization treats the notion of market power in a narrower sense in that it is associated solely with control over the market price. Thus, firms exhibiting market power are price makers rather than price takers. In contrast, development economists discuss market power in a broader sense and often relate it to particular cost advantages of a firm. For example, large firm size is associated not only with economies of scale but also with the ability to extract concessions (often in the form of tax exemption, export licenses, and the like) from foreign governments. This, however, need not imply price control at all.
8.
See Connor and Mueller ( 1982) for support for this position, while Demsetz ( 1973) provides counterarguments.
9.
Although more identified with the industrial organization approach, Hymer ( 1972) also mentioned the importance of location-specific factors. For example, he stressed that "the application of location theory suggests a correspondence principle relating centralization of control within the corporation to centralization of control within the international economy" (p. 123). He also pointed out that "the multinational corporation, because of its power to command capital and technology and its ability to rationalize their use on a global scale, will probably spread production more evenly over the world's surface than is now the case" (p. 124).
10.
Relevant studies in this regard are Helleiner ( 1973), Reidel ( 1975), Lipsey and Weiss ( 1981), and Kravis and Lipsey ( 1982).
11.
Horst ( 1972) provides empirical evidence to support this claim.
12.
Although other U.S. possessions qualify for this tax exemption, according to the U.S. Deparment of Commerce ( 1979, p. 73), 612 of 624 firms operating under the Tax Reform Act of 1976 are located in Puerto Rico.
13.
The Puerto Rican case is interesting in that, despite the lack of barriers to the movement of goods and resources, it cannot be taken entirely as a regional example. Differences in language, culture, local customs, and the like make the decision to invest on the island more than just a regional one. Thus, ceteris paribus, the fixed costs (due to uncertainty and risk) of setting up operations in Puerto Rico are greater than that of a move within the mainland United States.
14.
See Davidson ( 1980) for a discussion of this point. He mentions that as firms become established in foreign markets, the uncertainty

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Labor in the Puerto Rican Economy: Postwar Development and Stagnation
Table of contents

Table of contents

  • Title Page iii
  • Contents vii
  • Figures and Tables ix
  • Foreword xiii
  • Preface xv
  • Acknowledgments xxi
  • Chapter 1 the Demographics of the Puerto Rican Population and Labor Force Change 1
  • Notes 31
  • Chapter 2 a Model of Labor Markets and Mobility 35
  • Notes 70
  • Chapter 3 Cyclical and Secular Movements in Labor Supply 73
  • Notes 103
  • Chapter 4 Job Creation and Joblessness 105
  • Conclusions 140
  • Appendix 141
  • Notes 143
  • Chapter 5 Prospects for Human Resource Development 149
  • Notes 158
  • References 159
  • Index 171
  • About the Author 175
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