national institutions and subnational development in africa we investigate the role of national institutions on subnational african development in a novel framework that accounts both for local geography and cultural genetic traits we exploit the fact that the political boundaries in the eve of african independence partitioned more than two hundred ethnic groups across adjacent countries subjecting similar cultures residing in homogeneous geographic areas to different formal institutions using both a matching type and a spatial regression discontinuity approach we show that differences in countrywide institutional structures across the national border do not explain within ethnicity differences in economic performance as captured by satellite images of light density the average non effect of national institutions on ethnic development masks considerable heterogeneity partially driven by the diminishing role of national institutions in areas further from the capital cities

realizing the gains from trade export crops marketing costs and poverty this paper explores the role of export costs in the process of poverty reduction in rural africa the authors claim that the marketing costs that emerge when the commercialization of export crops requires intermediaries can lead to lower participation into export cropping and thus to higher poverty they test the model using data from the uganda national household survey the findings show that i farmers living in villages with fewer outlets for sales of agricultural exports are likely to be poorer than farmers residing in marketendowed villages ii market availability leads to increased household participation in export cropping coffee tea cotton fruits and iii households engaged in export cropping are less likely to be poor than subsistence based households the authors conclude that the availability of markets for agricultural export crops helps realize the gains from trade this result uncovers the role of complementary factors that provide market access and reduce marketing costs as key building blocks in the link between the gains from export opportunities and the poor

metals or management explaining africa s recent economic growth performance explanations for africa s poor long run growth performance have varied over time the theories examined include geography jeffrey d sachs and andrew warner 1997 institutions william easterly and ross levine 1997 daron acemoglu simon johnson and james robinson 2001 2002 nathan nunn 2007 2008 health david bloom and sachs 1998 gregory n price 2003 and economic dependency william darity 1982 more recently economists have attempted to explain what the economist has called africa s new period of unparalleled economic success the economist 2008a 33 average annual real gdp growth was 1 8 percent between 1980 and 1989 and increased to 4 4 percent between 2000 and 2005 per head real growth in africa fell by 1 1 percent between 1980 and 1989 and increased 2 1 percent between 2000 and 2005 world bank 2007a this recent reversal of fortune may stem from the broad economic reforms that many african countries instituted during the 1990s especially macroeconomic stabilization and financial market liberalization but it may also be due to the recent boom in international prices of oil copper and other primary commodities that constitute a significant fraction of africa s exports international monetary fund imf 2006 metals or management explaining africa s recent economic growth performance

interfirm relationships and informal credit in vietnam trading relations in vietnam s emerging private sector are shaped by two market frictions the difficulty of locating trading partners and the absence of legal enforcement of contracts examining relational contracting we find that a firm trusts its customer enough to offer credit when the customer finds it hard to locate an alternative supplier a longer duration of trading relationship is associated with larger credit as is prior information gathering customers identified through business networks receive more credit these network effects are enduring suggesting that networks are used to sanction defaulting customers

the long term effect of demographic shocks on the evolution of gender roles evidence from the transatlantic slave trade can demographic shocks affect the long run evolution of female labor force participation and gender norms this paper traces current variation in women s participation in the labor force within sub saharan africa to the emergence of a female biased sex ratio during the centuries of the transatlantic slave trade this historical shock affected the division of labor along gender lines in the remaining african population as women substituted for the missing men by taking up areas of work that were traditionally male tasks by exploiting variation in the degree to which different ethnic groups were affected by the transatlantic slave trade i show that women whose ancestors were more exposed to this shock are today more likely to be in the labor force have lower levels of fertility and are more likely to participate in household decisions the marriage market and the cultural transmission of internal norms across generations represent important mechanisms explaining this long run persistence

the curse of being landlocked institutions rather than trade this article revisits the long term economic effects of being landlocked the conventional wisdom which also prevails in policy circles is that landlockedness hurts development by reducing trade gravity models of bilateral trade seem to confirm this view however there is no evidence in cross country data of a systematic relationship between landlockedness and country s trade to gdp ratio drawing on this stylised fact the paper explores the possibility that landlockedness might affect gdp independently from its effect on trade theoretical considerations suggest that institutional quality could be a relevant transmission mechanism the estimation of a system of three equations confirms that landlockedness has a negative effect on gdp and that this negative effect is transmitted through institutions rather than trade moreover after controlling for the transmission via institutions and trade landlockedness has a further negative effect on gdp these findings call for a review of the policy approach to the development of landlocked countries

ethnic networks and access to credit evidence from the manufacturing sector in kenya it is often anecdotally observed that networks can facilitate exchange but there are few empirical studies that explore the significance of such networks in this paper the authors analyze the impact of ethnic networks on access to finance of kenyan firms using an exceptionally rich data set the authors find that ethnicity does not affect access to formal sources of finance but being a member of an ethnic group is significant in explaining access to informal sources of finance like supplier credit the authors interpret these results in terms of information and contract enforcement mechanisms that work within ethnic groups but not across them

relational contracts and the theory of the firm relational contracts informal agreements sustained by the value of future relationships are prevalent within and between firms we develop repeated game models showing why and how relational contracts within firms vertical integration differ from those between nonintegration we show that integration affects the parties temptations to renege on a given relational contract and hence affects the best relational contract the parties can sustain in this sense the integration decision can be an instrument in the service of the parties relationship our approach also has implications for joint ventures alliances and networks and for the role of management within and between firms

strategic default in the international coffee market this article studies strategic default on forward sale contracts in the international coffee market to test for strategic default we construct contract specific measures of unanticipated changes in market conditions by comparing spot prices at maturity with the relevant futures prices at the contracting date unanticipated rises in market prices increase defaults on fixed price contracts but not on price indexed ones we isolate strategic default by focusing on unanticipated rises at the time of delivery after production decisions are sunk and suppliers have been paid estimates suggest that roughly half of the observed defaults are strategic we model how strategic default introduces a trade off between insurance and counterparty risk relative to indexed contracts fixed price contracts insure against price swings but create incentives to default when market conditions change a model calibration suggests that the possibility of strategic default causes 15 8 average losses in output significant dispersion in the marginal product of capital and sizable negative externalities on supplying farmers

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

war migration and the origins of the thai sex industry this paper analyzes the determinants behind the spatial distribution of the sex industry in thailand we relate the development of the sex industry to an early temporary demand shock i e u s military presence during the vietnam war comparing the surroundings of thai military bases used by the u s army to districts close to unused thai bases we find that there are currently 5 times more commercial sex workers in districts near former u s bases the development of the sex industry is also explained by a high price elasticity of supply due to female migration from regions affected by an agricultural crisis finally we study a consequence induced by the large numbers of sex workers in few red light districts the hiv outbreak in the early 1990s

social structure and development a legacy of the holocaust in russia we document a statistical association between the severity of the persecution displacement and mass murder of jews by the nazis during world war ii and long run economic and political outcomes within russia cities that experienced the holocaust most intensely have grown less and both cities and administrative districts oblasts where the holocaust had the largest impact have worse economic and political outcomes since the collapse of the soviet union we provide evidence that the lasting impact of the holocaust may be attributable to a permanent change it induced in the social structure across different regions of russia

vertical integration and investor protection in developing countries the industrial organization of developing countries is characterized by the pervasive use of subcontracting arrangements among small financially constrained firms this paper asks whether vertical integration relaxes those financial constraints it shows that vertical integration trades off the benefits of joint liability against the costs of rendering the supply chain more opaque to external investors in contrast to the commonly held view that pervasive input and capital market imperfections are conducive to vertical integration the model predicts that the motives for vertical integration are not necessarily higher in developing countries in particular vertical integration is more likely to arise at intermediate levels of investor protection and better contract enforcement with suppliers reduces vertical integration only if financial markets are sufficiently developed evidence supporting both predictions is discussed

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

revisiting the cotton problem a comparative analysis of cotton reforms in sub saharan africa summary the cotton sector has been among the most regulated in sub saharan africa ssa and still largely is in west and central africa wca despite repeated reform recommendations by international donors on the other hand orthodox reforms in east and southern africa esa have not always yielded the expected results this paper uses a stylized contracting model to investigate the link between market structure and equity and efficiency in ssa cotton sectors explain the outcomes of reforms in esa and analyze the potential consequences of reforms in wca we illustrate our arguments with empirical observations on cotton sector performance

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

four scenarios of development and the role of economic policy we ask which economic policies can help a country create the most favourable conditions for development we observe that the dynamics of several development indicators can be grouped into four clusters each cluster corresponding to a different combination of growth and changes in inequality based on this observation we define four different development scenarios and use limited dependent variable regressions to study how structural and policy factors affect a country s probability to achieve the most or the least favourable of these scenarios our results point to a comforting picture through the choice of appropriate policies countries can effectively increase their chances to achieve the most favourable development scenario

the new economic case for migration restrictions an assessment abstract migration barriers tend to reduce global production by impeding efficient spatial reallocation of labor recent research argues for a countervailing effect of barriers tending to raise global production by preventing the spread of impoverishing institutions from poor to rich countries while evidence of this mechanism is scarce it is theoretically plausible at high migration rates we propose and calibrate a simple model of dynamically efficient migration when migrants spread economic institutions between countries the net effect of migration depends on three parameters transmission the degree to which origin country total factor productivity is embodied in migrants assimilation the degree to which migrants productivity determinants become like natives over time in the host country and congestion the degree to which transmission and assimilation change at higher migrant stocks on current evidence about the magnitudes of these parameters dynamically efficient policy would not imply open borders but would imply relaxation of current restrictions

did colonization matter for growth an empirical exploration into the historical causes of africa s underdevelopment we investigate the impact of 20th century european colonization on growth we 5nd that colonial heritage as measured by the identity of the metropolitan ruler and by the degree of economic penetration matters for the heterogeneity of growth performances in africa colonial indicators are correlated with economic and sociopolitical variables that are commonly employed to explain growth and there are growth gains from decolonization colonial indicators also add signi5cant explanatory power to worldwide growth regressions and are correlated with the sub saharan africa and the latin america dummies c

can the west save africa in the new millennium the western aid effort toward africa has surged due to writ ings by well known economists a celebrity mass advocacy campaign and decisions by western leaders to make africa a major foreign policy priority this survey contrasts the predominant transformational approach west comprehensively saves africa to occasional swings to a marginal approach west takes one small step at a time to help individual africans evaluation of one step at a time initiatives is generally easier than that of transformational ones either through controlled experiments although these have been oversold or simple case studies where it is easier to attribute outcomes to actions we see two themes emerge from the literature survey 1 escalation as each successive western transformational effort has yielded disappointing results as judged at least by stylized facts since again the econometrics are shaky the response has been to try an even more ambitious effort and 2 the cycle of ideas rather than a progressive testing and discarding of failed ideas we see a cycle in aid ideas in many areas in africa with ideas going out of fashion only to come back again later after some lapse long enough to forget the previous disappointing experience both escalation and cyclicality of ideas are symptomatic of the lack of learning that seems to be characteristic of the transfor mational approach in contrast the marginal approach has had some successes in improving the well being of individual africans such as the dramatic fall in mortality

slavery education and inequality abstract we investigate the effect of slavery on the current level of income inequality across us counties we find that a larger proportion of slaves over population in 1860 persistently increases inequality and in particular inequality across races we also show that a crucial channel of transmission from slavery to racial inequality is human capital accumulation i e current inequality is primarily influenced by slavery through the unequal educational attainment of blacks and whites finally we provide suggestive evidence that the underlying links run through the political exclusion of former slaves and the resulting negative influence on the local provision of education

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

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

the permanent effects of transportation revolutions in poor countries evidence from africa we exploit the construction and eventual demise of the colonial railroads in africa to study the impact of transportation investments in poor countries using ghana and sub saharan africa as a whole we assembled new data on railroads and cities spanning over one century to show that i railroads had large effects on the spatial distribution and aggregate level of economic activity during the colonial period as they constituted a transportation revolution in a context where no modern transportation technology previously existed ii these effects have persisted to date although railroads collapsed and road networks expanded considerably in the post independence period the analysis contributes to our understanding of the heterogeneous impact of transportation investments it shows that initial investments may have a large effect in poor countries with basic infrastructure as the countries develop increasing returns may then solidify their spatial distribution and subsequent investments may have a smaller effect on local economic development

protests and trust in the state evidence from african countries this paper provides empirical evidence that after protests citizens substantially revise their views on the current leader but also their trust in the country s institutions the empirical strategy exploits variation in the timing of an individual level survey and the proximity to social protests in 13 african countries first we find that trust in political leaders strongly and abruptly decreases after protests second trust in the country monitoring institutions plunges as well both effects are much stronger when protests are repressed by the government as no signs of distrust are recorded even a couple of days before the social conflicts protests can be interpreted as sudden signals sent on a leaders actions from which citizens extract information on their country fundamentals

is the optimal labor income tax progressive in a unionized economy this paper concerns optimal nonlinear labor income taxation in an economy with union wage setting and endogenous hours of work the purpose is to study the determinants of tax progression we show that the optimal degree of progression of the labor income tax depends on the extent to which the government can influence the wage rate via tax policy as well as on its ability to redistribute income across individuals in addition the argument for progressive labor income taxation depends on whether hours of work are chosen by the employed themselves or the union

factor endowments inequality and paths of development among new world economies whereas traditional explanations of differences in long run paths of development across the americas generally point to the significance of differences in national heritage or religion we highlight the relevance of stark contrasts in the degree of inequality in wealth human capital and political power in accounting for how fundamental economic institutions evolved over time we argue moreover that the roots of these disparities in the extent of inequality lay in differences in the initial factor endowments dating back to the era of european colonization we document through comparative studies of suffrage public land and schooling policies systematic patterns by which societies in the americas that began with more extreme inequality or heterogeneity in the population were more likely to develop institutional structures that greatly advantaged members of elite classes and disadvantaging the bulk of the population by providing them with more political influence and access to economic opportunities the clear implication is that institutions should not be presumed to be exogenous economists need to learn more about where they come from to understand their relation to economic development our findings not only contribute to our knowledge of why extreme differences in the extent of inequality across new world economies have persisted for centuries but also to the study of processes of long run economic growth past and present

export price shocks and rural labor markets the role of labor market distortions abstract to what extent can workers in developing countries seize gains from trade to answer this question we resort to a unique exogenous labor demand shock triggered by a surge in the world market price of cotton in 2010 11 by capitalizing on tajikistan s geographic variation in the suitability for cotton production we identify the effect of the export price hike on wages of rural workers the shock induces agricultural firms to shift towards labor intensive cotton production the subsequent greater labor demand doubles wages for female cotton pickers on small entrepreneurial private farms but does not affect their wages on large parastatal farms we present evidence that parastatal farms recruit workers for low wages based on monopsony power and expand employment based on labor coercion of children and public sector workers our results highlight the importance of accounting for competitive structures in local labor markets when assessing the wage pass through of world market prices to workers in developing countries

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

historical origins of firm ownership structure the persistent effects of the african slave trade this paper uses evidence from the historical african slave trade to extend prior theory linking modern firm ownership structure to institutions and social capital we argue that institutions and so

market power and rents in global supply chains market power and competition policy in food supply chains has emerged as an important economic issue in economics and a highly sensitive item on the policy agenda consolidation is taking place in the food industry both in high income countries and in emerging economies but the impact of concentration in global food chains on efficiency and rent distribution is more nuanced and complex than often claimed we review the literature and extend it by developing a model which explicitly takes into account market imperfections and contract enforcement problems in supply chains increased competition benefits farms by improving contract conditions but contract enforcement becomes more complicated

loyalty exit and enforcement evidence from a kenya dairy cooperative organizations depend on members loyalty for their success studying a cooperative s attempt to increase deliveries by members we show that the threat of sanctions leads to highly heterogeneous response among members despite the cooperative not actually enforcing the threatened sanctions positive effects for some members persist for several months other members exit stopping delivering altogether among non compliant members we document substantial heterogeneity in beliefs about the legitimacy of the sanctions this lack of common understanding highlights the role played by managers in organizations and provides a candidate explanation for lack of sanctions enforcement documented by ostrom 1990 and other studies

narrow and scientific replication of the slave trade and the origins of mistrust in africa summary nunn and wantchekon 2011 argue that slave trades led to a culture of mistrust in africa they regress self reported trust from the 2005 afrobarometer surveys on ethnicity specific historic slave exports individuals from ethnic groups that experienced high levels of slave exports are less trusting causality is demonstrated by instrumenting slave exports using the historic distance of each ethnic group to the coast our narrow replication yields identical results the scientific replication repeats the analysis with afrobarometer survey data from 2008 which includes two new countries and more ethnic groups our replication confirms the results of nunn and wantchekon copyright 2012 john wiley sons ltd

states and power in africa by jeffrey i herbst a review essay herbst argues that africa is plagued by state failure to provide certain public goods in society such as law and order defense contract enforcement and infrastructure herbst has provided a bold historically informed theoretical analysis essential reading for economists interested in comparative institutions and development

impact of historical conflict on fdi location and performance japanese investment in china historical relations between countries bring important explanatory power for foreign direct investment fdi decisions yet little is known on whether a home host country relation exhibits heterogeneous effects on fdi across the country s subnational regions in this study we examine the long term impact of historical conflict on fdi location choices and performance using a sample of 8 646 japanese fdi in china we show that civilian casualties in different provinces of china during the second sino japanese war exert deterring effects on japanese fdi location choices furthermore we demonstrate that civilian casualties negatively affect japanese fdi performance and political capital accumulation strategies in the forms of excessive tax payment and local employment can reduce this negative effect this study contributes to the discussion on how within country differences of historical factors affect fdi location decisions and performance the findings on firms political capital accumulation strategies also provide important implications for fdi operation in an environment characterized by historical animosity

liberalization endogenous institutions and growth a comparative analysis of agricultural reforms in africa asia and europe thirty years ago a vast share of low and middle income countries was heavily state controlled the liberalizations of the 1980s and 1990s had greatly different effects on growth in countries in africa asia and europe a comparative framework is used to document these differences and a model is developed to formally analyze how liberalization affects production and income distribution when the institutions that govern production and exchange are also affected hypotheses are derived for how endogenous institutional adjustments affect the growth response to liberalization these insights motivate a series of explanations for the differences in performance across regions and commodities following liberalization

social capital conflict and welfare abstract this paper analyzes the role of external conflict as a force that can create social capital hostile inter group interactions can help to resolve intra group social dilemmas but these potential gains must be weighed against the insecurity of hostile relations with an out group our central result is that the presence of an outside threat can induce higher levels of social capital either because a protective aspect of social capital comes into play and or as a reallocation of investments from private to social capital given that social capital is potentially subject to free riding the threat by promoting a greater level of social capital can be welfare improving when the threat is severe social capital and welfare are more likely to fall this effect of an external threat on social capital is stronger in poor economies these results can shed light on the sometimes contradicting empirical evidence on the relationship between conflict and social capital

good bad and ugly colonial activities do they matter for economic development levels of development vary widely within countries in the americas we argue that part of this variation has its roots in the colonial era when colonizers engaged in different economic activities in different regions of a country we present evidence consistent with the view that bad activities those that depended heavily on labor exploitation led to lower economic development today than good activities those that did not rely on labor exploitation our results also suggest that differences in political representation but not in income inequality or human capital could be the intermediating factor between colonial activities and current development

colonial legacies and economic growth much of the work on colonialism has been theoretical or anecdotal in this paper i close the gap between the literature on development and new growth theory by testing the effect of colonization on subsequent growth and development in a sample of 63 ex colonial states from 1961 1990 i find that colonies that were held for longer periods of time than other countries tend to perform better on average after independence finally i show that the level of education at the time of independence can help to explain much of the development gap between the former british and french colonies in africa

endogenous emergence of credit markets contracting in response to a new technology in ghana abstract access to credit is important for the productivity and overall welfare of farmers in developing countries we present a theoretical framework which shows that a change in the mode of shipping from air to sea in the ghanaian pineapple industry made it profitable for pineapple exporters to provide myopic farmers with both in kind loans to improve productivity and cash loans for consumption smoothing despite being unable to monitor farmers or enforce repayment the innovative theoretical result is that providing farmers with additional cash loans can enforce greater input use without compromising repayment we provide evidence in the form of a case study documenting the dramatic rise of informal credit through contract farming after the switch to sea freight between 1996 and 2001 using this anecdote we argue that credit arrangements can arise spontaneously absent non market interventions to meet market needs even in the absence of proper legal protections for creditors

is trust the missing root of institutions education and development we report evidence that trust is the missing root relating education institutions and economic development we observe that more trust both increases education and improves legal and bureaucratic institutions which in turn spurs economic development we substantiate this intuition with a series of regressions that provide evidence that trust determines both education and the quality of institutions and that education and institutions in turn affect gdp per capita

contracts hold up and exports textiles and opium in colonial india trade and export it is argued spur economic growth this paper studies the microeco nomics of exporting we build a heuristic model of transactions between exporters and producers and relate it to east india company operations in colonial bengal our model and the historical record stress two difficulties the exporter and its agents might not uphold payment agreements and producers might not honor sales contracts the model shows when procurement succeeds or fails highlighting the tension between these two hold up problems we analyze several cases including the east india company s cotton textile venture the famous opium monopoly and present day contract farming

can development aid contribute to social cohesion after civil war evidence from a field experiment in post conflict liberia civil war is very common in the develop ing world with harmful welfare effects when it occurs many fear that the devastation wrought by violent conflict destroys social capital impedes economic development and leads to the recur rence of violence paul collier et al 2003 in response donors are injecting large amounts of aid into post conflict countries a significant share of this assistance is spent on community driven reconstruction cdr programs which support the establishment of new local institu tions in order to promote social reconciliation whether this assistance has this effect is how ever largely unknown can brief foreign funded efforts to build local institutions in fact have posi tive effects on local patterns of cooperation we address this question using a randomized field experiment to evaluate the impact of a cdr project in northern liberia the project was funded by the united kingdom s department for international development dfid and imple mented by the international rescue committee irc the project attempted to build demo cratic community level institutions for making and implementing decisions about local public goods this model of support for participatory processes to enhance local public goods provi

household inequality entrepreneurial dynamism and corporate financing economic theories provide conflicting hypotheses on how wealth inequality affects entrepreneurial dynamism to empirically investigate its impact we construct local measures of household wealth inequality based on financial rents home equity and 1880 farmland we identify its effects on entrepreneurship by instrumenting it with land distribution under the 1862 homestead act or us states removal of death taxes wealth inequality decreases firm entry and exit and the proportion of high tech businesses across metropolitan statistical areas there is also less redistribution into public goods supportive of entrepreneurship such as schooling and the judiciary income per capita consequently grows more slowly

reputation effects and the limits of contracting a study of the indian software industry this paper examines evidence of the role that reputation plays in determining contractual outcomes we conduct an empirical analysis of the indian customized software industry using a data set we collected containing detailed information on 230 projects carried out by 125 software firms we propose a model ofthe industry where reputation determines contractual outcomes the evidence supports the view that reputation matters ex ante contracts as well as the outcome after ex post renegotiation vary with firms characteristics plausibly associated with reputation this holds after controlling for project client and firm characteristics

the impact of the transatlantic slave trade on ethnic stratification in africa in the last 15 years economists and economic historians have argued that africa has undergone a reversal of fortune and that ethnic fragmentation is a significant cause of africa s underdevelopment in this article we join these narratives by arguing that the transatlantic slave trade increased the degree of ethnic heterogeneity in africa today using both correlational and causal instrumental variables analysis we find an economically and statistically significant positive relationship between slave exports and ethnic heterogeneity this relationship is robust to changes in the scheme for drawing ethnic boundaries and the choice of observational unit

solving the mystery of the africa dummy abstract most empirical studies have reported a negative effect on growth of being an african country even when accounting for ethnic heterogeneity modeling policy choices has reduced this effect in recent studies but these have begged the question of why africa appears adverse to developmental policies this paper uses a cross sectional data set to show that the governments of arbitrary postcolonial states as are most african states face substantial limitations to their power and are constrained in their responses deriving greater relative power payoffs from neo patrimonial than from developmental policies differing levels of state legitimacy account therefore largely for the policy choices which characterize most of africa

trade credit in zimbabwean manufacturing abstract credit from suppliers is an important but often neglected source of finance for manufacturing firms zimbabwe is no exception unlike credit from financial institutions trade credit does not rely on formal collateral but on trust and reputation contract enforcement is flexible network effects and statistical discrimination affect the screening of trade credit applicants black entrepreneurs are disadvantaged by their lack of business contacts and by the difficulty of distinguishing themselves from the mass of financially insecure and short lived african owned businesses in zimbabwe a vicious circle is created between weak financial base unreliability as a debtor and inability to gain access to credit