state characteristics and the location of foreign direct investment within the united states a conditional logit model of the location decision of foreign firms investing in manufacturing facilities in the united states is developed and estimated the authors results for 1981 83 indicate that states with higher per capita incomes and higher densities of manufacturing activity attracted relatively more foreign direct investment in addition higher wages deterred foreign direct investment while higher unemployment rates attracted it surprisingly higher unionization rates were associated with increased foreign direct investment overall higher taxes deterred foreign direct investment however more extensive transportation infrastructures and larger promotional expenditures were associated with increased foreign direct investment copyright 1991 by mit press

determinants of u s direct investment in the e e c revisited abstract this paper expands upon an earlier work in this review concerning the specification of a model to identify the determinants of u s direct foreign investment dfi in the e e c compared to earlier studies a longer data series is used an improved tariff discrimination proxy is employed and predicted sales are estimated and used as the output variable in the empirical work a variable to capture the effect of the u s capital control programs is also included the findings reaffirm the importance of market size especially in the plant and equipment equations as being an important determinant of dfi strong support was also found for the growth hypothesis consistent statistical support was found for the tariff discrimination hypothesis in addition the findings imply that a variable to capture the effects of fluctuating exchange rates should be included in future studies

institutions and legacies electoral volatility in the postcommunist world the postcommunist states of eastern europe and the former soviet union have witnessed levels of electoral volatility higher than both western europe and latin america levels that have deleterious

is trade good or bad for the environment sorting out the causality we seek to contribute to the debate over globalization and the environment by asking what is the effect of trade on a country s environment for a given level of gdp we take specific account of the endogeneity of trade using exogenous geographic determinants of trade as instrumental variables we find that trade tends to reduce three measures of air pollution statistical significance is high for concentrations of so2 moderate for no2 and lacking for particulate matter although results for other environmental measures are not as encouraging there is little evidence that trade has a detrimental effect on the environment

determinants of u s direct investment in the e e c revisited again abstract this paper discusses the scaperlanda balough comment on a previous study of mine that appeared in this review the scaperlanda balough paper extends and improves upon my study by employing better variables to test the hypotheses however i offer a different interpretation of the empirical evidence they present concerning the efficacy of the u s controls on direct investment

geographic diffusion and the transformation of the postcommunist world since the collapse of communism the states of postcommunist europe and asia have defined for themselves and have had defined for them two primary tasks the construction of viable market economies and the establishment of working institutions of representative democracy the variation in political and economic outcomes in the postcommunist space makes it without question the most diverse region in the world what explains the variation all of the big winners of postcommunism share the trait of being geographically close to the former border of the noncommunist world even controlling for cultural differences historical legacies and paths of extrication the spatial effect remains consistent and strong across the universe of postcommunist cases this suggests the spatially dependent nature of the diffusion of norms resources and institutions that are necessary to the construction of political democracies and market economies in the postcommunist era the authors develop and adduce evidence for the spatial dependence hypothesis test it against rival hypotheses and illustrate the relationships at work through three theoretically important case studies

multi period insurance contracts this paper examines the form of insurance contracts in the presence of asymmetric information about consumers accident probabilities our goal is to understand the adjustment in contract terms as a function of accident histories in a finite horizon model we also compare these adjustments between alternative market structures our principal findings indicate that history dependent insurance contracts serve a useful sorting role individuals who declare themselves low risks to insurance companies face adverse contracturai terms if they subsequently have many accidents these adjustments are strongest in the case of a single insurance seller but are present in the competitive model as well

trade competition and domestic pollution a panel study 1980 2003 this research note examines whether trade competition abets regula tory races in the environmental area to analyze trade competition we develop a new measure structural equivalence which assesses competitive threats that a country faces from other countries whose firms export the same products to the same destination countries employing this new measure we analyze air pollution intensity sulfur diox ide or so2 and water pollution intensity biochemical oxygen demand or bod for a panel of 140 countries for the time period 1980 2003 we find that trade competi tion is a significant predictor of water pollution intensity among structurally equiva lent countries we then test separately whether trade competition abets upward and downward regulatory races we find that in the case of water pollution countries respond symmetrically to downward and upward races that is they follow their struc turally equivalent competitor countries both when they ratchet down their regula tions and when they ratchet up regulations in the case of air pollution however countries are responsive to downward policy changes only in competitor countries

inspiration coalition and substitution external influences on postcommunist transformations there has been a recent explosion of interest in the external influences on the political and economic transformations of postcommunist states this article consolidates several analytical advances in this literature and distills three main functions of external actors namely to lengthen the time horizons of postcommunist politicians to expand the circle of interested reformers and to deter opponents of reform the article argues that a focus on external influences is a growth area for good conceptual work only if it addresses the union of foreign and domestic influences rather than treating them as stylized alternative explanations the central point is that outside actors should be considered as striving to influence the choices of existing domestic actors with whom they can be seen to form a kind of informal coalition at bottom outsiders do best through a combination of strategies strengthening domestic actors already committed to their approach winning over new domestic actors to their priorities and preventing the unconvinced from obstructing reforms

dependency revisited international markets business cycles and social spending in the developing world while increased exposure to the global economy is associated with increased welfare effort in the organization for economic cooperation and development oecd the opposite holds in the developing world these differences are typically explained with reference to domestic politics tradables unions and the like in the developing world are assumed to have less power or interests divergent to those in the oecd interests that militate against social spending i claim that such arguments can be complemented with a recognition that developed and developing nations have distinct patterns of integration into global markets while income shocks associated with international markets are quite modest in the oecd they are profound in developing nations in the oecd governments can respond to those shocks by borrowing on capital markets and spending countercyclically on social programs no such opportunity exists for most governments in the developing world most of which have limited access to capital markets in tough times more significant incentives to balance budgets and as a result cut social spending at the times it is most needed thus while internationally inspired volatility and income shocks seem not to threaten the underpinnings of the welfare state in rich nations it undercuts the capacity of governments in the developing world to smooth consumption and particularly consumption by the poor across the business cycle the author would like to thank steph haggard kristin bakke wongi choe tim jones and seminar participants at duke university penn state university washington university mit and the university of new mexico for their helpful comments nancy brune mark hallerberg and rolf strauch and nita rudra were very generous in providing their capital account oecd fiscal and potential labor power data respectively

the interdependence of individual portfolio decisions and the demand for insurance we analyze the individual s demand for insurance as a special case of general portfolio hedging activity the demand for insurance contracts is determined simultaneously with the demands for other assets in the portfolio we demonstrate that when the payoffs of the policy are correlated with the payoffs to the individual s other assets the demand for insurance contracts is generally not a separable portfolio decision we argue that this separability condition is not generally met because of significant interdependence of claims across different insurance policies furthermore our generalizations can reverse the standard prediction that wealthier individuals will demand less insurance

after state socialism the political origins of transitional recessions transitions from state socialism created a startling range of initial economic outcomes from renewed growth to deep economic crises debates about the causes have largely ignored the political dis

tariff jumping dfi and export substitution japanese electronics firms in europe abstract analysis of micro data on japanese electronics firms establishes that the rapid increase in japanese manufacturing investments in the late 1980s has for a substantial part been induced by ec antidumping and other trade restricting measures targeting japanese firms evidence is found at the firm level that such tariff jumping investment has substituted for exports from japan on the other hand firms which invested in ec distribution activities acquired ec firms or produce components within a vertical keiretsu export relatively more to europe the latter finding suggests that subcontractor firms were able to expand components exports by supplying the european manufacturing plants of their parent firms

ties to the rest autocratic linkages and regime survival the relationship between international linkages and the nature and survival of political regimes has gained increasing attention in recent years but remains one that is poorly understood in this article we make three central contributions to our understanding of international linkage politics and autocratic regime survival first we introduce and develop the concept of autocratic linkage and highlight its importance for understanding the international politics of autocratic survival second we use event history analysis to demonstrate that autocratic linkage has a systematic effect on the duration of authoritarian regimes finally we complement our quantitative analysis with a focused comparison of autocratic linkage politics in the middle east we show that variation in saudi arabian support for autocratic incumbents in the wake of the arab spring protests can be explained in significant part by variation in linkage relationships

authoritarian state building and the sources of regime competitiveness in the fourth wave the cases of belarus moldova russia and ukraine this article explores the sources of regime competitiveness in the post cold war era through a structured comparison of regime trajectories in belarus moldova russia and ukraine for the period 1992 2004 an examination of these cases suggests the need for a fundamental rethinking of the commonly held view of the transition process especially in countries that face relatively weak international democratizing pressures approaching these countries as unconsolidated autocracies rather than as simply emerging democracies draws attention to key sources of political competition that have largely been ignored in the literature on competitive regimes thus competitive politics in belarus moldova russia and ukraine were rooted less in robust civil societies strong democratic institutions or leadership than in the inability of incumbents to maintain power or concentrate political control by preserving elite unity controlling elections and or using force against opponents such pluralism by default has been the outgrowth of the strength of anti incumbent national identity and incumbent weakness as defined by a lack of know how ineffective incumbent organization and or the weakness of certain dimensions of state power

rational citizens against reform poverty and economic reform in transition economies the debate on the political obstacles to economic reform in postcommunist countries has centered around two interrelated theories adam przeworski argues that short term negative distributional consequences can stall economic reform joel hellman contends that industry insiders and political elites have incentives to stall economic reform although both sets of theories contend that the distributional aspects of economic transition affect reform important differences remain in their interpretation of the relationship between the rising levels of poverty and income inequality in transition economies this article empirically examines the relationship between the pretransition levels of poverty and income inequality in 17 postcommunist transition economies using cross sectional regressions the central finding in this article is that countries with large spans of the population hovering above poverty are less likely to achieve high levels of economic reform lending support to theory that adverse socioecon

the relative distribution of united states direct investment this paper adopts the traditional mundellian international capital movements framework in order to examine the changing distribution of u s manufacturing direct investment between the united kingdom and the six original countries of the european economic community as the community has moved from an initial grouping which excluded the u k to a larger group of countries which now includes that country the study employes an intercept shift slope shift estimating framework to address this question the results of the study suggest that relative u s manufacturing investment in the u k eec6 has responded significantly to the applicability of the common external tariff to britain relative market size moreover apparently ceased to be a determining variable in the years following british entry into the eec due to its integration into a more unified eec market

the diffusion of inclusion an open polity model of ethnic power sharing while there is a growing consensus that ethnic inclusion produces peace less is known about what causes transitions to power sharing between ethnic groups in central governments in multiethnic states the few studies that have addressed this question have proposed explanations stressing exclusively domestic factors yet power sharing is spatially clustered which suggests that diffusion may be at play inspired by studies of democratic diffusion we study the spread of inclusive policies with an open polity model that explicitly traces diffusion from inclusion in other states our findings indicate that the relevant diffusion processes operate primarily at the level of world regions rather than globally or between territorial neighbors thus the more inclusive the region the more likely a shift to power sharing becomes shifts away from inclusion to dominance are less common since world war ii but they are more likely in regional settings characterized by ethnic exclusion

economic growth and environmental degradation the environmental kuznets curve and sustainable development abstract in this paper we critically examine the concept of the environmental kuznets curve ekc it proposes that there is an inverted u shape relation between environmental degradation and income per capita so that eventually growth reduces the environmental impact of economic activity the concept is dependent on a model of the economy in which there is no feedback from the quality of the environment to production possibilities and in which trade has a neutral effect on environmental degradation the actual violation of these assumptions gives rise to fundamental problems in estimating the parameters of an ekc the paper identifies other econometric problems with estimates of the ekc and reviews a number of empirical studies the inference from some such ekc estimates that further development will reduce environmental degradation is dependent on the assumption that world per capita income is normally distributed when in fact median income is far below mean income we carry out simulations combining ekc estimates from the literature with world bank forecasts for economic growth for individual countries aggregating over countries to derive the global impact within the horizon of the bank s forecast 2025 global emissions of so 2 continue to increase forest loss stabilizes before the end of the period but tropical deforestation continues at a constant rate throughout the period

delegation to international organizations agency theory and world bank environmental reform current international relations theory struggles to explain both the autonomy and transformation of international organizations ios previous theories either fail to account for any io behavior that deviates from the interests of member states or neglect the role of member states in reforming io institutions and behavior we propose an agency theory of ios that can fill these gaps while also addressing two persistent problems in the study of ios common agency and long delegation chains our model explains slippage between member states interests and io behavior but also suggests institutional mechanisms staff selection monitoring procedural checks and contracts through which states can rein in errant ios we evaluate this argument by examining multiple institutional reforms and lending patterns at the world bank from 1980 to 2000

timing is everything elections and trade liberalization in the postcommunist world in the wake of the soviet bloc s collapse various postcommunist countries rushed to gain greater access to foreign markets many of them have made substantial progress in liberalizing commerce but the movement toward free trade has been by no means universal one prominent view is that the establishment of democratic institutions has stimulated economic reform in thepostcommunist world the authors conduct one of the first studies on this topic and find that democracies are indeed more likely to liberalize trade than nondemocracies they also find that the electoral calendar has a potent influence on the timing of commercial reform in postcommunist democracies controlling for a range of factors politicians are most likely to reduce trade barriers immediately after voters go to the polls trade liberalization is much less likely to occur at other points in a democracy s electoral calendar and elections have no effect on commercial reform in nondemocracies

the great divide literacy nationalism and the communist collapse as communist regimes collapsed in the years 1989 91 communist parties and leaders exited power in roughly half the cases the causes and the impact of this variation have generated considerable controversy the authors show that the combined timing and content of the introduction of mass literacy was responsible for generating the national standards and comparisons that either sustained the legitimacy of communist party rule or led to its rapid and complete demise during the collapse of communist regimes mass literacy explains more of the patterns of the communist exit than do structural modernization or communist legacy accounts and it provides a clear and sustained causal chain

openness country size and government abstract this paper shows that smaller countries have a larger share of public consumption in gdp and are also more open to trade these empirical observations are consistent with recent theoretical models explaining country formation and break up and may account for the observed positive empirical relationship between trade openness and government size

the political foundations of post communist regimes marketization agrarian legacies or international influences this article explores the causes of differing post communist regime transitions in eastern europe and the former soviet union emphasizing the increasingly prominent thesis that economic liberalization promotes political democratization we explore this argument in light of findings from other regions that have emphasized modernization agrarian class structure and international influences our results are based on a multilevel design strategy first analyzing data on 26 post communist countries over a 7 to 9 year period using time series cross sectional methods and then turning to a comparative analysis of four purposively selected cases to explore the causal mechanisms implied but not tested in the quantitative analysis our results suggest that faith in economic liberalization as a cause of democratization may be misplaced however there is support for the notion that large agrarian sectors are unfavorable to democratic development whereas positive democratic conditionality from outside agents can p

insurance consumption and saving a dynamic analysis in continuous time this paper shows how the demand for non life insurance interacts with consumption and saving the analysis is set in continuous time using the maximum principle when insurance is actuarially fair the insurance and consumption decisions are separable with loaded premiums and alternatively without insurance optimal consumption is dynamically related to the growth rate of the loss probability and a growing loss probability generates precautionary saving with loaded premiums less than full insurance is demanded at each instant and optimal cover varies over time whether or not the loss probability is constant

the fourth wave of democracy and dictatorship noncooperative transitions in the postcommunist world the transition from communism in europe and the former soviet union has only sometimes produced a transition to democracy since the crumbling of the berlin wall in 1989 and the collapse of the soviet union in 1991 most of the twenty eight new states have abandoned communism but only nine of these have entered the ranks of liberal democracies the remaining majority of new postcommunist states are various shades of dictatorships or unconsolidated transitional regimes this article seeks to explain why some states abandoned communism for democracy while others turned to authoritarian rule in endorsing actorcentric approaches that have dominated analyses of the third wave of democratization this argument nonetheless offers an alternative set of causal paths from ancien regime to new regime that can account for both democracy and dictatorship as outcomes situations of unequal distributions of power produced the quickest and most stable transitions from communist rule in countries with asymmetrical balances of power the regime to emerge depends almost entirely on the ideological orientation of the most powerful in countries where democrats enjoyed a decisive power advantage democracy emerged conversely in countries in which dictators maintained a decisive power advantage dictatorship emerged in between these two extremes were countries in which the distribution of power between the old regime and its challengers was relatively equal rather than producing stalemate compromise and parted transitions to democracy however such situations in the postcommunist world resulted in protracted confrontation between relatively balanced powers the regimes that emerged from these modes of transitions are not the most successful democracies but rather are unconsolidated unstable partial democracies

why no backsliding the european union s impact on democracy and governance before and after accession this article documents and explains the puzzling lack of backsliding in political reforms among the new postcommunist eu members even though these countries are no longer subject to the powerful incentives of the eu membership promise using a combination of cross national statistics expert interviews and public opinion data the authors show that the new eu members have experienced at most a slowdown in reforms rather than a genuine backlash the authors attribute this finding to the fact that the loss of leverage after the countries joined the european union was balanced by a combination of alternative leverage and linkage mechanisms including greater dependence on eu aid and trade and greater exposure to the west for both elites and ordinary citizens for the latter expanded work and travel opportunities seem to be associated with higher expectations of government performance and greater political involvement which may be crucial for future governance reform in the region

globalization domestic politics and social spending in latin america a time series cross section analysis 1973 97 this study examines the effects of globalization democratization and partisanship on social spending in fourteen latin american countries from 1973 to 1997 using a pooled time series error correction model the authors examine three sets of issues first following debates in the literature on oecd countries they want to know whether social spending has been encouraged or constrained by integration into global markets within this context they examine the extent to which such outcomes might be influenced by two additional sets of domestic political and institutional factors discussed in work on developed countries the electoral pressures of democratic institutions and whether or not popularly based governments are in power the authors show that trade integration has a consistently negative effect on aggregate social spending and that this is compounded by openness to capital markets this is the strongest and most robust finding in the study neither democratic nor popularly based governments consistently affect overall social spending the authors then disaggregate spending into social security transfers and expenditures on health and education they find that popularly based governments tend to protect social security transfers which tend to flow disproportionately to their unionized constituencies but they have a negative impact on health and education spending conversely a shift to democracy leads to increases in health and education spending which reaches a larger segment of the population the authors conclude by emphasizing the contrasting political logics of the different types of social spending

globalization and the decline of the welfare state in less developed countries why have trends in government welfare spending in developing countries diverged from those in developed countries i address this question by investigating the effects of capital and trade flows on government welfare spending in fifty three developing countries using an original measure of labor power in developing countries i test the links between international markets labor s political strength and the welfare state i argue that labor s collective action problems caused by large populations of low skilled and surplus workers offset labor s potential political gains from globalization i show that when the proportion of low skilled workers in a nation is high globalization will lead to a decline in welfare spending most significantly the results suggest that in nations where labor market institutions are not yet well developed government social welfare spending is constrained by international market forces

international trade and environmental policy in the postcommunist world this article examines whether commercial openness has affected environmental policy in the postcommunist countries of central and eastern europe and the commonwealth of independent states during the cold war these countries had closed trade regimes combined with little environmental regulation and poor environmental quality since the fall of the berlin wall and the breakup of the soviet union many postcommunist countries have engaged in extensive trade liberalization some countries however have been slower to open their markets and others have maintained highly protectionist trade policies have countries that opened up to global markets improved their environmental policies or has increasing exposure to the international trading system undermined efforts to improve environmental policy the results indicate that trade openness undermined a key element of environmental policy in the region by reducing governments ability to collect environmental taxes and support environmental investments

the perils of polarization economic performance in the postcommunist world perhaps the most striking feature of the postcommunist transformation is the tremendous variation in rates of economic growth across countries to account for these differences this article develops an alternative to the j curve and partial reform views that currently dominate discussions of the politics of economic reform this approach treats economic performance as a political struggle between ex communist and anticommunist factions engaged in a war of attrition over economic and political resources using a pooled time series analysis of economic growth across twenty five postcommunist countries for the period 1990 98 it finds that political polarization between ex communist and anticommunist factions has had a devastating effect on economic growth where these competing factions have had roughly equal power and have struggled over the economic rules of the game as in bulgaria or ukraine economic growth has been slow in contrast where either ex communist or anticommunist factions have dominated the political scene as in estonia or uzbekistan economic performance has been much better in addition economic growth has followed the electoral calendar in polarized countries as elections approach and the odds of a change in economic policy increase growth rates have plummeted in polarized countries these findings have implications for studies of the postcommunist transformation the political business cycle and the politics of economic reform more generally

oil and democracy endogenous natural resources and the political resource curse by the end of the twentieth century a scholarly consensus emerged around the idea that oil fuels authoritarianism and slow growth the natural abundance once thought to be a blessing was unconditionally and then later only conditionally a curse for political and economic development we re examine the relationship between oil wealth and political regimes challenging the conventional wisdom that such natural resource rents lead to authoritarian outcomes we contend that most efforts to examine the causal linkages between natural resource abundance and political regime have been complicated by the likelihood that both democracy and oil revenue are endogenous to the industrialization processes itself particularly in its developmentalist form our quantitative results based on an analysis of global data from 1970 to 2006 show that both resource endogeneity and several mechanisms of intraregional regime diffusion are powerful determinants of democratic outcomes qualitative evidence from the history of industrialization in latin america yields support for our proposed causal claim oil wealth is not necessarily a curse and may even be a blessing with respect to democratic development