How we got here
State history and economic development: Evidence from six millennia
Oana Borcan, Ola Olsson & Louis Putterman
Journal of Economic Growth, March 2018, Pages 1–40
Abstract:
The presence of a state is one of the most reliable historical predictors of social and economic development. In this article, we complete the coding of an extant indicator of state presence from 3500 BCE forward for almost all but the smallest countries of the world today. We outline a theoretical framework where accumulated state experience increases aggregate productivity in individual countries but where newer or relatively inexperienced states can reach a higher productivity maximum by learning from the experience of older states. The predicted pattern of comparative development is tested in an empirical analysis where we introduce our extended state history variable. Our key finding is that the current level of economic development across countries has a hump-shaped relationship with accumulated state history.
Anticorruption and growth: Evidence from China
Guangjun Qu, Kevin Sylwester & Feng Wang
European Journal of Political Economy, forthcoming
Abstract:
This study investigates the relationship between anticorruption and economic growth by focusing on the anticorruption campaigns run by the Communist Party of China. To measure the intensity of the Party's anticorruption efforts, we count the number of articles from official newspapers that discuss corruption. We first show how our proxy compares with alternative measures. Using panel data of Chinese provinces, we then estimate using various methodologies the effect of anticorruption on growth, finding a negative impact. We also find that the detrimental effect upon growth results from lowering physical investment during the anticorruption campaigns. Our findings do not imply that governments should not try to lower corruption, but do suggest a cost of doing so.
Is colonialism history? The declining impact of colonial legacies on African institutional and economic development
Robbert Maseland
Journal of Institutional Economics, April 2018, Pages 259-287
Abstract:
This paper investigates the claim that colonial history has left an enduring imprint on Africa's institutional and economic development. The literature following Acemoglu, Johnson and Robinson (2001) and Sokoloff and Engerman (2000) maintains that different types of colonialism affected the institutional environment differently, and that path-dependence subsequently ensures that these institutional differences and their impact on economic performance are persistent over time. By tracing the impact of colonial institutions on contemporary institutions over time, I show that – in contrast to claims in this literature – the relevance of colonial legacies to institutional quality and to per capita income is rapidly disappearing in Africa. Differences in institutional quality or income are explained less and less by colonial legacy, while there is some evidence that precolonial social and geographical circumstances are becoming more important. I conclude that while colonialism has affected African institutional and economic development significantly, this impact is not persistent. Rather, the evidence suggests that colonialism has created a large but very temporary institutional shock, after which a long-run equilibrium is being restored.
The Origins of the Division of Labor in Pre-Modern Times
Emilio Depetris-Chauvin & Ömer Özak
Southern Methodist University Working Paper, February 2018
Abstract:
This research explores the historical roots of the division of labor in pre-modern societies. It advances the hypothesis and establishes empirically that intra-ethnic diversity had a positive effect on the division of labor across ethnicities in the pre-modern era. Exploiting a variety of identification strategies and a novel ethnic level dataset combining geocoded ethnographic, linguistic and genetic data, it establishes that higher levels of intra-ethnic diversity were conducive to economic specialization in the pre-modern era. The findings are robust to a host of geographical, institutional, cultural and historical confounders, and suggest that variation in intra-ethnic diversity is the main predictor of the division of labor in pre-modern times.
Economic Leadership and Growth
Craig Brown
Northeastern University Working Paper, December 2017
Abstract:
Economies governed by former economics students grow faster than economies governed by leaders with other education backgrounds; a result which is most evident for presidents. Faster growth (average growth) occurs during an economic leader’s first year (entire tenure), primarily through investment. When focusing on close elections which “quasi-randomize” economic leadership, I find a large effect that is robust controlling for a leader’s advanced education. Investors seem to hasten their activity in anticipation of their economic leader’s eventual reduction of the top personal income-tax rate. Overall, the findings suggest that economic leaders improve short-term growth through the anticipation of policy changes.
Geography, land inequality and regional numeracy in Europe in historical perspective
Joerg Baten & Ralph Hippe
Journal of Economic Growth, March 2018, Pages 79–109
Abstract:
We find a relationship between geographic factors and numeracy in more than 300 regions of Europe around the year 1900. We argue that the distribution of land ownership is a plausible mechanism, given that it is related to the geographic factors under study. Consistent with theoretical studies in the Unified Growth Theory framework, we find that inequality in land distribution has a negative correlation with human capital formation as landowners did not have incentives to promote educational institutions or were not willing to pay the necessary taxes. This study explains a substantial share of the differences in development gradients between rural European regions in a historical perspective.
Precolonial Legacies and Institutional Congruence in Public Goods Delivery: Evidence from Decentralized West Africa
Martha Wilfahrt
World Politics, forthcoming
Abstract:
Scholars have long identified political bias in the way African politicians distribute state resources. Much of this literature focuses on the role of group identities, mainly ethnicity, and partisanship. This article shifts the focus to local governments, which have become increasingly important players in basic social service provision, and argues that public goods allocation under democratic decentralization is intimately shaped by historical identities. Specifically, the author highlights the role of identities rooted in the precolonial past. To explain this, she articulates a theory of institutional congruence, arguing that greater spatial overlap between formal institutional space and informal social identities improves the ability of elites to overcome local coordination problems. Looking to the West African state of Senegal, the author deploys a nested analysis, drawing on interviews with rural Senegalese elites to understand how the precolonial past shapes local politics today via the social identities it left behind. She also tests the argument with a unique, geocoded data set of village-level public goods investments in the 2000s, finding that areas that were once home to precolonial states distribute goods more broadly across space. These patterns cannot be explained by ethnic or electoral dynamics. Two brief examples from on-the-line cases illuminate how the presence of precolonial identities facilitates local cooperation. The article thus calls into question the tendency to treat identities as static over time, highlighting the interactive relationship between institutions and identities while drawing attention to emerging subnational variation in local government performance following decentralization reforms across the developing world.
Endogenous borders and access to the sea
Brad Sievers & Robert Urbatsch
Political Geography, March 2018, Pages 43-53
Abstract:
A longstanding literature suggests that being landlocked inhibits countries' development. Yet a corollary implication of the underlying theories supporting this conclusion is that having multiple neighbors should lessen the drawbacks of being landlocked – and this implication does not appear to be borne out in practice. This suggests that traditional claims about the causal effect of being landlocked may be overstated. Landlocked countries instead may tend towards worse developmental outcomes because of the very same political factors – such as rough terrain, hostile neighbors, or colonial heritage – that originally led them to be cut off from the ocean. Empirical tests confirm this idea: accounting for the political factors that associate with becoming landlocked greatly reduces the estimated statistical effect of being landlocked on development. Caution is warranted when blaming lack of ocean access for social, political, and economic outcomes of interest.
Allocation rules for global donors
Alec Morton, Ashwin Arulselvan & Ranjeeta Thomas
Journal of Health Economics, March 2018, Pages 67–75
Abstract:
In recent years, donors such as the Bill and Melinda Gates Foundation have made an enormous contribution to the reduction of the global burden of disease. It has been argued that such donors should prioritise interventions based on their cost-effectiveness, that is to say, the ratio of costs to benefits. Against this, we argue that the donor should fund not the most cost-effective interventions, but rather interventions which are just cost-ineffective for the country, thus encouraging the country to contribute its own domestic resources to the fight against disease. We demonstrate that our proposed algorithm can be justified within the context of a model of the problem as a leader-follower game, in which a donor chooses to subsidise interventions which are implemented by a country. We argue that the decision rule we propose provides a basis for the allocation of aid money which is efficient, fair and sustainable.
The Co-Evolution of Education and Tolerance: Evidence from England
David Fielding
Social Forces, forthcoming
Abstract:
Using data from several periods of English history and building on the literature on culture and institutions, we analyze the co-evolution of education and attitudes toward women’s and minority rights. First, we establish a strong association between the size of twenty-first-century educational institutions in a given location and the attitudes prevalent there: the proximity of a large college or university is associated with individual support for women’s and minority rights, regardless of whether the individual has been to university. Second, we present evidence for high inter-temporal persistence in the geographical variation in the density of educational institutions over several centuries. Third, we show that the geographical distribution of later educational institutions depends not only on the distribution of medieval institutions, but also on correlates of medieval exposure to ethnic and religious diversity that are likely to have influenced attitudes. Institutions and culture co-evolve, and the inter-temporal persistence of the density of educational institutions is one mechanism (though probably not the only one) that explains the association between medieval exposure to diversity and twenty-first-century attitudes.
Government spending effects in low-income countries
Wenyi Shen, Shu-Chun Yang & Luis-Felipe Zanna
Journal of Development Economics, forthcoming
Abstract:
Despite the voluminous literature on fiscal policy, very few papers focus on low-income countries (LICs). This paper develops a New Keynesian small open economy model to show, analytically and numerically, that several prevalent features of LICs — dependence on external financing, public investment inefficiency, and a low degree of home bias in public investment — play important roles in government spending effects. External financing increases the resource envelope, mitigating the crowding out effects, but it tends to appreciate the real exchange rate, lowering traded output. Although capital scarcity in LICs implies high returns to public capital, low marginal investment efficiency can substantially dampen the output multiplier. Also, public investment may not be effective in stimulating output in the short run, as LICs often rely on imports to a large extent to carry out public investment projects, weakening its role as a short-run demand stimulus.
Land, State Capacity, and Colonialism: Evidence From India
Alexander Lee
Comparative Political Studies, forthcoming
Abstract:
Many authors have argued that colonial institutions influenced contemporary economic outcomes by influencing levels of economic inequality and political conflict. Such accounts neglect an additional important mechanism, differences in state capacity. These two mechanisms of colonial persistence are examined in the context of India, where colonial land tenure arrangements are widely thought to influence contemporary outcomes through class conflict. However, land tenure institutions were also associated with differences in state capacity: In landlord-dominated areas, the colonial state had little or no presence at the village level. An analysis of agricultural outcomes in Indian districts, using a set of original measures of colonial state capacity, shows that while land tenure in isolation is a surprisingly weak predictor of agricultural success, state capacity has a strong and consistent positive association with 20th-century economic activity. The findings reinforce the importance of colonial rule in influencing contemporary state capacity and the importance of state capacity for development.