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Dictatorship, Democracy, and Development
Abstract
This book shows that in calling economics the ‘dismal science’, Thomas Carlyle was profoundly wrong. The influence of economic thinking on other social sciences is bringing about a theoretical integration of all the social sciences under one overarching paradigm. The ten chapters of this book illustrate the intellectual advances that account for this unified view of economics and societies. The key theme that emerges is the interaction between political, economic, legal, and social forces. Examples of this include the political influence of corruption and special interest groups, the organizational structure of a government, the effect of commercial law, and the differences between communities with high and low social fragmentation. All these affect and are affected by economic conditions.
... However, some theories question the role of political stability in promoting economic growth, especially when it comes to keeping up with an accelerated pace of economic growth (Olson, 1993). In the long term, a stable society with unchanged borders and an entrenched political regime is increasingly resistant to change. ...
The economy, like all other human activities, would not be properly exercised in a place where there is a societal unsteadiness. Indeed, governments place the maintenance of political stability at the center of their interests. So, what is the impact of maintaining this stability upon the economic performance? To provide an answer to this question, we have studied this dynamic on the most unstable continent on the planet, Africa. This paper attempts 36 TITRE DE L'ARTICLE International Journal of Economics and Management Research, V.1, N°4, Juin-Juillet 2021 to model the relationship between these two components under a macro-dynamic model, Autoregressive Delayed Model (ARDL), on a panel of forty African countries over a period of 20 years that goes from 1997 to 2017. The paper's empirical results reveal that political stability has an impact on GDP per capita through investment. Moreover, the nature of this impact may depend on the location of an African country in the sample. Indeed, this model allows us to distinguish three categories of countries where the impact of stability on economic performance is either positive, negative or neutral. In the short run, political stability has a positive impact on GDP per capita across the Southern African region, while its impact is neutral for North African countries.
... This work ranges from applications of rational choice theory to heterodox political economy, but a common theme is the evolution of state-society relations through bargaining over taxation. The emergence of institutions to protect property rights, establish checks and balances on the executive, or provide political stability has been traced to different aspects of the tax bargain (North, 1990: 49;Olson, 2000). ...
The digitization of taxation systems can assist inclusion. However, it can also inadvertently lead to adverse outcomes for the poor in developing countries where many firms in the informal sector have low capabilities. Moreover, larger formal sector firms are often politically networked and in a position to engage in extractive informal transactions that digitization alone cannot restrict. Thus, while digitization creates tools for the enforcement of formal regulations, formalization can be unequal. This contribution focuses on digitized taxation as an application of a more general problem with digitization as a tool for formalization, referring to evidence from the rollout of the Goods and Services Tax (GST) in India. Using the analysis of political settlements, the authors distinguish between types of rule violations in developing economies. Networked higher-capability firms engage in ‘informal’ transactions when they violate rules to extract rents. This is different from the informality of unregistered micro and small enterprises in the informal sector who often violate rules they cannot adhere to, and make informal payments to enforcers to continue operating. When digital technologies are used in these contexts, adverse outcomes for welfare and inclusion can follow from ‘premature formalization’. A more cautious and inclusive path to formalization is necessary to protect vulnerable groups.
... 5 While average incomes have increased, the rise in inequality is most pronounced "in the upper parts of the distribution in most countries" (Jaumotte et al., 2013). Further, many countries, mainly autocracies, do not have strong developed markets or democratic institutions (Olson, 1993). Hence, economic agents in autocratic countries may behave quite differently than those in developed economies (Adam et al., 2011). ...
We identify new country characteristics that influence cross border equity flows: income inequality, autocracy, and sovereign wealth funds. Using 149 source countries and 34 OECD host countries for 2002‐2013, we find that OECD host countries receive higher Foreign Portfolio Investment (FPI) inflows from source countries with high income inequality and source countries with a sovereign wealth fund; but lower inflows from autocratic source countries. We argue that concentrated wealth in a society, overseas investments for the benefit of future generations, and political regimes influence FPI. Those variables have been understudied though they provide valuable indicators for policymakers and investors. We supplement our core analysis with realistic interactions between those new variables, and with the increasing importance of tax havens. Our results hold throughout a variety of robustness checks.
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This essay discusses how criminal organizations in South America have reconfigured themselves in the face of the pandemic scenario experienced since late 2019. In particular, it examines how the practices and actions carried out by these associations were carried forward in the pandemic, maintaining or even giving force the influence of crime on the life of South American society. It is argued that in order to understand criminal governance, it is essential to consider the discussion of how the territories in which these organizations operate are not in conflict with the state, but rather there is a hybrid governance in which criminal organizations and the state coexist as two sources of legitimacy and authority. There is a complementarity of actions, in which criminal organizations were seen during the pandemic occupying state functions in the adoption of protective measures, and provision of assistance, but always with a clear objective of maintaining the status quo of their illicit activities. In the end, it is clear that criminal organizations have consolidated themselves as a governance space recognized as legitimate during the pandemic, complementing and, perhaps even, eclipsing the role of state bureaucracy in the face of the seriousness of the health emergency experienced, especially in the cases of Brazil and Colombia.
The traditional perception is that foreign aid provides leaders in recipient states access to nontax revenue, which incumbents may be able to manipulate in order to provide public or private goods as is required to maintain office. Recognizing this possibility, donors have been shifting away from direct government-to-government aid and toward bypass aid, administered by NGOs and civil society groups rather than the regime directly. Receiving aid through alternative channels is designed to increase aid’s effectiveness, yet it has potential implications for incumbent leaders who may have less ability to manipulate aid receipts to their benefit. In this paper, we argue that bypass aid should negatively affect leaders’ tenure, conditional on the political institutions in place. Using data on bypass aid from 2004 to 2017, we find evidence of a punishing effect and conclude that bypass aid is a particularly acute problem for leaders in authoritarian regimes. The findings imply that efficiency and stability may present a tradeoff for potential donors and that bypass aid may not be the panacea of the aid effectiveness movement.
Domestic and international regulators routinely invoke and construct different time horizons to justify the creation of legal norms within their respective spheres. In their routine development, national and international lawmaking processes are characterized by different temporal narratives, and this mismatch occasionally causes frictions between the two levels of governance. Two factors are essential for understanding the role played by the politics of time in the definition of normative outcomes at the domestic and international levels. Firstly, the time perceptions and preferences of any community are socially constructed, ever-changing, and may be strategically manipulated to pursue specific policy goals. Secondly, the production of legal norms always entails diachronic commitments, which generate dilemmas for lawmakers whenever they choose between short- and long-term objectives. While domestic normative processes and time narratives are predominantly characterized by a circular and short-term horizon, international law chiefly involves a linear, incremental, long-term progression towards some ultimate goal of humankind. The interaction between the different time narratives enshrined in domestic and international lawmaking shapes the temporal dimensions of global governance and regulatory action.
Prevailing views suggest rebels govern to enhance their organizational capacity, but this book demonstrates that some rebels undertake costly governance projects that can imperil their cadres during war. The origins for this choice began with the Chinese Communist Party (CCP) during the Chinese Civil War. The CCP knowingly introduced challenging governance projects, but nevertheless propagated its strategy globally, creating a behavioural model readily available to later rebels. The likelihood of whether later rebels' will imitate this model is determined by the compatibility between their goals and the CCP's objectives; only rebels that share the CCP's revolutionary goals decide to mimic the CCP's governance fully. Over time, ideational and material pressures further encouraged (and occasionally rewarded) revolutionary rebels' conformity to the CCP's template. Using archival data from six countries, primary rebel sources, fieldwork and quantitative analysis, Governing for Revolution underscores the mimicry of and ultimate convergence in revolutionary rebels' governance, that persists even today, despite vast differences in ideology.
This chapter examines the roles of politicians with backgrounds in the private sector to better understand how a fragmented and newly democratic country can pursue economic reform. The chapter considers the case study of Indonesia, where obstacles to reform can emerge from within its multiparty presidential system. At present, Indonesia is experiencing economic stagnation and there is a sense of urgency when it comes to creating economic opportunity. This chapter examines the political landscape across Joko Widodo’s presidential term and his expressed commitments to deregulation.KeywordsCredible commitmentEconomic reformElectoral democracyTheory of action
Why are laws and contracts effectively enforced in some developing countries but shelved, undermined, or sabotaged in others, even when formal institutions are in place? We develop a model to explore the interaction between the ruler, front-line bureaucrats, and civilians. We emphasize that bureaucrats’ beliefs play a vital role in determining law enforcement outcomes. Bureaucrats’ beliefs about the ruler’s type determine their expectations about whether the ruler would launch an investigation when observing law non-enforcement, which then shapes their incentive to enforce laws. The ruler’s discretion to pursue personal interests has a signaling value as to his or her type. Our game generates a unique separating equilibrium, wherein ruler types differ in whether to exercise discretion to advance personal interests and the bureaucrats enforce the law if and only if not observing the ruler’s discretion. The game also yields two pooling equilibria where different ruler types choose the same strategy. We illustrate the theoretical insights with a comparative discussion of rulers in weak states and in developmental states.
Based on the perspective of market attention, this study investigates financial analysts' performance in the presence of corporate philanthropy in China. We find that the involvement of corporate philanthropy is associated with lower analyst forecast error. Additionally, our results show that the favorable effect of philanthropy on analyst forecast accuracy is stronger for firms with higher and easier information exposure in the face of engaging in corporate philanthropy. Collectively, our findings have important implications for academics and practitioners in understanding the function of corporate philanthropy in financial markets.
How stable are democracies? Building on Ghosal and Proto (2009, Journal of Public Economics , 93, 1078–1089), the conditions under which democracies are stable are analyzed. How these conditions relate to the threat of the rise of right wing populism poses to democracies is discussed.
What determines violent reaction during state formation processes? To address this question, we exploit the uprisings that occurred when southern Italy was annexed to Piedmont during Italian unification in the 1860s. We assemble a novel dataset on episodes of brigandage, a form of violent rebellion against the unitary government, and on pre-unification social and economic characteristics of southern Italian municipalities. We find that the intensity of brigandage is ceteris paribus lower in and close to settlements of Piedmontese origin. We argue that geographical distance from these communities is a proxy for cultural distance from the Piedmontese rulers. Thus, our results suggest that, in the context of state formation, cultural proximity to the new ruler reduces social unrest by local communities. After ruling out alternative mechanisms consistent with the economic literature, we provide suggestive evidence of cultural persistence and diffusion in our context, and discuss two possible culture-based drivers of our results: social identification with the Piedmontese rulers, and a clash between local values and some specific content of the new institutions.
This study investigates how statehood experience influences financial institutions' efficiency through the quality of governance. To this effect, the study employs a Tobit instrumental variables technique with data from 22 African countries for the period 2002–2018. The state antiquity index, recently provided by Ang and Fredriksson (2018), is used to capture statehood experience whereas rule of law, voice and accountability, regulatory quality, political stability and absence of violence, government effectiveness, and control of corruption are the indicators of the governance quality. Our results show that statehood experience, directly and indirectly, influences financial institutions' efficiency. The nature of the direct effect is negative, while that of the indirect effect depends on the governance indicator considered. Indeed, the negative effect of statehood experience is moderated by the strict application of the rule of law and amplified by control of corruption, political stability and absence of violence, and excessive regulation. Thus, to reduce the negative effect of statehood experience on the efficiency of financial institutions, older African states should: i) promote strict enforcement of the rule of law and alternation of power, and ii) relax regulation and government intervention.
The subject of the paper is to explain the impact of three braking negative transition factors causing the long-term stagnation of socio-economic development in the three selected countries of South East Europe (SEE) - Bosnia & Herzegovina, Montenegro, and Serbia. It is about institutional inefficiency (which is generated in the synergistic action of alternative institutions and neoliberalism), the post-socialist totalitarian legacy related to the nomenclatures of power, and the underdevelopment of socio-cultural capital. The aim of this paper is to prove their dominant influence on the reproduction of the socio-economic development deficit (in fact: stagnation) in the observed countries through a hypothetically constructed survey model. The starting point is the basic hypothesis that the overall phenomenology of developmental stagnation is caused by wrong, slow, and inefficient institutional changes (political and macroeconomic), which have caused the dominance of alternative institutions. It also starts with the auxiliary hypothesis that privileged institutional monism (expressed in pronounced non-market appropriation) was the basic motive for the action of these braking factors, although methodologically and essentially it was in paradoxical contradiction with the proclaimed promises of “reformers”. In addition to the usual methods of social sciences, the paper used the results collected through an electronic survey of 900 respondents. In conclusion, the set hypotheses were verified, confirming the imperative need for democratization of society and the application of institutional pluralism on the model of developed countries, which implies the elimination of the considered braking factors.
Few technologies have been mired in hype more than blockchain, which is the underlying peer-to-peer network protocol for cryptocurrencies such as Bitcoin. Given the technology’s emphasis on purported “immutable ledgers” and trust-less sharing models, there has been a great deal of interest in applying blockchain to democratic reforms. From localized decision-making to national-scale voting systems, blockchain has spurred a surge of interest in how democracy might “get a software update”. While significant research exists on socio-technological imaginaries (perceptions) and potential applications (experiments) within the Global North, few studies have looked at more dynamic contexts, particularly Central Asia. In light of the violence surrounding elections in October 2020 and previous revolutions against the country’s central government, the status of democracy in Kyrgyzstan is, at best, fragile and, at worst, non-existent. This article explores alternative futures scenarios for localized, blockchain-driven governance futures in Kyrgyzstan and concludes with a proposal for deeper investigation.
In environments of seemingly intractable conflict, how should we understand the role of state capacity building and security-sector reform in transitions to peace? Prevailing wisdom suggests that a strong state security apparatus mitigates cyclical violence and aids in transitions to predictable, rule-governed behavior. Yet growing attention to police brutality in institutionalized democracies calls this assumption into question. Drawing on a multiyear study of war making and state making in eastern DR Congo, this article interrogates logics of police capacity building, analyzing how and why reform efforts intended to bolster the state’s monopoly on violence frequently fail to curb the unrest they seek to disrupt. I argue that enhancing the coercive capacity of the police can entrench a wartime political order that makes peace more elusive; when police deploy the image of the state toward destabilizing ends they reinforce the institutions of everyday war, undermining the stability a monopoly on violence is intended to build.
There is evidence for mixed effects of democracy on the development of the financial sector. Part of the literature explains theses controversies by assuming that democracy’s effect on development is non-linear. This paper tries to bring new insights into this debate by examining non-linearities by the way of a new method of analysis, i.e., a panel smooth transition regression model. We use a sample of 90 developing countries over the period 1984–2007 and rely on panel smooth threshold regression, fixed effects, and system GMM models. Findings confirm the fact that the relationship between democracy and financial development is indeed non-linear. Furthermore, results demonstrate that the level of democracy and financial system development are correlated in a U-shaped manner. Hence, there are two extreme regimes where democracy’s impact on the financial system is different depending on the democracy level. Particularly, there is a threshold level of democracy, estimated at 5, beyond which more democracy enhances the financial sector development and below which democracy hinders the development of the financial system.
This paper develops a theory of the relationship between policy disasters and political institutions. Policy disasters, defined as avoidable, unintended extreme negative policy outcomes, are important political, and historical events above that receive relatively little attention from political scientists and scholars of public policy. Using the predictions of punctuated equilibrium theory, I argue that systems with higher error accumulation will experience more policy disasters. Systems with more veto players and weaker information flows will experience more policy disasters, but information flows will have a stronger impact than veto players. I test this theory using data on financial crises and natural and technological disasters across 70 countries over 60 years. I find strong evidence that systems with weaker information flows and more veto players tend to have greater policy disaster risk. 本文就政策失败和政治制度之间的关系提出一个理论。政策失败被定义为可避免的、无意的极端消极政策结果，它们是重要的政治事件和历史事件，但相对而言却并未受到政治科学家和公共政策学者的重视。通过住用间断平衡理论的预测，我主张，错误积累程度更高的系统将经历更多政策失败。否决者更多、信息流更弱的系统将经历更多的政策失败，但与否决者相比，信息流将发挥更大的影响。通过住用与“70个国家在60年里的金融危机和自然灾害及技术失败”相关的数据，我对该理论进行检验。我发现有力证据表明，信息流更弱、否决者更多的系统往往面临更高的政策失败风险。. Este artículo desarrolla una teoría de la relación entre políticas de desastres e instituciones políticas. Los desastres de políticas, definidos como resultados de políticas extremadamente negativos, evitables e involuntarios, son eventos políticos e históricos importantes mencionados anteriormente que reciben relativamente poca atención de los científicos políticos y los estudiosos de las políticas públicas. Usando las predicciones de la teoría del equilibrio puntuado, sostengo que los sistemas con mayor acumulación de errores experimentarán más desastres de políticas. Los sistemas con más jugadores con veto y flujos de información más débiles experimentarán más desastres políticos, pero los flujos de información tendrán un impacto más fuerte que los jugadores con veto. Pruebo esta teoría utilizando datos sobre crisis financieras y desastres naturales y tecnológicos en setenta países durante sesenta años. Encuentro pruebas sólidas de que los sistemas con flujos de información más débiles y más jugadores con veto tienden a tener un mayor riesgo de desastres de políticas.
Did parliamentary constraints foster economic activity or was activity the cause of constraints? This article addresses the first part of this question by examining the long‐term effects of belonging to the Duchy of Württemberg wherein the parliament placed considerable checks on the various dukes from 1495 to 1796. I use a geographic natural experiment and compare areas just inside of the Duchy with adjacent areas outside of it. Economically similar prior to 1495, areas within the Duchy had a higher degree of urbanization and commercialization in the subsequent period. I provide further evidence that this difference reflects three mechanisms: local representation in parliament, improved local public‐goods provision, and attraction of upper‐tail human capital.
Families produce people. This presents a problem for autocratic regimes. On the one hand, familial production benefits the autocrat by augmenting the future productivity of the labor force. On the other hand, familial production threatens the autocrat by drawing current resources and loyalty away from the collective. This paper presents a theory of autocratic family policy in which the deciding factor is how much present control over resources an autocrat is willing to forego for future control. I apply this theory to the Soviet Union, arguing that the somersault of Soviet family policies (1917–1944) was a response to this tradeoff under different conditions.
As environmental pollution brings a series of problems to society and residential lives, how to effectively reduce air pollution and control climate change have become urgent problems. Since institutional quality is an important factor affecting air quality, we evaluated the causal relationship between them based on cross-country panel data from 2000 to 2016. We find that the improvement of institutional quality significantly reduces PM2.5\documentclass[12pt]{minimal} \usepackage{amsmath} \usepackage{wasysym} \usepackage{amsfonts} \usepackage{amssymb} \usepackage{amsbsy} \usepackage{mathrsfs} \usepackage{upgreek} \setlength{\oddsidemargin}{-69pt} \begin{document}$${PM}_{2.5}$$\end{document}, and this pollution reduction effect is obvious in high-income countries and in countries with common laws. Furthermore, under the components of institutional quality, the quality of government regulation, the degree of rule of law, corruption control, and government effectiveness have significant emission reduction effects. To explore how institutional quality affects air pollution, we perform mechanism analysis from the perspective of economic development, foreign trade, and technology progress. We further verify three environmental propositions including the Environmental Kuznets Curve, the Pollution Paradise Hypothesis, and Porter Hypothesis. Results show that the pollution reduction effect of institutional quality can be mediated by economic development rate, foreign direct investment, and technological progress. The Environmental Kuznets Curve exists, the Pollution Paradise Hypothesis is validated in countries with lower institutional quality level, and the improvement of the institutional quality can achieve the Porter Effect through technological progress.
This paper reviews the Roman tax collection system since the Late Republic to the Principality, focusing on the transition from the tax-farming system to a more centralized, census-based administration. We attempt to justify this transition according to New Institutional Economic theories (Transaction Cost Economics and Property Rights Theory). The paper argues that, during the Republic, the auction-based system of tax farming ended up giving place to opportunistic behaviors and abusing practices due to information asymmetries and contract incompleteness, enhanced by the collusion of tax farmers and governors. The Principality improved the efficiency of the tax collection system through the introduction of a bureaucratic and census-based administration, which allowed imperial employees to monitor the tax-farming activities.
This chapter characterises the relations between religion, institutions, and the transparency–prosperity nexus. It explains how economic prosperity, democracy, and transparency are part of a feedback loop that constitutes a single phenomenon. More importantly, this chapter deepens the institutional analysis by concentrating on the particular historical influence of religion on the different legal traditions in Europe and the Americas. It is the cornerstone of Part 3 and, as such, of the entire book.
The Reformation brought forth a wide range of modern institutions. Among these, education and democracy are the most crucial ones for ensuring prosperity/transparency outcomes. Likewise, Protestantism has impacted the secularisation of the state in Protestant countries (and also in Roman Catholics, albeit to a lesser, more indirect extent). Protestantism fosters horizontal power relations and secular-rational attitudes towards authority. Thus, such egalitarian and secular attitudes are linked to greater transparency and prosperity.
The Lutheran German Revolution formed the basis of the various later Protestant, dissenting revolutions and legal traditions (i.e. British and American). Some of its concepts (e.g. separation of state functions from the church; state-sponsored education) permeate all modern legal systems to this day and ended the monopoly of Roman canon law.
Regardless of the advances made by Roman Catholicism in the Second Vatican Council (Vatican II: 1962–1965), corporatist ideologies remain prevalent, mostly in Latin America. But while Roman Catholic discourse has shifted, the institutional inertia persists and maintains the hierarchical status quo and longstanding feudal structures.
This chapter defines the conditions elements of the research model in this study (Fig. 10.1007/978-3-030-78498-0_2#Fig1 ). Therefore, Sects. 5.1–5.7 refer to some influential theories that have sought to explain differences in prosperity between countries from diverse disciplinary perspectives. Potential prosperity factors/theories can be clustered into three groups: (1) cultural and religious values; (2) institutions and economic growth; (3) environment and geography. Each of these distinct theories may contain “a grain of truth” about understanding prosperity imbalances between countries. Ideally, prosperity theories should be complementary instead of competing explanations. For example, geography and environmental theories explain how seasonal lands can provide a society and its economy better conditions to prosper. Institutional theory helps explain how institutions model social prosperity by perpetuating equality loops or by concentrating wealth. Cultural theory contributes to the understanding of the influence of cultural variables, such as religious beliefs and values, on prosperity. Yet, the relations among environment/geography, culture, institutions, and prosperity are highly complex and involve massive historical dynamics which would normally far exceed the scope of empirical research.
Electoral autocracies – regimes that adopt democratic institutions but subvert them to rule as dictatorships – have become the most widespread, resilient and malignant non-democracies today. They have consistently ruled over a third of the countries in the world, including geopolitically significant states like Russia, Turkey, Venezuela, Egypt, Indonesia, Nigeria and Pakistan. Challenging conventional wisdom, Popular Dictators shows that the success of electoral authoritarianism is not due to these regimes' superior capacity to repress, bribe, brainwash and manipulate their societies into submission, but is actually a product of their genuine popular appeal in countries experiencing deep political, economic and security crises. Promising efficient, strong-armed rule tempered by popular accountability, elected strongmen attract mass support in societies traumatized by turmoil, dysfunction and injustice, allowing them to rule through the ballot box. Popular Dictators argues that this crisis legitimation strategy makes electoral authoritarianism the most significant threat to global peace and democracy.
Armed groups seeking to govern territory require the cooperation of many civilians, who are widely perceived as enemy collaborators after conflict ends. The empirical literature on attitudes toward transitional justice focuses heavily on fighters, overlooking more nuanced understandings of proportional justice for civilian collaborators. Through a survey experiment conducted in an Iraqi city that was controlled by the Islamic State, we find that variations in the type of collaboration an actor engages in strongly determine preferences for punishment and forgiveness. While exposure to violence is associated with a greater desire for revenge, perceived volition behind an act—a relatively unstudied factor—is much more important. This research provides unique empirical data on the microfoundations of enemy collaborator culpability. By widening our analytical lens to consider a more realistically broad spectrum of enemy collaboration, we avoid affirming a false dichotomy between victims and perpetrators that is commonly adopted in postwar settings.
This article shows that over the last three decades, competitive elections were associated with increased deforestation. Protection of forested areas provides long-term public goods, while their destruction provides short-term private goods for particular voters. Politicians facing a competitive election offer voters access to forested areas mainly for small-scale farming or commercial use of timber in exchange for electoral support. I test this theory of political deforestation using satellite generated global forest cover data and the results of over 1,000 national-level elections between 1982 and 2016. I find that countries that undergo a democratic transition lose an additional 0.8 percentage points of their forest cover each year, that years with close elections have over 1 percentage point per year higher forest cover loss compared to nonelection years, and that as the margin of victory in an election decreases by 10 points, the amount of deforestation increases by 0.7 percentage points per year. These increases are on the order of 5–10 times the average rate of forest loss globally. This suggests democratization is associated with underprovision of environmental public goods and contested elections are partially responsible for this underprovision.
We survey the recent economics and history literature on the Chinese state to investigate its role in China's long-term socioeconomic development. We highlight three insights. First, unlike in Europe, where interstate competition helped give rise to capitalist states with high capacity, the Chinese state emerged from a different historical context. Second, the 18th- and 19th-century Chinese state does not fit into the mould of a strong and extractive Oriental despotic state as once commonly believed. By conventional measures, early modern China had a weak state. Third, state building and centre-local relations are two useful dimensions to understand development and change in China's recent history and political economy. To adapt China to a changing world, Chinese state builders embarked on a long process of state building from the late-19th century through the Republican and Communist eras. Facilitated partly by regional decentralisation, the process now sees the Chinese state playing a substantially larger role in the economy and everyday life than any previous time in history.
The sport of surfing is best enjoyed with one rider on one wave, but crowding makes that optimal assignment increasingly hard to attain. This study examines the phenomenon of surf localism, whereby competitors are excluded from waves by intimidation and the threat of violence. An alternative way to accommodate crowds is contained in the surfer’s code, which sets informal rules and self-enforced regulations to avoid conflict in the water. Both regimes establish property rights over common pool resources with no state intervention, creating a setting wherein users face the question of cooperation or conflict. The disposition to cooperate and follow norms has been shown to vary substantially across different cultures, though. Employing data from over seven hundred surf spots on the European Atlantic coast, this study reports evidence that certain informal cultural norms significantly reduce the probability of violent exclusion, while formal state institutions mostly are irrelevant. The results also indicate that informal norms become more important with greater resource quality and, possibly, with increasing scarcity.
The evolution of Mancur Olson's views regarding The Rise and Decline of Nations, the second of his three main books, is examined. It expands and extends to history and to the world the arguments presented in his earlier work, The Logic of Collective Action. Although Olson never abandons the idea that the accumulation of interest groups in a democratic society can lead to its economic stagnation, how this comes about and can be overcome changes somewhat by the time of his final book, Power and Prosperity, which focuses on the problems of transition economies and proper political governance. A sign of the greater complexity of his later views emerges in his analysis of the U.S. South, presented in his 1983 presidential address to the Southern Economic Association.
Mancur Olson, professor of Economics at the University of Maryland‐College Park, died February 19, 1998. He served the Southern Economic Association as a member of the Executive Committee in 1978‐80, as President‐Elect in 1980‐81, and as President in 1981‐82. Three of his colleagues, Wallace Oates, Joe Oppenheimer, and Thomas Schelling, contributed personal essays to a memorial symposium in Public Choice Studies (No. 31, 1998), a journal published in Japanese. The Editor thanks the Japan Public Choice Society for permission to publish these contributions in English for the benefit of our readers.
This chapter discusses the unknown future. With uncertainty, something good or bad may happen. In investment, one is often concerned with the likelihood of the latter. Then there are complicating unknown unknowns. The investments return known only ex post sums it up as for a roulette ball that has reached standstill. Economic slumps represent risk. Everyone may have been too optimistic regarding the future. Asset prices could fall sharply, particularly for stocks and fixed real assets. For SWFs, slumps may be the most important risk. Another important factor is political stability. The world became safer for investment around 1990. Still, geopolitics represents a risk that has excluded some areas from receiving investments. However, for most investors more mundane, traditional risks dominate. A further uncertainty is demographics. Resource wealth is diluted by immigration. Traditional Norwegians have few children, late in life. Newcomers have higher birth rates and are not integrated in the labor market. Higher immigrant employment rates and more successful integration seems needed for long-term success and sustainability.
Deposits of hydrocarbons are a specific type of non-renewable natural resources. Once developed and sold, they are gone. They can be left alone for prospective future development or extracted and converted into financial assets. The more easily extractable parts are developed early. Over time, technological development increases the volume of that category. Oil resource are ‘free’, and extraction highly profitable. An oil industry may thus attract significant resources. Positive income shocks evolve in good times, with needs to save for the future. In Norway, the state has mended individual savings failure through removing income from current budgets and investing it systematically long-term. Throughout the oil age there has been significant savings and investment, till 1998 in domestic infrastructure through public budgets, and later internationally through a large SWF. With erratic hydrocarbon prices, it was risk-reducing not to leave more hydrocarbons untouched. This is underscored both by high investment returns and recent indications of fossil fuel non-sustainability.
This article explores the role of trust in corrupt networks and networks that facilitate corruption. Specifically, we ask what is the role of particularized trust in the operation of systemic corruption? How is the basis of trust reflected in the logic of corruption and with which effects? Based on the analysis of 50 in‐depth interviews in two Mexican cities, we analyze two types of particularized trust that bind actors in informal networks: trust based on political affiliation and/or personal relationships and trust derived from complicity, or the co‐participation in illicit activities. Analysis suggests that the basis of trust and the dynamics that arise thereof have different effects on the functioning and stability of the informal networks and that these, in turn, reflect the informal governance systems in place. This article provides further empirical evidence to the central role that particularized trust plays in contexts of systemic corruption, highlighting the importance of understanding these dynamics for the design of anti‐corruption efforts.
Modern seçime dayalı demokrasilerde siyasi parti başkanı, devlet ya da hükümet başkanı, ya da seçilmiş milletvekillerinin uzun süreli ve kalıcı olarak siyasette bulunmaları durumunu “Gedikli Siyaset” olarak adlandırıyorum. Siyasete adımını atan bir kimse öncelikle seçildiği parlamentoya bir sonraki dönem bir daha seçilebilmenin hesabını yaparak hareket eder; bir siyasi partiye başkan olarak seçilmiş siyasetçi delege hesaplarının matematiğini iyi yaparak o makamda uzun süreli ve kalıcı olmayı hedefler; seçilmiş bir devlet başkanı ya da hükümet başkanı da görev süresi konusunda anayasada bir sınırlama yoksa o makama tekrar seçilebilmeyi arzular; anayasa izin vermediği takdirde siyasi manüpülasyonlar yoluyla o makamda kalmaya çalışır, hatta daha da ileri giderek kendini “ebedi lider” ya da “yaşam boyu lider” olarak ilan etmenin yollarını arar. Özellikle demokrasi, sosyal sermaye ve ahlak yönünden zayıf olan toplumlarda siyaset tarihi bu yazdıklarımızı doğrulayacak pek çok gedikli siyasetçi örnekleriyle doludur.
Devlet başkanı ya da hükümet başkanlarının, siyasi parti başkanlarının, milletvekillerinin ömür boyu kariyer siyasetçiliği yapmalarını engelleyecek bağlayıcı anayasal kurallar anayasal demokrasinin olmazsa olmaz şartlarından birisidir.
İster başkanlık sistemi, ister parlamenter sistem olsun bir başkan, cumhurbaşkanı ya da başbakanın görevde kalmasının belirli bir süre (dönem) ile sınırlandırılması gerekir. Bu konuda modern demokrasilerin bir kısmında uygulama alanı bulan maksimum 2 dönem (4+4=8 yıl) kuralı uygun bir anayasal kural olarak benimsenebilir.
Siyasal parti başkanları için de benzer bir anayasal kural kabul edilebilir. Yani bir siyasal parti başkanı ve parti meclisi üyelerinin en fazla iki dönem görevde kalabilecekleri kuralı kabul edilebilir.
Temsilciler Meclisi’ne seçilecek (Millet Meclisi) milletvekilleri ve yerel yönetim temsilcileri (belediye başkanları) için de aynı kural benimsenebilir.
Bundan yaklaşık 350 yıl öncesinde John Lilburne ve arkadaşlarının kaleme aldığı Anayasa metninde yer alan şu kuralın ana mantığının hiçbir zaman akıllardan çıkarılmaması gerekir:
“V.-Aynı kişinin iktidarda uzun süre bulunmasından ortaya çıkan çeşitli rahatsızlık ve tehlikelerden kaçınmak için (…)
mevcut parlamentonun hiçbir üyesi bir sonraki temsilcilik için seçilme niteliğine sahip değildir ve gelecekteki herhangi bir temsilciliğin her hangi bir üyesi kendisinden hemen sonra gelen meclise seçilme ehliyetine sahip değildir.”
Tesviyeciler Hareketi Bildirgesi ( 30 Nisan 1649)
Seçilmiş bir politikacının maksimum iki dönem görev yaptıktan sonra tekrar parlamentoya girmesini engelleyen açık bir anayasal tasfiye kuralı fevkalade önemlidir.
John Lilburne ve arkadaşları ikinci bir döneme izin vermeyen ve görev süresini bir dönem olarak sınırlayan bir kuralı benimsemişlerdir. Tek dönem ya da iki dönem sınırlamasının her ikisinin de artıları ve eksileri vardır. Ancak doğru olan görev süresini sınırlamaya dönük bir “tesviye” (tasfiye) kuralı oluşturulmasıdır.
Seçilmişler için geçerli olacak kuralın bir benzerinin belirli kilit öneme sahip kurumların başkan ve üyeleri için de geçerli olması önem taşır. Anayasa Mahkemesi başkan ve üyelerinin, üst derece mahkemelerin başkan ve üyelerinin, Merkez Bankası başkanının vs. hem seçiminin siyasetten bağımsız olması, hem de seçilen bu yöneticilerin aynı makamda uzun süre görev yapmalarını engelleyecek anayasal kurallara da ihtiyaç olduğunu düşünüyorum.
This article introduces a novel conceptualization of democratic resilience - a two-stage process where democracies avoid democratic declines altogether or avert democratic breakdown given that such autocratization is ongoing. Drawing on the Episodes of Regime Transformation (ERT) dataset, we find that democracies have had a high level of resilience to onset of autocratization since 1900. Nevertheless, democratic resilience has become substantially weaker since the end of the Cold War. Fifty-nine episodes of sustained and substantial declines in democratic practices have occurred since 1993, leading to the unprecedented breakdown of 36 democratic regimes. Ominously, we find that once autocratization begins, only one in five democracies manage to avert breakdown. We also analyse which factors are associated with each stage of democratic resilience. The results suggest that democracies are more resilient when strong judicial constraints on the executive are present and democratic institutions were strong in the past. Conversely and adding nuance to the literature, economic development is only associated with resilience to onset of autocratization, not to resilience against breakdown once autocratization has begun.
Populist and authoritarian leaders are increasingly coming to power in large countries. They often have a climate sceptic approach and do away with mitigation policies when coming to power. Increasing impacts of extreme meteorological events linked to climate change could lead to a situation where the supporters of the populist leader or elites crucial for the survival of an authoritarian regime are pushing to do something to address climate change. In order not to lose power, the leader may look for quick and cheap solutions. In such a context, solar radiation modification (SRM), for example, by stratospheric aerosol injection (SAI), will become very attractive as it is likely to have low costs and rapid effects. Populist or authoritarian governments are unlikely to care for negative impacts of SRM abroad as they often act nationalistically with an explicit disdain for multilateral solutions. We discuss the incentive structure and political economy that populist and authoritarian leaders may face regarding unilateral use of SRM and elaborate how the international community could try to prevent or at least ‘contain’ such unilateral uses of SRM. Unfortunately, such ‘containment’ is contingent on the most powerful states not being populist or authoritarian regimes. Solar radiation modification through stratospheric aerosol injection or – to a lesser extent – marine cloud brightening ‐ is a ‘pandora’s box technology’. It seemingly addresses the climate change problem rapidly and cost‐effectively. It is the ideal tool for an unscrupulous authoritarian or populist leader who wants to be seen as acting quickly and decisively against climate change.
This paper presents cross-country evidence about the relationship between politicians’ horizon and their rent-seeking behavior. Using information from CIA’s World Factbook and from the National Elections across Democracy and Autocracy dataset, we construct variables of term limits, term length and political turnover at the top executive level. We simultaneously estimate the correlations between these three variables and corruption—measured using a corruption index—from pooled cross-sections of 137 developed and developing countries observed from 2000 to 2015. We find a positive correlation between corruption and: (i) term limits at low level of term length, (ii) term length in the absence of term limits, and (iii) political turnover. Results suggest that politicians behave best if there are no term limits and frequent elections. We also provide evidence that the downward sloping part of a U-shape relationship between political turnover and corruption previously found in empirical papers can be explained by accountability and observability technologies. Theoretical mechanisms that can explain these findings are discussed.
The constitutional political economy (CPE) approach as developed by James Buchanan places emphasis on supermajority rules—in particular, a unanimity requirement for constitutional change. Critics argue that this approach “privileges the status quo” in two problematic ways: (1) alternatives are treated unequally, because the status quo requires a smaller coalition to be “chosen” than any other institutional arrangement selected to replace it; and (2) individuals are treated unequally, because those who happen to support the status quo have excessive power to impose their will on the larger group, implying that a minority illegitimately is privileged to block change. This is a serious and important challenge. At the same time, we argue that critics have conflated two analytically distinct issues in arguing that the CPE paradigm (and constitutionalism more generally) “privilege the status quo”. Moreover, we aim to show that in rejecting the “privileged position of the status quo”, critics must confront an equally challenging task: Providing a “measuring stick” by which the legitimacy of the status quo, and changes to it, can be judged. It is precisely skepticism regarding the possibility of providing a criterion of legitimacy that is independent of agreement that leads to the peculiar position of the status quo in Buchanan’s thought.
Corruption is widely believed to have an adverse effect on the economic performance of a country. However, many East-and-Southeast-Asian countries either achieved or currently are achieving impressively rapid economic growth despite widespread corruption – the so-called East-Asian-Paradox. A common feature of these countries was that they were autocracies. We re-examine the corruption-growth relationship, in light of the East-Asian-Paradox. We examine the role of political regimes, in mediating corruption–growth relationship using panel data over 100 countries for the period 1984–2016. We find clear evidence that corruption–growth relationship differs by the type of political regime, and the growth-enhancing effect of corruption is more likely in autocracies than in democracies. The marginal effect analysis shows that in strongly autocratic countries, higher corruption may lead to significantly higher growth, while this is not the case in democracies. Alternatively, democracy is not good for growth if there is a high level of perceived corruption. We provide suggestive evidence that the mechanism by which corruption is growth-enhancing in autocracies is through the perceived credibility of the commitment of ruling political elites to economic freedom, thereby providing confidence to the firms to invest, leading to long-term growth.
Uncertainty induced by various economic and non-economic factors instigates macroeconomic instability. Macroeconomic instability, further, reduces predictability of a country’s macroeconomic situation, leading to misallocation of resources, reduction in economic growth and investment. This study aims at investigating the impact of violence on macroeconomic instability in selected developing countries over the period of 1984–2016. In doing so, the study has used various dimensions of violence in order to test the size, significance and direction of each type of violence for macroeconomic instability. Macroeconomic instability index is computed by using terms of trade, inflation rate, unemployment rate and real exchange rate. For estimating the impact of violence on macroeconomic instability, we have employed system GMM technique. This empirical findings state that violence increases macroeconomic instability in selected sample of developing countries. We also report that among developing countries, low-income countries suffer more from violence in comparison to the middle-income countries. This finding is robust among all dimensions of violence taken by the study. Notably, we have found that the harmful impact of interstate violence is highest for macroeconomic instability. Our findings are robust as violence creates uncertainty which distorts investment, savings and consumption, and hence affects overall economic performance.
This paper investigates whether politicians who have plagiarized their PhD dissertations perform worse in running their polities than those who have not committed plagiarism. We look at the Russian regional governors and document that a substantial portion of them have plagiarized PhD theses. We find a negative association between plagiarized PhD of a governor and development of infrastructure (specifically, housing construction and spread of broadband Internet) in a region, controlling for other region-level characteristics potentially affecting infrastructural development. We argue that in the Russian context, a plagiarized PhD thesis is likely to indicate that a governor both is inclined to dishonest behavior and possesses poor managerial capabilities, which should have a particularly negative effect on the performance of their regions in terms of the development of infrastructure.
In this reply, I respond to and elaborate on the critique of my book “The Code of Capital” published in this special issue. The common thread of the critiques is the call for more theorizing of the themes the book addresses, especially the conception of state power, of resources, social relations and questions of knowledge and access to knowledge about the law, or epistemology. This reply is only a first response to issues that do require further analysis and I am hoping to follow suit on at least some of them in the near future.
This paper examines whether autocracy is a gamble. Using robust variance tests and other analyses, we find that long-term growth varies more across autocracies than across democracies. This remains true even when richer countries are excluded from the sample. We also investigate channels, to see if the higher variance of growth outcomes across autocracies can be traced to a higher variance in investment ratios or productivity growth. Overall, the paper’s findings suggest that growth prospects are more uncertain for autocracies than democracies, and especially for closed autocracies. From the viewpoint of a domestic population, autocracy remains a gamble.
en A common view is that verified earnings reports encourage investment through improved transparency. We lack direct evidence on this foundational proposition because researchers cannot observe counterfactuals in which a manager either (i) must remain silent about performance or (ii) can make any statement about performance they desire, even a bald‐faced lie. We experimentally manipulate whether a manager can provide information to an investor by voluntarily disclosing a verified earnings report, communicating freely via unverifiable cheap talk, or both. Our experiment involves repeated interactions between an uninformed investor with funds that, if invested, generate uncertain gains, and a trustee‐manager who observes and then divides gains after they are realized. We hypothesize and find that (i) the provision of a verified earnings report leads to higher investment compared with a world in which reporting is not possible and (ii) the provision of a verified earnings report leads to more accurate cheap talk communication than when earnings reports are unavailable. Contrary to our prediction, we find that investment when both earnings reports and cheap talk are possible is statistically indistinguishable from investment when only cheap talk communication is available. Further tests reveal that a lack of verified earnings reports leads managers to sustain a partner's investment by providing high returns to the investor while also limiting (but not completely eliminating) deceptive communication and profit‐taking. Our main conclusion is that verified earnings reports promote investment on a stand‐alone basis by improving transparency, but the effect of greater transparency from earnings reports on investment is more nuanced when earnings reports can influence the disclosure of unverifiable information. The main implication of our evidence is that the greater transparency of management behavior with verified earnings reports is not unambiguously positive because making behavior more transparent can lead managers to change their behavior.
RÉSUMÉ
fr Les rapports sur les résultats vérifiés accroissent‐ils les investissements?
Selon une conception largement répandue, les rapports sur les résultats vérifiés encouragent les investissements, car ils accroissent la transparence. Nous ne disposons pas de données directes confirmant cette proposition de base, car les chercheurs ne peuvent pas effectuer de vérifications factuelles lorsqu'un gestionnaire : 1) n'est pas autorisé à parler de rendement ou 2) peut faire toutes les déclarations qu'il désire à propos du rendement, même s'il s'agit de mensonges éhontés. À l'aide de manipulations expérimentales, nous examinons si un gestionnaire peut fournir de l'information à un investisseur en lui transmettant volontairement un rapport sur les résultats vérifiés, en communiquant avec lui librement dans le cadre d'une discussion informelle non vérifiable, ou de ces deux façons. Notre expérience comporte des interactions répétées entre un investisseur non informé disposant de fonds qui, s'ils sont investis, génèrent des profits incertains, et un gestionnaire fiduciaire qui observe puis divise les profits réalisés. Nous prévoyons et établissons que : 1) la transmission d'un rapport sur les résultats vérifiés entraîne une hausse des investissements par rapport à une situation où une telle transmission n'est pas possible et 2) la transmission d'un tel rapport mène à des discussions informelles plus précises que lorsque ce type de rapports n'est pas fourni. Contrairement à nos prévisions, nous constatons qu'il est statistiquement impossible de distinguer le niveau d'investissements associé à la possibilité à la fois de transmettre un rapport et de discuter de façon informelle de celui associé à la seule possibilité de discussion informelle. Des tests additionnels révèlent que l'absence de rapports sur les résultats vérifiés incite les gestionnaires à soutenir les investissements d'un partenaire en générant des rendements élevés pour l'investisseur tout en limitant (sans toutefois les éliminer) les discussions fallacieuses et la prise de profit. Notre principale conclusion est qu'en soi, les rapports sur les résultats vérifiés favorisent les investissements en augmentant la transparence, mais que l'effet de cette transparence accrue sur les investissements est plus nuancé lorsque ces rapports peuvent influencer la divulgation d'information non vérifiable. La conséquence principale de nos observations est que la plus grande transparence des gestionnaires en présence de rapports sur les résultats vérifiés n'est pas entièrement positive, car la transparence accrue peut inciter les gestionnaires à modifier leurs comportements.
This research paper is aimed at formulation of a composite Governance and Democracy Index (GDI) based on the six indicators of good governance by Kaufmann et al. (2003, 2007) to assess and evaluate the relative performances of 10 major democracies of the world for the time period of 20 years (1998 – 2017) (Base Year = 1996). In order to do
so, three distinct methodologies are adopted based on the absolute values and relative changes in the observations of independent variables. The extended part of this research involves formulation of Governance, Democracy, and Emancipation Index (GDEI) which incorporates the Emancipative values.
Money laundering is not a victimless crime. Under certain circumstances, it may lead to significant criminal violence. We analyze the specific case of money laundering in local economies. Criminal organizations invest dirty money in legal local businesses, which may lead to short-term improvements in the economy that benefit the population. Authorities with access to local information may (purposely) fail to report suspicious economic activities to specialized agencies in charge of money laundering because it is politically and economically convenient. The economic windfall generated from illicit money can eventually attract additional criminal organizations to the community, or may fragment the dominant criminal organization, endogenously increasing violence. The violence generated in no way compensates the previous economic growth. We develop theoretical insights on the conditions under which this mechanism exists, and empirically test its incidence and the magnitude of its effects, using Mexican municipalities as units of analysis.
We analyze the economic performance of countries after a multi‐decade political ruler, defined as having been in office 20 or more years, loses power. For 37 countries experiencing such an end‐of‐reign event in the period 1971–2005, we use an event study approach to compare growth in the decade following the event with growth in pre‐event periods. The results show that event countries have below average growth in the year a long‐term political leader leaves office and that cumulative growth in the ensuing decade at best matches and at worst falls significantly short of pre‐event growth levels. Growth contractions are no different following irregular transitions than after regular transitions, suggesting our results are not explained by inadvertent post‐reign turmoil. Our results instead suggest that post‐event contractions may be shaped by deliberate efforts by long‐term leaders to concentrate power while in office and poison the post‐reign economic or political environment.
All of the major religious confessions existing today have outlasted every single secular ruling regime known in human history. That observation poses an interesting puzzle for social scientists interested in institutional durability. If religions can be seen as governance institutions that organize and coordinate people’s lives, why have they outlasted secular states? Despite claims regarding the inevitability of secularization, religious institutions refuse to fade from the social landscape and in many places are thriving and expanding. I argue that the durability of religious institutions relative to secular governing regimes is related to the unique ability of religions to avoid the public choice “paradox of government” as laid out by James Buchanan. More precisely, religious institutions are more resilient because they effectively provide vital public goods, involve “citizens” in the process of governance at the local level, and provide a credible neutral arbitrator for violations of the governing covenant. A further argument is made for the efficiency of religious institutions relative to states based on the smaller deadweight losses associated with participatory governance. Finally, state-sponsored confessions expose themselves to the paradox of government and become less effective in pursuing their missions.
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