Emerging
Clans, Guilds, and Markets: Apprenticeship Institutions and Growth in the Pre-Industrial Economy
David de la Croix, Matthias Doepke & Joel Mokyr
NBER Working Paper, March 2016
Abstract:
In the centuries leading up to the Industrial Revolution, Western Europe gradually pulled ahead of other world regions in terms of technological creativity, population growth, and income per capita. We argue that superior institutions for the creation and dissemination of productive knowledge help explain the European advantage. We build a model of technological progress in a pre-industrial economy that emphasizes the person-to-person transmission of tacit knowledge. The young learn as apprentices from the old. Institutions such as the family, the clan, the guild, and the market organize who learns from whom. We argue that medieval European institutions such as guilds, and specific features such as journeymanship, can explain the rise of Europe relative to regions that relied on the transmission of knowledge within extended families or clans.
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Does Lean Improve Labor Standards? Management and Social Performance in the Nike Supply Chain
Greg Distelhorst, Jens Hainmueller & Richard Locke
Management Science, forthcoming
Abstract:
This study tests the hypothesis that lean manufacturing improves the social performance of manufacturers in emerging markets. We analyze an intervention by Nike, Inc., to promote the adoption of lean manufacturing in its apparel supply chain across 11 developing countries. Using difference-in-differences estimates from a panel of more than 300 factories, we find that lean adoption was associated with a 15 percentage point reduction in noncompliance with labor standards that primarily reflect factory wage and work hour practices. However, we find a null effect on factory health and safety standards. This pattern is consistent with a causal mechanism that links lean to improved social performance through changes in labor relations, rather than improved management systems. These findings offer evidence that capability-building interventions may reduce social harm in global supply chains.
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Property rights and economic development: The legacy of Japanese colonial institutions
Dongwoo Yoo & Richard Steckel
Journal of Institutional Economics, forthcoming
Abstract:
Several studies link development to institutions transplanted by European colonizers and here we extend this line of research to Asia. Japan imposed its system of well-defined property rights on some of its Asian colonies. In 1939, Japan began to register private land in its island colonies, an effort that was completed in Palau but interrupted elsewhere by World War II. Within Micronesia, robust economic development followed only in Palau where individual property rights were well defined. We show that well-defined property rights in Korea and Taiwan secured land taxation and enabled farmers to obtain bank loans for irrigation systems. Considering Japanese colonies, we use the presence or absence of a land survey as an instrument to identify the causal impact of new institutions. Our estimates show that property-defining institutions were important for economic development, results that are confirmed when using a similar approach with British Colonies in Asia.
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How Rome Enabled Impersonal Markets
Benito Arruñada
Explorations in Economic History, forthcoming
Abstract:
Impersonal exchange increases trade and specialization opportunities, encouraging economic growth. However it requires the support of sophisticated public institutions. This paper explains how Classical Rome provided such support in the main areas of economic activity by relying on public possession as a titling device, enacting rules to protect innocent acquirers in agency contexts, enabling the extended family to act as a contractual entity, and diluting the enforcement of personal obligations which might collide with impersonal exchange. Focusing on the institutions of impersonal exchange, it reaches a clear positive conclusion on the market-facilitating role of the Roman state because such institutions have unambiguously positive effects on markets. Moreover, being impersonal, these beneficial effects are also widely distributed across society instead of accruing disproportionately to better-connected individuals.
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Bala Ramasamy & Matthew Yeung
Applied Economics Letters, forthcoming
Abstract:
Although the effect of culture on national innovation levels is well-established, previous literature assumes cultural homogeneity within a nation. In this article we analyse two aspects of diversity – ethnic and values – and their impact on national innovation output. We show that ethnic diversity or fractionalization and values diversity are distinct and while the former has a negative effect on innovation, the latter contributes positively. However, countries are bound to have both types of diversity. We find that countries that are ethnically homogenous but diverse in values orientation are the best innovators.
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Explaining Cross-Country Productivity Differences in Retail Trade
David Lagakos
Journal of Political Economy, forthcoming
Abstract:
Many macroeconomists argue that productivity is low in developing countries because of frictions that impede the adoption of modern technologies. I argue that in the retail trade sector, developing countries rationally choose technologies with low measured labor productivity. My theory is that the adoption of modern retail technologies is optimal only when household ownership of complementary durable goods, such as cars, is widespread. Because income is low in the developing world, households own few such durables. The theory implies that policies that increase measured retail productivity do not necessarily increase welfare.
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Trust and delegation: Theory and evidence
Nurullah Gur & Christian Bjørnskov
Journal of Comparative Economics, forthcoming
Abstract:
Social trust is associated with good economic performance, but little is known about the transmission mechanisms connecting trust and performance. We explore the effect of trust on delegation decisions. In a theoretical framework, we note that delegation is a low-cost option when management decisions can be implemented without monitoring. This option is, however, risky and more likely to be profitable in higher-trust environments. In a set of cross-country regressions, we show a strong association between trust and delegation, which is increasing in economic sophistication.
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Precolonial Political Centralization and Contemporary Development in Uganda
Sanghamitra Bandyopadhyay & Elliott Green
Economic Development and Cultural Change, April 2016, Pages 471-508
Abstract:
The role of precolonial history on contemporary development has become an important field of study within development economics. Here we examine the role of precolonial political centralization on contemporary development outcomes with detailed subnational data from Uganda. We use a variety of data sets and obtain two striking results. First, we find that precolonial centralization is highly correlated with modern-day development outcomes such as GDP, asset ownership, and poverty at the subcounty, district, and individual level; additional results using an instrumental variable approach confirm this finding. Second, we find that public goods such as immunization coverage and primary school enrollment, as well as perceptions of local government quality, are not correlated with precolonial centralization. These findings are thus consistent with a correlation between precolonial centralization and private rather than public goods, thereby suggesting the persistence of poverty and wealth from the precolonial period to the present.
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Do Good Institutions Promote Countercyclical Macroeconomic Policies?
César Calderón, Roberto Duncan & Klaus Schmidt-Hebbel
Oxford Bulletin of Economics and Statistics, forthcoming
Abstract:
The literature has argued that developing countries are unable to adopt countercyclical monetary and fiscal policies due to financial imperfections and unfavourable political-economy conditions. Using a world sample of up to 112 industrial and developing countries for 1984–2008, we find that the level of institutional quality plays a key role in countries’ ability and willingness to implement countercyclical macroeconomic policies. Countries with strong (weak) institutions adopt countercyclical (procyclical) macroeconomic policies, reflected in extended monetary policy and fiscal policy rules. The threshold levels of institutional quality at which policies are acyclical are found to be similar for monetary and fiscal policy.
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The changing face of financial development
Panicos Demetriades & Peter Rousseau
Economics Letters, April 2016, Pages 87–90
Abstract:
We provide evidence from a large number of countries which demonstrates the changing nature of the finance-growth nexus. Specifically, we show that financial depth is no longer a significant determinant of long-run growth. Instead we find evidence to suggest that certain financial reforms have sizeable growth effects, which can be positive or negative depending on how well banks are regulated and supervised.
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The Impact of Accession to the European Union on Homicide Rates in Eastern Europe
Sylwia Piatkowska, Steven Messner & Lawrence Raffalovich
European Sociological Review, February 2016, Pages 151-161
Abstract:
The present study builds on previous work by Andresen by examining the effects of entry into the European Union (EU) on the levels of homicide in the 10 Eastern European countries that joined the EU in 2004 and 2007. Andresen’s research has indicated that accession to the EU led to increased levels of violent crime across municipalities in Lithuania over the 2001–2006 period. We go beyond prior work by using pooled cross-sectional time-series data that cover approximately 20 years for these 10 Eastern European nations. The results from fixed-effects regression analyses at the national level are generally consistent with Andresen’s research, indicating that entry into the EU is positively associated with levels of homicide. In addition, we find that economic growth has a negative effect on homicide rates, whereas the divorce rate and income inequality have positive effects on homicide rates. These findings reaffirm for the sample of Eastern European countries results reported for other cross-national samples. However, our analyses also reveal that these structural covariates do not account for the observed relationship between EU entry and homicide rates. We conclude with a discussion of the some of the mechanisms that might be responsible for the EU effect.