A developing story
Do Social Rights Affect Social Outcomes?
Christian Bjørnskov & Jacob Mchangama
American Journal of Political Science, forthcoming
Abstract:
While the United Nations and NGOs are pushing for global judicialization of economic, social, and cultural rights (ESCRs), little is known of their consequences. We provide evidence of the effects of introducing three types of ESCRs into the constitution: the rights to education, health, and social security. Employing a large panel covering annual data from 160 countries in the period 1960–2010, we find no robust evidence of positive effects of ESCRs. We do, however, document adverse medium‐term effects on education, inflation, and civil rights.
A Forensic Examination of China’s National Accounts
Wei Chen et al.
Brookings Papers on Economic Activity, forthcoming
Abstract:
China’s national accounts are based on data collected by local governments. However, since local governments are rewarded for meeting growth and investment targets, they have an incentive to skew local statistics. China’s National Bureau of Statistics (NBS) adjusts the data provided by local governments to calculate GDP at the national level. The adjustments made by the NBS average 5% of GDP since the mid-2000s. On the production side, the discrepancy between local and aggregate GDP is entirely driven by the gap between local and national estimates of industrial output. On the expenditure side, the gap is in investment. Local statistics increasingly misrepresent the true numbers after 2008, but there was no corresponding change in the adjustment made by the NBS. We provide revised estimates of local and national GDP by re-estimating output of industrial, wholesale, and retail firms using data on value-added taxes. We also use several local economic indicators that are less likely to be manipulated by local governments to estimate local and aggregate GDP. The estimates also suggest that the adjustments by the NBS were insufficient after 2008. Relative to the official numbers, we estimate that GDP growth from 2008-2016 is 1.7 percentage points lower and the investment and savings rate in 2016 is 7 percentage points lower.
Does an Inclusive Citizenship Law Promote Economic Development?
Patrick Imam & Kangni Kpodar
IMF Working Paper, January 2019
Abstract:
This paper analyzes the impact of citizenship laws on economic development. We first document the evolution of citizenship laws around the world, highlighting the main features of jus soli, jus sanguinis as well as mixed regimes, and shedding light on the channels through which they could have differentiated impact on economic development. We then compile a data set of citizenship laws around the world. Using cross-country regressions, panel-data techniques, as well as the synthetic control method and subjecting the results to a battery of tests, we find robust evidence that jus soli laws - being more inclusive - lead to higher income levels than alternative citizenship rules in developing countries, though to a less extent in countries with stronger institutional environments.
Technology in 1500 and genetic diversity
Tiago Neves Sequeira & Marcelo Santos
Empirical Economics, April 2019, Pages 1145–1165
Abstract:
The study of the deeply rooted determinants of development, technology and innovation is a very recent strand of the literature. This paper investigates the relationship between technology in 1500 and the ancestral genetic diversity of populations. It shows a strong hump-shaped relationship between genetic diversity and technological developments in 1500. This means that some of the technological achievements may stem from the genetic diversity mostly determined more than a millennium before. Results are robust to the introduction of several controls and to IV estimation. Moreover, our results highlight that agriculture and communication were the technologies most influenced by genetic diversity.
The World System and the Hollowing Out of State Capacity: How Structural Adjustment Programs Affect Bureaucratic Quality in Developing Countries
Bernhard Reinsberg et al.
American Journal of Sociology, January 2019, Pages 1222-1257
Abstract:
The administrative ability of the state to deliver effective policy is essential for economic development. While sociologists have long devoted attention to domestic forces underpinning state capacity, the authors focus on world system pressures from Western-dominated international organizations. Scrutinizing policy reforms mandated by the International Monetary Fund (IMF), the authors argue that “structural conditions” exert deleterious effects on bureaucratic quality by increasing the risk of bureaucrats falling prey to special interests and narrowing potential policy instruments available to them. The authors test these arguments using a new data set on IMF conditionality from 1985 to 2014. Their analysis shows that structural conditions — especially conditions on privatization, price deregulation, and public sector employment — reduce bureaucratic quality. Using instrumentation techniques, the authors also discount the possibility that the relationship is driven by the IMF imposing structural conditions precisely in countries with low bureaucratic quality. A careful reconsideration of IMF policy reforms is therefore required to avoid undermining local institutions.
Estimating Causal Relationships Between Women’s Representation in Government and Corruption
Justin Esarey & Leslie Schwindt-Bayer
Comparative Political Studies, forthcoming
Abstract:
Does increasing the representation of women in government lead to less corruption, or does corruption prevent the election of women? Are these effects large enough to be substantively meaningful? Some research suggests that having women in legislatures reduces corruption levels, with a variety of theoretical rationales offered to explain the finding. Other research suggests that corruption is a deterrent to women’s representation because it reinforces clientelistic networks that privilege men. Using instrumental variables, we find strong evidence that women’s representation decreases corruption and that corruption decreases women’s participation in government; both effects are substantively significant.
Money and modernization in early modern England
Nuno Palma
Financial History Review, December 2018, Pages 231-261
Abstract:
Classic accounts of the English industrial revolution present a long period of stagnation followed by a fast take-off. However, recent findings of slow but steady per capita economic growth suggest that this is a historically inaccurate portrait of early modern England. This growth pattern was in part driven by specialization and structural change accompanied by an increase in market participation at both the intensive and extensive levels. These, I argue, were supported by the gradual increase in money supply made possible by the importation of precious metals from America. They enabled a substantial increase in the monetization and liquidity levels of the economy, hence decreasing transaction costs, increasing market thickness, changing the relative incentive for participating in the market and allowing agglomeration economies to arise. By making trade with Asia possible, precious metals also induced demand for new desirable goods, which in turn encouraged market participation. Finally, the increased monetization and market participation made tax collection easier. This helped the government to build up fiscal capacity and as a consequence to provide for public goods. The structural change and increased market participation that ensued paved the way for modernization.
Path Dependence in European Development: Medieval Politics, Conflict, and State Building
Avidit Acharya & Alexander Lee
Comparative Political Studies, forthcoming
Abstract:
During the Middle Ages, most European polities operated under a norm that gave only the close male relatives of a monarch a privileged place in the order of succession. When no such heirs were available, succession disputes were more likely, with distant relatives and female(-line) heirs laying competing claims to the throne. These disputes often produced conflicts that destroyed existing institutions and harmed subsequent economic development. A shortage of male heirs to a European monarchy in the Middle Ages could thus have harmful effects on the development trajectories of regions ruled by that monarchy. We provide evidence for this by showing that regions that were more likely to have a shortage of male heirs are today poorer than other regions. Our finding highlights the importance of the medieval period in European development and shows how small shocks can work in combination with institutions and norms in shaping long-run development paths.
Vestiges of Transit: Urban Persistence at a Micro Scale
Leah Brooks & Byron Lutz
Review of Economics and Statistics, forthcoming
Abstract:
We document intra-city spatial persistence and its causes. Streetcars dominated urban transit in Los Angeles County from the 1890s to the early 1910s, and were off the road entirely by 1963. However, we find that streetcars' influence remains readily visible in the current pattern of urban density and that this influence has not dissipated in the 60 years since the streetcar's removal. We examine land use regulation both as a consequence of streetcars and as a mechanism for streetcars' persistent effect. Our evidence suggests that the streetcar influences modern behavior through the mutually reinforcing pathways of regulation and agglomerative clustering.
The long-run effects of government spending on structural change: Evidence from Second World War defense contracts
Zhimin Li & Dmitri Koustas
Economics Letters, May 2019, Pages 66-69
Abstract:
This paper studies the long-run effects of the largest government spending program in U.S. history — Second World War defense spending — on structural change in local economies. We link a dataset of war supply contracts with economic data at the county level spanning from 1930 to 2000. Using counties that received no defense spending as a comparison group and controlling for prewar characteristics, we find that wartime defense spending led to sustained reallocation of labor to manufacturing and other non-agricultural sectors in war production centers, contributing to the long-term population growth in those regions.
Institutions and the “Resource Curse”: Evidence From Cases of Oil-Related Bribery
Paasha Mahdavi
Comparative Political Studies, forthcoming
Abstract:
While some resource-rich countries are highly corrupt, others have transparent and well-functioning governments. What explains this wide variation in so-called “resource-cursed” states? I show that these differences result from domestic institutional choices over how resource extraction is governed. Some governments grant procurement authority — the ability to award contracts for production rights — to state-owned enterprises, whereas others place this authority in ministries. Building upon agency theory, I argue that this choice matters: The relative political autonomy of state-owned enterprises compared with ministries fosters an opaque regulatory environment that incentivizes malfeasance. Using new data on transnational bribes in 59 oil-producing countries, I show evidence for a robust link between oil-related institutions and bribery, even after addressing the endogeneity of institutional choice via instrumental variables analysis. This research has implications not only for the political economy of the resource curse hypothesis but also for existing theories on corruption and regulatory independence.
Diversity, Institutions, and Economic Outcomes: Post-WWII Displacement in Poland
Volha Charnysh
American Political Science Review, forthcoming
Abstract:
How does an increase in cultural diversity affect state–society interactions? Do institutional differences between heterogeneous and homogeneous communities influence economic activity? I argue that heterogeneity not only impedes informal cooperation but also increases demand for third-party enforcement provided by the state. Over time, the greater willingness of heterogeneous communities to engage with state institutions facilitates the accumulation of state capacity and, in common-interest states, promotes private economic activity. I test this argument using original data on post-WWII population transfers in Poland. I find that homogeneous migrant communities were initially more successful in providing local public goods through informal enforcement, while heterogeneous migrant communities relied on the state for the provision of public goods. Economically similar during state socialism, heterogeneous communities collected higher tax revenues and registered higher incomes and entrepreneurship rates following the transition to the market. These findings challenge the predominant view of diversity as harmful to economic development.
The Paradox of Power: Principal-agent problems and administrative capacity in Imperial China (and other absolutist regimes)
Debin Ma & Jared Rubin
Journal of Comparative Economics, forthcoming
Abstract:
Tax extraction is often low in absolutist regimes. Why are absolutists unable to convert power into revenue? Supported by evidence from Imperial China, we explain this puzzle with a principal-agent model which reveals that absolutists, unconstrained by rule of law and unable to commit to not predating on their tax-collecting agents (and the masses), may find it optimal to settle for a low wage-low tax equilibrium, while permitting agents to keep extra, unmonitored taxes. Our analysis suggests that low investment in administrative capacity is a conscious choice for an absolutist since it substitutes for credible commitment to refrain from confiscation from its agents.