Commerce of Education - Trade Agreements and the U.S. Economy, Educational Changes, Theory

By the end of the twentieth century, the world economy had shifted in two important ways. First, the free flow of capital had created a high level of global interdependency. Second, production and distribution were no longer regionally bound within the nation-state. Trade agreements provide evidence of these trends. Educational commodities in the global marketplace are evident as services and goods. Though increasingly evident, however, the effects of a growing global economic interdependence are not well understood theoretically or empirically.
Reactions to these changes range from an acceptance of democratic and economic possibilities to a resistance to open-market trends. Proponents embrace the economic order because these initiatives move their country toward the free flow of information and capital. Opponents recognize a power imbalance, and fear a loss in national identity. The arguments rest on the standardization processes couched within trade agreements.
Trade agreements encourage countries to participate in international standards organizations with a view toward harmonizing the technical regulations of individual countries. Organizations engaged in standards development call for increased certification, accreditation, and rigorous assessment of these standards. Adherence effectively allows labor to move freely across national boundaries. More subtly, it seems that nonelected governance bodies (e.g., a trade agreement) can become imbued within the architecture of a country's educational system.
Trade agreements typically deal with the commodification of raw materials and manufactured goods. There are few systematic studies that address the practical impact of trade agreements on education. This is because the notion of treating services as tradable commodities is new, both internationally and nationally. The General Agreement on Trade in Services (GATS), concluded in April 1994, was the first broadly based international agreement on trade in services. In the 1980s the U.S. services sector moved into the competitive market, driven by the deregulation of telecommunications, financial services, banking, and transportation.
Trade agreements rarely address service sectors broadly, nor is education as a service generally addressed. For example, consider three ways in which education has been introduced in these agreements:
Global agreements, such as the General Agreement on Tariffs and Trade and the World Trade Organization (GATT/WTO), generally mention education, but only as a low priority service item.
Regional agreements, such as the European Community, the North American Free Trade Agreement (NAFTA), and the Association of Southeast Asian Nations (ASEAN), provide inconsistent structural recognition of education. For example, the Single European Act dealt with education issues only at the national level. However, when polled, a majority of Europeans felt that "testing, certification, technical standards, and science and research" should be handled at the European level.
Bilateral agreements, such as those between Japan and United States, open up markets for provisional time periods.
The dominant trend in every facet of the United States economy is the shift from the production of goods to services. In 2000 the U.S. export of private services totaled $278.6 billion, exceeding imports by $78 billion.
Educational services encompass both programs and ancillary services. Programs are defined as sets of curricular activities that may lead to a certificate or degree. These may include aspects of the following: elementary, secondary, postsecondary, university, vocational, and technical education; child care; special education; adult and continuing education; corporate training; distributed learning; and technology-based training. Ancillary services are a necessary component to managing the needs of individuals and the logistics of servicing equipment. Activities include: the design, marketing, and sales of testing, certification, test preparation, tutoring, and other enhancement programs; management consulting; and administrative and human resources. Educational goods include the design, manufacture, and sale of textbooks, teaching materials, vocational and scientific equipment, software, videos, multimedia, school supplies, and furniture.
In 2000 U.S. exports of educational services totaled $10,287 million, which exceeded imports by $8,144 million and doubled the amount of exports in 1990 ($5,126 million). Asia and the Pacific Rim accounted for 55 percent of the 2000 export volume; Europe for 17 percent; and South America for 13 percent. In 1997 exports of educational goods included $11,600 million worth of textbooks and supplementary materials; $4,800 million in technology; and $3,000 million in testing and test preparation.
Educational Changes
Changes to educational systems are neither monolithic nor consistent. Changes in the content and form of educational services and goods occur at all levels and across cultures. The changes can roughly be categorized as being technological, organizational, social, or adaptive. These are not mutually exclusive categories, but provide a way to understand the complex interplay between global trade, the free-flow of information and labor, and the impact of trade on education. The role of technology in education can illustrate this complex interplay.
Information technology is one of the fastestgrowing economic sectors in the global economy almost without exception in every country. That is, countries at all different phases of development recognize the importance of being technologically connected. This may include funding projects for telecommunications infrastructure, buying hardware and software, or any type of technology training. Countries like South Africa or the twelve newly independent states of the former Soviet Union represent countries in transition to a market economy. Examining the telecommunications trade occurring in these countries can provide a helpful framework for imagining how to de-commodify education in these countries. Telecommunications in Sub-Saharan Africa has grown to 8 percent of the total market of goods and services. In Botswana the leading sector for U.S. exports and investment is in telecommunications; in Cote d'Ivoire telecommunications is the third leading export sector; in Guinea telecommunications is the sixth leading export sector and in Nambia it ranks fourth. In all cases, telecommunications follows agriculture or civil infrastructure sectors; i.e., it is ranked more important than household goods. Advanced computer technologies in multimedia, real-time delivery and e-mail through Internet connections, and the ease of use of interface of personal computer systems can drastically alter the traditional form and content of education. U.S. educational technology funding went from $23 million in 1994 to $766 million in 2000. In 1996 the Technology Literacy Challenge was issued in order to provide a major commitment of resources to connect every classroom to the Internet, expand access to modern, multimedia computers; make high-quality educational software an integral part of the curriculum; and enable teachers to effectively integrate technology into their instruction. Some argue, however, that access to computers does not improve reading scores, but that access to books does, and that money spent on computers is therefore better spent on libraries and reading programs.
At the postsecondary level, the impact of technology on education is illustrated by the growth in distance education, which is perceived to overcome geographic barriers to access, and may reduce costs. On the one hand, the challenges involved in implementing distance education include the need to handle organizational, management, and educational changes over the short and long term; limited access to quality programming among certain populations defined by race, social class, or geography; the need for teachers to learn new approaches to teaching, monitoring, and mentoring to adequately serve their students; and the need for standards of quality for new programs. On the other hand, the move to commercialize and digitize curriculum delivery is dismissed as an attempt to de-skill and get rid of teachers with little consideration toward the pedagogical impact. This viewpoint sees automation as a strategy for reducing the need for highly skilled tasks that are expensive to maintain; in the field of education teachers are highly skilled at educational tasks. When their tasks become automated then the need for teachers with those skills is reduced, thus the expectation of what is wanted from a teacher, a teachers' skills bank, is that one can get by with or pay less for teachers who are less skilled. The general caveat is to warn against addressing people as information processors or to redefine complex human issues such as trust as simply information.
The digital classroom gives rise to new teaching and learning styles that can be more flexible and adaptable, yet it raises issues of equity and access that are not fully understood. Curricular changes are extrapolated to the entire university level with the creation of virtual universities. Western Governors University (WGU) illustrates the move from a bricks and mortar to a clicks and mortar, virtual institution. WGU is a collaborative effort of eighteen western states to create a fundamentally online higher-education program. The WGU plan ensures that it be "market-oriented, independent, client-centered, degree-granting, accredited, competency-based, non-teaching, high quality, cost-effective, regional, and quickly initiated."
In general, commercialism and privatization are advocated as organizational mechanisms to address controversies around how best to improve educational efficiency, cater to pluralistic preferences, make institutions more accountable, and reduce government spending. The phrase school/business relationship can be misleading, since such partnerships encompass everything from genuine altruism to cynical exploitation of the youth market. For example, at the K–12 level, a school may receive computer equipment in exchange for electronic marketing to students; or a school may receive free pizza from a specific pizza franchise if students read so many books. At the university level, partnerships include university connections to science parks that impact the processes of invention, innovation, technology transfer, commercialization, and enterprise. Many universities encourage faculty entrepreneurship, provide support systems, and promote university-industry links. These changes in the university environment effected by the increasing roles of knowledge and technological innovation can lead to healthy economic benefits, but excessive commercialization may undercut the mission of public universities. Knowledge generation no longer in the public domain becomes owned by or proprietary to corporations and individuals connected to technology transfer license agreements. The ability to advance scientific knowledge can be restricted by access to proprietary knowledge.
Theory
Globalism can be examined from several angles. In a general sense, globalism can refer to the process in which events in distant locales make a difference in the lives of people in a local area. Global processes have heavily influenced changes in technology, changes in capital, and changes in the mobility of labor. No one theory of globalization that tries to account for its effects can capture the inherent ambiguity of the multitude of ongoing processes. Some theories of globalization say it has a homogenizing effect, resulting from the imposition of capitalist logic. Other theories say it creates heterogeneity by circulating goods, ideas, and culture, thus creating new hybrid cultures that emerge from processes of globalization, e.g., youth subcultures. Others claim that globalism is functionally equivalent to modernity, but is a more neutral term.
However, globalization can be construed as a cover word for what used to be called imperialism. This is a Marxist formulation, describing capitalism as having reached the imperialist stage, though rather than imposing its will through force and colonization, it does so through the force of advertising and commodification.
It is not a question of whether or not the global economy will happen, but a question of the global economy on whose terms. What is at stake is both how globalization is theorized and how technologies are used to better understand the complex interdependencies between commerce and education.
See also: GLOBALIZATION OF EDUCATION; INTERNATIONAL TRADE IN EDUCATION PROGRAMS, GOODS, AND SERVICES.
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BIBLIOGRAPHY
BRAY, MARK. 1998. "Privatisation of Secondary Education: Issues and Policy Implications." In Education for the Twenty-First Century: Issues and Prospects. Paris: UNESCO.
BROWN, JOHN SEELY, and DUGUID, PAUL. The Social Life of Information. Boston: Harvard Business School Press.
COLLINS, TIMOTHY, and DEWEES, SARAH. 2001. "Distance Education: Taking Classes to the Students." In Rural South: Preparing for the Challenges of the 21st Century. Mississippi State, MS: Southern Rural Development Center.
FEENBERG, ANDREW. 1999. "Reflections on the Distance Learning Controversy." The Canadian Journal of Communication 24 (3):337–348.
HENRICKSON, LESLIE, and KIM, SONGMI. 2000. "Education as Commodity in the Global Marketplace." International Journal of Education Policy, Research and Practice 1 (3):377–388.
HEYNEMAN, STEPHEN. 2000. "Educational Qualifications: The Economic and Trade Issues." Assessment in Education: Principles, Policy, and Practice 7 (3).
KEARNS, MICHAEL. 1999. The Education Industry: Markets and Opportunities. Boston: Eduventures.
KIM, ANNA. 1997. "State vs. Market in Educational Open-Market Policy Making in Korea." Ph.D. diss., University of California, Los Angeles.
RUST, VAL D., and KIM, ANNA. 1997. "Free Trade and Education." In International Handbook of Education and Development: Preparing Schools, Students and Nations for the Twenty-First Century, ed. William K. Cummings and Noel F. McGinn. London: Pergamon.
TORRES, CARLOS, and MORROW, RAYMOND. 2000. Globalization and Education: Critical Perspectives. New York: Routledge.Read more:

Sweden in brief / An economic miracle

Sweden in brief / An economic miracle
During the 20th century, what is often described as the "Swedish economic miracle" occurred. In the space of a few decades, a poor agrarian country was transformed into one of the world's most prosperous and sophisticated industrial nations.
The foundation for this amazing growth was northern Sweden's enormous wealth of forests, ore and hydroelectric power. The value of these natural resources was enhanced by a long series of ingenious Swedish inventions and refinements of inventions — the steam turbine, the roller bearing, the gas-powered beacon, the telephone, the cream separator, the safety match, the adjustable wrench, the Tetra Pak beverage packaging system, the AXE System (computer-controlled digital telephone switching system), the Brånemark® System (osseointegration), and the Leksell® Gamma knife, to name only a few. Even today, this kind of engineering brilliance remains at the core of the Swedish business sector.Cell phone from Sony Ericsson. Photo: Sony Ericsson
With an insufficient domestic market, major Swedish companies were "forced" right from the start to invest in exporting to customers worldwide. In many cases, this early globalization is regarded as having given Swedish companies a leg up in international competition — one reason why Sweden today has an extremely large number of multinational corporations and brands for its modest population. Volvo, Saab, Ericsson, ABB, AstraZeneca, Electrolux, IKEA, H&M, Hasselblad and Absolut are only a few of these Swedish-rooted companies and brands.
Although raw materials and processed raw materials still account for a sizable proportion of Swedish exports, the future of Swedish business is said to lie primarily in knowledge-intensive industries, where Sweden can take advantage of its advanced technological development, sophisticated infrastructure and high general educational level. Information technology (IT) and biomedicine are two such knowledge-intensive sectors in which Sweden has been among the global leaders for years.
Aside from these, nowadays a third Swedish industry of the future is mentioned increasingly often — the "experience industry." This concept is a new, comprehensive label for such inter- related creative sectors as design, music, fashion, the art industry, gastronomy, media, advertising and tourism, in which Sweden has experienced a creative revolution over the past decade that has attracted worldwide attention and given the country substantial new export income.

The Rise of the New Mercantilists: Unfair Trade Practices in the Innovation Economy

The United States leads the world in the development, production, and use of information technology (IT). Because IT is not only the major driver of economic growth but also a key source of high-paying jobs in sectors like semiconductors, hardware, services, and software, most countries have adopted policies to win the international competition for IT jobs. While most have adopted legitimate policies such as research and development (R&D) tax credits, programs to build IT skills, and liberalizing domestic markets, the payoffs from this path to IT industry competitiveness are neither certain nor immediate. As a result, many nations have turned to an easier and faster path to winning the global competition for IT leadership: erecting a whole host of unfair and protectionist policies focused on systematically disadvantaging foreign, including U.S., companies in global competition. These policies include:
raising the relative price of foreign IT products and services by applying tariffs, taxes, subsidies, and excessive antitrust enforcement;
acquiring foreign IT products and services without paying for them through digital theft and forcing U.S. companies to give up their intellectual property; and/or
blocking or limiting access of foreign companies to markets through standards, government procurement, data privacy and other policies.
Perhaps most troubling is that nearly all of the nations engaging in these unfair and distorting trade practices targeting U.S. IT leadership are members of the World Trade Organization (WTO) and signatories of the Information Technology Agreement (ITA). These nations and regions-from Asia, Europe, and South America-have aggressively put in place strategies that violate the spirit, and often the letter, of international trade rules. These countries want it both ways. They desperately want access to the U.S. market (and as reflected by the fact that the United States is running a nearly $800 billion massive trade deficit they are getting it) but they don’t want to buy U.S.-produced IT goods and services. They want U.S. IT foreign direct investment, through offshoring, joint ventures, and R&D, but they also want to systematically weaken the competitive advantage of U.S. IT companies in favor of their domestic IT companies.
These aggressive and unfair foreign IT trade policies lead to fewer high-paying IT jobs in the United States and threaten our global IT leadership position. But these policies don’t just hurt the United States, they hurt the global economy. By raising the price of IT goods and services, forcing companies to produce IT in places other than where they would prefer, and reducing incentives to produce innovations and intellectual property, these mercantilist policies distort trade, leading to a lower standard of living for global citizens.
These protectionist policies are not just targeted at IT, although that is the focus of this report. It is likely that other studies focusing on biotechnology, financial services, or aviation-to name just a few-would uncover similar practices.
If we want to maintain America’s IT leadership position the federal government needs to take a number of crucial steps:
1) The administration should vigorously and unequivocally enforce other nations’ IT trade commitments under the WTO. In particular, the Office of the U.S. Trade Representative (USTR) needs to be more proactive in challenging nations that are violating WTO rules or engaging in other unfair practices.
2) Congress needs to increase USTR’s appropriation so that it will have more resources to focus on trade enforcement.
3) Congress should allow companies to take a 25 percent tax credit for expenditures related to bringing WTO cases.
4) The administration should include the elimination of IT-based trade distortions among several important priorities when negotiating new bilateral trade agreements.
5) Congress should significantly expand funding for initiatives to educate the rest of the world on the importance to prosperity of innovation, IT usage, intellectual property protection, and market-based trade.
6) Congress should conduct hearings into the many and systematic strategies countries are using to challenge America’s competitive advantage in IT (and other innovation-based industries).
The United States is in the midst of a new trade war. But this time the war is not between socialism and capitalism, it’s between two very different versions of capitalism: one that puts consumers, property rights, and market-based decisions at the center and one that puts producers, “fair use,” and government intervention at the center. It’s a battle about which framework more effectively drives innovation and prosperity: the U.S. framework that focuses on the impact of corporate actions on consumer welfare, protects intellectual property and drives innovation, or the European and Asian framework that restricts innovation by giving priority to public rights.

Trade & Economy Translation

In the 21st Century, human science, culture and economy develop continuously. The whole world becomes a huge united market. Meanwhile, the indivision of labor gets more obvious day by day. Thus the economic and trade cooperation between countries becomes increasingly frequent. As people with different language and culture backgrounds increase their cooperation with each other in the economic and trade field, they increasingly rely on the economic and trade English. It has become the "the language of world business".
The concept of economic and trade English translation business covers a wide range. It includes translation of governments' economic policies, laws and regulations and also includes translation of correspondences, contracts and agreements for a certain business deal. Meanwhile, the style of economic and trade English writing varies a lot. And different writing styles require different language styles. Thus, while the economic and trade English translation holds a large share in the translation business, it is relatively difficult for translators.
Our company relies on the modern information technology. Through the basic measures such as candidate selecting, knowledge training and database construction, we guarantees the reliable translation quality for the clients. Details of the above mentioned measures are as follows: When setting up teams of economic and trade English translation, we emphatically test candidates' background knowledge of this field and their English skills; To enrich the translators' economic and trade knowledge and improve their translation skills, we train translators for specific projects and skills; With the help of office automation systems and powerful background databases, we build integrated and comprehensive translation memory databases and update them continuously. So on one hand, it improves translators' efficiency. On the other hand, it greatly enhances translation accuracy.
At present, we are adept at translating the theses, articles and reports in the economic and trade field. We have built up powerful translation memory databases and language material databases for economic and trade translation. It is convincing that we will become a helpful assistant for you and your enterprise when you do business in the international business community.

Special Section: Digital Economy and Information Technology Value

Special Section: Digital Economy and Information Technology Value Clemons, Eric K. , Dewan, Rajiv M. and Kauffman, Robert J.
Eric K. Clemons is a Professor at the Wharton School, University of Pennsylvania, where he has served since 1976. His visiting appointments include Harvard University, Cornell University, and Hong Kong University of Science and Technology. He serves on the editorial boards of the Journal of Management Information Systems and International Journal of Electronic Commerce. His research specialties are in the areas of IT and business strategy, IT and financial markets, making the decision to invest in strategic IT ventures, managing the risk of strategic IT implementations, and strategic implications of e-commerce for channel power and profitability. He is the past founder of the Hawaii International Conference on System Sciences’s annual Competitive Strategy, Economics and Information Systems mini-track, which will have its twentieth anniversary meeting in January 2007.
Rajiv M. Dewan is an Associate Professor at the University of Rochester’s William E. Simon Graduate School of Business Administration, where he is involved in research in electronic commerce, organizational issues in management and information systems, information technology industry, and financial information systems. He currently serves as the chair of the schoolwide doctoral program. His papers have been published in Management Science, Journal of Management Information Systems, Information Systems Research, INFORMS Journal of Computing, Decision Support Systems, IEEE Transactions on Computers, and other journals. Prior to joining the Simon School, he was a faculty member at Northwestern University’s Kellogg Graduate School of Management. He is a member of the Association for Computing Machinery, IEEE Computer Society, INFORMS, Association for Information Systems, and Beta Gamma Sigma. Dr. Dewan and two colleagues from the University of Rochester won the "Best Paper Award" in the Internet and Digital Economy Track at the Thirty-Fifth Hawaii International Conference on System Sciences (HICSS-35), January 2002. He has been organizing HICSS mini-tracks on strategy, economics, IS, and e-commerce since 1999.
Robert J. Kauffman is the Director of the MIS Research Center and Professor and Chair in the Information and Decision Sciences Department at the Carlson School of Management, University of Minnesota. He previously worked in international banking, and served on the faculty of New York University and the University of Rochester. His graduate degrees are from Cornell University and Carnegie Mellon University. His research focuses on senior management issues in IS strategy and business value, IT infrastructure investments, technology adoption, e-commerce and e-markets, and supply-chain management. His research has been published in Organization Science, Journal of Management Information Systems, Communications of the ACM, Management Science, MIS Quarterly, Information Systems Research, Decision Sciences, and other leading journals and conferences. He recently won best research paper awards at the INFORMS Conference on Information Systems and Technology (CIST) in 2003, 2004, and 2005; Hawaii International Conference on System Sciences in 2004; International Conference on Electronic Commerce in 2006; and the Eighth Information Management Conference in Taiwan in 2006. He is also a 2006 recipient of the IEEE Society for Engineering Management’s "Best Research Prize."

In this Special Section of the Journal of Management Information Systems, our authors explore new research themes and developments in the areas of digital economy and information technology (IT) value research. The first several papers represent the digital economy and IT value themes by addressing issues that arise through the outsourcing and systems design for flexibility and integration in manufacturing plant and financial services business processes. They examine how IT-driven supply-chain integration affects organizational abilities to achieve manufacturing process flexibility and competitive cost control, why IT investments make it possible for manufacturing plants to effectively outsource processes, and the role that IT integration plays in supporting high-performance import–export trade services in international banking. The next three papers examine interesting new theoretical perspectives. One is how network effects should influence firm-level business strategy for offering different kinds of value-maximizing licensing arrangements for software products. Another tackles the role of software stacks and technological complementarities when technology firms acquire other technology firms, and what our expectations should be for the consequent creation of market value. A third assesses the strategic opportunities that exist for firms to hyperdifferentiate their products when it is possible for online reviews to enable the identification of uniquely valuable product characteristics among interested high-end consumers.
The Special Section opens with a contribution to our knowledge of IT strategy in the manufacturing setting. The paper is entitled "Information Technology, Production Process Outsourcing, and Manufacturing Plant Performance," by Indranil Bardhan, Jonathan Whitaker, and Sunil Mithas. In a cross-sectional survey study of manufacturing plants, their IT capabilities, and the choices they make with respect to production process outsourcing, the authors examine the role that IT and process outsourcing play in achieving high performance in terms of plant costs and quality. They report that higher levels of IT investments are associated with a greater propensity to outsource production processes, and suggest that the systems integration capabilities are critical for this to work well for the firms. Such outsourcing also appears to be associated with some benefits; the authors report that better cost controls for plant overhead and labor expenses also result, and that higher quality results at the plant level. They also note that when a plant’s strategy is quality focused, there is a greater likelihood that process outsourcing will be observed. The authors speculate that this approach can take advantage of the core competencies of their outsourcing vendors, whose own technology investments may do more to support high quality than would otherwise be possible for the manufacturing plant. Interestingly, there is no evidence in this research that plants outsource processes simply to reduce costs. This is consistent with what is known in other research about the high costs and significant risks associated with interfirm collaboration. Overall, this research challenges other authors to pick up where it leaves off, and to establish additional new knowledge for senior managers on the rationale for and the efficacy of process outsourcing.
The second paper continues this emphasis on empirical research on IT value and manufacturing sector issues. Eric T.G. Wang, Jeffrey C.F. Tai, and Hsiao-Lan Wei present new research on "A Virtual Integration Theory of Improved Supply-Chain Performance" that also builds on our digital economy theme. The authors propose virtual integration as a governance mechanism for interorganizational interactions in supply-chain management, in lieu of other mechanisms. These include vertical integration, which is known to be inflexible in changing markets, and other forms of non-ownership-based collaboration, which may be more costly for the participants. They define virtual integration as the substitution of ownership with partnership by integrating a smaller set of suppliers through IT. They also argue that flexibility in supply-chain management is value-maximizing, and that virtual integration of buyer-supplier systems encourages the suppliers to be more responsive to the changing needs of the buyer. This study involves 149 responding firms in the automobile, chemical, computer and electronics, food, machine tool, metal, and textile industries. The authors find that although there was not a direct cost-reducing contribution for the manufacturer from virtual integration, the "loose coupling" with IT did yield benefits in terms of supplier responsiveness. The results were obtained through a structural equation model with path estimates that tested eight hypotheses.
The third paper is on IT integration in trade services business processes in international banking. Prabu Davamanirajan, Robert J. Kauffman, Charles H. Kriebel, and Tridas Mukhopadhyay contributed "Systems Design, Process Performance, and Economic Outcomes in International Banking." Their research uses the business process performance evaluation perspective for IT investments, and provides two different levels of analysis. One level is a process performance model that links system characteristics that impact business process outputs and performance quality. A second, more aggregate level of analysis is based on an economic performance model that enables senior managers to analyze the statistical connection between business process performance and the economic performance of the organization. The authors apply their modeling approach to the context of global trade services in international banking, where IT investments are made to effect systems integration to support letter of credit and lending management support. The authors’ data come from the American international banking community in New York City, during the 1990s, where historically large investments in IT were made to support international financial services business processes. The primary findings of the research include evidence for increased labor productivity and decreased cycle time in the presence of increasing electronic initiation of letter of credit-related lending requests. The authors also report that integration between the trade services system and the general ledger system in global trade services had a beneficial impact by reducing cycle time. An additional contribution of this research is that it offers new ideas about how to analyze business process-level IT investments in the presence of sequentially independent and reciprocally independent processes, as well as processes that exhibit pooled interdependence and have many shared activities.
The fourth paper in this Special Section examines technology value issues, and is by Lihui Lin and Nalin Kulatilaka. They study issues in the context of "Network Effects and Technology Licensing with Fixed Fee, Royalty, and Hybrid Contracts," especially the appropriateness of fixed fees versus royalties, which the economics literature has suggested is value maximizing for firms that license their technologies. The authors show that the usual conclusion from economics may not hold when IT innovations lead to the creation of products and services that exhibit network externalities. This problem is complicated by concerns on the part of the innovator about whether it is appropriate to license technology to competitors (such as Microsoft making some of its operating systems innovations available to Apple Computer, so that it is possible for Apple to produce Microsoft-compatible computers). Lin and Kulatilaka offer answers about the key drivers that underlie effective decisions, including the strength of the network externalities, the potential size of the market in which licensing will occur, and the investment levels required to create a similar technological innovation. They also explore the implications of current practices that have increasingly focused on developing hybrid approaches relative to managerial decision making for network externality-driven technology licensing policy.
The fifth paper in the Special Section is by Lucia Silva Gao and Bala Iyer. Their paper, "Analyzing Comple­mentarities Using Software Stacks for Software Industry Acquisitions," offers a new theoretical perspective about why firms that are closer in distance across different layers of the software stack are likely to be perceived in the financial markets as more likely to produce value and profits due to the expected technological complementarities. Their perspective is based on the economic theory of complementarities, which emphasizes the value that complementary assets and processes can produce in proximity to one another. The authors examine a number of different empirical models that implement event study methods in order to determine whether cumulative abnormal returns on equity show up among software companies involved in mergers and acquisitions. Especially interesting in this research is that the authors are able to empirically tease out the relative strength that software stack proximity has between firms whose capabilities are brought together. Based on the authors’ findings, one might guess that there is an "optimal" software stack distance in mergers and acquisitions that will support the creation of maximum business value. The authors’ findings are especially relevant in network industries, including electronic products, computer and hardware technologies, and information and communication technologies, where the use of complementary components is necessary in the creation of their products.
The closing paper of the Special Section focuses on a subject that will give good cheer to many readers of this journal: micro-brewery beer production. It also covers new theory in resonance marketing and the new possibilities for hyperdifferentiation in the digital economy. The authors, Eric K. Clemons, Guodong "Gordon" Gao, and Lorin M. Hitt, contributed "When Online Reviews Meet Hyperdifferentiation: A Study of the Craft Beer Industry." The thrust of their research is to examine the capabilities that the Internet offers to support resonance marketing, which emphasizes the degree to which consumers are well informed so they can purchase the products and services that delight them. The role of online reviews in this context is to supply consumers with "level-up" knowledge of the products that interest them, so it becomes possible for producers to hyperdiffer­entiate and better monetize what they are selling. It turns out that the craft beer industry is a perfect setting to explore these firm strategy issues, because beer is hardly a necessity and the differences among beers only become discernible to consumers as they gain experience and knowledge of the characteristics of the different products that are available. The paper contributes new ideas for the measurement of product positioning using online ratings from RateBeer.com, a popular Internet-based consumer rating service. The authors’ empirical analysis shows the extent to which positive reviews drive the growth of demand for new craft beers, consistent with their views of how resonance marketing can make hyperdifferentiation an effective strategy.
We thank the authors of the papers that appear in this Special Section for sharing their interesting research. We also want to recognize the reviewers and participants at the 2006 Hawaii International Conference on System Sciences. They offered their knowledge and outstanding comments and insights on the theory, analysis, methods, and findings in the research that we report. We also appreciated the help of our colleagues at the MIS Research Center of the Carlson School of Management at the University of Minnesota, the Simon Graduate School of Management at the University of Rochester, and the Wharton School of the University of Pennsylvania. Donna Sarppo always contributes flawless behind-the-scenes logistics in the construction of these annual special issues--thank you, Donna. Jesse Bockstedt, now a fourth-year doctoral student at the University of Minnesota, was our "managing editor" for this Special Section project. He provided excellent reviewing input to the coeditors, helped us to be in touch with the authors, and kept the reviewers on track to meet our tight delivery schedule. Penultimately, we offer our thanks for guidance and encouragement to Hugh Watson, who annually chairs the Organizational Systems and Technology Track, and to Ralph Sprague, who has chaired the Hawaii International Conference on System Sciences for many years. Finally, we thaank Vladimir Zwass, the editor of the Journal of Management Information Systems, for giving us a "blank canvas" each year on which to draw--and only after many late nights of effort, to produce this competitive strategy, economics, and information systems--focused issue of the journal.

The economies of China and India are set to grow by more than previously thought in 2009

The economies of China and India are set to grow by more than previously thought in 2009, the Asian Development Bank (ADB) has said.
Government spending in developing Asian economies had enhanced the region's growth prospects, it said. It now expects China to grow by 8.2% in 2009, up from an earlier forecast of 7%. India's forecast has been raised to 6% from 5%. But it also warned governments not to withdraw stimulus policies too soon.
"Expansionary fiscal and monetary policies have softened the blow of the global slump on the economy," the ADB said in its updated annual outlook. "A surge in bank lending and vigorous fixed-asset investment has maintained growth at a higher pace than was expected in March." But it added: "This is not the time for an exit from expansionary policies - the recovery remains fragile and subject to serious downside risks." The ADB raised its growth forecasts for the region to 3.9% in 2009, from its previous forecast of 3.4%. It also raised its 2010 forecasts to 6.4% from its previous estimate of 6%.

This week's G20 summit in the US will call for major reforms to promote a more balanced global economy,

This week's G20 summit in the US will call for major reforms to promote a more balanced global economy, according to a document seen by the BBC.
A draft paper hints at significant policy changes from G20 countries, including the UK, the US and China.
And while stimulus packages should continue for now, the document called for the creation of "transparent and credible" means to unwind that support.
Leaders will meet in Pittsburgh with the economy high on the agenda.
No enforcement
The document says huge imbalances in the global economy must be ironed out.
If this does not happen, the world will "face anaemic growth" at levels that are "unacceptably low", it says.
However the paper does not suggest any mechanism for enforcing its plans - other than countries coming under pressure from the International Monetary Fund (IMF).
And while no countries are mentioned by name, BBC business correspondent Joe Lynam says the document is suggesting that rich indebted countries, such as Britain and the US, should save more while cautious and savings-oriented nations such as Germany and China increase spending.
The document is ambitious, our business correspondent adds, and is aimed at removing some of the wild economic swings that have marked the opening decade of the 21st Century.
There have long been calls for China to allow its currency, the yuan, to rise, encouraging Chinese consumers to spend more on foreign goods.
But others argue that in the longer term, China should work on improving pensions, healthcare and other policies, to reduce the incentive people have to save so much.
Stimulus withdrawal
The document appears to back comments made by British Prime Minister Gordon Brown that there will be no early end to the international stimulus package aimed at taking the world out of recession.
But it calls on the IMF and the G20's Financial Stability Board to draw up, by November, "transparent and credible" ways of withdrawing that financial support.
The document also acknowledges that each country will have to find its own way of winding back its support in terms of the scale and timing of the pullback of support.

China Investment Corp, the country's $200bn (£123bn)

China's sovereign wealth fund has bought a stake in a Hong Kong-based commodities trading firm.
China Investment Corp, the country's $200bn (£123bn) fund, took a 15% stake in Noble Group in return for $850m.
The deal comes after China recently signed a pact with another commodity trader, Glencore, in an attempt to increase its influence in the sector.
China's rapid economic growth has made it one of the world's largest consumer of raw materials such as oil and steel.
Rising interest
Noble, whose shares are listed in Singapore, is one of the few publicly-listed commodity trading houses.
China's fund bought its shares at an 8% discount to Noble's last traded share price of 2.30 Singapore dollars.
Noble has investments in Australian coal, soybean crushing plants and sugar and ethanol mills in Brazil, among others.
In July, China Investment Corp paid $1.5bn for a 17% stake in Canadian miner Teck Resources Ltd.
"A lot of sovereign wealth funds or state-linked firms are increasingly showing interest in resources, so this is in line with the trend," said OCBC Securities analyst Lee Wen Ching. "Noble provides access to a diversified portfolio."
Sovereign wealth funds are the investment funds established by governments in Asia and the Middle East mainly, who have large surpluses of money which they wish to invest abroad.
Abu Dhabi has the largest fund, at $800bn, while Norway's is $400bn and Singapore has a $330bn sovereign fund.
China's fund was established in September 2007.

Loss-making carrier Japan Airlines (JAL) has asked for a government bail-out to help it survive.

Loss-making carrier Japan Airlines (JAL) has asked for a government bail-out to help it survive.
JAL president Haruka Nishimatsu made the requests after meeting Japan's new transport minister. He also proposed a more drastic restructuring.
The airline recently announced plans to cut 6,800 jobs.
JAL's shares had already tumbled 18% to a record low on rumours that it was seeking public money, or that it might seek to break up the company.
Tie-up hopes
"Ultimately, we think that the use of more funds will reduce our debts to the public," Mr Nishimatsu said.
He made the comments to reporters after meeting Transport Minister Seiji Maehara, who took over the role after the Democratic Party took charge of the government.
Mr Nishimatsu plans to apply for public funds under the industrial revitalisation law.
The law means that companies need to obtain approval from the government to restructure. They can then apply for loans from banks, which are backed by the Japanese government's wholly-owned Japan Finance Corp.
Media reports recently have said that several US and European airlines - including Air France-KLM, Delta Airlines and American Airlines - are in the running to take a stake in JAL and expand into Asia via code-sharing agreements.
Mr Nishimatsu said last week that he hoped JAL would have a deal in place with an international carrier by the middle of October.
Sector suffers
The airline industry as a whole has suffered in the global downturn, hit by a combination of falling passenger numbers and high oil prices.
The International Air Transport Association (Iata) has increased its forecast for losses across the whole industry to $11bn for 2009, from the $9bn it predicted earlier this month.
Airlines have already lost $6bn in the first half of the year alone, Iata said, with Asian airlines among the hardest hit.
In the Asia-Pacific region, Iata predicts airlines will report losses of $3.6bn for 2009.

Russia's largest carmaker

Russia's largest carmaker, Avtovaz, is to cut up to 27,600 jobs as it tries to cope with the global slump in demand.
The job cuts are more than a quarter of the 102,000-strong workforce at Avtovaz, which makes Lada cars.
Reports had suggested that 36,000 job losses were considered, but the company said that it managed to "significantly lower the initial figure".
Russia had the fastest growing car market in Europe until the financial crisis hit demand.
Overhaul
"Today, 102,000 people work at Avtovaz," the carmaker said.
"Such a number cannot guarantee effective and profitable production, therefore we have agreed to reduce the personnel by 27,600 people."
This includes 5,000 job cuts in "white collar" jobs announced last week, it said.
Of the workers being eliminated, Avtovaz said 13,000 employees would retire with pensions while another 5,500 would be forced to take early retirement.
The remaining 9,100 employees would leave the firm, but Avtovaz said 6,000 of those would have the option to work at the carmaker again in 2012.
Sales have dropped 40% this year as consumers, hard hit by the financial crisis, have shunned the carmaker.
Production freezes
Avtovaz, which is 25%-owned by French automaker Renault, had imposed month-long production freezes while it tried to reduce levels of its unsold stock.
No cars were built in August and the plant will work two weeks in four from September to February, which meant that the workers will have to survive for six months on half pay of $300 (£176) a month.
The decision led to large worker protests.
The carmaker was set up with Italy's Fiat during the Soviet years.
It is a key employer in the southern city of Togliatti based by the Volga River, which has a population of 700,000.
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