occupational choice and the process of development this paper models economic development as a process of institutional transformation by focusing on the interplay between agents occupational decisions and the distribution of wealth because of capital market imperfections poor agents choose working for a wage over self employment and wealthy agents become entrepreneurs who monitor workers only with sufficient inequality however will there be employment contracts otherwise there is either subsistence or self employment thus in static equilibrium the occupational structure depends on distribution since the latter is itself endogenous we demonstrate the robustness of this result by extending the model dynamically and studying examples in which initial wealth distributions have long run effects in one case the economy develops either widespread cottage industry self employment or factory production employment contracts depending on the initial distribution in the other example it develops into prosperity or stagnation

executive constraint and sovereign debt quasi experimental evidence from argentina during the baring crisis the literature on whether executive constraint improves the credibility of sovereign debt takes the political regime as the unit of analysis typically computing an average yield or price for each

structural drivers of productivity and employment growth a decomposition analysis for 81 countries the paper uses accounting methods to decompose aggregate labour productivity and employment growth into their sectoral components as well as into within sector and employment reallocation effects for a sample of 81 developed and developing countries using data going back to the mid 1980s key findings are that aggregate labour productivity growth for developing countries taken together is driven as much by services as by industry in spite of strong differences between countries and that within sector effects on aggregate labour productivity growth are more important than employment reallocation effects a pattern that holds for all regions

macroeconomic features of the french revolution this paper describes aspects of the french revolution from the perspective of theories about money and government budget constraints we describe how unpleasant fiscal arithmetic gripped the old regime how the estates general responded to reorganize france s fiscal affairs and how fiscal exigencies impelled the revolution into a procession of monetary experiments ending in hyper inflation

state capacity and long run economic performance we present new evidence about the long run relationship between state capacity the fiscal and administrative power of states and economic performance our database is novel and spans 11 european countries and 4 centuries from the old regime to world war i we argue that national governments undertook two political transformations over this period fiscal centralization and limited government we find a significant direct relationship between fiscal centralization and economic growth furthermore we find that an increase in the state s capacity to extract greater tax revenues was one mechanism through which both political transformations improved economic performance our analysis shows systematic evidence that state capacity is an important determinant of long run economic growth

cities constitutions and sovereign borrowing in europe 1274 1785 this article investigates the politics of sovereign borrowing in europe over the very long run i consider three alternative hypotheses regarding the sources of borrower credibility according to the first european states with constitutional checks on executive authority found it easier to obtain credit at low interest rates than did states that lacked such constraints my second hypothesis focuses on state type city state versus territorial state and the way in which this may have influ enced the balance of political power between owners of land and owners of capital in a society this hypothesis suggests that after controlling for other factors one should observe that city states in europe found it easier to borrow than did larger territorial states and that these city states paid lower interest rates on their debt finally my third hypothesis suggests that borrower credibility depended on the simultaneous presence of both constitutional checks and balances and a city state when one con siders a broad sample of cases over a long time span there is strong support for the proposition involving city states and merchant power but less support for the argu ment that constitutional checks influenced credibility regardless of state type city state or territorial state there is however some empirical evidence of an interaction effect whereby constitutional constraints on rulers made city states particularly cred ible as borrowers my results are robust to a number of controls for alternative deter minants for sample selection bias and for the endogeneity of city state development one of the most frequently cited recent arguments about european state develop ment involves the effect of constitutional checks and balances on economic per formance in areas where political institutions placed constraints on rulers scholars have argued that property rights were more secure which helped stimulate invest ment innovation and growth authors have suggested that checks and balances also facilitated long term borrowing by governments since creditors found it less likely that constrained rulers would default on loans easier access to loans at low interest rates gave some states an advantage in international competition the con trasting cases of great britain and france provide a popular illustration of the

the rise of europe atlantic trade institutional change and economic growth the rise of western europe after 1500 is due largely to growth in countries with access to the atlantic ocean and with substantial trade with the new world africa and asia via the atlantic this trade and the associatedcolonialism affected europe not only directly but also indirectly by inducing institutional change where initial political institutions those established before 1500 placed significant checks on the monarchy the growth of atlantic trade strengthened merchant groups by constraining the power of the monarchy and helped merchants obtain changes in institutions to protect property rights these changes were central to subsequent economic growth

income distribution and macroeconomics this paper analyzes the role of wealth distribution in macroeconomics through investment in human capital it is shown that in the presence of credit markets imperfections and indivisibilities in investment in human capital the initial distribution of wealth affects aggregate output and investment both in the short and in the long run as there are multiple steady states this paper therefore provides an additional explanation for the persistent differences in per capita output across countries furthermore the paper shows that cross country differences in macroeconomic adjustment to aggregate shocks can be attributed among other factors to differences in wealth and income distribution across countries

princes and merchants european city growth before the industrial revolution as measured by the pace of city growth in western europe from 1000 to 1800 absolutist monarchs stunted the growth of commerce and industry a region ruled by an absolutist prince saw its total urban population shrink by one hundred thousand people per century relative to a region without absolutist government this might be explained by higher rates of taxation under revenue maximizing absolutist governments than under nonabsolutist governments which care more about general economic prosperity and less about state revenue

the democratic advantage institutional foundations of financial power in international competition despite their presumed liabilities institutions associated with democracy serve as a source of power in prolonged international competition by increasing the financial resources that states can bring to bear the theory of sovereign debt suggests that a state s ability to raise money through public borrowing is enhanced when debtholders have mechanisms for sanctioning state leaders in the event of default institutions associated with liberal government provide such mechanisms all other things being equal states that possess these institutions enjoy superior access to credit and lower interest rates than do states in which the sovereign has more discretion to default unilaterally liberal states can not only raise more money from a given economic base but can also pursue tax smoothing policies that minimize economic distortions the ability to finance competition in a manner that is consistent with long term economic growth generates a significant advantage in prolonged rivalries these claims are explored by analyzing the anglo french rivalry 1688 1815 and the cold war

history institutions and economic performance the legacy of colonial land tenure systems in india we analyze the colonial land revenue institutions set up by the british in india and show that differences in historical property rights institutions lead to sustained differences in economic outcomes areas in which proprietary rights in land were historically given to landlords have significantly lower agricultural investments and productivity in the post independence period than areas in which these rights were given to the cultivators these areas also have significantly lower investments in health and education these differences are not driven by omitted variables or endogeneity problems they probably arise because differences in historical institutions lead to very different policy choices

colonialism and modern income islands as natural experiments abstract using a new database of islands throughout the atlantic pacific and indian oceans we find a robust positive relationship between the number of years spent as a european colony and current gdp per capita we argue that the nature of discovery and colonization of islands provides random variation in the length and type of colonial experience we instrument for length of colonization using variation in prevailing wind patterns we argue that wind speed and direction had a significant effect on historical colonial rule but do not have a direct effect on gdp today the data also suggest that years as a colony after 1700 are more beneficial than earlier years we also find a discernable pecking order among the colonial powers with years under u s british french and dutch rule having more beneficial effects than spanish or portuguese rule our finding of a strong connection between modern income and years of colonization is conditional on being colonized at all since each of the islands in our da

manufacturing output employment and real wages in the 1980s labour s loss until the century s end during the 1980s most developing countries experienced sharp declines in manufacturing output and real wages whilst their manufacturing sectors were supposedly restructured or made more competitive by having to confront market forces this article examines the extent to which macroeconomic adjustment and industrial restructuring policies succeeded in achieving their objectives

different paths to the modern state in europe the interaction between warfare economic structure and political regime theoretical work on taxation and state building borrows heavily from early modern european experience while a number of european states increased centralized tax revenues during this period for others revenues stagnated or even declined and these variations have motivated alternative arguments for the determinants of fiscal and state capacity this study reviews the arguments concerning the three determinants that have received most attention namely warfare economic structure and political regime and tests them by making use of a new and comprehensive tax revenue dataset our main finding is that these three determinants worked in interaction with each other specifically when under pressure of war it was representative regimes in more urbanized commercial economies and authoritarian regimes in more rural agrarian economies that tended to better aggregate domestic interests towards state building

regional convergence and national inequality this paper explores the implications of regional income convergence for measures of inequality at the national level in general such convergence occurs as poorer regions overtake more developed ones it is difficult to imagine any realistic scenario in which rising incomes in poorer regions would not have the effect of reducing absolute poverty at the same time it seems reasonable to assume that national inequality would fall as the mean incomes in the various regions converge given these general presumptions the recent economic history of regional convergence between the southern united states and the rest of the nation is quite puzzling over the last twenty five years mean family income in the southern united states has gone from about 80 of the national mean to about 93 at the same time inequality in the south and that in the non south have been changing only slightly when measured by gini coefficients under these circumstances with no serious deterioration in intraregional measures of inequality we would expect to observe a substantial reduction in national inequality as these two broad regions converge in mean incomes nevertheless there has been no significant decline in the national gini coefficient this apparent paradox is in contrast to an earlier period in u s history in which regional convergence occurred while national inequality was falling smolensky 1961 1963 the purpose of this paper is to demonstrate that the relationship between regional convergence and overall inequality is far from obvious in particular we shot that the convergence of mean incomes among regions ceteris paribus is not a sufficient condition for a reduction in common measures of ov erall inequality such as the gini coefficient the ceteris paribas conditions here are that the distribution of population across regions and the relative distribution of income within each region are held constant the proof of this assertion is made in section ii in section iii we demonstrate the relevance of this analysis to the u s case we show that the simple mean convergence of family incomes between the southern united states and the rest of the nation over the last twenty five years should not have been expected to have a direct effect on national inequality the naive link between regional income convergence and national income distribution does not hold up in this important case hence the arguments of section ii are more than analytical curiosa in a situation where the direct effects of income convergence are insufficient to reduce overall inequality there is the possibility that the broader process of regional convergence achieves this result more indirectly regional convergence may involve economic changes that work on intra regional income distributions or the distribution of population across regions in ways favorable to greater national equality in section iv we speculate on such indirect effects from a theoretical point of view we conclude that the direction and extent of such interactions are not obvious

why isn t the whole world experimenting with the east asian model to develop review of the east asian miracle abstract like narcissus the world bank sees its own reflection in east asia s success it attributes the east asian miracle to macroeconomic basics high saving and investment rates expenditures on education and exports but in reality these are anchored in micro institutions that exhibit pervasive state intervention east asia created competitiveness by subsidizing learning whereas bank policy emphasizes methods that effectively cut real wages the report is rich in empirical data but they do not support the bank s dismissal of industrial policy as ineffective and they are presented in a way that makes it difficult for students to corroborate bank findings the greatest disappointment of the report s market fundamentalism is a failure to study seriously how elements of the east asian model can be adapted to suit conditions in other countries

does structure influence growth a panel data econometric assessment of relatively less developed countries 1979 2003 neo schumpeterian streams of research emphasize the close relationship between changes in economic structure in favor of high skill and high tech branches and rapid economic growth they identify the emergence of a new technological paradigm in the 1970s strongly based on the application of information and communication technologies icts arguing that in such periods of transition and emergence of new techno economic paradigms the intermediate development countries and the countries which are not at the technological frontier have higher opportunities to catch up although this debate is theoretically well documented the empirics seem to lag behind the theory in this article we contribute to this literature by adding enlightening evidence on the issue more precisely we relate the growth experiences of countries which had relatively similar economic structures in the late 1970s with changes occurring in these countries structures between 1979 and 2003 the results reveal a robust relationship between structure and labor productivity growth and lend support to the view that producing though not user ict related industries are strategic branches of economic activity copyright 2011 the author 2011 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

mobility and modality trends in us state personal income we examine the mobility and modality trends in us state per capita personal income and its components during the 1929 1999 period we find strong evidence of convergence for states but that the tendency towards convergence and the associated mobility within the distribution varies during the period and especially for the 1980s our analysis of convergence by income component suggests that transfer income contributes more to the observed convergence than does asset income we also note that distributional mobility need not be accompanied by high rank mobility and find that trends toward convergence in the us have tended to preserve rank ordering cet article cherche a examiner les tendances de mobilite et de modalitequant aux revenus personnels par tete et a ses composants aux etats unis pendant la periode qui va de 1929 a1999 il s avere de fortes preuves d une convergence entre etats qui varie au cours de la periode etudiee et qui va de pair avec une variation de la mobilite associee au sein de

history lessons institutions factor endowments and paths of development in the new world the explanations offered for the contrasting records of long run growth and development among the societies of north and south america most often focus on institutions the traditional explanations for the sources of these differences in institutions typically highlight the significance of national heritage or religion we in contrast argue that a hemispheric perspective across the wide range of colonies established in the new world by the europeans suggests that although there were many influences factor endowments or initial conditions had profound and enduring effects on the long run paths of institutional and economic development followed by the respective economies

rural reforms and agricultural growth in china this paper employs province level panel data to assess the contributions of decollectivization price adjustments and other reforms to china s agricultural growth in the reform period decollectivization is found to improve total factor productivity and to account for about half of the output growth during 1978 84 the adjustment in state procurement prices also contributed positively to output growth its impact came mainly from the responses in input use the effect of other market related reforms on productivity and output growth was very small reasons for slowdown in agricultural growth after 1984 are also analyzed copyright 1992 by american economic association

elite self interest and economic decline in early modern europe why does the leading economic power of its time lose its dominance competing theories are tested through a comparison of four historical cases the florentine city state the spanish empire and the dutch and british nation states institutional context determined social actors capacities to apply their polities human and material resources to foreign economic competition specifically the dominant elites in each polity established the social relations and institutions that protected them from domestic challenges from rival elites and classes but these relations and institutions had the effect of limiting elites capacities to adapt to foreign economic rivals elites acting locally determined their capacities to act globally

sectoral regularities of productivity growth in developing countries a kaldorian interpretation this paper provides a kaldorian interpretation for empirical regularities of product ivity growth at the sectoral level of the economy the statistical evidence is based on a dataset drawn from internationally compatible time series for employment and value added in 30 developing countries based on novel non linear statistical techniques the findings show i a regular pattern of positive sectoral employment elasticities with respect to output growth ii robust differences across sectors in the magnitude of the employment elasticities and iii employment elasticities for all sectors that are signifi cantly less than unity suggesting strong evidence for increasing returns at the sector level of the economy

costly monitoring loan contracts and equilibrium credit rationing this paper develops a model with asymmetrically informed agents and costly monitoring of loan contracts where an equilibrium can exhibit credit rationing borrowers are identical ex ante but some receive loans and others do not in contrast to existing credit rationing theories rationing does not occur here due to inflexible prices adverse selection or moral hazard optimizing behaviour produces a standard debt contract in equilibrium the aggregate quantity of loans and equilibrium interest rates respond differently depending on whether there is rationing in equilibrium

inequality does cause underdevelopment insights from a new instrument consistent with the provocative hypothesis of engerman and sokoloff 1997 2000 this paper confirms with cross country data that agricultural endowments predict inequality and inequality predicts development the use of agricultural endowments specifically the abundance of land suitable for growing wheat relative to that suitable for growing sugarcane as an instrument for inequality is this paper s approach to problems of measurement and endogeneity of inequality the paper finds inequality also affects other development outcomes institutions and schooling which the literature has emphasized as mechanisms by which higher inequality lowers per capita income it tests the inequality hypothesis for development institutional quality and schooling against other recent hypotheses in the literature while finding some evidence consistent with other development fundamentals the paper finds high inequality to independently be a large and statistically significant barrier to prosperity good quality institutions and high schooling

collectivization and china s agricultural crisis in 1959 1961 the agricultural crisis in china in 1959 61 after the initial success of the collectivization movement resulted in 30 million extra deaths in this paper a game theory hypothesis proposes the main cause of this catastrophe i argue that because of the difficulty in supervising agricultural work the success of an agricultural collective depends on a self enforcing contract in which each one promises to discipline oneself a self enforcing contract however can be sustained only in a repeated game in the fall of 1958 the right to withdraw from a collective was deprived the nature of the collectivization was thus changed from a repeated game to a one time game as a result the self enforcing contract could not be sustained and agricultural productivity collapsed the empirical evidence is consistent with this hypothesis

economic history and modern india redefining the link this paper argues that to restore the link between economic history and modern india a different narrative of indian economic history is needed an exclusive focus on colonialism as the driver of india s economic history misses those continuities that arise from economic structure or local conditions in fact market oriented british imperial policies did initiate a process of economic growth based on the production of goods intensive in labor and natural resources however productive capacity per worker was constrained by low rates of private and public investment in infrastructure excessively low rates of schooling social inequalities based on caste and gender and a delayed demographic transition to lower birthrates and the resultant heavy demographic burden placed on physical capital and natural resources

regional earnings inequality in great britain a decomposition analysis this paper investigates the degree of earnings inequality in great britain over the period 1975 96 using individual based data it finds that the contribution of within group inequality to both earnings inequality cross sectionally and to its trend over time is substantially more important than the contribution of between group inequality thus the primary source of increasing inequality in the overall earnings distribution is increasing inequality within regions and not differences in average earnings between regions a decomposition of the gini coefficient is also adopted to illustrate how regional convergence in average earnings has been accompanied by increasing overall earnings inequality in the uk a partir des donnees aupres des particuliers cet article cherche a examiner l importance de l inegalite des revenus regionaux en grande bretagne de 1975 a 1996 il en resulte que la contribution de l inegalite a l interieur du groupe a l inegalite des revenus par echantillon et sur le temps s avere nett

behavioural and material determinants of production relations in agriculture in this essay we develop a framework for analysing the major institutions governing the production and exchange of output and the primary factors of production in rural areas the analysis incorporates general considerations of risk and information constraints jointly with the principal material attributes of agriculture and of agricultural production factors the framework is used to analyse barriers to the existence of the major intertemporal and factor markets it is applied specifically to land scarce environments for which it provides an internally consistent explanation for many of the well documented institutional features of such settings in addition the analysis provides new implications for among other phenomena the inter relationships among ownership holdings operational scale family size and factor productivity for the scarcity of animal rental markets and use of animals as collateral for the renting out of land by small landowners and for the existence of plantations for certain crops

convergence of the south and non south income distributions 1969 1979 income distribution and inequalities in the southern united states are analyzed and compared with data for the rest of the country the evidence presented in this paper reveals that in the 1970s the souths income distribution either converged or moved significantly closer to the income distribution of the rest of the country the degree of convergence depends on the definition of the recipient unit and to a degree on the particular cost of living index used to deflate southern and non southern incomes the convergence is attributed in part to the labor unionization in the northeast and the resulting relocation of companies to the south data are from the 1970 and 1980 censuses and concern total household income excerpt

deindustrialisation and the social and economic sustainability nexus in developing countries cross country evidence on productivity and employment in an empirical investigation of the interactions between industrial structure and macro outcomes an accounting framework was applied to relate changes in sectoral employment and output compositions to changes in overall productivity growth over time the numerical results were interpreted using a taxonomy describing industrialisation and deindustrialisation in developing countries the findings suggest that in particular industrial performance correlates with the overall performance of an economy and therefore is the key sector in explaining the sustainability of different regional patterns in overall productivity and employment growth that is negative rates of productivity growth in the industrial sector are strongly associated with negative productivity growth for the economy as a whole and vice versa further slow industrial growth may lead to low road development in which productivity growth trades off with employment growth while high road development is defined as simultaneously expanding

empowerment and efficiency tenancy reform in west bengal the paper analyzes the effect of agricultural tenancy laws offering security of tenure to tenants and regulating the share of output that is paid as rent on farm productivity theoretically the net impact of tenancy reform is shown to be a combination of two effects a bargaining power effect and a security of tenure effect analysis of evidence on how contracts and productivity changed after a tenancy reform program was implemented in the indian state of west bengal in the late 1970s suggests that tenancy reform had a positive effect on agricultural productivity there

money and monetary stability in europe 1300 1914 abstract this paper investigates the determinants of monetary stability in europe from the late medieval era until world war i through this period the anchor for monetary policy was the silver or gold value of the monetary unit states however frequently abandoned this anchor some depreciating their monetary units against silver and gold less than 10 fold and others more than 10 000 fold between 1500 and 1914 to understand the determinants of these differences we compile a new and comprehensive monetary history dataset for all major states in europe and test alternative theories we find strong evidence that political factors and in particular fiscal capacity political regime and warfare explain patterns of monetary stability this finding is robust to addressing endogeneity controlling for the instability induced by the mechanics of the monetary system and accounting for the impacts of new monetary technologies and the advent of fiat standard