QUANTITATIVE RESTRICTIONS ON THE FLOW OF NARCOTICS: SUPPLY AND DEMAND RESTRAINTS IN A NORTH–SOUTH MACRO‐MODEL

This paper constructs a macroeconomic model of North–South interaction where the flow of narcotics from the South to the North is restricted. The economic effects are akin to quantitative restrictions in trade policy. Two alternative policy scenarios will be considered. One involves reducing the supply of drugs at the source, accompanied by aid. Supply‐side restrictions have negative aggregate supply‐side effects in the producing region, because of the monopoly rents generated from that type of control. This makes them a second‐best policy, particularly if the accompanying aid is not used for poverty alleviation and fails to expand domestic aggregate demand. Alternatively, demand side restrictions will be found to be superior.     

THE F‐35 JOINT STRIKE FIGHTER AS A SOURCE OF INNOVATIon AND EMPLOYMENT: SOME INTERIM RESULTS

The F‐35 Joint Strike Fighter (JSF) programme is important for innovation in the Dutch economy and also contributes to other programmes in the aerospace industry (spin‐off) and other industries (spillover). On top of the expected value of US$9.2 billion in development and production, based on interviews with 10 companies and research institutes, an expected spin‐off of US$1.1 billion and an expected spillover of US$120 million will result. In addition, over 23,000 man‐years are associated with the activities in the development and production of the JSF. This study excludes the large and labour‐intensive Maintenance, Repair and Overhaul (MRO) activities. Further validation of data and an update of current results is planned for 2006.