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INSTITUTIONAL ISSUES IN THE SUSTAINABILITY OF CROSS-BORDER TRANSPORT INSTITUTIONAL DIMENTIONS OF CROSS-BORDER
TRANSPORT
– Introduction to the Theme of the Special Issue –
Professor, Department of Spatial Economics NOVA Endowed Professor, George Mason University 1. INTRODUCTION
An important reason why institutions are important is that they provide a basic level of justice and equity in Transport is a complex system composed of infra- society. Issues of justice are, however, not the only rea- structure, logistics and information subsystems that direct son institutions exist. Coase4 and North2 have called at- the actual movement of vehicles, ships and airplanes.
tention to the economic importance of institutions through Most transport flows take place within countries, but the the concept of ‘transaction costs’: when transaction costs international dimension is increasing. For example, the are high, institutions matter. For a broader review on the ratio between exports and GDP in the world economy has theme of institutions and transport we refer to Rietveld increased from about 1% in 1820 to about 18% in the year and Stough5. In the present special issue we focus on the 20001. This tendency towards internationalization calls importance of institutions on cross-border transport.
for increasing coordination of activities in and amongcountries. Despite the international character of transport, 2. INSTITUTIONS AND INTERNATIONAL
countries differ substantially in the routines used to deal TRANSPORT
with transport problems. These differences are related tofactors like, for example, differences in economic devel- The nation state has become a dominant factor in the opment as high income countries usually put greater em- formation of formal institutions: national legislation has phasis on the environmental impacts of transport than low become more abundant than ever. Therefore, institutions income countries. Another reason for differences among tend to be similar within countries. Two countervailing countries is that institutional arrangements differ. In this trends can be observed in the mean time. On the one special issue we analyze these differences in more detail hand, in many countries sub-national regions have be- where special attention is directed to the theme of sus- come more independent giving them broader scope to fol- low their own policies and formulate their own Researchers in the field of sustainable transport regulations. On the other, supra-national bodies are gain- have gradually become aware of the large importance of ing power. In Europe, for example, this has led to a shift institutions. For example, regulatory reforms and insti- of emphasis in legislation away from national govern- tutional change have had large impacts on trade and trans- port during the last decades. Institutions may be defined The institutional and cultural differences between as socially devised constraints that shape human interac- countries are, however, still pervasive. This leads to tion2,3. A related definition is to describe institutions as higher costs for international transactions compared to social rule structures that govern behavior. These struc- domestic ones6. Thus, national borders generally have a tures can be both formal and informal. Thus, institutions negative or dampening impact on the intensity of spatial do not only pertain to formal rules like legislation and interaction, implying a bias towards domestic partners in regulations, but also to informal rules such as manage- transport and transactions. This favors short distance ment practices, values and governance. The essence of transport patterns, which may be environmentally posi- institutions is that they structure incentives in human ex- tive. The increasing importance of the EU may be ex- pected to lead to reduced border friction and thus to INSTITUTIONAL DIMENTIONS OF CROSS-BORDER TRANSPORT – Introduction to the Theme of the Special Issue – broader spatial interaction patterns. Nevertheless there is known as STELLA (Sustainable Transport and Links and strong evidence that even after stripping borders from Liaisons with America) established new ways for research- most of their formal and financial trade impeding aspects, ers in Europe, Canada and the USA to share the results border related barriers to trade and spatial interaction re- of research into sustainable transport. The paper in this main large. This becomes visible for example when one issue by Black, Lee-Gosselin and Nijkamp provides an compares interregional flows within a country with in- overview of the STELLA-START activities, where it ternational flows. For activities such as freight transport, should be noted that the theme of the present special is- passenger transport, telephone traffic and migration, the sue is only one of the themes addressed in the broader level of spatial interaction between regions within a coun- programme. Black et al. review the need for improved try appears to be 2 to 20 times as large compared to re- international diffusion of such research, and for under- gions in different countries at comparable distances7.
taking cross-national comparative studies. A retrospective Similar results were found by McCallum8 and Helliwell9 view is given of the core research issues that would best for trade between the USA and Canada.
be pursued by ongoing international initiatives of this Comparing the USA and Europe, territorial differ- ences are especially interesting because in Europe there Brooks notes that borders between countries were are so many countries within the European transport net- originally established as a demarcation of territory and work that additional costs for transport across-borders are nations sought to defend their territory from enemy in- a historical legacy. One telling example is European air cursion. As countries became more trade-oriented, walls traffic control that is still organized on the basis of the became less important and border officials concentrated territories of individual countries. This has huge conse- on meeting customs and immigration concerns. Since the quences in terms of costs, safety and capacity of the air- terrorist attacks of 2001, borders have once again been ways. Another clear example is freight transport by rail seen in the light of their original purpose as security con- in Europe, where rail has a much smaller market share cerns have come to the fore. In the context of trans-At- than in the U.S. This has to do with the large discrepan- lantic trade and transport, she discusses the existing cies in technology used in the various countries (voltages, research for three types of freight moves – marine, air, equipment, railway security systems). Another factor is and intermodal container. The challenges that borders that the influence of the national railway companies in have traditionally presented for freight are regulatory, in- Europe is still very strong, and entry barriers for interna- frastructure and informational in nature, but more recently tional railway companies are high, both of which produce security has become not so much a fourth pillar as an negative impacts on the quality and price of international umbrella under which the other three must operate.
De Groot, Linders and Rietveld explore the impact In addition to a general analysis of institutions on of institutions on international trade. Ineffective institu- international trade and transport we pay special attention tions and bad governance increase transaction costs and to the theme of institutions and port development. The reduce international transport flows. They show that a reason is that international trade depends to a consider- more explicit analysis of institutional differences can ac- able extent on seaports, and the port sector operates un- count for several puzzling results in the empirical litera- der rather specific institutional conditions. Not only are ture on bilateral trade. More specifically, they show that seaports characterized by a high degree of unionization, differences in the effectiveness of institutions offer an but also by complex mixtures of national and regional explanation for the tendency of OECD countries to trade public interventions combined with private sector initia- disproportionately with each other, and with non-OECD tives. This leads to themes such as fiscal federalism and countries, as well as for the positive effect of GDP per fiscal competition. The institutional setting of seaports seems to be an important determinant of their stagnation Stough reviews the long running development of ports and their regions during the past century in termsof wars, technological change, political change and glo- 3. CONTENTS OF THE SPECIAL ISSUE
balization. As such, ports have needed to adjust to theseconditions to maintain their competitiveness. They have This special issue summarizes some of the contri- done this by adapting their physical and institutional in- butions and discussions in Focus Group 5 of the STELLA- frastructures and the adoption of new technologies. He STAR network. Starting in 2002, a thematic network argues that institutional adaptation is the most important INSTITUTIONAL ISSUES IN THE SUSTAINABILITY OF CROSS-BORDER TRANSPORT way in which ports have changed to remain competitive.
9. Helliwell, J.F. Do national borders matter for Quebec’s trade? “Cana- dian Journal of Economics” 29: pp.509-522. (1996).
By means of four case studies an analysis is carried outof the problems and responses made by the ports followedby an institutional examination and evaluation of the ad-justment process pursued.
Another contribution on institutional aspects of port development is given by Ubbels who focuses on West-ern Europe. He notes that despite the growing role of pri-vate involvement in recent port developments, mostmaritime trade is still largely handled in ports where in-vestments, pricing and other managerial decisions are, toa varying extent, dependent, or at least influenced by pub-lic bodies. He shows that the extent and type of publicintervention differs considerably between ports in theHamburg – Le Havre range. The wide variety in owner-ship, financing and management of ports throughout Eu-rope indicates that there is no level playing field atpresent. Because ports operate in an increasingly com-petitive environment this may lead to situations of unfaircompetition.
Komornicki discusses the consequence of barriers on transport between the new accession countries and theexisting countries of the EU. The paper discusses fivetypes of institutional barriers: lack of consistency in thetransport policy of the state in the transition countries, in-ertia of the spatial development plans in the domain ofinfrastructural development, inertia in functioning of thelarge state-owned carrier companies, the excess liberal-ization of the procedures in the domain of protestingagainst and blocking the investment projects and inflex-ible policy in the domain of improvement of road safety.
Examples of these institutional barriers are given for thecase of Poland and its neighboring countries, in particu-lar Germany.
REFERENCES
1. Maddison, A. The World Economy, a Millennium Perspective. OECD, 2. North, D.C. Institutions, Institutional Change and Economic Perfor- mance. Cambridge University Press, Cambridge. (1990).
3. Williamson O.E. Institutions and Economic Organization – the Gover- nance Perspective. Washington, D.C., World Bank. (1994).
4. Coase, R.H. The nature of the firm. “Economica” 1937: pp.386-405.
5. P. Rietveld and R. Stough. Barriers to Sustainable Transport. Spon, 6. Houtum, H. van. The Development of Crossing-border Economic Relations. Tilburg University, Tilburg. (1998).
7. Rietveld, P. Obstacles to Openness of Border Regions in Europe, in: M. van Geenhuizen and R. Ratti (eds.) Gaining Advantage from OpenBorders. An Active Space Approach to Regional Development. AshgatePublishing, Aldershot. pp.79-96. (2001).
8. McCallum, J.C.P. National borders matter. “American Economic Re-

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