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# Dictatorship, Democracy, and Development

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## 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.

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... 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. ...
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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). ...
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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). ...
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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.
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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
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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