inequality and fractionalization we present evidence that ethnic fragmentation explains variations in per capita income institutions and schooling better than income inequality when both are treated as endogenous to do so we identify instruments for ethnic fractionalization and income inequality based on historical experience using instrumental variables estimation we find that ethnic fractionalization explains the level of income both when income inequality is included as a control in the estimation and when it is not however we find no evidence that income inequality affects the level of income when ethnic fractionalization is properly treated as an endogenous variable we have similar findings when other development outcomes such as schooling or proxies for institutional quality are used as dependent variables these results are robust to various controls and changes in the sample size and suggest that some of the previous findings regarding the effect of income inequality on development should be attributed to ethnic fractionalization

you can t save alone commitment in rotating savings and credit associations in kenya abstract this article examines one reason why individuals develop and maintain local level financial savings organizations known as rotating savings and credit organizations or roscas economic theories suggest that individuals form roscas to finance the purchase of a lumpy durable good in response to intrahousehold conflict over savings or to provide themselves with insurance the article proposes an additional hypothesis for rosca participation saving requires discipline and some roscas may be formed to provide a collective mechanism for commitment in the presence of time inconsistent preferences data from 70 roscas located in western kenya indicate that the commitment hypothesis is plausible and broadly consistent with the design and patterns of participation in these roscas as many rosca participants put it you can t save alone

the economics of export performance requirements this paper analyzes the resource allocation and welfare effects of export performance requirements imposed on foreign investors it argues that a satisfactory analysis must consider the presence of tariff distortions and oligopolistic behavior in host country markets these create a second best environment in which an evaluation of the welfare effects of such requirements is no longer straightforward it is concluded that export requirements can improve home welfare by reducing payments to foreign capital reducing the output of commodities which are being overproduced and shifting profits toward domestically owned firms

group lending repayment incentives and social collateral abstract in this paper we investigate the impact on repayment rates of lending to groups which are made jointly liable for repayment this type of scheme especially in the guise of the grameen bank in bangladesh has received increasing attention we set up and analyze the repayment game which group lending gives rise to our analysis suggests that such schemes have both positive and negative effects on repayment rates the positive effect is that successful group members may have an incentive to repay the loans of group members whose projects have yielded insufficient return to make repayment worthwhile the negative effect arises when the whole group defaults even when some members would have repaid under individual lending we also show how group lending may harness social collateral which serves to mitigate its negative effect

keep your friends close the effect of local social networks on child human capital outcomes abstract social networks can affect demand for human capital investments by relaxing household time or budget constraints or by defining and reinforcing human capital preferences however empirically identifying the effect of social networks on human capital investment is usually problematic because households self select their networks in ways that may be correlated with their abilities to make these investments in northern ugandan internally displaced persons camps networks were not entirely self selected rebel activity which forced households into camps in 2002 disrupted pre existing social networks in ways that were exogenous to household human capital preferences this paper uses the exogenous variation in network disruption to identify a positive impact of networks on children s long term nutritional outcomes

the political economy of linguistic cleavages article i nfo this paper uses a linguistic tree describing the genealogical relationship between all 6912 world languages to compute measures of diversity at different levels of linguistic aggregation by doing so we let the data inform us on which linguistic cleavages are most relevant for a range of political economy outcomes rather than making ad hoc choices we find that deep cleavages originating thousands of years ago lead to better predictors of civil conflict and redistribution the opposite pattern emerges when it comes to the impact of linguistic diversity on growth and public goods provision where finer distinctions between languages matter 2011 elsevier b v all rights reserved

export performance and export import linkage requirements this paper examines the resource allocation effects of two policies widely employed by developing countries to improve their trade balances compared to free trade both export performance and export import linkage policies may actually worsen the balance of trade unless they are coupled with an import barrier on final goods even with such barriers an export import linkage policy still may not cause the trade balance to improve the effects of both policies on a number of domestic variables are discussed profit and output of domestic exporters can increase under trade performance policies

voluntary export restraints and foreign investment abstract this paper develops a model in which both voluntary export restraints vers and foreign investment can be considered we investigate the welfare effect of additional foreign investment under vers it is demonstrated that if the commodity subject to vers is more intensive in capital in the importing country which is assumed to be a debtor country additional foreign investment into that country raises its welfare

the harambee movement and efficient public good provision in kenya abstract those familiar with kenya since independence will know of the importance of the harambee system the term harambee has come to mean the provision of goods usually social infrastructure through the voluntary cooperation of members of the community provision of public goods in this way is an important alternative to the more normal method provision through tax finance here we compare these two methods of provision with a view towards determining first the circumstances under which harambee might be more effective and second what policies might be pursued to best utilize this system

the geography of linguistic diversity and the provision of public goods abstract this paper analyzes the importance of local interaction between individuals of different ethnolinguistic groups for the provision of public goods at the national level the conceptual framework we develop suggests that a country s public goods i decrease in its overall ethnolinguistic fractionalization and ii either increase or decrease in its local global ethnolinguistic complementarity a measure of how local interaction affects antagonism towards other groups in the society at large after constructing a 5 km by 5 km dataset on language use for 223 countries we empirically explore these theoretical predictions while overall fractionalization worsens public goods outcomes local interaction mitigates this negative association conditional on a country s overall diversity public goods outcomes are maximized when there are a few large sized groups and the diversity of each location mirrors that of the country as a whole

fractionalization and the size of government i study the effect of voters with a group based social conscience voters care more about the well being of those belonging to their own group than the rest of the population within a model of political tax determination both fractionalization and group antagonism reduce the support for redistribution whereas within group inequality increases support for redistribution inequality between groups has the opposite effect these results hold even if a poor group forms a majority using a panel constructed from us micro data i find support for the hypothesis that within race inequality increases redistribution while between race inequality decreases redistribution

does industrialization build or destroy social networks abstract this article estimates the relationship between changes in industrialization and changes in social networks measures in indonesia during 1985 97 using repeated cross sections of nationally representative surveys we analyze a rich set of social interaction measures including various measures of voluntary associational activity levels of trust and informal cooperation districts that experienced rapid industrialization showed significant increases in most measures of social interaction however districts that neighbor rapidly industrializing areas exhibited high rates of out migration significantly fewer community credit cooperatives and a reduction in mutual cooperation as assessed by village elders manufacturing growth can be thought of as a proxy for income growth here the findings are contrary to several recent claims regarding the role of social capital in economic development

local political business cycles evidence from philippine municipalities abstract this paper establishes the existence of short term political business cycles in the philippines over the period 2003 2009 examining a balanced panel of 1143 municipalities shows that employment levels increase in the two pre electoral quarters and drop sharply in the two quarters following elections further results are consistent with the cycles being generated by incumbents attempts to increase their chances of re election cycles are stronger in sectors that incumbents are more able to influence and when they expect stronger electoral competition evidence suggests that these cycles are detrimental to development

immigration ethnic diversity and political outcomes evidence from denmark i study the impact of immigration and increasing ethnic diversity on political outcomes in immigrant receiving countries focusing on immigration and election outcomes in danish municipalities 1981 2001 a rich set of control variables isolates ethnic diversity eects from those of other immigrant characteristics and a novel iv strategy based on historical housing stock data addresses issues of endogenous location choices of immigrants increases in local ethnic diversity lead to right ward shifts in election outcomes by shifting electoral support away from traditional big government left wing parties and towards anti immigrant nationalist parties in particular these eects appear in both local and national elections

pattern of trade between underemployed economies in this paper the authors analyze the factors determining the pattern of trade between underemployed economies they find among other things that a low wage land abundant country exports the land using labor intensive product to a high wage capital abundant country the authors also find conditions under which a high wage capital rich country may export the labor intensive product the leonteif paradox copyright 1990 by the london school of economics and political science

randomized evaluations of educational programs in developing countries some lessons this paper reviews recent randomized evaluations of educational programs in developing countries including programs to increase school participation to provide educational inputs and to reform education it then extracts some lessons for education policy and for the practice and political economy of randomized evaluations

environmental performance in socially fragmented countries social fragmentation is often associated with reduced co operative behaviour which undermines public goods provision such as environmental protection the few studies linking social fragmentation and environmental performance have been confined to using ethnic fractionalisation as the only measure of social heterogeneity in this paper we contribute to the literature in a twofold manner first we bring into the analysis alternative measures of social fragmentation i e religious fractionalisation ethnic religious polarisation that have received considerable attention in development economics in recent years second this is the first study to our knowledge that makes use of a large panel dataset of several environmental indicators to explore links between ethnic religious diversity and the environment we find that all indices of social fragmentation are negatively linked to measures of environmental quality although for some of them the size of the effect is larger in the case of polarisation

ethnic heterogeneity and public goods provision in zambia evidence of a subnational diversity dividend the diversity debit hypothesis that ethnic diversity has a negative impact on social economic and political outcomes has been widely accepted in the literature indeed with respect to public goods provision the focus of this article the conventional wisdom holds that a negative relationship between ethnic heterogeneity and public goods provision is so well established empirically that future research should abandon examination of whether such a relationship exists and focus instead on why it exists that is on the mechanisms underlying a negative relationship this article challenges the conventional wisdom on empirical grounds it demonstrates at the sub national level strong evidence for a diversity dividend that is a positive relationship between ethnic heterogeneity and some measures of public goods provision in particular welfare outcomes related to publicly provided goods and services building on the literature the article draws on new analysis at district level for zambia using a new dataset compiled by the authors from administrative budget and survey data which cover a broader range of public goods outcomes than previous work including information on both budgetary and welfare outcomes the article explores why relationships may differ for sub national budgetary and welfare outcomes considering separate models for each analysis shows results to be robust across a variety of alternative specifications and models given the more nuanced relationship between ethnic diversity and public goods provision documented the article argues that the key task for future work is not to address why the relationship is negative but to study under what conditions such direction holds true and the mechanisms that underlie a diversity dividend it concludes by considering key explanatory hypotheses against the zambian data to identify promising areas for such theory development more broadly while the diversity debit hypothesis highlights the costs of diversity and could be interpreted as providing support for polices that minimize it the findings in this article are consistent with a view that diversity can be good for communities not only for normative reasons but also because under some conditions it can support concrete welfare gains

enforcement socioeconomic diversity and tax filing compliance in the united states in this article we examine the determinants of tax filing compliance in the united states we use county level data on non filing rates for the tax year 2000 obtained directly from the internal revenue service we include explanatory variables identified in the rational compliance framework including an enforcement index against identified non filers the audit rate of filers and the average penalty rate for both filers and non filers we also examine the role of socioeconomic diversity on tax compliance testing whether within county heterogeneity in household income language race and religion can help explain variation in non filing rates we find that non filing is increasing with heterogeneity by race although not by income or language and that non filing is decreasing with heterogeneity by religious membership as for enforcement variables we find that non filing rates tend to fall with the enforcement index other variables have somewhat mixed results

ethnic diversity and social capital in indonesia this paper uses the variations of ethnic diversity between districts in indonesia to show that diversity leads to lower social capital outcomes i find that distinguishing between ethnic polarization and fractionalization matters for the results as polarization has a larger negative effect the results cannot entirely be attributed to selection on unobservables and at least part of the relationship should be interpreted as causal finally diversity seems to increase tolerance despite its negative effect on other social capital variables such as trust perceived safety and participation to community activities and voting in elections

the politics of public good provision evidence from indian local governments this paper uses village and household survey data from south india to examine how political geography and politician identity impacts on public good provision we provide evidence that the nature of this relationship varies by type of public good for high spillover public goods residential proximity to elected representative matters in contrast for low spillover public goods sharing the politician s group identity is what matters jel d78 h40

industrial policy in an imperfect world theoretical analyses of industrial policy normally restrict the range of possible outcomes by abstracting from either market or government failures this paper thus studies industrial policy and its effectiveness in a model that includes both market and government imperfections we introduce a public agency responsible for industrial policy into the model of hausmann and rodrik 2003 and assume that this agency has limited information and is partly politically motivated we further extend the model to allow the public agency to communicate with entrepreneurs and the entrepreneurs to engage in rent seeking we find that industrial policies are ineffective if the public agency is poorly informed but that they are not necessarily ineffective if the public agency is highly politically motivated given a highly politically motivated public agency industrial policies are effective if and only if the institutional setting ensures that such policies are modest e g by restricting the public agency s budget moreover our model helps us to understand why the same industrial policies that have failed elsewhere have been relatively successful in south korea and taiwan

the political economy of public goods some evidence from india we are interested in how public goods get allocated by a centralized state we use data on public goods and social structure from parliamentary constituencies in rural india to understand the allocation of these goods over the 1970s and 1980s national policies and political agendas during this period emphasized universal access to basic amenities and financed a rapid expansion in rural infrastructure we find evidence of considerable equalization in many of these facilities reflecting perhaps the importance of these commitments among the historically disadvantaged social groups those that mobilized themselves politically gained relative to the others measures of social heterogeneity that have been emphasized in the recent empirical literature on public goods are relevant but not overwhelming in their importance

ethnic diversity social sanctions and public goods in kenya abstract this paper examines ethnic diversity and local public goods in rural western kenya the identification strategy relies on the stable historically determined patterns of ethnic land settlement ethnic diversity is associated with lower primary school funding and worse school facilities and there is suggestive evidence that it leads to poor water well maintenance the theoretical model illustrates how inability to impose social sanctions in diverse communities leads to collective action failures and we find that school committees in diverse areas do impose fewer sanctions on defaulting parents we relate these results to the literature on social capital and economic development and discuss implications for decentralization in less developed countries

internal borders ethnic based market segmentation in malawi summary ethnic diversity is associated with poorer economic development but why i argue that market segmentation is one mechanism linking diversity to economic underdevelopment when ethnic groups are geographically segregated and trust is concentrated within groups markets will be tend to be segmented along ethnic lines i evaluate this argument using maize price data from seventy malawian markets over 14 years and combine it with census data on the spatial distribution of ethnic groups i find that maize price differences a key indicator of market segmentation are indeed larger for ethnically dissimilar markets even after taking sub national administrative borders geographic barriers and climatic differences into account these statistical findings are complemented by interview data from farmers and traders in three markets across malawi which highlight the centrality of trust in small scale maize trading as well as a preference for coethnic trading partners together these findings suggest that ethnic diversity and ethnoregional segregation in particular can have a negative impact on market integration an important driver of food security and long term economic development

community composition and collective action analyzing initial mail response to the 2000 census this paper analyzes how community heterogeneity influences resident decisions to undertake actions generating public benefits the decision in question is completing and returning the 2000 census questionnaire an action which secures a significant amount of federal grants for the community the model developed to explain this action allows members of societal groups to differentially value public benefits that accrue to other group members racial generational and socioeconomic class heterogeneity all predict significantly lower response rates at the county level the potential for endogenous sorting into heterogeneous counties implies that the magnitude of true behavioral effects exceeds these estimates

history social divisions and public goods in rural india we examine the influence of three historically important sources of social divisions on the availability of public goods in rural india colonial power landowner peasant relations as determined by the land tenure system and social fragmentation based on the hindu caste system and the presence of sizable religious minorities using data on public goods from 1991 we find that regions that were under british colonial power in the pre independence period and those where agrarian power was concentrated in the hands of landlords have lower access to these goods as do areas with high levels of social fragmentation jel h41 p16

tariff protection and taxation of foreign capital the welfare implications for a small country abstract this paper extends recent studies by deriving sufficient conditions for tariff immiserization in a small country in the presence of internationally mobile sector specific capital the returns of which are taxed or subsidized necessary conditions for a welfare augmenting tariff are also discussed and the analysis is extended to the welfare implications of changes in the tax or subsidy rate on the earnings of migrating capital

variable returns to scale urban unemployment and welfare the proposition that free trade is superior to no trade has a classical ancestry adam smith and ricardo were amongst the first proponents of free trade samuelson 26 proved and it is held by economists today that free trade is the optimal policy in the presence of standard paretoconditions it is also generally agreed amongst economists that lower trade intervention is superior to higher trade intervention given competitive conditions in a small country these propositions do not hold however in the presence of factor market imperfections such as wage differentials in a small country and therefore production or wage subsidies improves social welfare the two models which are generally used to investigate the positive as well as normative aspects of trade theory in the presence of unemployment are the uniform real minimum wage model which is based on the assumption of general rigidity of real wage in one or two sectors of production and the sector specific minimum wage model which focuses on the phenomenon of rural urban migration in the face of large scale urban unemployment these two models are commonly utilized by trade theorists to analyze trade and unemployment specifically studies by haberler 13 johnson 16 batra and seth 3 findlay 12 and brecher 6 7 investigate the consequences of rigid factor prices for a small country whereas the normative as well as positive aspects of sector specific unemployment have been explored by harris and todaro 15 bhagwati and srinivasan 4 5 and more recently by batra and naqvi 2 das 10 and kahn 19 it has been correctly observed that the introduction of an exogenously specified real minimum wage among other things generates unorthodox results concerning unemployment and gains from trade a large body of research has also been concerned with the welfare implications of different commercial policies in the context of variable returns to scale kemp and negishi 20 have pointed out the beneficial effects of trade in the presence of variable returns to scale production subsidy and consumption taxes eaton and panagariya 11 have analyzed the question of gains from trade in the presence of variable returns to scale and in the context of pareto welfare criterion whereas choi and yu 8 have examined the welfare implications of tariffs and consumption taxes as well as the welfare rankings of these policies under variable returns to scale while panagariya and succar 25 have modified the necessary and sufficient conditions for stability under increasing returns to scale in urban sector

export share requirements and unemployment the case of quota trade restrictions such as import tariffs have been a common practice for protecting domestic import competing industries in most less developed countries ldcs foreign firms may however circumvent such protection through direct investment in the host countries this is the well known tariff jumping direct foreign investment which has been examined by brecher and diaz alejandro 7 they show that the foreign capital inflow leads to overproduction of the output of tariff protected sectors and hence results in welfare reduction recently rodrik 17 demonstrates that export share requirements when applied to the output produced by foreign capital may offset the negative effect of foreign direct investment through the contraction of tariffprotected overproduced sectors thus an increase in such a requirement may actually improve welfare this result contradicts the earlier finding of davidson matusz and kreinin 11 which is obtained from a partial equilibrium framework the existing literature on export share requirements remains deficient in two respects first the full employment models have been deployed ignoring the fact that most ldcs suffer from massive unemployment second the analysis has been confined by and large to tariff protection thereby neglecting quantitative trade restrictions e g import quotas it is noteworthy that it is quotas rather than tariffs which constitute a major constraint on imports by developing countries 2 the purpose of this paper is thus to remedy these two shortcomings by developing a sectorspecific unemployment general equilibrium model with quota restrictions on imports as noted by richardson 16 export performance requirements operate in a second best environment import

eliciting and utilizing willingness to pay evidence from field trials in northern ghana we utilize the becker degroot marschak 1964 mechanism to estimate the willingness to pay for clean drinking water technology in northern ghana the bdm mechanism has attractive properties for empirical research allowing us to directly estimate demand compute heterogeneous treatment effects and study the screening and causal effects of prices with minor modifications to a standard field experiment setting we demonstrate the implementation of bdm along these three dimensions compare it to the standard take it or leave it method for eliciting willingness to pay and discuss practical issues for implementing the mechanism in true field settings jel classifications c93 d12 d82 l11 l31

ethnic segregation and public goods evidence from indonesia this article contributes to the study of ethnic diversity and public goods provision by assessing the role of the spatial distribution of ethnic groups through a new theory that we call spatial interdependence we argue that the segregation of ethnic groups can reduce or even neutralize the diversity penalty in public goods provision that results from ethnic fractionalization this is because local segregation allows communities to use disparities in the level of public goods compared with other communities as leverage when advocating for more public goods for themselves thereby ratcheting up the level of public goods across communities we test this prediction on highly disaggregated data from indonesia and find strong support that controlling for ethnic fractionalization segregated communities have higher levels of public goods this has an important and underexplored implication decentralization disadvantages integrated communities vis a vis their more segregated counterparts

the long term effects of africa s slave trades can part of africa s current underdevelopment be explained by its slave trades to explore this question i use data from shipping records and historical documents reporting slave ethnicities to construct estimates of the number of slaves exported from each country during africa s slave trades i find a robust negative relationship between the number of slaves exported from a country and current economic performance to better understand if the relationship is causal i examine the historical evidence on selection into the slave trades and use instrumental variables together the evidence suggests that the slave trades have had an adverse effect on economic development

urban unemployment terms of trade and welfare it is generally accepted prior to 1970 that a deterioration in the terms of trade results in lower social welfare in particular prebisch 11 and singer 12 have expressed the basic concern with the terms of trade the secular deterioration in the terms of trade facing less developed countries ldcs leads to income and welfare losses batra and pattanaik 2 nevertheless shows that a deterioration in the terms of trade in the presence of an intersectoral wage differential may raise welfare bhagwati and brecher 5 demonstrate that a decline in the terms of trade can improve real income if capital is mobile internationally recently anam 1 obtains a similarly interesting result for an economy engaging in quota induced rent seeking activities it is notable that none of these studies considers a key feature inherent in a typical ldc namely the existence of substantial urban unemployment thus the purpose of this paper is to examine the welfare impacts of terms of trade losses for ldcs plagued by pervasive urban unemployment the well known harris todaro 7 framework of sector specific unemployment is utilized in addition we derive and contrast various welfare effects of a change in the terms of trade when a ldc pursues alternative import substitution policies i e tariffs vs quotas over the short vs the long run the paper is organized as follows section ii develops the model and provides the transformation relation between urban and rural outputs section iii examines the welfare effects of an exogenous shift in the terms of trade for a tariff or quota distorted economy in the short run as well as in the long run finally concluding remarks are set out in section iv

village elections public goods investments and pork barrel politics chinese style a key issue in political economy concerns the accountability that governance structures impose on public officials and how elections and representative democracy influence the allocation of public resources in this paper we utilise a unique set of survey data set from nearly 2450 randomly selected villages describing china s recent progress in village governance reforms and its relationship to the provision of public goods in rural china between 1998 and 2004 two sets of questions are investigated using an empirical framework based on a theoretical model in which local governments must decide to allocate fiscal resources between public goods investments and other expenditures the empirical analysis both in the descriptive and econometric analyses suggests that when the village leader is elected directly ceteris paribus the provision of public goods rises compared to when the leader is not elected directly by villagers thus in this way it is possible to conclude that democratisation at least at the village level in rural china appears to increase the quantity of public goods investment second we seek to understand the mechanism that is driving the results also based on the survey data we find that when village leaders who had been directly elected were able to implement more public projects during their terms of office they as the incumbent were more likely to be re elected in this way we argue that the link between elections and investment may be a rural china version of pork barrel politics

multinational firms and the theory of international trade and investment tinational corporation in the arena of economic activity and political influence trade theorists have either ignored it or expressed unguarded skepticism at the ability of the conventional trade models to successfully capture and analyze the features of this new phenomenon the purpose of this paper is twofold first by building upon the contribution by richard caves we will show that the traditional trade models can be adapted in a way that preserves most if not all of the attributes introduced by international firms 2 second we will conduct a comparative statics analysis to explore the implications of tariffs and taxes for resource allocation and international capital movements our results here confirm what has already been well established in myriad empirical studies that maturation of the international firm has vastly increased economic interdependence among trading countries and that few nations can eschew the ripples caused by economic policies of other nations 3

participatory accountability and collective action experimental evidence from albania it has been argued that accountability is a public good that only citizens can provide governments can put institutions in place that allow citizens to hold public servants to account but citizens must participate in those institutions if accountability is to be achieved thus citizens face a social dilemma participate in holding public servants to account at a cost in terms of time and effort or free ride i e do not participate while benefiting from the efforts of those who do if this characterization of accountability is valid we would expect more cooperatively inclined citizens to participate in accountability institutions while the less cooperatively inclined do not we test the validity of this characterization by investigating the correlation between individual behavior in a simple public goods game and their participation in local and national accountability institutions in albania we involve a nationally representative sample of 1800 adults with children in primary school we find significant correlations between cooperativeness and participation in school accountability institutions and national elections both at the individual level and the district level these correlations are robust to the introduction of many controls in the analysis and in the case of national elections to the use of official election turn out statistics in place of self reported turn out

exploring gendered behavior in the field with experiments why public goods are provided by women in a nairobi slum abstract women and particularly women in all female groups appear to be especially adept at providing public goods in developing countries we use a one shot public goods game to explore the effect of sex and a group s sex composition on the voluntary provision of public goods in a nairobi slum sex heterogeneity hurts the voluntary provision of public goods because women but not men contribute less in mixed sex than same sex groups women contribute as much as men in same sex groups this result is driven by women s pessimism and men s optimism about others contributions in mixed sex groups rather than by gendered social preferences

between group contests over group specific public goods with within group fragmentation we model a contest between two groups of equal sized populations over the division of a group specific public good each group is fragmented into subgroups each subgroup allocates effort between production and contestation perfect coordination is assumed within subgroups but subgroups cannot coordinate with one another all subgroups choose effort allocations simultaneously we find that the group that is more internally fragmented receives the smaller share of the public good aggregate rent seeking increases when the dominant subgroups within both communities have larger population shares any unilateral increase in fragmentation within a group reduces conflict and increases the total income of its opponent strikingly the fragmenting community itself may however increase its total income as well even though its share of the public good declines hence a smaller share of public good provisioning cannot be used to infer a negative income effect on the losing community

urban unemployment and the gains from trade a welfare ranking of alternative commercial policies is constructed for the mobile capital harris todaro economy it is sh own that despite the presence of unemployment most noninterventioni st policies suggested by the competitive model of gains from trade ca rry over to the mobile capital harris todaro economy yet in contradi ction to the competitive model it is shown that all forms of trade i ntervention are not detrimental to welfare only those that reduce th e volume of trade are the export promotion policies so copiously fol lowed by developing countries are vindicated but their import substi tution policies are shown to be without justification copyright 1987 by the review of economic studies limited

us and them the origin of identity and its economic implications we investigate the origins of identity and the innate proclivity to draw a distinction between insiders and outsiders we propose an evolutionary explanation we argue that identity arises because it facilitates survival in an evolutionary setting we endogenize preferences and demonstrate that the evolutionarily stable preferences fashioned by natural selection would draw a distinction between insiders and outsiders we then work out the implications of such preferences in two contemporary scenarios one entailing rent seeking behavior and the other involving public good provision our results are in conformity with empirical evidence

tribe or nation nation building and public goods in kenya versus tanzania this article examines how government policies affect ethnic relations by comparing outcomes across two nearby districts one in kenya and one in tanzania using colonial era boundary placement as a natural experiment despite similar geography and historical legacies governments in kenya and tanzania have followed radically different language education and local institutional policies with tanzania consistently pursuing more serious nation building the evidence suggests that nation building has allowed diverse communities in rural tanzania to achieve considerably better local public goods outcomes than diverse communities in kenya to illustrate while kenyan communities at mean levels of diversity have 25 percent less local school funding than homogeneous communities on average the comparable figure in the tanzanian district is near zero the kenya tanzania comparison provides empirical evidence that serious reforms can ameliorate social divisions and suggests that nation building should take a place on policy agendas especially in africa

does political competition lessen ethnic discrimination evidence from sri lanka abstract the impact of political competition on ethnic discrimination remains largely unexplored to address this gap this paper explores the relationship between the level of political competition and the probability of receiving government transfers among ethnic minorities in sri lanka in the run up to the national elections of 2000 the paper shows that making politicians dependent on the votes of members of ethnic groups other their own can encourage moderation in discriminatory practices towards ethnic minorities specifically we find that political competition positively influenced the distribution of government food stamps among sri lankan tamils who otherwise are less likely to receive food stamps relative to the sinhalese majority the negative impact of political competition on discrimination is higher when minorities form part of swing constituencies than when they form part of the base support for political parties lessons learnt here suggest that having built in incentives in the design of the electoral process for intergroup bargaining and cooperation in countries with ethnically heterogeneous societies can be an effective restraint on ethnic discrimination this is consistent with other research that considers political institutions to be a key lever for making ethnically divided societies more inclusive

collective action and the group size paradox according to the olson paradox larger groups may be less successful than smaller groups in furthering their interests we address the issue in a model with three distinctive features explicit intergroup interaction collective prizes with a varying mix of public and private characteristics and nonlinear lobbying costs the interplay of these features leads to new results when the cost of lobbying has the elasticity of a quadratic function or higher larger groups are more effective no matter how private the prize with smaller elasticities a threshold degree of publicness is enough to overturn the olson argument and this threshold tends to zero as the elasticity approaches the value for a quadratic function we also demonstrate that these results are true irrespective of whether we examine group sizes over the cross section in some given equilibrium or changes in the size of a given group over different equilibria

decentralization and pollution spillovers evidence from the re drawing of county borders in brazil decentralization can improve service delivery but it can also generate externalities across jurisdictional boundaries we examine the nature and size of water pollution externalities as rivers flow across jurisdictions panel data on water pollution in brazilian rivers coupled with county splits that change the locations of borders allow us to identify the spatial patterns of pollution as rivers approach and cross borders controlling for fixed effects and trends specific to each location the theory of externalities predicts that pollution should increase at an increasing rate as the river approaches the downstream exit border that there should be a structural break in the slope of the pollution function at the border and that a larger number of managing jurisdictions should exacerbate pollution externalities we find support for all four predictions in the data satellite data on growth in night time lights along rivers show that local authorities allow more settlements to develop close to rivers in the downstream portions of counties which is the likely underlying mechanism the border effects on pollution are not as pronounced when the cost of inter jurisdictional coordination is lower

free riding and ethnic heterogeneity abstract this paper provides a new explanation for lower levels of public good provision in heterogeneous societies compared to their homogeneous counterparts social sharing norms force rich individuals to share part of their income with their poor relatives but do not apply across different ethnic groups because there is a more extensive redistribution in more homogeneous societies the cost of contributing to the public good is lower the model predicts the level of public goods provision and welfare monotonically decreases with the number of different ethnic groups

a conceptual framework for community based health insurance in low income countries social capital and economic development summary the international policy model linking community based health insurance cbhi and universal coverage for health care in low income countries is implicitly determined by the development of mutual health insurance in 19th century europe and japan the economic and health system frameworks employed in cbhi policy have not sufficiently taken into account contextual considerations social capital theories could contribute to understanding why generally cbhi does not achieve significant and sustainable levels of population coverage a framework of social capital and economic development is used to organize and interpret existing evidence on cbhi this suggests that solidarity trust extra community networks vertical civil society links and state society relations affect the success of cbhi aligning schemes to social determinants of cbhi could result in structures that differ from those proposed by current analytic frameworks

can social cohesion be harnessed to repair market failures evidence from group lending in guatemala the success of group lending in developing countries has been attributed to the ability of the institution to mitigate asymmetric information problems in credit markets previous research has offered a number of explanations for this phenomenon social ties between borrowing group members internal group pressure to repay loans and peer monitoring this research presents empirical tests on borrowing group data from guatemala which indicate that peer monitoring significantly effects borrowing group performance through stimulating intra group insurance group pressure is found to have a small effect in deterring moral hazard while the effect of social ties among members is statistically insignificant

explaining african economic performance africa has had slow growth and a massive exodus of capital in many respects it has been the most capital hostile region we review and interpret the aggregate level and microeconomic literatures to identify the key explanations for this performance there is a reasonable correspondence of the two sets of evidence pointing to four factors as being important these are a lack of openness to international trade a high risk environment a low level of social capital and poor infrastructure these problems are to a substantial extent attributable to government behaviour and the paper includes a review of the political economy literature which addresses that behaviour

analysis of perfonnance standards for direct foreign investments within the framework of a duopolistic model we investigate the impact of foreign investment standards on welfare output and employment minimum local content and export requirements reduce world output world welfare and the source country s welfare under certain conditions the decline in host country s consumer surplus resulting from diminished competition outweighs the shift of monopoly rent from the source country s firm to the host country s firm minimum content standards can increase host country s employment but only to a point marginal increases in the content requirement can actually reduce employment as the magnitude of foreign investment declines

tariffs quotas and voluntary export restraints with and without internationally mobile capital this paper presents a general framework for comparing the effects of tariffs quotas and vers voluntary export restraints both with and without international capital mobility expressions for the shadow price of foreign exchange and the shadow price of capital under each type of trade restriction are derived and it is shown that although international capital mobility raises the welfare cost of tariff protection it lowers the welfare cost of quantitative restrictions in most cases the effects of exogenous shocks in the presence of quotas are intermediate between those in the presence of tariffs and those in the presence of vers tarifs douaniers contingentements et restrictions volontaires d l exportation quand le capital est ou n est pas mobile internationalement l auteur presente un cadre general d analyse qu il utilise pour comparer les effets de tarifs douaniers de contingentements et de restrictions volontaires a l exportation dans des contextes ofu le capital est ou n est pas mobile internationalement l auteur derive le prix fictif du change etranger et le prix fictif du capital sous l un et l autre types de restrictions au commerce et montre que meme si la mobilite internationale du capital augmente le cofut en terme de bien etre de la protection tarifaire elle reduit le cofut en terme de bien etre des restrictions sur les quantites echangees dans tous les cas les effets de chocs exogenes quand des contingentements existent sont toujours dans la fourchette entre ceux qu on observe quand des tarifs douaniers existent et ceux qui prevalent quand des restrictions volontaires i l exportation existent

collective action in diverse sierra leone communities scholars have identified ethnic divisions as a leading cause of underdevelopment due partially to their adverse effects on public goods we investigate this issue in post war sierra leone one of the world s poorest and most ethnically diverse countries to address concerns over endogenous local ethnic composition we use an instrumental variables strategy using earlier census data on ethnicity and include several historical and geographic covariates perhaps surprisingly we find that local diversity is not associated with worse public goods provision across multiple outcomes and specifications with precisely estimated zeros we investigate the role of historical factors in generating the findings

the cost of segregation in social networks abstract this paper investigates the welfare effect of income redistribution in the private provision of public goods on networks we first show that the welfare effect of income redistribution is determined by bonacich centrality then we develop an index based on the network structure of interactions which roughly speaking measures the welfare effect of income redistribution confined to a component of contributors the proposed index vanishes when applied to large components of contributors that display special segregated interactions which suggests an asymptotic neutrality of redistributive policies

changing sources of competitive advantage cognition and path dependence in the finnish retail industry 1945 1995 in this study we analyze the finnish retail industry in 1945 1995 triangulating the major developments in society technology and firm level strategic choices we identified extensive variation in the sources of competitive advantage over time we found that the structural and cognitive cultural dimensions of firms that offered opportunities for success in some specific historical situations turned to be disadvantageous in other situations we propose a research framework that parcels managerial cognition into the elements of structure ideology and systemic and technical properties of the firm especially the notion of ideology is novel in the context of path dependence and cognition copyright 2006 oxford university press

leadership and the voluntary provision of public goods field evidence from bolivia abstract we conduct a controlled field experiment in 52 communities in rural bolivia to investigate the effect that local authorities have on voluntary public good provision in our study community members pool resources to provide environmental education material for local schools we find that voluntary contributions increase when democratically elected local authorities lead by example the results are driven by two factors 1 authorities like other individuals give more when they are called upon to lead than when they give in private and 2 high leader contributions increase the likelihood that others follow both effects are stronger when authorities as compared to randomly selected community members lead by example we explore two underlying sources of leadership influence first we provide evidence that the effect of a leader s contribution is not limited to signaling the value of the public good second we examine how leader characteristics affect the likelihood that others follow specifically our study shows that authority influence is driven by a combination of formal leadership status observable characteristics and the amount that authorities contribute when they give publicly before others

heckle and chide results of a randomized road safety intervention in kenya in economies with weak enforcement of traffic regulations drivers who adopt excessively risky behavior impose externalities on other vehicles and on their own passengers in light of the difficulties of correcting inter vehicle externalities associated with weak third party enforcement this paper evaluates an intervention that aims instead to correct the intra vehicle externality between a driver and his passengers who face a collective action problem when deciding whether to exert social pressure on the driver if their safety is compromised we report the results of a field experiment aimed at solving this collective action problem which empowers passengers to take action evocative messages encouraging passengers to speak up were placed inside a random sample of over 1 000 long distance kenyan minibuses or matatus serving both as a focal point for and to reduce the cost of passenger action independent insurance claims data were collected for the treatment group and a control group before and after the intervention our results indicate that insurance claims fell by a half to two thirds from an annual rate of about 10 percent without the intervention and that claims involving injury or death fell by at least 50 results of a driver survey eight months into the intervention suggest passenger heckling was a contributing factor to the improvement in safety available http www cgdev org files 1421541 file habyarimana jack heckle final pdf

do formula based intergovernmental transfer mechanisms eliminate politically motivated targeting evidence from ghana abstract various countries have adopted formulas for determining intergovernmental transfers as a strategy to limit the role of political considerations in resource allocation in this paper we investigate a formula based system of allocating resources from a central government to local governments to determine whether the political characteristics of recipient areas have any bearing on their allocation specifically we study the sharing of resources of the district assemblies common fund dacf in ghana amongst the country s district governments over the period 1994 to 2005 we find evidence that the mechanism does not eliminate politically motivated targeting of the grants per capita dacf grants were higher in districts where vote margins in the previous presidential election were lower suggesting that swing districts were targeted we find evidence that dacf formula indicators and their weighting were chosen and amended to produce politically desired patterns of transfers