Donatella Gatti

Dominique Plihon

Antoine Rebérioux

Jean-Philippe Tou¤ut

Anne- Gaël Vaubourg

Macroeconomic effects of ownership structure in OECD countries

Keywords: O43, O57, G32, K31 ownership concentration, labour market regulation, growth, developed countries JEL Classi…cation: O43, O57, G32, K31 ownership concentration, labour market regulation, growth, developed countries

Macroeconomic e¤ects of ownership structure in OECD countries

The paper investigates the impact of ownership concentration on GDP growth, for a sample of 18 OECD countries over the period 1980 to 2004. The econometric analysis shows that more concentrated ownership can speed up growth, for countries approaching the technological frontier, provided that labour market regulation is su¢ ciently tight. In the absence of employment regulation, the logic of …nancial markets discipline applies and dispersed ownership appears as more favorable for growth. Based on econometric results, impact coe¢ cients are calculated allowing to evaluate the growth points gained/lost following a given change in ownership concentration. This exercise reveals that a reform in the domain of ownership structure can yield sizeable e¤ects in terms of growth. Importantly, these e¤ects are unequally distributed across countries: Anglo-Saxon countries would take more advantage of deregulation (i.e. increased dispersion of ownership in a context of deregulated labour markets) while continental European countries would bene…t more from increased concentration of ownership in a context of reinforced labour regulation.

Introduction

This paper shades light on the macroeconomic consequences of …rms'ownership structures. The importance of ownership structure with respect to macroeconomic performance has been acknowledged since the in ‡uential contributions by La Porta et al. [1998] and [1999] as well as, more recently, [START_REF] Djankov | The Law and Economics of Self-Dealing[END_REF]. These authors investigate the e¤ects of ownership in large sample of developing/developed countries and underline the possible emergence of perverse political economy mechanisms leading powerful owners to ensure their interest by countering (at the political level) the …nancial development of a country. Hence, concentrated ownership would lead to underdevelopment traps with immature …nancial markets and weak growth (see also [START_REF] Morck | Corporate Governance, Economic Entrenchment, and Growth[END_REF].

This result relies on a standard distinction made within the corporate governance literature 1 between two alternative models of governance: the "insider" model (based on stable concentrated ownership) and the "outsider" model -based on dispersed ownership. Part of the literature identi…es the Anglo-Saxon (outsider) corporate governance model as the most performing one, in particular during the last decade. However, some authors insist on the fact that each model of corporate governance has its own strengths and weaknesses [START_REF] Shleifer | A survey of Corporate Governance[END_REF].

In fact, recent contributions in law and economics suggest that the impact of ownership structure indeed depends on "contexts". In particular, markets' regulation provides a crucial environment to assess the e¤ects of di¤erent structures of ownership. More speci…cally, a link would exist between ownership structure and employment relations because stable, concentrated ownership contributes, together with labour market regulation, to foster long-term partnerships with crucial categories of stake-holders [START_REF] Blair | Shareholder Value, Corporate Governance, and Corporate Performance[END_REF][START_REF] Deakin | Partnership, ownership and control: the impact of corporate governance on employment relations[END_REF][START_REF] Rebérioux | European Style of Corporate Governance at the Crossroads: the Role of Worker Involvement[END_REF]. A similar argument is developed within the approach in terms of "varieties of capitalism". This literature suggests that corporate governance models are embedded into larger institutional frameworks [START_REF] Aguilera | The Cross-National Diversity of Corporate Governance: Dimensions and Determinants[END_REF]. Stable institutional arrangements contribute to foster cooperation among actors within corporations (shareholders as well as stakeholders): cooperation allows to achieve better economic performance, by favouring speci…c investments by/on stakeholders as well as long-term projects by corporate managers [START_REF] Deakin | Partnership, ownership and control: the impact of corporate governance on employment relations[END_REF]Hall and Soskice, 2001).

In a similar vein, contributions in political economy and political economics indicate that ownership and markets regulations should be seen as joint results of a political process. [START_REF] Pagano | The Political Economy of Corporate Governance[END_REF] highlight two possible political equilibriums emerging out of a political compromise between employees and managers: a "corporatist" equilibrium achieved by exchanging larger independence for managers against stronger employment protection, and an Anglo-Saxon equilibrium characterized by strong shareholders protection and weak job security. Baker and Rueda [2007] describe "the situation prevailing in the golden age of social democracy" as the result of a de facto coalition between "insider capital" and "insider labor": this coalition allows insider actors to extract rents from outsider actors, and redistribute the bene…t of these rents among insiders. Hence, the insider model of corporate governance would require not only concentrated ownership, but also stable labour relations. On the contrary, the outsider model would be based on more dispersed ownership and ‡exible labour relations.

Turning to the empirical evidence, a growing stream of literature investigates the macroeconomic impact of markets'regulation within OECD countries. This literature points to the need for deregulation on product, labour and …nancial markets in order to speed up growth, particularly when a country is approaching the "technological frontier" [START_REF] Aghion | A Primer on Innovation and Growth[END_REF]Conway et al., 2006;[START_REF] Nicoletti | Regulation, Productivity and Growth: OECD Evidence[END_REF][START_REF] Acemoglu | Distance to Frontier, Selection and Economic Growth[END_REF]. Acemoglu et al. [2007] suggest that increased regulation more "e¤ectively" reduces incentives to innovate in countries/sectors close to the technological frontier. However, a few recent contributions cast some doubt on the robustness of these results (Amable, Demmou and Ladezma, 2007). Unfortunately, all studies above overlook the role of ownership structure. This paper aims to …ll the gap and empirically assess the joint e¤ects of ownership structure and labour markets'regulation on GDP per employee growth, for a sample of 18 OECD countries, over the period 1980-2004. In the next section, I explore the main theoretical channels through which ownership concentration can in ‡uence growth, and also present some descriptive evidence about the linkages between ownership concentration, labour market regulation and GDP per employee growth. In section 3, the econo-metric framework is proposed and evidence is presented by testing a growth equation on macroeconomic data for 18 OECD countries. In section 4, the estimated model is used to calculate impact coe¢ cients for ownership concentration on growth; results from simulations are discussed providing some hints on the e¤ects of di¤erent scenarios of structural reforms. Section 5 brie ‡y concludes.

2 Ownership structure: a macroeconomic approach In this section, I present the main theoretical channels through which ownership structure may in ‡uence GDP per employee growth. I subsequently turn to the descriptive evidence concerning the e¤ects of ownership structure, by exploiting a dataset of 18 OECD countries over the period 1980-2004.

theoretical channels

In their in ‡uential contributions, La Porta et al. [1998] and [1999] as well as [START_REF] Djankov | The Law and Economics of Self-Dealing[END_REF] develop a framework to assess the impact of ownership structure on growth, based on the logic of …nancial markets development and discipline. The authors adhere, in particular, to the idea that a single "best solution" exists to the agency problem between managers and owners: a system of dispersed ownership (linked to highly developed …nancial markets) coupled with strong legal protection of shareholders. The reasons why this system would favor growth are two-fold. First, while owners are prevented to exert strong direct control because they own small shares of public companies, managers are exposed to exit and/or takeover threats; this market discipline ensures that managers will "do the right thing" to maximize the company value. Second, dispersed ownership prevent owners to become too powerful and divert wealth according to their own private interest; this allows to avoid perverse political economy scenarios, such as powerful elites countering the …nancial development of a country, at the political level. To sum up, this situation is expected to yield an e¢ cient allocation of investments, and positive e¤ects on growth.

A few critics can be raised against these conclusions. First of all, the e¤ects of concentrated ownership are probably very di¤erent according to a country level of development. If one focuses on developed countries, it appears that the structure of ownership primarily has to "…t" production needs: in speci…c sectors, concentrated ownership may well be bene…cial to production, by favoring cooperation, economic stability and speci…c investments (Carlin and Mayer, 2003;Hall and Soskice, 2001). Moreover, tight …nancial markets discipline also yields a bias in strategic investments, by leading to excessive short-term maximization of …rms'market value [START_REF] Blair | Shareholder Value, Corporate Governance, and Corporate Performance[END_REF].

The literature has explored possible alternatives to …nancial markets discipline and "shareholders models". In particular, scholars have recently turned to the so called "stakeholders model" within which stakeholders, and in particular employees, are seen as actors making speci…c investments and thus improving their company's capital stock and value. However, for speci…c investment to emerge, e¤ective incentives must be in place: stable partnerships appear as a possible device to protect investors. Stable partnerships can be enforced through law and regulation, as well as through a greater concentration of ownership [START_REF] Blair | Shareholder Value, Corporate Governance, and Corporate Performance[END_REF][START_REF] Deakin | Partnership, ownership and control: the impact of corporate governance on employment relations[END_REF]. Hence, ownership concentration and markets regulation both appear to be ingredients of a stakeholder model of governance, thus favouring growth through investments in …rm speci…c assets such as human and physical capital.

A related argument is explored by Kharroubi [2006] who studies the effects of markets regulation on technology and growth. The model shows that markets regulation pushes …rms to invest in more productive technologies through a two-fold incentive mechanism: …rst, upgrading capital allows …rms to make their "almost-…xed" labour stock more e¢ cient; second, whenever technological investments are successful, they generate higher cash- ‡ows allowing to ease liquidity constraints. Hence, markets regulation may generate positive macroeconomic e¤ects in terms of growth.

Finally, ownership concentration and markets regulation are frequently associated with the emergence of economic and/or political "elites". It should be noted that, in the presence of externalities and market failures, elites can e¤ectively improve coordination across economic actors and favor industrial modernization [START_REF] Amable | Innovation and Industrial Renewal in France in Comparative Perspective[END_REF]. This mechanism bears important consequences for innovation and growth: business coordination (through elites, connected ownership and networks) allows …rms to better account for externalities stemming from education and innovation activities [START_REF] Gatti | Unemployment and Innovation Patterns: the critical role of coordination[END_REF]. Hence, corporations embedded in coordinated environments are likely to engage in education and research investments bearing important externalities, that would otherwise be overlooked by private actors.

The theoretical arguments brie ‡y reviewed above suggest that di¤erent structures of ownership may yield contrasted e¤ects on growth. In particular, the "context" (i.e. markets regulation) plays a crucial role: in the presence of tightly regulated markets, ownership concentration creates incentives for corporate stakeholders to bear substantive e¤orts in speci…c investments; on the other hand, deregulated markets and dispersed ownership enforce market discipline as a device preventing costly ine¢ ciencies.

The issue is therefore primarily empirical. I now turn to present the descriptive empirical evidence drawn on a sample of OECD countries over the period 1980 to 2004.

what do data suggest?

The empirical analysis relies on a sample of 18 OECD countries2 over the period 1980 to 2004. The sample includes a number of variables capturing the institutional, regulatory, political and macroeconomic features of all countries. These variables are presented and commented in the Appendix.

In this Section, I will focus on three main variables in my analysis: macroeconomic performance, ownership structure and labour market regulation.

In order to capture macroeconomic performance, I rely on data about GDP per employee (both in level and in growth rate); these data are drawn from OECD as well as Penn World Table. Let us now have a …rst look at the data and, in particular, to the descriptive evidence about levels of regulation and concentration, as well as their e¤ects on growth. point to several weaknesses of these data, in particular the fact that Worldscope …rms' population is very heterogenous (in size and composition) across countries and unstable over time (it has actually been increasing over time). the e¤ects of ownership concentration on growth. In this …gure, average country growth rates of GDP per employee are drawn against OC. In the …gure, I have highlighted countries experiencing average growth rates (over the whole period)) that are higher than the sample mean. As one can see, those countries are fairly distributed across di¤erent levels of concentration and regulation. In particular, there does not seem to be any clear negative relationship between concentration, regulation and growth. An important subset of countries (among which Germany and North European countries) have experienced fast growth rates in spite of high levels of concentration and/or regulation.

The descriptive evidence suggests that, within the sample and period considered, there is a positive relationship between levels of regulation and concentration. Moreover, fast growth does not appear to be the matter of low regulation/low concentration countries, but rather distributed across countries also showing high values of EPL and/or OC. To investigate more deeply the correlations between ownership, regulation and growth, let us now turn to the econometric analysis. Den Den Den Den Den Den Den Den Den Den Den Den Den Den Den Den Den Den Den Den Den Den Den Den Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger

Does high OC prevent growth?

Econometric analysis

In this section, I develop an econometric analysis based on a standard growth equation. After presenting the empirical model to be tested, I brie ‡y discuss the methodological issues related to estimations. Econometric results are then presented and their robustness checked in particular with respect to endogeneity issues.

empirical model

We have seen that recent contributions on the determinants of growth focus on the consequences of markets regulations on innovation: according to several authors, 5 regulation a¤ects innovation and growth di¤erently according to a country's distance with respect to the technological (or production) frontier. This assumption implies that the macroeconomic consequences of regulation depend on contexts, i.e. on the level of development and wealth.

This assumption is certainly fair. However, a crucial question rises concerning the direction of the e¤ects of regulation on growth, when countries get closer to the frontier. The standard argument is that countries get more and more harmed by markets regulation as they get closer to the frontier. However, the theoretical issues and empirical evidence presented in the previous section suggest that countries may indeed pro…t more from stricter regulation and ownership concentration when they approach the technological frontier: stronger incentives to invest in up-to-date technologies, higher productive e¤ort and implication by workers, a better perception of externalities linked to innovation could be crucial advantages to gain/consolidate a leadership position.

To tackle this issue, I estimate the joint e¤ects of labour markets regulation and ownership concentration on growth, by using OECD data on

+ 4 df i;t oc i;t + 5 df i;t epl i;t + i;t i = individual country …xed e¤ect, y i;t = GDP per employee, ln y i;t = growth rate (di¤erence between logGDP at the end and at the beginning of period t), y F t = GDP per employee of frontier country at time t (the frontier country is the country which has the highest GDP per employee level at period t), df i;t = ln y i;t y F t = country i distance with respect to the frontier at time t (the closer the country is to frontier the smaller the value of d i;t with 0 5 df i;t 5 1). Moreover, Educ i;t = a proxy for human capital in country i at time t, Y i;t = vector of macroeconomic controls, X i;t = vector of markets regulation variables, epl i;t = employment protection legislation,

oc i;t = ownership concentration.
In order to properly estimate Turning to the second issue, the empirical model ( 1) includes three interaction terms allowing to capture the idea that the macroeconomic consequences of ownership structure depend on contexts. First, we have seen that the impact of ownership may vary in response to the degree of regulation on labour markets: this e¤ect is apprehended through an interaction term between EPL and OC. Second, the consequences of regulation and ownership may also depend on the country's distance to the technological frontier; for this reason, I have included two interaction terms between EPL (respectively, OC) and countries'distance to frontier (DF). In the presence of interaction terms, the overall impact of OC and EPL on growth is obtained by computing the marginal e¤ect conditional on speci…c values of the interacted variables (Braumeoller, 2004). From model (1) one has:

@ ln y @oc = 1 + 3 epl + 4 df (2)
@ ln y @epl

= 2 + 3 oc + 5 df
Hence, the consequences of ownership concentration depend …rst, on the regulatory context (the level of EPL) and second, on the country distance to frontier (the value of DF). The same reasoning applies to employment protection legislation. A speci…c procedure presented by Amable, Demmou and [START_REF] Amable | Employment Performance and Institutions: New Answers to an Old Question[END_REF] allows to evaluate the e¤ects of each relevant variable for di¤erent levels of the interacted variables. This amounts to calculating the marginal e¤ects of each relevant variable, as well as all statistics about the signi…cance of those marginal e¤ects.

results

I now turn to the analysis of GDP per employee's growth. However, additional information about the overall e¤ects of EPL and OC needs to be gathered from the analysis of the interaction terms. In fact, all interaction terms are signi…cant under FEVD and XTIVREG2 regressions.

As one can see, the interaction between EPL and OC has a positive and signi…cant impact on growth: stronger employment protection (respectively, ownership concentration) favors growth in contexts where OC (respectively, EPL) levels are higher. This counters the direct negative e¤ects of increased regulation and concentration. Moreover, results about the two interaction terms between "distance to frontier", on the one hand, and EPL or OC, on the other hand, prove that the overall impact of EPL and OC on growth depends on the country position with respect to the frontier. Given the signs of the estimated coe¢ cients, the negative impact of OC on growth becomes smaller when approaching the frontier. Concerning the e¤ect of EPL, the positive sign of the interaction term shows that the direct negative impact of EPL is considerably reduced for countries that are far away from the frontier. A more detailed evaluation of the direct/indirect e¤ects of OC and EPL is reported in the Appendix (Table 2) where I present estimations for all marginal coe¢ cients. The main implications of these estimation results are presented in the following section.

Evaluating the impact of ownership concentration

As shown in Table 1 (…rst column), the FEVD procedure provides robust estimations for time-invariant indicators (OC in particular). Based on such estimations, it appears that the impact of variable OC on growth depends on contexts, i.e. on existing regulation and on country "distance to frontier".

More precisely, Table 2 (Appendix) gives all marginal coe¢ cients for OC (and EPL). This shows that the overall OC coe¢ cients are negative for low levels of EPL, and become positive for higher levels of EPL (if country "distance to frontier" ranges from average to very small). Hence, ownership concentration favors growth when countries get closer to frontier provided that those countries feature (at least) average levels of employment protection legislation. The e¤ect becomes stronger the closer a country gets to frontier.

These results provide an answer to the crucial questions raised in this paper. First, stronger ownership concentration is not necessarily bad for growth. Second, leader countries bene…t more from ownership concentration in the presence of a strong regulation on the labour market. Hence, econometric results provide some support to the theoretical arguments suggesting a positive impact of concentration on growth, provided that concentrated ownership is embedded into a suitable context (i.e. a highly regulated environment). I will explore more deeply the issue in Section below.

overall e¤ects of changes in concentration

I rely hereafter on estimated marginal coe¢ cients reported in Table 2 (Appendix). These coe¢ cients can be used to build impact coe¢ cients for variable OC. Impact coe¢ cients measure the growth points gained/lost following a certain increase in ownership concentration. I calculate impact coe¢ cients for di¤erent reference values of context variables: levels of regulation and country distance to frontier (DF). In particular, I consider three groups of countries: 'leaders' for which variable DF goes from min DF up to meanDF minus one sdDF ; 'average countries'for which variable DF is comprised between meanDF minus one sdDF and meanDF plus one sdDF ; and …nally, 'laggards' for which variable DF ranges between max DF and meanDF plus one sdDF .

Let me now turn to the analysis of the overall impact of ownership concentration on growth. By using coe¢ cients presented in Table 2, I calculate the growth points gained/lost following a 5 points increase in ownership concentration (ex. from 20% to 25% of concentration), provided that estimated coe¢ cients are statistically signi…cant. These gains/losses are evaluated for minimum to maximum country distance to frontier. Results are presented in Figure 3 below.

- The picture shows that, for laggards and average countries, the overall impact of a 5 point increase in ownership concentration is signi…cant and negative with low EPL levels, while not signi…cant when EPL takes average to maximum levels. For leader countries, it appears that the impact of increased ownership concentration becomes signi…cant and positive when employment regulation ranges from average to maximum levels; in this case, the overall impact of a 5 points increase in ownership concentration is relatively important for growth as it delivers additional 1-1,3 points of GDP per employee growth.

One might want to know how would sample countries be a¤ected by such an increase in ownership concentration. Figure 4 below shows that countries would respond di¤erently as a consequence of a change in ownership structure. If one focuses on countries that are relatively close to the frontier, it appears that Anglo-Saxon countries (and in particular the US and Canada) lie in an area where one can expect negative e¤ects from increased OC because of the very low levels of EPL; on the other hand, many European countries actually lie in an area where they would actually bene…t from such increase thanks to the high levels of regulation. This result calls for futher checks; I will therefore explore more deeply the consequences of reforms in ownership and regulation, in the following Section.

Increasing OC : which impact in sample countries?

policy scenarios

In this Section I present simulations of GDP per employee's growth, based on estimated regression coe¢ cients presented in Table 1 (column [START_REF] Acemoglu | Distance to Frontier, Selection and Economic Growth[END_REF], FEVD procedure). Econometric results have provided some support to the idea that changes in ownership structure are likely to produce di¤erent results according to contexts, i.e. according to the prevailing level of labour market regulation and to country distance with respect to the frontier. Hence, simulations presented below aim to shade some light on the consequences, for all sample countries, of changes in selected variables, namely ownership concentration and employment regulation.

In particular, four policy scenarios are simulated. First, I run a simulation exploring a situation where all countries would have selected levels of OC and EPL that are lower than actual ones by one standard deviation.

The consequences of this change are shown in Figure 5. As one can see, this kind of reform would have bene…ted a few countries in the sample: the UK, the US, Ireland, Canada and Australia (plus Japan), i.e. primarily Anglo-Saxon low regulation countries. All other countries, and in particular European countries, take no advantage, and even experience lower growth, following such reform.

Second, I simulate the alternative situation where countries'policy choice would have been to implement levels of both OC and EPL that are higher than actual ones by one standard deviation. This change is shown to be potentially bene…cial for all countries except the US and the UK (see Figure 6 below). Hence, a progressive increase in regulation and ownership concentration appears as a more suitable policy choice for continental European countries, as compared to the alternative deregulation policy.

Conclusion

This paper has investigated the impact of ownership structure on GDP per employee growth from a macroeconomic point of view. Contrary to common wisdom, the theoretical arguments presented in the paper suggest that concentrated ownership can in some cases favor growth. In fact, concentrated ownership tends to increase ownership stability thus fostering long term relationships with crucial stakeholders. In developed countries where (labour) markets are highly regulated, ownership stability can yield increased incentives to undertake …rm-speci…c investments. These investments favor productivity growth in di¤erent sectors of the economy, and can be crucial to achieve and/or maintain technological leadership.

The main contribution of the paper is empirical. I investigated the impact of ownership concentration on growth for a sample of 18 OECD countries over the period 1980 to 2004. The econometric analysis shows that the e¤ects of ownership concentration indeed depend on contexts, i.e. on the regulatory environment and on the country distance to the frontier. In fact, more concentrated ownership can yield positive e¤ects on growth (in particular for leader countries) provided that labour market regulation is su¢ ciently tight. In the absence of employment regulation, the logic of …nancial markets discipline applies and dispersed ownership appears as more favorable for growth. 1980 1985 1990 1995 2000 1980 1985 1990 1995 2000 1980 1985 1990 1995 2000 1980 1985 1990 1995 2000 1980 1985 1990 1995 1980 1985 1990 1995 2000 1980 1985 1990 1995 2000 1980 1985 1990 1995 2000 1980 1985 1990 1995 2000 1980 1985 1990 1995

marginal coe¢ cients

To assess the overall impact of EPL and OC, I calculate marginal e¤ects and their signi…cance conditional to …ve alternative values of the relevant variables: minimum and maximum levels, mean value and mean plus/minus one standard deviation. Results are reported below separately for the marginal e¤ect of EPL and OC.

  Concerning the structure of ownership, no OECD or World Bank standards exist in the area. One can alternatively exploit measures of e¤ective ownership concentration or rely on indirect measures of legal environment (shareholders protection, for instance). Because my main focus is about capturing the overall stability of ownership, I rely on data measuring e¤ective ownership concentration (OC indicator). Very few data are available for large scale cross-country analyses. A suitable indicator is provided by La Porta et al. [1998], [1999] and Djankov et al. [2006]. However, only one single observation in time is available: 3 concentration is measured as the "average percentage of common shares owned by the top three shareholders in the ten largest non-…nancial, privately-owned domestic …rms in a given country. A …rm is considered privately-owned if the State is not a known shareholder in it". Finally, turning to regulation on labour markets (EPL indicator), this is captured through the time-series indicator provided by Amable, Demmou and Gatti [2007]. This measure is obtained by interpolating the standard OECD indicator, on the basis of information collected through the FRDB Social Reforms Database 4 . FRDB database provides detailed records about social reforms in European countries in the areas of employment protection legislation, over the period 1985-2005. The speci…c procedure used to construct the EPL series is fully described by Amable, Demmou and Gatti [2007].

Figure 1

 1 Figure 1 below presents EPL and OC indicators for all countries included in the sample (vertical and horizontal red lines represent sample mean of each variable). The average country values of EPL is depicted against the single available country values of ownership concentration. As the …gure shows, countries in the sample are distributed across di¤erent levels of labour markets regulation and ownership concentration. However, a positive correlation appears between the two indicators of labour markets regulation and ownership concentration. The picture also highlights countries for which both OC and EPL are above (below) the sample mean value (sample means are indicated by brown lines). An important number of countries appear to be characterized by either high or low levels of both OC and EPL: as expected, Anglo-Saxon countries share low concentration and low regulation; while South European countries as well as Germany, Belgium and Austria feature high concentration and high regulation. However, several countries lie between these two groups, in particular North European countries as well as France, Ireland and Canada.

Figure 1 .

 1 Figure 1. OC and EPL in sample countries

( 1 )

 1 one has to solve two methodological problems: …rst, how to treat slowly changing variables (such as indicators for regulation and ownership concentration) within a …xed e¤ects model; second, how to appreciate the overall e¤ects of variables included in interactions terms. Concerning the …rst problem, a few variables included in the model (such as ownership concentration and product market regulation) are invariant or change very slowly. These variables capture features that characterize a single country -or a small subset of countries: they are thus very close to individual country e¤ects. Plümper and Tröger [2007] propose a speci…c technique for analyzing the e¤ect of time-invariant variables in …xed-e¤ect models: the FEVD estimator. This procedure takes three steps: (i) estimate a …xed-e¤ects model (ii) regress the unit e¤ects on the time-invariant variables (iii) re-estimate the …rst stage including the error term of the second stage. The procedure amounts to extracting from the …xed e¤ect the part of it that is explained by slowly changing variables. This allows to give more sense to …xed e¤ects by explicitly modelling their institutional components. The FEVD estimator appears to be crucial in the present study because of the speci…city of certain indicators, in particular OC wich has no time pro…le.

Figure 3 .

 3 Figure 3. Growth points gained/lost following a 5 points increase in OC

Finally, two more

  Figure 7 below).

Finally, the paper

  has provided some hints about the possible e¤ects of changes in ownership concentration and regulation. Based on econometric results, impact coe¢ cients have been presented allowing to evaluate the growth points gained/lost following a given change in ownership concentration. This exercise reveals that a reform in the domain of ownership structure can yield sizeable e¤ects in terms of growth. More important, these e¤ects are unequally distributed across countries: Anglo-Saxon countries would take more advantage of deregulation (i.e. increased dispersion of ownership in a context of deregulated labour markets) while European countries would bene…t more from increased concentration of ownership in a context of reinforced regulation.

  Figure 5

Figure 7 6

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	.03 Growth higher and OC lower than average				Growth and OC higher than average
	MeanGrowth	.02
		.01
		0
		.2	.3	.4	.5	.6
				OC
				Figure 2

  18 developed countries over the period 1980-2004. The estimated model includes regulation and ownership indicators, macroeconomic controls, the e¤ects of externalities from leader countries as well as a measure of individual countries'distance with respect to the technological frontier (see, in particular, Nicoletti and Scarpetta, 2003):

	ln y i;t =

i + 1 ln y F t + 1 X i;t + 2 Y i;t + 3 Educ i;t + + 1 oc i;t + 2 epl i;t + 3 oc i;t epl i;t +

Table 1

 1

	DlogGDP per employee	[1]	[2]
	DlogFrontier	0.302***	0.297***
		(0.108)	( 0.092)
	Distance to frontier	0.119	0.206*
		(0.086)	( 0.128)
	Effective real exchange rate	-0.024*	-0.031**
		(0.014)	(0 .012)
	Education	0.061***	0.078***
		(0.015)	(0 .023)
	EPL*distance to frontier	0.114***	0.188***
		(0.032)	(0.042)
	OC*distance to frontier	-0.409*	-0.737**
		(0.218)	(0.349)
	EPL	-0.075***	-0.132*
		(0.026)	(0.069)
	EPL*OC	0.154***	0.272*
		(0.053)	(0.148)
	REGREFF	0.000	0.00
		(0.001)	(0.00)
	OC	-0.039***
		(0.007)
	PMR SI	0.011***	0.0054
		(0.001)	(0.004)
	eta	1.000***
		(0.045)
	Estimator	XTFEVD	XTIVREG2
		pcse option	gmm option
	Time/country dummies	Yes	Yes
	Number of Obs	410	380
	Note: Standard errors in parentheses
	* p<0.10, ** p<0.05, *** p<0.01
	Summary test statistics for IV regression
	Anderson Rubin test	F(9,343)= 6.28	P-value<1%
	Stoch Wright test	Chi-sq(9)=41.12 P-value<1%
	Hansen J statistic	5.442	P-value>10%
	Endogeneity test	17.962	P-value<5%

  Aul Aul Aul Aul Aul Aul Aul Aul Aul Aul Aul Aul Aul Aul Aul Aul Aul Aul Aul Aul Aul Aul Aul Aul Aul Aus Aus Aus Aus Aus Aus Aus Aus Aus Aus Aus Aus Aus Aus Aus Aus Aus Aus Aus Aus Aus Aus Aus Aus Aus Bel Bel Bel Bel Bel Bel Bel Bel Bel Bel Bel Bel Bel Bel Bel Bel Bel Bel Bel Bel Bel Bel Bel Bel Bel Can Can Can Can Can Can Can Can Can Can Can Can Can Can Can Can Can Can Can Can Can Can Can Can CanDen Den Den Den Den Den Den Den Den Den Den Den Den Den Den Den Den Den Den Den Den Den Den Den Den Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fin Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Fr Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger Ger Ir Ir Ir Ir Ir Ir Ir Ir Ir Ir Ir Ir Ir Ir Ir Ir Ir Ir Ir Ir Ir Ir Ir Ir Ir It It It It It It It It It It It It It It It It It It It It It It It It It Jap Jap Jap Jap Jap Jap Jap Jap Jap Jap Jap Jap Jap Jap Jap Jap Jap Jap Jap Jap Jap Jap Jap Jap Jap NL NL NL NL NL NL NL NL NL NL NL NL NL NL NL NL NL NL NL NL NL NL NL NL NL Nor Nor Nor Nor Nor Nor Nor Nor Nor Nor Nor Nor Nor Nor Nor Nor Nor Nor Nor Nor Nor Nor Nor Nor Nor PT PT PT PT PT PT PT PT PT PT PT PT PT PT PT PT PT PT PT PT PT PT PT PT PT Sp Sp Sp Sp Sp Sp Sp Sp Sp Sp Sp Sp Sp Sp Sp Sp Sp Sp Sp Sp Sp Sp Sp Sp Sp Sw Sw Sw Sw Sw Sw Sw Sw Sw Sw Sw Sw Sw Sw Sw Sw Sw Sw Sw Sw Sw Sw Sw Sw Sw UK UK UK UK UK UK UK UK UK UK UK UK UK UK UK UK UK UK UK UK UK UK UK UK UK US US US US US US US US US US US US US US US US US US US US US US US US US

		.8
		.6
	MeanDF	.4
	Low distance to frontier +	.2					Low distance to frontier +
	low EPL						high EPL
	OC ð						OC ð
	negative	0					positive
	impact on	0	.5	1	1.5	2	impact on
	growth			MeanEPL			growth
				Figure 4

Table 2

 2 Min distance Low distance Average distance High distance Max distance

		to frontier	to frontier	to frontier	to frontier	to frontier
	Marginal effect of EPL
	Min OC	-0.045***	-0.042**	-0.024*	-0.006	0.040***
		(0.017)	(0.016)	(0.013)	(0.011)	(0.015)
	Mean OC less 1sd	-0.031**	-0.028**	-0.010	0.007	0.054***
		(0.013)	(0.012)	(0.009)	(0.008)	(0.016)
	Mean OC	-0.012	-0.009	0.009	0.026***	0.073***
		(0.008)	(0.008)	(0.006)	(0.008)	(0.020)
	Mean OC plus 1sd	0.007	0.011	0.028***	0.046***	0.092***
		(0.008)	(0.008)	(0.009)	(0.013)	(0.025)
	Max OC	0.017*	0.020**	0.038***	0.055***	0.102***
		(0.009)	(0.010)	(0.012)	(0.016)	(0.027)
	Note: Standard errors in parentheses
	* p<0.10, ** p<0.05, *** p<0.01
	Marginal effect of OC
	Min EPL	-0.031***	-0.044***	-0.107**	-0.170**	-0.338**
		(0.010)	(0.014)	(0.045)	(0.078)	(0.167)
	Mean EPL less 1sd	0.042	0.030	-0.033	-0.097	-0.264
		(0.032)	(0.033)	(0.052)	(0.081)	(0.166)
	Mean EPL	0.128**	0.115*	0.052	-0.011	-0.179
		(0.061)	(0.061)	(0.071)	(0.093)	(0.171)
	Mean EPL plus 1sd	0.213**	0.200**	0.137	0.074	-0.093
		(0.090)	(0.090)	(0.096)	(0.112)	(0.180)
	Max EPL	0.267**	0.255**	0.191*	0.128	-0.039
		(0.109)	(0.109)	(0.113)	(0.126)	(0.188)
	Note: Standard errors in parentheses
	* p<0.10, ** p<0.05, *** p<0.01

Becht and Mayer,

2001; Faccio and Lang, 2002; Gugler et al., 2004; Shleifer and Vishny, 1997.

Those countries are: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, Netherlands, Norway, Portugal, Spain, Sweden, United Kingdom, United States

[START_REF] Bong-Chan | Financial Globalization, Governance, and the Evolution of the Home Bias[END_REF] propose an indicator of ownership concentration based on Worldscope data, available for two points in time(1994 and 2004). However, the authors themselves

The FRDB Social Reforms Database has been developed by the Fondazione Rodolfo Debenedetti (http://www.frdb.org).

[START_REF] Aghion | A Primer on Innovation and Growth[END_REF], Conway et al. [2006], Nicoletti and Scarpetta [2003], Acemoglu, Aghion and Zilibotti [2007].

Canada Canada Canada Canada Canada Canada Canada Canada Canada Canada Canada Canada Canada Canada Canada Canada Canada Canada Canada Canada Canada Canada Canada Canada Denmark Denmark Denmark Denmark Denmark Denmark Denmark Denmark Denmark Denmark Denmark Denmark Denmark Denmark Denmark Denmark Denmark Denmark Denmark Denmark Denmark Denmark Denmark Denmark Finland Finland Finland Finland Finland Finland Finland Finland Finland Finland Finland Finland Finland Finland Finland Finland Finland Finland Finland Finland Finland Finland Finland Finland France France France France France France France France France France France France France France France France France France France France France France France France Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Ire land Ire land Ire land Ire land Ire land Ire land Ire land Ire land Ire land Ire land Ire land Ire land Ire land Ire land Ire land Ire land Ire land Ire land Ire land Ire land Ire land Ire land Ire land Ire land Italy Italy Italy Italy Italy Italy Italy Italy Italy Italy Italy Italy Italy Italy Italy Italy Italy Italy Italy Italy Italy Italy Italy Italy Jap an Jap an Jap an Jap an Jap an Jap an Jap an Jap an Jap an Jap an Jap an Jap an Jap an Jap an Jap an Jap an Jap an Jap an Jap an Jap an Jap an Jap an Jap an Jap an Netherlands Netherlands Netherlands Netherlands Netherlands Netherlands Netherlands Netherlands Netherlands Netherlands Netherlands Netherlands Netherlands Netherlands Netherlands Netherlands Netherlands Netherlands Netherlands Netherlands Netherlands Netherlands Netherlands Netherlands Norway Norway Norway Norway Norway Norway Norway Norway Norway Norway Norway Norway Norway Norway Norway Norway Norway Norway Norway Norway Norway Norway Norway Norway Portugal Portugal Portugal Portugal Portugal Portugal Portugal Portugal Portugal Portugal Portugal Portugal Portugal Portugal Portugal Portugal Portugal Portugal Portugal Portugal Portugal Portugal Portugal Portugal Spain Spain Spain Spain Spain Spain Spain Spain Spain Spain Spain Spain Spain Spain Spain Spain Spain Spain Spain Spain Spain Spain Spain Spain Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Un ited Kingdom Un ited Kingdom Un ited Kingdom Un ited Kingdom Un ited Kingdom Un ited Kingdom Un ited Kingdom Un ited Kingdom Un ited Kingdom Un ited Kingdom Un ited Kingdom Un ited Kingdom Un ited Kingdom Un ited Kingdom Un ited Kingdom Un ited Kingdom Un ited Kingdom Un ited Kingdom Un ited Kingdom Un ited Kingdom Un ited Kingdom Un ited Kingdom Un ited Kingdom Un ited Kingdom United States United States United States United States United States United States United States United States United States United States United States United States United States United States United States United States United States United States United States United States United States United States United States United States


Irina Peaucelle

Keywords: History of Finance Theories, Pension Funds, Insurance and Private Financial Institutions, Sovereign wealth funds, Financial Industry: USA, France, Russia JEL classification: A2, G23, G24, G28, N2

Despite the multiplicity of research on the surge of the financial industry the world over, little is done to understand the national context shaping the objectives and designs of this economic sector. The overall image that emerges from the literature is that globalisation and liberalisation of economies make the expansion of this sector indispensable for further development. This paper stresses the heterogeneity of the socio-psychological origins of the need for saving and contribution management, as well as the heterogeneity of the sources of savings and loan funding. In particular this paper discusses the following national characteristics: 1) the social belief in trust that smoothes the progress of insurance and pension fund business in the USA, 2) the traditional preference for saving and lending in France that explains the advance of banks and credit institutions for analysis of financial risks, and 3) the natural resources ground rent of Russian State provides the formation of sovereign-wealth funds, which require an up to date knowledge based investment management. This paper serves as a road sign indicating that the path of uniform financial industry formation is a waste of time and may bring about social and economic troubles.

Some finance and insurance theories singled out

Nowadays the financial industry (sector or services) is composed of the banking industry, managing time deposits, making loans, investing in securities, and other financial services, such as: foreign exchange, debt services, derivatives and equities management. Insurance and investment management are usually included also in this industry. All previously quoted economic activities have historically formed a specific financial services workforce.

Finance and insurance are concerned with the transfers of risks between dates (credit and savings) and/ or situations (derivative assets, insurance contracts); with the mobilization of savings, with the resources allocation; and with fulfilling the functions of corporate control. The first insurance products were essentially of three types: they concerned the financing of expeditions, the usury by means of the so-called tontine 2 , and the trust as the first system of spousal benefit coverage. Both finance and insurance were based on risk sharing among individuals, who are investors in the first example, members of the tontine in the second one, members of a family in the third. Clearly, the modern equivalent of expeditors financing is a hedge fund specialized in capital-risk; the second one is closer to a mutual fund, whereas the third corresponds to a pension fund. Currently, hedge and mutual funds are considered as financial instruments, whereas the financial or insurance status of a pension fund is not clear.

A brief history of finance theories in Western Europe

Until the beginning of the 20 th century, financial science in Europe had to do with state property. It developed the best rules for state property accumulation, administration and utilisation, and is known as "classical" financial theory.

2 Tontine is an investment scheme named after Italian banker Lorenzo de Tonti who introduced it in France in 1653. The concept is the following: Each participant pays a sum into a tontine. The funds are invested and each participant receives dividends. At the death of a participant, his share is divided among the surviving ones. The last surviving participant receives the dividends and the capital reverts to the state and is used to fund public works projects. Tontines were prohibited in Britain and the USA because of the incentive for subscribers to kill each other. Switzerland made an active use of tontines in the 17 th and 18 th centuries. Tontines were the first types of government bonds.

The birth of this financial line of thought is connected with Italian thinkers Giovanni Botero and Nicolas Machiavelli (1469Machiavelli ( -1527)). French scientist J. Bodin (1530Bodin ( -1596) ) introduced the notion of sovereignty and depicted seven principal sources of state income: domains, friends' gifts, military spoils, ally's tributes, trade, subject's taxes and export-import customs. Thomas Hobbes (1588-1679), English philosopher, popularized the idea of indirect taxation. With Physiocrats, French economists of the 18 th century, A.R.J. Turgot (1727Turgot ( -1781) ) and François Quesnay (1694-1774), begin the rationalist period of financial thought. Turgot introduced the notions of opportunity cost and risk involved in invested capital in something other than land ownership, and he promoted interest as serving, using today's vocabulary, a strategic function in the economy. Scottish economist John Law (1671-1729), acting principally in France, believed that money was only a means of exchange that did not constitute wealth in itself. He is said to be the father of finance, responsible for the adoption and use of paper money or bills. J.Law was an expert in statistics and was the originator of the economic notions: "the scarcity theory of value" (criticised by A.Smith and K.Marx) and "real bills doctrine". "Real bills doctrine" of money applied the "reflux principle" to the money supply. It identifies money as credit, and credit is determined by the "needs of trade".

The originators of systematized financial science were J. Sonnenfels (1733-1817) and J.H.G.

Justi (1717-1771) -German specialists of the so-called Kameral sciences. Their main purpose was toward developing methods of extracting revenue for state public coffers (exchequer).

French mathematician Louis Bachelier in 1900 analysed the evolution of shares prices on the stock exchange using a stochastic model and concluded that the forecast of their dynamic will never become an exact science, because, as he wrote, "the market unknowingly obeys a law that dominates it: the law of probability". This is considered a pioneer work in the domain of modern financial theory.

Two analytical financial specialisations were developed by Russian scholars at the end of the 19 th century: balance analysis and financial calculation. In 1891 A. N. Glagolev published a book, "Elementary Theory of Long-Term Financial Transactions", in which he gives formulas to measure the profitability of interest securities and similar financial calculations, and answers the question of how to plan the repayment of long-term loans of various types.

The developing insurance doctrine is associated in Europe with "Political Arithmetic" by William Petty (approximately 1676), containing sections on the value of advanced payments.

Nikolaï Lunsky, Russian financier and accountant of the early 20 th century greatly enriched and systematized "political arithmetic", and called this discipline "higher financial calculations". 3At the same period American economist Irving Fisher gave a rough idea of the function of credit policy in terms of resource allocation over time in economic development. Creators of theories of money, J.M. Keynes, J. Hicks, N. Kaldor and J. Marschak, considered portfolio selection problems, which involve the investigation of risks.

The intrusion of the American financial science

In the middle of the 20 th century begins a principally new stage of financial science, since logical interpretation and substance change radically. American scientists open this so-called neo-classical era of financial theory, based on four theses: 1) The economic power of a state depends on economic prosperity of its private sector, the core of which is composed by big corporations; 2) The state should minimise its intervention in private sector activity; 3) Profits and capital markets are the main sources for financial development of corporations (joint-stock companies); 4) Internalisation of markets results from integration trends in the financial policy of states. This financial theory rests on proposals such as, among others: the utility theory4 , the arbitrage pricing theory (S.Ross), the theory of capital structure (F. Modigliani, M. Miller), the portfolio theory (H. Markowitz), the capital asset-pricing model (J.Williams), and the optionpricing theory (R.Merton, M. Scholes, F.Black).

Russian social psychology and the French conventional school

Classical financial theory is characterised not only by the choice of state property as a subject of analysis, but also by a key idea that money becomes capital when it starts to take part in the creation of present and future values of economic fundamentals5 (the new profits and valueadded, in Marx's terminology). This objectivity (necessary materialisation) of the future is largely accepted in economic science and even in the neo-classical theory of finance. Economists can disagree on the informational efficiency of finance to come up to the objective economic future; they retain usually the postulate of objectivity as necessary for the estimation without ambiguity of the value of fundamentals and for the elaboration of economic policy. According to André Orléan (2005), such quasi automatic acknowledgement of a set of proposals that support the acceptance of the objectivity hypothesis can be explained by generalized fascination and by lengthy learning of the modelling tools, largely developed in the 20 th century. A.Orléan's thesis continues the tradition of Maurice [START_REF] Halbwachs | Les cadres sociaux de la mémoire[END_REF] in emphasising the social construction of time. He says that the future escaping from our knowledge is not a natural phenomenon, but a result of the process of collective "shared beliefs". If so, it is important to have the capability to learn objectively the future, but not to suppose that it exists objectively. He calls this way of thinking "conventionalist". The financial convention is easily determined as a shared manner to interpret the economic future. People accept financial conventions, such as: wage, pension and interest rate specifications, just because every person is expecting the occurrence, the outcome of which will confirm his or her expectations. This conventionalist approach recognises implicitly the force of social and historical analysis of collective consciousness, initiated in the beginning of the 1930's by the Russian psychologist Lev Vygotsky. Indeed, Vygotsky established that knowledge is made up of artefacts and elements of culture. As a means of production, cultural artefacts are created by humans and are objective. They transform the person and his psychology. All factors of an environment are decisive in a socio-historical development of consciousness. There are new ways of behaviour, new methods of information acquisition, new systems of understanding reality, and new motives for actions according to complex models of social practice. Formation of complex forms of comprehending reality and activities is accompanied by radical changes in brain processes, which influence forms of comprehension on an emotional level and appear to be the sources of human activity. Vygotsky (1925) has named this phenomenon "the semantic and system structure of consciousness". The created social information is coded in meaningful cultural systems and is transferred through the function of various specific signs and institutions.

Language, systems of measures, information technologies and communications, mathematical models, among others, represent signs. Due to the signs, psychological functions develop their two important features: strong-willed character and integrity of consciousness. Vygotsky's ideas are important because they qualify human knowledge as a product of social history and represent means of expansion of social consciousness, called by A. Orléan "shared beliefs".

In financial science it became more frequent to consider ways of thinking and explain the reasons of convergence of beliefs. For example, Marie Brière (2005) analysing the public bonds market, deduces that bonds' prices reflect the scared beliefs diffused by such strong-minded decision making agents as the Central Bank or popular financial analysts. She suggests considering financial markets as a public space of opinions and contacts where ideas and conjectures circulate. The convergence process consists of the creation of the intrinsic force of competing ideas and their diffusion6 . The existence of convention, as it is established or interpreted, is compatible with different individual estimations. As long as a convention is accepted, the agent refers to what the convention foresees.

Insurance vs. finance

We posit that finance and insurance are concerned with the transfers of risks between dates and situations. Socio-historical psychology helps us appreciate the multiplicity of conventions explicating the reasons for insurance and finance convergence, despite the contradictions between their natural objectives, as well as the finance industry's development without an insurance component.

Sabine Montagne (2006) brightly explains how the trust -shared belief in insuranceemerges and how it transforms to create the financial industry. Trust is a core of the jurisdiction system called equity, created in the 14 th century by the sovereign of England to contradict common law. The trustees were the persons that administered the property on behalf of some beneficiaries. Initially it was the property of warring lords (engaged in war), that was managed in profit to heir families under guardianship. More generally, trust is a conventional institution that manages an accumulated estate, funds for social needs on behalf of some category of population.

Thus, the trust presents some characteristics that reduce the distance between the purpose of collective insurance conception (security right) and one of saving private (property right).

Almost certainly, the management of risks between dates throughout the pension funds was the most important achievement of financial capitalism.

Efforts to manage efficiently pension funds have been widely studied also in Russian economic literature at the end of 19 th century. It was expected at that time that the Russian Railways pension offices would have substantial capital and that they would face the task of acquiring securities that would yield the most significant revenue. To answer a set of questions posed by this situation, Polish mathematician Boleslav Maleshevsky (1889-1890) published in Russian a five volume work "Theory and Practice of Pension Savings". In this book the author presents a mathematical theory of evaluation of long-term financial transactions, his definition of mathematical statistics and the theory of insurance.

Pension funds are efficiently internalised in American economy because their function is embedded in the social and economic fundamental common belief in trust. Political ingenuity, in creating the pension fund, consisted in relocation of the convention of trust, helping to incite to save rather than to contribute. Social Security, created in the US in 1935, calls for contributions7 , but it is the pension funds, built on the trust principle of saving, that enjoys legitimacy in American society.

Pension funds came to the fore at the end of the 19 th century; they became specific practice between 1950 and 1970, when they were mainly defined benefit schemes arrangements.

"Defined benefit schemes" signifies that the employer pledges to disburse the annuity at the contracting level as a function of wages and seniority. In the 1980s pension funds turned out to be powerful investors. The funds with "defined contribution schemes" replaced progressively the former ones (defined benefit). The employer contributes only in constituting individual capital for employees, and such pension fund guarantees that holdings will be managed in conformity with established professional rules, that prudent person rule will be respected, but it does not assure substantial performance.

Specific financial industry formation in various countries

In classical tradition Camerron, Crisp and Tilly (1967) analysed the historical interactions between finance and industrialisation in England (1750-1844), France (1800-1870), Russia , Japan (1868Japan ( -1914) ) and Scotland (1750-1845). They highlighted the positive, growth inducing role of banking systems during these periods of accumulation. Neo-classical theoretical literature and numerous cross-country case studies, as well as both: industry and firm level empirical studies, conjure up the impact of country financial systems on agents' investment decisions, on savings rates and on general economic growth. For instance, Ross [START_REF] Levine | Réflexions sur l'hypothèse d'objectivité de la valeur fondamentale dans la théorie financière moderne[END_REF] analyses the finance-growth nexus and proves that cross-country institutional differences (legal and accounting) explain differences in the level of financial development and growth.

Our enquiry is other: we consider the reasons for financial industry formation and the speediness of its development in different social, psychological and historical circumstances.

From pension funds to a financial industry in the US

Pension funds as well as mandatory health insurance funds are buffers of accumulated indirect or deferred wages. During their expansion, pension funds stand out as gradually separated from the employer. At the first stage, one throws them out of the internal management system and relegates them to insurance companies. Later pension funds become a system with several actors: insurers, actuaries, government and trade unions. The peculiarities of the activity emerge and require new technical guidance. Competing actors respond to the new demand of employers. The actuaries are requested, for example, to measure the performance of investment, i.e. to assess risk. Thus, different types of financial intermediaries are contributing to this transformation of activity: firms of actuaries, committees of management professionals, and brokers. Already in the mid-1970s, the firm Becker in the US managed to control the performance of over three thousand funds. It is an industry that provides more than performance assessment; it elaborates benchmarks, standards of performance, which can be confronted from that time on.

Then, in presenting themselves as professional intermediaries, holders of technical knowledge, the actors of the pension industry, accredit the idea that the centralization and allocation of savings is determined technically. From there, investors can go on transferring financial assets, but their action is localized within a framework set by financial intermediaries.

The power to attract savings and allocate them, that is to control the movement and enhancement of the capital, passed into the hands of decision makers in the financial sector.

French usury capitalism and flourishing financial industry

Often the French financial system is considered immature as compared with that of the UK, for example. Two types of arguments sustain this thesis; one of them can be regarded as classical criticism, the other as neo-classical.

Let's comment on the first. In the early 20 th century a French author published, under the pseudonym Lysis (1908), a paper that gives the details of the French variant of capitalistic development. Vladimir [START_REF] Lenin | Империализм как высшая стадия капитализма[END_REF] made use of this reference and I do it in my turn. In France, capitalism began its development with petty usury capital and ended its development in the 19 th century with gigantic usury capital. With stationary fundamentals: population stagnant industry, commerce and shipping, this country could grow rich by usury, showing that extensive periods exist when financial expansion affects the pattern of economic wealth without the development of a "real economy". The first state-chartered bank with the power to issue unbocked paper currency, the Banque Générale, was established in France in 1716. It was John Law who thought of creating this institution. His idea was to encourage the exchange of means of payment in order to avoid hoarding and revive trade. This note-issuing bank was a spectacular success. A contemporary author wrote that the "rue Quincampoix in Paris (where the bank was located) was filled with traders of all kinds, most of whom had abandoned their profession to become brokers ... Mechanics, clerks of financiers, practitioners, soldiers and lackeys transvestites, women of all ages, beautiful or ugly, and many people without a trade rascals and others, scrambled in all directions, trying to find their place... Some, foreseeing that property on this street would climb to top prices, seized all the houses for rent as well as apartments; they did not leave even attics and basements. A cobber who worked under four planks had the idea of changing his little hut into an office that he decorated with little stools where women attracted to the area by curiosity could sit. Seeing that this idea worked for him, he abounded his trade in order to furnish pens and paper. His efforts in this new trade earned him two hundred pounds a day, at the height of the activities. Here was no one, no matter how helpless he was who, in the wake of trading that was going on in this place, did find a livelihood and even save for the future. Those who neither talent nor profession had decided to offer their backs to shareholders who could not get rid of the crowd were delighted to use them for calculating the profits of their operations" 8 . The unlimited issue of bank-notes by the Banque Générale was accompanied by the withdrawal of coins from circulation. As a result, Stock Exchange speculation reached an unprecedented scale and culminated, in 1720, in the bankruptcy of the bank, plunging France and Europe into a grave economic crisis, which had an important role in setting the stage later for the French Revolution. 9

In the recent study by André [START_REF] Gueslin | Banks and State in France from the 1880s to the 1930s: The impossible advance of the Banks[END_REF] we can find the confirmation of a usury type of French capitalism. Indeed, despite an expansion between the 1880s and 1930s, the banking sector played a modest role in the development of the industrial sector, measured in terms of credit policy. Apart from the railway enterprises, all others had difficulties in drawing French investors. People preferred to invest in government bonds and in foreign securities rather than in equities, and enterprises were hostile to borrowing to banks. Between 1850 and 1870 Paris was probably the first place in Europe for foreign exchange; far and wide in the 19 th century, France has been an exporter of capital mainly in Europe and primarily in Russia. These were for the most part government loans and not investments in industrial undertakings. Lysis wrote: "The French are the usurers of Europe". In this respect Lenin's conclusion can be taken to mean that unlike British colonial capitalistic accumulations, French capitalism might be termed as financial one. Gueslin says that France was becoming in the pre-World War I period a nation of rentiers.

8 According to Marmont Du Hautchamp Histoire du Système des finances sous la minorité de Louis XV pendant les années 1719 et 1720, précédé d'un abrégé de la vie du duc régent et du sieur Law, La Haye, Chez Pierre de Hondt, 1739, cited by Edgar [START_REF] Faure | Trente journées qui ont fait la France Gouriéroux, C[END_REF]. 9 The effects of these banking schemes on France were so traumatic that, until recently, the term "bank" was boycotted by French banks in order to avoid stoking up memories of an unlucky institution created by John Law. The common substitute term is "credit", as in "Credit Lyonnais", "Credit Agricole", and «Credit Foncier".

Neo-classical theoretical literature speaks of the relative immaturity of the French financial system, arguing that compared to the London Stock Exchange, smoothly regulated, it was inefficient because the state controlled it. The UK system was more cost-effective, because it had a microstructure organisation with free entry of investors and issuers that decreases in theory transaction costs and impels financial product diversification. P-C. Hautcoeur and A.Riva (2007) contest the inefficiency of French finances which was in reality a multi-polar organisation, satisfying the heterogeneous enquires: the Parquet (the Bourse) was matched by the Coulisse (free market) and inter-bank operations were rather developed.

One century ago a financial industry already existed in France. As proof of this, I cite information from the article by Eug. Kaufmann in Die Bank, 1909: "One of the three biggest French banks, the Credit Lyonnais, has organized a financial research service, which permanently employs over fifty engineers, statisticians, economists, lawyers, etc. The service is divided into eight departments: one specializes in collecting information concerning industrial establishments, another studies general statistics, a third railway and steamship companies, a fourth, securities, a fifth, financial reports, etc" (cited by [START_REF] Lenin | Империализм как высшая стадия капитализма[END_REF]).

Nowadays (in 2005) the banking industry in France contributes 2.8 % of the GNP. By comparison: the automobile industry -1%, the food-industry -1.8 %, and energy -2%.

Financial science prolongs French traditions, which are not founded on equity trust as in the financial innovations linked to the pension industry, but above all on the shared believe in the possibility of forecasting economic development and managing it lean on the financial industry.

A recent paper by C. Gouriéroux ( 2007) puts forward such a type of achievement. It stresses the importance of sustainable development, and it gives a precise scheme of creation and regulation of special funds (shared between sovereign and private mandatory funds) for achieving this target. 10 The risk to be hedged has some characteristics: 1) The cost to be hedged 10 For instance, it can be a fund set up to cover the future costs of cleaning up and the regeneration of soils following the closure of a nuclear enterprise.

is very large, which requires a progressive financing plan; 2) this is a long term risk, that is why risky assets must provide better return in the long run without a large increase of volatility due to a possible diversification over time; 3) such funds can became mandatory, their management has to be controlled to avoid too large risk taken, and they are likely to be submitted to international regulation; 4) as it is difficult to know precisely the date of the closure of a firm and the clearingup cost, a system of margin calls has to be introduced to account for the more accurate expected date of closure and expected cost.

In Figure 1. the proposal of such funds is presented in its structural environment within a modern financial industry: corporate shareholder, insurance company, different types of industrial and financial control devices.

Rent and Russian sovereign-wealth funds

In Russia financial aspects of the state economy have been studied since the middle of the 17 th century, and the classical model dominated until recent liberal economic transformations.

There was no need to develop any analysis of financial risks and/or of valorisation of enterprises before, because state property was global and the functions of resources allocation, savings mobilization, enterprise control, trading of goods and services were carried out through planning institutions. Besides this, the semantic and system structure of Russians (using the expression of L.Vygotsky) is based on some economic and cultural signs, which influence the character of financial and insurance industry development. Among them, eternal dependence of economy on natural resources and eternal problem of rent 11 relations. For example, at the end of 19 th century B.Maleshusky, introducing the theory of insurance, wrote: "the theory of rents should be a natural introduction to [my pension theory], because the formulas of the latter discipline represent a significant analogy with the formulas of the former." A.Glagolev (1891) described the theory of composite interests and rent theory as the basis for financial mathematics.

The Russian economist-academician Dmitry Lvov estimated in 2005 that 75% of all undistributed profits in Russia are provided by natural resources: gas, oil, forest, fish, etc.

Accordingly, basic earnings are created by nature, that is to say we face absolute ground-rent, and its owner should be monetary honoured. In Russia the owner is either the entire population, or its representative, the state.

11 Classical economists argued that the main source of government revenue is taxation of profits, wages and land rents, which have a single value substance and are the origin for other incomes. As the three primary sources of income are interchangeable as tax revenue, then any State has the possibility to choose among some alternatives an optimal, from the societal point of view, tax system. Such a system is one where the tax burden falls on rent income from the use of land and other products of nature. See Marx (1867).

In the USSR era the surplus of the rising prices of natural resources was used mainly by the stat for military purposes and for international economic help. After the liberalisation of the Russian economy in 1992, ground rent was grabbed by private companies 12 . What was wrong was that until 2005 a large portion of the surplus was transferred by companies' owners in foreign countries to their personal accounts.

At the present, oil-rich Russia, encouraged by the rising price of petroleum, has retained a vast amount of international assets in the form of reserves -government-controlled funds.

Russian authorities began by constituting the state Stabilization Fund, financed from the extra profits of the budget, based on the cost of one barrel of oil in excess of $27. It included also the profits gained from the savings on interest-bearing payments in the case of early pay off of external debt. The Stabilization Fund is made up to oblige the recurring expenses of the budget to remain below the minimal receipts, i.e. receipts which would be always collected, independently of the economic situation in the energy resources markets. The state makes a decision to save, so as to ensure the normal development of the country in the event of abrupt deterioration of exporting conditions. In 2006 the Russian Stabilization Fund was estimated as one of ten biggest sovereign funds in the world (see table 1.).

Discussion: The financial industry as an activity of risk management in different socio-historical contexts

The financial industry is an economic sector producing 1) the means of transactions between other economic sectors and 2) services of insurance for control of various risks. It is generally admitted that this activity derives from the management of the contradictory (in its aims) trust of pension funds in the US, but has been used to satisfy other demands in different circumstances.

The US pension industry created an interesting precedent and the financial industry developed because different types of funds were introduced with various objectives, sources and regulation rules. For example, international mutual funds provide managed portfolios to individual investors. The regulation principles were elaborated stipulating that such funds can be invested in bonds or stocks with specified proportions and without short sell. Hedge funds have more speculative objectives and can be invested in a large array of assets: options, swaps and short sell

Figure 1 :

 1 Figure 1 : The structural environment

  are allowed. The financial professions resemble each other more and more because of the standardization of controls in Finance and Insurance (Basel II, Solvency II) and the proliferation of joint products, particularly in France.The new "sovereign-wealth" funds are used to realise a new type of nationalisation, opines the American economist Larry Summers. He writes "A signal event of the past quarter-century has been the sharp decline in the extent of direct state ownership of business as the private sector has taken ownership of what were once government-owned companies. […] Yet governments are now accumulating various kinds of stakes in what were once purely private companies". The question is: how can new financial reserves best be used? One can use them in shaping the fund for public scientific and innovative development, or as the fund for national technological agencies, or for programs of regional training. The resources can be used also to support exports, to reduce the tax load on firms (compensation for falling incomes), or for the expansion of credit for restructuring. The management of reserves can introduce innovations within social insurance schemas. It must give scientifically proven answers on such questions as: Do investment regulations require some form of asset-liability matching? Do mature plans tend to invest more in fixed-income securities? As in a world of portfolio-choice defined contribution schemes, there is no external actor over which to spread volatility risk, thus each country has to determine its volatility risk tolerance level. It became possible to construct a new planning theory, which would be in symbiosis with financial industry achievements. Bibliography Brière, M. (2005) Formation des taux d'intérêt. Anomalies et croyances collectives. Economica, Paris Camerron, R., Crisp, O., Hugh, T., Tilly, R. Banking in the Early Stages of Industrialization: A Study in Comparative Economic History, New York: Oxford University Press

Table 1 .

 1 Biggest sovereign funds in 2006At the beginning, the savings of the Fund were converted into foreign currencies and paid to the accounts of the Russian federal Treasury. The operations of placement of the surplus receipts of the Funds were entrusted to the ministry for Finances and to the Central Bank, which managed the accounts in foreign currencies. The Ministry for Finances invests the funds in foreign assets in three accounts, one in dollars (45%), another in euros (45%) and a third in pounds sterling (10%). The Russian Central Bank proceeded with the acquisition of the claims of 14 developed foreign states. It prefers to compose its portfolio of low risk public obligations. For the moment, the Russian authorities do not have enough boldness to invest these large public money sums of the Stabilization Funds inside Russia, and to convert them to Russian financial instruments. The shared opinion exists that the fund placed in inside assets, can not serve as a reserve regardless of the state of the national economy. In the event of economic crisis, national currency and domestic obligations are usually devalued, thus the fund would be devalued too. The Russian financial system faces a common problem: How to establish what the obstacles are to countries buying each other's bonds to diversify national risk in government reserve funds? One probable limit to a bond immunisation strategy for savings is whether sufficient indexed government bonds exist to match the potential demand. Currently the demand outstrips the supply, indicates D. Lindeman in an OCDE (2003) note.At the end of March, 2007, the Russian parliament approved the reform of the budget. The budget is now formed without the components of revenues generated from oil and gas, which will be used to form two new funds: the Reserve Fund and the National Wealth Fund. Thus, the Stabilization Fund ended its existence on January 1, 2008, and it is evaluated at 144 Mds$. The Reserve Fund will not exceed 10% of GDP (that represents about 120 Mds$ at the end of 2007), and if the revenue of fuel sales surpasses this amount, it will complete the National Wealth Fund. They certainly must avoid recapitalisation of western banks, in 2008, which were not acquainted with evaluation of their operational risks. The Ministry of Finance must provide information monthly through its site the volume of receipts and of their deployment. This reform of the federal budget is an obvious mix of classical and neo-classical financial politics. This is a "classical" financial one, because it ministers to the State Treasury, and it is "neo-classical" because it uses funds as tool of management, like private property.Thus the Russian financial industry is developing on the basis of the new Fund of Reserve with an aim to incorporate international investment regulations, and as the basis of the Fund of future generation to innovate and build sustainable development pass. The former fund needs new professionals of risk analyses, operating in the context of social insurance ideas (security rights) and of non-for-profit saving 13 (sovereign ownership right).

	Country	Name	Mds$	%GDP2006
	United Arabic Emirates	Investment authority of Abou-Dhabi	625	520.7
	Norway	Pension government funds	322	102.6
	Singapore	GIC	215	169.0
	Kuwait	Investment authority of Kuwait	213	268.7
	China	China Investment Corporation	200	8.0
	Russia	Stabilisation Fund	127.5	14.2
	Source: Lyons, G. "State capitalism: The rise of sovereign wealth funds", cited from Coeuré (2008)

investments abroad in firms with a rating more than AAA-(evaluated by Fitch or S&P). No one firm in Russia has such a high rating.

Accordingly to N.Lunsky: "Higher financial calculations (computing) are applied mathematics that studies the financial, statistic and political economy problems accessible for the mathematical analysis".

The expected utility model was already proposed by D.Bernoulli in 1738 as a solution to the Saint Petersburg paradox.

Fundamentals are called also "intrinsic value" that is a theoretical calculation reflecting the fair value by taking into account hypotheses of future returns and risks.

See also the paper by Gourieroux -Peaucelle (1996) on the diffusion of innovations in finance

The pension systems, which call for contribution, are named usually "pays-as-you-go", and "retraite par repartition", in France.

The way of doing it was the following: if the average tax rate on corporate profits was 24%, it was, for example, significantly lower for oil companies.

Non-for-profit firms or firms operating with "disguised" profit objectives are those that use surplus income for internal development.