72 10 3494 https://omeka.ibu.edu.ba/files/original/51e3553dcfd1e2bc534c1725dd5fc425.pdf a52b502341316ca56b9704c2f0628bf3 PDF Text Text Journal of Economic and Social Studies CONFERENCE NOTES AND REPORTS Symposium Notes on Ethics and Social Responsibility, 14th and 15th of April 2011 ISCTE – Lisbon University Institute Maja SAVEVSKA Université Libre de Bruxelles Institut d’Études Européennes Maja.Savevska@ulb.ac.be This much awaited symposium brought together practitioners and scholars involved in some aspect of the broad concept of social responsibility. Although not necessarily limited to, the symposium mainly focused on the individual and corporate responsibility in different organizational settings. The symposium was roughly divided in panel and poster sessions covering a wide range of topics, such as: corporate misconduct, individual ethics in organizations, ethical decision making, business ethics, ethics and organizational performance etc. The symposium was opened and closed by two key note speakers, Prof. Daniel Arenas Vives and Prof. Jan Jonker respectively. Both professors delivered inspiring reflections on the need for a sustainable business practices. Overwhelming number of researchers coming from Portugal, UK, Turkey, Brasil, USA, Bosnia and Herzegovina, Italy, Belgium, Denmark, Netherlands, Spain, presented their findings at the symposium. We witnessed a lot of collaborative efforts among researchers with the aim of providing a large scale analysis of across sectoral and industry specific socially responsible initiatives. The reappearing theme that deserves further explanation was Corporate Social Responsibility (CSR herein), understood in its widest terms. Originating from the business and management literature in the 1970s, the concept of CSR has recently gained impetus thanks to globalization. Although we lack a scientific consensus on the exact Volume 1 Number 2 July 2011 155 �Maja SAVEVSKA definition of the concept of CSR, we can agree at least on three essential constituents that define the membership boundary of the CSR concept: (i) its voluntary nature, (ii) its multi-stakeholder participation, (iii) its objective to balance between profit orientation and social concerns. The symposium styled itself as a forum where both practitioners and researchers explore empirical and theoretical aspects of the CSR regime. The numerous research projects presented at the symposium were significantly skewed in favor of eclectic case studies as opposed to theoretical exploration of the state of art or meta-CSR empirical analysis. Notwithstanding the variations, once could discern three major research streams at this symposium: one focused on consumer attitudes, another on corporate mis/conduct and employee’s perception of it, and the third on the impact of the CSR strategies, be it internal or external. For the purpose of this report, I would have to single out presentations that captured my attention and would illustrate the diversity of case studies. Within the first research stream Selin Türkel and Burcu Öksüz from Izmir University of Economics and Ana Patrícia Duarte and Carla Mouro from ISCTE presented innovative ways of measuring consumer attitudes towards CSR in Turkey and Portugal respectively. In their ongoing study, Türkel and Öksüz constructed experiments where they control for different communication platforms in order to explore their effects on the consumer attitudes. While the completed survey of Duarte and Mouro demonstrated that the external CSR initiatives have significantly greater effect on consumer behavior than the internal initiatives. The second stream that emerged at the symposium was focusing on the corporate conduct and the perception of the employees. The joint effort of Ana Patrícia Duarte and José Conçalves des Naves explored the effects of employees’ perception of the company’s socially responsible behavior on the employees’ commitment. Susana Leal, Arménio Rego and Arnaldo Coelho gave special contribution in that they provided a psychological twist to the research by looking at the way the employees’ perceptions mediated through the psychological capital influence the Organizational Citizenship Behavior (OSB).1 In similar lines, Raquel Matos and Eduardo Simões explored the effects of the ethical climate on the OCB. It is worthwhile mentioning the research of Chiara Mio and Alvise Favotto from University of Venice who looked at the differences in perceptions along the hierarchy line of a company. The third stream of analysis was exploring the effects of the CSR initiatives. Particularly interesting was the study of Maria Vieira de Melo and Diego César de Vasconcelos 1 The employees conduct, apart from their specific job description that influences the operation within the company. 156 Journal of Economic and Social Studies �CONFERENCE NOTES AND REPORTS / Symposium Notes on Ethics and Social Responsibility who explored the effects of the CSR practices in the construction industry on the industrialization and the environment in Brazil. Valuable conclusion was also reached by Ana Patrícia Duarte and Sónia Conçalves who controlled for the internal and the external CSR strategies. In turn, they detected a positive impact of the internal CSR strategies on the employees’ conduct. It was especially rewarding seeing how the concept of CSR has left its European hearthland and gained sufficient impetus in other regions. Mohammet Sait Dinc and Teoman Duman study on the employees’ perception of the marketing strategies in Bosnia and Herzegovina was a case in point from the Balkans. Pelin Baytekin and Deniz Maden analysis of the nexus of CSR and education where they investigated Turkcell’s CSR initiative was yet another promising example. It has been rewarding to learn that many companies have realized the need to reassert their competitive position by improving their Corporate Citizenship role within the communities. One presentation that deserves mention in this report was that of Robson Sø Rocha who challenged some of the tenets of Varieties of Capitalism scholarship. In his study, Rocha was exploring the survival strategies of liberal market economic actors that operate within a coordinated market economy setting. Namely, his case study of an equity firm that bought the Danish TDC represents a valuable contribution to the neo-institutional theories. To the great pleasure of those who put more emphasis on theory, myself included, the symposium offered a theoretical panel where Rosa Slegers and me provided Aristotelian and constructivist twist to the debate. Slegers put forward the idea of a virtue-based approach to business ethics by using insights from evolutionary biology. Myself, I tried to provide a critical reading of the existing theoretical interpretations of CRS and argued for a constructivist understanding of the CSR potential to foster good corporate behavior. This report, by singling out papers, cannot do justice to the tremendous effort put by all the scholars whose attendance was highly appreciated. The vast number of undertaken studies is indicative of the importance that both the academic and the practitioner communities place in the concept of social responsibility. Although we lack a meta-CSR analysis and the jury is still out there to judge the impact of the CSR regime, the symposium brought us a step further in our understanding of the CSR regime. One can only hope that the critical theorists would be proven wrong in their assessment of CSR as an oxymoronic concept that cannot replace the good old regulations’ approach. Volume 1 Number 2 July 2011 157 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1076 Title A name given to the resource CONFERENCE NOTES AND REPORTS Symposium Notes on Ethics and Social Responsibility, 14th and 15th of April 2011 ISCTE – Lisbon University Institute Author Author SAVEVSKA, Maja Abstract A summary of the resource. This much awaited symposium brought together practitioners and scholars involved in some aspect of the broad concept of social responsibility. Although not necessarily limited to, the symposium mainly focused on the individual and corporate responsibility in different organizational settings. The symposium was roughly divided in panel and poster sessions covering a wide range of topics, such as: corporate misconduct, individual ethics in organizations, ethical decision making, business ethics, ethics and organizational performance etc. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2011-01 Keywords Keywords. Article PeerReviewed H Social Sciences (General),HB Economic Theory,HG Finance https://omeka.ibu.edu.ba/files/original/f43b49a2e7cfbe6f379294d80381be55.pdf 9edca5e109172d6859379d13400658cb PDF Text Text Journal of Economic and Social Studies Paradigm Shift for Sustainable Development: The Contribution of Islamic Economics Z. Hafsa ORHAN ASTRÖM International University of Sarajevo (IUS), Strategic Analysis and Risk Assessment (SARA) Program, Sarajevo, Bosnia and Herzegovina. hafsaorhan82@hotmail.com ABSTRACT Sustainable development is a common concept of the 21st century. However, the expected changes towards sustainable development are slow. We believe every change starts with changes in understanding of the subject matter. If sustainable development is the aim, it should start with changes in understanding. This paper aims to explain the necessary paradigm shift for sustainable development by the contribution of Islamic economics. While doing this, the reasons of paradigm shift, the content of such a paradigm shift, and the possible contributions of Islamic economics will be analyzed. Keywords: Sustainable Development; Paradigm Shift; Islamic Economics Volume 1 Number 1 January 2011 73 �Z. Hafsa ORHAN ASTRÖM Introduction The concept of ‘sustainable development’ started to appear in the 1970’s and became a frequent hot topic for discussions about world politics, economy and the environment. However, the fulfillment of the aim of sustainable development is yet to happen. There are different reasons for this unfulfillment, such as the lack of political will, the effect of financial crises, etc. But we believe the problem is at a deeper level, i.e., at the paradigm level. The aim of this paper is to discuss the possible contribution of Islamic economics to the necessary paradigm shift for the aim of sustainable development. In this sense, there are two hypotheses: H1: A paradigm shift is necessary for the aim of sustainable development H2: Islamic economics can contribute to the paradigm shift for the aim of sustainable development While trying to find out the validity of the above hypotheses, we will analyze the reasons for the necessity of a paradigm shift, the structure of a possible paradigm shift, and why and how Islamic economics can contribute to such a paradigm shift. The next section will give background information on sustainable development, the paradigm shift concept and Islamic economics. The third section will be about the relationship between sustainable development and Islamic economics. The last section will conclude the paper. Literature Review To be able to analyze the possible contributions of Islamic economics to the paradigm shift for sustainable development, some concepts should be clear first. The three basic concepts of this paper will be introduced. These concepts are sustainable development, paradigm shift and Islamic economics. The concept of sustainable development started to appear in the 1970s. The reason behind the emergence of such a concept was the growing awareness of the depletion of natural resources, and worsening environmental conditions on the one hand and increasing world population on the other hand, i.e., demand-supply discrepancy. Despite the common use of the concept, there is a lack of an explicit definition. One of the first attempts towards the definition of this concept was done by World Conservation Strategy (1980): “For development to be sustainable, it must take account of social and ecological factors, as well as economic ones; of the living and non-living resource base; and of the long-term as well as the short-term advantages and disadvantages of alternative action.” However, today the most commonly used definition is the one established by the World Commission on Environment and Development (1987): “Economic and social development that meets the needs of the current generation without undermining the ability of future generations to meet their own needs.” This definition can sound vague since it does not indicate what is meant by ‘meeting the needs of the current generation’ and ‘without undermining the future generations’ ability of meeting 74 Journal of Economic and Social Studies �Paradigm Shift for Sustainable Development: The Contribution of Islamic Economics their own needs’. At this point, Dalal-Clayton and Bass (2002) explain what they actually mean. According to them, meeting the needs of the present generation covers the economic needs, social, cultural and health needs plus the political needs. On the other hand, “without undermining the future generations’ ability to meet their own needs” refers to minimising usage, the sustainable use of renewable resources, and keeping within the absorptive capacity of local and global sinks for wastes. Efforts to maintain sustainable development include treaties and establishment of rules, laws and regulations. The actors taking part in these efforts are quite diverse, such as intergovernmental organizations, non-governmental organizations, nations, international organizations, the private sector and civil society. One of the earliest efforts in the global arena was the Stockholm Conference held in 1972. However, the first comprehensive attempt came with the Rio Declaration on Environment and Development (1992), issued as a result of the United Nations Rio Conference. The declaration covers 27 principles. The following Earth Summit was in South Africa. It ended with the Johannesburg Declaration (2002) where the commitment to sustainable development is mentioned once more and the challenges were indicated. Additionally, three sets of goals were established due to the three different time horizons: the short-term (for 2015) goals of the Millennium Declaration of the United Nations; the two-generation goals (for 2050) of the Sustainability Transition of the Board on Sustainable Development; and the long-term (beyond 2050) goals of the Great Transition of the Global Scenario Group. Another declaration was released by the International Law Association Committee on the legal aspects of sustainable development, called the New Delhi Declaration on the Principles of International Law Related to Sustainable Development (2002). The declaration includes 7 principles which are based on the previous declarations mentioned above. Some of these principles are the duty of states to ensure sustainable use of natural resources, the principle of equity and the eradication of poverty, and the principle of common but differentiated responsibilities. Another important document is the Kyoto Protocol (1997) which was adopted with a direct focus on global warming. Heretofore, around 200 countries have signed the protocol, which includes 28 articles. Efforts are not limited to the global summits. There are also efforts at the regional or state level. The fourth Asia-Pacific Forum for Environment and Development (2003) summarizes the efforts done in the region, e.g., a sub-regional cooperation in Southeast Asia, the ASEAN Regional Centre for Biodiversity Conservation established in the Philippines in 1999 to coordinate ASEAN initiatives on biodiversity conservation, biodiversity loss and degradation in the region; and the Regional Environment Programme (SPREP) established in 1982 by the governments of the South Pacific region to protect the regional environment. According to the report of the Minister of Public Works and Government Services (2001), the Government of Canada Action Plan 2000 on Climate Change outlines cost-effective measures that will take Canada one-third of the way to its Kyoto target. Despite all these efforts, there are different problems and challenges ahead for the aim of sustainable development. Some of the basic problems are lack of conformity among different actors who have their own agendas, properties and capabilities, financial inadequacies and lack of legal enforcement. However, there is another problem which we believe should attract basic concern, i.e. paradigmatic problems. Woods (2002) argues that sustainable development confers a contested paradigm since the term ‘sustainability’ is vague in itself and more importantly, it lacks an approach that tackles the Volume 1 Number 1 January 2011 75 �Z. Hafsa ORHAN ASTRÖM irreconcilability among economic, social and environmental dimensions. Henceforth, we argue that to be able to tackle such a problem, a paradigmatic shift is necessary. Paradigm and Paradigm Shift Literally, a paradigm is “a typical example or pattern of something; a model” (Hobson, 2004). The prominent figure known for the idea of paradigm shift is Kuhn. He identifies paradigm as “... what the member of scientific community, and they alone, share” (Kuhn, 1970). The idea of paradigm shift is a cyclic process which starts with an already settled paradigm. In time, anomalies and crises emerge as a natural process. As a response to these crises, scientific discoveries begin which result in scientific revolutions through paradigmatic shift. A typical paradigm shift cycle follows the scheme below: Normal science--> Model Drift--> Model Crisis--> Model Revolution--> Paradigm Change Islamic Economics Islamic economics has medieval roots, including an immense literature from Muslim scholars such as Al-Ghazali, Ibn-Khaldun, and Ibn-Qayyim. On the other hand, a better-organized contemporary Islamic economics paradigm flourished in the second half of the twentieth century, especially with the de-colonization of Muslim countries. Islamic economics is built upon the knowledge coming from the basic sources of the religion of Islam which are Quran and sunnah -sayings and living habits of the prophet Mohammed-, plus the accumulated knowledge of Islamic jurisprudence generated by consensus (ijma), analogy (qıyas) and independent interpretation (ijtihad). According to the well-known contemporary definition, economics is the science of allocating scarce resources due to unlimited wants. The difference in Islamic economics starts from this point, where the assumption is the lack of absolute scarcity (stock) even if there is relative scarcity (flow) in this world. According to a comprehensive definition (Ahmed, 2002) “Islamic economics is the science that studies the best possible use of all available economic resources, endowed by Allah, for the production of maximum possible output of Halal goods and services that are needed for the community now and in future and the just distribution of this output within the framework of shariah and its intents.” Rules and regulations in Islam follow the objectives of public welfare (maslahah) which are categorized as preservation of life, property, religion, reason and procreation. Asutay (2007) describes Islamic economics as a ‘system’ which owns its framework paradigm, value system, foundational axioms – such as doctrine of oneness (tawhid), justice and charity (adl wa’l-ihsan), self-development (tazkiyah), responsibility (fardh) - operational principles, specific methodology and functional institutions. Because of these peculiarities, Islamic economics is seen as an alternative paradigm (Presley & Sessions, 1994; Zaman, 2005). The primary properties of Islamic economics can be seen below: 76 Journal of Economic and Social Studies �Paradigm Shift for Sustainable Development: The Contribution of Islamic Economics 1. Islamic multi-faceted point of view connecting the different parts of life together, e.g., social, economic, political and religious issues 2. Dominance of a normative approach 3. Importance of social altruism 4. The approach of connecting financial sector and real sector 5. Acceptance of no absolute ownership, no absolute scarcity 6. Criticism of waste Discussion According to the Kuhn cycle, paradigm shifts occur when there are anomalies which need novel explanations. When the concept of sustainable development came into existence, there were anomalies which necessitated a paradigm shift. Such anomalies were increasing inequalities within and among the nations, increasing poverty, especially in developing countries, depletion of the ozone layer, global warming, depletion of some species of animals and plants, water and air pollution, etc. Sustainable development was an effort to change the way of thinking towards the planet. That is why the concept of development is preferred instead of growth, which is believed to reflect only a quantitative aspect of countries without taking into account some other qualitative items such as education, health and equality. However, the success of sustainable development as a new paradigm is yet to be clear. The basic problem arises due to the inconsistencies between its rhetoric and the axioms of the entrenched economic paradigm. In that regard, here comes the possible contribution of Islamic economics which is pronounced as an alternative economic system. Below, the possible contributions of Islamic economics to the paradigm shift of sustainable development will be analyzed according to different issues. The first possible contribution can come from the normative approach of Islamic economics. It is one of the criticisms of contemporary economic theory that it identifies itself as a value-free science. One of the reflections of such an identity can be seen in the determination of efficiency in society. As it is known, in the classical economic theory, economic efficiency is described by Pareto optimality, where it is impossible to make one better without making another one worse off. The problematic part in that approach is the lack of any statement on equity or social well-being. Similar criticisms are made for utilitarianism, the social utility theory of classic economics. According to Van Wyk (2001), the basic criticisms of utilitarianism are the consequentalism where “… the rightness of actions is judged entirely by the goodness of the consequent state of affairs” and welfarism in which “… the goodness of the state of affairs must be judged entirely by the goodness of the set of individual utilities in the respective of state affairs.” It was mentioned before that one of the foundational axioms of Islamic economics is adl wa’l-ihsan, which can be named as just balance or equilibrium where “a ‘maximal’ rate of economic growth must be maintained to satisfy the requirement of intergenerational equity. By the same token, from the many growth paths available, the choice will be restricted to those which satisfy the Islamic ethical constraints.” (Naqvi, 1997) In order to show the difference of the welfare structure in Islamic economics, the below model of Naqvi (ibid.) can be followed. First of all, welfare (W) is a function of u (the average individual utility function) which depends on k(t) (the per capital Volume 1 Number 1 January 2011 77 �Z. Hafsa ORHAN ASTRÖM consumption), C (the average commodity basket) which depends on k(t), x(t) (the per capita capital stock) and t (time). The welfare function can be seen below: (1) On the other hand, there are two constraints, motion and wealth: (2) (3) where, Q2 is the square of the difference of wealth holding in the society. The second constraint means that the tolerance for inequality is dependent on the level of per capita income. B is an upper limit in a constraint maximization problem. The next step is to maximize the first equation due to the constraints of 2 and 3. At the end, we get the equalities: below: (4) (5) According to Naqvi (ibid.), these equalities prove that “in order to maximize aggregate social welfare and the growth in the size of the commodity basket containing the wage goods in a growing economy, the inequality of wealth must be held at a minimum, while capital is priced efficiently.” Indeed, one of the problems with the paradigm of sustainable development is the Sisyphean effort of combining value free economic theory with non-value free social issues. Another possible contribution can be to adopt the altruistic point of view of Islamic economics instead of the self-interest driven, rational economic agent (homo-economicus) theory. In the economic dictionary, homo economicus or economic man is defined as “a person who makes rational decisions in order to achieve their most preferred outcome given the constraints upon choice” (Black, Hashimzade, & Myles, 2009). The most typical aspect of economic man is profit maximization ability. As a result of profit maximization, the equilibrium occurs where (Hasan, 1992): (6) (7) (8) when, (9) (10) 78 Journal of Economic and Social Studies �Paradigm Shift for Sustainable Development: The Contribution of Islamic Economics In these equations, a, b and c are positive constants and R refers to the profit. Meanwhile, equation 9 and 10 show the negative relationship between price (P) and output (Q) and the positive relationship between average cost (AC) and output (Q). It is quite a common criticism that the basic agent of the classic economics, homo-economicus, is a value-free agent. This was the basic reason why Kahneman and Tversky developed a new theory, called Prospect Theory later on, i.e., to include the ideas and values of the people into the economic decision-making system. On the other hand, there is another type of agent called homo-islamicus who “... is said to be both entrepreneurial and moral. He is an Islamic personality who defines his existence by combining private and public life and religious and economic activities through his Islamic ethical values and norms. He does not eschew economic activity and retreat to other-worldly asceticism because of his religion. Nor does he make concessions with regard to his religion and morals for his business activity. He is competitive, productive and innovative, rather than a rent-seeker and speculative. He thinks that being economically successful is a duty of any and every Muslim, as Islam condemns idleness, laziness and encourages hard work and resourcefulness” (Adas, 2006). According to the profit maximization results of a homo-islamicus agent (Hasan, 1992): (11) (12) (13) where, (14) The results of these two profit maximization calculations show that the equilibrium quantity and profit are higher for homo-islamicus agent, showing that the efficiency is higher, while the price is lower. The aforementioned properties of Islamic economics, normative and altruistic approaches, are especially the ones in which classic economic theory has problems with respect to becoming an alternative paradigm of sustainable development. Additional contributory properties of Islamic economics can be mentioned, such as the multi-faceted point of view where the coherence among the social, political, economic and environmental issues is not neglected, and the non-absolutist point of view. Non-absolutist point of view refers to the acceptance of not having absolute freedom and ownership. One of the problematic points of view of today’s generation is that they have the rights of limitless ownership without taking into account the responsibilities towards society and humanity. According to Islamic economy, what people earn is not immune from the rights of other people, e.g., according to the seventieth chapter, twenty third and fourth verses of the Holy Quran (Asad, 2006) “... And in whose wealth there is a right acknowledged for the beggar and the destitute...” It can be argued that there are limitations or constraints in terms of private ownership in other systems Volume 1 Number 1 January 2011 79 �Z. Hafsa ORHAN ASTRÖM besides Islam. However, the sources and contents of such restrictions are different for Islam. For instance; because of the faith in God and the hereafter, Muslim people are obliged to pay a tax called zakah to the needy people as a proof that people have rights on other people’s earnings. On the other hand, as an Islamic law, a private ownership can be limited if there is concern for social well-being. Islam is unique in its idea of ownership since it is seen by many, e.g. A. Kia and M. S. Chaudhry, as lying between capitalism, where private ownership is almost sacred, and socialism, where private ownership is not accepted. The last contributory part can come from the criticism of wasting in Islamic economics in the age of massive commercialization and consumption, e.g., according to the Holy Quran (7:31) “O Children of Adam! Wear your beautiful apparel at every time and place of prayer: eat and drink: But waste not by excess, for Allah loveth not the wasters.” Conclusion In this paper, we discussed why the sustainable development paradigm has not been turned into a paradigmatic shift of Kuhnian cycles. In this regard, we indicated why Islamic economics can contribute such a paradigmatic shift. In doing this, we elaborated on the possible contributory points. At this point, it can be argued that the practice of Islamic economics is not promising, e.g., the backwardness of Muslim communities in terms of economic, political, social and environmental issues. However, the success of applications depends on different aspects such as different comprehensions by different authorities, political power, historical dynamics, necessary institutions etc. Presently, the rejection of Islamic economic paradigm due to the negativeness in applications seems hasty. Another issue is the universal applicability of Islamic economics. First of all, it should be indicated that to get contributions from Islamic economics for the paradigm of sustainable development does not necessarily mean to be Muslim. As can be seen, the above-mentioned possible contributory properties include universally acceptable aspects. The peculiarity of Islamic economics is the combination of these aspects with economic theories. It is true that there are some other alternative points of view trying to put value-based analysis into current economic theory, such as cognitive economics or prospect theory, but none is as comprehensive as Islamic economics yet. Moreover, the criticism of Islamic economics against the current one is deeper than these alternatives. As a comprehensive alternative, socialism can be mentioned. However, its practicality is a big question mark. It can be asked at this point why Islam as an economic system is more viable in practice than socialism. My quick answer is because the former one is more compatible with human nature where private ownership, family and faith are not neglected. References Adas, E. B. (2006). The Making of Entrepreneurial Islam and the Islamic Spirit of Capitalism, Journal for Cultural Research, 10, 113-137. Ahmed, H. (2002). A Microeconomic Model of an Islamic Bank. Jeddah: Islamic Development Bank. 80 Journal of Economic and Social Studies �Paradigm Shift for Sustainable Development: The Contribution of Islamic Economics Asad, M. (2006). The Message of the Quran. Istanbul: Isaret Yay. Asutay, M. (2007). A Political Economy Approach to Islamic Economics: Systemic Understanding for an Alternative Economic System, Kyoto Bulletin of Islamic Area Studies, 1, 3-18. Black, J., & Hashimzade, N., & Myles, G. (2009). Oxford Dictionary of Economics. Oxford: Oxford University Press. Dalal-Clayton, B., & Bass, S. (2002). Sustainable Development Strategies: A Resource Book. London: Earthscan Ltd. Hasan, Z. (1992). Profit Maximisation: Secular versus Islamic. In S. Tahir et al (Eds.), Readings in Microeconomics: An Islamic Perspective (pp. 239-255). Malaysia: Longman. Hobson, A. (2004). The Oxford Dictionary of Difficult Words. Oxford: Oxford University Press. International Union for Conservation of Nature and Natural Resources & United Nations Environment Programme & World Wildlife Fund (1980). World Conservation Strategy. IUCNUNEP-WWF. United Nations Documents, Johannesburg Declaration on Sustainable Development. Retrieved May 20, 2010, from http://www.un-documents.net/jburgdec.htm Kuhn, T. S. (1970). The Structure of Scientific Revolutions. Chicago: The University of Chicago Press. Kyoto Protocol to the United Nations Framework Convention on Climate Change (1997). Retrieved on June 2010 from http://unfccc.int/resource/docs/convkp/kpeng.html Government of Canada (2000). Action Plan 2000 on Climate Change (ISBN: 0-662-29444-0). Retrieved on June 2010 from file:///tmp/M22-135-2000E.pdf Naqvi, S. N. H. (1997). The Dimensions of an Islamic Economic Model, Islamic Economic Studies, 4, 1-24. International Law and Agreements (ILA) New Delhi Declaration of Principles of International Law Relating to Sustainable Development (2002, April). International Environmental Agreements: Politics, Law and Economics, 2, 211-216. Presley, J. R., & Sessions, J. G. (1994). Islamic Economics: The Emergence of a New Paradigm, The Economic Journal, 104, 584-596. United Nations Environment Programme (UNEP). Rio Declaration on Environment and Development. Volume 1 Number 1 January 2011 81 �Retrieved on May 2010 from http://www.unep.org/Documents.multilingual/Default.asp?Documen tID=78&ArticleID=1163 Van Wyk, M. W. (2001). Equal Opportunity and Liberal Equality. (Unpublished doctoral dissertation). The University of Johannesburg, Johannesburg. Woods, D. (2002). Sustainable Development A Contested Paradigm: Economics Forum of the Foundation for Water Research. Birmingham, UK. Zaman, A. (2005). Towards a New Paradigm for Economics, 18, 49-59. � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1059 Title A name given to the resource Paradigm Shift for Sustainable Development: The Contribution of Islamic Economics Author Author ORHAN ASTRÖM, Z. Hafsa Abstract A summary of the resource. Sustainable development is a common concept of the 21st century. However, the expected changes towards sustainable development are slow. We believe every change starts with changes in understanding of the subject matter. If sustainable development is the aim, it should start with changes in understanding. This paper aims to explain the necessary paradigm shift for sustainable development by the contribution of Islamic economics. While doing this, the reasons of paradigm shift, the content of such a paradigm shift, and the possible contributions of Islamic economics will be analyzed. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2011-01 Keywords Keywords. Article PeerReviewed H Social Sciences (General),HB Economic Theory,HG Finance https://omeka.ibu.edu.ba/files/original/89301abe1f55d2831bbf7d67dae22b5f.pdf 8dd8701bdfb32c846bc50b02535be554 PDF Text Text Journal of Economic and Social Studies Measuring the Level of International Capital Mobility for MENA Countries Muhittin KAPLAN Melikşah University, Faculty of Economics and Management, Department of Economics, Kayseri, Turkey. mkaplan@meliksah.edu.tr Hüseyin KALYONCU Melikşah University, Faculty of Economics and Management, Department of International Trade and Business, Kayseri, Turkey. hkalyoncu@meliksah.edu.tr ABSTRACT To achieve sustainable development, it is vitally important to sustain macroeconomic stability, which is closely related to the extent of capital mobility allowed by a country. This paper attempts to measure the level of international capital mobility empirically by estimating the Feldstein-Horioka coefficients employing the panel data for the MENA countries over the period 1963-2007. In empirical analysis, time series properties of the data are examined using recently developed techniques of panel unit root. Having obtained that variables of the model are stationary variables, we use the fixed effect panel model in the analysis of data.The results indicate that capital mobility has always been high in MENA countries but this is particularly obvious for the period 1980-2007, which corresponds to the liberalization period. For the subperiod of 1963-1980, the estimated coefficients are relatively higher, implying the presence of a relatively lower level of capital mobility. Keywords: Feldstein-Horioka puzzle; Capital mobility; Fixed Effect Panel Volume 1 Number 1 January 2011 25 �Muhittin KAPLAN & Hüseyin KALYONCU Introduction This paper examines the degree of capital mobility for MENA countries. It is well known that one of the important aspects of achieving sustainable development is to preserve macroeconomic stability, which is closely related to the extent of capital mobility. For this reason, measuring the level of capital mobility is an important task to achieve. While higher capital mobility was encountered as one of the reasons behind the recent worldwide financial crisis, the subject is also important for policy makers and firms for a number of reasons; (i) the effectiveness of macroeconomic policies is closely related to the degree of international capital mobility; (ii) higher international capital mobility helps firms to allocate resources efficiently and achieve risk diversification; (iii) higher international capital mobility may also increase volatility which may end up with financial crisis. For example, the global financial crisis began in the USA and spread to Europe and then to the whole world. Today we see that devastating effect of global financial crisis is more pronounced in developed countries than the developing countries. When we consider the MENA countries in this sense, although they are not composed of a homogeneous group, they seem that they are not as much affected as developed countries. It can be argued that this is because most of the MENA countries are oil-exporting countries and high oil prices following the invasion of Iraq led to an accumulation of significant amounts of dollars in these countries. Even though this is true, this cannot be the sole reason. To be sure, we first need to measure whether capital mobility is high in these countries. If capital mobility is high for this group of countries, we can accept that the capital they accumulated helped them to stabilize their economies during the crisis and that is why they are less affected by the global financial crisis. If capital mobility is low, then we say that these countries were exempt from the crisis because they were luckily not allowing free movement of capital. Review of the empirical literature shows that most of the studies on the measurement of the level of international capital mobility have focused on estimating the Feldstein and Horioka (1980, hereafter FH) model. FH model involves examining the relationship between savings and investment empirically. Intuitively, the FH model implies that the correlation between savings and investment will be one if capital movement is not allowed and otherwise it will be zero if there is perfect capital mobility. Since then, many studies have been carried out to estimate the relationship between savings and investment, producing an enormous literature on the subject. In this paper, we aim to estimate the FH coefficient for MENA countries using the fixed effect panel model. FH coefficients will be estimated for MENA countries over the period of 1963-2007 and sub-periods of 1963-1980, 1981-2007, 1981-1997 and 1998-2007. The small coefficients will be interpreted as increased capital mobility. Literature Review Given the importance of the subject for open economies, a number of different empirical 26 Journal of Economic and Social Studies �Measuring the Level of International Capital Mobility for MENA Countries methodologies were developed aiming to measure the extent of capital mobility. The FeldsteinHorioka model has found widespread use in the empirical literature because the model is simple as well as providing an intuitive explanation for the level of capital mobility. The model suggested and empirically estimated by Feldstein and Horioka (1980) is as follows: (I/Y) = cons + b (S/Y) (1) where I, S and Y represent domestic investment, domestic saving and gross domestic product respectively. The coefficients cons and b denote constant term and savings-retention coefficients and they are the coefficients that will be ultimately estimated. In equation (1), dependent variable, domestic investment and independent variable, domestic saving is given as shares of the gross domestic product. Using data over 1960-74, Feldstein and Horioka (1980) found that the savings-retention coefficient is very close to the one for 16 OECD countries, implying low capital mobility. Since then, an enormous literature has accumulated to test the Feldstein-Horioka puzzle and explain the puzzle. Apergis and Tsoumas (2009) provide a detailed survey of these studies of empirical literature. In general, the empirical literature on the subject provides mixed results for both developed and developing countries. Studies testing the puzzle for developing countries found out that the savingretention coefficient is small, indicating that the level of capital mobility is high in these countries (Payne and Kumazawa, 2006; Apergis and Tsoumas, 2009;Coakley et.al., 1999). On the contrary, some studies provide evidence that capital mobility is low in developing countries (Murthy, 2008; Ghosh and Ostry, 1995). While Wong (1990) argue that the high capital mobility observed in developing countries can be attributed to the size of the non-traded sector, Kasuga (2004) argue that small-sized and inefficient financial mechanisms in developing countries lead to high capital mobility. Ozmen (2005), Bahami-Oskooee and Chakrabarati(2005), and Sinha and Sihna (2004) find that the correlation between saving and investment is high in larger economies. Bangake and Eggoh (2010) mention the importance of the legal protection system provided for investors in relation to capital mobility. They tested the Feldstein-Horioka puzzle for 37 African countries using the panel cointegration technique and found that savings and investment are a non-stationary and cointegrating series. Their estimation results indicate that capital mobility is higher (0.34) in the countries with strong legal protection of investors than in countries with worse protection (0.85). Overall, the test of the Feldstein-Horioka puzzle for the developing countries, including Middle East countries, shows high capital mobility because the magnitude of foreign aid and the extent of the non-traded sector are high in these countries and they have weak financial markets and are relatively open economies (Apergis and Tsoumas, 2009). Econometric Methodology and the Data This paper attempts to investigate the relationship between investment rate and saving rate to measure the level of capital mobility for MENA countries. The data subject to empirical analysis is taken from IMF International Financial Statistics for 12 countries in the MENA region over the period 1963- Volume 1 Number 1 January 2011 27 �Muhittin KAPLAN & Hüseyin KALYONCU 2007. The data set is determined by the availability of the data. In other words, those countries that have unbroken series of data over the sample period are included in the data set. These countries are Algeria, Israel, Iran, Egypt, Jordan, Kuwait, Libya, Morocco, Saudi Arabia, Syria, Tunisia, and Turkey. The variables employed in the empirical work involve gross domestic investment and gross domestic savings as percentages of gross domestic product. As in any empirical study employing time series data, it is vital to determine the level of integration of series. For this reason, we first check the level of integration of investment rate and saving rate variables. The integration level of variables can be determined by the standard unit root tests such as the Augmented Dickey-Fuller (ADF) test. However, it is well-known that standard unit root tests which are test based on individual time series have low power against stationary alternatives. For this reason, the recently developed panel unit root tests were frequently employed in the investigation of the time series properties of data. Since panel data increases the power of the test by enhancing the time series dimension of the data by the cross section, the results will be more reliable. Some of the most popular panel unit root tests are as follows: the LLC (Levin, Lin and Chu, 2002), the IPS (Im, Pesaran and Shin, 2003), ADF - Fisher Chi-square (Maddala and Wu,1999), and PP - Fisher Chi-square (Choi, 2001). While the LLC test allows for heterogeneity of individual deterministic effects and a heterogeneous serial correlation structure, it assumes the presence of a homogeneous autoregressive root under the alternative. The latter is identified as a serious limitation for the LLC test. The LLC test procedure involves using pooled t-statistics of the estimator to evaluate the hypothesis of non-stationarity of each individual time series. The more recently developed IPS tests overcame the limitation of the LLC test by allowing for heterogeneity of the autoregressive root under the alternative. The IPS test is simple to calculate and allows for residual serial correlation and heterogeneity of dynamics across groups. However, simulations indicate that the IPS test is sensitive to a correct choice of lag orders in the underlying ADF regressions; the power of the t-bar test is more favorably affected by a rise in time dimension of the data than the cross-section units of the data; and the interpretation of the IPS test results are difficult because of the heterogeneous nature of the alternative hypothesis. Maddala and Wu’s (1999) and Choi’s (2001) tests were similar in the way that both suggested panel unit root tests performed using a Fisher statistic, but they were developed to overcome the shortcomings of the LLC and the IPS tests. Maddala and Wu’s (1999) and Choi’s (2001) tests solves the problems related to previously mentioned tests by providing the combination of probability values for a unit root tests applied to each group in the data set. With this in mind, we employed the LLC, the IPS, ADF-Fisher and PP-Fisher panel unit root tests in this paper. For the LLC and IPS test, the optimal lag length is determined according to Schwarz criteria. The time series properties of the variables involved determined our choice of the empirical methodology to use in the analysis of measuring the extent of capital mobility model. As shown below, since both independent and dependent variables of the empirical model are stationary variables, we did not test for cointegration and decided to estimate the model with fixed effect panel data model. The empirical findings are provided in the next section. 28 Journal of Economic and Social Studies �Measuring the Level of International Capital Mobility for MENA Countries Empirical Results In this section, the estimation results obtained from panel unit root tests and the equation (1) which shows the relationship between investment rate and saving rate will be provided. Table 1 and Table 2 provide panel unit root tests results for investment and saving variables respectively. In the first column, the LLC, the IPS, ADF-Fisher and PP-Fisher panel unit root tests are given. While the second column provides panel unit root test results with constant, results with constant and trend are given in the third column. It is worth mentioning that the optimal lag length for the tests were determined according to Schwarz criteria. Examination of the tables shows that the null hypothesis of non-stationarity is rejected at 1% level by all tests. Therefore, we conclude that the variables subject to empirical analysis of the paper are stationary at levels and hence there is no danger of regression results being spurious. Table 1. Panel Unit root test results for the Investment variable Levin, Lin and Chu Im, Pesaran and Shin W-stat ADF - Fisher Chi-square PP - Fisher Chi-square With constant Statistics Probability* -3.26816 0.0005 -4.65013 0.0000 70.1163 0.0000 63.3885 0.0000 With constant and trend Statistics Probability* -2.45043 0.0071 -3.54615 0.0002 57.4535 0.0001 43.4409 0.0089 Note: *Probabilities for Fisher tests are computed using an asymptotic Chi-square distribution. All other tests assume asymptotic normality. Table 2. Panel Unit root test results for the Saving variable With constant Statistic Probability* Levin, Lin & Chu t* -2.59357 0.0047 Im, Pesaran and Shin W-stat -3.20335 0.0007 ADF - Fisher Chi-square 52.5655 0.0007 PP - Fisher Chi-square 53.0406 0.0006 With constant and trend Statistic Probability* -3.06139 0.0011 -2.80969 0.0025 47.3121 0.0031 48.4657 0.0022 Note: *Probabilities for Fisher tests are computed using an asymptotic Chi-square distribution. All other tests assume asymptotic normality. Having established that both saving and investment variables are integrated I(0), fixed effect panel methodology is used in the estimation of the F-H model. Table 3 presents the empirical findings for the whole period and the sub-periods. Examination of the table shows that the independent variables of the model and tests related to the model are given in the first column. The following five columns provide estimation results for different time periods. Estimation results for the whole period 19632007 are given in the second column. The sub-periods are determined by the main changes which occurred in the world economy. For example, 1980 marks the beginning of the liberalization period for developing countries. The year of financial crisis, 1997, in Asia is also a turning point in terms of Volume 1 Number 1 January 2011 29 �Muhittin KAPLAN & Hüseyin KALYONCU financial system in the world. Theoretically, we expect that capital mobility has increased over these periods in line with financial liberalization policies. Examination of the Table 3 indicates that there is no statistically significant relationship between saving and investment rates implying the presence of very high capital mobility in the MENA region. The saving-retention coefficient (b) is almost zero for the period 1963-2007. Considering the subperiods, it is clearly obvious that after 1980 capital mobility is significantly high compared to the period of 1963-1980. While the saving-retention coefficient is 0.13 and statistically significant at the 5% level for 1963-1980, it is very close to zero and not statistically significant for 1981-2007 periods. This indicates that liberalization policies had an immense effect in the MENA region in terms of increased capital mobility. Another important observation about the saving-retention coefficient is that this coefficient remained about the same during the sub-periods of 1981-1997 and 1998-2007. Table 3. Fixed Effect Panel Estimation Results Period Constant Savings R-squared S.E. of regression F-statistic Wald Test (Chi-square) Fixed Effects Tests: Cross-section F-Test Period F-Test 1963-2007 0.234 (50.8)* 1963-1980 0.2001 (11.87)* 1981- 2007 0.243 (52.2)* 1981-1997 0.250 (47.1)* 1998-2007 0.240 (23.4)* 0.0051 (0.285) 0.130083 (1.94)** -0.02902 (-1.54) -0.040 (-1.78)*** -0.056 (-1.48) 0.533 0.0547 9.854* 0.081 0.666408 0.055731 12.813* 3.753** 0.561 0.046 9.567* 2.373 0.487 0.0508 5.935* 3.179*** 0.862 0.025 29.22* 2.185 28.514* 5.403* 17.802* 13.269* 25.929* 2.942* 10.789* 2.964* 52.831* 3.562* Note: Values in brackets are t-values. *,**,*** denote significance at the levels of 1%, 5% and 10% respectively. We also tested whether estimated savings-retention coefficients are different from zero using the Wald test. As seen from the table, except for the 1963-80 and 1981-1997 periods, the savings-retention coefficients are not different from zero statistically, implying the presence of perfect capital mobility. Finally, it is seen that both cross-section and period fixed effects contribute statistically significantly to the explanation of the dependent variable. In particular, significant period effects imply the existence of close connections among countries of the MENA region over time. Considering the economic policies followed by the countries in the MEAN region, these findings provided above seem to be suspicious. As we know, most of these economies are closed economies, their financial markets are not developed and they have undertaken liberalization policies very recently. In this sense, we can argue that the findings of this study are in agreement with the findings 30 Journal of Economic and Social Studies �Measuring the Level of International Capital Mobility for MENA Countries of the literature. As mentioned above, the level of capital mobility is found to be higher in relatively closed economies than open economies, in countries with inefficient financial markets than those with financially developed markets, etc. Since some of the MENA countries are resource-rich countries, they accumulate enormous savings; since they do not have financially developed markets, they need foreign capital and aid. Taking these together, we conclude that capital mobility is high in the MENA region. Conclusion In this study, we attempted to measure the degree of capital mobility in the MENA region. Time series properties of the data investigated using panel unit root tests indicated that both variables of interest are stationary. Therefore, we estimated the Feldstein-Horioka equation with fixed effect panel methodology. The findings of the study provided a number of important insights into the level of capital mobility in the region. First, characteristics of sub-periods are very different from each other in terms of the level of capital mobility. While the capital mobility is relatively low during the period of 1963-1980, it is pretty high during the period of 1981-2007. Secondly, the results imply the presence of perfect capital mobility in the period of 1981-2007. Thirdly, although the sub-periods of 1981-1997 and 1998-2007 are slightly different from each other, it seems that the perfect capital mobility assumption holds in these periods as well. References Apergis, N. &Tsoumas, C. (2009). A survey of the Feldstein-Horioka puzzle: What has been done and where we stand. Research in Economics, 63, 64-76.doi:10.1016/j.rie.2009.05.001 Bahami-Oskooee, M. &Chakrabarati, A. (2005). Openness, size and the saving-investment relationship. Economic Systems, 29, 289-293.doi:10.1016/j.ecosys.2005.06.001 Bangake, C. &Eggoh, J. (2010). International capital mobility in African countries: Do the legal origins matter?. Economics Bulletin, 30, 1-10. Choi, I. (2001). Unit root tests for panel data. Journal of International Money and Finance, 20, 249–272.doi:10.1016/S0261-5606(00)00048-6 Coakley, J. &Hasan, F. & Smith, R. (1999). Saving, investment and capital mobility in LDCs. Review of International Economics, 7, 632-640.doi:10.1111/1467-9396.00188 Feldstein, M. &Horioka, C. (1980). Domestic saving and international capital flows. Economic Journal, 90, 314-329.doi:10.2307/2231790 Ghosh, A. R. &Ostry, J. D. (1995). The current account in developing countries: A perspective from Volume 1 Number 1 January 2011 31 �the consumption smoothing approach. The World Bank Economic Review, 9, 305-333.doi:10.1093/ wber/9.2.305 Im, K. S., Pesaran, M. H., & Shin, Y. (2003). Testing for unit roots in heterogeneous panels. Journal of Econometrics, 115, 53–74.doi:10.1016/S0304-4076(03)00092-7 Kasuga, H. (2004). Saving-investment correlations in developing countries. Economics Letters, 83, 371-376.doi:10.1016/j.econlet.2003.11.017 Levin, A., Lin, C. F., & Chu, C. (2002). Unit root tests in panel data: Asymptotic and finite-sample properties. Journal of Econometrics, 108, 1–24.doi:10.1016/S0304-4076(01)00098-7 Maddala, G. S. & Wu, S. (1999). A Comparative Study of Unit Root Tests with Panel Data and A New Simple Test. Oxford Bulletin of Economics and Statistics, 61, 631–52.doi:10.1111/14680084.61.s1.13 Murthy, N. R. Vasudeva (2009). The Feldstein–Horioka puzzle in Latin American and Caribbean countries: a panel cointegration analysis. Journal of Economics and Finance, 33(2), 176-188. doi:10.1007/s12197-008-9051-5 Ozmen, E. (2005). Macroeconomic and institutional determinants of current account deficits. Applied Economics Letters, 12, 557-560.doi:10.1080/13504850500120714 Payne, J. &Kumazawa, R. (2006). Capital mobility and the Feldstein-Horioka puzzle: Reexamination of less-developed countries. The Manchester School, 74, 610-616.doi:10.1111/j.14679957.2006.00512.x Sinha, T. &Sihna, D. (2004). The mother of all puzzles would not go away. Economics Letters, 82, 259-267.doi:10.1016/j.econlet.2003.06.002 Wong, D. Y. (1990). What do saving-investment relationship tell us about capital mobility? Journal of International Money and Finance, 9, 60-74.doi:10.1016/0261-5606(90)90005-K � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1053 Title A name given to the resource Measuring the Level of International Capital Mobility for MENA Countries Author Author KAPLAN, Muhittin KALYONCU, Hüseyin Abstract A summary of the resource. To achieve sustainable development, it is vitally important to sustain macroeconomic stability, which is closely related to the extent of capital mobility allowed by a country. This paper attempts to measure the level of international capital mobility empirically by estimating the Feldstein-Horioka coefficients employing the panel data for the MENA countries over the period 1963-2007. In empirical analysis, time series properties of the data are examined using recently developed techniques of panel unit root. Having obtained that variables of the model are stationary variables, we use the fixed effect panel model in the analysis of data.The results indicate that capital mobility has always been high in MENA countries but this is particularly obvious for the period 1980-2007, which corresponds to the liberalization period. For the subperiod of 1963-1980, the estimated coefficients are relatively higher, implying the presence of a relatively lower level of capital mobility. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2011-01 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 1986 – 8502 H Social Sciences (General),HB Economic Theory,HG Finance https://omeka.ibu.edu.ba/files/original/6e4bc501fb64bd81ce39913735223a1c.pdf 6d56c35b29faee3357ea0083e621d28d PDF Text Text Journal of Economic and Social Studies R&D Investment, Governance and Management Entrenchment in French Companies Listed in SBF250 Abderrazak DHAOUI Department of Econometrics and Management University of Sousse, Faculty of Law Economics and Political Sciences, Tunisia abderrazak.dhaoui@fsegs.rnu.tn Fathi JOUINI Department of Econometrics and Management University of Sousse, Faculty of Law Economics and Political Sciences,Tunisia fathi.jouini@fdseps.rnu.tn Abstr ct This study seeks to explain the management entrenchment by investment of free cash flow (FCF) in research and development (R&D), debt, market structure (internal or external), the multinational nature of firms and the characteristics of the board of directors using a sample of 128 groups of French companies listed on the SBF250 between 2003 and 2008. The results show that investment in R&D helps the managers to enhance their authority with respect to the shareholders. The multinational nature of the firm exerts a significant effect on the entrenchment strategy. Manager replaces the internal capital market to the outside market to avoid scrutiny by creditors. We also find an insignificant effect exerted by the debt on the management entrenchment. Finally, we find the absence of a significant relationship between management entrenchment, as measured by discretionary accruals and seniority of the officers, and the characteristics of the board of directors. Keywords: Management entrenchment, R&D, internal market capital, governance mechanisms. Jel odes: G32, M14 Volume 1 Number 2 July 2011 5 �Abderrazak DHAOUI & Fathi JOUINI Introduction The management entrenchment is a deliberated behavior realized by the manager considered as more informed actor which consists of serving own interests at the expense of the shareholders as less informed actors. It takes different forms. The first consists of influencing the accounting results by increasing or decreasing them according to individual needs. The second consists of increasing the specific investment to let the information asymmetry between shareholders and managers more complex, which helps these later to maintain their stations long term. The agency theory (Fama, 1980; Jensen and Meckling, 1976; Jensen and Murphy, 1990) examines this subject on the level of the agency conflicts characterizing the relationships between managers, shareholders and creditors. It insists on several control systems limiting the differences of opinions and interests. The confrontation of this theory to the entrenchment one explains why some control systems are ineffective when managers serve their own interests at the expense of shareholders. This is to say that the integration of the entrenchment theory hypotheses contributes to determine the limits of the mechanisms of control exerted on the managers to incite them to act in the interest of their principal (Alexandre and Paquerot, 2000). The analysis of the control systems exerted to influence the management behavior is essential to the comprehension of the organization’s function and its performance (Alexandre and Paquerot, 2000). However, in spite of the importance of studies realized within the framework of the independent firms, this topic remains, according to our knowledge, little explored within the framework of the companies of group such as the particular case of the multinational companies having a strong internationalized activities. The aim of this study is to identify and analyze the factors, being able to reinforce or to attenuate the discretionary behavior of the managers in order to discover the differences or the similarities of the behaviors of the managers in multinational and domestic companies as regards the entrenchment target. To reach this objective, we try to confront various theories to argue the entrenchment strategies. The diversity of ideas developed in theoretical and empirical studies shows the absence of agreement on the matter. It leads to question on the strategy and trajectories of entrenchment and on the effectiveness of the control systems imposed on the managers. Accordingly, the central question of our research: 6 Journal of Economic and Social Studies �R&D Investment, Governance and Management Entrenchment in French Companies Listed in SBF250 Up to what point can the entrenchment systems influence the effectiveness of the control imposed on the managers? To bring answers to this question, we try to investigate the managers’ discretionary behavior of 128 multinational and domestic French firms over the 2003-2009 period to identify the influences which they had to undergo by the mechanisms of control. This paper is organized as follows: in the first section we present the management entrenchment strategy and the factors influencing positively or negatively the opportunist behavior. We present in the second section the methodology and the estimated model. Results are presented and discussed in the third section. Finally, the fourth section is devoted to the conclusion. Entrenchment strategy and influences of the control systems imposed on the managers Trajectories of the management entrenchment The concept of entrenchment was developed by Shleifer and Vishny (1989). It is a strategy which focuses on the directors to increase their own utilities in their organization by increasing their private expenditure and/or the cost of their replacement. Profiting from a situation of entrenchment, the manager may, likely, decide according to his situation to benefit from his capacity in pecuniary or different other form. He can also increase his capacity to be maintained in the station longest possible or to transmit his capacity to a successor whom will have chosen (Paquerot and Chapuis, 2003). For these reasons, he develops various strategies. S/He uses the resources of his organization to invest in specific activities which increase the firm’s risk and generate a significant informational asymmetry. Accordingly, s/he increases his capacity and different advantages s/ he perceives such as the good remuneration and the security of his job (Alexandre and Paquerot 2000). Volume 1 Number 2 July 2011 7 �Abderrazak DHAOUI & Fathi JOUINI Compared to the whole of the firm’s partners, the managers have a better access to the specific information. This latter constitutes an essential resource for the organization. It represents for the controllers a source of power (Pfeffer 1881, 1882, Pfeffer and Salancik, 1978). However, the strategic state of the managers enables them to control the access to the information and to restrict its availability for the other actors in the organization. Their investment and finance policies depend on the nature of their objectives. They act in increasing the informational asymmetry towards the controllers to increase their discretionary behavior. To spur their opportunism by preparing a suitable land, they maintain various transactions with the subsidiaries such as specific investments (transactions in physical flow) or use their internal capital market (ICM) (transactions in financial flows) by transferring internal resources between the parent companies and their subsidiaries or between the subsidies themselves to finance specific and (geographically) diversified investments. These strategies help them to limit the access of the other actors in the firm to the information. This indicates that the innovation and the decentralization constitute a means to avoid the control exerted by the shareholders and other stakeholders. Stiglitz and Edlin (1992) explain how the managers can benefit from the informational asymmetry to restrict the shareholders’ control and to dissuade potential directors to postulate for the firm management. The investment policy constitutes, in this way, a notable entrenchment tool. According to Alexandre and Paquerot (2000) the increase in firm risks through a particular investment policy in the specific sectors but wellknown to the managers can eliminate potential competitors’ teams without necessary skills to a good management of the firm. The aim of the strategies adopted by the managers is to increase their discretionary behavior “using the means at their disposal, i.e. their human skills but also the firm’s assets, to neutralize the control systems and to increase the dependence of the stakeholders towards the resources which they control” (Alexandre and Paquerot, 2000; p. 9). They can also increase the informational asymmetry towards the stakeholders by investing in assets they have good know-how. This makes information more complex to apprehend for the stakeholders and the potential directors. Thus, it would be beneficial for the manager to increase the dependence of the shareholders to them in order to increase their discretionary behavior (Shleifer and Vishny, 1989; Morck, Shleifer and Vishny, 1990). They make specific transactions with the subsidies and decentralize the specific investments even this can be against the objective of maximization of the shareholders wealth. 8 Journal of Economic and Social Studies �R&D Investment, Governance and Management Entrenchment in French Companies Listed in SBF250 The management entrenchment becomes easier once the informational asymmetry between shareholders and managers increases. Thus, the latter find advantages in investing in assets raising their discretionary. Innovation and decentralization constitute strategic tools helping managers to increase their informational asymmetry towards the shareholders. Particularly, the decentralization of the specific investment makes more difficult the control of the managers’ behavior. Geographical, linguistic and cultural disparities induce – at least - two effects: the increase in the cost of information and the decrease of their pertinence and quality. Moreover, the R&D includes large part of tacit knowledge (Grant, 1996a and b; Nonaka and Takeuchi, 1997). Thus, it would be so difficult to transfer this information, which constrains the shareholders to exert their control on the managers. These investment policies (innovation and decentralization) decrease the effectiveness of the control exerted on the managers. The comprehension of their effects on the effectiveness of the modes of control and consequently on managerial behavior can be given starting from the confrontation of the contributions of the entrenchment and the agency theories. H1a: The increase in R&D facilitates the management entrenchment. H1b : The decentralization of the specific investments reinforces the managerial discretionary behavior. The managers use the free cash-flows to finance the R&D programs. This financial mode allows them to avoid the debt finance which constitutes an effective system of control. In this sense, Jensen (1986) supposes that managers can increase their wealth at the expense of the shareholders by investing the free cash-flow in specific assets and limiting their distribution as dividend. In the same idea, the entrenchment theory (Shleifer and Vishny, 1989), argues that the managers invest these funds in specific investments to increase their compensation and their private expenditure since they are related to the increase in the firm size. Thus, they take advantages using the free cash-flows to avoid the control exerted by the external market and to increase discretionary behavior in making decisions, which enables them to increase their authority towards the shareholders. Indeed, investment on the free cash-flows even in non-profitable projects increases the firm size over its optimal limit. This gives the manager more ability to increase the value of assets under their control and to constrain the control exerted by the shareholders. Volume 1 Number 2 July 2011 9 �Abderrazak DHAOUI & Fathi JOUINI Taking the predictions of the agency theory as a starting point, several studies suppose, in opposition to the pecking order theory of Myers (1984), which excessive use of internal financing is due to the agency conflicts between the managers and the creditors. Seeking to limit external control, the managers prefer internal finance compared to the debt. This helps them to protect information relating to the strategies of development of their organizations (Gertner, Robert, Scharfstein and Stein, 1994). It reinforces, also, their discretionary power and limits the control exerted by the creditors. In the absence of a bank control, the managers can make decisions serving their own interests. They benefit from the stability of the cash-flows to increase their investment in R&D. The decentralization of these investments offers them additional possibilities to improve their wealth at the expense of the shareholders. It reinforces informational asymmetry between managers and shareholders by increasing the knowledge dispersion which induces several difficulties to evaluate present and future value of the firm. H2: The presence of free-cash-flows helps manager to invest in R&D in entrenchment targets While many existing studies report that diversified firms can rely on internal capital markets that enable them to pool and reallocate corporate resources more efficiently than external market (Williamson 1975), several recent studies challenge these findings. Anxious to increase informational asymmetries towards the shareholders, the managers invest in R&D and diversify them. They benefit from the presence of the internal capital market (ICM) to transfer the financial resources from the subsidiary with excess financial resources to those having important investments in R&D. Thus, the ICM helps managers to finance the specific investments, which consequently support their entrenchment. It constitutes a fundamental financing instrument for risky investments which are rationed on the external market. Its presence reinforces the managers’ opportunism and decreases the shareholders gain. Accordingly, the transfer of resources to the subsidiary with high R&D, through the ICM is considered as induced by the objective of maximization of the managers’ wealth at the expense of the shareholders (Jian and Wong, 2003; Liu and Lu, 2004; Thomas, Herrmann and Inoue, 2004; Chang, 2003; Friedman, Johnson and Mitton, 2003). The managers can, particularly, make special transfer of resources serving their own needs (Jian and Wong, 2003 and Thomas et al., 2004). They manage to divert the firm resources to specific projects offering them more independence on the share- 10 Journal of Economic and Social Studies �R&D Investment, Governance and Management Entrenchment in French Companies Listed in SBF250 holders and other external controllers using internal transfers of capital between parent companies and their subsidiaries and/or between the subsidiaries themselves (Chang, 2003; Friedman et al., 2003; Liu and Lu, 2004). This transfer of resources to the specific and geographically diversified investments helps managers to paralyze the control systems by increasing the informational asymmetry within the organization. This asymmetry contributes largely to affect the effectiveness of the control systems and prevents the controllers from applying a sanction. H3: Managers substitute their internal capital market to external market in order to avoid the control system. The agency relationship: conflict of interest which incites to develop different mechanisms of control The financial theory supposes that various modes of control can be used to force the managers to manage the firm in accordance with shareholders’ interests. The shareholders’ structure, the composition of the board of directors, the presence of institutional investors, the incentive compensation, the debt… constitute direct or indirect control systems influencing the managers’ behavior. Thus, the shareholders concentration and/or the presence of financial or institutional shareholders are supposed to have a positive influence on the firm performance. In the same way, the presence of certain administrators (financial or institutional), the part of capital held by the member of the board of directors and the recourse to external administrators more independent and more qualified than the internal ones should exert an effective control on the managers (Alexandre and Paquerot 2000). At the same, the use of debt and incentive compensation can dissuade the manager to manage the firm so as to improve its performance because they must pay future engagements towards their creditors and they have to improve their remuneration since it is indexed on the performance. However, in opposition to the agency theory which proposes various mechanisms to control the managers and to incite them to make decision improving the firm profitability, the entrenchment theory relativizes the role of these mechanisms. It supposes that they will not always be sufficient to limit the opportunistic behaviors of the managerial teams (Alexandre and Paquerot, 2000). Volume 1 Number 2 July 2011 11 �Abderrazak DHAOUI & Fathi JOUINI Thus, the potential investors find in the development of the agency theory a whole of control systems allowing, on one hand, to discipline the managers and on the other hand, to incite them to manage the firm in accordance with their principal interests. In this design, the board of directors constitutes, according to the agency theory, the principal internal mechanism of control. The board of directors presents a specific influence on the other control systems exerted on the managers and has a significant disciplinary role dissuading the managers to act in the shareholders interest. This conception was supported theoretically by Hermalin and Weisbach (2003). They announce that the board of directors contributes to reduce the agency conflicts between the shareholders and the managers. This prediction is confirmed recently by Lefort and Urzua (2008). These authors confirm the fact that the board of directors plays a pivotal role in the management control. It constitutes a principal mechanism of control which seems to reduce the agency costs between the shareholders and the managers. Particularly three significant dimensions of the board of directors are frequently discussed in previous theoretical and empirical studies. The first is related to the size of the board (Jensen, 1993; Yermack, 1996). A big size increases the effectiveness of the control exerted by the board of directors because in such case there is high possibility to be composed by more experiments and competent members. However, the difficulties in coordinating the individual contributions, the conflicts at the time of the decision-making and the difficulties in maintaining good relations between the members as well as the high costs of communications between them seem to reduce these advantages and the effectiveness of the control exerted by the board on the managers (Lipton and Lorsh, 1992; Jensen, 1993). H4a : The larger the size of board of directors, the higher the effect on the managers’ activities. Moreover, the entrenchment theory insists particularly on a pivotal dimension: the independence of the administrators to the managers (Alexandre and Paquerot, 2000). According to Weisbach (1988) and Rosenstein and Wyatt (1997) internal administrators have more capacity to be opposed to the most contestable decisions that make the managers than it is the case of internal administrators. Their presence increases the shareholders wealth rather than reinforce the management entrenchment (Cotter, Shivdasani and Zenner, 1997; Black, Jang, and Him, 2006). 12 Journal of Economic and Social Studies �R&D Investment, Governance and Management Entrenchment in French Companies Listed in SBF250 Dahya, Dimitrov and McConnell. (2008) investigated the effectiveness of the control exerted by the board of directors. Using a panel of 799 companies in 22 countries, they conclude that the independence of the board of directors ensures an effective control on the managers. Kor and Misangyi (2008) confirmed the same result using a sample of 78 firms over the 1990-1995 period and by Lefort and Urzua (2008) using a sample of 160 Chilean Companies. More recently, several studies such as Lin, Ma and Su (2009) and Lau, Sinnadurai and Wright (2009) have confirmed the same results that independence of the boards of directors improves the effectiveness of the controls of the managers. Particularly, Chen, Dyball and Wright. (2009) confirmed this relationship using a sample of 101 Australian firms and conclude that external administrators have more capacity to control the manager when compared to internal ones. H4b : The presence of external administrators reinforces the effectiveness of the board of directors The distinction between the function of chief executive officer (COE) and the chairman of the board of directors constitutes the third dimension is considered as very important. Few studies support the idea that the duality of functions improves the firm performance (Godard and Schatt, 2000). They consider that duality facilitates the management and avoid divergence in making decisions and strategies. It leads consequently, a higher performance (Godard, 1998). Oppositely, several studies consider that duality limits the separation of the functions of decision and control. It plays against the principle of independence of the board of directors through the manager influences (Mizruchi, 1983; Patton and Baker, 1987; Daily and Dalton, 1993). However, the separation of both the function of CEO and chairman of the board limits the capacity of the manager to influence the control exerted by the administrators (Beasley and Salterio, 2001). Thus, the separation of the two functions seems to limit the discretionary behavior of the manager and to ensure the effectiveness control exerted by the board of directors (Jensen, 1993). H4c: The separation of both the function of CEO and chairman of the board of directors improves the effectiveness of the board of directors. Regarding the influence of institutional investors, schools of thought seem to be opposed. The first, represented by the holding of the agency theory, confirms the Volume 1 Number 2 July 2011 13 �Abderrazak DHAOUI & Fathi JOUINI hypothesis of institutional investors controllers. They contribute effectively to the control of the managers (Brickley, Lease and Smith, 1988; Barclay and Holderness, 1991; Bethel and Liebeskind, 1993; McConnell and Servaes, 1990; Mallette and Fowler (1992); Chaganti and Damanpour, 1991; Agrawal and Mandelker, 1992; like Bathala, Moon, and Rao, 1994). The importance of capital they hold gives them more authority toward the managers (Brickley and al, 1988; Pound, 1992). It incites them, in addition, to invest in manager control because they will not have the capacity to liquidate their situation easily. This control helps them to avoid the losses associated to the managers’ discretionary they can support. Moreover, the importance and the diversity of investments they carry out give them the advantage of easy access to information, which facilitated their control of managers. In this line, Alexandre and Paquerot (2000; p. 15) suppose that “the resources they hold help them to exert their control at a weaker cost than the other stakeholders. In fact, the nature of their activities and the importance of investments they carry out allow them a better access to information, which implies simultaneously a better knowledge on the performance of the companies of the sector, abundant information on the environment, a better knowledge of the management market… Moreover, they have particular skills to analyze available information about the firm and its environment. These various advantages enable them to exert their control at a weaker cost compared to individual shareholders “. The second current of thought, represented by the holding of the [Les tenants de la théorie] entrenchment theory, supports the hypothesis of institutional investors serving the managers interests. Pound (1988), Wruck (1989), Shivdasani (1993) and Slovin and Sushka (1993) argue that institutional investors have the capacity to collaborate with managers at the expense of the ordinary shareholders. Their presence limits, consequently, the effectiveness of the other mechanisms of control (Neumann and Voetmann, 1998) and encourages the management entrenchment. In fact, they can act as speculative shareholders and privilege the short-term return on the long-term (Ben M’Barek, 2003; Coffee, 1991; Stapledon, 1996; Bushee, 2001). Having such qualities, they find more advantages in collaborating with the managers rather than in investing in their control. This increases their own wealth on the shirt-term level even at the expense of the other shareholders. H5 : Institutional investors contribute to an effective control on the managers In addition, the use of the stock-options as incentive compensation is considered by the financial theory intended to incite the managers to invest in the more profitable 14 Journal of Economic and Social Studies �R&D Investment, Governance and Management Entrenchment in French Companies Listed in SBF250 projects (Baber, Janakiraman and Kang, 1996; Kole, 1997; Hutchinson and Gul, 2004). They are intended to solve the agency conflicts by indexing the managers’ compensation on the firm performance (Caby and Hirigoyen, 2005). Thus, several studies show that the stock-options play a pivotal role in aligning the managers’ interests on those of the shareholders which reduce significantly the agency conflicts (Core and Guay, 2001; Hartzell and Starks, 2003; Yermack, 1995; Mehran, 1995; Palia, 2001). They reduce the divergence of interests between the shareholders and the managers and incite these later to make more profitable decisions. Taking the agency theory as a starting point, these studies consider that incentive compensation contributes to align the managers’ interests on those of the shareholders. It influences positively the performance since it incites the managers to make more profitable decisions (Jensen and Murphy, 1990; Murphy, 1986; Hall and Liebman, 1998). Oppositely, several studies support the predictions of the entrenchment theory and reject the assumption that incentive compensation reduces the conflicts of interest between managers and shareholders. According to Chen, Steiner and Whyte (2006) and Sullivan and Spong (2007), the stock-option can induce more risk for the shareholders on the long-term and can cause damages to their wealth. In fact, the managers try to increase the value of the stocks they hold in order to improve their compensation. This incites them to manipulate the accounting results to enhance them or to smooth their volatility in order to influence the way the potential investors perceive the future profitability and risk of the firm. This masks the real profitability and affects the firm growth since the shareholders make their decisions using bad information about accounting results. They can invest in projects increasing the failure risk or reject others more profitable considering bad information about the performance and the risk of their company. Oppositely, the managers take advantages of these manipulations when the firm profitability is low and their remuneration is based on stock-options. The increase on the firm value at a shirt-term improves their remuneration even if it affects negatively the firm value at a long-term. H6 : The remuneration by stock-options serves to align the interests of the mangers on those of the shareholders. The debt is considered in the financial literature as an external mechanism being able to dissuade the managers to make decisions maximizing the firm value (Jensen and Meckling, 1976; Jensen 1986; Denis and Denis, 1995). It contributes to reduce the Volume 1 Number 2 July 2011 15 �Abderrazak DHAOUI & Fathi JOUINI free cash-flows problem (Jensen, 1986) since the managers are asked to pay their engagement towards their bank which limits their discretionary power (Stulz, 1990). In fact, the creditors accept to finance only profitable projects to guarantee the refunding of their debt. They refuse, consequently, to finance specific investments since their value decreases in case of financial distress (Nekhili and Poincelot, 2000). The debt incites, therefore, the managers to invest in more profitable projects in order to avoid the disciplinary effect of the external market. However, the managers can use their investment policy to influence the capacity of the creditors to evaluate the profitability and the risk of their projects. They invest in R&D in diversified subsidiaries in order to increase informational asymmetry. In such situation, the creditors encounter serious difficulties to obtain necessary information to evaluate the profitability and risk of the investment and to control the managers. H 7: The debt exerts a significant disciplinary effect on the managers Methodology and results Sample Our sample includes 128 French firms with dimensions to index SBF 250. Since they present an atypical financial operation or that their economic operation is difficult to conceive in the reason of insufficiency of available data, certain companies such as banks, the insurance companies… are withdrawn from the initial sample. Firms are classified in multinationals and domestics. To distinguish between them, we refer to two criteria used in Doukas and Pantzalis (2003). A firm is defined as multinational when this firm reports foreign assets and foreign sales ratios of 10% or more. On the other hand, the firm is defined as domestic firm only if it reports any foreign assets and foreign sales. Using this classification rule, two groups of companies are identified: the first includes 56 domestic firms and the second includes 72 multinational firms. 16 Journal of Economic and Social Studies �R&D Investment, Governance and Management Entrenchment in French Companies Listed in SBF250 The financial and managerial data are collected using annual reports. Collected data covers the 2003-2009 period. Our final sample consists of 128 groups over a period of 7 years (896 observations). The use of the panel data give the advantage to benefit from the both, individual and temporal dimension of the available information. Model The aim of this section is to present the relation between the management entrenchment, the investment strategies and the governance. The model giving these relationships is shown below: ENTRit =+ α 0 α1R & Dit + α 2 DECit + α 3CFit + α 4 ICM it + α 5 NADM it + α 6 EXTADit + α 7 SEPARATit + α 8 INSTITit + α 9 STOKOPit + α10 DEBTit + α11SIZEit + α12 INTit + ε it with ENTRit : the management entrenchment measured by both the discretionary accruals and the seniority of the managers of the firm i in the year t, NADMit: size of the board of directors of the firm i in the year t measured by the number of administrators, EXTADit: Independence of the board of directors measured by the number of external administrators divided by the number of all the administrators, SEPARATit: Boolean variable having the value 1 if there is separation of the function of chief executive officer and chairman of the board of directors of the firm i in the year t, and 0 otherwise, INSTITit: Boolean variable having the value 1 if there is presence of institutional investors holding more than 5% of assets of the firm i in the year t, and 0 otherwise, STOKOPit: Boolean variable having the value 1 if firm i use the stock-option as incentive compensation in the year t, and 0 otherwise, DEBTit: the debt used by the firm i in the year t measured by the financial debt divide by the total liabilities, Volume 1 Number 2 July 2011 17 �Abderrazak DHAOUI & Fathi JOUINI R&Dit: the R&D expenditures divided by the total net sales, DECit: Boolean variable having the value 1 if there is R&D decentralization in the firm i in the year t, and 0 otherwise, CF it: The current cash-flows are used as a indicator of the capacity of the firm to generate future cash-flows. The selected cash-flows correspond to the result before depreciation, expenses and taxes, ICMit : internal capital market measured by the volume of transactions between headquarters and their subsidiaries or between subsidiaries themselves, INTit : Boolean variable having the value 1 if the firm i is a multinational company, and 0 otherwise, SIZEit : the firm size measured by the logarithm of total assets, εit : the error term. Results and discussion The estimation of multiple regression models requires the absence of multicolinearity between the independent variables. This problem refers to a situation in which two or more explanatory variables are highly correlated. A problem of bi-variable multicolinearity arises when two independent variables are strongly correlated. Kervin (1992) estimates that a serious problem of multicolinearity arises starting from a limit of 0,7. Table 1 presents the Pearson correlation between exogenous variables appearing in our model. 18 Journal of Economic and Social Studies �R&D Investment, Governance and Management Entrenchment in French Companies Listed in SBF250 Table 1: Pearson correlation between independent variables size Dec Mic ebt int size 1.00 Dec 0.35 1.00 Mic -0.10 0.12 1.00 0.20 -0.15 0.00 1.00 int -0.40 -0.67 -0.04 0.18 1.00 ebt f tkopt nstit R& f -0.13 0.16 0.21 -0.28 -0.14 1.00 tkopt 0.15 0.14 0.02 -0.04 -0.06 0.05 1.00 nstit 0.21 0.44 0.06 -0.06 -0.36 0.10 0.01 1.00 R& -0.01 0.34 0.17 -0.10 -0.17 0.36 0.08 0.25 1.00 a ext a 0.02 0.10 -0.02 -0.03 -0.09 0.00 0.00 -0.00 -0.09 1.00 ext 0.02 0.03 0.03 -0.03 -0.01 0.02 0.07 0.05 -0.03 0.07 1.00 sepa at -0.00 0.04 -0.00 -0.05 -0.03 -0.01 -0.01 -0.01 0.01 0.11 0.08 sepa at 1.00 Results in table 1 indicate that all correlation coefficients are lower than 0,7. Consequently, we conclude the absence of bi-variable multi-colinearity. In addition, the sample combines both individual and time series data. This seems generate a risk of homogeneity on the sample which leads to bad estimators using the MCO regression. This requires some tests to identify if there is a presence of individual effects in the data and to specify in such case whether it is a fixed or a random effect. Two tests are used. The first is the test of presence of individual effect. The result is an “F-Statistic”. There is individual effect if the “p-value” is lower than the significance level (here: 10%). The second is the “Hausman” test. This later specifies the type of effect. The result is a “Chi-2” statistic which indicates that there is a random effect if the “p-value” is higher than 10% and a fixed effect otherwise. The results of the two tests are presented in table 2. Volume 1 Number 2 July 2011 19 �Abderrazak DHAOUI & Fathi JOUINI Table 2: Homogeneity and Hausman tests Models Model 1: ccruals Model 2: eniority of the manager Homogeneity (127, 752) 5.90 5.78 Hausman test Estimation Method rob > chi2(12) rob>chi2 0.0000 18.23 0.1090 GL 0.0000 19.72 0.0727 Within Results in table 2 indicate that all «p-value» of the statistics “F” are lower than 10%. Thus, we reject the hypothesis of homogeneity of the data. Moreover the Hausman test indicates for the first model (Accruals) the effectiveness of the random effect estimator. However, the estimator gives bad results if there is a strongly correlation between the errors and the explanatory variables. For this reason, it would be better to use the GLS estimator. Oppositely, the results of the “Hausman” test indicates for the second model (seniority of the manager) the effectiveness of the within operator. Table 3 presents the results of the multi-variable estimate regression for entrenchment measured by both the accruals and the seniority of the managers. Table 3: Multi-variable estimation regression result Variables endogenous ccruals (GL ) Variables exogenous oef. . R&D D M DM D R U D _cons z-statistic 0.1689 0.1091 0.6690 0.0725 -0.0008 0.0035 -0.0189 -0.4872 -0.2170 -0.0108 -0.0008 -0.0369 0.7440 Wald chi2(12) rob > chi2 Log likelihood umber of obs umber of groups bs per group: seniority of the manager (W H ) oef. . z-statistic 1.75** 0.2415 6.33*** 0.0455 31.15*** 0.6526 4.40*** 0.0424 -0.54 0.0008 0.13 -0.0340 -1.62 -0.0016 -7.23*** -0.4945 -2.45** -0.4224 -0.71 0.0038 -0.07 0.0313 -10.99*** -0.0408 14.12*** 0.8160 1499.46 R-sq: within 0.0000 (12,806) 316.5322 rob > 892 umber of obs 128 umber of groups min = 6 avg = 6.97 max = 7 bs per group: 2.29** 2.53** 26.82*** 2.09** 0.57 -1.20 -0.13 -5.63*** -5.68*** 0.24 2.45** -9.64*** 13.18*** 0.5922 97.55 0.0000 892 128 min = 6 avg = 6.95 max = 7 Significant at the level:: (***) 1% ; (**) 5% and (*) 10%. 20 Journal of Economic and Social Studies �R&D Investment, Governance and Management Entrenchment in French Companies Listed in SBF250 Results in table 3 indicate a positive influence of the R&D on the management entrenchment. The specific investment helps managers to improve their own returns at the expense of the shareholders and to maintain their position at long-term. They invest in R&D to escape from the control through the increase of informational asymmetry. The specificity of these investments is that they are in dependency to the managers’ private knowledge and competence. They influence, consequently, their presence in the firm at the long-term. In addition, managers may profit from the increase on R&D associate to this investment to influence the effectiveness of the control they supported by limiting the capacity of the controllers to specific information. This gives them more authority towards the shareholders and the other stakeholders. The financial intermediaries have generally different means to dissuade the managers. They have easy access to private information which offers them more authority towards the manager. Consequently, they exert an effective control. However, the managers influence the quality of the control using their investment strategy. They increase their investment in R&D to avoid the debt finance since creditors refuse to finance specific investment. In fact, there are intangible assets which can’t serve as guarantee in case of financial distress. They, also, increase the firm risk and help managers to transfer incomes from creditors to shareholders. Managers profit from this situation of less debt finance to serve their own interests at the expense of the shareholders. Giving that they are less controlled they increase their private expenditures in specific assets allowing them to be in the firm at a long-term. These results seem to confirm the prediction of Nekhili and Poincelot (2000) considering that the R&D, as risky and intangible investments, cannot be easily financed by debts. Taken together these arguments allow us to confirm our first hypothesis according to which the R&D reinforces the management entrenchment. Given that the R&D considered separately influences positively the management entrenchment, his decentralization reinforces the opportunist behavior since it generates several problem of informational asymmetry. Results in table 3, indicate a positive and significant impact of the decentralization of the R&D on both the accruals and the seniority of the managers. Managers decentralize their specific investment to decrease the effectiveness of the control. They increase the difficulty to access to private information serving to a good control because the external environment constitutes a major resource of uncertainty. Volume 1 Number 2 July 2011 21 �Abderrazak DHAOUI & Fathi JOUINI Thus, innovation and decentralization constitute essential factors encouraging the emergence of the favorable conditions for the management entrenchment. Indeed, diversification increases organizational complexity which affects negatively the quality of available information. This indicates that innovation and diversification help manager to maximize their own interests at the expense of the development of the firm. They increase, particularly, the informational opacity which enhance the authority of the managers towards the shareholders and others controllers. Particularly, decentralization leads to more uncertainty by increasing the cultural and linguistics distance between the actors. Environmental uncertainty influences the control system and helps managers to make decisions serving their entrenchment. These arguments seem to confirm our hypothesis H1b according to which the decentralization of R&D reinforces the management entrenchment. We notice, in addition, a positive influence of the internal finance on both the accruals and the seniority of the managers. This seems to confirm our second hypothesis and the predictions of the theory of free cash-flows developed by Jensen (1986). That is to say that managers use the excess of internal resources to finance specific investment serving their own interests at the expense of the shareholders. They invest in intangible assets even they are non profitable in order to increase their discretionary behavior. The R&D generates serious problems of informational asymmetry between shareholders and managers and helps these later to entrench largely in the firm. The dependence of these investments on the managers’ knowledge and competences helps them to be maintained in their station at a long-term and/or to maximize their private expenditure. Internal finance is used by managers to avoid the disciplinary effect of the debt. This indicates a positive relationship between the internal resources and the management entrenchment. The excess in cash-flows helps managers to finance specific investment generally constrained on the external market. This helps them to increase informational asymmetry by investing in specific assets and to avoid the control of external market. We also note that the presence of the ICM reinforces the opportunistic behavior of the managers. It presents a positive impact on management entrenchment. In fact, the managers substitute their internal market to the external market in order to avoid the control exerted by this later. Secondly, the flexibility of transaction within 22 Journal of Economic and Social Studies �R&D Investment, Governance and Management Entrenchment in French Companies Listed in SBF250 the ICM helps them to transfer the excess of financial resources from subsidiaries with less investment in R&D to those with high investment in order to enhance their opportunistic behavior. In other words, the internal finance of the risky investment by ICM allows the managers to improve enhance their gain at the expense of the shareholders. This result seems to be in contradiction with the prediction of Williamson (1975) according to which the IMC serves to finance the well profitable projects and to exert a significant control on the managers. Taken together, these arguments allow us to confirm the third hypothesis according to which the managers prefer the ICM to the external market in order to increase their discretionary behavior by investing in specific investment and eliminating the control of the debt. We note, Moreover, a negative relationship between the management entrenchment and the presence of institutional investors. These later, exert by comparison to their individual competitors, more effective control on the managers. They have necessary skills allowing them a better evaluation ex ante of risk and return associated to new investments and to ensure an effective control ex post on the managers. In fact, given the importance of assets they hold, the institutional investors are incited to invest in the control of the manager instead of liquidating their portfolio of assets because the sale of the blocks of stocks affects negatively their value. The high assets they hold give them, also, more authority towards the managers. These later have to manage the firm so as to improve its performance in order to avoid the possibility of massive sale of assets held by the institutional investors. In fact, the massive sale of assets decreases the stock price and affects negatively the firm performance what reduces, significantly, the managers’ gain particularly if their compensation is based on the performance. This confirms our hypothesis H 5 according to which the presence of institutional investors exerts an effective control on the managers. We note, in addition, a negative relation between the management entrenchment and the incentive compensation. This result is in accordance with our sixth hypothesis. The stock-option as incentive compensation serves to align the interest of the managers on that of their principal (shareholders). It decreases the agency conflict between shareholders and managers and incites the later to manage the firm to improve the performance. These results confirm the predictions of Caby and Hirigoyen (2005), Core and Guay (2001), Hartzell and Starks (2003) and Palia (2001). Incentive compensation constitutes, in fact, a very significant tool Volume 1 Number 2 July 2011 23 �Abderrazak DHAOUI & Fathi JOUINI serving to resolve the agency conflicts by punishing the deviating behavior of the managers. The shareholders are the first victims of the discretionary behaviors of the managers. Since they have not necessary skills to control the managers, the shareholders choose to align their compensation to the performance. In fact, the stock-options incite the managers to invest in more profitable and less risky project what improve the firm performance and consequently their own gain since their compensation is indexed on the performance. Results in table 3 indicate, oppositely, a non-significant relationship between the debt and the management entrenchment measured by both the discretionary accruals and the seniority of the managers. The creditors have, naturally, several means to discipline the managers. They have an easier access to private information enabling them to better control the manager. Moreover, the obligation of refunding of the debt and the interests is supposed to reduce the manager autonomy compared to the shareholders. In particular, the creditors agree to finance only profitable projects to guarantee the refunding of their debt at the date of payment. They require fixed assets as guarantees and refuse to finance the R&D investments since they are in major part intangible. Their net value asset (NVA) is very weak even null in the event of discontinuity of the business. Consequently, the creditors incur high risk when they finance these investments. Moreover, the increase in the expenditure in R&D helps the manager to increase the risk of the activity and to ensure a transfer of wealth from the creditors to the shareholders. Thus, to avoid the debt and to neutralize its disciplinary effect, the managers try to increase their investments in R&D. They also decentralize these investments to increase informational asymmetry and to incite the creditors to refuse the financing of their organizations. This strategy influences the effectiveness of the control exerted by the debt on the manager. For these reasons, the debt constitutes only marginally part in the financing of the R&D. The decentralization of these investments reinforces informational asymmetry and pushes the creditors to minimize the debt amounts. Taken together, these arguments seem to explain why the debt exerts a significant disciplinary effect on the managers. We note, moreover, the absence of a significant relation between the management entrenchment and the characteristics of the board of directors. Several arguments 24 Journal of Economic and Social Studies �R&D Investment, Governance and Management Entrenchment in French Companies Listed in SBF250 can be proposed to interpret this result. Firstly, the increase in the investments in R&D restricts the access of the administrators to information and gives the managers more authority vis-à-vis the shareholders. Secondly, the high number of administrators can generate conflicts and poses a problem of coordination and several difficulties to maintain good relations between the members, which affect the quality of the control exerted by the board of directors on the managers. This leads to reject the hypotheses H4a, H4b and H4c, according to which the characteristics of the board of directors (size, independence and separation of the functions of CEO and chairman) exert an effective control on the managers. We also note a positive relationship between the multinational character of the firm and the management entrenchment as measured by the seniority of the managers. However, the impact of the multinational character on the accruals is non-significant. The leaders diversify their investment to benefit from uncertainties characterizing the external environment of their organization. The investments which they maintain abroad are difficult to control because of the cultural differences and the linguistic difficulties that may face the controllers. Moreover, the costs of transfer of knowledge increase the difficulty to access to information about foreign activities. This seems to reinforce the capacity of the managers with respect to these actors and to increase their discretionary behavior. Conclusion This study examines the effectiveness of the control system imposed on the managers by confronting the assumptions of the theories of the agency, the incentives, and the management entrenchment. The effectiveness of the control systems seems to be influenced by the deviating behavior of the managers. Their statute offers them the capacity to make decisions affecting the shareholders wealth and the effectiveness of the control exerted by these later. The innovation and the (geographically) diversification help them to influence the quality of the control exerted by the board of directors and the financial intermediaries. The investment of the additional resources in R&D in geographically diversified units increases the investment risks and the informational asymmetry toward the partners of the company. It increases, consequently, the discretionary of the manager at the expense of the shareholders and prepares to a favorable ground to their opportunistic behavior. Volume 1 Number 2 July 2011 25 �Abderrazak DHAOUI & Fathi JOUINI However, the institutional investors have necessary competences to exert a more effective control on the managers. The diversity of the investments they carry out helps them to evaluate more efficiency the position and to ensure a more effective control. The alignment of the compensation to the performance may solve the agency problems between shareholders and managers. It incites the later to make decisions which do not affect the shareholders wealth and which create more value. References Agrawal, A. and Mandelker, G. (1992). Shark Repellents and the Role of Institutional Investors in Corporate Governance. Managerial and decisions economics, 13, 15-22. Alexandre, H. and Paquérot, M. (2000). 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(1995). Do Corporation Award CEO Stock Options Effectively?. Journal of Financial Economics, 39, 237-269. Yermack, D. (1996). Higher market valuation of companies with a small board of directors. Journal of Financial Economics, 40 (2), 185-211. � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1062 Title A name given to the resource R&D Investment, Governance and Management Entrenchment in French Companies Listed in SBF250 Author Author DHAOUI, Abderrazak JOUINI, Fathi Abstract A summary of the resource. This study seeks to explain the management entrenchment by investment of free cash flow (FCF) in research and development (R&D), debt, market structure (internal or external), the multinational nature of firms and the characteristics of the board of directors using a sample of 128 groups of French companies listed on the SBF250 between 2003 and 2008. The results show that investment in R&D helps the managers to enhance their authority with respect to the shareholders. The multinational nature of the firm exerts a significant effect on the entrenchment strategy. Manager replaces the internal capital market to the outside market to avoid scrutiny by creditors. We also find an insignificant effect exerted by the debt on the management entrenchment. Finally, we find the absence of a significant relationship between management entrenchment, as measured by discretionary accruals and seniority of the officers, and the characteristics of the board of directors. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2011-01 Keywords Keywords. Article PeerReviewed H Social Sciences (General),HB Economic Theory,HG Finance https://omeka.ibu.edu.ba/files/original/9dbfe0163671f29e99d99f5962ad2400.pdf c898bfba8756a8a90186cabaf61fe317 PDF Text Text Journal of Economic and Social Studies Growth rate of Motor Vehicles in India Impact of Demographic and Economic Development Rameshwar D S G.A. College Samalkha(Panipat)-(HR)-India sunnygarg333@yahoo.com Sandeep J Bhagwan Parshuram Group of Institution, Gohana- (HR)-India sandybpr26@gmail.com Kewal S Bhagwan Parshuram Group of Institution, Gohana- (HR)- India kelu5feb@gmail.com Abstr ct While motorization rate in India is lower than many developing countries-both in absolute term and relative to size of population, but over the last decade, India is experiencing one of the highest motorization growth rates in the world. This paper examines the influence of population growth, increase in urbanizations and economic development on rapid growth of motor vehicles in India by using secondary data which are correlated by line graph method. Economic development is the major factor affecting the growth rate of motor vehicles. Motor vehicle growths have been largely concentrated in major cities which deteriorate the environmental condition of Urban India. This leads to concern among environmentalists over the further impact on Indian and global environment and considers their implication for future transportation growth in the country. Keywords: Motor vehicles, Growth rate, Population, Economic Development, Urbanization Jel odes: L91, O18 Volume 1 Number 2 July 2011 137 �Rameshwar D S & Sandeep J & Kewal S Introduction The growth rate of vehicles is the backbone of economic development and the Indian automotive Industry is the second fastest growing in the world. About 8 million vehicles are produced annually in the country today. In 2009, the country reported 121.63 million registered motor vehicles, a motorization rate of 22 vehicles per 1000 population (Road Transport Yearbook, 2008). (In comparison, the United States – the world’s most motorization nation - reported 675 vehicles per 1000 population). The motorization rate of India is lower than many developing (Brazil- 222 per 1000 population, South Africa 153 per 1000 population) countries through out the world. But, over the last three decades, motor vehicles numbers have been doubling every ten or fewer years in India as against a 2 % - 5 % annual growth rate in Canada, the United States, the United Kingdom & Japan (Badami, 2009). Motor vehicle growth rate has been largely concentrated in the major cities. India has experienced tremendous growth rate in motor vehicles & this lead to interest of environmentalist, business leaders, government officials and researchers for a number of reasons. Already, India’s motor vehicles have had a substantial detrimental impact on the environment. Automobiles are the primary sources of air pollution in India’s major cities. In India, transport sector emits an estimated 261 Tg of CO2, of which 94.5 % was contributed by road transport. In Delhi, the data show that out of total 300 metric tones of pollutants belched out every day, close to two third (66%) is from vehicles. Similarly, the contribution of vehicles to urban Air pollution is 52% in Bombay & close to one third in Calcutta (Vinish, 2008). The transport sector in India consumes about 17 % of total energy & is responsible for 60% of the Green House gas from various activities (Tedoy, 2008). The pollution from vehicles is due to discharge like CO, unburnt HC, Pb, NO2 & suspended particulate matter mainly from tail pipes. Furthermore, India is experiencing second largest growing automobile industry & this rapid growth rate of automobile has raised both excitements among business leader over the potential enormous and largely untapped market for automobile and concern among environmentalist. The potential massive size of the nation’s motor vehicle fleet has raised concern over the addition of carbon dioxide to the atmosphere & its potential for global change. An examination of the factors that have contributed to rapid growth rate of motor vehicle in India is very important to understand the likely future course that the growth 138 Journal of Economic and Social Studies �Growth rate of Motor Vehicles in India - Impact of Demographic and Economic Development might take. This paper presents an analysis of these factors in India and considers their implication for future motor vehicle growth rate in the country. Growth rate of Motor Vehicles in India India has experienced tremendous growth rate in motor vehicle in recent years (see Fig. 1). The total number of motor vehicles increased from 52.37 million in 2000 to 121.63 million in 2009-i.e. an average growth rate of 9 % per year in the country. Some analysts predicted that India’s motorization rate will continue to grow to 40 vehicles per 1000 by 2020. Figure 1. Total Motor Vehicle in India, 2000-2009. Source: Road Transport Year Book (Issues of 2007, 2008 and 2009). The largest majority of vehicles in India are found in metro cities. Number of vehicles in Indian cities is 40 millions with a share 30 % of total vehicles in India. Chennai, Bangalore, Kolkatta, Delhi and Mumbai with 15.2 million vehicles constitute 38 % of total vehicles of important cites and 13 % of total vehicles in India (Motor Transport Statistics, 2009). The second tier cities like Coimbtore (12 %), Mudrai (11 %), Nagpur (14.6 %) and Vishakhapatnam (17.2 %) posted a compound annual growth rate (CAGR) of about 11 % or more. Mumbai & Chennai posted a Volume 1 Number 2 July 2011 139 �Rameshwar D S & Sandeep J & Kewal S growth rate of 6.2 % and 13.2 % respectively (Road Transport Year book, 2009.) What are the factors which are responsible for growth rate in motor vehicles? Experience & lesson from other developing countries can give an idea about the process unfolding in India. Many analysist identify these primary factors that influence the growth rate of motor vehicle in many developing countries and they are population growth, increased urbanization and economic development (Riley, 2002). These factors can provide a basis for examination if the change that have taken place in India in last 10 years. Table 1 summarizes these changes. Table 1. Total Population, Urban population, GDP and Motors vehicle, 2000-2009. Year (As on 31st March) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Growth Rate 1016710 1028610 1045547 1067388 1079117 1095722 1112186 1128521 1144734 1160813 Urban Population (Thousands) 281416 285748 294668 301224 307721 314145 321623 329112 336746 371460 GDP (At Constant Price in crores) Base year 1999-2000 1822767 1954276 2137952 2291770 2570644 2923237 3339976 3847477 4399451 4629702 Total Motors Vehicles (Million)1 52.37 54.99 58.92 67.01 72.72 81.5 89.61 100.7 110.52 121.63 1.48 3.16 10.96 9.81 Population (Thousands) Note: 1Include both passenger and commercial vehicles. Source: 1) Road Transport Year Books-2007 and 2009 (Published by Ministry of Surface Transport and highway, India) 2) Indian Demographic Statistics. Data retrieved from www.tradingeconomics.com/statistics 140 Journal of Economic and Social Studies �Growth rate of Motor Vehicles in India - Impact of Demographic and Economic Development Population Growth Population growth can have a significant influence on the number of motor vehicles in most of the developing countries. As the size of population increases, the consumption level of per person increases in term of goods & services. In modern world, transport is an important service used by peoples, so the size of transportation sector is sensitive to these population changes. It can be argued that population growth largely influences the absolute number of vehicles in the country. If a population growth were the only explanatory factors, the number of motor vehicles would be grew at the same rate as population, then by influencing absolute size of vehicles fleet and not the number of vehicles relative to population size. There is indication in Table 1 that population growth has not contributed substantially to motor vehicle growth rate in India. As seen in Table 1, population growth in the country has been relatively moderate. The population growth fell considerably after 2003-04 and in recent years. According to projected population by Ministry of Home affairs, India population growth rate peaked till 2003, at that time, nation population grew at nearly 1.75 % annually. As a result, 10 million people are added to population each year. But after that the population growth fell sharply. The reasons of slow down in population growth are due to lower fertility in the country. The nation’s fertility rate declined to 2.65 in 2009 as compared to 2.91 in 2003 and 6.2 in 1951. This fertility decline often contributed overall socio economic development and rising cost of child bearing and successful voluntary family planning programme in recent year due to mass awakening (Chaurasia, 2010).The rate of growth of motor vehicles in recent years is much more than that of growth of population. The populations grow at the rate 1.48% annually during last 10 years while motor vehicles grow at 9.82 %. It suggest that population growth has played a very minor role in India’s motor growth rate. Simple arithmetic supports this assertion. If the population growth was the only factor effecting motor vehicle growth rate between 2000-2009, the motorization rate would be remain constant as population growth rate. But motor vehicles grow near about 9 times of the growth rate of population. Clearly, additional factor are influencing the nation motorization rate and driving the nation’s motor growth rate. Volume 1 Number 2 July 2011 141 �Rameshwar D S & Sandeep J & Kewal S Urbanization India has been predominantly rural in character throughout the ages, but now many urban centers have flourished from time to time. The country is growing rapidly with 32% population residing in urban areas and this is expected to increase to 40% by 2030 (Annual Report, NIPFP, 2007-08). Urbanization makes more & more people migrate to the town for jobs, education and medical aid. It leads to significance influence on the number of motor vehicles. As the proportion of the population living in urban areas increases, the demand for motor vehicles also rises in proportions. With their higher income & modern western standard of living – private ownership of vehicles (Car, two-wheeler etc.) is often seen as one of the first symbol of success and prosperity. (European Environment Agency Report, 2008). Urbanization promotes growth of trade, commerce and service sector which rely on heavy commercial vehicles (Mondal & Chary, 2006). For job movement taxicabs, passenger vans and buses are appearing in Urban Center for transportation. While growth in dense urban areas like Delhi, NOIDA, Gurgaon, Mumbai, Kolkatta etc., lead to development of public or alternative transport system and effect on demand for personal vehicles especially in nearby non urban areas, where individuals and business rely on motor vehicles to access and participate in their urban areas. India’s currently having some of the world’s large and most densely populated urban areas. India has three mega cities with population over 10 million, Mumbai (16.4 millions), Kolkatta (14 million) and Delhi (13.1 million). In addition, the numbers of cities with population above 1 million were 35 in 2001 and current trends likely to result in the emergence of 60 – 70 such cities by the year 2021 (Annual Report, NIPFP, 2007-08). However there is some indication that urbanization has also not contributed substantially to the number and growth rate of motor vehicles in India. Despite the rapid growth of urbanization, the proportion of the country’s population living in urban area is relatively low. As shown in table, 27 % of total population living in urban areas in 2000 which merely increased to 32 % in 2009. The average growth rate of urban population is 3.16% which is higher than population growth but have been relatively very moderate with growth rate of motor vehicles. The four main components of urban growth- natural increase, migration, boundary change and declassification attributed to urban growth in India. The largest contributor is natural increase (Pathak & Mehta, 2005). 142 Journal of Economic and Social Studies �Growth rate of Motor Vehicles in India - Impact of Demographic and Economic Development Rural to urban migration has played some role in growth of urban population. The other most affecting the urban population growth in India involves a transition process, by which total urban population is increased by creation of new cities and town and by expansion of existing urban areas. These factors influencing urban growth in India suggest that urbanization alone has a little effect on motor vehicle growth. Economic Development Industrialization and economic development in developing countries can have a strong impact on number and growth rate of motor vehicles. Economic growth and development affects the motorization rate in many ways. First, due to rise in national income, personal income rises, demand for consumer goods tends to increase. The avaibility of more income gives individuals and households the economic opportunity to purchase more luxurious item like automobiles. As more and more persons buy motor vehicles, the motorization rate will increase (Richet & Ruet, 2008) Economic development also significantly influences the demand and supply of motor vehicles in a country. On demand side, due to more demand, economics of scale in vehicle production take place and it reduces the price of vehicles, and operation of law and demand, it added a greater segment of the population and economic development lead to small and nuclear family which increase the number of household and in turn goods and services demanded by them increases and so vehicles. On supply side, growth in business sector can lead to increase in production or import of new vehicles. Economic development means more funds and facilities of infrastructure like road, fuel sources and other services relate to motor vehicles, which also fuelled more production and vehicles (Riley, 2002). Thus, on both side there is a trend of increase motorization in the country. Of the three primary factors identified as affecting motor vehicles in India, Economic development in India is the most substantial influencing factor. Economic development in India occurred at rapid pace in recent years in spite of global slow down. (Annual Gross Income-India, 2008) Volume 1 Number 2 July 2011 143 �Rameshwar D S & Sandeep J & Kewal S The gross domestic production for the nation was 1822761 crores in 2000 and it increase to 4629702 crores in 2009. The GDP grew at annual rate of 9 % in recent years. Economic development in India is largely a result of LPG (Liberalization, Privatization and globalization) policy of 1991 and its second generation reform in last decades. In 1991, Indian government deregularise the economy and began instituting a series of measures to shift the controlled and regulated economy to market oriented economy. This paradigm shifts opened the door of economy to foreign trades and investment. The result of these measures has been tremendous growth in the country that continues in recent year. Economic reform and subsequent increases in income have been associated with changing patterns of spending on goods and services and emergence of consumerism in India. Along with diversification and expansion of economic activities, owing private vehicles (Two wheelers and car) is becoming a practical option for many Indians. Comparison of factors over Time These data suggest that economic development is the most significant factor influencing motor vehicles growth rate in India. It appears to be consistent with similar finding that vehicle grow with income and economic development. (Riley, 2002). The closer examination of data suggest that situation in India is not so simple but quite complex. Figure 2 shows the relative increase in motor vehicle with relative increase in total population, urban population and GDP during 2000-2009. Each of variables is standardized to value 1 in year 2000. Lines of graph show the increase in variable each year relative to base year 2000. As shown in graph, total population growths were moderate during the time period. However, growth of urban population is also moderate but higher than total population. It shows the trend of rising in coming years. The growth of GDP was substantially increasing over time and increase is more than four fold over the last 10 years. Graphically, the relationship between motor vehicles and total population and urban population is as expected, motor vehicles growing at a significantly faster rate than these two demographic variables. But the relationship between motor vehicles and GDP is more complicated. 144 Journal of Economic and Social Studies �Growth rate of Motor Vehicles in India - Impact of Demographic and Economic Development During year 2000 to 2005, total motor vehicle and GDP look like to be growing at a relatively similar rate with GDP only slightly ahead of vehicles. But after 2005, Growth and GDP appear to accelerate much more than growth rate in motor vehicles, but trends of rising motor vehicles seen as it catch the GDP trend in coming years Figure 2. Relative increase in Motor Vehicles as compared to total population, Urban Population, GDP, 2000-2009. 3.00 GDP Relative value of variables 2.50 2.00 Total motor vehicles 1.50 Urban Population 1.00 Total Population 0.50 0.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Years Source: Based on the data in Table 1. The relationship of motor vehicle and GDP indicate the strong growth of both the variables but more acceleration of motor vehicle growth rate and one might expect that if motor vehicles grow at this rate it may overcome the GDP growth and one has to find out more factors influencing its growth. In fact, the growth rate make an important feature which during the increase in motor vehicles in India i.e. the unique composition of motor vehicle fleet. When the composition is taken into account, the situation look significantly interesting and different (Halcrow group limited, Saxena & Banister, 2008). Volume 1 Number 2 July 2011 145 �Rameshwar D S & Sandeep J & Kewal S Indian Composition of Vehicle Population Motor vehicle fleet in whole country composed of two-wheelers, three wheeler (car, Jeep and taxi), passenger vehicle (Bus and other passenger vehicle) and commercial vehicle. India had 121.63 million vehicles at the end of year 2009. Personalized mode (constituting mainly two wheeler and cars) accounted for more than four-fifth of motor vehicles in the country compared to their share of little three-fifth in 1951. Further breakup of motor vehicle population reflects preponderance of two wheeler with share of more than 73 % in total vehicle population followed by three wheeler (Car and Jeep) at 15 % and passenger vehicles at 10 % (See Table 2). Share of commercial vehicle is very low, near about 5 %. With a rising income and greater need for mobility the personalized mode of transport is likely to grow in importance in coming year. India like many other countries in Asia has experienced high annual growth rate in excess of 10 %. This is equivalent to doubling vehicle fleet in about seven years. The two wheeler population in India is 3856 Crores in 2001 which increase upto 91235 crores in 2009 almost tripled in 9 years. With the rapid pace of urbanization and economic development, more is a rising trends of personal vehicles. Car is most comfortable vehicle and luxurious option for transportation in India. So share of car is rising in India. Share of cars in total vehicles is near about 9 %. The car owner ship in India is 8 per thousand people (Burange & Yamini, 2010). With country’s highway infrastructure improving and business growing, growth of small and heavy commercial vehicles segment outperforming in the growth. The commercial vehicle population doubled of in last ten years. The growth rates of commercial vehicle remain same in all the years and steadily rising. The motorization trends itself is dominated by following preferences in India. • High specification car, including small utility vehicles. • Diesel four wheeler • Motorcycle in two wheelers (Halcrow group limited, Saxena & Banister, 2008). 146 Journal of Economic and Social Studies �Growth rate of Motor Vehicles in India - Impact of Demographic and Economic Development Table 2. Composition of Indian Motor Vehicle Population, 2000-2009 Y R ( nding on 31st March) 2000 2001 2002 2003 2004 2005 2006 2007 2008 ( )1 2009 ( ) 1 2 wo Wheelers ( n crores ) 38556 41581 47519 51922 58799 64743 73209 81235 91235 hree Wheelers ( n crores ) 7058 7613 8599 9451 10320 11526 11860 12026 12523 assenger vehicles ( n crores)2 6429 6756 7397 7596 8349 8913 9080 10263 10500 ommercial Vehicles ( n crores) 2948 2973 3492 3749 4031 4436 4985 5401 5967 Provisional Data estimated by using previous year data and net addition. Constitute Taxis, Cab and others public Four- wheelers transport Source: Ministry of Surface Transport of India, Society for Automobile Association of India. Impact of government policy on motorization Government policy can have a significant impact on the size, composition and growth rate of a nation’s motor vehicle fleet. In India, state and national governments directly or indirectly control the supply, demand, the distribution of automobiles, fuel price and fuel supply, the development of road and other component of infrastructure needed to motor vehicles. In India, state also directly involve in the development of public transport system (The Energy Resource Institute, TERI, 2009). Indian transport passed through the phase of tight government control and licensing to liberal economic reform which results higher level of foreign investment in automobile sector and increase vehicle production and its sale. The liberalization steps, such as, relaxation of the foreign exchange and equity regulations, reduction of tariffs on imports, and the banking reforms, initiated by the Government of India, have played an equally important role in enabling the Indian Automotive industry achieve great heights. According to society for automobile manufacturer, India is second largest manufacturer of motorcycle and seventh largest manufacturer Volume 1 Number 2 July 2011 147 �Rameshwar D S & Sandeep J & Kewal S of car in 2009 in the world. Healthy competition benefited the end consumer since cost of service or product come down substantially, added many consumer dreaming of an own vehicle. So number of privately vehicles has grown substantially in last 10 years. Car ownership is growing at a rate of 10-15% per year (Tiwari, 2007). The growth rate of motorcycle is 17.4 % during last 6 year and overall penetration of two-wheeler in India become 28 % of all household (Indicus, 2010). Secondly, large investments have been made for the development of transport infrastructure and facilities. There has also been impressive qualitative development by state government also. Private participation is made for development of highway, service centre and maintenance of road etc. This promotes better quality services to transport and have a positive impact on the growth rate of private vehicle. Private vehicle accounts for 30 % of total transport in India (Tiwari, 2007). India has taken the lead in redesigning the car for buyer who might otherwise be able to afford only a motorcycle. The emergence of “low cost cars” appears to be the single most important trend in growth rate of cars. Now it is easier for two wheeler buyers to migrate car like Nano. The relaxation in import duty, allowing second hand purchasing of vehicles, giving tax holidays and other incentive developed a system of private vehicle ownership. The inadequate public transport and easy availability of financing facilities, institutionalizations of automobile finance for private vehicle have resulted in increase in vehicle ownership level and their usage. Simple vehicle registration process and easy availability of driving license also fuelled to motor vehicle ownership. Recently, some scientists and environmentalists have directly challenged government policy to develop a western style automobile centered transportation system. They pointed that automobile will increase traffic congestion and worsen air pollution. So policy maker should concern about problem associated with development of motorized India (Vinish, 2008). Methodology Research is based on secondary data collection through various agencies and research groups. These data are tabulated to find out coordination between growth and automobiles and various affecting factors using trend line method to find out positive correlation between them. No regression coefficient is discovered to show 148 Journal of Economic and Social Studies �Growth rate of Motor Vehicles in India - Impact of Demographic and Economic Development the cause and affect in this study. This study discusses the relation by observing variable trends which may be closely related. The research analysis of many researchers also mentioned to show positive relationship between considered variables. Research Findings This paper finds a positive relation between increases of automobiles and its effecting factors like growth of population, growth of urban population and growth of nation income. After considering the correlation trends of various factors, it finds that it is the change in income which mostly promoting the growth of automobile in India, however, growth of population and urban population also influences the growth rate of vehicles. But it is the economic development in India which support the growth rate of personal vehicles which look the most comfortable and luxury items in Indian Consumer basket. Economic change also promotes urbanization and the process promotes transportation which is called backbone for movement and economic development. But the unregulated and unplanned growth rate of vehicles gives a concern to environmentalists and town planners. Conclusion and Implications The most important trends in India are therefore of rapid population growth, increasing urbanizations, growing per capita incomes and rising motorizations. As Indian cities grow in population, they are also sprawling outwards. The lack of effective urban planning strategy or control is resulting in low density development which is associated with an increase in the number and length of trips. For most Indians this forces an increased reliance on motorized transport. Cars and motorcycles are increasingly necessary to get around. The economic growth, increasing disposable income, and increasing urbanization is creating greater demand for transport and the number of vehicles on India’s road system is growing rapidly. India like many other counties in Asia has experienced high annual growth rate in excess of 10 %. This is equivalent to doubling vehicle fleets in about seven years. Traffic composition in India is of mixed nature. A wide variety of about a dozen type of slow –and fast moving vehicle exists. Personalized mode (constituting mainly two wheeler and cars) accounted more than 80% of the Volume 1 Number 2 July 2011 149 �Rameshwar D S & Sandeep J & Kewal S vehicle population in India. The explosion in passenger vehicle due to economic development in recent years suggests that economic demand for motor vehicle existed in country and as infrastructure and institutional framework improved and government liberalized the policy, passenger vehicle particularly personal vehicles – have exhibited tremendous growth and the sale of these vehicles is increasing very fastly. Transport poses a dilemma in that it is necessary for economic and social development, yet it is associated with environmental degradation, especially with regard to atmospheric pollution. Transport activities have a very adverse effects on the environment such as air pollution, noise pollution etc. Transport infrastructure in India is expanding considerably in terms of network and services. Road transport accounts for a major share of air pollution load in major metropolitan cities of India. In most urban areas, air pollution has worsened due to traffic congestion. The environmental effects of fuels like oil and petroleum products are of growing concern owing to increasing consumption levels. The combustion of these fuels in vehicles has been a major source of pollution. With the increasing vehicles in country, the vehicular pollution has also increased and it accounts for a considerable share of vehicular pollution in India. The inevitable urbanization and its growth in India will result in the pressure on urban transport, which is likely to increase substantially in the coming years In addition; it is associated with adverse noise and land use impacts. Rapid motorization in India also has important implications for energy security and climate change. The growth in energy consumption in road transport, which has tripled since 1981 and accounts for 90 percent of energy consumption for all transport modes, has been the most rapid of all sectors. Road transport accounts for 9 percent of all energy consumption, it does so for as much as 30 percent of the consumption of petroleum products; by contrast, the residential sector accounts for only 20 percent. It is important to mention that our research methodology based on graphical correlation which may have the chance of inclusion of many factors affecting the growth rate of motor vehicles which are not in our study but these three factors are more prominent. In conclusion, it is important to prioritize the road transport sector in energy and climate change policy, given the rapid growth in energy in this sector, and its almost exclusive dependence on, and large share of consumption of petroleum fuels. It is certainly desirable to implement technological measures to improve vehicle fuel economy (and shift to less carbon-intensive and cleaner energy sources, where possible). But equally, it is important to apply a wide range of economic and institutional approaches in a concerted fashion to promote accessibility and curb motor vehicle activity. 150 Journal of Economic and Social Studies �References Annual Gross Income- India (2008). Euro Monitor International. Retrieved on Feb, 2011 from http://www.euromonitor.com/mcn-annual-grossincome.pdf Annual Report (2003). Auto Fuel Policy. Ministry of Petroleum & Natural Gas. New Delhi, ND: Government of India. Annual Report (2008-09). Economic Survey of India 2008-2009. Planning Department, Government of India. New Delhi, ND: Government of India. Annual Report (2001). Provisional Population Totals, India. New Delhi, ND: Government of India. Automotive Component Manufacturers Association (ACMA) (2007). Engine of Growth Driving the Indian Manufacturing Sector, Status report of Indian automotive component industry. Badami, M. G. (2009). Urban Transport Policy as if People and the Environment Mattered: Pedestrian Accessibility the First Step. Economic and Political Weekly. 95(33), 43-51. Banister, D. (2005). Unsustainable transport. London, LD: Spon publication. Burange, L. G. & Yamini, S. (2008). Competitiveness of firms in Indian Automobile Industry. University Department of Economics, Mumbai (India). 23 (8), 1-27. Chaurasia, A. R. (2010). India 2009. New Delhi, ND: LAP European Environment Agency, (2008). Report/No.3/2008/ on Transport at a Cross road, Copenhagen, 30-42. Graves, A. (1994). Fuel environment and the economy: Automobile and the voice of society. Parliamentary Brief, 2 (10), 1-12. Halcrow group limited, Saxena, S. & Banister, D. (2008). Breaking the trend: Visionary and back casting for Transport in India and Delhi. Retrieved on Feb, 2011 from http://www.halcrow.com/39578-REG-DPTA.pdf Indicus, G. (2010). Public attitude to transport. 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R., Mittal, N., Zhu, Y. & Korattyswaroopam, N. (2007). Urban transport trends and policies in China & India: Impacts of Rapid Economic Growth. Transport Reviews. 27 (4), 379-410. Pundir, B. P. (2007). Vehicular Air Pollution in India: Recent Control Measures and Related Issues India Infrastructure Report. New Delhi, ND: Oxford University Press. Richet, X. & Ruet, J. (2008). The Chinese and Indian Automobile Industry in Perspective: Technology Appropriation, Catching-up and Development. Transit Stud. Rev.. 15, 447-465. Riley, K. (2002). Motor Vehicles in China: The Impact of Demographic and Economic Changes - Population and Environment, 23, (5), 479-494. Road transport year book. (2007). Ministry of Surface Road Transport & Highways, New Delhi, ND: Transport Research Wing. Road transport year book. (2008). Ministry of Surface Road Transport & Highways, New Delhi, ND: Transport Research Wing. Road transport year book. (2009). Ministry of Surface Road Transport & Highways, New Delhi, ND: Transport Research Wing. �Sriraman, S. (2006). Road transport development of India. New Delhi, ND: Oxford University Press. Singh, S. K. (2006). Future mobility in India: Implications for energy demand and CO2 emission. Transport Policy, 13(5), 398-412. Society for Indian Automobile Association. (2009). Indian Automobile Industry Data. Retrieved on Jan, 2011 from http://www.siamindia.com/scripts/IndustryStatistics.aspx. The Energy Resource Institute (TERI) (2009). Mobility for development. New Delhi, ND: Teri Press. 43-50. Tedoy, R. (2008). National Urban Policy and its implication. Transport Research, New Delhi, ND, 3, 13-17. Tiwari, G. (2007). Urban Transport in Indian Cities. Urban Age. Retrieved on Jan, 2011 from www.urban-age.net/10_cities/07.../india_Tiwari.html Vinish, K. (2008). Vehicular pollution control – a concept note. Retrieved on Feb, 2011 from http://www.coe.mse.ac.in/dp/vinish. � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1073 Title A name given to the resource Growth rate of Motor Vehicles in India - Impact of Demographic and Economic Development Author Author DAYAL SHARMA, Rameshwar JAIN, Sandeep SINGH, Kewal Abstract A summary of the resource. While motorization rate in India is lower than many developing countries-both in absolute term and relative to size of population, but over the last decade, India is experiencing one of the highest motorization growth rates in the world. This paper examines the influence of population growth, increase in urbanizations and economic development on rapid growth of motor vehicles in India by using secondary data which are correlated by line graph method. Economic development is the major factor affecting the growth rate of motor vehicles. Motor vehicle growths have been largely concentrated in major cities which deteriorate the environmental condition of Urban India. This leads to concern among environmentalists over the further impact on Indian and global environment and considers their implication for future transportation growth in the country. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2011-01 Keywords Keywords. Article PeerReviewed H Social Sciences (General),HB Economic Theory,HG Finance https://omeka.ibu.edu.ba/files/original/f889528dfa8367ea5f102abaf07d7267.pdf 5a8477b3244d33d89afa98572cf3aa4b PDF Text Text Symposium Notes of the 2nd INTERNATIONAL SYMPOSIUM ON SUSTAINABLE DEVELOPMENT, June 8-9 2010, Sarajevo; Economy and Management Sessions Mustafa ÜÇ Epoka University Department of Business Administration, Tirana, Albania muc@epoka.edu.al The 2nd International Symposium on Sustainable Development was held on the premises of International Burch University in Sarajevo, on June 8-9 2010. Participants from five different countries and more than four hundred academics participated in this distinguished event. After the opening remarks and key-note speech, concurrent sessions were held which were designed according to the theme of the proceedings in different disciplines. There were three main categories in the symposium: economy and management, social sciences, and science and technology. In this paper, after giving information on the opening remarks that common part for all categories in the conference, I review only the economy and management sessions of the symposium. The 2nd International Symposium on Sustainable Development opened with the speech of International Burch University Rector Prof. Dr. Hüseyin Padem. The Rector of the host university addressed his pleasure to see the participants and thanked them for their contributions. After his speech, Safet Keso, Minister of Education of Sarajevo Canton, Emeritus Professor John Tunbridge, Canada Carleton University and Brighton University Professor and Prof. Dr. Hüseyin Çelik, Former Minister of Education and Culture of the Republic of Turkey also addressed the audience. Firstly, all speakers thanked the organizing committee and the participants and they stressed the importance of this scientific event and its topic “Sustainable Development.” The keynote speaker of the symposium, Emeritus Professor Dr. John Tunbridge from Brighton University, UK, presented his topic ``Sustainable Development: Community, Heritage and Tourism,`` which concluded that Bosnia and Herzegovina’s natural and cultural resources have great potential for this type of tourism.Before the beginning of parallel sessions for each discipline, owners of posters began to present their posters and answered questions about their studies in the main entrance hall. In the afternoon, the first parallel sessions were started at the chairmen’s call. There were three parallel sessions for the economy and management discipline from 14:00 to 18:00. Within nine separated sessions, 45 proceedings were presented by the academics. In the first session of the economy and management section, three topics were considered in detail from the aspect of sustainable development. The first parallel session’s main topic was concerned with accounting and auditing issues. The second parallel session mostly focused on energy strategies and sustainability. The third and last parallel session was allocated for the proceedings which aimed to discuss tourism from different perspectives. �The second session of the first day also had three parallel sessions. The proceedings’ topics were mostly based on law issues in the first session. Especially, changing regulations and the effects of this change on the business world were evaluated in detail with some case studies. The second parallel session’s main topic was the European Union (EU). After a general review of the Balkan countries with a paper titled “Comparative Analysis of Bosnia Herzegovina to the other Former Yugoslav Federation Countries in the Context of Political and Economic Perspectives,” the following proceedings provided discussions on specific issues about the EU and the EU process. In the third parallel session, tourism was again the main topic and presentations were held related to the topic. The third session of the first day of the symposium was separated into three parallel sessions. In the first, macroeconomic issues were discussed and proceedings were presented about financial crises and solutions. The relationship between regional development and universities and some regional agencies were the theme of the second session. The proceedings had empirical findings and revealed the positive role and contribution of universities and other regional agencies to regional development. The proceeding presented in third parallel session consisted of specific management issues, such as intellectual capital and risk tolerance of executives on a broad scale. On the second day of the symposium, parallel sessions continued from 9:00 to 18:30. There were two sessions in the morning separated into three parallel sessions. There were three afternoon sessions and they were held in two different halls. Briefly, 57 proceedings were presented by the end of the second day of the symposium with 12 separate sessions. There were two different parallel sessions in the first session of the second day of the symposium. During the first session, macroeconomics issues like Balkan countries’ human development and analysis of the sustainability of current accounts were discussed by the presenters. In the second one, for the most part, marketing issues were discussed in axes of sustainable development. The third session focused on cost accounting and international accounting standards, which are among the most disputed contemporary issues in the field. The second session in the morning also had three separated parallel sessions also. In the first session, micro issues were taken into consideration, such as the relationship between strategy and performance, corporate governance, and values in corporations. The second session consisted of several proceedings which had some particular marketing issues. In the third section, the global crisis and its effects were taken into consideration one more time. The afternoon of the second day had three sessions, each of them consisting of two parallel sessions which were designed in accordance with the proceedings’ topics on similar subjects. Proceedings in the first session included specific studies on fundamental topics of management and organization, such as entrepreneurship, leadership and its types, and organizational behavior. In the second session, the main topics were macro economy and public finance. In the third session, there were proceedings containing quantitative methods and some had advanced statistical methods, such as fuzzy techniques. The topics discussed during the second session were appealing; Multi-Dimensional Performance Measurement Model in Businesses, Relationship between Religiosity and Ethical Attitudes of Managers, A Successful Case Study for a Chinese Family Business. In the third session’s first parallel session, there were invaluable proceedings on a broad scale from finance to marketing which had statistical analyses as their �point in common, such as Garch analysis and data envelope analysis. The second parallel session had different topics such as the contribution of universities to the national economies and financial determinants of investment in Turkey. In the second parallel session, answers to these questions were investigated with proceedings titled Does International Capital Mobility Increase the Risk of Financial Crisis? and A Comparison of Ethical Perspectives in Business in Turkish Ahilik and American Society and the American Marketing Association. After the presentation of the last proceeding on the comparison between Turkish Ahilik and the American Marketing Association, participants of the session discussed the reliability and eligibility of comparison of these two institutions. Consequently, there are some common points in the symposium which should be specified here. First of all, participants found a good opportunity for presenting new research, exchanging information and discussing current issues. The symposium played a very important role by providing a meeting ground for academics from various places. After the completions of the presentations, chairmen of the sessions granted time for questions and comments about the presented studies. In this way, many new ideas were introduced about ongoing papers and further research. The fact is that symposiums do not only consist of several scientific events but also contain social activities. In this context, participants of this symposium were very lucky because after two days long papers presentation, they had an opportunity to see some of the natural beauties of Bosnia and Herzegovina on trips to Mostar and Travnik. � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 2354 Title A name given to the resource Symposium Notes of the 2nd INTERNATIONAL SYMPOSIUM ON SUSTAINABLE DEVELOPMENT, June 8-9 2010, Sarajevo; Economy and Management Sessions Author Author ÜÇ, Mustafa Abstract A summary of the resource. The 2nd International Symposium on Sustainable Development was held on the premises of International Burch University in Sarajevo, on June 8-9 2010. Participants from five different countries and more than four hundred academics participated in this distinguished event. After the opening remarks and key-note speech, concurrent sessions were held which were designed according to the theme of the proceedings in different disciplines. There were three main categories in the symposium: economy and management, social sciences, and science and technology. In this paper, after giving information on the opening remarks that common part for all categories in the conference, I review only the economy and management sessions of the symposium. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2011-01-30 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 1986 – 8502 AC Collections. Series. Collected works https://omeka.ibu.edu.ba/files/original/d22bf44085cbc96c2f36d66d6fe90015.doc fe0cfc03b176b1360a1d537e5054348a https://omeka.ibu.edu.ba/files/original/ec4e09f9d88c5d74ee62d91833c8b200.pdf d5476c95039f4772b9e701fb3299badc PDF Text Text Investigation of Development Indicators in the Balkan Countries for the Post-Socialist Period Fatih ÇELEBİOĞLU Dumlupınar University, Faculty of Economics and Administrative Sciences, Department of Economics, Kütahya, TURKEY fcelebi@dumlupinar.edu.tr Abstract: Since the collapse of central economic planning in the world, former Iron Curtain Countries have been changing as social, economic and political structures. Some former socialist countries (such as Bulgaria, Slovenia and Romania) and Greece became full members of the EU. Some Balkan countries (such as Serbia, Montenegro, Croatia, BosniaHerzegovina, and Macedonia) lived through difficult war years. After the wars, they have started to struggle for the economic, social and political reconstruction process. Each country in the Balkan Peninsula wants bigger real per capita income, a better welfare level, and generally to become a developed country. But these countries have some political, economic and social problems in the development process. The aim of this paper is to analyze Balkan countries in terms of development indicators such as per capita GDP, population growth, life expectancy, consumption potential, education, national income and income distribution in the period of the 2000’s. In addition, new suggestions for accelerating the development process will be discussed at the end of the study. Key Words: Balkan Countries, Development, Development Indicators �Introduction The Balkan Peninsula is an important area, having witnessed important historical and political experiences and incidents for ages. But it has been living through a historical alteration in recent decades. Although some Balkan countries (such as Turkey and Greece) were relatively stable in the 1990’s, there was war in Serbia, Montenegro, Croatia, BosniaHerzegovina, and Macedonia. Some former socialist countries (Bulgaria, Slovenia and Romania) and Greece became full members of the EU. The others have been struggling toward this goal. Although Kosovo declared independence in 2008, many countries have not accepted this situation. Nevertheless the Balkan Peninsula is in a relatively stable condition nowadays, compared with the last ten years. All the Balkan Countries, especially those which have gained independence in recent decades, want to become rapidly developed. But all Balkan countries have some political, economic and social problems in this process. After a long war and an unstable political period, the Balkans has now seized the opportunity for their development process. This region has been gaining stable structures over time and this stable period has been supporting development indicators. In this paper, the Balkan countries will be analyzed in terms of development indicators such as education, population, national income and income distribution in the 2000’s. Conceptual Analysis of Development1 Since World War II, one of the important discussion subjects has been development. However, generally the development concept is accepted as a problem of underdeveloped countries. Underdeveloped countries which have not gone through the industrial revolution do not experience the evolution process that it brings, and do not fulfill the necessities of the development process. Development is used sometimes instead of concepts such as improvement, modernization, structural changing, and industrialization. This semantic shift complicates the definition of the development concept. According to Peet and Hartwick (2009:1), development as a better life for most people means, essentially, meeting basic needs: sufficient food to maintain good health; a safe, healthy place in which to live; affordable services available to everyone; and being treated with dignity and respect. Anther definition of development is innovative changes resultant in the socio-economic structure of a country. It can be understood from these definitions that development is related not only to economic paradigms but also social life, health systems, educational and vocational structures, democracy, freedoms, human rights etc. For this reason, it is multidimensional and it extends over a very long time. Development is also related to economic growth. A stable economic growth process is very important for development. Unstable economic conditions negatively affect this process. On this point, a stable economic structure comes into question. When there is a stable economic structure, economic growth supports the development process. This concept is more important for developing countries. For example, Turkey had big problems with unstable economic and political structures in the 1970’s and 1990’s. Also, almost all the Balkans experienced unstable political and economic periods in the 1990’s. There are also new approaches to the development concept. The most important of these belongs to Amartya Sen, who won the Nobel Economics Prize in 1998. Amartya Sen (1993:3) defines development “as a process of expanding the real freedoms that people �enjoy”. Again according to SEN, development requires the removal of major sources of unfreedom: poverty as well as tyranny, poor economic opportunities as well as systematic social deprivation, neglect of public facilities as well as intolerance or overactivity of repressive states (Sen, 1993:3). The approach of Sen combines two important concepts: freedoms and development. Also he recommends developing freedoms before other indicators. Main Development Indicators For years, many indicators have been used by economists in order to explain different levels of development among countries. However, which indicators are the best explanatory indicators of development levels? We need to investigate indicators that are being used to explain the development process by international institutions such as the World Bank (especially World Development Indicators-WDI Online Database) and the UN (United Nations, especially UNDP-United Nations Development Programme, 2010a). The World Bank uses more than 331 indicators from the World Development Indicators (WDI) covering 209 countries. These indicators fall under 16 headings such as Agriculture & Rural Development, Infrastructure, Aid Effectiveness, Labor & Social Protection, Economic Policy and External Debt, Poverty, Education, Private Sector, Energy & Mining, Public Sector, Environment, Science & Technology, Financial Sector, Social Development, Health, and Urban Development (for details look at The World Bank, WDI Online Database). UNDP calculates the Human Development Index (HDI). HDI includes some special data such as life expectancy at birth, adult literacy rates, gross primary-secondary and tertiary enrolment, and GDP (gross domestic product) per capita (PPP - Purchasing Power Parity). HDI distinguishes three subgroups as developed (high development), developing (middle development), and underdeveloped (low development) countries. According to Map 1, Africa, Middle East, South Asia and some South American countries have big problems in terms of the level of human development. Especially in Africa, the level of human development is lower than other regions of the world. Map 1. World Map Indicating the Human Development Index Based On 2007 Data, Published On October 2009 0.950 and Over 0.900–0.949 0.850–0.899 0.800–0.849 0.750–0.799 0.700–0.749 0.650–0.699 0.600–0.649 0.550–0.599 0.500–0.549 0.450–0.499 0.400–0.449 0.350–0.399 under 0.350 not available Source: http://hdr.undp.org/en/, 25.04.2010 Again UNDP (United Nations Development Programme, 2010b) uses eight topics to determine the development level of each country (particularly developing countries): �eradicate extreme poverty and hunger, achieve universal primary education, promote gender equality and empower, reduce child mortality, improve maternal health, combat HIV/AIDS, malaria and other diseases, ensure environmental sustainability, and develop a global partnership for development in scope of Millennium Development Goals (for details look at UN - Millennium Development Goals 2009 Report). Also, each country collects some data on development by using international standards. Hundreds of variables are used by official statistical institutions for this purpose. Some of these variables are per capita GDP, literacy rate, tertiary education, unemployment rate, urban population, population growth rate, public expenditure on education, number of doctor, electric power consumption, number of computer and internet users, final consumption expenditure, daily newspaper, fertility rate, foreign direct investment, life expectancy at birth, etc. Also the Human Development Index and Democracy Index 2 are used to determine the level of development in a country. The next section offers an analysis of development indicators in the Balkan countries by using some of these variables. Analysis of Development Indicators for Balkan Countries In this section, the situation of Balkan countries in terms of some indicators of development will be investigated. But due to the wars and unstable political period in the Balkans, not all Balkan countries reached full independence in the same year. For this reason, we have data that has a different initial year for each country (especially in the 1990’s). This problem has been almost solved in the 2000’s. But Kosovo’s independence is not accepted by many countries. This situation complicates the comparison all Balkan countries. According to UNDP statistics, all Balkan counties (excluding Slovenia and Greece) are within the High Human Development classification. Slovenia and Greece are within the Very High Human Development classification (UN, 2009). According to current economic development literature, the best indicator of development is value of per capita GDP (Gross Domestic Product) in a country. Mostly Balkan countries have low per capita GDP. For example Albania had $1677 per capita GDP in 2007; Bosnia and Herzegovina had $2044; Bulgaria had $2401; Macedonia had $2061; Montenegro had $2269; Romania had $2595 and Serbia had $1780. Exclusively Greece ($15052), Croatia ($5794), Slovenia ($13333) and Turkey ($5053) had relatively bigger per capita GDP than the aforementioned countries’ (see Chart 1). It is possible that the global crisis in 2008-2009 and the financial crisis in Greece have changed these figures. The other important indicator of development is final consumption expenditure (% of GDP). High levels of final consumption expenditure (% of GDP) refer low level or intermediate product expenditure, capital goods (% of GDP) in a country. According to Chart 2, we can say that especially Bosnia & Herzegovina, Montenegro, Serbia and partially Albania have high level final consumption expenditures. These countries also have low level saving rates. For this reason the investment amount in these countries is lower than in the other Balkan countries. Education3 level is a very effective indicator of development. Literacy rates are very close to percent 100% (excluding Turkey). Turkey has 88.66%. This figure shows that Turkey is the worst country in terms of literacy rate in the Balkans (see Chart 3). Another important variable is life expectancy at birth. According to Chart 4, Greece has the best figures with 79.7 years. Turkey has the lowest number with 71.8 years. Life expectancy level in the �Balkans is on average lower than in the Euro area (80.4 years) and higher than the world average (68.7 years). Population growth rate is very slow in the Balkans. Especially Bosnia & Herzegovina (-0.14), Bulgaria (-0.48), Croatia (-0.04), Romania (-0.16) and Serbia (-0.43) have negative level population growth figures (see Chart 5). Others (excluding Turkey and Slovenia) have figures very close to zero. This situation is dangerous for the coming years. The demographic structure will be very old in the next decades. This can bring social security problems similar to those of Germany and the other Western European countries. Nowadays foreign direct investment (FDI)4 has been accepted by many countries as a fact of the development process. When Chart 6 is investigated, we can see that Serbia (3.95) and Slovenia (3.34) have the best figures of foreign direct investment (FDI). Macedonia has the lowest FDI with (-0.01). The lowest value of per capita electric power consumption is in Albania with 976.1 kWh. The highest value is in Slovenia (7123.5 kWh). Greece has the second highest value of per capita electricity power consumption with 5372.1 kWh (see Chart 7). In order to comprehend the relation between electric consumption and development, Yuan et al. (2007) can be consulted. Unemployment5, as a percentage of the total labor force, is an important indicator of economic development. Macedonia (36.02%) and Bosnia & Herzegovina (31.09%) had very high unemployment figures in 2006. The third highest unemployment figure is in Serbia with 20.84%. But the global crisis may have changed these figures in the Balkan countries as it has in the world generally. For example, the unemployment figure is 14% in Turkey in 2009 (see Chart 8). Income distribution6 is another considerable variable of development. The highest value of the GINI index is in Turkey with 43.2. Macedonia (39.0), Bosnia & Herzegovina (35.8) and Greece (34.3) respectively follow Turkey. Croatia has the lowest value of the GINI Index with (29.0). The share of the poorest 10% of population in the GDP is in Turkey with 1.9%. Again Turkey has the highest value in terms of the share of the richest 10% of the population in the GDP with 33.2%. The highest share of income in the poorest 10% is in Croatia (3.6%) and the lowest share of income in the richest 10% is also in Croatia with (23.1%). We can say that Croatia has the best figures in the Balkans in terms of income equality (see Table 1). �Table 1. Share of Income or Expenditure (%) and Inequality Measures in Balkan Countries in 2007 Share of income or expenditure (%) Inequality measures Richest 10% Poorest Richest to poorest Gini 10% 10% 10% Index Greece 2.5 26.0 10.2 34.3 Slovenia 3.4 24.6 7.3 31.2 Croatia 3.6 23.1 6.4 29.0 Bulgaria 3.5 23.8 6.9 29.2 Romania 3.3 25.3 7.6 31.5 Albania 3.2 25.9 8.0 33.0 Macedonia 2.4 29.5 12.4 39.0 Bosnia & Herz. 2.8 27.4 9.9 35.8 Turkey 1.9 33.2 17.4 43.2 Note 1: The GINI index lies between 0 and 100. A value of 0 represents absolute equality and 100 absolute inequalities. Note 2: Data was compiled from UNDP Human Development Index Industrial production index is frequently used an indicator of development. When the industrial production index values of Balkan countries are investigated, Romania (120.6) has the highest value of industrial production index and Greece (101.1) has the lowest value (see Table 2). It is interesting that Serbia has lost industrial production capacity, because Serbia had 113.1 index values in 1998, but Serbia had a 108.6 score in 2007. Also Greece has lost production capacity. Besides, we haven’t got Albania’s index value. Table 2. Industrial Production index (2005=100) in Balkan countries 1998 1999 2000 2001 2002 97.0 111.5 124.8 100.0 110.7 86.6 81.9 .. .. .. 53.7 59.3 64.8 72.8 79.6 83.3 94.4 100.0 107.4 117.3 .. .. 68.6 70.0 73.3 82.9 93.5 100.0 106.0 116.2 Croatia 80.5 79.5 80.7 85.5 89.7 92.7 95.6 100.0 104.1 109.3 Greece 95.1 95.1 100.8 98.7 99.3 99.8 100.8 100.0 100.8 103.4 Montenegro 91.4 84.4 87.6 87.0 87.5 89.6 101.9 100.0 101.0 101.1 Romania 76.3 74.4 97.0 100.8 100.9 100.5 102.9 100.0 109.3 120.6 113.1 84.1 93.7 93.8 95.5 92.6 99.2 100.0 104.7 108.6 81.6 81.1 86.2 88.7 90.9 92.1 96.6 100.0 105.7 113.3 Albania Bosnia & Herz. Bulgaria Serbia Slovenia 2003 2004 2005 2006 2007 Turkey 77.8 74.9 79.4 72.5 79.4 86.3 94.7 100.0 105.8 110.6 Explanation: Data comes from UNECE Statistical Division Database, compiled from national and international (CIS, EUROSTAT, IMF, OECD) official sources. Economic indicators are necessary, but not by themselves sufficient for the comparison of all the Balkan countries. For this reason we need other pointers. We investigate Human Development Index values and Democracy Index values for Balkan countries. Table 3 shows HDI ranks and values for Balkan countries in 2003 and 2009. The highest value belongs to Greece with 0.892 and its rank in HDI was 24 in 2003. Again Greece has the �highest values of human development index with 0.942 and its rank is 25 in the world in 2009. Turkey (0.806) has the lowest value of HDI in 2009 and its HDI rank was 79. When 2009 ranks are compared with 2003, Greece, Bulgaria, Macedonia, Bosnia & Herzegovina lost their former positions. But Croatia, Romania, Albania and Turkey obtained better positions. Table 3. Situation of Balkan countries in Human Development Index Values HDI rank in 2003 Human development index value 2003 HDI rank in 2009 Human development index value 2009 Greece 24 0.892 25 0.942 Slovenia 29 0.881 29 0.929 Croatia Bulgaria 47 57 0.818 0.795 45 61 0.871 0.840 Romania 72 0.773 63 0.837 Montenegro - - 65 0.834 Serbia - - 67 0.826 Albania 95 0.735 70 0.818 Macedonia Bosnia & Herz. 60 0.784 72 0.817 66 0.777 76 0.812 Country Name Turkey 96 0.734 79 0.806 Explanation: Data was compiled from UNDP Human Development Report 2009 (calculating with 2007 values) and UNDP Human Development Report 2003 (calculating with 2001 values) Another important subject for development is the democracy level in country. We can investigate the democracy index to understand this relation. The Democracy Index is calculated by The Economist Intelligence Unit based on the answers to 60 questions for 167 countries (EIU, 2008). According to Table 4, Greece is the strongest democracy in the Balkans. According to Table 4, the weakest democracy in the Balkans belongs to Turkey. While Greece and Slovenia have full democracy; Albania, Bosnia & Herzegovina and Turkey have hybrid regimes. This situation is generally parallel to economic development levels. Table 4. Democracy Index (2008) Country Name Rank in the Index Kind of Democracy Score Greece 22 Full Democracy 8.13 Slovenia 30 Romania 50 51 Full Democracy Flawed Democracy 7.96 7.06 Flawed Democracy 7.04 52 Flawed Democracy 7.02 Serbia 63 Flawed Democracy 6.49 Montenegro 65 Flawed Democracy 6.43 Macedonia 72 Flawed Democracy 6.21 Albania 81 Hybrid Regime 5.91 Bosnia & Herz. 86 Hybrid Regime 5.70 Croatia Bulgaria Turkey 87 Hybrid Regime 5.69 Explanation: Data comes from The Economist, Economist Intelligence Unit �When Democracy Index (2008) values are accommodated in the Map 2 for each country, lighter colors show more democratic countries and darker areas represent authoritarian countries. Especially North America and West Europe have lighter colors. Africa, the Middle East, and Asian countries have mostly darker colors. Balkan countries have average values. After analysis of indicators in Balkan countries, we discuss how can accelerate the development process of Balkan countries in the next section. Map 2. World Map Indicating the Democracy Index (2008). Look at http://en.wikipedia.org/wiki/Democracy_Index, 01.05.2010 �Discussion of the Development Process in Balkan Countries When the special position of the Balkans (multicultural, multi-religious and multi-ethnic) is considered, it is quite difficult to offer new suggestions. Even so, we explain some ideas for the Balkan countries below. The Balkans has had important problems throughout its history. Especially after the Ottoman Empire, an unstable politic and economic life began in all the Balkan Peninsula. With socialism, there came a relatively stable political and economic life. However, after the collapse of socialism, war, blood, tears, and unstable politic and economic life came back to the Balkans. Nowadays the Balkans has been living more stable days. We know that development is closely related to stable politic and economic structures. For this reason, the first and the most important stage are strengthening of the stabilization process. To strengthen the stabilization process, first of all, the European Union’s full membership process should be accelerated for Balkan countries that are not members of the EU. Secondly, by considering the ethnic, religious and cultural structures of the region, bilateral goodwill (bona fides) agreements should be signed among countries. Thirdly, some countries in the region should play a part in this process as mediators. For example, Turkey invited the presidents of Bosnia & Herzegovina and Serbia to talk about the problems between the two countries last April. After that, all Balkan countries should be invited to international institutions. For example, Bosnia & Herzegovina was invited to NATO last April, 2010. The invitation of Bosnia & Herzegovina is necessary, but it is not enough by itself. For this reason, all Balkan countries that are not members of NATO should be invited. And by protecting cultural, ethnic and religion diversity, an interior peace law agreeable to different parts of society should be composed. EU trade policy should be accepted by all Balkan countries. Free trade should also be improved in the Balkans. Tariffs and other arrangements should be reciprocally dropped. Visa applications should be facilitated to improve trade among Balkan countries, especially �for businessman and scientists. Bilateral trade agreements should be improved. Collective science, education and R&D agreements should be signed. A Balkan Commonwealth that includes all Balkan countries should be established in the near future. A substructure of information and communication technologies should be developed. Manufacture and service sectors should be supported by governments. Productivity levels of industry should be accrued. To support industrial production, transfer of technology should be allowed. Barriers to foreign direct investment should be decreased. A tax system with progressive rates should be established to decreasing GINI Index and social benefits for poor populations should be improved. A banking system should be developed and its trustworthiness level should be boosted. Barriers to touristic travel should be diminished. Especially visa application should be facilitated. Countries that have insufficient capital for investment need foreign direct investment to accelerate economic development. For this, foreign direct investment for whole sectors should be allowed. Democratic reforms such as human rights, constitutional state, economic freedoms, and freedom of thought should be carried out, particularly in Turkey, Albania, and Bosnia & Herzegovina. A bigger part of budgets should go to education and productive investment. When compared with developed countries, Balkan countries (excluding some full members of the EU such as Greece and Slovenia) have important problems in economic development. Many countries in this region have less level GDP figures. Also human development and democratic levels are not sufficient. Nowadays, the Balkan Peninsula has some opportunities related to the development process after the war and an unstable politic and economic life. These opportunities can be realized in the forthcoming periods. But this is depends on better orientation and management of economic, politic and social processes. Also, protecting and improving the stabilization process will be important in the next decades. It is a reality that war and unstable politic and economic conditions encourage backwardness, poverty and anti-democratic applications of governments. Conversely, peace, trade, and stable politic and economic life will cause better conditions for all nations in the Balkans. �References Chen C, Chang L., Zhang Y. (1995) The Role of Foreign Direct Investment in China's Post1978 Economic Development. World Development. Volume 23. Issue 4. April. pp 691-703. Foster J. and Sen A. (1997) On Economic Inequality. Oxford University Press. New York. Online Etymology Dictionary, http://www.etymonline.com/index.php?search=develop&searchmode=none, 08.04.2010. Özay M. (1995) Employment Creation and Green Development Strategy. Ecological Economics. Volume 15. Issue 1. October. pp. 11-19 Peet R. and Hartwick E. (2009) Theories of Development: Contentions, Arguments, Alternatives, 2nd edition, The Guilford Press, New York. Przeworski A. & Alvarez M.E. & Cheibub J.A. & Limongi F. (2000). Democracy and Development: Political Institutions and Well-Being in the World, 1950-1990. CambridgeUniversity Press. Saviotti P.P. and Pyka A. (2004) Economic Development, Qualitative Change and Employment Creation. Structural Change and Economic Dynamics. Volume 15. Issue 3. September. pp. 265-287. Self S. and Grabowski R. (2003) Education and Long-run Development in Japan. Journal of Asian Economics. Volume 14. Issue 4. August. pp. 565-580. Sen A. (1999) Development as Freedom, Oxford University Press, New York. The Economist Intelligence Unit –EIU (2008), Democracy Index, http://graphics.eiu.com/PDF/Democracy%20Index%202008.pdf, 01.05.2010 The United Nations Economic Commission for Europe (UNECE) Statistical Division Database, http://www.unece.org/stats/stats_h.htm, 24.04.2010 The World Bank, http://data.worldbank.org/indicator, 22.04.2010 �The World Bank, WDI (World Development Indicators) Online Database UN (2009), The Millennium Development Goals Report 2009, New York. UNDP (2003), Human Development Report 2003, Oxford University Press, New York. UNDP (2009), Human Development Report 2009, Palgrave Macmillan, New York. UNDP (2010a). Human Development Reports, http://hdr.undp.org/en/, 25.04.2010 UNDP (2010b). Human Development Statistics, http://hdr.undp.org/en/statistics/, 18.04.2010 Yuan J., Zhao C., Yu S. and Hu Z. (2007) Electricity Consumption and Economic Growth in China: Cointegration and Co-Feature Analysis. Energy Economics. Volume 29. Issue 6. November. pp. 1179-1191. Endnotes Note 1: According to the Online Etymology Dictionary, Development concept was used for the first time in 1756, "an unfolding, from develop + -ment). Of property, with the sense "bringing out the latent possibilities" is from 1885. The meaning "state of economic advancement" is from 1902. The meaning "advancement through progressive stages" is from 1836. Note 2: See Przeworski et al. (2000). They investigate relations between democracy and development. Note 3: Self and Grabowski (2003) examine the relationship between education and longterm development. Note 4: See Chen C, Chang L., Zhang Y. (1995). They examine the role of FDI in China’s economic development process. Note 5: Özay (1995) analyzes the job-creating development concept. Also Saviotti and Pyka (2004) investigate the relationship between employment and development. Note 6: For detailed information about income inequality, see Foster and Sen (1997). In this study, Foster and Sen investigate measures of inequality. � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 2352 Title A name given to the resource Investigation of Development Indicators in the Balkan Countries for the Post-Socialist Period Author Author ÇELEBİOĞLU, Fatih Abstract A summary of the resource. Since the collapse of central economic planning in the world, former Iron Curtain Countries have been changing as social, economic and political structures. Some former socialist countries (such as Bulgaria, Slovenia and Romania) and Greece became full members of the EU. Some Balkan countries (such as Serbia, Montenegro, Croatia, Bosnia-Herzegovina, and Macedonia) lived through difficult war years. After the wars, they have started to struggle for the economic, social and political reconstruction process. Each country in the Balkan Peninsula wants bigger real per capita income, a better welfare level, and generally to become a developed country. But these countries have some political, economic and social problems in the development process. The aim of this paper is to analyze Balkan countries in terms of development indicators such as per capita GDP, population growth, life expectancy, consumption potential, education, national income and income distribution in the period of the 2000’s. In addition, new suggestions for accelerating the development process will be discussed at the end of the study. Key Words: Balkan Countries, Development, Development Indicators Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2011-01-30 Keywords Keywords. Article PeerReviewed JZ International relations https://omeka.ibu.edu.ba/files/original/d1258eded30e6dd9a6b83e81dbd7054c.pdf ba387ad4ed12ea9d92300a3e802fb551 PDF Text Text EDITORIAL Journal of Economic and Social Studies, A Contemporary View on Economic and Social Research Teoman DUMAN International Burch University Faculty of Economics, Management Department Sarajevo, Bosnia and Herzegovina tduman@ibu.edu.ba Welcome to the first issue of the Journal of Economic and Social Studies. The beginning of 2011 comes with enthusiasm and great motivation for initiating an academic, peer-reviewed journal dedicated to publishing scholarly work in economics and related scientific areas. In this journal, we plan to publish conceptual and empirical papers that take an interdisciplinary perspective in the areas of economics, business administration, public administration, political studies, international relations, labor economics and industrial relations, econometry, sociology and psychology. As scientific inquiry advances, researchers in different scientific areas benefit from theories and concepts in other areas, which can bring a broader perpective to their explanations. As such, our journal will attempt to bring academics from various backgrounds to advance theories and offer solutions for society's problems. The number of academic journals that publish papers in economics and related areas has risen in proportion to the advancements in information technologies. The increasing number of journals have also motivated researchers to produce more specific research studies in different academic disciplines. In relation to this matter, one of the areas on which we expect our prospective writers to conduct research will be Balkan studies, through which we plan to offer solutions to the problems of this complicated area. The problems that arose following the recent war and political conflicts in the area necessitate a journal that gives priority to scientific research specific to the area. Balkan-specific research is also related to the largest economic and polical union in the world, namely the European Union. Expectations from and expected influences of the integration of Balkanic countries into the European Union are receiving closer attention from researchers and the public. In addition to economic, administrative and political perspectives, sociological and psychological perspectives on the problems of the Balkanic area attract a great deal of attention. This portion of Europe is extremely culturally diverse and these diverse cultures live in close proximity to each other. Many of the past problems of this area are rooted in sociological structures and solutions to these problems can only be found by understanding social structures and the psychology behind them. In the current issue, we publish seven papers and one conference report. In the first article, Ulussever, Yumusak and Kar report a research study from the Saudi Arabian equity market and show proof of the day-of-the-week effect in this market. The authors use data from January 2001 to December 2009 from the Saudi stock exchange TADAWUL and suggest that investors take the day-of-the-week variations into account in the volatility of the Saudi stock exchange. �In the second article, Kaplan and Kalyoncu measure the level of international capital mobility for the twelve MENA countries (Algeria, Israel, Iran, Egypt, Jordan, Kuwait, Libya, Morocco, Saudi Arabia, Syria, Tunisia, and Turkey) over the period 1963-2007. The authors show that capital mobility levels differ for different sub-periods, e.g., there was perfect capital mobility during the 1981-2007 period. In addition, Yildiz, Hotamisli and Eleren test a performance measurement model for businesses where they argue that they use both qualitative and quantitative data together in a modified gap model. The authors test performance levels of 42 enterprises in Turkey where they use gap percentages instead of gap scores. Yuksel, Zaim and Yuksel introduce different aspects of a radio frequency identification system (RFID) which is heavily used by most businesses in their business systems and supply chain management. Technology use is becoming more important especially for small to midsize enterprises in order to stay competitive in today’s business world. Astrom proposes a paradigm shift in sustainable development through the perspectives of Islamic economics. Astrom questions the role and possible contribution of Islamic economics in today’s understanding of sustainable development, with a debatable viewpoint. In the sixth article, Ucan and Ozturk investigate the effect of financial development on investment levels in Turkey for the period of 1970 through 2009. The authors conclude that high financial development is an indicator of future domestic investement. The authors argue that, according to the results, financial developments in the 1980's contributed to the investment levels in Turkey. In the last article, Celebioglu presents an investigation of development indicators in Balkan countries for the post-socialist period. Celebioglu compares Balkan countries with respect to economic indicators and presents the current economic situation in these countries. Finally, Uc summarizes his observations from the latest conference held at International Burch University. It was a successful and comprehensive conference which stimulated us to prepare the current issue of this journal. I would like to thank to the authors of this issue for their hard work and cooperation. Also, I would like express my gratitude to the reviewers who spent their valuable time reviewing papers for this issue. I hope that this will be a good start and promising future for our journal. � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 2350 Title A name given to the resource Journal of Economic and Social Studies, A Contemporary View on Economic and Social Research Author Author DUMAN, Teoman Abstract A summary of the resource. Welcome to the first issue of the Journal of Economic and Social Studies. The beginning of 2011 comes with enthusiasm and great motivation for initiating an academic, peer-reviewed journal dedicated to publishing scholarly work in economics and related scientific areas. In this journal, we plan to publish conceptual and empirical papers that take an interdisciplinary perspective in the areas of economics, business administration, public administration, political studies, international relations, labor economics and industrial relations, econometry, sociology and psychology. As scientific inquiry advances, researchers in different scientific areas benefit from theories and concepts in other areas, which can bring a broader perpective to their explanations. As such, our journal will attempt to bring academics from various backgrounds to advance theories and offer solutions for society's problems. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2011-01-30 Keywords Keywords. Article PeerReviewed DOI Digital object identifier doi: 10.14706/JECOSS11111 Identifier An unambiguous reference to the resource within a given context ISSN 1986 – 8502, H Social Sciences (General) Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1082 Title A name given to the resource Yabancılara Türkçe Öğretim Kılavuzu (Turkish Instructor's Guide for Foreigners - Basic Level) Author Author Arslan, Mustafa Abstract A summary of the resource. Türkiye'nin dünya üzerindeki konumu, köklü tarihi geçmişi ve teknolojik vasıtaların toplumlar arası mesafeyi kısaltmasıyla Türkçe bugün dünyada öğrenilme gereksinimi duyulan dillerden biri haline gelmiştir. Bu bağlamda yabancıların Türkçe öğrenmek için yoğun talepleri Türkçeyi öğretmeye yönelik daha planlı çalışmaların ortaya konmasını gerekli kılmıştır. Türkiye'de ve yurt dışında yabancılara Türkçe öğreten kurumlar ve kurslar açılmıştır. Yabancılara Türkçe öğretmek amacıyla görsel ve işitsel birçok farklı yayınlar hazırlanmıştır. Türkçe dünya dili olma yönünde bugün hayal edilemeyecek yerlere ulaşmıştır. Türkçe gelecekte dünyadaki en çok konuşulan birkaç dilden biri olmaya adaydır. Yabancılara Türkçe öğretecekler için bu eser, önemli bir başvuru kaynağı olacaktır. Publisher An entity responsible for making the resource available Nobel Date A point or period of time associated with an event in the lifecycle of the resource 2011-02 Keywords Keywords. Book PeerReviewed P Philology. Linguistics,PI Oriental languages and literatures https://omeka.ibu.edu.ba/files/original/0a2579c0e669b4c8925245155b57819c.pdf 400faf19bb39049b6feb94dadcce7c4b PDF Text Text INTERNATIONAL BURCH UNIVERSITY FACULTY OF EDUCATION DEPARTMENT OF ENGLISH THE THEME OF FREEDOM AND INDEPENDENCE IN PARADISE LOST GRADUATE PROJECT by Nedžad Gudić Project Supervisor Assist. Prof. Dr. Azamat Akbarov SARAJEVO April, 2011 �THE THEME OF FREEDOM AND INDEPENDENCE IN PARADISE LOST Nedžad Gudić MA, English Literature, 2011 Submitted to the Graduate Study Unit in partial fulfillment of the requirements for the degree of Master of Arts in English Literature INTERNATIONAL BURCH UNIVERSITY APRIL, 2011 �1 APPROVAL PAGE Student : Nedžad Gudić Faculty : Faculty of Education Department : English Language and Literature Thesis Subject : The Theme of Freedom and Independence in Paradise Lost Date of Defense : I certify that this final work satisfies all the requirements as a graduate project for the degree of Master of Arts. Assist. Prof. Dr. Azamat Akbarov Head of Department This is to certify that I have read this final work and that in my opinion it is fully adequate, in scope and quality, as a graduate project for the degree of Master of Arts. Assist. Prof. Dr. Shahab Yar Khan Supervisor Examining Committee Members Assoc. Prof. Dr. International Burch University …………... Assoc. Prof. Dr. Sarajevo University …………... Assist. Prof. Dr. International Burch University …………... It is approved that this final work has been written in compliance with the formatting rules laid down by the Graduate Study Unit. Assist. Prof. Dr. Head of Graduate Study Unit �THE THEME OF FREEDOM AND INDEPENDENCE IN PARADISE LOST 1 Abstract In the Paradise Lost, John Milton tried to explain how evil is seductive. It is one of the reasons why he portrayed Satan with ultra human dimensions in Book I and II. And what makes Satan so heroic is not the particular situation he is in or any facts about him: his magnificence comes from the inspired verse which Milton puts into his speeches. No one reading these speeches can miss their power and eloquence. It is no accident that when Winston Churchill was looking for something to rally the British people after the military disaster of Dunkirk, he used these lines on the radio. There is nothing in English literature to match the heroic determination, power, courage, and energy manifested here and throughout Satan's early speeches. And his followers are appropriately energized.At very end Paradise Lost was more than a work of art. Indeed, it was a moral and political treatise, a poetic explanation for the course that English history and Human kind had taken. Key words: John Milton, Independence, Freedom, Evil �Acknowledgements There are many people who helped to make my years at the graduate school most valuable. First of all, I thank to almighty God, my major professor and supervisor. I also thank to Asst.Prof.Dr.Shahab Yar Khan who contributed much to the development of this research starting from the early stages of my graduate project. Asst.Prof.Dr. Shahab Yar Khan provided valuable contributions to this Graduate project and I thank him for his insightful suggestions and expertise. Many thanks to Department computer staff, who patiently answered my questions and problems on word processing. I would also like to thank to my graduate student colleagues who helped me all through the years full of class work and exams. My special thanks go to Asst.Prof.Dr. Azamat Akbarov whose friendship I deeply value. The last words of thanks go to my family. I thank my parents Ibrahim, Suada and my brother Fedža for their patience and encouragement. Lastly I thank Amra Gekić for her endless support through this long journey. �To my family, friends and girlfriend �Table of Contents 1. ....................................................................................................................... Abstrac t..................................................................................................................................... ii 2. ....................................................................................................................... Table of Contents ................................................................................................................ iii 3. ....................................................................................................................... 1. Inroduction ........................................................................................................... 1 2. Epic ....................................................................................................................... 5 4. ................................................................................................................ 2.1 What is an epic ? ......................................................................................................... 5 5. ................................................................................................................ 2.2 The Paradise Lost as an epic and Homer's and Virgil infulence on Milton…7 3. The Theme of Freedom and Idenpendence in Paradise Lost ......................... 11 3.1 The significian of English Puritanism ........................................................11 3.2. Civil war in England and Milton's part in it .......................................... 16 3.3. The Theme of Fredoom and Indenpence in Paradise Lost....................17 4. The role of Adam, Eve and the Son of God in the Paradise Lost...................25 4.1 The importance of Obedience to God ........................................................... 25 4.2 The role of Archangels loyal to God ...................................................... 28 4.3. Satan's followers and idea of ―Happy fall‖ .........................................30 �5. Conclusion ........................................................................................................... 33 References ................................................................................................................. 35 Curriculum Vitae ..................................................................................................... 36 �Chapter 1 Introduction One of the greatest poets of the English language, best-known for his epic poem PARADISE LOST. Milton's powerful, rhetoric prose and the eloquence of his poetry had an immense influence especially on the 18th-century verse. Besides poems, Milton published pamphlets defending civil and religious rights. John Milton was born on december 9, 1608, in London. His mother, Sarah Jeffrey, a very religious person, was the daughter of a merchant sailor. Milton's father, also named John, had risen to prosperity as a law writer - he also composed music. The family was wealthy enough to afford a second house in the country. Milton's first teachers were his father, from whom he inherited love for art and music, and the writer Thomas Young, a graduate of St Andrews University. His father had left Roman Catholicism and Milton was raised Protestant, with a heavy tendency toward Puritanism. As a student, he wanted to go into the ministry, but was disillusioned with the scholastic elements of the clergy at Cambridge. Cambridge, however, afforded him time to write poetry. After Milton’s graduation, he did not consider the ministry. Instead, he began a six-year stay at his father’s recently purchased country estate of Horton with the stated intention of becoming a poet. Milton made his move to Horton, a village of about 300 people, in 1632, saying that God had called him to be a poet. One of his first great works, Comus, a Masque, was written around this time. In 1637, Milton’s mother died, �possibly of the plague. That same year, one of his Cambridge friends, Edward King, a young minister, was drowned in a boating accident. Classmates at Cambridge decided to create a memorial volume of poetry for their dead friend. Milton’s poem, untitled in the volume but later called Lycidas, was the final poem, possibly because the editors recognized it as the artistic climax of the volume. Whatever the reasoning, the poem, signed simply J. M., has become one of the most recognized elegiac poems in English. Milton toured the European continent in 1638-1639 and met many of the great Renaissance minds, including Galileo and Grotius. The beginning of the Puritan Revolution found Milton back in England, fighting for a more humanist and reformed church. For more than twenty years, Milton set aside poetry to write political and religious pamphlets for the cause of Puritanism. At this time, Milton began writing prose pamphlets on current church controversies. The political climate was charged as Charles I invaded Scotland, and the Long Parliament was convened. Milton wrote pamphlets entitled Of Reformation, Of Prelatical Episcopacy, and Animadversions in 1641, and The Reason for Church Government in 1642. For the young poet, the Puritan aspect of his work, at least in the public eye, began to take precedence over his poetry. Milton more and more sided with the idea that the church needed ―purification‖ and that that sort of reform could not come from a church so closely connected to the king. In 1642, the Civil War began, and its effects touched Milton directly. That same year, he married Mary Powell, daughter of a Royalist family from Oxford. A month after the marriage, Mary returned to Oxford to live with her family. The precise reasons for her leaving Milton are not known. Personal problems, political differences, or simple safety (Oxford was the headquarters for the Royalist army) may have motivated her. Milton’s brother, Christopher, also announced as a Royalist at about this same time.Whatever the reason for Mary Powell’s desertion of Milton, he published the pamphlet On the Doctrine and Discipline of Divorce in 1643, followed by On Education and Areopagitica in 1644. Each of these works centered on the need for individual liberty. The ideas that Milton expressed in these writings are commonplace values today, but in the 1640s, they were so radical that Milton acquired the nickname, ―Milton the divorcer.‖Around 1645, Mary Powell returned to Milton. Once again, the reasons for her return are unclear. Charles I had lost the Battle of Naseby and any hope for military victory. �The Powell family, avowed Royalists, were now in danger. They were ejected from their home in Oxford as Charles’ power waned. Within a year of Mary’s return to Milton, her entire family had moved in with the couple.With the return of Mary and the arrival of her family, Milton was suddenly the head of a large household. His first collection of poetry, entitled Poems, was published in 1646. The volume included Lycidas, Comus, and ―On the Morning of Christ’s Nativity.‖ In July, seven months after Poems was published, Milton’s first daughter, Anne, was born. The marriage that had begun inauspiciously now seemed, if not perfect, at least sound. Shortly after the reunion of Milton with his wife and the birth of his first child, both his father-in-law, Richard Powell, and his own father died. Milton was left with a moderate estate. He complained at this point that he was surrounded by ―uncongenial people,‖ a problem that was resolved a few months later when all the Powell relatives moved back to Oxford. Milton and his wife and daughter then moved into a smaller house in High Holborn. For the first time, the couple had a reasonably normal life and family. In 1648, a second daughter, Mary, was born. The year 1649 marked a decisive change in Milton’s life. Charles I was executed, with Milton probably in attendance. The murder of a king was shocking to the people of a country that had always lived under a monarchy and for whom the king had an aura of divinity. Milton attempted to justify the situation with his Tenure of Kings and Magistrates. This pamphlet, along with Milton’s other work for the Puritans, resulted in his being offered the position of Secretary for the Foreign Tongues. For a time, he served as Secretary for Foreign Tongues under Cromwell. Milton now assumed full-time political office, corresponding with heads of states or their secretaries in Latin, the lingua franca of the day. Among other duties, he also responded to political attacks on the new Cromwellian government, particularly those attacking the philosophy and morality behind the violent overthrow of the monarchy. Milton was a "passionate fighter" (Šentija, 1979) for freedom of press and mixed product of his time. On the one hand, as a humanist, he fought for religious tolerance and believed that there was something inherently valuable in man. As a Puritan, however, he believed that the Bible was �the answer and the guide to all, even if it went against democracy itself. Where the Bible didn't afford an answer, Milton would turn to reason. John Milton ( 1608-1674) Milton himself was married three times, all of which were rather unhappy affairs. He defended divorce in "The Doctrine and Discipline of Divorce" in 1643. With this and other treatises, Milton often came in conflict with the Puritanism he advocated. At the end of the war, Milton was imprisoned for a short time for his views. In 1660, he emerged blind and disillusioned with the England he saw around him. Nevertheless, he was yet to write his greatest work. Paradise Lost was published in 1667, followed by Paradise Regained in 1671. Milton's ability to combine his poetry with his polemics in these and other works, was the key to his genius. The classical influences in his work can be clearly delineated: Homer, Ovid, but especially Virgil. Shakespeare was the leading playwright of his day, and there are some references to his works in Milton's own poetry. The style and structure of the Spencer's "The Faerie Queen," was another influence on Paradise lost.. Milton died from "gout" in 1674 and was buried in the Church of St. Giles in London. �2 Chapter 2 3 Epic �2.1 What is an epic? An epic in its most specific sense is a genre of classical poetry originating in Greece. The conventions of this genre are several: (a) It is a long narrative about a serious or worthy traditional subject. (b) Its diction in elevated in style. It employs a formal, dignified, objective tone and many figures of speech. (c) The narrative focused on the exploits of a hero or demigod who represents the cultural values of a race, nation, or religious group. (d) The hero's success or failure will determine the fate of that people or nation. (e) The action takes place in a vast setting, and covers a wide geographic area. The setting is frequently some time in the remote past. (f) The action contains superhuman feats of strength or military prowess. (g) Gods or supernatural beings frequently take part in the action to affect the outcome. (h) The poem begins with the invocation of a muse to inspire the poet, a prayer to an appropriate supernatural being. The speaker asks that this being provide him the suitable emotion, creativity, or words to finish the poem. (i) The narrative starts in medias res, in the middle of the action. Subsequently, the earlier events leading up to the start of the poem will be recounted in the characters' narratives or in flashbacks. (j) The epic contains long catalogs of heroes or important characters, focusing on highborn kings and great warriors rather than peasants and commoners. (k) The epic employs extended similes (called epic similes) at appropriate spots ofthe story, and a traditional scene of extended description in which the hero arms himself. A long narrative Poem in elevated Style, presenting characters of high position in a series of adventures which form an organic whole through their relation to a central figure of heroic proportions and through their development of Episode important to the history of a nation or �race. According to one theory, the first epics took shape from the scattered work of various unknown poets, and through accretion these early Episodes were gradually molded into a unified whole and an ordered sequence.Though held vigorously by some, this theory has generally given place to one which holds that the materials of the epic may have accumulated in this fashion but that the epic poem itself is the product of a single genius who gives it structure and expression. Epics without certain authorship are called Folk epics, whether the scholar believes in a folk or a single authorship theory of origins, however. Epics, both Folk and Art epics, share a group of common characteristics:  the hero is a figure of imposing stature, of national or international importance, and of great historical or legendary significance;  the setting is vast in scope, covering great nations, the world, or the universe;  the action consists of deeds of great valor or requiring superhuman courage; supernatural forces—gods, angels, and demons--interest themselves in the action and intervene from time to time;  a style of sustained elevation and grand simplicity is used; and the epic poet recounts the deeds of his heroes with objectivity. Some of the most well known, and most important, works of literature in the world are examples of epic poetry. These heroic adventure tales have often had surprising durability over time, such as Homer's story of love and heroism, The Illiad, which continues its life in the modern film Troy. Also Milton's Paradise Lost is called an epic of Christian culture. Epic poems are more than simply a lengthy story told in poetic form, and their ability to remain accessible, relevant, and remembered over time owes a significant debt to their roots in an oral tradition and to their cyclical pattern of events. �The term applies most directly to classical Greek texts like the Iliad and the Odyssey but it is clear that Roman authors like Virgil intentionally imitate the genre in works like the Aeneid.However, some critics have applied the term more loosely. The Anglo-Saxon poem Beowulf has also been called an epic of Anglo-Saxon culture, Milton's Paradise Lost is called an epic of Christian culture, El Cid is an epic of Spanish culture, Longfellow's Hiawatha is an epic of American culture, and Shakespeare's various History Plays have been collectively called an epic of Renaissance Britain. Contrast with the mock epics of Alexander Pope and later Enlightenment writers to see its influence in humorous form. 2.2 The paradise lost as an epic and Homer′s and Virgil influence on Milton: Professor Khan wrote in his book From Renaissance To Classicism "an epic is a long narrative, adventutous poem. With its embellished, hyperbolic, bombastic language it deals with the conflict between good and evil. The subject of en epic is normally ancient and nacional, having its roots in history and legend. Milton′s subject is also ancient, more ancient �than any other epic- poet. Homer and Virgil and other epic –poets have taken their subjects from the history and legend of their country. Milton, on the contrary, has taken his subject from scriptures. His theme belongs to a time before the nations were born. He deals with the history of man kind itself. He deals with creation of the universe and fall of Man, a subject of interest not to any one nation, but to all man kind. Its action moves from heaven to hell and from hell to heaven through chaos in which lies the newly created world of man. It concerns itself with the fortunes, not of a city or an empire, but of the whole human race and with that particular event in the history of the race which has moulded all its destinies. This epic is the history of Heaven and Earth and Hell". (Khan, 2006) Paradise Lost is written in blank verse. A long poem constructed throughout in iambic pentametre(each line consisting of five feet and ten syllables, the accent being on the second syllable), would be infinitely wearisome; and hence Milton introduced endless variation, such as trochees and spondees, in metre. Following the invocation and prologue, Milton continues in the epic style by beginning in medias res, in the middle of things. Satan is first seen lying in the pit of Hell. That a great religious epic focuses on Satan, presents him first, and in many ways makes him the hero of the poem is certainly surprising and something of a risk on Milton’s part. Milton does not want his audience to empathize with Satan, yet Satan is an attractive character, struggling against great odds. Of course, Milton’s original audience more than his modern one would have been cognizant of the ironies involved in Satan’s struggles and his comments concerning power. The power that Satan asserts and thinks he has is illusory. His power to act derives only from God, and his struggle against God has already been lost. To the modern audience, Satan may seem heroic as he struggles to make a Heaven of Hell, but the original audience knew, and Milton’s lines confirm, that Satan’s war with God had been lost absolutely before �the poem begins. God grants Satan and the other devils the power to act for God’s purposes, not theirs. "The catalogue of demons that follows Satan’s escape from the burning lake follows an epic pattern of listing heroes—although here the list is of villains. This particular catalogue seems almost an intentional parody of Homer’s catalogue of Greek ships and heroes in Book II of the Iliad" (Lewis, 1961). The catalogue is a means for Milton to list many of the fallen angels as well as a way to account for many of the gods in pagan religions—they were originally among the angels who rebelled from God. Consequently, among these fallen angels are names such as Isis, Osiris, Baal, and others that the reader associates not with Christianity but with some ancient, pagan belief. Of the devils listed, the two most important are Beelzebub and Belial. The council of demons that begins Book II recalls the many assemblies of heroes in both the Iliad and the Aeneid. Further the debates also seem based on the many meetings that Milton attended in his various official capacities. In his speech, each devil reveals both the characteristics of his personality and the type of evil he represents. For example, Moloch, the first to speak, is the unthinking man of action. Like Diomedes in the Iliad, he is not adept in speech, but he does know how to fight. He is for continued war and unconcerned about the consequences. But, moreover, the attitude toward violence exhibited by Moloch reveals a particular type of evil. In the Inferno, Dante had divided evils into three broad categories: sins of appetite, sins of will, and sins of reason. In the Renaissance, these categories still dominated much thought concerning the nature of evil. In Moloch, the reader sees a straightforward example of the evil that comes from the will. Unthinking violence is the result of lack of control of the will. And for Moloch, the ―furious king‖ (VI, 357), violence defines his character. In Book VI, Milton presents his description of epic warfare. He follows many of the conventions of the great classic epics, such as the Iliad and the Aeneid, by giving graphic descriptions of battles and wounds, highlighting the boasting give and take in individual battles, and developing massive scenes of chaotic violence. However, Milton goes beyond his classical models and, in a sense, mocks the nature of the warfare he describes. The reasons that lie behind this sense of mockery in Book VI have been frequently discussed and disputed �by critics and commentators. The general sense of those who see a kind of mocking humor in the battle scenes is that Milton was dealing with two difficulties. First, the combat in Heaven is between combatants who cannot be killed, and second, there is no doubt as to the outcome of the battle. In relating his warfare metaphor, Raphael, either wittingly or unwittingly, creates the feel of a mock-epic rather than true dramatic epic. The individual encounters have a cartoonish aspect about them. Abdiel, whose heroism in standing up to Satan receives deserved praise from God, first confronts Satan and knocks him backwards. Next, Michael splits him down the middle. In the Iliad, such a wound would be the end of the warrior. But, in Paradise Lost, Satan cannot be killed so the wound, like wounds in cartoons, heals. In the prologue to Book IX, Milton says that his work must now take a tragic tone and that this Christian epic, though different, is nonetheless more heroic than earlier epics like the Iliad and the Aeneid. Again, he calls on Urania as the muse of Christian inspiration to help him complete his work and show the true heroism that lies in the Christian idea of sacrifice. Then Milton returns to his story. Yet for all of these connections to tragedy, Paradise Lost is not a tragedy; it is a Christian epic with a tragic core. Adam is a noble hero, but as Milton notes in this prologue, he is not a hero like Achilles, Aeneas, or Odysseus. Satan continue his intention to struggle against God, saying, ―Better to reign in Hell than serve in Heaven‖ (263). Homer's Odysseus says that when he interviewed Achilles in the underworld, Achilles expressed an attitude opposite to Satan's: "I would rather be a paid servant in a poor man's house and be above ground than king of kings among the dead" (Odyssey, 11.363-65). "Paradise lost is a classical epic, having all the common features of the Homer and Virgil. It is a long narrative poem in XII books, with grandeur and majesty of the classical epic, it is unity of themeand treatment of every episode lead to the the central theme-"the fall of man" and "the lose of paradise". Alongwith wars and heroic exploits there is supernatural-God and his angles, and Satan and his followers. There are only two human characteres, Adam and Eve. �In fact, unlike a classical epic which deals with a subject of nacional importance, with the war- like exploits of some hero of nacional stature, the theme of Milton′ s epic is vaster and of a more universal human intrest. It concerns itself with the fortunes, not of a city or an empire, but of the whole human race, and with that particular event in the history of the race which has moduled all its destenies. Around this event, the plucking of an apple, are rage, according to the strictese rules of the ancient epic, the histories of Heaven and Earth and Hell. The scene of action is Universal Space. The time represented is eternity. The characters are God and all his creatures. And all these are exsibited in the clearest and most inevitable relation with the man and his destiny." Besides the allusions to classical literature and mythology, to Biblical tradition, and to the contemporary litertures of europe, Milton has introduced his humanist version of the fall of man in his greates work. Every critic admits that Paradise Lost is the biggest epic of English poetry and falls into the category of the biggest poet achievments in the world. In the end, Milton chose not to copy Homer and Virgil, but to create a Christian epic. His creation is still a work of great magnitude in an elevated style. Milton chose not to write in hexameters or in rhyme because of the natural limitations of English. Instead he wrote in unrhymed iambic pentameter, or blank verse, the most natural of poetic techniques in English. He also chose a new kind of heroism to magnify and ultimately created a new sort of epic—a Christian epic that focuses not on the military actions that create a nation but on the moral actions that create a world. �5 4 Chapter 3 The Theme of Freedom and Idenpendence in Paradise Lost 3.1 The Significance of English Puritansim Puritanism seems to have risen out of discontent with the Elizabethan Religious Settlement, which was felt by the more radical Protestants to be giving in to "Popery" (i.e., the Roman Catholic Church). While Protestant movements in Europe were driven by issues of theology and had broken radically with Catholic models of church organization, the English Reformation had brought the Church under control of the monarchy while leaving many of its religious practices intact. In the eyes of the Puritans, doctrine had been made unacceptably subservient to politics. Persecuted under Mary I of England ("Bloody Mary"), Protestants like Thomas Cartwright, Walter Travers, and Andrew Melville had gone into exile as Puritans in Europe, where they came into close contact with the magisterial reformers in Calvinist Geneva and Lutheran Germany. These contacts shaped their position towards Elizabeth's religious via media (middle way). Although all influenced by Calvinism, Puritans were not united on every issue. This reflects the origins of the movement, which developed through several phases. They shared a belief that all existing churches had become corrupted by practice, by contact with pagan civilizations (particularly that of Rome), and by the impositions of kings and popes. They all argued for a restructuring and "purifying" of church practice through biblical supremacy and shared, to one degree or another, a belief in the priesthood of all believers. However, they differed from one another on issues of church polity (organization of church power). By the 1570s, Puritans were arguing for a Presbyterian model or a Congregationalist model, but all were outspoken in their criticism of the structure and liturgy that the monarchy required. Attempts by the bishops of the Church of England to enforce uniformity of usage in the Book of Common Prayer turned the episcopal hierarchy into a specific target of their �grievances. Tracts such as the Martin Marprelate series lampooned the government and the church hierarchs. "These radicals were looked down on by the dominant faction in the Church of England and were given the name "Puritan", in mockery of the radicals' apparent obsession with "purifying the Church" (Morton, 1955) Contemporarily with the English Reformation, the Church of Scotland had been reformed on a Calvinist Presbyterian model which many Puritans hoped to extend to England. When James VI of Scotland became James I of England, he appointed several known Puritans to powerful positions within the Church of England and checked the rise in power of William Laud. Nevertheless, he was not a Puritan and regarded them with great suspicion, viewing the Puritan movement as potentially dangerous to the royal control of the Church. He authorized the King James Bible in part to reinforce Anglican orthodoxy against the Geneva Bible. Popular among Puritans, the Geneva Bible had anti-royalist translations and interpolated revolutionary notes. Luther had called for vernacular Bible translations and church services; for the Puritans, who believed in biblical supremacy, having an English-language Bible was of paramount importance. Each new round of political disappointments during this period faced each individual Puritan and the Puritan congregations with a new crisis. The question was whether they should continue in outward conformity with a distasteful religious regime, or should they take the separatist and illegal step of withdrawal from the state church? Each fresh controversy led to a new round of schisms, and, as such, the groundwork was set for the eventual heirs of Puritanism, from the "low-church" Protestant and Evangelical wing of the Church of England, to the various dissenting sects. 1625 to 1660 During the reign of Charles I, a committed High Churchman, relations soured and it is generally held among historians that religious tensions created by the dominance of the �Laudian faction during the Personal Rule were a major factor in the outbreak of the English Civil War. Puritans certainly agitated against the king, and reform of the religion was a rallying cry for the Parliamentary forces. However, Puritanism by this point had become not merely a religion, but a cultural entity. "By this time, Puritans were more often referred to as Dissenters. Since English Dissenters were barred from any profession that required official religious conformity, Puritans became instrumental in a number of new industries. They dominated the export/import business and were eager to colonize the New World. With the flourishing of the trans-Atlantic trade with America, Puritans in England were growing quite wealthy. Similarly, the artisan classes had become increasingly Puritan. Therefore, the economic issues of the English Civil War (tax levies, liberalization of royal charters), the political issues of the English Civil War (purchasing of peerages, increasing discontent between the House of Lords and the people, rebellion over the attempt to introduce a Divine right of kings to Charles I), and the religious tensions were all bound together into a general dispute that pitted Church of England Cavaliers against Puritan Roundheads" ( Morton, 1955). Puritan factions played a key role in the Parliamentarian victory and became a majority in Parliament, while Puritan military leader Oliver Cromwell became head of the English Commonwealth. In the Commonwealth period, the Church of England was removed from royal control and reorganized to grant greater authority to local congregations, most of which developed in a Puritan and semi-Calvinist direction. There was never an official Puritan denomination; the Commonwealth government tolerated a somewhat broader debate on doctrinal issues than had previously been possible, and considerable theological and political conflict between Puritan factions continued throughout this period. The label "Puritan" fell out of use when their movement became the status quo; it was replaced by the broader term Nonconformist, which was used after the English Restoration to refer to all Protestant denominations outside of the official Church. The pejorative name "Dissenter"3 (for nonConforming Protestants, as opposed to Catholics) was also used. �Many Puritans immigrated to North America in the 1620-1640s because they believed that the Church of England was beyond reform. However, most Puritans in both England and New England were non-separatists. They continued to profess their allegiance to the Church of England despite their dissent from Church leadership and practices. Emigration resumed under the rule of Cromwell, but not in large numbers as there was no longer any need to "escape persecution" in England. In fact, many Puritans returned to England during the war. From 1660 to present day The influence of the Puritan movement persisted in England in various forms. All official discrimination against Puritans in England ended in the 1640s when Puritan forces under Oliver Cromwell overthrew the monarchy in the English Civil War. With the Restoration of the monarchy in the 1660s the Church of England attempted to re-assert its authority as the official English church. However, respect for the Puritan Church's separatism and freedom of conscience won by them and other English Dissenters under Cromwell, continued despite the Restoration and the 1662 Act of Uniformity. The central tenet of Puritanism was God's supreme authority over human affairs, particularly in the church, and especially as expressed in the Bible. This view led them to seek both individual and corporate conformance to the teaching of the Bible, and it led them to pursue both moral purity down to the smallest detail as well as ecclesiastical purity to the highest level. On the individual level, the Puritans emphasized that each person should be continually reformed by the grace of God to fight against indwelling sin and do what is right before God. A humble and obedient life would arise for every Christian. �Like the early church fathers, they eliminated the use of musical instruments in their worship services, for various theological and practical reasons. Outside of church, however, Puritans were quite fond of music and encouraged it in certain ways. Another important distinction was the Puritan approach to church-state relations. They opposed the Anglican idea of the supremacy of the monarch in the church (Erastianism), and, following Calvin, they argued that the only head of the Church in heaven or earth is Christ (not the Pope or Archbishop of Canterbury). However, they believed that secular governors are accountable to God (not through the church, but alongside it) to protect and reward virtue, including "true religion", and to punish wrongdoers — a policy that is best described as noninterference rather than separation of church and state. The separating Congregationalists, a segment of the Puritan movement more radical than the Anglican Puritans, believed the Divine Right of Kings was heresy, a belief that became more pronounced during the reign of Charles I of England. Other notable beliefs include:  An emphasis on private study of the Bible  A desire to see education and enlightenment for the masses (especially so they could read the Bible for themselves)  The priesthood of all believers  Perception of the Pope as an Antichrist  Simplicity in worship, the exclusion of vestments, images, candles, etc.  Did not celebrate traditional holidays that they believed to be in violation of the regulative principle of worship.  Believed the Sabbath was still obligatory for Christians. � Some approved of the church hierarchy, but others sought to reform the episcopal churches on the presbyterian model. Some separatist Puritans were presbyterian, but most were congregationalists. In addition to promoting lay education, it was important to the Puritans to have knowledgeable, educated pastors, who could read the Bible in its original Greek, Hebrew, and Aramaic, as well as ancient and modern church tradition and scholarly works, which were most commonly written in Latin, and so most of their divines undertook rigorous studies at the University of Oxford or the University of Cambridge before seeking ordination. Diversions for the educated included discussing the Bible and its practical applications as well as reading the classics such as Cicero, Virgil, and Ovid. They also encouraged the composition of poetry that was of a religious nature, though they eschewed religious-erotic poetry except for the Song of Solomon, which they considered magnificent poetry, without error, regulative for their sexual pleasure, and, especially, as an allegory of Christ and the Church. In modern usage, the word puritan is often used as an informal pejorative for someone who has strict views on sexual morality, disapproves of recreation, and wishes to impose these beliefs on others. None of these qualities were unique to Puritanism or universally characteristic of the Puritans themselves, whose moral views and ascetic tendencies were no more extreme than many other Protestant reformers of their time, and who were relatively tolerant of other faiths — at least in England. The popular image is slightly more accurate as a description of Puritans in colonial America, who were among the most radical Puritans and whose social experiment took the form of a Calvinist theocracy. 3.2 Civil war in England and Milton′s part in it John Milton was one of the great poets of England whose life spanned the most turbulent period of English history. His youth was spent in the dissolving reign of Charles I who desperately held on to his power by dissolving Parliament. This foolishness could only last so �long, and civil war broke out in 1642. This war would elevate an intensely religious and unboundedly ambitious, charismatic, and the man named Oliver Cromwell to the height of power; in 1649, after overthrowing the monarchy and taking over England, Cromwell executed Charles I and thus ushered in a new state which he called the Commonwealth and Protectorate that was, nominally, Puritan. H e was such capable military officer that he became a high ranking general and great inspiration for his society.Cromwell nominally subscribed to Calvin's principles of civil government, in which the best form of government is either an aristocracy (rule by the best) or a combination of aristocracy and democracy (rule by the people)&emdash;the latter would become the basis of American government. Cromwell, however, wanted to be king and ruled harshly, calling himself "Protector of England" and setting up in effect a military government. When Cromwell died in 1658, his son, Richard, tried to lift the reigns of power and succeed his father as Protector, but did not have his father's iron heart or charisma. In 1660, Charles II, the son of Charles I, was recalled from France and put on the throne of England. By then, however, the English Parliament had gotten used to the power it had gained during the Protectorate, and Charles II and later his son, James II, would see their power gradually erode away and gather around the English Parliament.Concerned with the Puritan cause, Milton wrote a series of pamphlets against episcopacy (1642), on divorce (1643), in defense of the liberty of the press (1644), and in support of the regicides (1649). He also served as the secretary for foreign languages in Cromwell's government. After the death of Charles I, Milton published The Tenure of Kings and Magistrates (1649) supporting the view that the people had the right to depose and punish tyrants.In 1651 Milton became blind, but like Jorge Luis Borges is our century, blindness helped to stimulate his verbal richness. "He sacrificed his sight, and then he remembered his first desire, that of being a poet." (Breda, 1973) After the Restoration of Charles II in 1660, he was arrested as a noted defender of the Commonwealth, but was soon released. Besides public burning of Eikonklastes and the first Defensio in Paris and Toulouse, Milton escaped from more punishment after Restoration, but he became a relatively poor man. In the 1660s Milton moved with his third wife to what is now Burnhill Row. He spent there the remaining years of �his life, apart from a brief visit to Chalfont St Giles in 1665, to avoid the plague. His late poems were dictated to his daughter, nephews, friends, disciples, and paid amanuenses. The causes of this turbulent, violent century can be easily summed up with a religious question and a political question: a.) how far should the reformation be taken in the Protestant church? and b.) how much authority should a king have? As the century progressed and more and more blood was spilled in England, a.) the answer to the first question was, "as far as any group wishes to take it," in other words, religious tolerance and freedom for all Protestant sects, and b.) the answer to the second was, "the king should have no authority." 3.3 The Theme of Freedom and Independence in Paradise Lost Milton meditated many subjects, from both British and biblical history, before he finally decided on the Fall as the theme for his great epic. In the begining there existed according to Milton God and Chaos. God is: "Thee Father first they sung Omnipotent, Immutable, Immortal, Infinite, Eternal King; thee Author of all being, Fountain of Light, thy self invisible" (Book III, 372-375) And Chaos is: "In the wide womb of uncreated night"(Book II, 150) "Eternal Anarchie, amidst the noise"(Book II, 896) "The secrets of the hoarie deep, a dark Illimitable Ocean without bound, Without dimension, where length, breadth, & highth"(Book II, 892-894) and where " Thir embryon Atoms; they around the flag" and where Chance governs all. Into this wilde Abyss. �"To the discription of chaos is devoted much of the Book II;from this description we realise that Chaos is "uncreated night" and "Eternal Anarchie", whereas God created order and light. But if the chaos is God′s opposer, he is still "His dark materials to create more Worlds"(II916)it is to say his primaray matter from which he create." (Puhalo, 1966) Why did war in the Haven begin in the first place? In the book V Raphael says that the rebellion began when God presented his newly ―begotten‖ Son to the angels as their new ruler. Many commentators have been troubled by Milton’s use of the word ―begotten‖ since it suggests that the Son was ―born‖ to God and thus denies the doctrine of the Trinity. However, Milton also uses the term ―anointed‖ as a synonym for ―begotten,‖ and so the generally accepted meaning for the passage is that the Son is now begotten or anointed as the Messiah or King of Heaven to rule over the angels.The rest of Raphael’s description of the rebellion gives the lie to Satan’s description of the rebellion in Book I. Satan was not heroic in his opposition to God; instead he sneaked away in the night. Further, he convinced other angels to follow him with sophistic arguments and the magnificence of his appearance in Heaven. The real hero of the last part of Book V is Abdiel who follows his own beliefs and challenges Satan in front of all the Devils’ hosts. Abdiel cannot be swayed by Satan’s arguments and taunts and heroically deserts Satan. Abdiel is the only one of Satan’s hosts who has the fortitude and moral character to oppose the mighty archangel. Milton here gives the reader a direct contrast between pomp without substance (Satan) and substance without pomp (Abdiel).The battle lasts two days. On the first day, the angels easily beat the rebellious angels back; on the second day, under the assault of a cannon that the demons have built, the angels’ victory is not so easy. In response to the cannon fire, the Heavenly hosts grab mountains, hills, and boulders and pelt the rebels, literally burying them and their cannon. The rebels dig out and begin to respond in kind, and the air is soon filled with the landscape. At this point, God, fearing for the physical safety of Heaven (he knows that Satan is no real threat to his power, but the rebels are literally uprooting the landscape), calls forth the Son, who attacks the rebels single-handedly in his chariot and �easily herds them into a gap that opens into Hell. Afraid to go forward or back, the rebels are eventually forced through the gap into Hell.Raphael concludes his narrative and tells Adam that Satan now envies Man’s position and will try to tempt the two humans into disobedience. Raphael reminds Adam of the fate of the rebellious angels and warns him not to yield to temptation. Probably the most famous quote about Paradise Lost is William Blake’s statement that Milton was ―of the Devil’s party without knowing it.‖ While Blake may have meant something other than what is generally understood from this quotation the idea that Satan is the hero, or at least a type of hero, in Paradise Lost is widespread. However, the progression, or, more precisely, regression, of Satan’s character from Book I through Book X gives a much different and much clearer picture of Milton’s attitude toward Satan. But we must addmit that we have sympaties for Satan especially in the book I and II. Gustave Dore′ Depiction Of Satan From John Milton's Paradise Lost �Milton′s imagery draws a contrast which helps us in understanding the Satan in the Book I. The Hell is portrayed as closely as possible to the nature of horror portrayed in Inferno. "A Dungeon horrible, on all sides round As one great Furnace flam'd, yet from those flames No light, but rather darkness visible Serv'd onely to discover sights of woe, Regions of sorrow, doleful shades, where peace [ 65 ] And rest can never dwell, hope never comes That comes to all; but torture without end Still urges, and a fiery Deluge, fed With ever-burning Sulphur unconsum'd", (Milton, 1667) Following the prologue and invocation, Milton begins the epic with a description of Satan, lying on his back with the other rebellious angels, chained on a lake of fire. The poem thus commences in the middle of the story, as epics traditionally do. Satan, who had been Lucifer, the greatest angel, and his compatriots warred against God. They were defeated and cast from Heaven into the fires of Hell. Lying on the lake, Satan is described as gigantic; he is compared to a Titan or the Leviathan. Next to Satan lies Beelzebub, Satan’s second in command. Satan comments on how Beelzebub has been transformed for the worse by the punishment of God. With effort, Satan is able to free himself from his chains and rise from the fire. He flies to a barren plain, followed by Beelzebub. From the plain, Satan calls the other fallen angels to join him, and one by one they rise from the lake and fly to their leader. As they come, Milton is able to list the major devils that now occupy Hell: Moloch, Chemos, Baalem, Ashtaroth, Astarte, Astoreth, Dagon, Rimmon, Osiris, Isis, Orus, Mammon, and Belial. Each devil is introduced in a formal cataloguing of demons. These fallen angels think that they have escaped from their chains through their own power, but Milton makes it clear that God alone has allowed them to do this. In the philosophy of politics, the idea of freedom comes up often. �Most people say they support most types of freedom. Of course, the word freedom has little meaning if we do not have a common definition. In this article, I will explain my definition of freedom. Freedom starts with a principle of self-control, also known as self-ownership. In a free society, each and every person has legal control (or "ownership") of their own body and mind. As such, the concept of freedom refers to a certain type of political empowerment. It refers specifically to equal empowerment. In other words, a free society is one with an equal distribution of legal rights and in which each and every person has as much legal rights as possible. Basically, a free person has the legal allowance to do whatever he or she wants insofar as he or she does not offensively harm or coerce other people against those other people's wills. Remember, the limitation is a logical requirement. Freedom obviously can not include the legal right to limit other people's freedom because that would be illogical. The theme of freedom and independence is perhaps the most controversial one in the poem because it portrays Satan as the very embodiment of heroic energy. This energy is constantly expressed in his oppositon to the will of god despite heavy odds. In fact, Milton′s own self esteem, pride and republicanism, are voiced by satan. Milton believed in Cromwell and the civil war at first, but would later have second thoughts about Cromwell (in fact, Satan in Paradise Lost is clearly Oliver Cromwell). Milton would spend his later years during the reign of Charles II blind and distressed over the social problems of the seventeenth century, a distress which gave rise to his two great epic poems. Milton's distaste for the monarchy led directly to his embracing the rule of Oliver Cromwell. From 1630 through 1658 Milton wrote at least 24 sonnets. Many of these celebrate the rise of "Lord General Cromwell" and "New Forcers of Conscience." When Cromwell's government collapsed and Charles II ascended the thrown, Milton was imprisoned, fined, and his property confiscated. Yet Milton steadfastly accepted his decisions and the consequences. �Three years after the fall of Cromwell's government, Milton began writing Paradise Lost. Readers of the epic often find Satan the most compelling character, especially at the beginning of the poem, which he dominates. Satan has used his free will to choose his role in the universe. The famous statement by Satan that it is "better to reign in Hell than serve in Heaven" is an endorsement of individual rights and responsibility, versus serving authority. Satan describes his enemy as "the tyranny of Heaven." We can obviously see that Oliwer Cromwell had infulence on John Milton, because Cromwell proved most capable as a military leader and clothed conservatively , he possessed a Puritan fervor and a commanding voice, he quickly made a name for himself by serving in both the Short Parliament (April 1640) and the Long Parliament. Oliver Cromwell was known by his passionate speeches in the Parliament. And it is the most obvious that Oliver Cromwell was Satan from Paradise Lost. Oliver Cromwell 1599-1658 �"Ideology of the Paradise Lost has deep root in social situation of England and with realistic view mirrors state and political standpoint of its writer and his class of that time."(Puhalo, 1966) "Satan′s speeches brings out the salient traits of his character, resourcefulness and foresight. He is not coward; but his courage is not rash and unthinking. Like clever politician, he would like to think before he leaps". (Khan, 1966) A mind not to be chang'd by Place or Time. The mind is its own place, and in it self Can make a Heav'n of Hell, a Hell of Heav'n. What matter where, if I be still the same, And what I should be, all but less then he Whom Thunder hath made greater? Here at least We shall be free; th' Almighty hath not built Here for his envy, will not drive us hence: Here we may reign secure, and in my choyce To reign is worth ambition though in Hell: Better to reign in Hell, then serve in Heav'n. (Milton, 1667) We must admit how Satan is brilliant leader, he is telling his fallen angels that everything in our minds that we see in speech above. Satan motivates them to countinue their fight. Milton portrays the Satan as a rebel and God as a tayrant. It′s the war between an autocrat and democrates. Seeing Milton′s own literary career and the impact of the civil war on his writing, it would be far fatched to say that Milton did see a touch of glory in Satan. And Satan is introduced in this background- not as helpless victim, but as a character of ultra human dimensions. �After the fall soon discerns and sees Beelzebub weltering by his side and cries out: "If thou beest he; But O how fall'n! how chang'd From him, who in the happy Realms of Light Cloth'd with transcendent brightness didst out-shine Myriads though bright: If he Whom mutual league, United thoughts and counsels, equal hope And hazard in the Glorious Enterprize, Joynd with me once, now misery hath joynd In equal ruin" (Milton, 1667 ) Even in suffering Satan′s concern is about the others and theirs suffering is more important then his own. This is humantarian impuls. Although aware that he has lost the war Satan′s heroism is immediately brought to focus in his adress to fallen angles: "All is not lost; the unconquerable Will, And study of revenge, immortal hate, And courage never to submit or yield: And what is else not to be overcome?" (Milton, 1667) Milton puts many of these very same arguments in the mouth of his Satan. Satan uses the Protestant rhetioric of legitimate rebellion by "princes" or inferior magisrates" aganist a king and transform it into a rallying cry for overthrow of God himself. Satan continually refers to his compatriots as "Princes and Powers".(Puhalo, 1667) Satan′s optimsim is heroic. The main couse of his audacity lies in his immortality. "And this Empyreal substance cannot fail" (Milton, 1667) �Charles I We know that God can not kill angels, they are immortal. And this shows Satan′s role of the leader. As the leader he tries to motivate his fallen angels, trying to tell them that they must keep fighting. "Awake, arise, or be for ever fall'n"(Milton, 1667) Milton devotes much of the poem′s early books to devolping Satan′s character. We can even see him as an innocent victim, overlooked for an important promotion. The first impression of the book I leaves us with clear picture of autochracy and democracy. God is autochrat. His whole world whirles around him. He is the centar of his own world. On the other hand, satan is democratic. Democratic elements among the devils: they had a council, the unique idea and army to fight to God. Satan′s emphasis in his first speech the nature of equality of organization-equal hopes for everyone. Satan is more closer to Puritans who fought against the autochracy. Using adjectives as monarch, autocrat, tyrant how Satan desribe God, makes obvious that God is – Charles I. �So Milton uses Satan to critisize the tyranny. In the contex Satan′s war is ear for independence. At the end of Chapter III, I would like say that the speeches of Satan and his followers in book I and II are magnificient in their way, Miltonic. To see Satan as a hero because Milton goes out of his way to show the superficial seductiveness of this kind of evil is to show extraordinary naivete. Many readers and myself have argued that Milton deliberately makes Satan seem herioc and appealling early in the poem to draw us into sympathizing with him aganist our will, so that we may see how seducive evil is and learn to be more vigilant in resisting its appeal. Satan′s character or our perception of his character changes significantly from Book I to his final appearance in Book II. In Book I he is strong, imposing figure with great abilities as a leader and public statesman, whereas by the poem′s end he slinks back to hell in serpent form. Satan′s gradual degradation is dramatized by the sequence of different shapes he assumes. And then at very end Milton changes Satan from great wat-leader into smooth-tongued and specious politican. 9 6 7 8 Chapter 4 The role of Adam, Eve and God The Son in the Paradise Lost 4.1 The Importance of Obedience to God The first words of Paradise Lost state that the poem’s main theme will be ―Man’s first Disobedience.‖ Milton narrates the story of Adam and Eve’s disobedience, explains how and �why it happens, and places the story within the larger context of Satan’s rebellion and Jesus’ resurrection. Raphael tells Adam about Satan’s disobedience in an effort to give him a firm grasp of the threat that Satan and humankind’s disobedience poses. In essence, Paradise Lost presents two moral paths that one can take after disobedience: the downward spiral of increasing sin and degradation, represented by Satan, and the road to redemption, represented by Adam and Eve. While Adam and Eve are the first humans to disobey God, Satan is the first of all God’s creation to disobey. His decision to rebel comes only from himself—he was not persuaded or provoked by others. Also, his decision to continue to disobey God after his fall into Hell ensures that God will not forgive him. Adam and Eve, on the other hand, decide to repent for their sins and seek forgiveness. Unlike Satan, Adam and Eve understand that their disobedience to God does not know that their disobedience will be corrected through generations of toil on Earth. This path is obviously the correct one to take: the visions in Books XI and XII demonstrate that obedience to God, even after repeated falls, can lead to humankind’s salvation. Significant aspect of Milton’s description of the Garden is the role that Adam and Eve have there. Their duty is to tend Eden, to keep nature from running wild. The implication here is that Man brings order to nature. Nature is beautiful in itself but also without control. Left alone, the beauty of nature can be lost in weeds, unchecked growth, and decay. Eve mentions how difficult it is for the two humans to do all that is necessary. Some commentators see the struggle between Man and nature as one of the basic themes in all literature. Nature represents the Dionysian side of the universe, emotional, unrestrained, without law, while Man represents the Apollonian side, moral, restrained, lawfully structured. Nature runs rampant: Man civilizes. Milton’s description of the Garden and Adam’s and Eve’s duties within it bring this Dionysian / Apollonian contrast into play. Satan’s entrance into the Garden shows that both the natural and civilized aspects of the world can be corrupted by evil. �Adam Adam is a strong, intelligent, and rational character possessed of a remarkable relationship with God. In fact, before the fall, he is as perfect as a human being can be. He has an enormous capacity for reason, and can understand the most sophisticated ideas instantly. He can converse with Raphael as a near-equal, and understand Raphael’s stories readily. But after the fall, his conversation with Michael during his visions is significantly one-sided. Also, his self-doubt and anger after the fall demonstrate his new ability to indulge in rash and irrational attitudes. As a result of the fall, he loses his pure reason and intellect. Adam’s greatest weakness is his love for Eve. He falls in love with her immediately upon seeing her, and confides to Raphael that his attraction to her is almost overwhelming. Though Raphael warns him to keep his affections in check, Adam is powerless to prevent his love from overwhelming his reason. After Eve eats from the Tree of Knowledge, he quickly does the same, realizing that if she is doomed, he must follow her into doom as well if he wants to avoid losing her. Eve has become his companion for life, and he is unwilling to part with her even if that means disobeying God. Adam’s curiosity and hunger for knowledge is another weakness. The questions he asks of Raphael about creation and the universe may suggest a growing temptation to eat from the Tree of Knowledge. But like his physical attraction to Eve, Adam is able to partly avoid this temptation. It is only through Eve that his temptations become unavoidable. Eve Created to be Adam’s mate, Eve is inferior to Adam, but only slightly. She surpasses Adam only in her beauty. She falls in love with her own image when she sees her reflection in a body of water. Ironically, her greatest asset produces her most serious weakness, vanity. After Satan compliments her on her beauty and godliness, he easily persuades her to eat from the �Tree of Knowledge. The introduction of Eve even more obviously reveals her character and points to the future. Eve describes how she fell in love with her own image when she first awoke and looked in the water. Only the voice of God prevented this narcissistic event from happening. God turned Eve from herself and toward Adam. The suggestion here is that Eve’s vanity can easily get her into trouble. Eve’s weakness is further indicated in her relationship with Adam. Adam is superior in strength and intellect while Eve is the ideal companion in her perfect femininity. This relationship is sexist by modern standards but reflects the beliefs of Puritan England as well as most of the rest of the world at the time. Even so, Eve’s dependence on Adam suggests that she could be in trouble if she has to make serious decisions without Adam’s aid. Eve’s vanity and feminine weakness in conjunction with Adam’s warning about the Tree of Knowledge are a clear foreshadowing that Eve will eventually yield to temptation. Aside from her beauty, Eve’s intelligence and spiritual purity is constantly tested. She is not unintelligent, but she is not ambitious to learn, content to be guided by Adam as God intended. As a result, she does not become more intelligent or learned as the story progresses, though she does attain the beginning of wisdom by the end of the poem. Her lack of learning is partly due to her absence for most of Raphael’s discussions with Adam in Books V, VI, and VII, and she also does not see the visions Michael shows Adam in Books XI and XII. Her absence from these important exchanges shows that she feels it is not her place to seek knowledge independently; she wants to hear Raphael’s stories through Adam later. The one instance in which she deviates from her passive role, telling Adam to trust her on her own and then seizing the fruit of the Tree of Knowledge, is disastrous. Eve’s strengths are her capacity for love, emotion, and forebearance. She persuades Adam to stay with her after the fall, and Adam in turn dissuades her from committing suicide, as they begin to work together as a powerful unit. Eve complements Adam’s strengths and corrects his weaknesses. Thus, Milton does not denigrate all women through his depiction of Eve. �Rather he explores the role of women in his society and the positive and important role he felt they could offer in the divine union of marriage. God The Son The merciful, compassionate side of God is presented in the Son, not referred to as Jesus because Jesus had not been born at this time in theological history. In Book III, God says that Adam and Eve will fall and must suffer death. However, death can be overcome for humans if someone in Heaven will sacrifice himself to death for Man. The Son says that he will become human and die in order to defeat death. This act clearly defines the Son. He is powerful and brave, merciful, and willing to act to help Mankind. God’s duty is to provide justice—the law has been declared. It is the Son who provides mercy to temper justice—the natural law. The Son’s power is also further revealed in Book VI when God decides to end the rebellion of the angels. God sends only the Son in a chariot against Satan and his hosts. The Son by himself is able to defeat the rebellious angels and cast them into Hell. Milton uses the Son as the acting hand of God’s decisions. God also uses the Son as the creator of Earth and the universe around it. Milton connects the Son closely to Mankind by making the Son the creator of the biblical account. Even though Milton refers to the Son as God in Book VII, it is, nonetheless, the Son who, with golden compasses, lays out the universe and creates Earth and Mankind. Once again, the Son carries out God’s plan. Finally, after the fall of Adam and Eve, the Son goes to Earth at God’s request and passes judgment on the serpent, Adam, and Eve. Beyond telling the humans what their punishment will be, the Son also pities them and clothes them in skins. God seems to be almost the embodiment of ideas while the Son converts those ideas to actions.At the end of Paradise Lost, Michael shows Adam a vision of Jesus, who is the Seed that will ultimately destroy Satan. This scene is the obvious close of the story. The Son, becoming human through Jesus, will live and die. Through resurrection from death, he will finally overcome Satan and save man from the results of the fall. If the reader finds God �difficult to comprehend, he finds the Son more compassionate and merciful. Through both characters combined, Milton presents a complete picture of God. 4.2 The role of Archangels loyal to God Michael an archangel, one of the fiercest fighters in the battle between the rebellious angels and those loyal to God. Michael’s name was a war cry of the good angels. In Paradise Lost, the fallen angels remember particularly the pain of Michael’s sword. At the end of the epic, Michael reveals to Adam the biblical history of the world through the birth of Jesus. Michael also leads Adam and Eve out of Eden. Raphael one of the archangels. According to tradition Raphael was the angel of Man and was supposed to deal with Earth. Milton seems to follow that tradition since Raphael, often called the ―affable archangel,‖ is sent to Earth to warn Adam and to answer any questions Adam has. Many scholars fault Raphael’s advice and find him complicit in the Fall of Man. The conversation between Raphael and Adam takes place in Books V—VIII. An interesting sidebar to Raphael’s visit to Adam is the fact that the angel can eat, in fact needs to eat, although human food is not his normal fare. The point of the scene is to show Adam that through obedience to God, he may rise to a higher spiritual level and become like the angels. However, the force of the scene comes from the gusto with which Raphael partakes of Eve’s meal. For a modern reader, Raphael is reminiscent of John Travolta’s portrayal of the angel Michael in the movie Michael. Raphael seems to enjoy human food a little too much. Beyond this unintentional humor though, Milton uses Raphael’s appetite for a brief discourse on how all the elements of the universe pass from one to the other in a large circle. The food that Man eats nourishes not only his physical body but also sustains his reason, Man’s highest faculty. In angels, a more sublime food produces the even higher faculty of intuition so that angels know with an immediacy that Man, relying on reason, cannot. �Gabriel In the Bible, the archangel Gabriel is the angel of mercy in contrast to Michael, the angel of justice. In the New Testament, Gabriel announces the coming of Jesus to Mary. In Paradise Lost, he is the angel who guards the gate of Eden. He captures Satan on his first attempt at corrupting Adam and Eve and sends him away. Abdiel Angel in Satan’s host who opposes Satan’s plan to rebel and returns to God. In the battle with the rebellious angels, Abdiel confronts Satan and pushes him backwards. Abdiel also stands as an example for both Satan and for Adam and Eve. That is, Abdiel responds appropriately when confronted with temptation. Had Satan resisted his own envious thoughts, he would not have rebelled. Had the other angels been like Abdiel, they would not have followed Satan; they would have remained true to God. If Adam and Eve had been like Abdiel, they would not have eaten from the Tree of Knowledge Disobey. 4.3 Satan′s followers and idea of "Happy fall" The council of demons that begins Book II recalls the many assemblies of heroes in both the Iliad and the Aeneid. Further the debates also seem based on the many meetings that Milton attended in his various official capacities. In his speech, each devil reveals both the characteristics of his personality and the type of evil he represents. For example, Moloch, the first to speak, is the unthinking man of action. Like Diomedes in the Iliad, he is not adept in speech, but he does know how to fight. He is for continued war and unconcerned about the consequences. But, moreover, the attitude toward violence exhibited by Moloch reveals a particular type of evil. In the Inferno, Dante had divided evils into three broad categories: sins of appetite, sins of will, and sins of reason. In the Renaissance, these categories still dominated much thought concerning the nature of evil. In Moloch, the reader sees a straightforward example of the evil that comes from the will. Unthinking violence is the result �of lack of control of the will. And for Moloch, the ―furious king‖ (VI, 357), violence defines his character. In contrast to Moloch, Belial as a character type is a sophist, a man skilled in language, an intellectual who uses his powers to deceive and confuse. His basic argument is that the devils should do nothing. Belial wishes to avoid war and action, but he couches his arguments so skillfully that he answers possible objections from Moloch before those objections can be raised. He, in fact, rises to speak so quickly that the assembly is not able to respond to Moloch’s idea. Belial also suggests the possibility that at some point God might allow the fallen angels back into Heaven, though these arguments seem specious at best and simply an excuse for cowardly inactivity. In terms of evil, Moloch uses reason for corrupt purposes. The use of reason for evil was theologically the greatest sin because reason separates man from animals. Belial’s sophistry is not as corrupting as Beelzebub’s and Satan’s fraud will be, but it is still a sin of reason. Milton, in fact, introduces Belial as fair and handsome on the outside but ―false and hollow‖ within (112). Milton makes the point about reason straightforwardly at the end of Belial’s speech by referring to it as ―words cloth’d in reason’s garb‖8 (226), as opposed to simply words of reason. Belial’s persuasive speech for nothing is followed by the practical, materialistic assessment of Mammon. Mammon sees the little picture. He finds no profit in war with God or in doing nothing. Hell, he argues can be made into a livable, even pleasurable place. In Heaven, Mammon always looked down at the streets of gold. In Hell, he sees the gem and mineral wealth and thinks that Hell can be improved. In terms of sin, Mammon exhibits the sin of the appetite. Here the basic instinct of appetite controls the person. Mammon’s desire for individual wealth controls his assessment of everything. The proverb that one cannot serve God and Mammon both easily translates to the idea that one cannot serve both God and one’s appetite. Finally, Beelzebub rises to speak—and he speaks for Satan. His argument to attack God by corrupting Man is Satan’s argument. Satan has intended this plan all along and simply uses �Beelzebub to present it. The entire council has been a sham, designed to rubber stamp Satan’s design, a design that also allows Satan to leave Hell. Beelzebub’s speech and actions are like those of Belial in that they pervert reason. But unlike Belial’s arguments, Beelzebub’s involve treachery against his fellow demons. All of the devils have involved themselves in treachery against God, but now Beelzebub and Satan compound this treachery by defrauding their own companions. The devils have seemingly been given a choice within a council, but in fact this seeming choice was illusion. They have been set up to do Satan’s bidding. For many Renaissance thinkers, this type of treachery would have been considered Compound Fraud, the worst sin of all.Milton’s stated purpose in the poem is to justify God’s ways to Man. By the end of Book X, Milton has been able to explain his concept of what God did and why, but he has offered little in the way of justification. Can the single instance of disobedience by Eve and then Adam justify death, war, plague, famine—an endless list of evil? To truly accomplish his goal, Milton needs to show the effects of the fall on Adam and Eve over a longer period and at the same time develop the notion that some greater good than innocence and immortality in Paradise could result from the fall. Books XI and XII represent Milton’s attempt at justification. The justification of God’s ways is developed in two ways. First, the justification of God’s acts is presented to Adam as a part of the plot structure. That is, through the visions Michael shows Adam, Adam gains a greater individual understanding of what he did, why it was wrong, what the consequences are for him and for all Mankind, and why those consequences are truly better than what would have happened if Adam and Eve had remained sinless in the Garden. Second, the justification for God’s ways is developed in a broader scope for the reader as a representative for all Mankind. Through Adam’s actions and consequences, the reader gets Milton’s explanation of why Man fell and why sin, death, and the myriad of other evils exist on Earth. Through Adam’s vision, the reader also sees how Adam’s sin will be repeated in various ways and various times throughout history. It is in these final two books that Milton completes his argument for his audience and either does or does not achieve the justification he set as his goal. The idea of the ―happy fall‖ stands in contrast to the more �common notion that Adam’s action simply created sin and death and destroyed Man’s chance for blissful, paradisiacal immortality. Both concepts of the fall existed in seventeenth-century theology, and Milton chooses to accentuate the felix culpa as part of his justification of God’s ways to Man. By emphasizing the good that will emerge from the fall of Man, Milton makes the end of Paradise Lost, if not triumphant, at least optimistic. Adam and Eve are no longer the beautiful, but strangely aloof, innocents of Books I through VIII. At the end of the epic, as they leave Eden, Adam and Eve are truly human. Their innocence has been transformed by experience, and they now approach the world with a greater knowledge of what can happen and what consequences can follow evil actions. The pride they had in their inability to do evil has been replaced with the knowledge of what evil is and how easy it is to give in to both pride and evil. �Conclusion Paradise Lost the greatest book of John Milton give me incredible pleasure of reading it that I have never felt it before. The powerful senteces that Milton provides give us unexplainable pleasure of reading of this Masterpiece. I must say that have enjoyed in every minute of writing and reading this finale work. We are dealing in the Paradise Lost with the begining of evil, and how to fight it. The begining of the "man′s first disobedience" and expulsion from Eden. In my opinion John Milton is trying show us how evil is seducive. It is one of the reason why he portrayed Satan with ultra human dimensions in Book I and II and it is the reason why I have choosen freedom and idenpendence to write about it. We are actually talking about the begining of the world and issues related with freedom of speech. In my opinion, this is the root of the begining for freedom and independence in the human history. These opening questions we have raised above are enormously emphasized by the extraordinarily powerful depiction of Satan himself. And what makes Satan so heroic is not the particular situation he is in or any facts about him: his magnificence comes from the inspired verse which Milton puts into his speeches. No one reading these speeches can miss their power and eloquence. What though the field be lost? All is not lost: the unconquerable will, And study of revenge, immortal hate, And courage never to submit or yield: And what is else not to be overcome? �It is no accident that when Winston Churchill was looking for something to rally the British people after the military disaster of Dunkirk, he used these lines on the radio. There is nothing in English literature to match the heroic determination, power, courage, and energy manifested here and throughout Satan's early speeches. And his followers are appropriately energized: He spake, and, to confirm his words, out flew Millions of flaming swords, drawn from the thighs Of mighty cherubim, the sudden blaze Far round illumined Hell. Highly they raged Against the Highest, and fierce with grasped arms, Clashed on their sounding shields the din of war. Hurling defiance toward the vault of Heaven. (1.663-669) At very end Paradise Lost was more than a work of art. Indeed, it was a moral and political treatise, a poetic explanation for the course that English history and Human kind had taken. �References Breda, Kogoj-Kapetanović (1973), Povijest Svjetske Književnosti, Mladost, pp. 84, Zagreb. Khan, Shahab Yar Khan (2006), From Renaissance to Classicism,Fakultet humanističkih nauka, pp. 136-155. Mostar. Lewis, C.S (1961), A Preface to Paradise Lost, Lectures Delivered at University College, pp. 12-14 North Wales Milton, John (1667), Paradise Lost, Line 1-796 Book I, London Morton, A.L (1955), Istorija Engleske, Veselin Masleša, pp. 116-214 Sarajevo Puhalo, Dušan (1966), Milon i njegovi tragovi u Jugoslovenskim književnostima, Mladost, pp. 198, Beograd. Šentija, Josip (1979), Opća enciklopedija, Jugoslovenski Leksikografski Zavod, pp.92, Zagreb. �Curriculum Vitae Nedžad Gudić was born on 9 October 1980, in Travnik. Primary school he finished in Gornji Vakuf and after that he finished ―Turkish Bosnian Sarajevo College‖ in Sarajevo. He received his BS degree in English Language and Literature in 2007 at the ―Džemal Bijedić― University in Mostar.He works as an English Teacher in High School Gornji Vakuf . As an interpreter he worked for OSCE (organization for security and cooperation in europe) and for company Saraj-komerc d.o.o He was official interpreter at international leading trade fair for automotive industry in Frankfurt am Main(part time job). He is also an official interpreter of Gornji Vakuf – Uskoplje Municipality. � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 755 Title A name given to the resource THE THEME OF FREEDOM AND INDEPENDENCE IN PARADISE LOST Author Author Gudić, Nedžad Abstract A summary of the resource. In the Paradise Lost, John Milton tried to explain how evil is seductive. It is one of the reasons why he portrayed Satan with ultra human dimensions in Book I and II. And what makes Satan so heroic is not the particular situation he is in or any facts about him: his magnificence comes from the inspired verse which Milton puts into his speeches. No one reading these speeches can miss their power and eloquence. It is no accident that when Winston Churchill was looking for something to rally the British people after the military disaster of Dunkirk, he used these lines on the radio. There is nothing in English literature to match the heroic determination, power, courage, and energy manifested here and throughout Satan's early speeches. And his followers are appropriately energized.At very end Paradise Lost was more than a work of art. Indeed, it was a moral and political treatise, a poetic explanation for the course that English history and Human kind had taken. Key words: John Milton, Independence, Freedom, Evil Date A point or period of time associated with an event in the lifecycle of the resource 2011-04-22 Keywords Keywords. Thesis NonPeerReviewed PE English